CHAPTER ONE: SUCCESSION AND TRANSFER TAXES 3. Partial institution of an heir.

Consequently, intestacy takes place as

to the undisposed portion.
Art. 712 (New Civil Code) 4. When the heir instituted is incapable of succeeding
“Ownership is acquired by occupation and by intellectual creation. 5. Other causes such as:
Ownership and other real rights over property are acquired and a. Non-fulfillment of the suspensive condition attached to the
transmitted by law, by donation, by testate and intestate succession, institution of an heir.
and in consequence of certain contracts, by tradition. They may also be ➢ Suspensive Condition – is a condition depending upon
acquired by means of prescription.” the happening of an uncertain event which must be
fulfilled before an obligation arises
MODES OF OWNERSHIP: b. Preterition – omission in the testator’s will of one, some or all
1. Occupation of the compulsory heirs in the direct line which has the effect
2. Intellectual Creation of annulling the institution of an heir
3. Law c. Fulfillment of resolutory condition
4. Donation ➢ Resolutory Condition – refers to a condition whereby,
5. Tradition upon fulfillment terminates an already enforceable
6. Contract obligation
7. Prescription d. Expiration of a term or period of institution
8. Succession e. Non-compliance or impossibility of compliance with the will
f. Repudiation of the instituted heir
TRANSFER TAXES AND SUCCESSION DEFINED
• Transfer Taxes – taxes imposed upon the gratuitous disposition of ELEMENTS OF SUCCESSION
private properties or rights. 1. Decedent – person whose property is transmitted through
• Gratuitous Transfer – one that neither imposes burden nor succession, whether or not he left a will.
requires consideration from transferee or recipient ➢ Decedent – without a will
- There is absence of financial consideration ➢ Testator – with a will
- Gratuitous transfers are essentially donations ➢ Executor – person designated in the last will and testament
- Opposite of Gratuitous Transfers are Onerous Transfers to carry out the provisions of the decedent’s will
• Onerous Transfer – one where the transferee gives consideration ➢ Administrator – person appointed by the court to perform the
in return for the property or right(s) received. same duty, in case the latter refused to accept the
- Subject to business taxes instead of transfer taxes appointment, failed to qualify under the law, or the last will and
testament did not appoint one.
• Donation Mortis Causa 2. Inheritance (Estate) – Include all the property, rights, and
- Gratuitous transfer of donation took effect at time of death obligations of a person which are not to be extinguished by death
- Subject to Estate Tax and all which have accrued thereto since the opening of
• Donation Inter Vivos succession.
- Transfer took effect during the lifetime of both donor and the ➢ Personal Rights – Not transmissible. Not extinguished by
donee death.
- Subject to Donor’s Tax 3. Successors – a person who is called to the succession either the
provision of a will or by operation of law
• Succession – mode of acquisition by virtue of which, the property, ➢ Devisees and Legatees – gifts are given by virtue of a will
rights, and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to CLASSIFICATION OF SUCCESSORS OR HEIRS
another or others either by his will or by operation of law. A. COMPULSORY HEIRS – those who succeed by force of law to
- Includes all the property, rights, and obligations not some portion of the inheritance, in an amount predetermined by
extinguished by his death law, known as the legitime.
- The rights to the succession is transmitted from the moment - Succeed whether the testator likes it or not
of death of the decedent - Cannot be deprived by the decedent of their legitime except
- “The heirs succeed immediately to all the property of the by disinheritance
deceased ancestor at the moment of death as completely as
if the ancestor had executed and delivered to them a deed for Kinds of Compulsory Heirs:
the same before his death.” • Primary – those who have precedence over and exclude other
compulsory heirs
NOTE: Obligations < Rights + Property • Secondary – those who succeed only in the absence of the
primary compulsory heirs
• Concurring – those who succeed together with the primary or
NATURE OF TRANSFER TAXES
secondary compulsory heirs
• Subject Matter of Transfer Taxes
- The privilege of the transferor to gratuitously transfer property
PRIMARY COMPULSORY SECONDARY COMPULSORY
or rights which takes effect at the date of death of the
A. Legitimate children and D. Legitimate Parents and
transferor
their legitimate legitimate ascendants (in default
- Although, the amount of transfer tax is based on net estate
descendants of A)
or net gifts, it shall not be construed as subject to property
tax B. Surviving Spouse E. Illegitimate parents (no other
- Transfer tax is an Excise Tax or Privilege Tax imposed on descendants). They inherit only
the act of passing the ownership of property and not on in default of A and C.
the value of the property or right C. Illegitimate children and
their descendants,
• Transfer Mortis Causa – Transfer to take effect at date of death legitimate
• Transfer Inter Vivos – Transfer to take effect during the lifetime of **Brothers and sisters are neither compulsory heirs nor strangers.
both the donor and the donee However, they may be voluntary heirs.

