[Letter]

Dear Attorney,

I am one of the compulsory heirs of a deceased property owner who co-owned a residential property with his two brothers. All three original co-owners have since passed away, and my father, one of them, died in 1997. We, as his compulsory heirs, have an interest in settling the estate tax obligations. However, we are uncertain whether we can pay only our corresponding one-third share of the estate tax due, considering that the other co-owners and their respective heirs are not fully cooperating at the moment.

Could you kindly advise us on whether paying just our share of the estate tax is legally permissible and how we might proceed if the other parties do not fulfill their obligations? We understand this involves multiple deceased co-owners, varying timelines, and potential complexities under Philippine tax and inheritance laws. Any guidance you can provide on the proper procedures and legal implications would be greatly appreciated.

Respectfully,
A Concerned Heir

[Legal Article on Philippine Law: A Comprehensive Analysis of Partial Estate Tax Payments, Co-Ownership, and Settlement Procedures]

Introduction
In the Philippines, the settlement of an estate following the death of a property owner involves a highly structured legal and fiscal framework. When the decedent leaves behind real property co-owned with others, and all original co-owners are likewise deceased, the complexity intensifies. Questions often arise regarding how to pay the estate tax due, particularly when multiple sets of heirs are involved and not all are willing or able to contribute their share of the tax. This article provides a meticulous, in-depth exploration of the legal principles, relevant statutes, and practical considerations governing whether heirs may pay only their proportional share of the estate tax for inherited property. It aims to clarify the legal landscape for compulsory heirs who face such a challenge.

I. Legal Framework Governing Estates and Estate Taxation
A. Nature of Estate Tax
Under Philippine law, estate tax is a tax on the right of succession—imposed on the transfer of the decedent’s property to his or her heirs. It is governed primarily by the National Internal Revenue Code (NIRC), as amended, with various rules and regulations promulgated by the Bureau of Internal Revenue (BIR). The estate tax is not a tax on the property per se, but on the privilege of transferring that property from the deceased to their successors.

B. Relevant Legislation and Regulations

National Internal Revenue Code, particularly sections on estate taxation.
Applicable rules from the BIR, including Revenue Regulations and Revenue Memoranda that clarify procedures for filing the estate tax return, computing the tax due, and claiming deductions.
Civil Code provisions relating to inheritance, co-ownership, and partition.
Family Code and the rules on succession, including compulsory heirs and their respective shares, as well as the rights of heirs to demand partition.

C. Historical Context of Estate Tax Law
The applicable estate tax rate and procedure depend on the law prevailing at the time of the decedent’s death. For a father who passed in 1997, the estate tax rates and allowable deductions differ from those provided under more recent amendments, such as the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which took effect in January 2018. Thus, to determine the exact estate tax due, one must first ascertain which law was in force at the date of death. In this scenario, the 1997 estate tax rules apply, including the corresponding rate structure and deductions.

II. Co-Ownership and Its Implications
A. Definition of Co-Ownership
Co-ownership exists when two or more persons own an undivided thing in common. The shares of the co-owners are generally proportional to their respective interests. When one co-owner dies, the title to that share passes to their heirs, but it remains undivided unless and until there is a proper partition.

B. Effect of Multiple Deaths on Co-Ownership
When all original co-owners are deceased, each owner’s fractional share of the property passes to their respective heirs. The property now has multiple layers of inheritance: the estate of each deceased co-owner must be settled. Until partition occurs, all heirs collectively own the property in an undivided state. Each set of heirs steps into the shoes of their decedent, succeeding to the same rights, obligations, and limitations.

C. Undivided Interests and Joint Obligations
Although each heir technically succeeds to a proportional share of the decedent’s interest, the property remains indivisible until partitioned. Practically, it remains one taxable estate for each deceased owner. The complexity is that there might now be several estates to settle: that of your father and those of his co-owners. Each estate is separately taxable, and each set of heirs must comply with the requirements for that particular decedent’s estate before transferring title to the inherited property.

