What Is an Extrajudicial Settlement of

Estate?
Extrajudicial means outside of court; hence, an extrajudicial settlement of
estate means heirs do not need go to court to partition the properties left by a
deceased decedent.
It is settling an estate by drafting a contract where the properties are divided
among the heirs as they see fit. Enumerated in the contract are the properties left
by the deceased, which is collectively recognized as the estate.
What are the requirements of an extrajudicial settlement of estate?
An extrajudicial settlement of estate is only possible if the decedent had left no
will. In the event that there is one, extrajudicial settlement is only applicable to
the properties not addressed in the will. The decedents estate must also not
have any existing debts. Should there, these must first be satisfactorily paid, with
the remainder being what is subject to division among heirs.
Speaking of heirs
When heirs are not able to reach an agreement on the division of the properties,
they are relegated to having to filing a standard action for partition instead.
All heirs must also be of legal age. Should one be a minor, he or she must be
duly represented by judicial or legal representative.
Solitary heirs may adjudicate the entire estate to him or herself by means of an
affidavit. Called an Affidavit of Self Adjudication, this is filed in the Register of
Deeds of the locale where the decedent resided.
A group of heirs, on the other hand, must reach an agreement and subsequently
divide the estate among themselves by way of a Deed of Extrajudicial
Settlement of Estate and Adjudication of Estate. This must be signed by all
heirs, notarized before a Notary Public, and contain the following information:

The decedent left no will and no debt

Each heirs relationship to the decedent

That they are the decedents only surviving heirs

An inventory with individual descriptions of the decedents properties, both

real and personal, that the heirs have agreed to divide among themselves

The exact manner which the properties are to be divided

The heirs then secure a bond from a reputable bonding company recognized by
the Register of Deeds, and file it simultaneously with the registration of the
notarized Deed of Extrajudicial Settlement and Adjudication of Estate.
Upon successful completion of notarized extrajudicial settlement of estate, legal
owners can readily put their real estate properties up for sale with minimal
difficulties, whether it be featuring it on a real estate listings website, having it
attached to a particular broker, or transferring it to its eventual buyer.

http://investinginphilippines.com/what-is-an-extrajudicial-settlement-ofestate/

Buying and selling of property is a business transaction long in existence, as even those with little
to no real estate experience have a general understanding of the process. In a nutshell, it is
indeed fairly simple: an owner sells and an interested buyer purchases, with some legal
formalities in between.
There are instances where the process is a little more cumbersome, like when a property owner
passes away without having been able to name heirs. While it does not fully keep the property in
limbo, the failure to transfer ownership prevents it from being sold later on, or worse, opens it up
for other parties to make a claim on the property.
A simple fix for this is an extrajudicial settlement, and in this edition of Lamudi Q&A, we discuss
how the process works.
Q: How does extrajudicial settlement of estate work?
A: An extrajudicial settlement is the settling of an estate via the drafting of a contract, which
indicates how a deceased owners properties will be divided among the heirs as they see fit. The
properties left by the deceased listed in the contract is collectively recognized as the estate.
The settlement is considered extrajudicial, or out of court, as the heirs do not go to trial to
divide the properties left by the deceased property owner.
Q: What is necessary in going about the settlement procedure?
A: It should be noted that the very first requirement for an extrajudicial settlement is the absolute
absence of a will, as this is what the settlement process was made to address. In the event that
there is a will, an extrajudicial settlement can still be used to address properties not included in it.
Apart from this, the other requirements for an extrajudicial settlement are the following:
1. The decedents estate must have no existing debts. If there are, these must first be
satisfactorily paid. The estate can be used for payment, with the remainder being what is subject
to division among the heirs.
2. A judicial or legal representative for heirs who are minors.
3. An Affidavit of Self Adjudication. These are for sole heirs who wish to adjudicate the entire

estate to him- or herself, filing the affidavit at the Register of Deeds of the locale where the
decedent resided.
4. A Deed of Extrajudicial Settlement of Estate and Adjudication of Estate. This, on the other
hand, is for a group of heirs. This must be signed by all individuals involved, notarized before a
Notary Public, and include the following information:
a. Text indicating the decedent left no will and no debt;
b. Each heirs relationship to the decedent;
c. That they are the decedents only surviving heirs;
d. An inventory with individual descriptions of the decedents properties, both real and personal,
that the heirs have agreed to divide among themselves; and
e. The exact manner that the properties are to be divided.
5. The heirs then secure a bond from a reputable bonding company recognized by the Register of
Deeds, and file it simultaneously with the registration of the notarized Deed of Extrajudicial
Settlement and Adjudication of Estate.
Upon successful completion, legal owners can then put their real estate properties up for sale
with minimal difficulties. They can market the property in any real estate listings website, have it
handled by their chosen broker, or transfer it to its eventual buyer with ease.

