Chapter 1 : Succession and Transfer Tax

Under Civil Code Ownership

:

thru :
TRANSFER TAXES
may be acquired
① Occupation
Imposed upon the gratuitous disposition of PRI properties/rights
& Intellectual creation
⑤ Law

① Donation
⑤ Tradition
GRATUITOUS TRANSFER
Contract
⑧ Neither imposes burden nor requires consideration from transferee/recipient
⑦ prescription
⑧ SUCCESSION Essentially Donations -
bes transfer of ownership is Free
absence of Financial considerations

TYPES OF TRANSFER TAXES

.
1 Estate Tax Donation morts at the time of DEAM of the Conor
-

causa
-

.
2 Donor's Tax Donation inter viros during the lifetime of both donor/donce
- -

SUCCESSION
CAUSA
(Property Rights Obligations)
, ,
-

PRO
MORTS

A mode of acquisition by virtue of which , the Property Rights and Obligations to the extent of the value of inheritance,
,

of a
person are transmitted th his death to another / others either by will / operation of law
-

Decedent's Estate
Inheritance
To be acquired/inherited by the Heir(s)

·
roperty Property Includes all PRO of a
person not extinguished
by his death
Rights Rights

Obligations Obligations
Right of Succession
Transmitted from the moment of death of decedent,

Cut-off Period: The amount of obligation acquiredinherited by notwithstanding postponement of actual possession I
As of te date of death of decedent an heir should not be more than the combined
enjoyment of estate by beneficiary
value of the properties and rights inherited.

NATURE OF TRANSFER TAXES

Transfer tax Excise tax privilege tax imposed act of passing ownership of property G not the value of property I rights
: - >
or on

subj matter of)= Privilege of the transferor to gratuitously transfer property/Rights (inter vos or morts causal
Altho amount
, of transfer tax is based on net estate/ gifts ,
it shall not be construed as property tax

LAW GOVERNS IMPOSITION OF ESTATE TAX

Governed by the Statute of Force at the time of death of decedent
succession takes place G right of state to
tax the privilege to transmit estate
rest instant
Estate Tax =
accrues as the date of death of decedent upon death

accrual of tax is distinct obli to pay the

=

from same

NOTE : under TRAIN LAW , Filing of estate Tay Return is within one (1) year From death
KINDS OF SUCCESSION
1 Testamentary/testate succession -

results from designation of an heir ,

made in a WILL executed in the form prescribed by Law

Legal/Infestate succession affected by operations of law bes decedent not execute will VOID
-

2 or It is

3 MixedSuccession affected partly by "will" and partly by operation of law

-

CAUSES OF LEGAL SUCCESSION OR INTESTACY 4

. Other Causes
1 If a person dies who a will or wI void will or has subsequently lost its validity
capable
,

heir instituted
,
a =
not of
2 When the "WILL" does not institute an heir.
succeeding
3 Partial institution of heir-intestacy takes place as to undisposed portion . nonfulfillment of suspensive
b
condition attached to institution
of heir

ELEMENTS OF SUCCESSION .
c Preteration

& Fulfillment of condition

Resolutory
1 Decedent-person whose property is transmitted the succession ,
whether or not he left a will
.
e Expiration of term/period of
If he left a will =
called TESTATOR
institution
f .

Noncompliance/ impossibility
w/ the will
of compliance
Executor -

person designated in last willEntestament to carry out provisions of decedent's will

also performs 9 .

Repudiation of instituted heir

fiduciary duty taking of the decedent's estate prior
-

a e g
. care

To final disposition to the heirs

Administrator -

person appointed by court a performs same duty in lieu of executor If the latter : a refused to accept appointment,
b .

Failed to quality under the law ,

c .
last willE testament did not appoint one

2 Inheritance (Estate) -

include all PRO not extinguished by death & accrued since opening of succession

Rights purely personal NOT TRANSMISSIBLE for they extinguished by death

-
= :
are

3 Successor/heir) -

person called to the succession by will/provision of law

Devisees and legatees= persons to whom gifts of real & personal property are respectively given by virtue of a will

Compulsory Heirs who succeed by Force of law to some portion of inheritance in an amount predetermined by Law
-

known as LEGITIME
cannot be deprived by testator of their legitime except by disinheritance properly affected
-

KINDS OF COMPULSORY HEIRS

1 Primary -

who have precedence over a exclude other compulsory heirs (legitimate children & descendants (

2 Secondary
-

who succeed only in the absence of primary compulsory heirs (legitimate parents & ascendants (
3 Concurring
-

who succeed together wh primary or

secondary compulsory heirs (illegitimate children & descendants & surviving spouse)

COMPULSORY HEIRS NOTE : Brothers and sisters are neither compulsory

Primary
Compulsory SecondaryCompulsory
* Legitimate children and their D. Legitimate parents and legitimate
heirs nor strangers
legitimate descendants. ascendants. (They inherit only in However , they may be VOLUTARY HERS
default of "A")
Surviving spouse E Illegitimate parents (no other
B
.

