a. Succession occurs at the time of death – Art.

777

1. Uson v. Del Rosario, 92 Phil. 530

FACTS:

This case is about the action for recovery of the ownership and possession of 5 parcels of land in
Pangasinan, filed by Maria Uson against Maria Del Rosario and her four children.

Fuastino, husband of Maria Uson, died in 1945 and left no other heir except his wife. However, Maria
Uson claims that when Faustino died, Maria Del Rosario, his common law wife, took possession of his
properties, denying Uson her of her rights.

Maria Del Rosario, however, argues that while Faustino was still alive. He executed a public document to
declare his separation with Maria Uson and gave her a parcel of land in return she would renounce her
right to inherit any other property from Faustino.

ISSUE:

Whether Maria has a stronger claim to the properties of Faustino - YES

RULING:
The court held that the properties should belong to the heirs of the decedent at the time of his death.
Faustino died during 1945, prior to the new civil code. In the old civil code, illegitimate children may not
inherit from their illegitimate parents.
Furthermore, while Maria Uson did expressly renounce to inherit future properties thather husband may
acquire, the court said they cannot entertain this because future inheritance may not be subjects to a
contract.

2. De Borja v. Vda. De Borja, 46 SCRA 577 (1972)

FACTS:

Francisco de Borja filed a petition for probate of the will of his wife who died, Josefa Tangco, with the
CFI of Rizal. He was appointed executor and administrator, until he died; his son Jose became the sole
administrator. Francisco had taken a 2nd wife Tasiana before he died; she instituted testate proceedings
with the CFI of Nueva Ecija upon his death and was appointed special administatrix. Jose and Tasiana
entered upon a compromise agreement, but Tasiana opposed the approval of the compromise agreement.
She argues that it was no valid, because the heirs cannot enter into such kind of agreement without first
probating the will of Francisco, and at the time the agreement was made, the will was still being probated
with the CFI of Nueva Ecija.

ISSUE:

W/N the compromise agreement is valid, even if the will of Francisco has not yet been probated.

RULING:

YES, the compromise agreement is valid.

The agreement stipulated that Tasiana will receive P800,000 as full payment for her hereditary share in
the estate of Francisco and Josefa.

There was here no attempt to settle or distribute the estate of Francisco de Borja among the heirs thereto
before the probate of his will. The clear object of the contract was merely the conveyance by Tasiana
Ongsingco of any and all her individual share and interest, actual or eventual, in the estate of Francisco de
Borja and Josefa Tangco. There is no stipulation as to any other claimant, creditor or legatee.

And as a hereditary share in a decedent’s estate is transmitted or vested immediately from the moment of
the death of such causante or predecessor in interest (Civil Code of the Philippines, Art. 777) there is no
legal bar to a successor (with requisite contracting capacity) disposing of her or his hereditary share
immediately after such death, even if the actual extent of such share is not determined until the
subsequent liquidation of the estate.

3. Lorenzo v. Posadas, 64 Phil. 353

FACTS:
Thomas Hanley died, leaving a will and a considerable amount of real and personal properties.
Proceedings for the probate of his will and the settlement and distribution of his estate were begun in the
CFI of Zamboanga. The will was admitted to probate.

The CFI considered it proper for the best interests of the estate to appoint a trustee to administer the real
properties which, under the will, were to pass to nephew Matthew ten years after the two executors named
in the will was appointed trustee. Moore acted as trustee until he resigned and the Lorenzo herein was
appointed in his stead.

During the incumbency of the Lorenzo as trustee, the defendant Collector of Internal Revenue (Posadas)
assessed against the estate an inheritance tax, together with the penalties for deliquency in payment.
Lorenzo paid said amount under protest, notifying Posadas at the same time that unless the amount was
promptly refunded suit would be brought for its recovery. Posadas overruled Lorenzo’s protest and
refused to refund the said amount. Plaintiff went to court. The CFI dismissed Lorenzo’s complaint and
Posadas’ counterclaim. Both parties appealed to this court

ISSUE:

(a) When does the inheritance tax accrue and when must it be satisfied?

RULING:

The accrual of the inheritance tax is distinct from the obligation to pay the same.

Acording to article 657 of the Civil Code, “the rights to the succession of a person are transmitted from
the moment of his death.”. the heirs succeed immediately to all of the property of the deceased ancestor.
The property belongs to the heirs at the moment of the death of the ancestor as completely as if the
ancestor had executed and delivered to them a deed for the same before his death.”

Whatever may be the time when actual transmission of the inheritance takes place, succession takes place
in any event at the moment of the decedent’s death. The time when the heirs legally succeed to the
inheritance may differ from the time when the heirs actually receive such inheritance. ” Thomas Hanley
having died on May 27, 1922, the inheritance tax accrued as of the date.
From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the obligation
to pay the tax arose as of the date. The time for the payment on inheritance tax is clearly fixed by section
1544 of the Revised Administrative Code as amended by Act No. 3031, in relation to section 1543 of the
same Code. The two sections follow:

SEC. 1543. Exemption of certain acquisitions and transmissions. — The following shall not be taxed:

(a) The merger of the usufruct in the owner of the naked title.

(b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the
trustees.

(c) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance
with the desire of the predecessor. xx

SEC. 1544. When tax to be paid. — The tax fixed in this article shall be paid:

(a) In the second and third cases of the next preceding section, before entrance into possession of the
property.

