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More details for the estate planner

(Article published in the Aug 11,2004 issue of TODAY, Business Section)

Taken individually and in isolation, the recent rules issued by the Supreme Court on notarial practice (A.M. Res. 02-8-13 SC) and on legal fees (A.M. Res. 04-2-04-SC) have little direct impact on the art and science of estate planning in the Philippines.  But viewed in conjunction with the broader picture, they do have practical implications which estate owners must at least be aware of since it is the small misstep that often results in thwarting the best laid plans of mice and men.

An estate owner wanting to write a will has a choice of executing either a holographic will, which is subject to no formal requirement beyond being “entirely written, dated and signed by the hand of the testator himself” (Article 810, Civil Code) or a notarial will, which, among another formal requirements, “must be acknowledged before a notary public  by the testator and the witnesses” (Article 806, Civil Code).  Many had opted for the notarial form because the benefits of notarization far outweighed the inconvenience of the testator and his witnesses going to the notary to acknowledge the document.

The revised rules on notarial practice have made acknowledgment a bit more inconvenient thus necessitating a second look on the preference for notarial wills.  In the first place, notaries, as pointed out previously (See Trust and Estates, August 4, 2004, TODAY), have been prohibited from performing notarial services outside their “regular place of work,” except “on certain exceptional occasions or situation” (Section 2(a), Rule IV, A.M. Bi, 02-8-13-SC).  Among the exceptions are notarial acts in “hospitals and other medical institutions where a party to an instrument or document is confined for treatment.” Not included, however, are residences of testators who are too weak to leave their homes but are not confined in hospitals and other medical institutions.  While a case, based on the spirit of the law, for a liberal interpretation of the law to permit the latter can possibly made, the fact is that, as presently written, the letter of the new rules does not allow it.


Moreover, a notary is prohibited from performing a notarial act if, among other instances, the person involved as a signatory “is not personally known to the notary public or otherwise identified by the notary public through competent evidence of identity…” (Section 2(b), Id.). usually because of the sensitivity of the document, the testator brings his will before a notary who knows him.  That complies with the personal knowledge requirement as to him who is a principal with respect to the will proper, i.e., the dispositive provisions portion of the document.

However, it is most unusual for the notary to also know personally the three attesting witness.  In that case, they must under present rules be identified by “competent evidence of identity.” The best way to comply with this new requirement is for the attestign witnesses (who are principals with respect to the attestation clause of the will) to bring with them “at least one current identification document issued by an official agency bearing the photograph and signature of the individual” (Section 12, Id.)

Otherwise, what is needed to identify the attesting witnesses is the oath or affirmation of: (a) one credible witness not privy to the instrument, document or transaction, who is personally known to the notary public and who personally knows the individual (i.e. the attesting witnesses); or of (b) two similarly qualified witnesses who each personally knows the individual and shows to the notary public documentary identification. In effect, unless the attesting witnesses have appropriate documentary identification themselves, they themselves will need witnesses to identify them.

Finally, since both testator and attesting witnesses are principals in their own right, they must, under the new rules, all sign, in addition to the will in the manner provided by law, but also the notarial register (Section 3. Id.)

For all that, the notary can possibly’ charge under A.M. 04-2-04-SEC (hereinafter referred to as “new Rule 141”) no more than P100 or at the most P400 assuming that an argument can be made that the acknowledgment of a will is in reality four acknowledgments, one each for the testator and his three witnesses.

This brings us tot he new rules on legal fees.

When the estate planner dies and the need to settle his estate judicially arises, the heirs are confronted by the costs of “initiating proceedings for the allowance of wills, granting letters of administration…[that are] collected in accordance with the value of the property involved in the proceedings…” (Section 7(d), new Rule 141).  The fees are charged according to a schedule that increases the rate as the bases increases, but for practical purposes, the rule of thumb is 1.25 percent of the estate since anything above P400,000 is assessed P12.50 per P1,000 of the value declared in the petition. It makes no sense to undervalue the estate since “if the value of estate as definitely appraised by the court is more than the value declared in the application, the fees on the difference shall be paid…[and] a certificate from the clerk of court that the proper fees had been paid shall be required prior to the closure of the proceedings.” The rate used to be only in the vicinity of 1 percent.

         There are other legal fee adjustments, such as a similar increase by 25 percent in cases filed by or against the estate (not arising out of a judgment), mandated by the new Rule 141 that are applicable, as well to other cases filed in court and not just to estates and trusts.  The point, however, is that the cheese has been moved, albeit so slightly, and it behooves those in the rat rate to take time out and sniff the air to determine what, under the new dispensation, is good for them and their loved ones.