BUSINESS TAXATION

TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00

SUCCESSION

transmissible rights and obligations existing at Illegitimate parents (no

SUCCESSION : Republic Act No. 386 or the Civil the time of his death, but also those which have other descendants). They
Surviving spouse
1.0 Code of the Philippines which is effective August accrued thereto since the opening of the inherit only in default of “A”
1, 1950 succession. & “C”.
Illegitimate children and
●​ Modes of Acquiring Ownership: ★​ Legitime – that part of the testator's property their descendants,
★​ Occupation which he cannot dispose of because the law has legitimate or
★​ Law reserved it for certain heirs who are, therefore, illegitimate
★​ Donation called compulsory heirs. NOTE ! Brothers and sisters are neither compulsory
★​ Tradition heirs nor strangers. However, they may be voluntary
★​ Compulsory heirs – those who succeed by force
★​ Intellectual Creation heirs.
of law to some portion of the inheritance, in an
★​ Prescription
amount predetermined by law, known as the
★​ Succession ★​ Voluntary Heirs – those instituted by the
legitime. They succeed whether the testator likes
it or not. They cannot be deprived by the testator testator in his will to succeed to the inheritance
●​ Definition of Terms: of the portion thereof of which the testator can
★​ Succession – is a mode of acquisition by virtue of their legitime except by disinheritance properly
effected. freely dispose. Free portion refers to the
of which the property, rights and obligations to portion or value left in the estate after
the extent of the value of the inheritance of a deducting the legitime of the compulsory heirs.
➢​ Primary – those who have precedence over
person are transmitted through his death to The share of a voluntary heir is determined
and exclude other compulsory heirs (i.e.,
another or others either by his will or by through the last will and testament.
legitimate children and descendants).
operation of law.
➢​ Secondary – those who succeed only in the ★​ Legal or Intestate Heirs – those who succeed
★​ Decedent – the general term applied to the to the estate of the decedent by operation of
absence of the primary compulsory heirs;
person whose property is transmitted through law (decedent died without a valid will or his
(i.e., legitimate parents and ascendants).
succession, whether or not he left a will. If he left estate was not entirely disposed of by will).
a will, he is also called the testator. ➢​ Concurring – those who succeed together
with the primary or secondary compulsory ORDER OF INTESTATE SUCCESSION
★​ An heir – a person called to the succession
heirs (i.e., illegitimate children and 1 Legitimate children or descendants
either by the provision of a will or by operation of
descendants and surviving spouse). 2 Legitimate parents or ascendants
law. Devisees and legatees are persons to whom
gifts of real and personal property are 3 Illegitimate children or descendants
TABLE 1-1: COMPULSORY HEIRS 4 Surviving spouse
respectively given by virtue of a will.
Primary Compulsory Secondary Compulsory 5 Brothers and sisters, nephews and nieces
★​ The inheritance includes all the property, rights Legitimate parents and Other collateral relatives within the 5th degree of
Legitimate children and 6
and obligations of a person which are not legitimate ascendants. consanguinity
their legitimate
extinguished by his death. The inheritance of a (They inherit only in
descendants. 7 State or the Government
person includes not only the property and the default of “A”)

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BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

➢​ With a void will ★​ The making of a will is a strictly personal act;

