Basic Principles of Succession - Devisees and legatees, persons whom gifts of real

property and personal property, respectively are given

Succession – is a mode of acquisition by virtue of which, by
by virtue of a will
property, rights, and obligations to the extent of the value
4. Acceptance
of the inheritance, of a person are transmitted through his
- Express acceptance, made in a public or private
death to another or others either by his will or by operation
document
of law (Art. 774). The inheritance includes all the property,
- Tacit acceptance, resulting from acts by which the
rights, and obligations of a person which are not
intention to accept is necessarily implied, or which one
extinguished by his death (Art. 776).
would have no right to do except in the capacity of an
heir.

Modes of Acquiring Property

 Occupation Executors – person appointed by testator to carry out the

 Intellectual creation directions and requests in his will
 Law Administrator – person appointed by the court to
 Donation administer the assets and liabilities of a decedent
 Tradition
 Contract
 Prescription
Types of Heirs
 Succession
1. Compulsory or Forced Heirs
- By those who succeed by force of law
Three (3) kinds of Succession - Legitime, amount predetermined by law; portion of
estate preserved by law
1. Testamentary Succession 2. Voluntary Heirs
- Made in a will in the form prescribed by law - If by will
- Last will and testament - Those instituted by the testator in his will to succeed to
2. Legal or Intestate Succession the inheritance of the portion thereof of which the
- Did not execute a will testator can freely dispose
- By operation of law 3. Legal or Intestate Heirs
3. Mixed Succession - By operation of law
- Partly by will and partly by operation of law

Elements of Succession

1. Death of decedent
- Decedent, person whose property is transmitted
through succession
- Testator or testatrix, decedent who left a will
2. Inheritance
- Includes all the property, rights, and obligations of a TESTAMENTARY SUCCESSION
person
- Devise, is a testamentary disposition Will
- Legacy, is a gift or bequest by will of personal property
- Legal declaration before the death of the decedent
3. Successors
regarding how he wants his property transferred after
- Heirs, devisees and legatees
his death.
- Heirs, called to the succession either by the provision of
- is an act whereby a person is permitted, with the
a will or by operation of law
formalities prescribed by law, to control to a certain
degree the disposition of his estate after his death.
Making of a will is a strictly personal act; it cannot be left in Forms of Will
whole or in part to the discretion of a third person or
Every will must be in writing and executed in a language or
accomplished through the instrumentality of an agent or
dialect known to the testator.
attorney.
Every will must be acknowledged before a notary public by
the testator and the witnesses.
Codicil

- an instrument that amends (i.e., changers, modifies, or

Holographic Will
supplements) the provisions of a will.
- Must be executed with the same formalities as a will - Will written entirely by the testator with his own hand
but is only required to have a provision or provisions and not witnessed or attested.
amending a will.
A person may execute a holographic will which must be
entirely written, dated, and signed by the hand of the
testator himself.
Probate of a will
It shall be necessary that at least one witness who knows
- Court procedure by which a will is proved to be valid or
the handwriting and signature of the testator explicitly
invalid.
declare that the will and the signature are in the
handwriting of the testator himself.

Capacity and Intent to Make a Will If the signature of the testator in a will is contested, at least
three of such witnesses shall be required.
Persons of either sex under eighteen years of age,
which is the age of majority, cannot make a will. They do
not have the legal capacity to make contracts hence he
Will of an Alien
cannot acquire and control property independently.
- Who is abroad produces effect in the Philippines if
In order to make a will, it is essential that the
made with the formalities prescribed by the law of the
testator be of sound mind at the time of its execution. To be
place om which he resides, or according to the
of sound mind, it is not necessary that the testator be in full
formalities observed in his country, or in the conformity
possession of all his reasoning faculties, or that his mind be
with those which the Civil Code prescribed.
wholly unbroken, unimpaired, or unshattered by disease,
injury, or other cause.

If the testator, one month or less, before making Will of a Citizen

his will was publicly known to be insane, the person who
maintains the validity of the will must prove that the - Executed in accordance with the law of the country of
testator made it during lucid interval. which he is a citizen or subject and which might be
proved and allowed by the law of his own country shall
A married woman may make a will without the have the same effect as if executed according to the
consent of her husband and without the authority of the laws of the Philippines.
court.

