Dear Attorney,

I hope this letter finds you well. I am writing to seek your legal advice regarding the transfer of co-ownership shares of a deceased family member in our family properties. My brother passed away in November 2023, and we are trying to determine the best method to transfer his co-ownership in these properties to his heirs.

Before his death, we had considered executing a Deed of Donation for the transfer of his share. However, given the current circumstances, I am concerned that it may now be too late to proceed with such a document. Specifically, I would like to know:

Is it still possible to execute a Deed of Donation after his death to facilitate the transfer of his co-ownership to his heirs?
If not, would an Extrajudicial Settlement of Estate (EJS) be the only viable option at this point? If so, what are the steps and legal requirements for such a process?

I would appreciate your expert guidance on these matters and any advice you can provide to ensure we proceed correctly.

Thank you in advance for your assistance.

Sincerely,

A Concerned Heir

Legal Article: Transfer of Property Ownership After Death in the Philippines: Deed of Donation vs. Extrajudicial Settlement of Estate

Introduction

The question of how to transfer property ownership after the death of a co-owner is a common issue faced by many families in the Philippines. Understanding the legal landscape is crucial to ensure the smooth and proper transfer of the deceased's share in family properties to their rightful heirs. This article delves into the options available in such a situation, specifically addressing whether a Deed of Donation is still executable after the death of a co-owner and whether an Extrajudicial Settlement of Estate (EJS) becomes the only route for transferring ownership. This article will thoroughly examine the legal principles surrounding these options and provide practical advice on how to proceed.

Deed of Donation and Its Application Under Philippine Law

A Deed of Donation is a legal document that allows a person (the donor) to voluntarily transfer ownership of a property or a portion thereof to another person (the donee), usually without consideration or in exchange for something of less than full value. Under the Civil Code of the Philippines, donations are governed by Articles 725 to 773, and the essential requisites of a donation include the following:

Capacity of the Donor: The donor must have the legal capacity to make a donation. The donor must be of sound mind, of legal age, and must have full ownership of the property being donated.
Intent to Donate: The donor must voluntarily intend to transfer ownership, and the donation must not be coerced or made under duress.
Acceptance by the Donee: The donee must accept the donation either in the same document or in a separate document, to be effective.

Is It Too Late to Execute a Deed of Donation After Death?

A fundamental characteristic of donations is that they are acts inter vivos—acts done while the donor is alive. Upon the donor’s death, any intention or plan to donate becomes null and void because the donor is no longer capable of making voluntary acts. Therefore, a Deed of Donation cannot be executed posthumously. After the donor's death, any property that they owned will form part of their estate, which must be distributed according to the laws of succession.

In your case, because your brother passed away in November 2023, a Deed of Donation is no longer possible for transferring his co-ownership share in family properties. At the time of his death, his share in the properties automatically became part of his estate, and any transfer of ownership must now proceed under the legal framework governing estates, which may involve either judicial or extrajudicial settlement.

The Law on Succession

Upon the death of an individual, all of their properties, rights, and obligations that are not extinguished by death are transferred to their heirs through succession. This is governed by the Civil Code of the Philippines, specifically Articles 774 to 1105.

There are two main types of succession:

Testate Succession: If the deceased left a last will and testament, the distribution of the estate will follow the wishes stated in the will, provided that it does not violate laws on compulsory heirs (Articles 885-890 of the Civil Code).
Intestate Succession: If the deceased did not leave a will, the estate will be distributed according to the rules of intestate succession, which assign shares to the heirs based on their relationship to the deceased. This is detailed in Articles 960 to 1016 of the Civil Code.

In your situation, if your brother did not leave a will, intestate succession rules will apply, and his heirs (which may include his spouse, children, or other family members) will inherit his co-ownership share in the family properties.

Extrajudicial Settlement of Estate (EJS)

Given that a Deed of Donation is no longer an option, the next step is to explore how the estate can be transferred to the heirs. The most common process, when the heirs are in agreement and there is no contention regarding the distribution of the estate, is an Extrajudicial Settlement of Estate (EJS).

Under Rule 74, Section 1 of the Rules of Court, EJS allows the heirs to settle the estate without going through court litigation, provided the following conditions are met:

The decedent left no will (or if there is a will, it has already been probated).
The heirs are all in agreement on the division and distribution of the estate.
The estate does not have any outstanding debts (or if there are debts, these have been fully paid).

An EJS involves the execution of a notarized Extrajudicial Settlement Agreement signed by all the heirs, stating how the properties of the deceased will be divided among them. Once the agreement is executed, it must be:

Published in a newspaper of general circulation once a week for three consecutive weeks.
Filed with the Register of Deeds, where the properties are registered, for the necessary transfer of title to the heirs.

If the heirs cannot agree on how to divide the estate, or if there are disputes or issues with debts, then the estate will need to go through judicial settlement, which requires court intervention and a formal estate proceeding.

Steps in Executing an Extrajudicial Settlement of Estate

If you are considering an EJS for your brother's estate, the following steps will typically need to be followed:

Determine the Heirs: Identify all legitimate heirs of the deceased, including the surviving spouse, children, and any other legal heirs under the rules of intestate succession.
Inventory of the Estate: Make a full inventory of the properties, assets, and liabilities of the estate.
Drafting the EJS Agreement: A lawyer will draft the Extrajudicial Settlement Agreement, which should specify the division of the estate among the heirs. All heirs must sign this agreement.
Notarization: The EJS Agreement must be notarized by a notary public.
Publication: The notarized EJS must be published in a newspaper of general circulation for three consecutive weeks.
Payment of Estate Tax: The heirs must settle the estate tax with the Bureau of Internal Revenue (BIR). Under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, estates are subject to a 6% estate tax on the net estate, which is the total value of the properties less allowable deductions.
Filing with the Register of Deeds: After paying the estate tax, the heirs must file the EJS Agreement with the Register of Deeds where the properties are located to have the titles transferred to the heirs.

Legal Considerations and Potential Challenges

While an Extrajudicial Settlement can be a smooth process, there are potential challenges that heirs should be aware of:

Disagreements Among Heirs: If one or more heirs refuse to sign the EJS Agreement, the settlement cannot proceed extrajudicially, and a judicial settlement will be required.
Undiscovered Debts or Creditors: If the decedent had debts that were not initially known, creditors can file claims against the estate. In such cases, the heirs may become liable for the debts.
Failure to Publish: Failure to comply with the publication requirement can render the EJS void, and the settlement will not be legally recognized.

Conclusion

In your situation, because your brother has already passed away, executing a Deed of Donation is no longer legally feasible. The only viable option at this point is to proceed with an Extrajudicial Settlement of Estate or, if necessary, a judicial settlement if there are disputes among the heirs or if the estate has outstanding debts.

By following the appropriate legal steps, including determining the heirs, drafting and notarizing the EJS Agreement, complying with the publication requirement, and settling the estate tax, you can ensure the smooth transfer of your brother's co-ownership shares in the family properties to his rightful heirs.

Seeking the assistance of a qualified lawyer will help you navigate this process and ensure that all legal requirements are met.