http://www.lamudi.com.ph/journal/qa-how-does-extrajudicial-settlement-ofestate-work/

Extrajudicial Settlement of Estate in the

Philippines
Settlement of an estate need not undergo judicial proceedings all the time. Rule 74,
Section 1 of the Rules of Court allows the extrajudicial settlement of estate by
agreement among the heirs. Said Rule states:
Sec. 1. Extrajudicial settlement by agreement between heirs. If the decedent left no
will and no debts and the heirs are all of age, or the minors are represented by their
judicial or legal representatives duly authorized for the purpose, the parties may,
without securing letters of administration, divide the estate among themselves as
they see fit by means of a public instrument filed in the office of the register of
deeds, and should they disagree, they may do so in an ordinary action of partition. If
there is only one heir, he may adjudicate to himself the entire estate by means of an
affidavit filed in the office of the register of deeds. The parties to an extrajudicial
settlement, whether by public instrument or by stipulation in a pending action for
partition, or the sole heir who adjudicates the entire estate to himself by means of an
affidavit shall file, simultaneously with and as a condition precedent to the filing of
the public instrument, or stipulation in the action for partition, or of the affidavit in
the office of the register of deeds, a bond with the said register of deeds, in an

amount equivalent to the value of the personal property involved as certified to

under oath by the parties concerned and conditioned upon the payment of any just
claim that may be filed under Section 4 of this rule. It shall be presumed that the
decedent left no debts if no creditor files a petition for letters of administration within
two (2) years after the death of the decedent.
The fact of the extrajudicial settlement or administration shall be published in a
newspaper of general circulation in the manner provided in the next succeeding
section; but no extrajudicial settlement shall be binding upon any person who has not
participated therein or had no notice thereof.
However, extrajudicial settlement of estate cannot be resorted to every time. There
are conditions which must be satisfied such as:
1.
The
decedent
left
no
will
2. The decedent has no debts or his debts have been fully paid.
3. The heirs are all of legal age or the minors are duly represented by their judicial or
legal
representatives.
4. A public instrument is duly executed by the heirs and filed with the Register of
Deeds.
Extrajudicial settlement of estate is often recommended to expedite the transfer of
properties of the decedent to his heirs. This is in view of the fact that judicial
settlement of estate takes years before the case is concluded. Furthermore, this is
more adversarial and is resorted to when the heirs disagree on the properties to be
partitioned and the corresponding shares of the respective heirs.
An extrajudicial settlement of estate is done by executing an Extrajudicial
Settlement Among Heirs. This is a legal document specifying:
1. Compliance with the legal conditions for an extrajudicial settlement
2. Description of the properties to be extrajudicially settled (title number, value,
location,
lot
size,
technical
description,
etc.)
3.
Nature
of
the
property
(if
conjugal
property)
4.
Name
of
the
heirs
5.
How
the
properties
shall
be
divided
amongst
the
heirs.
6.
Posting
of
a
bond
if
there
is
personal
property
involved.
7. Undertaking that the Deed will be published in a newspaper of general circulation
once a week for 3 consecutive weeks.
It must be noted that the Deed of Extrajudicial Settlement must be published in a
newspaper of general circulation once a week for 3 consecutive weeks. Kindly consult
with the Register of Deeds where the property is located for the listing of these
newspapers.
Before filing the Deed of Extrajudicial Settlement with the Register of Deeds where
the land is located, it is necessary that the estate taxes be paid first. Under Philippine
laws, estate tax is defined as a tax on the right of the deceased person to transmit
his estate to his lawful heirs and beneficiaries at the time of death and on certain
transfers, which are made by law as equivalent to testamentary disposition.
According to the Bureau of Internal Revenue, estate tax is not a tax on property but
rather imposed on the privilege of transmitting property upon the death of the owner.
It bears great emphasis that the Estate Tax Return must be filed within six (6) months
from the decedents death. The deadline may be extended by the Commissioner of

