TRANSFER AND Introduction

BUSINESS TAXATION
TRANSFER OF PROPERTY
Property- anything that is or may be the subject of ownership

Ownership- exclusive right of possessing, enjoying and disposing

of a property
MODES OF ACQUIRING
OWNERSHIP
1. Occupation
2. Intellectual Creation
3. Donation
4. Succession
5. Prescription
CONCEPT AND NATURE OF
TRANSFER TAXES
Transfer taxes- Tax imposed upon the gratuitous disposition of private
property

Estate tax- decedent heir

Donor’s tax- donor donee

Both estate and donor’s tax are EXCISE TAXES.

BASIC CONCEPTS OF Introduction
SUCCESSION
SUCCESSION
• It is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are
transmitted through his death to another or others either by his will or by
operation of law.
KINDS OF SUCCESSION
1. Testamentary or testate

2. Legal or intestate

3. Mixed
ELEMENTS OF SUCCESSION
1. Death of the decedent

2. Inheritance- includes all the property, rights and obligations of a person

which are not extinguished by his death
Devise- real property
Legacy- personal property

3. Successors- heirs, devisees, legatees

ELEMENTS OF SUCCESSION
4. Acceptance- may be expressed or tacit
- an heir may accept or repudiate an inheritance

Executor- appointed by the testator

Administrator- appointed by the court
TESTAMENTARY SUCCESSION
Will- It 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

Testate- if a person dies leaving a will

Codicil- an instrument that amends the provisions of a will

Probate of a will- court procedure by which a will is proved to be valid or invalid

CAPACITY AND INTENT TO
MAKE A WILL
1. At least 18 years of age; and
2. Of sound mind
Note: It is not necessary that the testator be in full possession of all his reasoning faculties, or that
his mind be wholly unbroken, unimpaired, or unshattered by disease, injury or other cause. It shall
be sufficient if the testator was able at the time of making the will to know the:
     a. nature of the estate to be disposed of;
     b. proper objects of his bounty; and
     c. character of the testamentary act

3. A married woman may make a will without the consent of her husband, and without the authority
of the court.
CAPACITY TO SUCCEED BY
WILL OR INTESTACY
• the heir, devisee or legatee must be living at the moment the succession opens, except in case
of representation, when it is proper

• a child already conceived at the time of death of the decedent is capable of succeeding
provided it be born later

• if the fetus had an intrauterine life of less than seven months, it is not deemed born if it dies
within 24 hrs after its complete delivery from the maternal womb

• State, provinces, municipal, corporations, private corporations, organizations, or associations

FORMS OF WILLS
• Every will must be in writing and executed in a language or dialect known to the
testator.

• Every will, other than a holographic will, must be subscribed at the end thereof by
the testator himself or by the testator’s name written by some or other person in his
presence, and by his express direction, and attested and subscribed by 3 or more
credible witnesses in the presence of the testator and of one another.

• Every will must be acknowledged before a notary public by the testator and the
witnesses.
FORMS OF WILLS
Holographic will- A will written entirely by the testator with his own hand
and not witnessed or attested.

• It is subject to no other form, and may be made in or out of the Philippines,

and need not be witnessed.
REVOCATION OF WILLS AND
TESTAMENTARY
DISPOSITIONS
• A will may be revoked by the testator at any time before his death.

• Any waiver or restriction of this right is void.

• A revocation of a will based on a false cause or an illegal cause is null and

void.
INSTITUTION OF AN HEIR
It is an act by virtue of which a testator designates in his will the person or
persons who are to succeed him in his property and transmissible rights and
obligations.
LEGITIME
It is the part of the testator’s property which he cannot dispose of because the
law has reserved it for certain heirs who are called compulsory heirs.
COMPULSORY HEIRS
1. Legitimate children and descendants, with respect to their legitimate parents and ascendants

2. In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate
children and descendants

3. The widow or widower

4. Acknowledged natural children, and natural children by legal fiction

5. Other illegitimate children

COMPULSORY HEIRS
• One who has no compulsory heirs may dispose by will of all his estate or any part
of it in favor of any person having capacity to succeed.