III. Estate Settlement Procedures
A. Extrajudicial Settlement
Where all heirs are of age, agree to a distribution, and no will contests arise, the estate can be settled extrajudicially. This involves executing an Extrajudicial Settlement of Estate instrument, publishing a notice in a newspaper, and then securing a BIR Certificate Authorizing Registration (CAR) after paying the estate tax. However, if not all parties cooperate, extrajudicial settlement becomes challenging.

B. Judicial Settlement
If disputes arise or not all heirs concur, judicial settlement may be necessary. A court proceeding ensures a proper accounting, determination of heirs, liquidation of obligations (including estate taxes), and distribution of property. This is more time-consuming, costly, and complex.

C. Partition and Its Importance
Partition is the act that dissolves co-ownership by assigning specific portions of the property to each heir or set of heirs. Before partition, no single heir can assert exclusive dominion over a particular portion. Estate tax clearance is typically required to transfer titles and proceed with a clean partition. Without clearing estate taxes, the heirs cannot register property titles in their names.

IV. Estate Tax Payment Responsibilities
A. Liability of the Estate
The estate tax is imposed on the entire net estate of the deceased at the time of death. Generally, the liability to pay estate tax devolves upon the executor, administrator, or in the absence thereof, the heirs themselves. The estate tax must be settled before the distribution of the estate to the heirs. Typically, the BIR issues a CAR only once the full estate tax due is paid.

B. Joint and Several Liability of Heirs?
Philippine law does not usually treat heirs as individually and separately liable for the full estate tax unless they collectively fail to pay and have taken possession of the estate’s assets without complying with tax obligations. Each heir’s obligation to the estate tax is tied to their share in the estate. However, from the BIR’s perspective, the estate tax is a liability of the entire estate, not subdivided from the outset according to the shares of individual heirs.

C. Time of Payment and Penalties
Estate tax must be filed and paid within a specific period from the decedent’s date of death. For deaths prior to the TRAIN Law’s effectivity, the period was generally six months from death, extendible by the Commissioner of Internal Revenue. Delays result in interests, surcharges, and penalties, which continue to accrue until full settlement. Since many years have passed (the father died in 1997), penalties and interest might be significant unless covered by tax amnesties.

V. Can Heirs Pay Only Their Proportionate Share of Estate Tax?
A. Theoretical Possibility
In theory, each group of heirs may attempt to pay the estate tax corresponding to their decedent’s fractional interest. For example, if the father owned 1/3 of the property, the heirs of the father’s estate might try to settle the estate tax related only to that 1/3 interest. This approach, however, raises practical and legal issues. The BIR generally requires a settlement of the entire estate of one decedent before issuing a CAR for that decedent’s share. Since the estate tax is computed on the entire net estate of the deceased (not just the real property portion but all included assets), a partial payment for only a fraction of the property might not be acceptable unless the BIR is amenable and each estate is handled separately.

B. Distinguishing Between Multiple Estates
If we are dealing with three separate estates (one for each deceased co-owner), it may be possible to pay the estate tax for one estate independently of the others, provided each decedent’s estate is settled individually. The key question is whether your father’s estate is distinct enough and can be settled on its own terms. If the property’s title stands in the name of the three original co-owners as co-owners, the BIR would require estate tax clearance for each decedent’s share before allowing a full transfer of that share to the heirs.

C. Segmenting the Estate Tax Liability
If the property formed part of your father’s gross estate, the estate tax corresponding to his death and the assets he left behind (including the 1/3 co-owned property interest) can be computed and paid. The BIR would assess the estate tax on the father’s entire net estate, including all other assets he owned at the time of death. After paying that estate tax, your father’s heirs could theoretically obtain a CAR for their inherited interest. However, the property remains co-owned with the heirs of the other deceased co-owners, who also need to settle their decedents’ estate taxes before a clean title transfer can be effected.

