The law that governs the issues on inheritance is the New Civil Code of the Philippines (NCC), not the Family Code..

“Testate or testamentary succession” refers to situations where the person dies leaving a last will. The person who executes a last will is called the “testator.”

The share in the inheritance is called “legitime.” The NCC provides for compulsory heirs” or certain people to whom the testator is obligated to give their legitimes.

In computing the legitimes, the remaining portion of the estate is called the “free” portion. The testator can give this portion to anyone.

Legal or intestate succession” refers to situations where the person died without a last will; the share in the inheritance is called “intestate share.”

“Extrajudicial settlement of estate” is a voluntary agreement among the heirs partitioning the estate (free of debts), executed before a notary public, and published once a week for three weeks in a newspaper of general circulation.

A sole heir claiming the whole estate can file an“Affidavit of adjudication by sole heir” with the Register of Deeds (if real property is involved) or with the BIR.

Sample Succession Issue:

Q: Father died intestate, how are we to divide the assets  with our mother and four brothers?

A deeper concern is that my brother has been estranged from his legal wife for 30 years. He has a common-law wife and an dopted a son 2 decades ago.

The brother died recently. Is his estranged wife entitled to his properties left behind, how about the common-law-wife and the adopted son? There have been no adoption papers for his son.

Ans: Under the Philippine law on Intestate succession, only compulsory heirs of the deceased are entitled to inherit from his or her estate. Other relatives may inherit only upon default or absence of the compulsory heirs.

Under the Civil Code of the Philippines, compulsory heirs include the surviving spouse and the children whether legitimate or illegitimate. When we speak of intestate succession, it is understood that the deceased or decedent left no will upon his/her death.

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 do 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 them 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.

2) Judicial Settlement of Estate- If the deceased left no will but there are creditors or claimants or an heir is minor or suffering from incapacity to act and/or the heirs cannot agree amongst themselves in the manner or partition or distribution of the estate, the settlement of estate shall be by means of Judicial Settlement. This means that the heirs or creditor(s) concerned have to file a petition in the Court of Law for the settlement of estate.

Unless there is a third party claimant, this scheme should be avoided as much as possible. 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. The sharing of the heirs is the same as what is mentioned above, less the provisions for the payments of creditors, if any.

As to the common law wife of the deceased brother , for as long as they are legally married and that marriage was not annulled , she is still considered as compulsory heirs of the deceased and as such entitled to inherit from her husband .

As to the adopted son, if the adoption is legal in the sense that the adoption was authorized by the court, then the adopted son is considered as a compulsory heir. However, if the birth certificate of the “adopted son” would show that the father is your deceased brother, and during the lifetime of your deceased brother, the status of this “adopted son” was never questioned him or any third party, and then he could be considered as a compulsory heir.

As to the live-in partner of the deceased, she is not entitled to inherit from the estate as she is not considered as a spouse under the law.

Source of this case

What about Estate Taxes?

Nonresident foreigners pay estate tax only on property located in the Philippines. The taxable inheritance is arrived at after deducting all expenses, losses, debts, and taxes related to the property (all proportionate to the ratio of the Philippine gross estate to his total estate) as well as the surviving spouse’s net share. Estate tax is levied at progressive rates.

ESTATE TAX

TAX BASE, PHP (US$) TAX RATE
Up to 200,000 (US$4,348) 0%
200,000 – 500,000 (US$10,870) 5% on band over US$4,348
500,000 – 2 million (US$43,478) 8% on band over US$10,870
2 million – 5 million (US$108,696) 11% on band over US$43,478
5 million – 10 million (US$217,391) 15% on band over US$108,696
Over 10 million (US$217,391) 20% on band over US$217,391
Source: Global Property Guide

 

Citizens and Resident Foreigners

Citizens and resident foreigners are allowed the following deductions, aside from the expenses and taxes related to the property as well as the surviving spouse’s share, before arriving at the taxable estate:

  • PHP1 million (US$21,739) standard deduction,
  • PHP1 million (US$21,739) for the family home,
  • PHP200,000 (US$4,348) for funeral expenses, and
  • PHP500,000 (US$10,870) for medical expenses during one whole year before the testator’s death.

 

Confused as to who gets what? Peruse the comparative table of legitimes and intestate shares.

Surviving heir Legitime Intestate share
Illegitimate children

Surviving spouse

1/3

1/3

(Remaining 1/3 is free portion; Art. 894, NCC)

1/2

1/2

Illegitimate children

Surviving spouse

Legitimate parents

1/4

1/8

1/2

(Art. 899, NCC; testator may freely dispose of the remaining 1/8 of the estate.)

1/4

1/4

1/2

Illegitimate children

Legitimate parents

1/4

1/2

1/2

1/2

Legitimate parents

Surviving spouse

1/2

1/4 (taken from the free portion)

(Art. 893, NCC)

1/2

1/2

Illegitimate parents

Surviving spouse

1/4

1/4

1/2

1/2

Illegitimate children alone 1/2 (divided by number of illegitimate children)

Remainder is free portion (Art. 901, NCC)

All
Legitimate parents alone 1/2; remaining half is free portion (Arts. 889 and 890, NCC) All
Illegitimate parents alone 1/2 All
Surviving spouse alone 1/2, 1/3, 1/2 (Art. 900, NCC) All
Legitimate children (or their descendants) alone 1/2 (divided by the number of children)

Remaining half is free portion (Art. 888, NCC)

All
One legitimate child (or descendant)

Surviving spouse

1/2

1/4

Remaining 1/4 is free portion (Art. 892, NCC)

1/2

1/2

Two or more legitimate children (or their descendants)

Surviving spouse

1/2 (divided by the number of children)

Equal to the share of one child

Remainder is free portion (Art. 892, NCC)

Consider spouse as 1 legitimate child and divide estate by total number
Legitimate child

Illegitimate child

1/2

1/2 of each legitimate child (Art. 176, Family Code)

Remainder is free portion (Art. 892, NCC)

Please readArticle 176 of the Family Code: computing the legitimes of legitimate and illegitimate children; an illegitimate child gets one-half)
Surviving spouse

Brothers and sisters (nephews and nieces, in case of deceased siblings)

1/2 (remaining half is free portion; Art. 900, NCC)

Not entitled to anything since they are not compulsory heirs; testator may choose to give them something out of the free portion

1/2

1/2 (divided by the number of brothers and sisters; nephews and nieces of deceased siblings divide among themselves the share that should have to their parents)

Art. 1001, NCC

 

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