Sale of Inherited Land Not Yet Transferred to the Heirs
Philippine Law Perspective – 2025
Disclaimer. This article is for general information only and is not a substitute for legal advice. Conveyancing rules change and local registers sometimes add requirements; always consult a Philippine lawyer before acting.
1. The Situation in a Nutshell
When a Filipino landowner dies, all his/her property forms part of the “estate.” Until the estate is settled (by extrajudicial or judicial means) and a new Transfer Certificate of Title (TCT) is issued in the names of the heirs, the land remains titled in the decedent’s name. Yet heirs—or occasionally third-party buyers—often want to sell that property before transfer.
At first glance this seems simple: “Just sign a deed of sale.” In reality, the transaction sits at the intersection of succession law, property law, tax law, and land-registration practice. Missteps can void the sale, expose parties to tax surcharges, or embroil everyone in litigation that may last decades.
2. Key Legal Foundations
| Topic | Core Authority | Practical Effect |
|---|---|---|
| Succession creates co-ownership | Civil Code arts. 774-784, 1078-1101 | From the moment of death, inheritance passes “by operation of law.” Until partition, heirs are co-owners of the entire estate. |
| Disposition of an undivided share | Art. 493 | Any heir may sell his/her undivided hereditary portion without others’ consent. |
| Disposition of the entire parcel | Arts. 1311-1312, 1390; 1397; 1399 | A deed signed by some heirs selling the whole property is void/voidable as to non-consenting heirs. |
| Extrajudicial settlement | Rule 74, Rules of Court | Permits heirs of full age and with no outstanding debts to settle and, in the same instrument, sell estate assets; must be notarised and published 3 consecutive weeks in a newspaper. |
| Judicial settlement / probate | Rule 73-90, Rules of Court | When there are debts, minors, or disputes, a probate or intestate proceeding is required. Sale of estate property needs court approval (Rule 89). |
| Estate tax | NIRC 1997, as amended (Estate tax rate: 6 % of net estate); RA 11569 (Estate-Tax Amnesty extension to 14 June 2025) | Estate tax (or amnesty) must be paid before the BIR issues an electronic Certificate Authorizing Registration (eCAR). |
| Land registration | PD 1529 (Property Registration Decree) & Registry of Deeds manuals | No new TCT or annotation of sale will be allowed without the BIR eCAR, transfer tax receipt, DAR clearances (if agricultural), and other documentary requirements. |
3. Understanding the Co-Ownership
- Automatic co-ownership. Death does not divest title; it merely pads the owner’s name with “Deceased.” The heirs collectively become owners in common until partition.
- Acts that all co-owners may perform – management, collection of fruits, payment of taxes.
- Acts requiring unanimous consent – sale, mortgage, or lease of the entire thing for more than one year (Art. 493).
- Partition ends co-ownership. After partition each heir owns a determinate portion and is free to sell it individually.
4. Four Legitimate Paths to Sale
| Path | When Appropriate | Who Signs the Deed | Special Approvals |
|---|---|---|---|
| A. Extrajudicial Settlement With Sale (EJS&S) | Estate has no outstanding debts, heirs are all of age (or minors are duly represented) | All heirs (or their attorneys-in-fact) | 1. Publication for 3 weeks 2. BIR eCAR (after estate-tax payment) |
| B. Extrajudicial Settlement Then Sale | Heirs first wish to adjudicate then dispose later | 1. Deed of Settlement signed by all heirs. 2. Separate Deed of Sale—again by all heirs. |
Same as above; buyer usually asks that both deeds be annotated. |
| C. Judicial Settlement / Probate | There are debts, minors, or disputes, or a will naming an executor | Executor/Administrator with court approval under Rule 89 | Court order authorising disposition plus BIR eCAR |
| *D. Sale of Undivided Share | One or more heirs want liquidity but others don’t | Only the selling heir(s) (they may use an SPA) | Buyer takes only the undivided share; co-ownership continues. Buyer may later sue for partition. |
Why buyers often insist on EJS&S
- Faster than probate.
