A brief overview of extrajudicial settlement

When a person passes on, those left behind are often faced not only with emotional loss but also with the task of settling the person’s affairs. The process of estate settlement affects families from all walks of life, regardless of the size or value of the estate involved. It is therefore not surprising that estate settlement continues to receive public attention, including through proposals in Congress relating to estate tax, such as bills seeking to extend estate tax amnesty programs or to revisit the existing estate tax system itself. While these proposals remain under discussion, they reflect a shared recognition that estate settlement is a common and often challenging experience for many Filipinos and foreigners who have properties in the Philippines.

Estate settlement is the process by which a decedent’s properties, rights, and obligations are identified, settled, and transferred to his or her heirs. There are different ways to complete this in the Philippines, depending on the circumstances. One of the most commonly used methods is extrajudicial settlement (EJS) which allows heirs to settle the estate among themselves without going to court. This is allowed if the decedent did not leave any will, there are no unpaid debts (or the heirs agree to take responsibility for them), and all heirs sign and publish the agreement to divide the estate.

For many families, EJS offers a way to move forward without the added cost, time, and formality associated with judicial processes. However, while EJS simplifies the procedure, it does not remove the legal and tax requirements that accompany the transfer of property from one party to another.

The EJS process actually starts with the determination of who are the heirs and what are the properties left by the deceased. The heirs will then have to decide how the properties will be divided among themselves. This agreement must be formalized in a notarized deed of extrajudicial settlement, which must be published once a week for three consecutive weeks in a newspaper of general circulation. These procedural steps, while straightforward in principle, also form the basis for subsequent steps involving taxes and property transfers.

Tax law imposes a 6% estate tax on the transfer of a decedent’s net estate upon death to the heirs, regardless of whether the estate is settled through court proceedings or through EJS. The law allows certain deductions to arrive at the net estate subject to tax, such as the value of the family home or certain properties received prior to death, subject to limitations.

Beyond estate tax, the way the heirs apportion the estate can also have separate tax consequences. A 6% donor’s tax may apply if an heir gives up part of his or her rightful share so that another heir receives more than his or her legal share. Donor’s tax can likewise be imposed when there is a specific renunciation in favor of a particular co‑heir, as opposed to a general renunciation. In a recent Court of Tax Appeals (CTA) case, the court held that although certain paragraphs of the EJS appeared to indicate a general renunciation (i.e., without designating a specific recipient), these were effectively negated by later provisions that clearly directed the repudiated shares in favor of a specific heir. Consequently, the CTA considered renunciation in the EJS as a gratuitous transfer or donation. Careful drafting and aligning allocations with legal shares help avoid unintended donor’s tax exposure.

Where land or other real property forms part of the estate, local taxes likewise come into play. Under the Local Government Code, local government units are authorized to impose a tax on the transfer of ownership of real property, including transfers by donation and inheritance. The specific rates and procedures may vary depending on the city or municipality, adding another step to the settlement process.

Notably, settling an estate also involves the submission of required documents (e.g., death certificate of the decedent, the deed of extrajudicial settlement, proof of publication of EJS, tax declarations, certificates of title), filing the estate tax return, and paying the tax due to the Bureau of Internal Revenue (BIR). Heirs or their representative must also secure a Certificate Authorizing Registration (CAR) from the BIR for each property before any transfer can be recorded by other institutions such as the Register of Deeds (RD) and the Land Transportation Office (LTO).

Ultimately, beyond these required documents and processes, it’s important to recognize the human context in which estate settlement takes place. Families often begin the settlement process while still grieving the loss of a loved one. During this period, attention is understandably focused on personal and family matters, and the completion of legal and tax requirements may not be an immediate priority. In reality, this may contribute to delays in filing estate tax returns or settling tax obligations within the periods prescribed by law, resulting in the imposition of penalties and interest. This experience is not uncommon and reflects the practical challenges faced by families navigating estate settlement during a difficult time.

From the perspective of families, these layered requirements combined with emotional and personal circumstances can make EJS feel more tedious than initially expected. While the absence of court proceedings remains a clear advantage, the overall timeline of the settlement may still be affected by the need to gather the required documents, complete tax filings, and secure clearances. The delays at any stage may affect the next steps, making timing and coordination an important part of the process.

The government passed several estate tax amnesty measures, with the most recent ending on June 14, 2025. These helped to ease the burden of long-standing unpaid estate taxes for families of decedents, especially those from earlier years. Today, legislators are once again discussing potential amnesty and other reforms, reflecting their continued recognition of the practical realities faced by families in settling estates. While these are still under deliberation, families must manage estate settlement based on existing rules and procedures.

