Transfer taxes Nature of transfer tax
- Taxes imposed on gratuitous - Transfer tax is an EXCISE tax.
disposition of private properties or - Subject matter is the privilege of
rights. the transferor to gratuitously
transfer property or rights which
Gratuitous/ unilateral transfer: takes effect at the date of death or
- neither imposes burden nor during the lifetime of the donor and
requires consideration. donee
- Transfer of ownership is free - Shall not be constructed as a
because of the absence of property tax.
financial consideration.
- DONATIONS.
Law that governs the imposition
Onerous/ bilateral transfer:
- Transferee gives consideration in - Governed by the statute/law in
return for the property or right(s) force at the time of death of the
received. decedent.
- Subject to business tax instead of - Estate tax accrues at the date of
transfer tax death of the decedent and the
- SALE/ BARTER/ ESTATE accrual of tax is distinct from the
obligation to pay the same.
- In the Ph, succession itself is
governed by the Civil Code.
Types of Transfer taxes
1. Estate tax
2. Donor’s tax
The amount of liability to be assumed
by the heir(s) shall be limited only to the
Donation moris causa - take effect at the
extent of the value of the properties and
time of death of the donor. Estate tax
rights inherited.
Donation inter vivos - take effect during the
lifetime of both the donor and the donee.
Donor’s tax Under the TRAIN law, the filing of an
estate tax return is within one (1) year
Succession - mode of acquisition from the date of death.
by virtue of which the property, rights and
obligations to the extent of the value of
inheritance, of a person are transmitted
Kinds of Succession
through his death to another or others
either by his will or by operation of law. Inheritance is transmitted either
- Rights are transmitted from the through last will and testament or by
moment of death of the decedent. operations of law.
- The heirs succeed immediately to
all the property of the deceased Died testate - left a will at the time of their
ancestor at the moment of death. death.
Died intestate - died without leaving a will. depending upon the
happening of an
1. Testamentary or testate uncertain event
succession - results from the which must be
designation of an heir, made in a fulfilled before an
will in the form prescribed by law. obligation arises.
2. Legal or intestate succession - c. Preterition - omission in the
affected by operations of law since testator’s will of one, some
the decedent did not execute a will or all of compulsory heirs.
or if the last will and testament is d. Fulfillment of resolutory
void. condition - upon fulfillment
3. Mixed succession - affected partly terminates an already
by will and partly by operations of enforceable obligation
law. e. Expiration of term or period
of institution.
f. Non-compliance or
impossibility of compliance
Causes of legal succession or intestacy
with the will.
1. If a person dies without a will, or g. Repudiation of the
with a void will, or one which has instituted heir.
subsequently lost its validity.
a. The last will and testament
shall be executed in a
language or dialect known Elements of succession
to the considered valid. 1. Decedent - person whose property
2. When the “will” does not institute is transmitted through succession
an heir a. Testator - if they left a will
3. Partial institution of heir. b. Executor - the person
Consequently, intestacy takes designated in the last will
place as to the undisposed portion and testament, performs a
a. Mixed succession exists. fiduciary duty
b. Properties not in the estate c. Administrator - appointed
that were not included in by the court and performs
the will, such properties the same duty of an
shall be disposed of in executor.
accordance with law. 2. Inheritance (estate) - all the
4. Other causes of legal succession property, rights and obligations of
or intestacy a person not extinguished by death
a. Heir is not capable of and have accrued thereto since the
succeeding opening succession.
b. Non-fulfillment of the a. Rights which are purely
suspensive condition personal are not
attached to the institution transmissible.
of heir. 3. Successor - person who is called
i. Suspensive to the succession by will or
condition - through operations of law.
a. Heir a. Can be freely disposed of,
b. Legatee - personal property hence, any one can inherit
c. Devisee - real property from free portion
d. Compulsory heirs - succeed
by force of law to some
portion of the inheritance Order of intestate succession:
known as the 0legitime. 1. Legitimate children / descendants
legally entitled to inherit a 2. Legitimate parents / ascendants
portion of an estate, 3. Illegitimate children / descendants
regardless of what the will 4. Surviving spouse
says. 5. Brothers and sister, nephews and
i. Primary - nieces
descendants 6. Collateral relatives within 5th
ii. Secondary - only in degree
the absence of the 7. State or government
primary, ascendants Collateral relatives
iii. Concurring - last Consanguinity (blood relatives) -
resort descending from the same stock or
e. Voluntary heirs - instituted common ancestors. Known as related by
by the testator in their will blood or consanguinity.
to succeed to the a. Lineal consanguinity - subsists
inheritance of the portion between persons of whom one is
thereof which the testator descended in a direct line from the
can freely dispose. other
f. Legal or intestate heirs - b. Collateral consanguinity - same
succeed to the estate of ancestors, but not descend one
the decedent by operation from the other.
of law.
Wills
Composition of gross estate An act prescribed by law, to control
to a certain degree the disposition of his
1. Legitime - reserved by law estate to take effect after their death.
specifically to compulsory heirs, A document whereby the testator
regardless if there is a will or none. disposes their properties or estate to take
a. Cannot be disposed of effect upon their death.
because the law has Making of will is a personal act, it
reserved it for certain heirs cannot be left in whole or in part at the
(compulsory heirs). discretion of a third person or an agent or
2. Free portion - as provided in the attorney.
last will and testament; in absence Persons prohibited by law to make
of a will, this portion of the estate a will:
shall be distributed to intestate 1. Below 18 years old
heirs 2. Who are not of sound mind at the
time of its execution
The law presumes that every proved that the will was in fact executed
person is of sound mind. Burden of proof and attested in substantial compliance
that the testator was not is on the person with all requirements of the law.
who opposes the will.