Revocation of Wills and Testamentary Disposition

Capacity to Succeed by Will or by Intestacy
A will may be revoked by the testator at any time before his
Persons not incapacitated by law may succeed by will or ab death. Any waiver or restriction of his right is void.
intestato.
A revocation of a will based on a false cause, or an illegal
cause is null and void.
 Institution of Heir 7. When a child or descendant leads a dishonorable or
disgraceful life;
Is an act by virtue of which a testator designates in his will
8. Conviction of a crime which carries with it the penalty
the person or persons who are to succeed him in his
of civil interdiction
property and transmissible rights and obligations.

Disinheriting spouse
Legitime
1. When the spouse has been convicted of an attempt
Part of the testator’s property which he cannot dispose of
against the life of the testator, his or her descendants,
because the law has reserved it for compulsory heirs.
or ascendants;
Legitimate Legitimate Illegitimate 2. When the spouse has accused the testator of a crime
Surviving Free
Children/ Parents/ Children/ for which the law prescribes imprisonment for six years
Spouse Portion
Descendant Ascendant Descendant or more, and the accusation has been found to be false;
same as
the 1/2 the 3. When the spouse by fraud, violence, intimidation, or
legitime legitime of undue influence causes the testator to make a will or to
a 1/2 excluded varies
of a a legitimate change one already made;
legitimate child
4. When the spouse has given cause for legal separation
child
none none none 5. When the spouse has given grounds for the loss of
b 1/2 1/2
surviving surviving surviving parental authority;
none none 6. Unjustifiable refusal to support the children or the
c 1/2 1/4 1/4
surviving surviving
other spouse.
none none none
d 1/2 1/2
surviving surviving surviving
none none
e 1/3 1/3 1/3
surviving surviving LEGAL OR INTESTATE SUCCESSION

If a person dies without leaving a will, the person is said to

have died intestate, a status known as intestacy. In this
Disinheritance case, the government provides a default estate plan under
which the decedent's estate is disposed.
Disinheritance of children and descendants
1. If a person dies without a will, or with a void will, or
1. When a child or descendant has been found guilty of an one which has subsequently lost its validity.
attempt against the life of the testator, his or her 2. When the will does not institute an heir to or dispose of
spouse, descendants or ascendants all the property belonging to the testator. In such case,
2. When a child or descendant has accused the testator of legal succession shall take place only with respect to
a crime for which the law prescribes imprisonment for the property of which the testator has not disposed;
six years or more, if the accusation has been found 3. If the suspensive condition attached to the institution
groundless; of heir does not happen or is not fulfilled, or if the heir
3. When a child or descendant has been convicted of dies before the testator, or repudiates the inheritance,
adultery or concubinage, with the spouse of the there being no substitution, and no right of accretion
testator; takes place;
4. When a child or descendant by fraud, violence, 4. When the heir instituted is incapable of succeeding,
intimidation, or undue influence causes the testator to except in cases provided in the Civil Code.
make a will or to change one already made
5. A refusal without justifiable cause to support the
parent or ascendant who disinherits such child or
CONSANGUINITY
descendant;
6. Maltreatment of the testator by word or deed, by the - The relation of persons descending from the same
child or descendant; stock or common ancestor.
- Known as blood relatives, related by blood or Gross Estate is allowed deductions under the tax law.
consanguinity
Net Taxable Estate is the basis of the estate tax to be
- May be lineal or collateral
imposed.
Lineal Consanguinity
ESTATE TAX
- May be descending or ascending
- Is the tax on the right to transmit property at death and
- Subsists between persons of whom one is descended in
on certain transfers which are made by law the
a direct line from the other
equivalent of testamentary dispositions.
- Not a tax on the property, transferor or transferee.
- An excise tax or privilege tax and its object is to tax the
Collateral Consanguinity
shifting of economic benefits and enjoyment of
- Subsists between persons who have the same property from the dead to the living.
ancestors but who not descend (or ascend) one from
the other.

LAW THAT GOVERNS THE IMPOSITION OF ESTATE TAX

Affinity
1. Estate taxation is governed by the statute in force at
- Connection existing in consequence of a marriage
the time of death of the decedent.
between each of the married spouse and the kindred of
2. Estate tax accrues as of the death of the decedent. The
the other.
accrual of the tax is distinct from the obligation to pay
the same.
3. Succession takes place upon the death of the decedent.
Right of Representation The right of the State to tax the privilege to transmit
Representation is a right created by fiction of law. the estate vests instantly upon death.
4. The tax rates and procedures prescribed under R.A.
The right of representation takes place in the direct 10963 or The Tax Reform for Acceleration and Inclusion
descending line but never in the ascending. Law (TRAIN Law) and Section 3 of Revenue Regulations
12-2018 shall govern the estate of the decedent who
dies on or after January 1, 2018. For estate taxes falling
Full Blood due or have accrued beginning Jan. 1, 1998 up to Dec.
31, 2017, the tax rates prescribed under R.A. 8424 or
Persons who have the same father and the same mother.
The Tax Reform Act of 1997 shall apply.
Half Blood