- Avoids “perfecting” two instruments.
- Publishing the EJS&S cures intra-heir notice issues and starts the 2-year period within which aggrieved heirs (or creditors) may file a claim (Rule 74 §4).
5. Critical Documentary Checklist
Death Certificate (PSA) – to prove date of transfer mortis causa.
Owner’s Duplicate TCT/Original Certificate of Title – still in the decedent’s name.
Certified true copy of title (Registry of Deeds).
Latest Tax Declaration (Assessor).
Deed of EJS&S or Deed of Sale – notarised, with complete technical description.
Special Power of Attorney – if any heir is abroad or unavailable.
Affidavit of Self-Adjudication (if there is only one heir).
Publication clippings (Rule 74).
BIR Forms
- Estate Tax Return (BIR Form 1801) or Estate-Tax Amnesty Return (BIR Form 2118-E)
- Documentary Stamp Tax (BIR Form 2000-OT; 1.5 % of selling price, zonal value, or fair market value, whichever is higher)
- Capital Gains Tax (BIR Form 1706; 6 % of same tax base) – but CGT is not imposed if the seller is the estate; if heirs sell in their personal capacity, CGT applies.
Electronic CAR (Estate + CGT/DST).
Transfer Tax Receipt (provincial/municipal treasurer; max 0.75 % of price or zonal value).
DAR Clearance / VLT exemption – if agricultural.
Certificates of No Pending Case – some RDs require a certification from the clerk of court that no case involving the land is docketed.
TINs of all heirs and buyer (BIR rules).
6. Tax Nuances
- Estate Tax (6 %) is based on the net estate (gross assets less allowable deductions) as of time of death.
- Estate-Tax Amnesty (RA 11213, RA 11569, RR 17-2021) – flat 6 % on net undeclared estate, regardless of date of death (if on or before 31 Dec 2021). Amnesty ends 14 June 2025.
- Capital Gains Tax (CGT) – not due when the seller is the estate itself (Estate to buyer). If the heirs first settle and title is transferred to them then they sell, the second leg is subject to CGT.
- Value-added Tax (12 %) – rarely arises, but if the estate or heirs are classified as VAT-registered real-estate dealers, VAT may apply instead of CGT.
- Documentary Stamp Tax (DST) – always due on conveyance, even during estate-tax amnesty.
7. Registration Flow at the Registry of Deeds
Present eCAR and original TCT.
Annotate the Deed of EJS&S (or Partition; or Sale) on the back of the TCT.
Pay registration fees (LRA circular schedule).
RD issues a new TCT either:
- In the buyer’s name (if sale simultaneous), or
- In the heirs’ names (“Heirs of Juan Dela Cruz”) if only settlement/partition is being registered.
Secure tax declaration transfer at the Assessor’s Office.
8. Leading Jurisprudence
| Case | G.R. No. & Date | Doctrine |
|---|---|---|
| Heirs of Malate v. Gamboa | G.R. 195253, 20 Jan 2016 | The estate has a distinct personality for actions involving the property, but heirs may sue on its behalf if no administrator is appointed. |
| Mercado v. Go Bio-tze | G.R. 185589, 13 Oct 2021 | A sale of entire estate property by one heir without authority from the others is void with respect to the shares of non-consenting heirs. |
| Sulit v. Pascual | G.R. 211947, 30 Jan 2019 | Registry of Deeds cannot register a deed of sale absent proof of estate-tax payment (or amnesty). |
| Spouses Cruz v. Bancom Dev. Corp. | 166 SCRA 725 (1988) | Buyer of undivided share becomes a co-owner and may demand partition; co-ownership is not a bar to sale of a specific aliquot share. |
| Heirs of Ypon v. Ricaforte | G.R. 207125, 05 Apr 2022 | The two-year period under Rule 74 for filing claims after publication is not applicable to compulsory heirs who never consented to the EJS&S; their action for reconveyance is imprescriptible if they remain in actual possession. |
9. Typical Pitfalls & How to Avoid Them
| Pitfall | Why It Happens | Mitigation |
|---|---|---|
| Partial signatures – not all heirs sign the deed | Absent/split families, overseas workers | Use SPA authenticated by Philippine consulate (or apostilled). If impossible, sell only the consenting heirs’ undivided shares. |