it cannot be left in whole or in part to the
➢​ With a will which has subsequently lost discretion of a third person, or accomplished
its validity through the instrumentality of an agent or
attorney.
➢​ When the will does not institute an heir
to, or dispose of all the property ★​ The testator may entrust to a third person
belonging to the testator the distribution of specific property or sums
of money that he may leave in general to
➢​ If the suspensive condition attached to specified classes or causes, and also the
the institution of heir does not happen designation of the persons, institutions or
or is not fulfilled establishments to which such property or
sums are to be given or applied.
➢​ If the heir dies before the testator
★​ The testator may not make a testamentary
★​ An executor (male) or executrix (female) is the ➢​ If the heir repudiates the inheritance,
disposition in such manner that another
person named in a will to perform these duties. there being no substitution, and no right
person has to determine whether or not it is
of accretion takes place;
★​ An administrator (male) or administratrix to be operative.
(female) is the person appointed by the ➢​ When the heir instituted is incapable of
★​ When there is an imperfect description, or
probate court to complete these tasks when succeeding, except in cases provided in
when no person or property exactly answers
there is no will or no executor or executrix has the Civil Code.
the description, mistakes and omissions
been named in the will.
★​ Mixed – is that effected partly by will and must be corrected, if the error appears from
★​ Accrual – The rights to the succession are partly by operation of law. the context of the will or from extrinsic
transmitted from the moment of the death of evidence, excluding the oral declarations of
the decedent. Payment of taxes accrues from ●​ As to effectivity: the testator as to his intention; and when an
the time of death of the decedent. (RR 2-2003, ★​ Inter vivos uncertainty arises upon the face of the will,
as amended) ★​ Mortis Causa as to the application of any of its provisions,
the testator's intention is to be ascertained
●​ Kinds of Succession: 1.1 TESTAMENTARY SUCCESSION from the words of the will, taking into
★​ Testamentary – is that which results from ●​ Wills in General consideration the circumstances under
the designation of an heir, made in a will ★​ A will is an act whereby a person is which it was made, excluding such oral
executed in the form prescribed by law. permitted, with the formalities prescribed by declarations
law, to control to a certain degree the
★​ Legal or intestate disposition of this estate, to take effect after ●​ Testamentary Capacity and Intent
➢​ If a person dies without a will his death. ★​ All persons who are not expressly prohibited
by law may make a will.

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BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

★​ Persons of either sex under eighteen years ★​ A married woman may make a will without it and communicate to him, in some practicable
of age cannot make a will. the consent of her husband, and without the manner, the contents thereof.
authority of the court.
★​ In order to make a will it is essential that the ●​ If the testator is blind, the will shall be read to him
testator be of sound mind at the time of its ★​ A married woman may dispose by will of all twice; once, by one of the subscribing witnesses,
execution. her separate property as well as her share of and again, by the notary public before whom the
the conjugal partnership or absolute will is acknowledged.
★​ To be of sound mind, it is not necessary that community property.
the testator be in full possession of all his ●​ In the absence of bad faith, forgery, or fraud, or
reasoning faculties, or that his mind be ●​ Forms of Wills undue and improper pressure and influence,
wholly unbroken, unimpaired, or unshattered ★​ Every will must be in writing and executed in defects and imperfections in the form of
by disease, injury or other cause. It shall be a language or dialect known to the testator. attestation or in the language used therein shall
sufficient if the testator was able at the time not render the will invalid if it is proved that the
of making the will to know the nature of the 1.2 NOTARIAL WILL will was in fact executed and attested in
estate to be disposed of, the proper objects ●​ Every will, other than a holographic will, must be substantial compliance with all the requirements
of his bounty, and the character of the subscribed at the end thereof by the testator of article 805.
testamentary act. himself or by the testator's name written by some
other person in his presence, and by his express 1.3 HOLOGRAPHIC WILL
★​ The law presumes that every person is of direction, and attested and subscribed by three or ●​ A person may execute a holographic will which
sound mind, in the absence of proof to the more credible witnesses in the presence of the must be entirely written, dated, and signed by the
contrary. The burden of proof that the testator and of one another. hand of the testator himself. It is subject to no
testator was not of sound mind at the time other form, and may be made in or out of the
of making his dispositions is on the person ●​ The testator or the person requested by him to Philippines, and need not be witnessed.
who opposes the probate of the will; but if write his name and the instrumental witnesses of
the testator, one month, or less, before the will, shall also sign, as aforesaid, each and ●​ In holographic wills, the dispositions of the
making his will was publicly known to be every page thereof, except the last, on the left testator written below his signature must be
insane, the person who maintains the validity margin, and all the pages shall be numbered dated and signed by him in order to make them
of the will must prove that the testator made correlatively in letters placed on the upper part of valid as testamentary dispositions
it during a lucid interval. each page. The attestation clause xxx.
●​ In the probate of a holographic will, it shall be
★​ Supervening incapacity does not invalidate ●​ Every will must be acknowledged before a notary necessary that at least one witness who knows
an effective will, nor is the will of an public by the testator and the witnesses. the handwriting and signature of the testator
incapable validated by the supervening of explicitly declare that the will and the signature
capacity. ●​ If the testator be deaf, or a deaf-mute, he must are in the handwriting of the testator. If the will is
personally read the will, if able to do so; contested, at least three of such witnesses shall
otherwise, he shall designate two persons to read be required. In the absence of any competent
witness referred to in the preceding paragraph,