Persons who have the same father but not the same
mother and vice versa.
(1) Benefit-received Theory
- Recognizes the role of the State in the distribution of
Order of Intestate Succession the estate of the decedent to the heirs.
(2) Privilege Theory or State Partnership Theory
(1) Legitimate children or descendants - Inheritance is a privilege granted by the State, it is but
(2) Legitimate parents or ascendants righteous that the State collect its share
(3) Illegitimate children or descendants (3) Ability to Pay Theory
(4) Surviving spouse - The inheritance they received are able and capable the
(5) Brothers and sisters, nephews, and nieces taxes due the State.
(6) Other collateral relatives the 5th degree (4) Redistribution of Wealth Theory
(7) State
- Reduces the property received by the heirs through 3. Shares, obligations or bonds issued by any foreign
taxes hence there is a more equitable distribution of corporation 85% of the business of which is located in
wealth in the society. the Philippines;
4. Shares, obligations, or bonds issued by any foreign
corporation if such shares, obligations or bonds have
acquired a business situs in the Philippines; and
5. Shares or rights in any partnership, business or industry
GROSS ESTATE established in the Philippines.
- Includes any right to income that had accrued but had
not yet been received as the date of the decedent’s
death. Valuation of Gross Estate

1. Real Property
 FMV (zonal value) as determined by the
Resident Citizen, Non-Resident Citizen and Resident Alien Commissioner
Decedents  FMV as shown in the schedule of values fixed by the
1. a. Tangible Personal Property provincial and city assessors, whichever is higher.
b. Intangible Personal Property
2. Real or Immovable Property 2. Shares of stock
3. Taxable Transfers  Unlisted Shares
a. Transfer in contemplation of death  Common – book value
 The thought of death is the motivating factor  Preferred – par value
for the transfer  Listed Shares (in the stock exchange) – arithmetic
mean between the highest and the lowest
b. Revocable Transfer quotation
 Transfer by trust
 Proceeds of Life Insurance – insurance is a 3. Right to usufruct, use or habitation, annuity
contract of protection against natural risk such  Value shall be determined taking into account the
as death. probable life

c. Transfer under a general power of appointment 4. Units of participation

 Power of Appointment – the right to designate  Bid price
the person or persons who will succeed to the
property of a prior decedent.
 Donor of the power – creates the power of
appointment DEDUCTIONS FROM GROSS ESTATE
 Donee of the power – given the right to
exercise the power Resident Citizen, Non-Resident Citizen and Resident Alien
 Appointed Property – property being Decedents – determined by deducting from the value of the
transferred gross estate the ff:
 Limited or special power of appointment –
1. Standard Deduction equivalent to five million pesos
authorizes the done of the power to appoint
(P5,000,000). (Discussed after Family Home for
illustration purposes.)
2. Claims Against the Estate
Non-Resident Alien Decedent 3. Claims of the Deceased Against Insolvent Persons
1. Franchise which must be exercised in the Philippines; 4. Unpaid Mortgages, Taxes and Casualty Losses.
2. Shares, obligations, or bonds issued by any corporation The deduction herein allowed in the case of claims
or Sociedad anonima organized or constituted in the against the estate, unpaid mortgages or any
Philippines in accordance with its laws; indebtedness shall, when founded upon a promise or
 agreement, be limited to the extent that they were
contracted bona fide and for an adequate and full
consideration in money or money's worth.
5. Property Previously Taxed
6. Transfers for Public Use
7. Family Home maximum deduction of ten million pesos
(P10,000,000)
8. Amount Received by Heirs under Republic Act No. 4917
9. Net Share of the Surviving Spouse in the Conjugal
Partnership or Community Property. (To be discussed
in Chapters 7 and 8.)

Non-Resident Alien Decedents - shall be determined by

deducting from the value of the gross estate situated in the
Philippines at the time of death the following:

1. Standard Deduction (P500,000) equivalent to five

hundred thousand pesos
2. Losses and Indebtedness subject to limitation
3. Property Previously Taxed
4. Transfers for Public Use
5. Net Share of the Surviving Spouse in the Conjugal
Partnership or Community Property