Quick answer

The person who may lawfully operate a business during estate settlement depends first on the business structure and the authority shown by the estate and business records.

Sole proprietorship: The deceased owner’s spouse, child, manager, or employee does not automatically become the new proprietor. If judicial settlement is pending, the court-appointed executor or administrator generally controls and manages estate property—but ordinarily should wind up the deceased’s business, not continue it indefinitely, unless the will or a specific court order authorizes continued operation. A special administrator has narrower, preservation-focused powers.
Corporation: The corporation remains separate from the deceased shareholder’s estate and ordinarily continues through its board and authorized officers. The executor, administrator, or heirs deal with the deceased’s shares; they do not automatically become corporate managers.
One Person Corporation (OPC): The designated nominee—or alternate nominee when applicable—temporarily manages the corporation after the single stockholder’s death, subject to the Revised Corporation Code’s succession procedure.
Partnership: The surviving partners ordinarily conduct winding up. A partner’s death generally causes dissolution unless the partnership agreement or applicable rules validly permit continuation. The estate representative protects and accounts for the deceased partner’s interest but does not automatically take the partner’s place in management.
Undivided business owned directly by the heirs: If there is no court-appointed representative and the estate may legally be settled extrajudicially, the heirs should act under a clear written agreement. One heir should not assume exclusive control merely because that person is the surviving spouse, eldest child, current manager, or holder of the keys.

Authority to preserve property is not necessarily authority to continue trading, borrow money, dispose of major assets, admit new owners, or use estate funds without limits.

Start with the business structure

The business name used on signs, invoices, social media, or permits may not reveal its legal structure. Check:

The DTI certificate of business-name registration;
SEC certificate, articles, bylaws, General Information Sheet, and stock-and-transfer book;
Partnership agreement and SEC records;
BIR Certificate of Registration, books, invoices, and tax filings;
Mayor’s or business permit and industry-specific licenses;
Bank account title and authorized signatories;
Land titles, leases, vehicle registrations, and equipment records; and
Contracts showing whether the contracting party was the deceased personally or a corporation or partnership.

This distinction is decisive. A sole proprietorship and its proprietor are not separate juridical persons in the way a corporation is. By contrast, corporate assets belong to the corporation, not directly to its shareholders. The death of a shareholder therefore does not ordinarily place the corporation’s cash, inventory, or equipment inside the shareholder’s estate; what normally enters the estate is the deceased’s ownership interest in the shares.

If the deceased was a sole proprietor

A sole proprietorship presents the greatest risk of unauthorized continuation because the owner and the business were legally one person.

Under Rule 84, Section 3 of the Rules of Court, a duly appointed executor or administrator has possession and management of the deceased’s real and personal estate for as long as necessary to pay debts and administration expenses. That power supports measures needed to secure inventory, collect receivables, protect premises, maintain records, and prevent loss.

It does not create an unrestricted right to carry on the deceased’s trade as though nothing happened. In Wilson v. Rear, the Supreme Court explained that an executor or administrator ordinarily has no power to continue the deceased’s business without authority and may incur personal liability for doing so. Limited continuation may be justified for a reasonable period when properly authorized—for example, to preserve value and enable a sale as a going concern. The decision is available in the Supreme Court’s official collection through Lawphil.

Accordingly, an executor or administrator considering continued operation should normally ask the probate court for a specific order identifying:

The reason continued operation benefits or preserves the estate;
Its proposed duration;
The person who will manage daily operations;
Spending, borrowing, and contracting limits;
Treatment of wages, taxes, insurance, and existing obligations;
The accounting and reporting system;
Whether estate assets may be exposed to new business risks; and
The proposed end point—sale, transfer, closure, or distribution.

Being named as executor in a will is not by itself a substitute for court authority. The person ordinarily must obtain letters testamentary after the will is allowed. An administrator likewise acts by virtue of letters of administration.

What a special administrator may do

A special administrator is appointed temporarily while the appointment of a regular executor or administrator remains unresolved. Rule 80 focuses this role on taking possession of and preserving the estate. A special administrator may sell perishable or other property only as the court orders and ordinarily does not pay the deceased’s debts unless directed by the court.

The Supreme Court describes a special administrator as an officer under the probate court’s supervision whose principal function is preserving the estate until a fully authorized representative takes over. See Tan v. Gedorio, G.R. No. 187879, July 5, 2010.