• One who has compulsory heirs may dispose of his estate provided he does not
contravene the provisions of the Civil Code with regard to the legitime of said heirs.
COMPULSORY HEIRS
Legitimate Legitimate Illegitimate
Children/ Parents/ Surviving Spouse Children/ Free Portion
Descendants Ascendants Descendants
Same as the
½ the legitime of a
1/2 excluded legitime of a varies
legitimate child
legitimate child
none surviving 1/2 none surviving none surviving 1/2
none surviving 1/2 1/4 none surviving 1/4
none surviving none surviving 1/2 none surviving 1/2
none surviving none surviving 1/3 1/3 1/3
DISINHERITANCE
•A compulsory heir may be deprived of his legitime for causes expressly
stated by law.

•Disinheritance can be effected only through a will wherein the legal cause
therefore shall be specified.
DISINHERITANCE OF
CHILDREN AND
DESCENDANTS
DISINHERITANCE OF A
SPOUSE
LEGAL OR INTESTATE
SUCCESSION
1. If a person dies without a will, or with a void will, or one which
subsequently lost its validity

2. When the will does not institute an heir to, or dispose of all the property
belonging to the testator. In such case, legal succession shall take place only
with respect to the property of which the testator has not disposed.
LEGAL OR INTESTATE
SUCCESSION

3. If the suspensive condition attached to the institution of heir does not

happen or is not fulfilled, or if the heir dies before the testator, or repudiates
the inheritance, there being no substitution, and no right of accretion takes
place

4. When the heir instituted is incapable of succeeding, expect in cases

provided in the Civil Code.
LEGAL OR INTESTATE
SUCCESSION
Intestacy- If a person died without leaving a will

The government provides a default estate plan under which the decedent’s estate is
disposed.
CONSANGUINITY
Consanguinity- It is the relation of persons descending from the same stock or
common ancestor.

Lineal Consanguinity- It subsists between persons of whom one is descended on a

direct line from the other

Son, father, grandfather, great-grandfather, upwards = DIRECT ASCENDING

LINE
Son, grandson, great-grandson, downwards = DIRECT DESCENDING LINE
CONSANGUINITY
Collateral Consanguinity- It subsists between persons who have the same
ancestors, but who not descend or ascend one from the other.
Ex: Uncle and nephew

Affinity- It is the connection existing in consequence of a marriage between each of

the married spouse and the kindred of the other.
Ex: Brother/Sister-in-law
RIGHT OF REPRESENTATION
Representation- It is a right created by fiction of law, by virtue of which the
representative is raised to the place and the degree of the person represented and
acquires the rights which the latter would have if he were living or if he could have
inherited.

The right of representation takes place in the direct descending line, but never in the
ascending.

In the collateral line, it takes place only in favor of the children of brothers or sisters,
whether they be of the full or half blood. a
ORDER OF INTESTATE
SUCCESSION
1. Legitimate children/descendants
2. Legitimate parents/ascendants
3. Illegitimate children/descendants
4. Surviving spouse
5. Collateral relatives within the 5th degree
6. The State
ORDER OF INTESTATE
SUCCESSION Other
Legitimate Illegitimate Brothers,
Legitimate Collateral
Children/ Children/ Surviving Sisters/Nep
Parents/ Relatives State
Descendant Descendant Spouse hews,
Ascendants w/in 5th
s s Nieces
degree
none none
entire excluded excluded excluded excluded
surviving surviving
½ if only none
excluded 1/2 excluded excluded excluded
child surviving
1/3 each if 2 excluded none
1/3 excluded excluded excluded
children surviving
none none none
Entire excluded excluded excluded
surviving surviving surviving
none
1/2 1/4 1/4 excluded excluded excluded
surviving
ORDER OF INTESTATE
SUCCESSION Other
Legitimate Illegitimate Brothers,
Legitimate Collateral
Children/ Children/ Surviving Sisters/Nep
Parents/ Relatives State
Descendant Descendant Spouse hews,
Ascendants w/in 5th
s s Nieces
degree
none none
1/2 1/2 excluded excluded excluded
surviving surviving
none none none none
entire excluded excluded
surviving surviving surviving surviving
none none none
1/2 1/2 excluded excluded
surviving surviving surviving
none none none none
entire excluded excluded
surviving surviving surviving surviving
none none none none none
entire excluded
surviving surviving surviving surviving surviving
ORDER OF INTESTATE
SUCCESSION Other
Legitimate Illegitimate Brothers,
Legitimate Collateral
Children/ Children/ Surviving Sisters/Nep
Parents/ Relatives State
Descendant Descendant Spouse hews,
Ascendants w/in 5th
s s Nieces
degree
none none none none none none
entire
surviving surviving surviving surviving surviving surviving