Chapter 2 Transfer taxes and Basic Succession

The surviving relatives are the father of the deceased and the surviving spouse. How much would
be the distribution to each heir?
Distribution:
Father of deceased P 3,500,000
Surviving spouse 3,500,000
Total inheritance P 7,000,000

Survivors: Parents, Brothers and Sisters as Surviving Relatives

In default of the legitimate children and descendant of the deceased, his parents and ascendants
shall inherit from him. The collateral relative are excluded from the inheritance. (Art. 985, Civil
Code of the Philippines)

Illustration
The net estate to be inherited under intestate succession is P7,000,000. The surviving relatives
are the father of the deceased, the 2 brothers, and a sister of the deceased. How much would be
the distribution to each heir?
Distribution:
Father of deceased P 7,000,000
Brothers - 0 -
Sisters - 0 -
Total inheritance P 7,000,000

Survivors: Surviving Spouse Alone

The surviving legitimate spouse will inherit the entire estate if none of the following survivors:
1. Legitimate descendants;
2. Legitimate ascendants;
3. Illegitimate children and their descendants (whether legitimates or illegitimate); and
4. Brothers and sisters, nephews and nieces of the descendant.
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Illustration
The net estate to be inherited under intestate succession is P9,000,000.
How much is the share of surviving spouse if the relative left by the decedent is his legitimate
wife his second cousins?
Since the decedent’s second cousin is in the 6th degree of collateral line, he disqualified in the
intestate succession. The entire estate will be inherited by legitimate wife.
Note: Situation where the legitimate spouse cannot inherit from the estate of his or her deceased
spouse are the following:

1. Where the surviving spouse is disinherited based on the valid ground. (Art. 921, Civil
Code)
2. When the surviving spouse is the guilty party in a legal separation case. (Art. 1062, Civil
Code; Art. 63 [4], Family Code)
3. When the surviving spouse repudiates the inheritance. (Art. 1044, Civil Code)

Survivors: Surviving Spouse, Brothers and Sisters

Should brothers and sister or their children survive with the widow or widower, the latter shall be
entitled to one-half of the inheritance and the brothers and sisters or their children to the other
half. (Art. 1001, Civil Code of the Philippines)

Illustration

The net estate to be inherited under intestate succession is P9,000,000.

The surviving relatives are the 2 brothers of deceased, the son of the sister of the deceased, and
the surviving spouse. How much would be the distribution to each heir?

Distribution:

Surviving spouse, ½ P 4,500,000

Brothers, (9,000,000/2) x (2/3) 3,000,000
Nephew (sister side), (9,000,000/2) x (1/3) 1,500,000
Total inheritance P 9,000,000

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Survivors: Adopt Child and Legitimate Children and Surviving Spouse

An adopt children succeeds to the property of the adopting parents in the same manner as a
legitimate children. (Art. 979, Civil Code of the Philippines)

Illustration

The net estate to be inherited under intestate succession is P9,000,000.

The surviving relatives are the legitimate son the adopted daughter, and the surviving spouse of
the deceased. How much would be the distribution to each heir?

Distribution:
Legitimate son (P9,000,000/ 3) P 3,000,000
Adopted daughter (P9,000,000/ 3) 3,000,000
Surviving spouse (P9,000,000/ 3) 3,000,000
Total inheritance P 9,000,000

Adopted Child is the Deceased

Article 984 of the Civil Code had been repealed by article 190 of the Family Code. Adopting
parents are made intestate or legal heirs of the adopted, if the latter died without any legitimate
children or did not rescind the adoption.
Adopting parents are now legal heirs of the adopted. Biological parent have ceased to be intestate
heirs of the adopted child. (Sec. 18, R.A. 8552)

Illustration
The net estate to be inherited upon death of X, single without a child and adopted son Y and Z, is
P9,000,000.
The surviving relatives are his adopting parents and his biological father. How much would be
the distribution to each heir?
Distribution:
Adopting parents P 9,000,000
Biological father 0
Total inheritance P 9,000,000

