CHAPTER 01: Succession and Transfer Taxes

Under the Art. 1712 of the Civil Code (CC), The Law that Governs the Imposition of Estate
ownership may be acquired by, Tax
1. Occupation
- accrues as the date of death of the decedent and
2. Intellectual creation
the accrual of the tax is distinct from the obligation
3. Law
to pay the same
4. Donation
5. Contract - under the TRAIN Law, the filing of estate tax
6. Prescription return is within one (1) year from date of death
7. Succession
Kinds of Succession (Art. 778 CC)
Types of Transfer
1. Testamentary or testate succession - results
 Gratuitous transfer – subject to transfer from the designation of an heir, MADE IN A WILL
taxes executed in the form prescribed by law
 Onerous transfer – subject to business
taxes 2. Legal or intestate succession - which is
effected by operations of law (based on the
Types of Transfer Taxes provisions of the civil code pertaining to
succession) since the DECEDENT DID NOT
1. Estate tax: donation mortis causa – at the
EXECUTE A WILL or - if the last will and testament
time of the death of the donor
executed by him is void
 accrual: right upon death of
decedent 3. Mixed succession - effected PARTLY by “will”
 due date: within one year from death and partly by operation of law
 estate: juridical person – the
taxpayer Causes of Legal Succession or Intestacy
 the personal obligation to file and 1. If a person dies without a will, or with a void will,
pay the estate tax: or one which has subsequently lost its validity.
Order of Priority
a. the administrator or executor RULE: The last will and testament shall be
b. any of the heir(s) executed in a language or dialect known to
2. Donor’s tax: donation inter vivos – during the testator to be considered valid.
the lifetime of both the donor and the done
2. When the “Will” does not institute an heir.
Succession
REASON: No heir was identified in the will.
- a mode of acquisition by virtue of which, the
3. Partial institution of heir. Consequently, intestacy
Property, Rights and Obligations to the EXTENT
takes place as to the undisposed portion
OF THE VALUE OF THE INHERITANCE, of a
person are transmitted through his death to another  Partial institution of heir means the entire
or others either by HIS WILL or BY OPERATION estate was not disposed of in the last will
OF LAW and testament.
- the rights to the succession are transmitted from 4. Other causes of legal succession or intestacy
the MOMENT OF DEATH of the decedent
Nature of Transfer Taxes
 Transfer tax is an excise tax.
- the privilege of the transferor to gratuitously
transfer property or rights

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 a. When the heir instituted is not capable of
succeeding
b. Non-fulfillment of the suspensive
condition attached to the institution heir
c. Preterition (omission in the testator’s will
of one, some or all of the compulsory heirs
in the direct line which has the effect of
annulling the institution of heir).
a. 3. Concurring – those who succeed
d. Fulfillment of “resolutory condition’.
together with the primary or compulsory
e. Expiration of term or period of institution.
heirs (i.e. illegitimate children and
f. Non-compliance or impossibility of
descendant and surviving spouses)
compliance with the will.
g. Repudiation of the instituted heir.
Elements of Succession
1. Decedent – a deceased person; the person b. Voluntary heirs – those instituted by the testator
whose transmitted through succession; if he left a in his will to succeed to the inheritance of the
will, he is called a testator portion thereof of which the testator can freely
dispose
 Executor - a person designated in the last
will and testament to carry out the  Free portion – portion of value left in the
provisions of the decedent's will; taking care estate after deducting the legitime of the
of the decedent’s estate compulsory heirs
 Administrator - a person appointed by the
court and performs the same duty, in lieu of c. Legal or intestate heirs - those who succeed to
an executor the estate of the decedent by operation of law

