FS2223-ESTATETAX-01

BSA 2105 Atty. F. R. Soriano

PRINCIPLES OF SUCCESSION

Succession
Succession is a mode of acquisition by virtue of which the property, rights and obligations to the
extent to the value of the inheritance, of a person are transmitted through his death to another either by will
or by operation of law.

Elements of the definition

1. Mode of acquisition (or ownership)
2. Transfer of property, rights and obligations to the extent of the value of the inheritance of a person
(called grantor or transferor, decedent, testator.) (Testator refers to a person who executed a will.)
3. Transmission through death – The right to the inheritance is not available if the person from whom
the inheritance shall come from is still alive.
4. Transmission to another (called grantee, transferee, heir, successor, legatee, devisee)
5. By will or by operation of law

Inheritance distinguished from succession

Inheritance is the property or right acquired; succession is the manner by virtue of which the property
or right is acquired.

What inheritance includes

1. Property

2. Rights not extinguished by death

a. Examples of rights extinguished by death – Right to hold public office, rights of a partner in a
partnership, or as agent or principal in a contract of agency, right to pursue an education (such
as a scholarship grant).
b. Examples of rights not extinguished by death – Right to bring a court action to eject a tenant,
right to continue a lease contract either as lessor or lessee.

3. Obligations not extinguished by death (to the extent of the value of the inheritance)
In general, all obligations are transmissible, unless purely personal like the obligation to
support, or not transferable by law or contract.

Elements of succession
1. Decedent – The general term applied to a person whose property is transmitted through succession,
whether or not he left a will. If he left a will, he is also called the testator.

2. Estate – The totality of assets and liabilities which a person holds at the time of his death. (Blas vs.
Santos, 111 Phil 519)
a. Testate estate – An estate of a deceased person which is settled or to be settled with a valid last
will and testament.
b. Intestate estate – An estate of a deceased person without a will.

3. Heir – An heir is a person called to the succession either by a provision of a will or by operation of
law; also referred to as “successor.”
a. Compulsory (forced or involuntary) heirs; voluntary heirs
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1) Compulsory heirs – They inherit even without a last will and testament.
a) Legitimate children and descendants, with respect to their legitimate parents or
ascendants.
b) In default of the foregoing, legitimate parents or ascendants, with respect to their
children or descendants.
c) Widow or widower, and
d) Illegitimate children.
2) Voluntary heirs – They inherit only if there is a last will and testament. The term
includes artificial persons like charitable and educational institutions.
b. Legatees and devisees
1) Legatees – They refer to persons whom gifts of personal property are given by virtue of
a will. The personal property is referred to as legacy.
2) Devisees – They refer to persons to whom gifts of real property are given by virtue of a
will. The real property is referred to as devise.

Kinds of succession
1. Testamentary – That which results from the designation of an heir, made in a will executed in the
form prescribed by law.
2. Intestate or legal – That which takes place when a person dies without a will, or with a void will, or
one that has subsequently lost its validity (revoked or ineffective). So called legal because the terms
are fixed by law, and intestate, because the succession takes place since there is no will or disposition
of the property concerned.
3. Mixed – Combination of testamentary and legal succession.

Will (also referred to as “Last Will and Testament”)

A will is an act whereby a person is permitted, with the formalities prescribed by law, to control to a
certain degree the disposition of his estate, to take effect after his death.

Who may make a will

1. General qualifications
a. At least 18 years of age.
b. Soundness of mind at the time the will is made.
Here, it is sufficient that the testator knows the nature of the estate to be disposed of, the
proper objects of his bounty, and the character of the testamentary act.
Unsoundness of mind is manifested in the following cases – drunkenness, idiocy
(congenital intellectual deficiency)
2. A convict under civil interdiction is allowed to make a will as civil interdiction prohibits only a
disposition of property inter vivos. Mortis causa
3. A married woman may make a will without the consent of her husband, and without the authority of
the court. She may dispose of by will her separate property as well as her share in the property
owned in common with her husband.

Kinds of will
1. Notarial will (also called ordinary or formal will by some authors) – That which requires, among
other things, an attestation clause by three instrumental witnesses and acknowledgment before a
notary public.

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2. Holographic or authographic will – One entirely written, dated and signed by the hand of the testator.
(Advantages – Easier to make, revise, keep secret.)
a. No witnesses are required.
b. No acknowledgment, i.e., appearance before a notary public is required.
c. May be made even by a blind testator.

Codicil
Codicil is 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 will is explained, added to, or
altered.

Revocation of will

No will shall be revoked except in the following cases:

1, By implication of law.

2. By some will, codicil or other writing executed as provided in case of will.

3. By burning, tearing, canceling, or obliterating the will with the intention of revoking it, by the
testator himself, or by some other person in his presence, and by his express direction.

