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Legal 411 by Alona C. Mercado

How inheritance is resolved in the Philippines

by Francesco Britanico

In my last article, I wrote about the extension of the inheritance tax amnesty in the Philippines and why this was good news for those who want to settle their inheritance issues.

This article will discuss the two basic ways by which Philippine property may be inherited: intestate or testate.

Intestate inheritance is when there is no valid last will and testament, which apportions the estate. In the absence of a will, the estate of a deceased Filipino will be divided among the heirs according to the provisions of the Civil Code of the Philippines. This is usually to the spouse, children, parents, siblings, or perhaps to cousins or other extended family.

Testate inheritance is through a valid last will and testament. The testator writes out a will according to the legal forms of either Philippine or foreign law. The estate will then be allocated to the heirs named in this will.

There are formal as well as substantive requirements for a will to be valid.

On the formal side, the Civil Code has requirements for how a will is made and executed by a testator. The Civil Code allows two options: 1. a completely handwritten will, which is dated and signed by the testator; or 2. a typewritten, notarized will witnessed by three disinterested persons. An alternative is to make a will according to the formal requirements of the place where it was made, such as Canada.

On the substantive side, a valid will must respect the limits that the Civil Code places on the testator’s freedom to apportion his or her estate. Among these limits is that portions of the estate must be reserved to compulsory heirs identified by law. Depending on the testator’s personal circumstances, these compulsory heirs may include the descendants, ascendants, or spouse. Failure to provide for compulsory heirs may result in the will being fully or partially invalid. (Although things will be different if the testator is no longer a Filipino citizen.)

How is either intestate or testate inheritance put into effect?

Intestate heirs must execute a notarized document called an extrajudicial settlement of the estate. In this document, they identify the properties covered by the estate and agree among themselves on how these are to be divided.

Since the heirs may be scattered between the Philippines, Canada, and elsewhere, it is often practical for some of the heirs to empower another to sign the extrajudicial settlement on their behalf.

The extrajudicial settlement may then be brought to the Bureau of Internal Revenue, the Registers of Deeds, the banks, and other institutions to implement its terms and transfer the title or ownership of the assets to the heirs.

An extrajudicial settlement is only possible if all the legal heirs are in unanimous agreement. If they are not, if even just one of them refuses to approve the agreement, then a case to settle the estate must be filed in court.

A court case is also necessary when there is a last will and testament. This is called a probate case (or a reprobate if it is a foreign will). Probate is a court process that authenticates the will, proving to the court that it really is the last will and testament of the testator and that it complied with the formal requirements for a valid will. No will can transfer property unless it has undergone probate.

The probate case is filed in the city or province where the testator resided or in which the property is located. Evidence to prove the will’s authenticity must be presented in court. The court will weigh the evidence and rule on the validity of the will. The will’s executor shall implement the will after a favourable ruling and then submit a report to the court.

How long will the court process take?

This depends on several factors, such as how heavy the court docket is and whether any heirs file an opposition to the probate.

Interestingly, a probate case can be instituted even while the testator is still alive. The testator himself or herself obtains a court ruling on his will’s validity during his or her lifetime. Of course, a will that the testator submitted for probate and personally affirmed in court is much more certain to be upheld by the judge. This shall spare the heirs of the trouble and cost of probating the will after his death, allowing them to implement the will’s provisions with far less inconvenience after the testator passes away.

Atty. Francesco Britanico is a lawyer in the Philippines. He can be reached at francesco.britanico@lawyerphilippines.org and www.lawyerphilippines.org.

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