2. Inheritance (Estate) - include all the property, Order of Intestate Succession

rights and obligations of person which are not 1. Legitimate children/descendants
extinguished by death and all which have accrued 2. Legitimate parents/ascendants
thereto since the opening of succession 3. Illegitimate children/descendants
3. Successor or Heir - a person who is called to 4. Surviving spouse
the succession either the provision of a will or by 5. Brothers and sisters, nephews, and
operation of law nieces
6. Other collateral relatives within the
 Devisees and legatees - persons to whom 5th degree
gifts of real and personal property are 7. State of the government
respectively given by VIRTUE OF A WILL
Composition of Gross Estate
a. Compulsory heirs - those who succeed by force
of law to some portion of the inheritance, in an  Legitime - part of a testator's property
amount predetermined by law which he cannot dispose of because the law
has reserved it for certain heirs
a. 1. Primary - those who have precedence
over and exclude other compulsory heirs (i-
e., legitimate children and descendants)
a. 2. Secondary – those who succeed only
in the absence of the primary compulsory
heirs; (i.e. legitimate parents and
ascendants)

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 Wills
- an act whereby to a person is permitted with the
formalities prescribed by law, to control to a certain
degree of his estate to take effect after his death
- the persons prohibited by law to make a will are
those BELOW 18 years old and those who are
NOT OF SOUND MIND at the time of its execution
- burden of proof: who opposes the probate of the
will
Collateral Relatives - during lucid interval: valid will
 Consanguinity - the relation of persons Kinds of Wills
descending from the same stock or
common ancestors; related by blood or 1. Notarial or Ordinary or Attested Will (Art. 804
consanguinity – 808 of the New Civil Code)
 Lineal consanguinity - may be Requisites for a Valid Notarial Will
descending or ascending; subsists
between persons of whom one is a. It must be in writing and executed in
descended in a direct line from the a language or dialect known to the
other testator.
 Collateral consanguinity - which b. It must be subscribed at the end
subsists between persons who have thereof by the testator himself or by
the same ancestors, but who not the: testator's name written by some
descend (or ascend) one from the other person in his presence and by
other his express direction.
 Affinity - the connection c. It must be attested and subscribed
existing in consequence of a by three or more credible witnesses
marriage between each of in the presence of the testator and of
the married spouse and the one another.
kindred of the other
The following are disqualified from being witnesses
to a will (Art. 821 CC):
 Any person not domiciled in the Philippines.
 Those who have been convicted of
falsification of a document, perjury, or false
testimony.
2. Holographic Will - a written will which must be
entirely written, dated and signed by the hand of
the testator himself. It subject to no other form and
it may be made in or out of the Philippines and
need not be witnessed (Art. 811 CC). In case of
any insertion, cancellation, erasure or alteration in a
holographic will, the testator must authenticate the
same by his full signature.
 Codicil - a supplement or addition to a will,
made after the execution of a will and
annexed to be taken as a part thereof, by
which any disposition made in the original

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 will is explained, added to or altered. In 1) By implication of law
order that a codicil may be effective, it shall
2) By some will, codicil, or other writing executed as
be executed as in the case of a will.
provided in case of wills
(Arts.825 and 826 CC).
 Probate of a will - a court procedure by 3) By burning, tearing, cancelling, or obliterating the
which a will is proved to be valid or invalid. will with the intention of revoking it, by the testator
o In the probate of a holographic will, it himself, or by some other person in his presence,
shall be necessary that at least one and by his express direction. If burned, torn,
witness who knows the handwriting cancelled, or obliterated by some other person,
and signature of the testator without the express direction of the testator, the will
explicitly declare that the will and the may still be established, and the estate distributed
in accordance therewith, if sits contents, and due
signature are in the handwriting of
execution, and the fact of its unauthorized
the testator.
destruction, cancellation, or obliteration
o Intestate proceedings – the are established according to the Rules of Court.
proceedings in the absence of last
will - Article 837: original will -> another will: revocation
of original will -> another will: revival of original will
Foreign Wills
- Subsequent wills annul dispositions in prior wills
The will of an alien who is abroad produces effect that conflict with them, even if the new will becomes
in the Philippines if inoperative due to heirs' incapacity or renunciation.
Revocations based on false or illegal causes are
a. made with the formalities prescribed by the law null and void.
of the place in which he resides, or
Institution of heir
b. according to the formalities observed in his
country, or - an act by virtue of which testator designates in his
will the person or persons who are to succeed him
c. in conformity with those which the Philippine civil in his property and transmissible rights and
code prescribes obligations
When a Filipino is in a foreign country, he is - in such cases the testamentary dispositions made
authorized to make a will in any of the, forms in accordance with the law shall be complied with
established by the law of the country in which he and the remainder of the estate shall pass to the
may be. Such will may be probated in the legal heirs
Philippines (Art. 815 CC).
Disinheritance
Revocation of Wills and Testamentary
Dispositions - a testamentary disposition by which a compulsory
heir is deprived of, or excluded from the inheritance
- the testator can revoke his will any time before he to which he has a right. Disinheritance is not
dies applicable to voluntary heirs.
- any waiver or restriction of this right is void (Art. - can be effected only through a will therein the
828) legal cause shall be specified; otherwise, annuls
- as long as it is done where he resides the institution of heirs as it may prejudice the
person disinherited
- revocation is valid when:
- the burden of proving the truth of the cause for
 Philippines’ not testator’s domicile: without disinheritance shall rest upon the OTHER HEIRS
the PH OF THE TESTATOR, if the disinherited heir should
 Philippines’ testator’s domicile: within the deny it
PH
Requisites for Disinheritance:
Modes of Revoking A Will:

