SUCCESSION AND TRANSFER TAXES  amount of transfer tax is based on the net

estate or net gifts (NOT A PROPERTY TAX)

Ownership may be acquired through:  classified as an Estate Tax or privilege tax

(OILDTCPS) The Law that Governs the Imposition of Estate Tax

1. Occupation  Governed by the statute in force at the time of

2. Intellectual Creation death of the decedent
3. Law  Estate Tax accrues as the date of death of the
4. Donation decedent and the accrual of the tax is distinct
5. Tradition from the obligation to pay the same
6. Contract
Kinds of Succession
7. Prescription
8. Succession  Testamentary or testate succession –
designation of an heir, made in a will executed
Transfer Taxes and Succession Defined
in the form prescribed by law
 Transfer Taxes (Estate Tax or Donor’s Tax) –  Legal or intestate succession – effected by
imposed upon gratuitous disposition of private operations of law (provision on succession of
properties or rights the civil code) since there is an absence of will/
o Gratuitous Transfer – does not impose the will is void
burden nor requires any consideration  Mixed Succession – effected partly by “will” and
from the transferee or recipient; hence partly by operation of law
these are essentially donations.
 Donation Mortis Causa –
donation takes place at the time CAUSES OF LEGAL SUCCESSION OR INTESTACY
of death of the donor, SUBJECT
TO ESTATE TAX 1. If a person dies without a will, or with a void
 Donation Inter Vivos – donation will, or one which has subsequently lost its
takes place during the lifetime of validity
both the donor and the donee, 2. When the will does not institute an heir
SUBJECT TO DONOR’S TAX 3. Partial institution of heir. Consequently,
o Onerous Transfer – opposite of the intestacy takes as to the undisposed portion
former, the transferee gives 4. When the heir instituted is incapable of
consideration in return for the property succeeding
or rights received, subject to business 5. Other causes such as:
taxes a. Non fulfillment of suspensive condition
attached to the institution of an heir.
Succession b. Preterition
c. Fulfillment of resolutory condition
 Properties, rights and obligations (to the extent
d. Expiration of term or period of
of the value of the inheritance) not
institution
extinguished by his death are transmitted to
e. Non-compliance or impossibility of
another/others either by his will or operation of
compliance with the will
law
f. Repudiation of the instituted heir
 Heirs succeed immediately to all the property of
the deceased ancestor at the moment of death Elements of Succession
as completely as if the ancestor had executed
and delivered to them a deed before his death  Decedent – general term applied to a person
whose property is transmitted through
Nature of Transfer Taxes succession (with or without will); testator – with
a will
 Subject matter – the privilege of the transferor
o Executor – person designated in the last
to gratuitously transfer property or rights
will and testament to carry out the
whether mortis cause or inter vivos
 provisions of the decedent’ will; also has a  succeed to the estate of the
fiduciary responsibility to take care of the decedent by operation of law
decedent’s estate prior to final disposition
to the heirs COMPULSORY HEIRS
o Administrator – appointed by the court Primary Compulsory Secondary Compulsory
and performs the same duty as the A. Legitimate D. Legitimate Parents and
executor if the executor: children and their legitimate ascendants
 refuses to accept appointment legitimate (They inherit only in
 failed to qualify under the law descendants default of A)
 last will and testament did not B. Surviving Spouse E. Illegitimate parents (no
appoint one other descendants). (They
 Inheritance (Estate) – includes all the property, inherit only in default of A
rights and obligations of a person which are not & C)
extinguished by death and all which have C. Illegitimate
accrued thereto since the opening of succession children and their
o purely personal rights are not descendants (L or
transmissible – extinguished by death ILL)
 Successors – a person who is called to the
succession either by the provision of a will or by
operation of law Composition of Gross Estate
o devisees and legatees are persons to
Descendant’s Estate To be Inherited by
whom gifts of real and personal property
1. Legitime (75% of Compulsory Heirs
are respectively given by virtue of a will
the estate) (regardless of whether or
o CLASSIFICATION OF SUCCESSORS OR HEIRS
not a last will and
UNDER THE LAW
testament was prepared)
 Compulsory Heirs – succeed by force
2. Free Portion (25% Compulsory Heirs and/or
of law to some portion of the
of the estate) Voluntary Heirs
inheritance, in amount
 as provided in the
predetermined by law called legitime
last will and
 succeeds whether the testator
testament
likes it or not and can only be
deprived when disinheritance is  in the absence of
the former,
properly effected
distribute to the
 Kinds of Compulsory Heirs
intestate heirs
o Primary – those who have
based on the order
precedence over and
of intestate
exclude other compulsory
succession table