Keeping premises secure or completing an emergency preservation measure is therefore different from opening new branches, obtaining loans, expanding inventory, or committing the estate to long-term contracts. When the intended act goes beyond preservation, prior court authority is especially important.

If the business is a corporation

A corporation ordinarily continues despite a shareholder’s death. Under the Revised Corporation Code, Republic Act No. 11232, a corporation generally has perpetual existence and acts through its board of directors and authorized officers.

This means:

Existing directors and officers continue to exercise their lawful corporate powers, subject to the articles, bylaws, board resolutions, and applicable law;
The deceased shareholder’s executor, administrator, or heirs do not automatically acquire the president’s, treasurer’s, director’s, or bank-signatory powers;
Corporate property must not be treated as estate property merely because the deceased owned most or all of the shares; and
The deceased’s shares, voting rights, unpaid dividends, and related rights must be handled through the proper estate and corporate procedures.

If the deceased was also the president, director, treasurer, or sole authorized bank signatory, the corporation should promptly document the vacancy and use the Code, bylaws, and valid board action to appoint or elect the appropriate replacement. The corporate secretary must report a director’s or officer’s death to the SEC within seven days from knowledge of it under Section 25 of the Code.

An heir who works in the company may continue performing an existing employee role, but heirship alone does not authorize that person to bind the corporation.

Special rule for a One Person Corporation

An OPC follows a statutory transition mechanism:

The corporate secretary must notify the nominee or alternate nominee of the single stockholder’s death or incapacity no later than five days after the occurrence.
The corporate secretary must notify the SEC of the death within the same five-day period and provide the required information about known legal heirs.
The nominee named in the articles becomes director and manages the OPC until the legal heirs are lawfully determined and decide who will hold the shares or whether the estate will be the single stockholder.
If the nominee cannot or will not serve, the alternate nominee acts under the same conditions.
Following receipt of the legally required succession document, the shares must be transferred under Section 132. The heirs must then notify the SEC, within the period stated in that section, whether the OPC will be wound up or converted into an ordinary stock corporation.

The exact documents and filings should be confirmed against the OPC’s SEC records and the SEC’s current filing requirements before submission.

If the deceased was a partner

Article 1830 of the Civil Code generally treats a partner’s death as a cause of partnership dissolution. Dissolution does not necessarily mean that all activity stops at once: the partnership proceeds to winding up, and the surviving partners ordinarily retain authority for acts appropriate to that process.

The partnership agreement must be reviewed carefully. It may provide for lawful continuation, purchase of the deceased partner’s interest, valuation procedures, insurance-funded buyout, or admission of a successor.

The executor or administrator of a deceased partner has access to partnership books and property for examination and inventory under Rule 84, Section 1. That protects the estate’s financial interest. It does not automatically make the representative a partner or authorize interference with day-to-day partnership management.

For a limited partnership, continuation after a general partner’s death depends particularly on the certificate, partnership agreement, consent requirements, and the Civil Code provisions governing limited partnerships.

Can the heirs operate the business together?

Successional rights are transmitted from the moment of death under Article 777 of the Civil Code, but this does not mean that each heir immediately owns a particular cash register, vehicle, store, account, or portion of inventory. Before partition, the heirs’ interests are generally undivided and remain subject to the estate’s debts, taxes, administration expenses, the surviving spouse’s property rights, and the eventual determination of valid shares.

If no judicial executor or administrator has taken possession and the estate qualifies for extrajudicial settlement, the heirs may make arrangements concerning undivided property. For acts of administration and better enjoyment of commonly owned property, Article 492 requires a majority representing the controlling interest—not merely the greater number of persons. A court may intervene if the majority’s decision is seriously prejudicial. Alterations require the consent prescribed by Article 491.

For a continuing business, prudent practice is to obtain a written agreement signed by all affected owners whenever possible. It should identify:

The temporary operator and scope of authority;
Ownership shares claimed, without prejudging unresolved succession issues;
Bank and payment controls;
Approval thresholds for purchases and contracts;
Compensation, reimbursements, and profit treatment;
Separate treatment of post-death income and expenses;
Access to books and regular reporting;
Prohibited related-party transactions;
Insurance and tax responsibilities; and
The termination date or event.