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BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

and if the court deem it necessary, expert ●​ The following are disqualified from being revocation takes place in this country, when it is
testimony may be resorted to. witnesses to a will: in accordance with the provisions of this Code.
★​ Any person not domiciled in the Philippines;
●​ When a number of dispositions appearing in a ●​ No will shall be revoked except in the following:
holographic will are signed without being dated, ★​ Those who have been convicted of ★​ By implication of law; or
and the last disposition has a signature and a falsification of a document, perjury or false
date, such date validates the dispositions testimony. ★​ By some will, codicil, or other writing
preceding it, whatever be the time of prior executed as provided in case of wills; or
dispositions. ●​ If the witnesses attesting the execution of a will
are competent at the time of attesting, their ★​ By burning, tearing, cancelling, or obliterating
●​ In case of any insertion, cancellation, erasure or becoming subsequently incompetent shall not the will with the intention of revoking it, by
alteration in a holographic will, the testator must prevent the allowance of the will. the testator himself, or by some other person
authenticate the same by his full signature. in his presence, and by his express direction.
●​ If a person attests the execution of a will, to If burned, torn, cancelled, or obliterated by
●​ When a Filipino is in a foreign country, he is whom or to whose spouse, or parent, or child, a some other person, without the express
authorized to make a will in any of the forms devise or legacy is given by such will, such devise direction of the testator, the will may still be
established by the law of the country in which he or legacy shall, so far only as concerns such established, and the estate distributed in
may be. Such will may be probated in the person, or spouse, or parent, or child of such accordance therewith, if its contents, and
Philippines person, or any one claiming under such person or due execution, and the fact of its
spouse, or parent, or child, be void, unless there unauthorized destruction, cancellation, or
●​ Two or more persons cannot make a will jointly, are three other competent witnesses to such will. obliteration are established according to the
or in the same instrument, either for their However, such person so attesting shall be Rules of Court.
reciprocal benefit or for the benefit of a third admitted as a witness as if such devise or legacy
person. had not been made or given. PROBATE OF WILLS (ALLOWANCE AND
1.6
DISALLOWANCE OF WILLS)
●​ Wills, prohibited by the preceding article, REVOCATION OF WILLS AND TESTAMENTARY ●​ No will shall pass either real or personal property
executed by Filipinos in a foreign country shall 1.5
DISPOSITIONS unless it is proved and allowed in accordance
not be valid in the Philippines, even though ●​ A will may be revoked by the testator at any time with the Rules of Court. The testator himself may,
authorized by the laws of the country where they before his death. Any waiver or restriction of this during his lifetime, petition the court having
may have been executed. right is void. jurisdiction for the allowance of his will. In such
case, the pertinent provisions of the Rules of
1.4 WITNESSES TO WILLS ●​ A revocation done outside the Philippines, by a Court for the allowance of wills after the
●​ Any person of sound mind and of the age of person who does not have his domicile in this testator's a death shall govern. xxx. Subject to the
eighteen years or more, and not blind, deaf or country, is valid when it is done according to the right of appeal, the allowance of the will, either
dumb, and able to read and write, may be a law of the place where the will was made, or during the lifetime of the testator or after his
witness to the execution of a will mentioned in according to the law of the place in which the death, shall be conclusive as to its due execution.
Article 805 of this Code. testator had his domicile at the time; and if the

