CHAPTER ONE: SUCCESSION AND TRANSFER TAXES 1.

If a person dies without a will, or with a void will, or one which

has subsequently lost its validity
Art. 712 (New Civil Code) 2. When the “will” does not institute an heir
“Ownership is acquired by occupation and by intellectual creation. 3. Partial institution of an heir. Consequently, intestacy takes place
Ownership and other real rights over property are acquired and as to the undisposed portion.
transmitted by law, by donation, by testate and intestate succession, 4. When the heir instituted is incapable of succeeding
and in consequence of certain contracts, by tradition. They may also 5. Other causes such as:
be acquired by means of prescription.” a. Non-fulfillment of the suspensive condition attached to the
institution of an heir.
MODES OF OWNERSHIP:  Suspensive Condition – is a condition depending
1. Occupation upon the happening of an uncertain event which must
2. Intellectual Creation be fulfilled before an obligation arises
3. Law b. Preterition – omission in the testator’s will of one, some or
4. Donation all of the compulsory heirs in the direct line which has the
5. Tradition effect of annulling the institution of an heir
6. Contract c. Fulfillment of resolutory condition
7. Prescription  Resolutory Condition – refers to a condition whereby,
8. Succession upon fulfillment terminates an already enforceable
obligation
TRANSFER TAXES AND SUCCESSION DEFINED d. Expiration of a term or period of institution
 Transfer Taxes – taxes imposed upon the gratuitous disposition e. Non-compliance or impossibility of compliance with the will
of private properties or rights. f. Repudiation of the instituted heir
 Gratuitous Transfer – one that neither imposes burden nor
requires consideration from transferee or recipient ELEMENTS OF SUCCESSION
- There is absence of financial consideration 1. Decedent – person whose property is transmitted through
- Gratuitous transfers are essentially donations succession, whether or not he left a will.
- Opposite of Gratuitous Transfers are Onerous Transfers  Decedent – without a will
 Onerous Transfer – one where the transferee gives  Testator – with a will
consideration in return for the property or right(s) received.  Executor – person designated in the last will and testament
- Subject to business taxes instead of transfer taxes to carry out the provisions of the decedent’s will
 Administrator – person appointed by the court to perform
the same duty, in case the latter refused to accept the
 Donation Mortis Causa appointment, failed to qualify under the law, or the last will
- Gratuitous transfer of donation took effect at time of death and testament did not appoint one.
- Subject to Estate Tax 2. Inheritance (Estate) – Include all the property, rights, and
 Donation Inter Vivos obligations of a person which are not to be extinguished by death
- Transfer took effect during the lifetime of both donor and the and all which have accrued thereto since the opening of
donee succession.
- Subject to Donor’s Tax  Personal Rights – Not transmissible. Not extinguished by
death.
 Succession – mode of acquisition by virtue of which, the 3. Successors – a person who is called to the succession either the
property, rights, and obligations to the extent of the value of provision of a will or by operation of law
the inheritance, of a person are transmitted through his death to  Devisees and Legatees – gifts are given by virtue of a will
another or others either by his will or by operation of law.
- Includes all the property, rights, and obligations not CLASSIFICATION OF SUCCESSORS OR HEIRS
extinguished by his death A. COMPULSORY HEIRS – those who succeed by force of law to
- The rights to the succession is transmitted from the moment some portion of the inheritance, in an amount predetermined by
of death of the decedent law, known as the legitime.
- “The heirs succeed immediately to all the property of the - Succeed whether the testator likes it or not
deceased ancestor at the moment of death as completely as - Cannot be deprived by the decedent of their legitime except
if the ancestor had executed and delivered to them a deed by disinheritance
for the same before his death.”
Kinds of Compulsory Heirs:
NOTE: Obligations < Rights + Property  Primary – those who have precedence over and exclude other
compulsory heirs
NATURE OF TRANSFER TAXES  Secondary – those who succeed only in the absence of the
 Subject Matter of Transfer Taxes primary compulsory heirs
- The privilege of the transferor to gratuitously transfer  Concurring – those who succeed together with the primary or
property or rights which takes effect at the date of death of secondary compulsory heirs
the transferor
- Although, the amount of transfer tax is based on net estate PRIMARY COMPULSORY SECONDARY COMPULSORY
or net gifts, it shall not be construed as subject to property A. Legitimate children and D. Legitimate Parents and
tax their legitimate legitimate ascendants (in
- Transfer tax is an Excise Tax or Privilege Tax imposed on descendants default of A)
the act of passing the ownership of property and not on B. Surviving Spouse E. Illegitimate parents (no
the value of the property or right other descendants). They inherit
only in default of A and C.
 Transfer Mortis Causa – Transfer to take effect at date of death C. Illegitimate children and
 Transfer Inter Vivos – Transfer to take effect during the lifetime their descendants,
of both the donor and the donee legitimate
**Brothers and sisters are neither compulsory heirs nor strangers.
THE LAW THAT GOVERNS THE IMPOSITION OF ESTATE TAX However, they may be voluntary heirs.