heirs
o Secondary – succeed only  Legitime – part of testator’s property which he
in the absence of primary cannot dispose of because the law has reserved
compulsory heirs it for the compulsory heirs; they cannot be
o Concurring – succeed deprived of this except through disinheritance
together with the primary  Free Portion – portion of the estate which the
or secondary compulsory testator can freely dispose to either:
heirs o Compulsory Heirs
 Voluntary Heirs – those instituted by o Voluntary Heirs (only when mentioned
the testator in his will to succeed in the will, in the absence of such, the
inheritance of the portion thereof of table below will be followed)
which the testator can freely dispose
ORDER OF INTESTATE SUCCESSION
 determined through the last
1. Legitimate children or descendants
will and testament
2. Legitimate parents or ascendants
 Legal or Intestate Heirs
3. Illegitimate children or descendants
 4. Surviving Spouse  may dispose by will her
5. Brothers and sisters, nephews and nieces separate property and her
6. Other collateral relatives within 5th degree share of the conjugal
7. State property
o Kinds of Wills
 Notarial or Ordinary or Attested
Collateral Relatives Will – executed in accordance
with the formalities prescribed
 Consanguinity – relation of persons descending in the civil code
from the same stock or common ancestors  Requisites:
(blood relatives) o In writing & executed in
o Lineal Consanguinity – may be a language/dialect
descending or ascending, subsists known to the testator
between persons of whom one is o Subscribed at the end
descended in a direct line from the thereof by the testator
other himself or by the
o Collateral Consanguinity – do not testator’s name written
ascend or descend from the other by some other person
Wills in his presence and by
his express direction
 a document whereby a person, called the o Attested & subscribed
testator disposes of his or her properties or by 3 or more credible
estate to take effect upon his death witnesses in the
 Making a will is a strictly personal act, cannot be presence of the
left in the discretion of an agent or attorney testator and of one
 All persons who are not expressly prohibited by another
law may make a will. Persons prohibited are as  Disqualified of being
follows: witnesses to a will:
o Those below 18 years old o persons not domiciled
o Those of unsound mind at the time of in the PH
its execution o persons convicted of
 Presumption – everyone is of falsification of a
sound mind, in the absence of document, perjury or
proof to the contrary false testimony
 Burden of Proof – person who  The will is valid if it is
opposes the probate of the will proved that the will was in
 If testator was publicly known fact executed and attested
to be insane (one month or less in substantial compliance
from the making of his will) – with all the requirements of
burden of proof that the will is the law
valid falls unto the person who  Holographic Will – written will
alleges that the will is valid, he which must be entirely written,
must prove that the will was dated and signed by the hand
made during a lucid interval of the testator himself
 Supervening Incapacity – does  may be made in or out of
not invalidate an effective will, PH
nor is the will of an incapable  need not be witnessed
validated by the supervening of  In case of any alteration,
capacity the testator must
 Married woman – may make authenticate the same by
will without consent of husband his full signature
and authority of the court  Codicil – supplement or
addition to a will, made
 after the execution of a will o NULL &VOID – revocation of will based
and annexed to be taken as on false cause
a part thereof
 Probate of A Will – a court Modes of Revoking A Will
procedure by which a will is
 Implication of Law
proved to be valid or invalid
 Will, Codicil or other writing executed
o For Holographic Will –
 Burning, tearing, cancelling or obliterating
at least one witness
the will with the intention of revoking it
who knows the
handwriting and
signature of the
testator explicitly Institution of an Heir
declare that the will
and signature are in the  testator designates in his will the person/s to
handwriting of the succeed him in his property and transmissible
testator explicitly rights & obligations
declare that the will  WILL IS VALID even in/if:
and signature are in the o the absence of an heir, or
handwriting of the o such institution should not comprise
testator the entire estate
o Intestate Proceeding – o the person instituted does not accept
proceedings in the the inheritance or is incapacitated to
absence of LW&T succeed
 in such cases, testamentary
Foreign Wills dispositions made in
accordance with the law will be
 the will of an alien who is abroad produces complied with and remainder
effect in PH if made with the formalities passes to legal heirs
prescribed by the law of the place in which he  Compulsory Heirs - can only be deprived of
resides, or according to the formalities
their legitime in consequence of disinheritance
observed in his country, or in conformity with
those stated in the civil code of PH

