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
Causes of Legal Succession or Intestacy
taxpayer
 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
a. When the heir instituted is not capable of
Nature of Transfer Taxes succeeding
b. Non-fulfillment of the suspensive
 Transfer tax is an excise tax. condition attached to the institution heir
- the privilege of the transferor to gratuitously c. Preterition (omission in the testator’s will
transfer property or rights of one, some or all of the compulsory heirs

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 in the direct line which has the effect of
annulling the institution of heir).
d. Fulfillment of “resolutory condition’.
e. Expiration of term or period of institution.
f. Non-compliance or impossibility of
compliance with the will.
g. Repudiation of the instituted heir.
Elements of Succession b. Voluntary heirs – those instituted by the testator
in his will to succeed to the inheritance of the
1. Decedent – a deceased person; the person portion thereof of which the testator can freely
whose transmitted through succession; if he left a dispose
will, he is called a testator
 Free portion – portion of value left in the
 Executor - a person designated in the last estate after deducting the legitime of the
will and testament to carry out the compulsory heirs
provisions of the decedent's will; taking care
of the decedent’s estate c. Legal or intestate heirs - those who succeed to
 Administrator - a person appointed by the the estate of the decedent by operation of law
court and performs the same duty, in lieu of
Order of Intestate Succession
an executor
1. Legitimate children/descendants
2. Inheritance (Estate) - include all the property,
2. Legitimate parents/ascendants
rights and obligations of person which are not
3. Illegitimate children/descendants
extinguished by death and all which have accrued
4. Surviving spouse
thereto since the opening of succession
5. Brothers and sisters, nephews, and
3. Successor or Heir - a person who is called to nieces
the succession either the provision of a will or by 6. Other collateral relatives within the
operation of law 5th degree
7. State of the government
 Devisees and legatees - persons to whom
gifts of real and personal property are Composition of Gross Estate
respectively given by VIRTUE OF A WILL
 Legitime - part of a testator's property
a. Compulsory heirs - those who succeed by force which he cannot dispose of because the law
of law to some portion of the inheritance, in an has reserved it for certain heirs
amount predetermined by law
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)
a. 3. Concurring – those who succeed
together with the primary or compulsory
heirs (i.e. illegitimate children and Collateral Relatives
descendant and surviving spouses)
 Consanguinity - the relation of persons
descending from the same stock or
common ancestors; related by blood or
consanguinity
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  Lineal consanguinity - may be - the persons prohibited by law to make a will are
descending or ascending; subsists those BELOW 18 years old and those who are
between persons of whom one is NOT OF SOUND MIND at the time of its execution
descended in a direct line from the
- burden of proof: who opposes the probate of the
other
will
 Collateral consanguinity - which
subsists between persons who have - during lucid interval: valid will
the same ancestors, but who not
descend (or ascend) one from the Kinds of Wills
other 1. Notarial or Ordinary or Attested Will (Art. 804
 Affinity - the connection – 808 of the New Civil Code)
existing in consequence of a
marriage between each of Requisites for a Valid Notarial Will
the married spouse and the a. It must be in writing and executed in
kindred of the other a language or dialect known to the
testator.
b. It must be subscribed at the end
thereof by the testator himself or by
the: testator's name written by some
other person in his presence and by
his express direction.
c. It must be attested and subscribed
by three or more credible witnesses
in the presence of the testator and of
one another.
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
Wills which any disposition made in the original
- an act whereby to a person is permitted with the will is explained, added to or altered. In
formalities prescribed by law, to control to a certain order that a codicil may be effective, it shall
degree of his estate to take effect after his death be executed as in the case of a will.
(Arts.825 and 826 CC).

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  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,
without the express direction of the testator, the will
and signature of the testator
may still be established, and the estate distributed
explicitly declare that the will and the
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
the institution of heirs as it may prejudice the
- as long as it is done where he resides
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:
1. Effected only through a valid will
1) By implication of law 2. For a cause expressly stated by law
3. Cause must be stated in the will itself
2) By some will, codicil, or other writing executed as 4. Cause must be certain and true
provided in case of wills 5. Unconditional
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6. Total (there is no partial disinheritance) 2. Parents/Ascendants:
7. The heir disinherited must be designated in such
a. When the parents have abandoned their children
a manner that there can be no doubt as to his
or induced their daughters to live a corrupt or
identity
immoral life, or attempted against their virtue;
The devises and legacies and other testamentary
b. When the parent or ascendant has been
dispositions shall be valid to such extent as will not
convicted of adultery or concubinage with the
impair the legitime. The children and descendants
spouse of the testator;
of the person disinherited shall take his or her place
and shall preserve the rights of compulsory heirs c. Loss of parental authority for causes specified in
with respect to the legitime; but the disinherited the Civil Code; and
parent shall not have the usufruct or administration
of the property which constitutes the legitime. d. Attempt by one of the parents against the life of
the other, unless there has been reconciliation
ART. 856 CC between them.
"A subsequent reconciliation between the offender 3. Spouse:
and the offended person deprives the latter of the
right to disinherit, and renders ineffectual any a. When the spouse has given cause for legal
disinheritance that may have been made." separation;

A. Common Causes for Disinheritance b. When the spouse has given grounds for loss of
parental authority.
1. When the heir has been found guilty of an
attempt against the life of the testator, his/her Rights of Representation
descendants or ascendants, and spouse in case of - a "right" created by fiction of law where the
children and parents; representative is raised to the place and degree of
2. When the heir has accused the testator of a the person represented, and acquires the rights
crime for which the law prescribes imprisonment for which the latter would have if he were living or
6 years or more, if the accusation has been found could have inherited. Representation may arise
groundless; either because of:

3. When the heir by fraud, violence, intimidation or 1. Death

undue influence causes the testator to make a will 2. Incapacity
or to change one already made; 3. Disinheritance

4. Refusal without justifiable cause to support the The representative(s) shall not inherit more than
testator who disinherits such heir. what the person they represent would inherit, if he
were living or could inherit (Art. 974). The law
B. Peculiar Causes for Disinheritance further provides that "representation" is not
1. Children/Descendants: available to:
1. As to compulsory heirs: In case of repudiation,
a. When the child or descendant has been
the one who repudiates his inheritance cannot be
convicted of adultery or concubinage with the
represented. Their own heirs inherit in their own
spouse of the testator;
right.
b. Maltreatment of the testator by word or deed by
2. As to voluntary heirs
the child/descendant;
3. Voluntary heirs, legatees and devisees who
c. When the child or descendant leads a
dishonorable or disgraceful life; a. Predecease the testator; or
d. When the child or descendant is convicted of a b. Renounce the inheritance cannot be represented
crime which carries with it a penalty of civil by their own heirs, with respect to their supposed
interdiction. inheritance.
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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