If the testor, before making the will 2. Holographic will - written will which
was publicly known to be insane, the must be entirely written, dated and
person who maintains the validity of the signed by the hand of the testator.
will must prove that the testator made it Can be made out of the Ph and
during a lucid interval (normal state after does not need witnesses.
having mental/head injury) .
Supervening incapacity (will done Codicil- supplement or addition to
at the period in lucid interval is valid) does a will, made after the execution of a will
not invalidate an effective will. and annexed to be taken as part thereof,
Married woman can make a will shall be executed as in the case of a will.
without the consent of the husband, and
without authority of the court, the married Probate of a will is a court procedure by
woman may dispose of all their separate which a will is proved to be valid or not, in
property as well as the share of her the probate of a holographic will at least 1
conjugal partnership. witness who knows the handwriting and
signature of the testator.
Kinds of wills:
1. Notarial or ordinary or attested will
Foreign wills
- executed in accordance with the
formalities prescribed by art. 804
to 808 Alien - Produces effect in the
a. Must be in writing and in Philippines if made with the formalities
language or dialect known prescribed by the law of the place in which
to the testator they reside, or according to the formalities
b. Subscribed (signed) at the observed in his country or in conformity
end thereof by the testator with the Philippine civil code.
themself A will made in the PH by a citizen
c. Attested and subscribed by or subject to another country shall have
3 or more credible the same effect as if executed according
witnesses to the laws of the PH if proved and
Cannot be witnesses: allowed by their own country.
a. Person not living in Filipino in foreign country -
the Philippines; authorized to make will in any of the forms
b. Convicted of established by the law of the country in
falsification of a which he may be.
document, perjury,
or false testimony Revocation of wills and testamentary
dispositions
In the absence of bad faith, defects A will may be revoked by the
and imperfections in the form of testator at any time before his death.
attestation or in the language used herein
shall not render the will invalid if it is
Modes of revoking a will: not legally entitled to a specific
1. By implication of law portion of the estate.
2. By some will, codicil, or other
executed as provided in case of REQUISITES for Disinheritance:
wills 1. Effected only through a valid will
3. Burning, tearning, cancelling, 2. For a cause expressly stated by
obliterating the will with the law
intention of revoking it. 3. Cause must be stated in the will
itself
4. Cause must be certain and true
When a new will is created, it doesn't
automatically revoke the previous will 5. Unconditional
unless it explicitly states so. If the new 6. Total (there is no partial
will doesn't expressly revoke the old one, disinheritance)
it only overrides or annuls the parts of the 7. The heir disinherited must be
previous will that are inconsistent or
designated in such a manner that
contradictory to the new one.
there can be no doubt as to his
identity
Institution of heir The burden of proving the truth of
- A testator designates in their will the cause for disinheritance shall rest
the person or persons who are to upon the other heirs of the testator, if the
succeed them in his property and disinherited heir should deny it.
transmissible rights and
obligations. Common causes for disinheritance
1. Heir has been found guilty of an
Validity of a Will:
attempt against the life of the
- A will is still valid even if it does not testator
name an heir. 2. Heir has accused the testator of a
crime for which the law prescribes
- It remains valid even if the named
imprisonment for 6 years or more
heir does not cover the entire estate.
3. Heir by fraud, violence, intimidation
- The will is also valid if the person or undue influence causes the
named as an heir is unable to inherit testator to make a will
due to incapacity or if they choose
4. Refusal without justifiable cause to
not to accept the inheritance.
support the testator who
disinherits such an heir.
Disinheritance
- Testamentary disposition by which Right of representation
a compulsory heir is deprived of, or Right created by fiction of law
excluded from the inheritance to where the representative is raised to the
which he has a right. place and degree of the person
- disinheritance is a legal action used represented and acquires the right which
to exclude compulsory heirs from the latter would have if he was living or
their rightful inheritance, but it does could have inherited.
not apply to voluntary heirs, who are The representative is legally
considered to be in the same position as
the person they are representing. This
means they inherit the rights and
responsibilities that the original person
Legitimacy:
would have had.
1. Death a. If the nephews and nieces are
2. Incapacity illegitimate (born out of wedlock),
3. Disinheritance they are not allowed to inherit from
their parent's relatives, such as
representative(s) shall not inherit uncles or aunts, due to Article 992
more than the person they represent of the new civil code.
would inherit.
Limitations:
Representation in not available to: a. Grandnephews and grandnieces
1. Compulsory heirs (children of nephews and nieces)
a. Repudiation - the one who cannot inherit by right of
repudiates cannot be representation in the collateral line
represented (relatives not directly in the line of
2. Voluntary heirs descent).
3. Voluntary heirs, legatees and
devisees who:
a. Predeceases the testator
b. Renounce the inheritance
Right of Representation: This legal
concept allows children to inherit the
share of their deceased parent. In this
context, it applies to the children of
brothers or sisters (nephews and nieces)
of the deceased person.
Conditions:
a. This right is only applicable if the
deceased person (the decedent)
has no direct descendants (like
children or grandchildren).
b. Nephews and nieces can inherit
only if they are alive at the time of
their uncle's or aunt's death.
c. They must share the inheritance
with at least one living uncle or
aunt.