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BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

●​ The will shall be disallowed in any of the following remainder of the estate shall pass to the legal legacies shall be valid insofar as they are not
cases: heirs inofficious. If the omitted compulsory heirs
★​ If the formalities required by law have not should die before the testator, the institution shall
been complied with ●​ The testator shall designate the heir by his name be effectual, without prejudice to the right of
and surname, and when there are two persons representation.
★​ If the testator was insane, or otherwise having the same names, he shall indicate some
mentally incapable of making a will, at the circumstance by which the instituted heir may be ●​ The share of a child or descendant omitted in a
time of its execution known. Even though the testator may have will must first be taken from the part of the estate
omitted the name of the heir, should he designate not disposed of by the will, if any; if that is not
★​ If it was executed through force or under him in such manner that there can be no doubt as sufficient, so much as may be necessary must be
duress, or the influence of fear, or threats to who has been instituted, the institution shall be taken proportionally from the shares of the other
valid. compulsory heirs.
★​ If it was procured by undue and improper
pressure and influence, on the part of the ●​ An error in the name, surname, or circumstances ●​ A voluntary heir who dies before the testator
beneficiary or of some other person of the heir shall not vitiate the institution when it transmits nothing to his heirs. A compulsory heir
is possible, in any other manner, to know with who dies before the testator, a person
★​ If the signature of the testator was procured certainty the person instituted. If among persons incapacitated to succeed, and one who
by fraud having the same names and surnames, there is a renounces the inheritance, shall transmit no right
similarity of circumstances in such a way that, to his own heirs except in cases expressly
★​ If the testator acted by mistake or did not
even with the use of other proof, the person provided for in this Code
intend that the instrument he signed should
instituted cannot be identified, none of them shall
be his will at the time of affixing his signature 1.8 DISPOSITION OF ESTATE
be an heir.
thereto. ●​ One who has no compulsory heirs may dispose
●​ Every disposition in favor of an unknown person by will of all his estate or any part of it in favor of
1.7 INSTITUTION OF HEIR
shall be void, unless by some event or any person having capacity to succeed.
●​ Institution of heir is an act by virtue of which a
circumstance his identity becomes certain.
testator designates in his will the person or ●​ One who has compulsory heirs may dispose of
However, a disposition in favor of a definite class
persons who are to succeed him in his property his estate provided he does not contravene the
or group of persons shall be valid.
and transmissible rights and obligations. provisions of this Code with regard to the legitime
●​ Heirs instituted without designation of shares of said heirs.
●​ A will shall be valid even though it should not
shall inherit in equal parts.
contain an institution of an heir, or such 1.9 SUBSTITUTION OF HEIRS
institution should not comprise the entire estate, ●​ The preterition or omission of one, some, or all of ●​ Substitution is the appointment of another heir so
and even though the person so instituted should the compulsory heirs in the direct line, whether that he may enter into the inheritance in default of
not accept the inheritance or should be living at the time of the execution of the will or the heir originally instituted.
incapacitated to succeed. In such cases the born after the death of the testator, shall annul
testamentary dispositions made in accordance the institution of heir; but the devises and 1.10 CONDITIONAL TESTAMENTARY DISPOSITIONS
with law shall be complied with and the
NARANJO/SIAPIAN/GUDANI | 3rd Yr SEC2 | PAGE 5
BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