Even unanimous agreement among heirs cannot override creditor rights, the authority of a later-appointed estate representative, a probate-court order, corporate governance rules, a partnership agreement, or regulatory licensing requirements.

The surviving spouse does not always have sole authority

The surviving spouse may own a separate share arising from the liquidation of the absolute community or conjugal partnership and may also inherit from the deceased. Those interests do not automatically authorize unilateral control of the entire business.

The correct analysis requires separating:

Property owned exclusively by the surviving spouse;
The spouse’s share in community or conjugal property;
The deceased’s share, which enters the estate;
Property owned by a corporation or partnership; and
Property personally owned by third parties but used by the business.

A spouse may continue acting in a corporate office or partnership role already validly held. That authority comes from the office, contract, or governing documents—not simply from marriage.

Permits, taxes, employees, and contracts still need attention

Authority under succession law is only one part of lawful operation. The operator must also confirm whether existing registrations and permits remain usable after the owner’s death.

For a sole proprietorship, do not assume that permits and registrations issued personally to the deceased automatically transfer. Contact the relevant BIR Revenue District Office, DTI office, local government business-permit office, and any industry regulator. Depending on the intended arrangement, the process may require estate registration, closure of the deceased’s registration, registration of a successor business, or amendment or replacement of permits.

The BIR’s current Form 1901 expressly covers estates and trusts as well as individual business taxpayers. The BIR also maintains official procedures for estate tax, new business registration, and business closure. The appropriate route depends on whether operations are being preserved for the estate, transferred to a new owner, or terminated.

Also review:

Employment status, payroll, mandatory contributions, and final-pay issues;
Existing leases, loans, franchises, distributorships, and supply contracts;
Clauses triggered by death, change of control, assignment, or default;
Insurance coverage and required notice of a change in control or operator;
Data-protection duties and access to customer records;
Food, health, professional, transport, environmental, or other sector permits; and
Whether a lease, loan, or regulated license prohibits transfer without consent.

A power of attorney granted by the deceased ordinarily ends upon death. It should not be used as post-death authority.

Practical steps for the first days and weeks

Secure rather than expand. Protect cash, inventory, equipment, records, passwords, premises, and perishable property. Avoid new long-term obligations until authority is clear.
Identify the legal owner. Match each major asset, account, permit, and contract to the deceased, corporation, partnership, spouse, or another owner.
Locate the will and governing documents. Preserve the original will, articles, bylaws, partnership agreement, shareholder agreements, board resolutions, and succession clauses.
Notify essential institutions carefully. Banks, insurers, landlords, major customers, suppliers, and regulators may require a death certificate and proof of authority. Do not misrepresent yourself as executor or administrator before appointment.
Open proper accounts. Do not route estate or company receipts through an heir’s personal account.
Record the death-date position. Prepare an inventory of cash, receivables, debts, stock, work in progress, payroll obligations, and outstanding orders as of the date of death.
Seek written authority. Obtain the necessary court order, corporate resolution, partnership authorization, or heirs’ agreement before continued trading.
Keep a complete audit trail. Record every receipt, expense, withdrawal, transfer, and decision after death.
Address taxes and permits promptly. Ask the appropriate agencies which registrations must be updated, replaced, or closed.
Choose an exit or transition plan. Continued operation should lead toward an authorized sale, transfer, distribution, incorporation, buyout, or orderly closure.

Evidence to preserve

Keep originals or reliable copies of:

Death certificate and original will;
Letters testamentary or letters of administration;
Orders appointing and defining the powers of a special administrator;
Court orders authorizing continued operation, sale, borrowing, or other material acts;
DTI, SEC, BIR, LGU, and sector-specific registrations;
Articles, bylaws, partnership and shareholder agreements;
Stock certificates, stock-and-transfer book, and corporate minutes;
Bank statements, deposit records, cash logs, and payment-platform reports;
Inventory counts, photographs, valuation records, and asset serial numbers;
Customer, supplier, lease, loan, franchise, and insurance contracts;
Payroll, SSS, PhilHealth, Pag-IBIG, and employment records;
Tax returns, books of account, invoices, and withholding records;
Messages showing instructions, approvals, objections, or demands for accounting; and
A dated log of all post-death business decisions.