In sum, extrajudicial settlement remains a valuable and legally recognized option for settling estates in the Philippines. At the same time, its effectiveness in practice largely depends on how well heirs or their representatives understand and manage the surrounding tax and legal requirements while coping with personal loss. A clearer appreciation of these realities may help set more realistic expectations and encourage informed decision-making during what is frequently a sensitive and challenging period. 

Source: Business World

Remittances seen growing despite ‘Trump volatilities’

Overseas Filipino workers’ (OFW) remittances are expected to grow despite a new US tax that took effect Jan. 1.

Maybank Investment Banking Group economist Azril Rosli on Tuesday said that while the bank remained “cautious of potential headwinds from tighter immigration policies and the new one-percent US remittance tax,” remittances were likely to weather “Trump’s volatilities as seen in Trump 1.0 (his first term)” with the support of a “growing share from the Middle East and other parts of Asia.”

The 1.0 percent tax applies to money sent from the US through cash, money orders and cashier’s checks, regardless of the sender’s citizenship. The tax does not apply to transfers made through US banks, US-issued debit or credit cards, or cash carried by hand.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the US remained the top source of cash remittances, accounting for 40 percent of the year-to-date total.

The central bank, however, has said that remittance data has its limits because money sent home by overseas Filipinos often passes through correspondent banks, most of which are based in the United States, and that remittances sent through couriers are also recorded under the country where the courier’s main office is located, again often the US.

Personal and cash remittances respectively rose by 3.2 percent to $35.7 billion and $32.11 billion as of end-November, latest BSP data showed, from $34.6 billion and $31.1 billion in January-November 2024.

The central bank expects remittances to hit $35.5 billion and $36.6 billion in 2025 and 2026, respectively.

Maybank expects remittances to grow to about $36.5 billion this year.

As for economic growth, the bank said this could remain subdued until next year due to domestic and global uncertainties.

“We continue to evaluate emerging risks from the external trade outlook, geopolitical tensions and tariff-related uncertainties that could impact economic growth and inflation,” Rosli said.

Maybank said growth could have slowed to 4.8 percent in 2025 from 2024’s 5.7 percent — below the government’s 5.5- to 6.5-percent target.

Growth is expected to rebound to 4.9 percent and 5.2 percent this year and in 2027, respectively, below the government’s downwardly revised 5.0- to 6.0-percent and 5.5- to 6.5-percent targets.

The impact of a flood control project scandal is not expected to be long-term, Rosli said, but this would also depend on whether the government takes concrete steps to address the issue.

“...I believe that the risk that it could influence the economic trajectory, it could be lesser if... the situation has been resolved by the government,” Rosli said.

“And I think the government has also been proactive to actually improve the situation and also given focus on the priorities of the budget funding, especially on the priorities for the people as well,” he added.

Moreover, the BSP’s “gradual easing of monetary policy” is expected to support the rebound in economic growth.

Rosli said the central bank could implement two more rate cuts this year — one 25-basis-point cut in the first half and another in the last six months of the year.

“This gradual approach reflects that the BSP needs to balance supporting modest GDP (gross domestic product) growth, while maintaining vigilance on emerging risks from the external trade outlook as well as geopolitical tensions and tariff-related uncertainties,” he said.

Source: Manila Times

When a Special Power of Attorney (SPA) Abroad Needs Authentication in the Philippines

It is an important legal requirement: a Special Power of Attorney (SPA) executed and notarized abroad must be authenticated if it is to be valid and binding in the Philippines.

Why? Because a notarization from a foreign country by itself does not guarantee that the document will be accepted by Philippine authorities. Authentication confirms the genuineness of the notarial act — the identity of the notary, the validity of the seal or stamp, and that the person signing actually appeared before the notary or authorized official.

If this authentication step is skipped, Philippine government agencies, courts, banks or the registry of deeds may reject the SPA — even if it was properly notarized overseas. This can derail transactions involving property, banking, legal representation, or other significant acts that rely on the SPA.

What changed with the Apostille Convention

Traditionally, the process of authenticating foreign documents for use in the Philippines was cumbersome: documents had to be recently legalized by the foreign government (often via its “foreign ministry” or equivalent), then authenticated by the Philippine Embassy or Consulate (“consularization” or “red ribbon”).

But since the Philippines became a party to the Apostille Convention on 14 May 2019, there is now a simpler route — apostillization.

• If the country where the SPA was executed is also a member (contracting state) of the Apostille Convention, the notary’s act can be certified via an apostille by that country’s designated “competent authority.” This apostille — usually a sticker, stamp, or attached certificate — verifies the authenticity of the notary’s signature/seal and the authority of the notary.

• Once properly apostilled, the SPA can be used in the Philippines without further authentication by the Philippine Embassy or Consulate.

