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This case highlights why lawyers recommend keeping the Extra-Judicial Settlement (EJS) and the sale as separate transactions. Ideally, sellers should finalize the EJS first before selling the property. The BIR scrutinizes every transaction, so it's best to have everything in order beforehand.
For instance, I’ve seen regulators require heirs to present a physical newspaper—not a digital copy—showing the price of a decedent’s club share from years ago.
As I mentioned in a previous post, the BIR does not allow estate settlements per property—it must cover the decedent’s entire known estate. I say “known” because additional properties can still be declared as long as the BIR remains unaware of them.
There are two main ways the regulator identifies a decedent’s properties:
+ Checking their system using the decedent’s TIN (which buyers submit during property transactions).
+ Requesting a Certificate of Aggregate Landholdings from the City Assessor.
Because of this, it’s best for sellers to settle the estate first before proceeding with a sale.
However, if a buyer is eager to secure the property and obtain the right of first refusal, they may choose to lend the heirs the funds needed for the estate tax settlement. In such cases, both parties should execute a promissory note and annotate the agreement on the title to serve as a legal safeguard against other potential buyers.