AND TESTAMENTARY DISPOSITIONS WITH A ●​ REQUISITES for Disinheritance: ➢​ Maltreatment of the testator by word or
TERM ★​ Effected only through a valid will deed, by the child or descendant
●​ The institution of an heir may be made ★​ For a cause expressly stated by law
conditionally, or for a certain purpose or cause. ★​ Cause must be stated in the will itself ➢​ When a child or descendant leads a
★​ Cause must be certain and true dishonorable or disgraceful life
●​ The testator cannot impose any charge, ★​ Unconditional
condition, or substitution whatsoever upon the ★​ Total (there is no partial disinheritance) ➢​ Conviction of a crime which carries with
legitimes prescribed in this Code. Should he do ★​ The heir disinherited must be designated in it the penalty of civil interdiction
so, the same shall be considered as not imposed. such a manner that there can be no doubt as
★​ Parents or Ascendants
to his identity
●​ Impossible conditions and those contrary to law ➢​ When the parents have abandoned their
or good customs shall be considered as not ●​ Common Causes for Disinheritance of Children children or induced their daughters to
imposed and shall in no manner prejudice the and Descendants, Parents or Ascendants, and live a corrupt or immoral life, or
heir, even if the testator should otherwise Spouse attempted against their virtue
provided ★​ When the heir has been found guilty of an
➢​ The loss of parental authority for
attempt against the life of the testator,
1.11 DISINHERITANCE causes specified in this Code
his/her descendants or ascendants, and
●​ A compulsory heir may, in consequence of spouse in case of children and parents. ➢​ The refusal to support the children or
disinheritance, be deprived of his legitime, for
descendants without justifiable cause
causes expressly stated by law. ★​ When the heir has accused the testator of a
crime for which the law prescribes ➢​ An attempt by one of the parents
●​ Disinheritance can be effected only through a will imprisonment for 6 years or more, if the against the life of the other, unless there
wherein the legal cause therefor shall be accusation has been found groundless. has been a reconciliation between
specified.
them.
★​ When the heir by fraud, violence, intimidation
●​ The burden of proving the truth of the cause for or undue influence causes the testator to ★​ Spouse
disinheritance shall rest upon the other heirs of make a will or to change one already made. ➢​ When the spouse has given grounds for
the testator, if the disinherited heir should deny it.
the loss of parental authority
★​ Refusal without justifiable cause to support
●​ Disinheritance without a specification of the the testator who disinherits such an heir. ➢​ When the spouse has given cause for
cause, or for a cause the truth of which, if
legal separation
contradicted, is not proved, or which is not one of
those set forth in this Code, shall annul the ●​ A subsequent reconciliation between the offender
institution of heirs insofar as it may prejudice the and the offended person deprives the latter of the
person disinherited; but the devises and legacies right to disinherit, and renders ineffectual any
and other testamentary dispositions shall be valid ●​ Other Causes for Disinheritance
★​ Children and Descendants disinheritance that may have been made.
to such extent as will not impair the legitime.

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BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

●​ The children and descendants of the person uncle, who is the brother of his father, four from
disinherited shall take his or her place and shall his first cousin, and so forth.
preserve the rights of compulsory heirs with
respect to the legitime; but the disinherited parent ●​ Full-blood relationship is that existing between
shall not have the usufruct or administration of persons who have the same father and the same
the property which constitutes the legitime. mother.

1.12 RELATIONSHIP ●​ Half-blood relationship is that existing between

●​ Proximity to relationships is determined by the persons who have the same father, but not the
number of generations. Each generation forms a same mother, or the same mother, but not the
degree. same father.

●​ A series of degrees forms a line, which may be ●​ CONSANGUINITY – relation of persons

either direct or collateral. A direct line is that descending from the same stock or common
constituted by the series of degrees among ancestors:
ascendants and descendants. A collateral line is ★​ Lineal consanguinity – descending or
that constituted by the series of degrees among ascending / direct line
persons who are not ascendants and
descendants, but who come from a common ★​ Collateral consanguinity – subsists between
ancestor persons who have the same ancestors, but
who not ascend or descend one from the
●​ The direct line is either descending or ascending. other
The former unites the head of the family with
those who descend from him. The latter binds a
●​ Blood Lines
person with those from whom he descends.

