Deed of Extra-Judicial Settlement in the Philippines

A comprehensive guide to its legal basis, requirements, procedure, taxation, and common pitfalls

1. What is an Extra-Judicial Settlement?

An extra-judicial settlement (EJS) is a private agreement by which the heirs of a deceased person partition and distribute the estate among themselves without filing a petition in court. Philippine law allows this shortcut only when all statutory conditions are met; otherwise the estate must pass through regular probate or intestate proceedings.

2. Legal Foundations

Source	Key provisions
Article 960–1105, Civil Code	Defines succession, heirs, legitimes, collation, partition, and rescission of partition.
Rule 74, Rules of Court	Governs EJS (Sections 1–4): prerequisites, form, bond, publication, liability to creditors, and two-year period for claims.
Rule 76–91, Rules of Court	Regular probate/intestate rules (for comparison).
Republic Act 10963 (TRAIN Law, 2018)	Flat 6 % estate tax, repeal of graduated rates, longer installment options on estate tax.
Estate Tax Amnesty Acts (RA 11213, RA 11569, RA 11956)	Temporary relief for unpaid estate taxes (check current effectivity).
Local Government Code (RA 7160)	Transfer tax (maximum 1 %) on real property transfers.
Notarial Law (RA 9344 & 2004 Rules on Notarial Practice)	Formalities for notarizing the deed.

3. When is Extra-Judicial Settlement Allowed?

No will (intestate) or there is a will but it was already probated and merely distributes property pro-indiviso.
All heirs are of legal age or minors are duly represented by legal guardians.
Estate has no outstanding debts, or debts have been fully paid; otherwise creditors must be satisfied or bond filed.
All heirs agree on the partition and sign the deed.
Estate is located in the Philippines. (Foreign real property must be settled under lex situs.)

Tip: If any heir is missing, incapacitated, or simply refuses to sign, resort to judicial intestate proceedings.

4. Forms of Extra-Judicial Settlement

Form	When used	Essential features
Affidavit of Self-Adjudication (ASA)	Only one heir succeeds to the entire estate (e.g., surviving spouse alone, or only child).	Section 1, Rule 74. Requires a bond equal to the value of personal property (often waived by registries in practice but may still be demanded).
Deed of Extra-Judicial Settlement Among Heirs (EJS Deed)	Two or more heirs.	May be coupled with a “with Waiver of Rights” (if one heir relinquishes) or “and Sale” (if heirs simultaneously sell to a third party).

5. Step-by-Step Preparation and Filing

Gather civil and property documents
- Death Certificate (PSA).
- Marriage Certificate / Birth Certificates of heirs (PSA).
- Titles, tax declarations, BIR certifications, bank statements, share certificates, etc.
Draft the deed
- Caption (e.g., “DEED OF EXTRA-JUDICIAL SETTLEMENT OF ESTATE”).
- Antecedents: identity of decedent, date/place of death, statement that he/she left no will and no debts.
- Enumeration and description of all estate assets.
- Manner of partition (who gets what; pro-indiviso or specific allocations).
- Undertaking to publish the notice and to pay taxes.
- Signatures of all heirs above their printed names with community tax certificate numbers/TINs.
Compute and pay Estate Tax
- BIR Form 1801 (Estate Tax Return) within one (1) year from death (extensions possible).
- Attach sworn Asset & Liability Declaration, notarized EJS draft, TIN of Estate (BIR Form 1904), photocopies of titles, car CR/OR, bank certificates, etc.
- Pay 6 % estate tax on net estate; avail amnesty if qualified.
- Secure eCAR (Electronic Certificate Authorizing Registration) for each real property.
Notarize the deed
- Personal appearance, competent evidence of identity, O.R. for documentary-stamp tax (DST at ₱15 per ₱1,000 of fair market value on real property, zero-rated on mere partition if no consideration—practices vary).
Publish a notice
- Once a week for three (3) consecutive weeks in a newspaper of general circulation where the decedent resided (Rule 74 §1).
- The notice need only state that the deed has been executed and is on file with the notary; newspapers usually provide a template.
- Keep the clipping and publisher’s affidavit; registries will ask for it.
Register the deed
Real property:
- Municipal/City Treasurer: pay transfer tax within 60 days from execution.
- Register of Deeds: present Owner’s Duplicate TCT/CCT, eCAR, original deed + publication proofs, tax clearance, updated real-property tax (RPT) receipt.
- New TCT/CCT will be issued in heirs’ names or in buyers’ names if simultaneous sale.
Motor vehicles:
- LTO: Deed, eCAR (if value > ₱1M, often required), original OR/CR, IDs.
Bank deposits / stocks / mutual funds:
- Submit deed, BIR eCAR, bank or brokerage internal forms.
- SEC clearance may be needed for unlisted shares.
Bond posting (if applicable)
- Only mandatory in ASA (self-adjudication) and only for personal property; amount: value of personalty (Rule 74 §1).
- Cash, surety, or property bond. Usually waived if a bank or creditors issue quitclaims.