Illegitimate. children and their descendants) They inherit only in

.

descendants ,
legitimate or default of "A" & "C"

illegitimate
 Voluntary Heirs instituted by testator in his will to succeed to portion which he freely dispose
-

a can

Free portion -

value left in estate after deducting legitime of compulsory heirs

Legal Intestate Heirs who succeed to estate of decedent by operation of law (who valid will entirely disposed by will
-

or not

COMPOSITION OF GROSS ESTATE ORDER OF PRIORITY

Decedent's Estate To be inherited by : 1
Legitimate children or descendants

is J
Legitimate parents or ascendants

·
compulsory
Heirs .
.
2

This portion estate is reserved by law

of the .
3
illegitimate children on descendants
specifically compulsory heirs regardless of whether
to ,
LEGITIME
a cs-will and testament was prepared
17/ Surviving spouse
5 . Brothers and sisters , nephews and nieces

Compulsory Heirs andor Voluntary Heirs. .

6 Other collateral relatives within the 5th degree
FREE PORTION
li e
.
.,
25 % ofth estate) Asprovidedintheastwillandtestamentnee estate State or the government
shall be distributed to "intestate heirs" based in
the order of priority
NOTE :
distribution of free portion in intestate succession is based on order

of priority bes in every inheritance relative nearest in degree excludes

,

more distant ones

, saving right of representation when it properly
a

takes place .

COLLATERAL RELATIVES
Consanguinity-relation of persons descending from same stock I common ancestors
-

These persons are known as BLOOD RELATIVES /related by blood/consanguinity (

It
may be LINEAR COLLATERAL
-

OR

-N
CONSANGUINITY EA R
COLLATERAL CONSANGUINITY

may be ascending or descending ,

is that which subsists which subsists between persons who have the same
between persons of whom one is descended in a direct line ancestors but not descend (or ascend) one from the
,

from the other. other .

NOTE : Proximity of relationship is

determined by the no . of

generations

Each generations forms a

degree
WILLS
An act whereby a person is permitted ,
wh formalities prescribed by law , to control to certain degree The disposition of his estate Take
to effect

after his death

A document whereby a (TESTATOR) disposes
person ,
his properties/estate upon his death

Making of will strictly personal cannot be left discretion of 3rd person

:
in
-

Law presumes= is
every person
·

accomplished thru instrumentality agent/attorney

-

of sound mind
Prohibited to make a will >
-

below 18 yo old G who are not sound mind at the time

Supervening incapacity NOT
·
:

ofIts execution invalidate a will

WILL
may make
·
Married woman

KINDS OF WILLS who

dispose
consent of husband/ may
of all her :

1 Notarial/Ordinary/ Attested Will executed wh Formalities prescribed

in accordance Q separate property
by Art 884-808 of New Civil Code
.
share of conjugal partnership

or/s absolute community property

Requisities for Valid Notarial Will

Writing Language/dialect
and known to
jestator
subscribed at the end by testator/testator's name written by other person in his presence wh his express direction

Attested & subscribed by 39 credible witnesses in presence ofTestator & one another

FF disqualified from being witness to a WILL Codicil

supplement / addition to will
-

a
any person not domiciled in PH
-

made after execution of will

who have been convicted of falsification of does , perjury/false testimony annexed to be part by which any
-

disposition made to
orig will is
:

.
2 Holographic Will must be entirely written , dated G signed by hand of testator
,
l altered
Explained added to
,

may be made in lout of PH & need not be witnessed -

To be effective :
executed as

in of WILL
in case of insertion cancellation erasure or alteration testator case
=
, ,

must authenticate by his full signature

Probate of a Will
-

court procedure to proved will to

Probate of a holographic Will be VALID or INVALID

atleast one witness to knows the handwriting & signature of

testator explicitly declare that will & signature
are in handwriting of the testator

3 Foreign Wills will of an alien in abroad produces effect in PH if : made with formalities prescribed by law of the place he resides
according to formalities observed in his country
in conformity wh those which PH cull code prescribed

will made in PH by citicent subs to another country : executed in accordance wh law of the country of which
shall have same effect as if executed according he is a citizen, subj which might be proved a allowed

To the laws of PH by the law of his own country

NOTE : When a Filipino is in Foreign country ,

he is authorized to make a will in any of the Forms established by law
of the country in which he may be .
such will may be probated in the PH
REVOCATION OF WILLS AND TESTAMENTARY DISPOSITIONS
A will may be revoked by testator at any time before death, any waiver I restriction
Modes of Revoking

Y
of this right is VOID
① implication of Law

②
Some will codicil other
writing incase of will
, ,
A revocation done outside PH by person who domicile in PH VALID,
=

