Extrajudicial Settlement of Estate: Meaning

Under Rule 74, Section 1, the heirs may divide the estate among themselves without a court-appointed administrator if:

• the deceased left no will;
• the deceased left no debts;
• the heirs are all of age, or the minors are represented by their duly authorized judicial or legal representatives.

The heirs then must:

• sign a public instrument and file it with the Register of Deeds;
• file a bond with the Register of Deeds equal to the value of the personal property involved, as certified under oath by the parties;
• publish the settlement in a newspaper of general circulation in the province once a week for three consecutive weeks (Sections 1 and 2).

If there is only one heir, he or she may take the whole estate through an affidavit of self-adjudication filed with the Register of Deeds. If the heirs cannot agree, they may go to court in an ordinary action for partition.

The law presumes the deceased left no debts if no creditor asks the court for letters of administration within two years after the death.

• An heir is left out. A settlement does not bind an heir who did not take part in it or had no notice of it. In Cua v. Vargas (2006), the Supreme Court said publication is "geared for the protection of creditors" and does not serve as notice to such heirs.
• A false sole-heir affidavit. In Rebusquillo v. Spouses Gualvez (2014), the Court held that an affidavit of self-adjudication is proper only when the person is the sole heir. A false one is void, and the property stays subject to partition.
• The two-year window. Under Section 4, for two years after the distribution, an heir who was unduly left out or a creditor can still claim against the bond and the real property, even if the property was transferred.

Until the estate is divided, the heirs own it in common, subject to the payment of the deceased's debts (Article 1078 of the Civil Code).

Made-up illustration: Lito dies with no will and no debts. He leaves a house and lot and a bank account. His wife and two adult children sign a public instrument dividing the property, post a bond for the bank money, publish the settlement once a week for three consecutive weeks and file the deed with the Register of Deeds. For the next two years, a creditor or a left-out heir can still go after the property.

Taxes and the documents the heirs need are covered in Extrajudicial settlement of estate: requirements and risks. To find out who the heirs are when there is no will, see intestate succession and Who inherits if there is no will?. Death, birth and marriage certificates can be requested through PSA Serbilis.