D. Practical Hurdles to Partial Payment

Issuance of CAR and Transfer of Title: The BIR will issue a CAR for the estate of the father, enabling the transfer of his share of the property into the names of his heirs. Without the other co-owners’ estates cleared of estate taxes, the property might remain under a consolidated title that still reflects the deceased co-owners, hindering final partition.
Refusal or Inaction by Other Heirs: If the other co-owner’s heirs fail to settle their share of the estate tax, the entire property remains in a state of incomplete transfer. Even if you secure a CAR for your father’s share, you may face difficulties in dealing with the property (e.g., selling or mortgaging your share) because it remains undivided and partly unregistered due to the unpaid taxes on the other shares.
Court Intervention: If the non-cooperation persists, judicial partition or settlement may become necessary, at which point the court may order forced payment of obligations, including the unpaid portions of the estate tax, or direct a sale of a portion of the property to satisfy tax obligations.

VI. Tax Amnesties and Relief Measures
A. Estate Tax Amnesty under the TRAIN Law and Subsequent Extensions
In recent years, the Philippine government offered estate tax amnesties to encourage taxpayers to settle long-overdue estate tax liabilities. These amnesties significantly reduce penalties and interest. For deaths before a certain cutoff date (originally December 31, 2017, and extended in some instances), heirs could avail of these amnesties. Checking the current state of tax amnesty laws may provide a more affordable route to regularize the estate’s tax obligations. However, each estate must still be settled individually.

B. Applying for Amnesty Separately
If the amnesty is still available or was available during the period you are settling, you could attempt to pay the reduced estate tax for your father’s estate alone. If granted, you would obtain a CAR for that portion of the property. This does not completely resolve the co-ownership and title issues, but it places your father’s heirs in a better legal position.

VII. Rights and Remedies of Diligent Heirs
A. Demand for Partition
If you have already settled your father’s estate tax, you can demand a partition of the property. Should the other co-heirs refuse, you may seek judicial partition. The court can order the property partitioned or sold, and from the proceeds, it could require payment of any outstanding taxes on other shares before distributing the remainder.

B. Forced Contribution
Heirs who pay more than their share of the estate’s obligations may seek reimbursement from the other heirs. If you were, for instance, compelled to pay a portion of the unpaid estate taxes attributable to another co-owner’s share to clear the property’s title, you may have a cause of action for reimbursement. Judicial action might be necessary if amicable settlement is impossible.

C. Negotiations with Co-Heirs
Practical solutions often involve negotiations. Even if the law technically permits you to settle your father’s estate independently, doing so without the others may have limited practical utility. Negotiating a joint settlement to pay all estates’ taxes together may ultimately lead to a cleaner, faster resolution, enabling the full transfer of titles and partitioning of the property.

VIII. Conclusion and Best Practices
In the Philippine legal context, heirs can attempt to pay only the estate tax corresponding to their decedent’s estate—essentially their share—and secure a CAR for that portion, provided that each estate is handled distinctly. However, without the other co-owners’ estates also being settled, the property remains only partially regularized, and the title may not fully reflect the distribution of shares. This can limit the practical utility of having cleared your portion of the taxes alone.

Best practices include:

Consulting a Philippine Lawyer Experienced in Estate Matters: An experienced attorney can navigate the complexities of multiple estates, co-ownership issues, and the requirements of the BIR.
Determining the Applicable Law and Rates: Since your father died in 1997, the pre-TRAIN estate tax law applies. Compute the tax accordingly, possibly availing of past amnesties if still permissible.
Securing Documents and Evidence of Ownership: Gather titles, tax declarations, and extrajudicial settlement drafts.
Attempting Amicable Settlements: Engage the other heirs to pay their respective shares of estate tax to avoid prolonged legal complications.
Considering Judicial Remedies: As a last resort, file for judicial settlement or partition if cooperation is not forthcoming.

Ultimately, the ability to pay only your share of the estate tax in isolation is possible in principle but complicated in practice. It may not achieve the desired goal of having the property fully and cleanly transferred into the heirs’ names without also addressing the estate tax obligations of the other co-owners. Thus, strategic planning, legal guidance, and potentially cooperative negotiations with the other sets of heirs are paramount.

This article is presented for general informational purposes only and does not constitute legal advice. For specific guidance tailored to individual circumstances, readers are encouraged to consult a qualified Philippine attorney experienced in estate and taxation law.