the BIR, in meritorious cases, not exceeding thirty (30) days. It must be noted that
the estate itself is assigned its own Tax Identification Number (TIN). The Estate Tax
Return is filed with Revenue District Office (RDO) having jurisdiction over the place of
residence of the decedent at the time of his death. If the decedent has no legal
residence in the Philippines, then the return can be filed with:
1. The Office of the Revenue District Officer, Revenue District Office No. 39, South
Quezon City; or
2. The Philippine Embassy or Consulate in the country where decedent is residing at
the time of his death.
Furthermore, the estate tax shall be paid at the time the return is filed. However,
upon request and if the Commissioner of the BIR finds that payment on the due date
of the Estate Tax or of any part thereof would impose undue hardship upon the estate
or any of the heirs, he may extend the time for payment of such tax or any part
thereof not to exceed five (5) years, in case the estate is settled through the courts or
two (2) years in case the estate is settled extra-judicially. If an extension is granted,
the BIR Commissioner may require a bond in such amount, not exceeding double the
amount
of
tax,
as
it
deems
necessary.
The estate tax is based on the value of the net estate as follows:
1.
If
not
over
P200,000,
it
is
exempt
2. If over P200,000 but not over P500,000, then tax is 5% of the excess over
P200,000
3. If over P500,000 but not over P2,000,000, then tax is P15,000 PLUS 8% of the
excess
over
P500,000
4. If over P2,000,000 but not over P5,000,000, then tax is P135,000 PLUS 11% of the
excess
over
P2,000,000
5. If over P5,000,000 but not over P10,000,000, then tax is P465,000 PLUS 15% of the
excess
over
P5,000,000
6. If over P10,000,000, then tax is P1,215,000 PLUS 20% of the excess over
P10,000,000
The basis shall be the net estate. That means that there are allowable deductions on
the estate. These deductions include funeral expenses, share of the surviving spouse,
medical expenses incurred by the decedent within 1 year prior to his death, family
home deduction of not more than P1,000,000.00, standard deduction of
P1,000,000.00, among others. It is best to consult with an accountant on this matter
to determine the accurate estate tax.
For extrajudicial settlement of estate, the following documents must be submitted
with the BIR:
1.
Notice
of
Death
2.
Certified
true
copy
of
the
Death
Certificate
3.
Deed
of
Extra-Judicial
Settlement
of
the
Estate
4.
Certified
true
copy
of
the
land
titles
involved
5. Certified true copy of the latest Tax Declaration of real properties at the time of
death
6. Photo copy of Certificate of Registration of vehicles and other proofs showing their
correct
value
7.
Photo
copy
of
certificate
of
stocks

8. Proof of valuation of shares of stocks at the time of death

a. For listed stocks newspaper clippings or certification from the Stock Exchange
b. For unlisted stocks latest audited Financial Statement of issuing corporation with
computation
of
book
value
per
share
9.
Proof
of
valuation
of
other
types
of
personal
property
10. CPA Statement on the itemized assets of the decedent, itemized deductions from
gross estate and the amount due if the gross value of the estate exceeds two million
pesos
11. Certification of Barangay Captain for claimed Family Home
Other documents may also be requested by the BIR.
After the estate taxes have been paid, the heirs may proceed to the Register of
Deeds where the land is situated. If the Register of Deeds would allow it, the filing
with the BIR and Register of Deeds may be simultaneous. The proof of payment of
the estate tax, Affidavit of Publication of the Deed, the Deed of Extrajudicial
Settlement of Estate are the basic requirements to be submitted to the Register of
Deeds. When all pertinent documents are submitted, the Register of Deeds will
correspondingly issue the Transfer of Certificates of Title to the proper heirs.
On a final note, it must be borne in mind that the extrajudicial settlement can be
nullified if it was done in fraud of creditors or other rightful heirs. Furthermore, this
can open the erring heirs to criminal liabilities.

http://ndvlaw.com/extrajudicial-settlement-of-estate-in-the-philippines/

GUIDELINES ON SETTLEMENT OF ESTATES

WHAT IS AN ESTATE?
1

An Estate is comprised of the real and personal properties of a decedent.

A life insurance policy or a pre-need plan or a mutual fund placement is

considered personal property.

WHEN IS THE SETTLEMENT OF AN ESTATE REQUIRED? The settlement of

an estate is required by Sun Life under the following circumstances:

1. The beneficiary who will receive the proceeds under a life insurance policy
or pre-need plan is an Estate.

2. The owner of the life insurance policy or pre-need plan or mutual fund
placement has become an Estate and needs to transact business with the
company.
HOW IS AN ESTATE SETTLED? An Estate may be settled judicially or
extrajudicially:

I. EXTRAJUDICIAL SETTLEMENT.

Extrajudicial means outside of court.

