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Expat Wills

You are an Heir

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You have inherited some properties in the Philippines, but you are a US citizen and/or a permanent resident and, after jumping for joy, settle down and ask – now, what do I need to do?

As an heir, you will have to deal with Philippine inheritance laws, estate settlement and estate taxes, real property taxes, and even capital gains when you sell these inherited properties.

Once a property owner dies (known as the “decedent”), his heirs have a limited period of time to settle his/her estate: go to court to probate the will, if there is one; or execute an Extra-Judicial Settlement of Estate (if there’s no will and no debts); get a tax clearance from Treasurer’s office where the property/ies is situated; go to the Bureau of Internal Revenue (BIR) to file estate tax returns, pay estate taxes and get a certificate authorizing registration of the properties; ask for new titles in the names of the heir/s from the Register of Deeds; and get new tax declaration/s for the properties in the name/s of the new registered owner/s.

However, a vast number of inherited properties remain in the name of the decedent due to several factors: all or most of the heirs no longer live in the Philippines and are citizens/residents of other countries and are not interested in their inheritance; or have no time or money to “settle the estate”; or simply do not want to get entangled in what they perceive to be a tedious process. Thus, it is normal to hear of second generation heirs inheriting properties originally owned, and still titled, in the name of a grandparent.

In settling an estate, you need to know not only the procedures, but more importantly, who are considered heirs, under Philippine laws.

Under Philippine laws, when a person dies and leave properties behind, the properties pass on to the heirs named in his/her will, by testate succession; or if there is no will, to his/her “compulsory heirs”- spouse and children (legitimate or illegitimate), by intestate succession. Whether there is a will or not, Philippine laws provide that 50% of the decedent’s entire estate is reserved to his/her legitimate children as their legitime (share).

For example, Teddy died in 1978 leaving several properties which he accumulated during his marriage: 6 hectares of farm lands in Bulacan and a house and lot in Antipolo. He left behind his wife of 35 years, Anita and his 2 children with her – Amado and Teddy, Jr. But he also had 2 other children with Felisa - Belen and Danny, who live in a house and lot in Paranaque titled under Teddy’s name. Anita and her children learned of the other family only upon Teddy’s death. However, they did not do anything to settle Teddy’s estate, as Amado continued to live in their Antipolo house with Anita and his own family; and Teddy, Jr migrated to the US in the 1980s.

Teddy’s widow, Anita died in 1985, without a will; and the eldest son, Amado in 2009. Belen and Danny have asked their half-brother Teddy, Jr. to divide the properties of Teddy, Sr. among the remaining heirs. But who are the remaining heirs? Teddy’s heirs would have been his 2 legitimate children, his widow Anita and his 2 illegitimate children.

Only 50% of the properties (net of taxes and liabilities) will form Teddy’s estate because 50% is Anita’s share in the conjugal (community) property. So, if the total net value of all of the properties (Bulacan farmlands, Antipolo and Paranaque) is P20 Million Pesos, Teddy’s estate for distribution to his heirs is only P10 Million Pesos.

Under Philippine laws, 50% of Teddy’s estate is reserved as the legitime (share) of his 2 legitimate children. Anita’s legitime is equal to the legitime of 1 legitimate child. The 2 illegitimate children each get only ½ of the legitime of each legitimate child. Thus, Amado and Teddy, Jr.’s legitime is P2.5 Million Pesos each; Anita also gets 2.5 Million Pesos; and Belen and Danny each get P1.25 Million Pesos (1/2 of the share of Amado or Teddy, Jr.). The remaining P2.5 Million pesos is what is known as “free portion” which can be divided among the heirs as they see fit. The legitimate children can also claim all of it, since the legitimes (shares) of the 2 illegitimate children have already been satisfied. So, if the Paranaque property which Teddy “gave” to Felisa and her 2 children is worth more than P1.5 Million Pesos, the 2 illegitimate children have to return the excess to Teddy’s estate.

Now, since Anita has also died, her estate should likewise be settled in the same manner as Teddy’s. Since her only heirs are her 2 children, her whole estate will be divided equally between Amado and Teddy, Jr.; but since Amado has died, his share in the states of his father and mother will devolve to his children – legitimate and illegitimate – who succeeds by right of representation. Of course, Amado’s estate should also be determined and settled.

The downside is, the BIR imposes high penalties and surcharges if estate returns are not filed and estates taxes have not been paid within the prescribed time but you can avail of tax amnesties given every now and then. The important thing is, if you have inherited properties in the Philippines, make sure you take hold of the property titles, settle the estate and get your own certificates of titles to the inherited properties.


Atty. Aurora Vega-Buzon is a partner in Chua Tinsay and Vega, A Professional Legal Corporation (CTV) - a full service law firm with offices in San Francisco, San Diego and Manila. The information presented in this article is for general information only and is not, nor intended to be, formal legal advice nor the formation of an attorney-client relationship. Atty. Vega will hold consultations in their Philippine office at Ortigas Center from September 28-October 1, 2009. Call or e-mail CTV for an in-person or phone consultation to discuss your particular situation and/or how their services may be retained at (619) 955-6277; or (415) 495-8088;

Publish date: 11/09/14 11:30
Source: by Atty. Aurora Vega-Buzon, Legal Buzz, Asian Journal San Diego, Published : 6 June 2014

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