THE LAW THAT GOVERNS THE IMPOSITION OF ESTATE TAX B. VOLUNTARY HEIRS – those instituted by the testator in his will to
- Estate taxation is governed by the statute in force at the time of succeed to the inheritance of the portion thereof of which the
the death of the decedent testator can freely dispose.
- Estate tax accrues as the date of the death of the decedent and the - Determined through the decedent’s Last Will and Testament
accrual of the tax is distinct from the obligation to pay the same ➢ Free Portion – portion or value left in the estate after
- In the Philippines, succession (excluding the ta aspect) is governed deducting the legitime of the compulsory heirs.
by the New Civil Code
C. LEGAL OR INTESTATE HEIRS – those who succeed to the estate
KINDS OF SUCCESSION of the decedent by operations of law
1. Testamentary or Testate Succession - Applied when the decedent died without a valid will or his
- Designation of heir is made through the execution of a Last estate was not entirely disposed of by will
Will and Testament
2. Legal or Intestate Succession COMPOSITION OF GROSS ESTATE
- Effected by operations of law Decedent’s Estate To be inherited by:
- The decedent did not execute a Last Will and Testament, or LEGITIME Compulsory Heirs
- The Last Will and Testament is VOID (e.g. 75%) Reserved by the law for compulsory heirs
3. Mixed Succession regardless of whether or not a last will and
- Party by “will” and partly by operations of law testament was prepared
FREE PORTION Compulsory Heirs or Voluntary Heirs
CAUSED OF LEGAL SUCCESSION OR INTESTACY (e.g. 25%) - Heirs provided in the last will and
1. If a person dies without a will, or with a void will, or one which testament
has subsequently lost its validity - If there is NO WILL, free portion is
2. When the “will” does not institute an heir distributed to the intestate heir
INTESTATE HEIRS (ORDER OF PRIORITY) REVOCATIONS OF WILL
1) Legitimate children or descendants - Waiver or restriction regarding revocation is VOID
2) Legitimate parents or ascendants
3) Illegitimate children or descendants Modes:
4) Surviving spouse 1. Implication of Law
5) Brothers and sisters, nephews and nieces 2. By some will, tearing, cancelling, obliterating the will with the
6) Other collateral relatives within 5th degree intention of revoking it, by the testator himself, or by some other
7) State person in his presence and by his express direction.