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Surviving Relatives are Beyond Fifth Degree
The right to inherit without a Will shall not extend beyond the fifth degree of relationship in the
collateral line. (Art. 1010, Civil Code)
Observe that there is no limit on the direct lines or lineal relatives. The provides a limit only to
the collateral line.
In default of the persons entitled to succeed in accordance with the provision of the preceding
Sections, the State shall inherit the whole estate. (Art. 1011, Civil Code of the Philippines)

Illustration
The net estate to be inherited under intestate succession is P9,000,000. The surviving relatives
are in two 4th cousins on the father side and one 5th cousin on the mother side. How much would
be the distribution to each heir?
Distribution:
Fourth cousins P - 0 -
Fifth cousins - 0 -
State 9,000,000
Total inheritance P 9,000,000

MIXED SUCCESSION
This kind of succession is effected partly by wall and partly by operation of law (Art. 780, Civil
Code of the Philippines). A testator made a will but omitted some properties, rights, or has
acquired some properties after the execution of his last will and testament. According, not all of
his last will and testament. Accordingly, not all of his properties shall be disposed based on the
will.
Illustration
In January 200A, Mrs. Nama Mathay, a widow and a Filipino citizen, executed a last will and
testament regarding some of her assets as follows:
Inheritance: FMV at time of death Heirs:
Family home P 3,000,000 Modesto (her son)
Jewelries 3,000,000 Desta (her daughter)
Car 1,000,000 Estoy (driver)
Total P 7,000,000
In November 1, 200A, Mrs. Nama Mathay, died. Not included in her last will testament was an
investment in shares of stock of San Miguel Corporation with fair market value of P3,000,000 at
the time of her death.
 The decedent’s obligations and expenses charged against the estate are bank loan, P200,000;
funeral, P200,000; and judicial, P100,000. The estate tax amounted to P500,000.
In this case, properties are to be distributed through the mixed succession method because the
shares of stock in San Miguel Corporation are without a will at the time of her death.
The net estate and distributed share of each heir entail the following computations:
1. Computation of net distribution estate:
Gross estate (P7,000,000 + P3,000,000) P10,000,000
Less: Diminutions of gross estate:
Bank loan P200,000
Funeral expense 200,000
Judicial expense 100,000
Estate tax 500,000 1,000,000
P 9,000,000
2. Distribution of net distributable estate:

Modestor Desta Estoy Total

Testate succession P3,000,000 P3,000,000 P1,000,000 P7,000,000

Intestate succession(P9M-P7M) /2 1,000,000 1,000,000 2,000,000

Mixed Succession P4,000,000 P4,000,000 P1,000,000 P9,000,000

Notes:
1. The distribution of net distributable estate is a mixed succession because the shares of
stocks were not included in the last will and testament whereby the excess of its fair
market value after deducting interment expenses shall be distributed among the
compulsory heirs using the intestate method.
2. The compulsory heirs have no rights to insist that the legitime be given in the form of
property. It is sufficient that the legitime may be be paid in cash (Marina Dizon – Rivera
vs. Estela Dizon, et al., l-24561, June 30, 1970)
Persons Incapable of Succeeding
Article 1027 of the Civil Code provides the ff. persons are incapable of succeeding:
1. The priest who heard the confession of the testator during his last illness, or minister of
the gospel who extended spiritual aid to him during the same period.
2. The relatives of such priest or minister of the gospel within the fourth degree, the church,
order, chapter, community, organization, or institution to which such priest or minister
may belong;
3. A guardian with respect to testamentary dispositions given by a ward in his favor before
the final accounts of the guardianship have been approved, even if the testator should die
after the approval thereof; nevertheless, any provision made by the ward in favor of the
 guardian when the latter is his ascendant, descendants, brother, sister, or spouse, shall be
valid;
4. Any attesting witness to the execution of a will, the spouse, parents, or children or any
one claiming under such witness, spouse, parents, or children;
5. Any physician, surgeon, nurse, health officer, or druggist who took care of the testator
during his last illness; and
6. Individuals, associate, and corporation not permitted by law to inherit.
Note: the person disqualified or incapacitated to succeed under the Art. 1027 of the Civil Code
are persons who could easily exert undue influence or pressure upon the dying testator because
of their special relationship.
The law intends to protect the rights of the heirs from fraud and deception by the possible
exercise of undue influence or pressure upon a dying person by the attending priests, ministers or
their relatives, physicians, etc.