●​ In the line, as many degrees are counted as there

are generations or persons, excluding the
progenitor. In the direct line, ascent is made to the
common ancestor. Thus, the child is one degree
removed from the parent, two from the
grandfather, and three from the
great-grandparent. In the collateral line, ascent is ●​ Order of Succession in Legal or Intestate
made to the common ancestor and then descent Succession
is made to the person with whom the ★​ Descending Direct Line
computation is to be made. Thus, a person is two ★​ Ascending Direct Line
degrees removed from his brother, three from his ★​ Illegitimate Children

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BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

★​ Surviving Spouse 6.​ Individuals, associations and corporations 7.​ Any person who by the same means
★​ Collateral Relatives not permitted by law to inherit. prevents another from making a will, or from
★​ The State revoking one already made, or who
INCAPACITY TO SUCCEED BY REASON OF supplants, conceals, or alters the latter's will;
1.14
1.13 INCAPACITY TO SUCCEED UNWORTHINESS
●​ The following are incapable of succeeding: ●​ The following are incapable of succeeding by 8.​ Any person who falsifies or forges a
1.​ The priest who heard the confession of the reason of unworthiness: supposed will of the decedent.
testator during his last illness, or the minister 1.​ Parents who have abandoned their children
of the gospel who extended spiritual aid to or induced their daughters to lead a corrupt
him during the same period; or immoral life, or attempted against their
virtue
2.​ The relatives of such priest or minister of the
gospel within the fourth degree, the church, 2.​ Any person who has been convicted of an
order, chapter, community, organization, or attempt against the life of the testator, his or
institution to which such priest or minister her spouse, descendants, or ascendants
may belong;
3.​ Any person who has accused the testator of
3.​ A guardian with respect to testamentary a crime for which the law prescribes
dispositions given by a ward in his favor imprisonment for six years or more, if the
before the final accounts of the guardianship accusation has been found groundless
have been approved, even if the testator
should die after the approval thereof; 4.​ Any heir of full age who, having knowledge of
nevertheless, any provision made by the the violent death of the testator, should fail
ward in favor of the guardian when the latter to report it to an officer of the law within a
is his ascendant, descendant, brother, sister, month, unless the authorities have already
or spouse, shall be valid; taken action; this prohibition shall not apply
to cases wherein, according to law, there is
4.​ Any attesting witness to the execution of a no obligation to make an accusation
will, the spouse, parents, or children, or any
one claiming under such witness, spouse, 5.​ Any person convicted of adultery or
parents, or children; concubinage with the spouse of the testator;

5.​ Any physician, surgeon, nurse, health officer 6.​ Any person who by fraud, violence,
or druggist who took care of the testator intimidation, or undue influence should
during his last illness; cause the testator to make a will or to
change one already made;

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BUSINESS TAXATION
TAX1102 | WEEK NO. 1 | 1st Semester | Saturday: 9:00 - 12:00
SUCCESSION

Surviving Heir Legitime Intestate Share

1/3
Illegitimate children 1/2
1/3
Surviving spouse 1/2
1/3 free portion
1/4
Illegitimate children 1/4
1/8
Surviving spouse 1/4
1/2
Legitimate parents 1/2
1/8 free portion
1/2 (divided by number of legitimate children)
Legitimate children alone All
1/2 free portion
1/2
Legitimate parents alone All
1/2 free portion
1/2
Illegitimate parents alone All
1/2 free portion
1/2 or 1/3*,
Surviving spouse alone 1/2 or 2/3 (free portion) All
*In articulo mortis
1/2 (divided by the number of children)
Legitimate children (or their descendants) alone All
1/2 free portion
1/2
One legitimate child (or descendant) 1/2
1/4
Surviving spouse 1/2
1/4 free portion
1/2 (divided by the number of children)
Two or more legitimate children (or their descendants) Consider spouse as 1 legitimate child and divide
Equal to the share of one child
Surviving spouse estate by total number
Remainder is free portion
1/2 1/2
Surviving spouse
1/2 free portion 1/2 (divided by the number of brothers and sisters;
Not entitled to anything since they are not compulsory heirs; nephews and nieces of deceased siblings divide
Brothers and sisters (nephews and nieces, in case of
testator may choose to give them something out of the free among themselves the share that should have to
deceased siblings)
portion their parents)

NARANJO/SIAPIAN/GUDANI | 3rd Yr SEC2 | PAGE 9