Note: The relative nearest in degree excludes the more distant ones, • If revoked without the knowledge of the testator → Still VALID
saving the right of representation when it properly takes place • Subsequent wills which do not revoke the previous ones in an
express manner, annul only those dispositions that are inconsistent
COLLATERAL RELATIVES with the latter wills
Consanguinity – the relation of persons descending from the same • Revocation stated in the second will will revoke the first will even if
stock or common ancestors. the new will becomes inoperative
- Also known as blood relatives • Revocation of a will based on a false cause or illegal cause is NULL
- It may be lineal or collateral and VOID
➢ Lineal Consanguinity – subsists between persons of whom
one is descended in a direct line from the other INSTITUTION OF HEIR
➢ Collateral Consanguinity – subsists between persons who Will is still valid even though:
have the same ancestors, but who do not descend or ascend 1. There is no stated heir
from one another. 2. It does not comprise the entire state
- Each degree forms a generation 3. The heir did not accept the inheritance
4. The heir is incapacitated
WILLS
Will – an act whereby a person is permitted, with the formalities DISINHERITANCE
prescribed by law, to control to a certain degree the disposition of his - Testamentary disposition by which a compulsory heir is deprived
estate to take effect after his death of or excluded from the inheritance to which he has a right
- A document where the testator disposes his or her properties or - Not applicable to Voluntary Heirs
“estate” to take effect upon his or her death - The grounds or causes of disinheritance shall be limited to those
- The making of a will is a strictly personal act expressly stated by law
- It cannot be left in whole or as a part of the discretion of a third - The burden of proving truth of the cause for disinheritance shall
person, or accomplished through the instrumentality of an agent or rest upon the other heirs of the testator, if the disinherited heir
attorney. should deny it
- Supervening incapacity does not invalidate an effective will, nor is - Disinheritance without a specification of the cause, or for a cause
the will of an incapable validated by the supervening of capacity. the truth of which, if contradicted, is not proved, or which is not one
- A married woman may make a will without the consent of her of those set forth in civil code, shall annul the institution of heirs in
husband, and without the authority of the court so far as it may prejudice the person disinherited.
- A married woman may dispose by will of all her separate property - The children and descendants of the person disinherited shall take
as well as her share of the conjugal partnership or absolute his or her place and shall preserve the rights of compulsory heirs
community property. with respect to the legitime. However, the disinherited parent shall
not have the usufruct or administration of the property which
Persons Prohibited to Make a Will constitute the regime.
1) Those below 18 years old
2) Those not of a sound mind Requisites of Disinheritance
- The law presumes that every person is of a sound mind, in the 1. Effected only through a valid will
absence of a proof to the contrary 2. For a cause expressly stated by law
3. Cause must be stated in the will itself
KINDS OF WILL 4. Cause must be certain and true
1. Notarial or Ordinary or Attested Will – one which is executed in 5. Unconditional
accordance with the formalities prescribed by Art. 804 to 808 of the 6. Total (there is no partial disinheritance)
New Civil Code 7. The heir disinherited must be designated in such a manner that
there can be no doubt as to his identity
Requisites for a Valid Notarial Will
a. Must be in writing Art. 856 NCC
b. Executed in any language or dialect known to the testator “A subsequent reconciliation between the offender and the offended
c. Subscribed at the end by the testator himself OR by the person deprives the latter of the right to disinherit, and renders
testator’s name written by some other person in his presence ineffectual any disinheritance that may have been made.”
and by his express direction
d. Attested and subscribed by three or more credible COMMON CAUSES FOR DINSINHERITANCE of children or
witnesses in the presence of the testator and of one another descendants, parents or ascendants, and spouse:
1. When the heir has been found guilty of an attempt against the life
2. Holographic Will of the testator, his or her descendants or ascendants, and spouse
- Must be entirely written in case of children and parents
- Subscribed or signed by testator himself 2. When the heir has accused the testator of a crime of which the law
- May be made inside or outside the Philippines prescribes imprisonment for 6 years of more, if the accusation has
- Need not be witnessed been found groundless
3. When the heir by fraud, violence, intimidation, or undue influence
CODICIL – It is a supplement or addition to will which purpose is to causes the testator to make a will or to change one already made
explain the will 4. Refusal without justifiable cause to support the testator who
disinherits such heir
PROBATE OF A WILL – Court procedure wherein the will is proved to
be valid or invalid Peculiar Causes for Disinheritance
1. Children or Descendants
Probate of a Holographic Will a. When the child or descendant has been convicted of adultery
1. At least one witness who knows the handwriting and signature of or concubinage with the spouse of the testator
testator declare that the will and signature are that of the testator b. Maltreatment of the testator by word or deed by the child or
descendant
INTESTATE PROCEEDINGS – Proceedings in the absence of a last c. When the child or descendants leads a dishonorable or
will and testament disgraceful life
d. When the child or descendant is convicted of a crime which
carries with it a penalty of civil interdiction
FOREIGN WILL 2. Parents or Ascendants
- Produces effect if made in conformity of: a. When the parents have abandoned their children or induced
1. Formalities prescribed by the law of the place where he or she their daughters to live a corrupt or immoral life, or attempted
lives against their virtue
2. According to formalities of his country b. When the parent or ascendant has been convicted of adultery
3. According to formalities of the Philippine Civil Code or concubinage with the spouse of the testator
c. Loss of parental authority for causes specified in the Civil
- Filipino in a foreign country: Code; and
➢ May make a will d. Attempt by one of the parents against the life of the other,
➢ Such will may be probated in the Philippines unless there has been reconciliation between them
3. Spouse
a. When the spouse has given cause for legal separation
b. When the spouse has given grounds for loss of parental
authority

RIGHTS OF REPRESENTATION
- It is a right created by fiction of law where the representative is
raised to the place and degree of the person represented, and
acquires the rights which the latter would have if he were living or
could have inherited

Representation may arise either because of:

1. Death
2. Incapacity
3. Disinheritance

• The representatives shall not inherit more than what the person
they represent would inherit, if he were living or could inherit
• Right of representation takes place in favor of children of brothers
or sisters, whether full or half blood and only if they concur with at
least one uncle or aunt (If the decedent has no descendants)
• Nephews and nieces already alive when the aunt or uncle died can
inherit by representing their predeceased parents

Representation is not available to:

1. Compulsory Heirs: In case of repudiation, the one who repudiates
his inheritance cannot be represented.
- Their own heirs inherit in their own right
2. Voluntary Heirs
3. Voluntary heirs, legatees, and devisees who:
a. Predecease the testator
b. Renounce the inheritance cannot be represented by their own
heirs, with respect to their supposed inheritance

• Illegitimate nephews/nieces are prohibited from inheriting from

relatives of their parents
• Grandnephews and grandnieces in the collateral line cannot
inherit by right of representation