Joint will not allowed

Two or more persons cannot make a will jointly, or in the same instrument, either for their reciprocal
benefit or for the benefit of a third person. Status – The will is void for the following reasons:

1. To allow secrecy, since the making of a will is a purely personal act.

2. To prevent undue influence.

3. Probate is difficult if death is at different times.
4. It mitigates against the right of the testator to revoke his will at any time.
5. In case of husband and wife, one may be tempted to kill the other.

Components of estate
1. Legitime – The portion of the estate which the law reserves in favor of compulsory heirs.

2. Free Portion – The portion of the estate in excess of the legitime. It may be given either to
compulsory heirs or third persons.

Persons who implement the provisions of will and/or administer the estate
1. Executor – The person named in the will who is entrusted to implement its provisions.

2. Administrator – The person appointed by the court to administer the estate when no executor was
named in the will, or one is named but fails to qualify, or when the decedent died intestate.

Extrajudicial settlement (If there are several heirs)

Extrajudicial settlement is an agreement among the heirs as regards the partition of the estate. This
may be entered into by the heirs if the following requisites are present:
1. The decedent left no will.

2. The decedent left no debts, or if there were debts left, all had been paid.

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3. The heirs are all of age, or if there are minors, the latter are represented by their judicial guardians or
legal representatives.
4. The extrajudicial settlement was published once a week for three consecutive weeks in a newspaper
of general circulation.
5, The partition was made by means of a public instrument duly filed with the Register of Deeds.

(Note: If the decedent left only one heir, the document to be executed is the Affidavit of Self-Adjudication.)

Court proceedings involving wills

1. Probate – A special proceeding in court to establish the validity of a will. Probate is mandatory,
which means that no will passes either real or personal property unless it is proved and allowed in a
proper court. Courts in probate proceedings, as a rule, are limited to pass only upon the extrinsic
validity of the will sought to be probated, but the courts are not powerless to do what the situation
constrains them to do, and pass upon certain provisions of the will, under exceptional circumstances.
A will may be probated during the lifetime of the testator or after his death.
The issues in the probate of a will involves the due execution thereof, such as age and mental
capacity of the testator, and the signing of the document by the testator and witnesses . (Purisima vs.
Raymundo, 66438-R, January 30, 1981)

2. Reprobate – A special proceeding to establish the validity of a will previously proved in a foreign
country.

Hereditary or distributable estate; taxable estate

1. Hereditary or distributable estate – The physical estate actually distributed to the heirs.

2. Taxable estate – The estate subject to the estate tax.

Estate tax
Estate tax is the tax imposed on the transfer of the net estate of the decedent.

Escheat proceedings
Escheat proceeding refers to a proceeding whereby the State (Republic of the Philippines), by virtue
of its sovereignty, steps in and claims the real or personal property of a person who dies intestate leaving no
heir. In the absence of a lawful owner, a property is claimed by the State to forestall an open ‘invitation to
self-service by the first comers.” (Republic vs. CA, G.R. No. 143483) It refers to the succession by the
State to property considered “ownerless” (bona vacantia) for lack of competent legal heirs. Escheat, being
an attribute of sovereignty, rests on the principle that ultimately it is the State that owns all property within
its territorial jurisdiction. (Civil Code of the Philippines by Edgardo M. Paras, citing 7 Manresa 169, In Re
Links Estate, 319 Pa. 513)

Requisites for filing of Escheat

1. A person died intestate, i.e., without a will.
2. He/she left real and/or personal properties in the Philippines.
3. He/she left no heirs entitled to the same.

Assignment of properties after estate is escheated

After the payment of debts and charges:
1. If the deceased resided in the Philippines:
a. Personal property shall be assigned to the municipality or city where the deceased last resided
in the Philippines.
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b. Real property shall be assigned to the municipalities or cities, respectively, in which the same
is situated.

2. If the deceased never resided in the Philippines:

The whole estate shall be assigned to the respective municipalities or cities where the same is
located. Such estate shall be for the benefit of public schools, and public charitable institutions and
centers, in such cities or municipalities. The court shall distribute the estate as the respective needs
of each beneficiary may warrant. The court, at the instance of an interested party, or on its own
motion, may order the establishment of a permanent trust, or that only the income from the property
shall be used.

Appearance of heir/s after proper escheat proceedings have been made

If a person legally entitled to the estate of the deceased appears and files a claim thereto with the
court within five (5) years from the date the property was delivered to the State, such person shall be
entitled to the possession of the same, or if sold, the city or municipality shall be accountable to him for
such part of the proceeds as may not have lawfully spent. (Art. 1014, Civil Code of the Philippines) If no
such claim is made within such period, the claim shall be barred forever.
(Note: The relative must be a relative within the fifth degree of relationship in the collateral line, as
for example, the child of a first cousin. The nearer relative, however, excludes the farther relative.)

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