Untitled

• Business and transfer taxes include succession, which is covered in Module 1.

Governing Law

• Republic Act No. 386, also known as the Civil Code of the Philippines took effect August 1, 1950.

Modes of Acquiring Ownership

• Ownership may be acquired through occupation, law, donation, tradition, intellectual creation, prescription, and succession.

Definition of Terms

• Succession involves the acquisition of property, rights, and obligations of a person, to the extent of the inheritance value.
• Transmission occurs through the person's death to others, either by will or by law as per Article 774.
• A decedent is a person whose property is passed on through succession.
• If they left a will, they are called the testator, as per Article 775.
• An heir is someone called to succession through a will or by law.
• Devisees and legatees are recipients of gifts of real and personal property through a will, as outlined in Article 782.
• Inheritance includes all property, rights, and obligations not extinguished by the person’s death, as per Article 776.
• Inheritance includes property and transmissible rights at death and those accrued since succession opening, per Article 781.
• Legitime refers to the portion of the testator's property that is reserved by law for compulsory heirs, as per Article 886.
• Compulsory heirs, as per Article 887, inherit a portion predetermined known as legitime, regardless of the testator's wishes.
• Compulsory heirs cannot be deprived of their legitime unless specifically disinherited.
• Compulsory heirs include: legitimate children and descendants with respect to legitimate parents/ascendants.
• Also legitimate parents and ascendants in default of the foregoing, with respect to legitimate children/descendants.
• Also the widow or widower, and illegitimate children (filiation must be proved).
• An executor is the person named in a will to perform duties related to the estate.
• An administrator is appointed by the probate court when there's no will or the will does not name an executor.
• Succession rights are transmitted upon the decedent's death, as per Article 777.
• Tax payments accrue from the time of death, as per RR 2-2003, as amended.

Effects of Death

• Decedent's Estate (property, rights, and obligations) will be acquired by the heirs.

Estate Tax and Transfer of Ownership

• An example is Roque, who died from COVID-19 on July 1, 2020.
• Roque's estate includes P1,000,000 in cash, a P5,000,000 commercial building, P1,000,000 cars, and a P3,000,000 house and lot.
• Joseph, the only heir, the executor filed the estate tax return and the same was paid on Aug 1, 2020 and properties were distributed on January 1, 2022.
• Transfer of Joseph's ownership took effect on July 1, 2020.
• Succession rights are thus transferred from the moment of death, despite the actual transfer on January 1, 2022.

Kinds of Succession

• Testamentary succession results from the designation of an heir in a will, executed as prescribed by law, per Article 779.
• Legal or intestate succession occurs as defined in the following instances:
  • When a person dies without a will
  • With a void will
  • With a will that has lost its validity
  • When the will does not institute an heir or dispose of all property
  • If a suspensive condition for the heir isn't met
  • If the heir dies before the testator
  • If the heir repudiates inheritance with no substitution or right of accretion
  • When the instituted heir cannot succeed, except as per Civil Code Article 960.
• Mixed succession is partly by will and partly by law, as stated in Article 780.

Elements of Succession

• Decedent pertains to the deceased person.
• Inheritance includes property, rights, and obligations not extinguished by death, including those accrued since succession opening.
• Personal rights are not transmissible after death.
• Successors are heirs called to the succession by will or law.
• A devisee is a person receiving gifts of real property by will.
• A legatee receives gifts of personal property by will.

Compulsory Heirs

• Primary heirs take precedence over others; it includes legitimate children and descendants.
• Secondary heirs succeed only if there are no primary heirs like legitimate parents and ascendants.
• Concurring heirs succeed along with primary or secondary heirs, which includes illegitimate children and surviving spouses.

Types of Heirs

• Voluntary heirs are instituted by the testator in their will and can freely dispose of the inheritance.
• The free portion is the estate left after deducting legitimes for the compulsory heirs.
• Voluntary heirship is determined by the last will.
• Legal or intestate heirs are those who inherit by law when there's no valid will or the estate isn't fully disposed of by will.
• With a will, a surviving Spouse (SS) would get 1/4 and Legitimate Child (LC) would get 1/2 of the estate.
• Without a will, SS gets 1/2 and LC gets 1/2.
• There is a legitime with a will, and no legitime without one.

Collateral Relatives

• Consanguinity is the relation of people from the same common ancestor.
• Lineal consanguinity exists between people in a direct line (ascending or descending).
• Collateral consanguinity exists when people have the same ancestors but aren't in a direct line.

Wills

• A will is an act allowing a person to control the disposition of their estate to a certain degree after death, as per Article 783.
• Making a will must be personal; it cannot be delegated to a third party or agent, as per Article 784.

Kinds of Wills

• There is the notarial, ordinary, or attested will and the holographic will.
• The Notorial / Ordinary / Attested will must follow Article 804 to 808 of the New Civil Code.
• It must be written and executed in a language known to the testator.
• It needs to be signed at the end by the testator or someone else by their express direction.
• There must be at least three credible witnesses present and attesting.
• A holographic will is entirely written, dated, and signed by the testator.
• There is no other required form, it may or may not be in the Philippines, and there is no need for it to be witnessed.
• Any changes (insertions, cancellations, etc.) must be authenticated by the full signature of the testator.

Institution of Heir and Disinheritance

• The institution of heir pertains to designating persons to succeed the testator’s property, rights, and obligations in a will.
• Disinheritance is a stipulation in the will by which the heir is deprived.

Requisites for Disinheritance

• Disinheritance is be done through a valid will.
• Disinheritance must be for a cause expressly stated by law.
• The cause for disinheritance must be stated in the will.
• The cause must be certain and true.
• The cause must be unconditional.
• Disinheritance must be total (no partial disinheritance allowed).
• The heir must clearly be designated in the will so there is no doubt of identity.