- Estate taxation is governed by the statute in force at the time of
B. VOLUNTARY HEIRS – those instituted by the testator in his will
the death of the decedent
to succeed to the inheritance of the portion thereof of which the
- Estate tax accrues as the date of the death of the decedent and
testator can freely dispose.
the accrual of the tax is distinct from the obligation to pay the
- Determined through the decedent’s Last Will and Testament
same
 Free Portion – portion or value left in the estate after
- In the Philippines, succession (excluding the ta aspect) is
deducting the legitime of the compulsory heirs.
governed by the New Civil Code
C. LEGAL OR INTESTATE HEIRS – those who succeed to the
KINDS OF SUCCESSION
estate 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
testament - Filipino in a foreign country:
- If there is NO WILL, free portion is  May make a will
distributed to the intestate heir  Such will may be probated in the Philippines
INTESTATE HEIRS (ORDER OF PRIORITY)
1) Legitimate children or descendants REVOCATIONS OF WILL
2) Legitimate parents or ascendants - Waiver or restriction regarding revocation is VOID
3) Illegitimate children or descendants
4) Surviving spouse Modes:
5) Brothers and sisters, nephews and nieces 1. Implication of Law
6) Other collateral relatives within 5th degree 2. By some will, tearing, cancelling, obliterating the will with the
7) State intention of revoking it, by the testator himself, or by some other
person in his presence and by his express direction.
Note: The relative nearest in degree excludes the more distant ones,
saving the right of representation when it properly takes place  If revoked without the knowledge of the testator  Still VALID
 Subsequent wills which do not revoke the previous ones in an
COLLATERAL RELATIVES express manner, annul only those dispositions that are
Consanguinity – the relation of persons descending from the same inconsistent with the latter wills
stock or common ancestors.  Revocation stated in the second will will revoke the first will even
- Also known as blood relatives if the new will becomes inoperative
- It may be lineal or collateral  Revocation of a will based on a false cause or illegal cause is
 Lineal Consanguinity – subsists between persons of whom NULL and VOID
one is descended in a direct line from the other
 Collateral Consanguinity – subsists between persons who INSTITUTION OF HEIR
have the same ancestors, but who do not descend or Will is still valid even though:
ascend from one another. 1. There is no stated heir
- Each degree forms a generation 2. It does not comprise the entire state
3. The heir did not accept the inheritance
WILLS 4. The heir is incapacitated
Will – an act whereby a person is permitted, with the formalities
prescribed by law, to control to a certain degree the disposition of his DISINHERITANCE
estate to take effect after his death - Testamentary disposition by which a compulsory heir is deprived
- A document where the testator disposes his or her properties or of or excluded from the inheritance to which he has a right
“estate” to take effect upon his or her death - Not applicable to Voluntary Heirs
- The making of a will is a strictly personal act - The grounds or causes of disinheritance shall be limited to those
- It cannot be left in whole or as a part of the discretion of a third expressly stated by law
person, or accomplished through the instrumentality of an agent - The burden of proving truth of the cause for disinheritance shall
or attorney. rest upon the other heirs of the testator, if the disinherited heir
- Supervening incapacity does not invalidate an effective will, nor is should deny it
the will of an incapable validated by the supervening of capacity. - Disinheritance without a specification of the cause, or for a cause
- A married woman may make a will without the consent of her the truth of which, if contradicted, is not proved, or which is not
husband, and without the authority of the court one of those set forth in civil code, shall annul the institution of
- A married woman may dispose by will of all her separate property heirs in so far as it may prejudice the person disinherited.
as well as her share of the conjugal partnership or absolute - The children and descendants of the person disinherited shall
community property. take his or her place and shall preserve the rights of compulsory
heirs with respect to the legitime. However, the disinherited parent
Persons Prohibited to Make a Will shall not have the usufruct or administration of the property which
1) Those below 18 years old constitute the regime.
2) Those not of a sound mind
- The law presumes that every person is of a sound mind, in Requisites of Disinheritance
the absence of a proof to the contrary 1. Effected only through a valid will
2. For a cause expressly stated by law
KINDS OF WILL 3. Cause must be stated in the will itself
1. Notarial or Ordinary or Attested Will – one which is executed in 4. Cause must be certain and true
accordance with the formalities prescribed by Art. 804 to 808 of 5. Unconditional
the New Civil Code 6. Total (there is no partial disinheritance)
7. The heir disinherited must be designated in such a manner that
Requisites for a Valid Notarial Will there can be no doubt as to his identity
a. Must be in writing
b. Executed in any language or dialect known to the testator Art. 856 NCC
c. Subscribed at the end by the testator himself OR by the “A subsequent reconciliation between the offender and the offended
testator’s name written by some other person in his person deprives the latter of the right to disinherit, and renders
presence and by his express direction ineffectual any disinheritance that may have been made.”
d. Attested and subscribed by three or more credible
witnesses in the presence of the testator and of one another COMMON CAUSES FOR DINSINHERITANCE of children or
descendants, parents or ascendants, and spouse:
2. Holographic Will 1. When the heir has been found guilty of an attempt against the life
- Must be entirely written of the testator, his or her descendants or ascendants, and spouse
- Subscribed or signed by testator himself in case of children and parents
- May be made inside or outside the Philippines 2. When the heir has accused the testator of a crime of which the
- Need not be witnessed law prescribes imprisonment for 6 years of more, if the accusation
has 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
1. At least one witness who knows the handwriting and signature of
adultery 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
their daughters to live a corrupt or immoral life, or attempted
she lives
against their virtue
2. According to formalities of his country
b. When the parent or ascendant has been convicted of
3. According to formalities of the Philippine Civil Code
adultery or concubinage with the spouse of the testator
 c. Loss of parental authority for causes specified in the Civil
Code; and
d. Attempt by one of the parents against the life of the other,
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