6. Two-Year Window for Claims

For two (2) years from the date of the publication of the deed, the estate remains subsidiarily liable for any debt of the decedent that was not paid or accounted for.

A creditor or omitted heir may file a claim directly against the distributed properties without need of revoking the deed.
After two years, claimants must sue the heirs personally, not the property, but they may still annul the partition if fraud is proven (Civil Code Art. 1104–1105).

7. Tax and Fee Summary

Item	Rate / Basis	When paid
Estate Tax	6 % of net estate (TRAIN)	BIR, within 1 year from death
DST on Deed	₱15/₱1,000 of fair market value or zonal value (if partition alone, often nil)	BIR, upon notarization
Transfer Tax	≤ 1 % of zonal or FMV	LGU Treasurer, within 60 days
Registration Fee	Graduated (₱8,000–₱20,000 typical)	Register of Deeds
Publication Cost	₱3,000–₱8,000 (Metro Manila rates)	Newspaper
Notarial Fee	₱1,000–₱5,000 (or % of value)	Notary Public
Bond Premium	~ 1 % of bond amount (if required)	Bonding company

Figures vary by region; always confirm current schedules.

8. Common Pitfalls and How to Avoid Them

Pitfall	Consequence	Preventive action
Omitting an heir (e.g., illegitimate child)	Deed may be annulled; criminal falsification possible	Publish notice, exhaust civil registry searches, secure waivers or include pro-indiviso share
Ignoring unpaid debts	Creditor may levy property within 2 years	List debts, pay or settle, keep receipts
Late estate-tax filing	25 %–50 % surcharge + 12 % annual interest	File within 1 year or request extension
No publication	Title transfer may be denied; deed deemed void vis-à-vis third parties	Always publish and keep proofs
Relying on online templates blindly	Missing mandatory clauses or exhibits	Have a lawyer review the draft
Minor heirs without guardianship order	Registry rejection; possible future annulment	Petition for guardianship or court-approved compromise

9. Sample Outline (Template)

DEED OF EXTRA-JUDICIAL SETTLEMENT OF ESTATE

KNOW ALL MEN BY THESE PRESENTS:

Parties; relationship to decedent

Statement of facts: name of decedent, Filipino citizen, residence, date/place of death (attach PSA Certificate).

No will & no outstanding debts (or debts fully paid; attach proof).

List of properties with descriptions and assessed/zonal values.

Agreement of partition (Table or narrative).

Undertakings: publication, tax payment, delivery of titles.

Liability clause under Rule 74 §4.

Signatures & acknowledgment.

(Attach: PSA certificates, tax declarations, TINs, asset schedules.)

10. Frequently Asked Questions

Can we include foreign-situs assets in the same deed?
Yes, but the deed will have no effect abroad; you’ll still comply with that jurisdiction’s succession law.
Do we still pay capital-gains tax?
A pure partition has no CGT; CGT (6 %) applies only if the deed simultaneously donates or sells a share to a non-heir.
Is publication required for self-adjudication?
Absolutely. The affidavit must also be published weekly for three weeks.
Can a deed be executed years after death?
Yes, but surcharges/interest on unpaid estate tax accrue.
Does the BIR require face-to-face appearance of all heirs?
Only the executor/administrator or designated heir (with SPA) files the return; others need not appear.

11. Best Practice Checklist

☐ Verify all heirs (legitimate, illegitimate, adopted, surviving spouse).
☐ Secure TIN for Estate and for heirs.
☐ Prepare sworn statement of no debts (or list of settled debts).
☐ Draft deed with lawyer; never rely solely on generic forms.
☐ Notarize and pay DST on the same day.
☐ Publish notice immediately; retain copies.
☐ File estate-tax return and obtain eCAR before going to Register of Deeds.
☐ Register deed within 60 days to avoid LGU penalties.
☐ Keep all receipts and certified true copies for at least 5 years.

12. Closing Notes & Disclaimer

An Extra-Judicial Settlement is an efficient way to distribute an estate only if the statutory requirements are strictly met. While many families complete the process without litigation, remember that:

The deed is not immune from later challenges (fraud, omitted heirs, unpaid creditors).
Tax rules and filing procedures change; always check the latest BIR, LRA, and LGU circulars.
This article provides general legal information—it is not legal advice. Complex estates (e.g., involving minors, foreign assets, or corporate shares) merit consultation with a Philippine lawyer specializing in estate practice.

Prepared April 2025 (Philippine context). Laws cited are current to the best of the author’s knowledge but may have been amended thereafter.