Below is a general informational overview of Philippine laws and practices regarding estate tax liabilities for inherited property that is still untitled (i.e., not covered by an official Certificate of Title). This discussion is for educational purposes only and should not be taken as legal advice. For specific questions and guidance, it is always best to consult a licensed Philippine attorney or tax professional.

1. Overview: What Is Estate Tax?

In the Philippines, estate tax is a tax levied on the right of a deceased person to transfer ownership of their estate to their heirs or beneficiaries. It is governed primarily by the National Internal Revenue Code (NIRC), as amended, including amendments introduced by the TRAIN Law (Republic Act No. 10963).

When a person dies, all of the decedent’s properties (whether real or personal, tangible or intangible) and any rights or interests in those properties form part of the gross estate. After allowable deductions—such as funeral expenses, medical expenses, and certain other deductible items—the net estate is what is subject to estate tax.

Key points:

Estate tax applies whether or not the property has been formally titled.
Payment of estate tax is necessary to effect a valid transfer of ownership to the heirs.

2. Untitled Properties in the Philippines

An “untitled property” typically refers to real property (e.g., land and/or a structure) which does not yet have an official Certificate of Title issued by the Registry of Deeds. There may instead be:

A tax declaration from the local government (assessor’s office);
Unregistered land that has only been informally transferred or is covered by rights of long-term possession or occupation;
An older type of ownership document, such as Spanish titles or other pre-Torrens system papers.

These properties still have value and, under law, they form part of a deceased person’s estate. As such, they are still subject to estate tax.

3. Why Estate Tax Applies Even if a Property Is Untitled

Regardless of its registration status, the property’s value belongs to the deceased person’s estate. The Bureau of Internal Revenue (BIR) generally looks at the fair market value or the assessed value (as shown by the tax declaration or assessor’s records) in determining how much estate tax may be due.

Key reasons:

Value of the Net Estate
Estate tax is calculated based on the value of all properties—titled or untitled—owned by the deceased at the time of death.
Tax Declaration as Evidence of Ownership and Value
In many localities, an untitled property is still recognized by a tax declaration. The local assessor’s office can provide an appraised value. This value is typically used in computing the estate tax.
Protection of Heirs’ Rights
Heirs often need a Certificate Authorizing Registration (CAR) or eCAR from the BIR to finalize a property transfer or register the property under their names. The BIR only issues this after estate tax obligations have been settled.

4. Procedures for Settling Estate Tax for Untitled Property

Below is a general procedural outline. The specifics can vary, and local BIR requirements sometimes differ; always verify with the relevant Revenue District Office (RDO).

Gather Documents
- Death Certificate of the deceased (original and certified true copy).
- Proof of Ownership of the untitled property, which often includes:
  - Tax Declaration from the Municipal or City Assessor’s Office.
  - Real Property Tax receipts indicating the property is assessed in the decedent’s name.
  - Affidavits or other supporting documents showing continuous, open, and public possession (if needed).
- Affidavit of Self-Adjudication (for a single heir) or Deed of Extrajudicial Settlement (for multiple heirs)—these are often notarized and sometimes published in a newspaper of general circulation as required by law.
- Other documents (e.g., the deceased’s latest Income Tax Return, if requested by the BIR, though this is less common under the TRAIN law).
File the Estate Tax Return (BIR Form 1801)
- Within one (1) year from the date of death (subject to extension under meritorious cases).
- Attach all documentary requirements.
Pay the Estate Tax
- Calculate the net estate according to BIR guidelines; the 6% estate tax rate under the TRAIN Law applies.
- Payment is made to an Authorized Agent Bank (AAB) of the BIR or to the BIR itself, depending on local rules.
Obtain the Certificate Authorizing Registration (CAR or eCAR)
- Once the estate tax is fully settled, the BIR will issue a CAR/eCAR, which confirms that all taxes have been paid.
- The CAR/eCAR is needed to proceed with further steps (e.g., applying for titling, registering the property in the names of the heirs, etc.).
Proceed with Titling (Optional or Next Step)
- If the heirs wish to secure a Torrens Title for the inherited untitled property, they would typically present the CAR/eCAR and other documents (e.g., extrajudicial settlement, proofs of ownership) to the Register of Deeds.
- The property will then be titled in the heirs’ names, subject to compliance with all documentary and procedural requirements.

