Q. On behalf of my brothers and sisters, I am writing to you as the surviving legitimate children of our late parents. We are all of legal age, married, citizens and residents of the Philippines, during the years of the demise of our parents.
Our father died in 1972, while our mother died in 1987. They were both Filipino citizens and residents of the Philippines when they passed away.
Unfortunately, they left no Will, neither important matter we failed to act on among us members of the family. However, we discovered four photocopies of an Original Certificate of Title, duly numbered, as well as, Free Patents’ Corresponding numbers on each of these four mentioned documents. Across each of these documents, stamped on which read in bold letters, “Owner’s Duplicate Certificate.”
Our agriculturist brother, in lieu of our deceased parents, at times attends to whatever official matters he has to settle with the Bureau of Lands District Office in Legazpi City. The question of succession rights to Real Property has never crossed his mind, nor among us siblings.
We shall appreciate your legal opinion on what we are to pursue to comply with our present National Law and on family rights. Likewise, any of our government’s charges, e.g. taxes, penalties, stamps, fees, etc. that must be settled by us. Thank you. “P”.
Ans: The failure of your parents to execute their respective wills does not mean that their estate cannot be settled or liquidated by the surviving heirs. Under the law and notwithstanding the absence of a will by your parents, the surviving heirs can still settle their respective estates.
On the basis of the facts you have mentioned, there are two (2) ways in which the estate of deceased person may be settled and liquidated by the heirs in the absence of a will .This is referred to as in law as Intestate Succession, to wit:
In intestate succession, the estate of the deceased may be partitioned or subdivided either by:
1) Extrajudicial Settlement of Estate- Under this scheme the decedent did not have a will and does not have unpaid creditors and minor children; and that all the heirs are in harmony as to the manner in which the property is to be subdivided or partitioned. And without going to the court, the heirs agreed amongst themselves to adjudicate the estate by means of instruments known “Extrajudicial Settlement of Estate” duly signed and notarized and have it published in the newspaper of general circulation for at least three (3) consecutive weeks. And of course to pay the required estate tax and compliance of procedure and administrative matters with the concerned government agencies.
Pursuant to law, the estate is divided by first liquidating the conjugal/matrimonial property. The legitimate spouse gets ½ portion of her share of the conjugal/matrimonial property and the remaining ½ which constitute the estate shall be divided equally amongst the heirs including the surviving spouse.
However, as all your parents are already deceased, their respective conjugal/matrimonial shares shall accrue to the entire estate subject to distribution and partition amongst all the heirs in equal or pro-rata proportion.
In case the child (heir) is illegitimate, his/her share is equivalent to only ½ of the shares of the legitimate child. Which are ¼ shares only?
2) Judicial Settlement of Estate- In contrast to the above, if the deceased left no will but there are creditors or claimants or an heir is/are minor(s) or suffering from incapacity to act and/or the heirs cannot agree amongst themselves in the manner of partition or distribution of the estate, the liquidation of the estate shall be by means of Judicial Settlement. The sharing scheme of the heirs is the same as aforesaid.
Thus, in the judicial settlement of estate, the heirs or creditors/claimants, as the case may be, have to file a petition in the Court of Law for the settlement of estate. Judicial Settlement could be adversarial and expensive especially if the heirs cannot agree amongst themselves how the estate is to be partitioned or subdivided.
Aside from being adversarial, this is also costly as parties will have to engage the services of lawyers. The process could take years to be resolved and could damage cordial and harmonious relations amongst or between the heirs. It is strongly suggested that where possible and within the bounds of law, this scheme should be avoided.
Payment of Estate Tax:
Furthermore, the Tax Code also requires that within two(2) months from the death of a decedent, it is the obligation of the estate through the heirs to serve notice to Bureau of Internal Revenue(BIR) of the fact of such death and not later than six(6) months thereafter, pay the corresponding Estate Taxes thereof. Otherwise, penalty charges and interest of the tax due thereof shall be imposed for late filing and payments of the estate tax.
Estate tax is normally assessed based on the net value of the estate, after all the allowable deductions and expenses are deducted from the gross estate of the deceased.
Then there is also Documentary and Stamp taxes that you have to pay, as well as the transfer and registration fees. The tax rates and the corresponding taxes due/amount thereof, varies according to the value of the estate or properties. It is suggested that you confer with a tax practitioner who can provide you professional information as regards the tax issues of the estate.
More delays mean more money would be wasted in the form of penalty charges and interest. These charges could accumulate over the years if unattended. Obviously, it would be to the best interest of the all the heirs to address the matter at the earliest time possible.
It is likewise suggested that you confer with your lawyer in the Philippines so that the proper courses of action shall be undertaken accordingly, more particularly in the documentation and formality requirements as prescribed by law in the settlement of the estate of the deceased person.
Thank for writing and looking forward you’ll find the above in order.