Revocation of Wills and Testamentary Dispositions Disinheritance

 Wills may be revoked at any time before the  a testamentary disposition by which a
testator’s death compulsory heir is deprived of, or excluded
 Revocation done outside the PH by a person from inheritance to which he has a right
who does not have PH as his domicile is valid  Voluntary Heirs – N/A
when done according to the law of the place  Requisites for Disinheritance
where the will was made or according the law o Effected only through a VALID WILL
of the place in which the testator had his o Cause EXPRESSLY STATED BY LAW
domicile o Cause MUST BE STATED IN WILL ITSELF
 Subsequent Wills – if they do not revoke the o Cause MUST BE CERTAIN & TRUE
previous ones in an express manner, annul only o UNCONDITIONAL
such dispositions in the prior wills as are o TOTAL
inconsistent with or contrary to those contained o DESIGNATED IN SUCH A MANNER THAT
in the latter wills THERE CAN BE NO DOUBT AS TO HIS
o revocations made in a subsequent will IDENTITY
shall take effect , even if the new will  Burden of Proof – rests upon the other heirs of
shall become inoperative by reason of the testator, if the disinherited heir shall deny it
the incapacity of the heirs, or by their  Disinheritance w/o specification of cause / for a
renunciation cause the truth of which (if contradicted) is not
proved / which is not one of those set forth in
 civil code, ANNULS the institution of heirs Right of Representation
insofar as it may prejudice the person
disinherited  Right created by fiction of law where the
 Devises and legacies – VALID to such extent as representative takes the place of the person
will not impair the legitime represented and acquires the rights which the
 Children & descendants takes the place of the latter would have if he were living or could have
person disinherited and shall preserve the rights inherited
of compulsory heirs with respect to the legitime  Arises because of:
o disinherited parent shall not have the o Death
usufruct /administration of the o Incapacity
property which constitutes the legitime o Disinheritance
 Representative shall not inherit more than what
the person would inherit – if he were living or
could have inherited
COMMON CAUSES FOR DISINHERITANCE of children or  Representation not available to:
descendants, parents or ascendants, and spouse: o Compulsory Heirs, in case of
When the heir: repudiation (the one who repudiates his
inheritance cannot be represented).
1. Has been found guilty of an attempt against the Their own heirs inherit their own right.
life of the testator, his/her o Voluntary Heirs, legatees or devisees
descendants/ascendants and spouse who:
2. Has accused the testator of a crime for which  Predecease the testator
the law prescribes imprisonment for 6 years or  Renounce the inheritance
more, & accusation has been found groundless (cannot be represented by their
3. By fraud, violence, intimidation or undue own heirs, with respect to their
influence causes the testator to make a will or supposed inheritance)
to change one already made  this right takes place only in favor of children of
4. Refusal without justifiable cause to support the brothers or sisters (whether full or half blood)
testator who disinherits such heir and only if they concur with at least one uncle
or aunt
Peculiar Causes for Disinheritance  this rule applies only when the decedent does
not have descendants
1. Children/Descendants:
 Nephews and nieces already alive when the
a. Has been convicted of adultery or
aunt or uncle died can inherit by representing
concubinage with the spouse of the testator
their predeceased parents
b. Maltreatment of the testator by word or
o when illegitimate they are prohibited by
deed by the child/descendant
the civil code from inheriting from the
c. Leads dishonorable/disgraceful
relatives of their father or mother like
d. Convicted of a crime which carries with it a
their uncles or aunts, or even from their
penalty of civil interdiction
grandparents
2. Parents/Ascendants
o Grandnephews and grandnieces in the
a. Abandoned their children or induced their
collateral line cannot inherit by right of
daughters to live with a corrupt or immoral
representation
life/ attempted against their virtue
b. Convicted of adultery or concubinage with
the spouse of the testator
c. Loss of parental authority for causes
specified in civil code
d. Attempt by one of the parents against the
life of the other, unless there has been
reconciliation
3. Spouse
a. Given cause for legal separation
b. Given grounds for loss of parental authority