| Skipping estate tax because “We will use the amnesty later.” | Ignorance of sequence: BIR eCAR is prerequisite to RD | File and pay estate tax (or amnesty) before lodging any deed. |
| Publishing EJS once, not thrice | Cost-saving | Rule 74 is mandatory: 3 consecutive weekly issues; keep the entire newspaper, not just clippings. |
| Buyer relies solely on certified TCT | Assumes title is clean | Conduct owner-lawyer interview, check for pending probate, trace multiple inheritance layers, secure notarised affidavits from heirs. |
| Agricultural land sold without DAR clearance | Misclassification or neglect | File for Certificate of Non-Coverage (CNC) or DAR Clearance; pay Land Bank if under VLT/VOS. |
| Long‐dormant title (e.g., OCT 1900s) | Heavy back taxes, lost survey data | Start with relocation survey, pay penalties, consider judicial re-issuance if Owner’s Copy lost. |
10. Frequently Asked Questions (FAQ)
Q1. Can the administrator sell estate land while probate is pending?
Yes—with prior court approval under Rule 89. The sale is void without the judge’s leave.
Q2. We have minors among the heirs; can we still do an extrajudicial settlement?
Yes, but each minor must be represented by a legal guardian duly appointed by the court, which often pushes parties toward a full probate proceeding.
Q3. Uncle Pedro (only one heir) executed an Affidavit of Self-Adjudication and sold the land. Twenty years later, new heirs appear. Is the buyer safe?
Not automatically. The two-year Rule 74 window limits creditors—but not compulsory heirs unaware of or excluded from the adjudication. However, long-term possession coupled with acquisitive prescription may bar an action for reconveyance if the land is not registered under the Torrens system.
Q4. Title is still ancestral (Spanish-title / Titulo Antiguo). Is the process different?
Yes. First secure a judicial confirmation of title under regular cadastral proceedings before you tackle estate settlement and sale.
Q5. Is e-signature allowed?
For land conveyances no. The Deed of Sale/EJS must be physically signed and notarised; e-notarisation is not yet accepted for real-property transfers (2025).
11. Practical Road-Map for Heirs & Buyers
If You Are the Heirs
- Gather documents: death certificate, title, tax dec, family tree.
- Check debts: If any, file a petition for probate/intestate.
- Choose a route: EJS&S if no debts; probate otherwise.
- Compute estate tax; consider amnesty before 14 Jun 2025.
- Publish the EJS for three weeks.
- Register and obtain new TCT/eCAR.
- Close the sale and receive payment when buyer sees the eCAR and new/annotated title.
If You Are the Buyer
Do due diligence:
- Verify death, heirs, pending cases (RTC/MTC/MTC-Land), liens.
- Obtain certified true copy of title and encumbrances.
Require EJS&S (or court-approved sale) duly published.
Insist on eCAR before paying full price.
Hold in escrow enough funds to clear estate tax if heirs have not done so.
After deed signing, register immediately to avoid double sale issues.
12. Conclusion
Selling land that belongs to an unsettled estate is perfectly feasible in the Philippines, provided parties respect the twin pillars of succession and registration law:
- All rightful heirs (or a duly authorised administrator) must convey; and
- All taxes and documentary formalities must precede registration.
Cutting corners—whether by ignoring non-residing heirs, skipping estate-tax payment, or leaving deeds unregistered—may produce a paper transaction that is unregistrable, void, or voidable. Done correctly, however, the sale can be closed in as little as 6–12 weeks (EJS route) or 8 months-plus (probate route).
Given the continuing 6 % estate-tax amnesty until 14 June 2025, 2024-2025 is an opportune window for families to settle long-dormant estates and unlock the economic value of inherited land.
Prepared 26 June 2025, Asia/Manila.