• However, if the SPA was notarized in a country not part of the Apostille Convention, you must still follow the older procedure — foreign legalization + consular authentication before the SPA is considered valid in the Philippines.

Thus, the Apostille Convention streamlines cross-border recognition of public documents (including SPAs), reduces bureaucracy, and makes it easier for Filipinos abroad to send notarized documents home for legal purposes.

What is the Apostille Convention — in simpler terms

The Apostille Convention — more formally the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (1961) — is an international treaty that simplifies the process of authenticating public documents (e.g. notarial acts, birth certificates, marriage certificates, court documents) when they are used abroad. Under the Convention:

• A participating country designates a “competent authority” (e.g. a Ministry of Foreign Affairs, Secretary of State, County Governor). That authority issues an Apostille Certificate for the document.

• The Apostille certifies authenticity — of the signature, the capacity of the signer, and, when applicable, the seal or stamp. Importantly, it does not certify the content of the document.

• Once a document bears a valid apostille, it becomes “honored as public document” in any other member country of the Convention. No further legalization (e.g. consular legalization, embassy certification) is required.

In effect, the Apostille Convention replaced the older “red ribbon / consularization” system with a single-step international certification — massively easing cross-border document exchange.

Who are the “Apostille Countries”? (Selected List & Highlights)

As of 2025, there are over 120 contracting states to the Apostille Convention worldwide.

Here are some examples across different regions:

• Europe: Austria, Belgium, France, Germany, Greece, Italy, Netherlands, Spain, Sweden, Switzerland, United Kingdom, and many others.

• Americas: United States, Canada (joined Jan 2024), Mexico, Brazil, Argentina, many Latin American and Caribbean countries.

• Asia–Pacific: Japan, Australia, South Korea, China (note: only Hong Kong & Macao SARs; mainland China isn’t party) according to some sources.

• Others: Various countries across Africa, Middle East, Latin America, and elsewhere. For example, a number of less-commonly cited countries are part of the convention according to publicly available member-lists.

Because the Convention is widely ratified, most countries where Filipinos live or travel are likely to be contracting states — which greatly helps in easing the authentication process for documents like SPAs, birth certificates, or educational credentials.

What This Means for Filipinos Abroad — And You

Given that you — and likely some people you know — may need to have documents notarized abroad for use in the Philippines (e.g. SPAs for real-estate dealings, representation, banking, remittances, family law, etc.), here are the practical takeaways:

• If you’re in a country that’s a contracting party to the Apostille Convention:  Have your SPA or relevant document notarized there, then request an Apostille Certificate from the country’s competent authority. Once apostilled, the document can be used in the Philippines — no further embassy/consulate authentication needed.

• If the country is not part of the Convention: Be prepared for the older process: notarization → legalization by foreign government → consular authentication by Philippine embassy/consulate. This can be longer and more complex.

• Always present the original notarized + apostilled/consularized document when submitting to Philippine authorities — e.g. Registry of Deeds, banks, courts. Some agencies may require a “certified true copy,” but the apostille or consular seal must be visible.

• Understand: an Apostille doesn’t validate the content, only the authenticity of the notarial act. The receiving agency in the Philippines still has the right to assess whether the document meets substantive legal requirements (e.g. SPA must contain detailed description of powers; certain acts like property sale require notarization per law).

Why the Apostille Convention Matters — Not Just for SPAs

Beyond SPAs, the Apostille Convention facilitates international mobility and transactions for Filipinos abroad:

• Birth, marriage, death certificates — important for dual citizenship, overseas employment, visa or immigration processes abroad.

• Educational credentials — diplomas, transcripts, certifications for foreign study or work.

• Court or notarial documents — affidavits, powers of attorney, contracts, adoption papers, etc.

Because over 120 countries are parties (and more join from time to time), this system significantly reduces red tape and speeds up cross–border legal and personal processes.

For Filipinos living partly abroad, dealing with properties in the Philippines, or planning international transactions — understanding and using the Apostille system could save time, money, and headaches.

Final Thoughts

We underscore a simple but often-overlooked truth: notarization abroad does not automatically guarantee recognition in the Philippines. 

Without proper authentication, foreign SPAs and other documents may be rendered ineffective.

But since the Philippines’ accession to the Apostille Convention, there is now a smoother, internationally-recognized path: apostillization.

This system reflects global legal cooperation and makes things easier for Filipinos abroad dealing with cross-border documentation.

If you are ever in the process of executing a Special Power of Attorney abroad — whether for land, banking, or personal matters — make it a point to check:

1. Is the country an Apostille Convention member?

2. If yes: apostille the SPA. If no: prepare for consular legalization.

3. Retain the original apostilled/consularized SPA when submitting it in the Philippines.

Source: Ziggurat Real Estate