③ burning tearing cancelling or obliterating

when done acc to law of place made I place testator domicile
, ,

revoking it by testator/other
.

w/ intention of
s at the time G If revocation takes place in PH when acc with
by other who direction of testator
.
- If =

still be established if content G provisions of new cull code .

may
due execution unauthorized destruction
,
~

are according to the riles of court

Art 837
m

NOTE :
Subsequent will which do not revoke previous ones ,
annul only dispositions in prior wills as are "If after making a will , the

inconsistent wh in subsequent will

testator makes 2nd will
expressly
or contrary 1st , the revocation
revoking the

Revocation in subsequent will takes effect even if new will should become inoperative of the 2nd will does not revive
the 1st will , which can be revived
due to incapacity of heirs , devisees/legatees or their renunciation .

will or codicil"
only by another
Revocation of will based on False/Illegal cause
= NULL GVOID

INSTITUTION OF HEIRS car+ 840)

an act by virtue of which a testator designates in his will the person/s who are to succeed him in his PRO
a will shall be VALID even tho :
.
1 It should not contain an institution of heirs
.
2 institution should not comprise entire estate
Testamentary dispositions made acc wh law

shall be complied w/ remainder of the estate .

3
person instituted should not accept inheritance / incapacitated to succeed
shall be pass to legal heirs

DISINHERITANCE
A testamentary disposition by which compulsory heirs is deprived of ,
or excluded from inheritance to which he has a right
Not applicable to voluntary heirs
can be affected only thru a will wherein legal cause shall be specified
Burden of proving truth of cause rest upon other heirs of testator ,
If denied by disinherited heir

Ground/s causels of disinheritance shall be limited

Requisities for Disinheritance
or

to those expressly stated by law

1 Effected only thre VALID will

For expressly stated by law
Art 858
2 cause

3 Cause must be stated in will itself

4 Cause must be certain and true Disinheritance who specification of cause / cause is not proven/
s Unconditional not one of those Forth
set in civil code
6 Total (no partial disinheritance) shall ANNUL The institution of heirs insofar as it

7 Heir disinherited must be designated in manner may prejudice the person disinherited

that there can be no doubt as to his identity

NOTE :
Devises and legacies and other testamentary disposition shall be VALID to extent as will NOT impair legitime
Children and descendants of the person disinherited shall take placeG shall preserve the rights of

compulsory heirs w/ respect to legitime

BUT: disinherited parent shall not have usufruct/administration of the property which constitute legitime

Art 856
COMMON CAUSES FOR DISINHERITANCEhidnendescendantse
"A subsequent reconcilation
between offender and offended
.
1 Heir has been found guilty of an attempt against life of testator ,
his descendants ,

person deprives the latter of the ascendants & spouse in case of children G parents
right to disinherit and renders Heir has accused testator of crime which law prescribes imprisonment for 6
,
2 years
ineffectual any disinheritance that
"

may have been made or more, If accusation has been found groundless
3 Heir by Fraud ,
violence , intimidation ,
or undue influence causes testator to make a will
to made
or
change one already
4 Refusal who justificable cause to support testator who disinherits such heirs

PECULIAR CAUSES FOR DISINHERITANCE

1 Children/Descendants a. when child / descendants has been convicted of adultery/concubinage wh spouse of testator
b
. Maltreatment of testator by word I deed by the child/descendant
c .
When the child I descendant leads a dishonorableI disgraceful life
d .
When the child / descendant is convicted of crime which carries with it a penalty of civil interdiction

2 Parents/ Ascendants a . When parents have abandoned their children /induced their daughters to live a corrupt /immoral life
or attempted against their virtue
b . When parent or ascendant has been convicted of adultery or concubinage wh the spouse of
testator
c Loss of parental authorityFor cause specified in Civil Code
.
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

RIGHT OF REPRESENTATION Death Incapacity Disinheritance

Right created by fiction of law where the representative is raised to the placed degree of a person represented ,
and acquires
the rights which latter would have inherited. [DID]
Representation may arise because of 1. .
Death 2 .

Incapacity .
3 Disinheritance
Takes place only inFavor of children of
If they concur w/ atleast 1 uncle/aunt
brothers/sisters ,
full/half blood & only
Representation NOT AVAIL TO :
.
1
Compulsory heirs :
In case of repudiation ,

when the decedent does not have descendants who repudiates his inheritance cannot be
applies only one

represented. Their own heirs inherit in their

nephews/nieces already alive when auntluncle died can inherit by representing own rights
their predeceased parents .
2 Voluntary heirs

illegitimate nephews /nieces Prohibited from inheriting from relatives Voluntary heirs legatees& devisees who :
= .
3 ,

9 Predecease the testator or

Grandnephews/nieces in collateral line cannot inherit by right of representation .
b Renounce inheritance cannot b represented by
their own heirs , w/ respect to supposed inheritance