5. Tax Rates and Penalties

Under the TRAIN Law (effective January 1, 2018 onward):

Estate tax is 6% of the net estate.
The filing and payment must be done within one (1) year from the date of the decedent’s death.
Penalties and surcharges: If you fail to file on time, you may incur surcharges, interest, or penalties (unless the BIR grants an extension or relief).

Late Filing or Settlement:

If the property was inherited many years ago without settlement, an estate tax amnesty (e.g., under Republic Act No. 11569) might apply under certain conditions. Check current laws, because amnesties are time-bound and subject to specific rules.

6. Special Considerations and Common Issues

Multiple Heirs
If there are several heirs, they typically execute a Deed of Extrajudicial Settlement, dividing the property among themselves. If they disagree, judicial settlement proceedings might be necessary.
Documentation Challenges
Untitled property is often inherited through informal means. The BIR generally accepts other forms of proof (tax declarations, affidavits, etc.) to establish that the property forms part of the decedent’s estate.
Older or Ancestral Lands
When it comes to ancestral lands or properties under older systems (e.g., Spanish titles), heirs may have extra steps in proving the chain of ownership. Consulting a lawyer who specializes in land titling or property law is strongly advised.
Local Ordinances & Requirements
Different local government units (LGUs) sometimes impose additional steps or have more stringent requirements for transferring real property. Ensure compliance with both BIR regulations and LGU rules.
Estate Tax Amnesty
The Philippine government has offered several estate tax amnesties in recent years to encourage people to settle long-overdue estate taxes. Under these programs, penalties and interest are waived, and in some cases, tax rates may be lower.
- Always check if an estate tax amnesty is currently in effect and if you qualify.

7. Common Misconceptions

“Untitled property means no estate tax.”
- This is a myth. Even if a property is untitled, as soon as it is established that the decedent owned or possessed it, its value belongs to the estate and is taxable.
“We can sell the property without paying estate tax.”
- In most cases, you cannot legally or formally transfer the property (via sale or donation) to a third party without first securing the CAR/eCAR from the BIR. Title companies and notaries typically require the CAR/eCAR before acknowledging the transaction.
“We can keep skipping estate tax if the property remains in the decedent’s name.”
- While it might be possible to avoid formal transfers for a while, failure to settle estate taxes complicates future transactions and estate settlements. It can also lead to large penalties if discovered or if the property is eventually sold or transferred.

8. Practical Tips

Begin Settlement Process Early
- Start assembling documents and computing potential taxes as soon as possible after the decedent’s passing to avoid interest, penalties, and legal complications.
Check Existing Estate Tax Amnesty Programs
- If you missed the original deadlines, see if any updated legislation or extended deadlines apply.
Get a Certified True Copy of the Tax Declaration
- Visit the local assessor’s office to secure a certified true copy of the tax declaration (or multiple copies). This is usually the main document proving the property’s existence and value.
Consult Professionals
- Seek the help of a lawyer for extrajudicial settlement drafting, especially if there are multiple heirs.
- Consult a tax professional or accountant to ensure correct computation and submission of estate tax forms.
Keep All Records
- Retain receipts, notarized documents, and any official communication from the BIR.
- Proper record-keeping helps if any issues arise.

9. Conclusion

Yes—estate tax is generally required for untitled inherited property in the Philippines. In the eyes of the law, “untitled” does not mean “nonexistent.” If a decedent had a recognized ownership interest or even a possessory right in real property, that property is part of their estate. Failure to pay the estate tax can lead to legal and financial complications, including penalties, difficulty in future transfers, and potential disputes among heirs.

Remember:

The 6% estate tax rate under current law applies to the net value of the estate.
The settlement must be initiated within one year from death (subject to any extension or amnesty).
BIR documentation—especially the Certificate Authorizing Registration (CAR/eCAR)—is critical for any subsequent registration or sale of the inherited property.

For specific concerns or unusual situations (e.g., ancestral lands, missing documents, multiple heirs in dispute), it is always prudent to consult a Philippine attorney who specializes in estate law or a licensed tax professional to ensure proper compliance and to protect your rights as heirs.

Disclaimer: This write-up provides general information based on Philippine laws and regulations but does not constitute legal or tax advice. Laws and regulations may change, and local practices can differ. For personalized advice, always consult a qualified lawyer or tax professional in the Philippines.