Made by: DVGRF

1. Effected only through a valid will c. When the child or descendant leads a
2. For a cause expressly stated by law dishonorable or disgraceful life;
3. Cause must be stated in the will itself
d. When the child or descendant is convicted of a
4. Cause must be certain and true
crime which carries with it a penalty of civil
5. Unconditional
interdiction.
6. Total (there is no partial disinheritance)
7. The heir disinherited must be designated in such 2. Parents/Ascendants:
a manner that there can be no doubt as to his
identity a. When the parents have abandoned their children
or induced their daughters to live a corrupt or
The devises and legacies and other testamentary immoral life, or attempted against their virtue;
dispositions shall be valid to such extent as will not
impair the legitime. The children and descendants b. When the parent or ascendant has been
of the person disinherited shall take his or her place convicted of adultery or concubinage with the
and shall preserve the rights of compulsory heirs spouse of the testator;
with respect to the legitime; but the disinherited c. Loss of parental authority for causes specified in
parent shall not have the usufruct or administration the Civil Code; and
of the property which constitutes the legitime.
d. Attempt by one of the parents against the life of
ART. 856 CC the other, unless there has been reconciliation
"A subsequent reconciliation between the offender between them.
and the offended person deprives the latter of the 3. Spouse:
right to disinherit, and renders ineffectual any
disinheritance that may have been made." a. When the spouse has given cause for legal
separation;
A. Common Causes for Disinheritance
b. When the spouse has given grounds for loss of
1. When the heir has been found guilty of an parental authority.
attempt against the life of the testator, his/her
descendants or ascendants, and spouse in case of Rights of Representation
children and parents;
- a "right" created by fiction of law where the
2. When the heir has accused the testator of a representative is raised to the place and degree of
crime for which the law prescribes imprisonment for the person represented, and acquires the rights
6 years or more, if the accusation has been found which the latter would have if he were living or
groundless; could have inherited. Representation may arise
either because of:
3. When the heir by fraud, violence, intimidation or
undue influence causes the testator to make a will 1. Death
or to change one already made; 2. Incapacity
3. Disinheritance
4. Refusal without justifiable cause to support the
testator who disinherits such heir. The representative(s) shall not inherit more than
what the person they represent would inherit, if he
B. Peculiar Causes for Disinheritance were living or could inherit (Art. 974). The law
1. Children/Descendants: further provides that "representation" is not
available to:
a. When the child or descendant has been
convicted of adultery or concubinage with the 1. As to compulsory heirs: In case of repudiation,
spouse of the testator; the one who repudiates his inheritance cannot be
represented. Their own heirs inherit in their own
b. Maltreatment of the testator by word or deed by right.
the child/descendant;
2. As to voluntary heirs

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3. Voluntary heirs, legatees and devisees who
a. Predecease the testator; or
b. Renounce the inheritance cannot be represented
by their own heirs, with respect to their supposed
inheritance.
The right of representation is granted to children of
brothers or sisters, if they agree with at least one
uncle or aunt, and only applies when the decedent
has no descendants. Illegitimate nephews and
nieces cannot inherit from relatives or
grandparents, and collateral line grandnephews
and grandnieces cannot.

Made by: DVGRF