The heirs do not have to go to court to partition the properties left

by the decedent.

There are two (2) kinds of extrajudicial settlement:

B. COMMON REQUIREMENTS FOR AN EXTRAJUDICIAL SETTLEMENT

TO BE VALID:

1. The decedent died intestate, i.e., without a valid will;

2. The estate has no outstanding debts at the time of the extrajudicial

settlement;

3. The heir/s are all of age, or the minor heirs are represented by their
judicial guardians or legal representatives;

4. The extrajudicial settlement is made in a public instrument,

stipulation or affidavit duly filed with the Register of Deeds;

5. The fact of such extrajudicial settlement must be published in a

newspaper of general circulation once a week for three (3)
consecutive weeks; and

A decedent is a deceased person.

6. The parties to the extrajudicial settlement shall file a bond with the
Register of Deeds in an amount equivalent to the value of the
personal property involved.
This bond should be filed simultaneously with the
extrajudicial settlement instrument(document).

Such bond will answer for the payment of any

just claim at any time within two (2) years after
the settlement and distribution of an estate.

B. WHO MAY EXECUTE AN EXTRAJUDICIAL SETTLEMENT?

1. THE SOLE HEIR. The one and only heir may adjudicate the entire
estate to himself by means of an affidavit (called an Affidavit of
Self-Adjudication) filed in the Register of Deeds of the place where
the decedent resided.
2

2. THE HEIRS AGREEING AMONG THEMSELVES. The heirs may

divide the estate among themselves by means of a notarized
instrument filed in the Register of Deeds.
The steps to follow are:

a. Prepare a Deed of Extrajudicial Settlement of Estate and

Adjudication of Estate to be signed by all of the heirs, which
must contain the following information:

That the decedent left no will;

That the decedent left no debt;

Each heirs relationship to the decedent (e.g. spouse, son,

daughter, father, mother etc.);

That they are the decedents only surviving heirs;

An enumeration and a brief description of the decedents

properties, both real and personal, which the heirs are now
dividing among themselves. The decedents Sun Life Financial
life insurance policy; pre-need plan number; or mutual fund

Heirs for purposes of the discussion on extrajudicial settlement, may refer to the following: 1) if the
deceased was single without children surviving parents; 2) if the deceased was single with children
legitimate and illegitimate children only; 3) if the deceased was single with illegitimate children and
surviving parents surviving parents and illegitimate children only; 4) if the deceased was married with
children - legal spouse and illegitimate and legitimate children only; and 5) if the deceased was
married with illegitimate children legitimate spouse, surviving parents and illegitimate children.
Claimants are encouraged to seek the advice of their own legal counsel.

placement certificate number must be specifically mentioned;

and
How the properties are to be divided among the heirs
including a specific mention of who will assume ownership
and/or all the benefits resulting from the Sun Life Financial life
insurance policy; pre-need plan; or mutual fund placement.

b. Have the Deed of Extrajudicial Settlement and Adjudication of

Estate notarized before a Notary Public after all the heirs have
signed it.
c. Secure a bond from a reputable bonding company acceptable to
the Register of Deeds.
The amount of the bond is equivalent to the
value of the personal property included in the
extrajudicial settlement.

d. Register the notarized Deed of Extrajudicial Settlement and

Adjudication of Estate with the Register of Deeds. The bond is
simultaneously filed with the Deed of Extrajudicial Settlement
and Adjudication of Estate.
e. Publish the Deed of Extrajudicial Settlement and Adjudication
of Estate in a newspaper of general circulation once a week for
three (3) consecutive weeks.
AI. JUDICIAL SETTLEMENT OF ESTATE. There are times when resort to
court is unavoidable, particularly when the deceased left a will or debts
and/or the heirs are in dispute.
A. COMMON REQUIREMENTS FOR JUDICIAL SETTLEMENT:
1. By means of a petition filed in court.
2. Where filed?
a. If the decedent was a resident of the Philippines at the time of
his death, the petition must be filed before the Regional Trial
Court in the place where he resided at the time of his death.

b. If the decedent was a resident of a foreign country at the time of

his death, the petition must be filed in any Regional Trial Court
in the province where he had estate.

3. Publication. Notice of the filing of the petition for settlement of estate and the
proceedings thereof are required to be published in a newspaper of general
circulation once a week for three consecutive weeks.