Preserve electronic records without altering metadata where a dispute is possible. Change operational passwords only through a documented, authorized process; retain access logs and do not delete the deceased’s business communications.

Common mistakes

Treating the eldest child or surviving spouse as the automatic operator;
Continuing to use the deceased’s personal bank account or signature;
Relying on a power of attorney after the principal’s death;
Confusing ownership of corporate shares with ownership of corporate assets;
Assuming that a court appointment permits unlimited continuation of a sole proprietorship;
Letting a special administrator undertake expansion rather than preservation;
Using estate money for personal expenses or paying selected heirs informally;
Distributing profits before accounting for taxes, creditors, wages, and administration expenses;
Selling land, equipment, or substantial inventory without the required consent or court authority;
Failing to separate pre-death obligations from post-death business debts;
Ignoring change-of-control, non-assignment, or death clauses in contracts; and
Operating under permits or professional licenses that cannot legally be transferred.

When legal help is urgent

Seek prompt advice from a Philippine succession or corporate lawyer—and, where appropriate, a CPA—if:

Several people claim the right to control the business;
Cash, inventory, passwords, titles, or records have been taken or concealed;
Payroll, rent, taxes, insurance, loan payments, or perishable stock require immediate action;
A bank has frozen accounts or rejected signatory authority;
The business faces foreclosure, eviction, termination, or loss of a valuable license;
An heir or manager is diverting sales to a personal or competing business;
There is no clear distinction between personal, estate, partnership, and corporate assets;
Continued operation will require borrowing, sale of major assets, or use of estate property as security;
The will is disputed, missing, or inconsistent with corporate or partnership documents;
The estate may be insolvent;
Minor, incapacitated, unknown, or overseas heirs are involved; or
A regulatory deadline or court notice is approaching.

Where immediate loss is likely, counsel can assess whether to seek appointment of a special administrator, a protective probate order, an injunction, corporate emergency action, or another appropriate remedy.

Frequently asked questions

Can an heir keep the store open before an administrator is appointed?

Not merely because the person is an heir. Short-term protective steps may be necessary, but continued trading needs a defensible source of authority—such as valid corporate office, partnership authority, agreement among the proper co-owners, or a court order. The safer course for a sole proprietorship is to seek prompt, specific authority.

Does the executor named in the will immediately control the business?

Not ordinarily. The will must generally be presented for probate, and the named executor must qualify and receive letters testamentary. Emergency protection may require court intervention before then.

May the estate employ the deceased owner’s manager?

Potentially, if the duly authorized representative or business governing body makes the appointment. The manager’s old authority should be checked because authority derived solely from the deceased may have ended at death. Duties, spending limits, compensation, and reporting should be written.

Who receives the profits earned after death?

That depends on the structure and source of the income. Corporate profits belong to the corporation unless lawfully distributed. Partnership proceeds are handled under partnership and winding-up rules. Income earned from estate property must be accounted for by the estate representative and remains subject to expenses, debts, taxes, ownership rights, and eventual distribution.

Can one heir sell business assets to pay expenses?

Generally not without proper authority. In judicial administration, significant sales of estate property may require an application, notice, and court approval under Rules 88 and 89. In co-ownership, an heir cannot sell a specific asset as exclusively theirs before partition, although an heir may deal with the heir’s undivided interest subject to the Civil Code’s limitations.

Can all heirs agree that one of them will operate the business?

Their written agreement may provide authority where the property is under their lawful co-ownership and no court-appointed representative controls it. It cannot displace creditor rights, court orders, corporate or partnership governance, permit requirements, or the rights of an omitted or legally represented heir.

Does the death of the owner cancel existing contracts?

Not automatically. Some obligations survive; others are personal or subject to death, assignment, default, or change-of-control clauses. Each important contract must be reviewed before performance is continued or rejected.

Is court approval always required?

No. A corporation ordinarily continues through its governing body, and some estates may be settled extrajudicially. But court authority may be essential when judicial settlement is pending, authority is disputed, a special administrator is involved, estate assets must be sold or encumbered, or continued operation would expose the estate to new risk.

Official legal references

This article provides general Philippine legal information, not legal or tax advice for a particular estate. Authority may depend on the will, court orders, ownership records, contracts, permits, family-property regime, business structure, and facts. Official sources and procedures were checked as of September 3, 2026.