(b) In other cases, within the six months subsequent to the death of the predecessor; but if judicial
testamentary or intestate proceedings shall be instituted prior to the expiration of said period, the payment
shall be made by the executor or administrator before delivering to each beneficiary his share.

The instant case does[not] fall under subsection (a), but under subsection (b), of section 1544 above-
quoted, as there is here no fiduciary heirs, first heirs, legatee or donee. Under the subsection, the tax
should have been paid before the delivery of the properties in question to Moore as trustee.

YES
The defendant maintains that it was the duty of the executor to pay the inheritance tax before the
delivery of the decedent’s property to the trustee. Stated otherwise, the defendant contends that
delivery to the trustee was delivery to the cestui que trust, the beneficiary in this case, within the meaning
of the first paragraph of subsection (b) of section 1544 of the Revised Administrative Code. This
contention is well taken and is sustained. A trustee is but an instrument or agent for the cestui que trust

The appointment of Moore as trustee was made by the trial court in conformity with the wishes of the
testator as expressed in his will. It is true that the word “trust” is not mentioned or used in the will but the
intention to create one is clear. No particular or technical words are required to create a testamentary trust.
The words “trust” and “trustee”, though apt for the purpose, are not necessary. In fact, the use of these
two words is not conclusive on the question that a trust is created. ” To constitute a valid testamentary
trust there must be a concurrence of three circumstances:

(1) Sufficient words to raise a trust;

(2) a definite subject;

(3) a certain or ascertain object; statutes in some jurisdictions expressly or in effect so providing.”

There is no doubt that the testator intended to create a trust. He ordered in his will that certain of his
properties be kept together undisposed during a fixed period, for a stated purpose. The probate court
certainly exercised sound judgment in appointmening a trustee to carry into effect the provisions of the
will

As the existence of the trust was already proven, it results that the estate which plaintiff represents has
been delinquent in the payment of inheritance tax and, therefore, liable for the payment of interest and
surcharge provided by law in such cases.

The delinquency in payment occurred on March 10, 1924, the date when Moore became trustee. On that
date trust estate vested in him. The interest due should be computed from that date.

NOTES: Other issues:

(a) When does the inheritance tax accrue and when must it be satisfied?

The accrual of the inheritance tax is distinct from the obligation to pay the same.

Acording to article 657 of the Civil Code, “the rights to the succession of a person are transmitted from
the moment of his death.” “In other words”, said Arellano, C. J., “. . . the heirs succeed immediately to all
of the property of the deceased ancestor. The property belongs to the heirs at the moment of the death of
the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same
before his death.”

Whatever may be the time when actual transmission of the inheritance takes place, succession takes place
in any event at the moment of the decedent’s death. The time when the heirs legally succeed to the
inheritance may differ from the time when the heirs actually receive such inheritance. ” Thomas Hanley
having died on May 27, 1922, the inheritance tax accrued as of the date.

From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the obligation
to pay the tax arose as of the date. The time for the payment on inheritance tax is clearly fixed by section
1544 of the Revised Administrative Code as amended by Act No. 3031, in relation to section 1543 of the
same Code. The two sections follow:

SEC. 1543. Exemption of certain acquisitions and transmissions. — The following shall not be taxed:

(a) The merger of the usufruct in the owner of the naked title.

(b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the
trustees.

(c) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance
with the desire of the predecessor. xx

SEC. 1544. When tax to be paid. — The tax fixed in this article shall be paid:
(a) In the second and third cases of the next preceding section, before entrance into possession of the
property.

(b) In other cases, within the six months subsequent to the death of the predecessor; but if judicial
testamentary or intestate proceedings shall be instituted prior to the expiration of said period, the payment
shall be made by the executor or administrator before delivering to each beneficiary his share.

The instant case does[not] fall under subsection (a), but under subsection (b), of section 1544 above-
quoted, as there is here no fiduciary heirs, first heirs, legatee or donee. Under the subsection, the tax
should have been paid before the delivery of the properties in question to Moore as trustee.

(b) Should the inheritance tax be computed on the basis of the value of the estate at the time of the
testator’s death, or on its value ten years later?

If death is the generating source from which the power of the estate to impose inheritance taxes takes its
being and if, upon the death of the decedent, succession takes place and the right of the estate to tax vests
instantly, the tax should be measured by the value of the estate as it stood at the time of the decedent’s
death, regardless of any subsequent contingency value of any subsequent increase or decrease in value

(c) In determining the net value of the estate subject to tax, is it proper to deduct the compensation
due to trustees?

A trustee, no doubt, is entitled to receive a fair compensation for his services. But from this it does not
follow that the compensation due him may lawfully be deducted in arriving at the net value of the estate
subject to tax. There is no statute in the Philippines which requires trustees’ commissions to be deducted
in determining the net value of the estate subject to inheritance tax
(d) What law governs the case at bar? Should the provisions of Act No. 3606 favorable to the tax-
payer be given retroactive effect?

A statute should be considered as prospective in its operation, whether it enacts, amends, or repeals an
inheritance tax, unless the language of the statute clearly demands or expresses that it shall have a
retroactive effect, . . . .” Act No. 3606 itself contains no provisions indicating legislative intent to give it
retroactive effect. No such effect can be given the statute by this court.

4. Rioferio v. CA, G.R. No. 129008, 13 January 2004

FACTS:
On May 13, 1995 Alfonso Orfinada died without a will, leaving several personal and real properties. He
was survived by his widow Esperanza and his children Lourdes, Alfonso, Nancy, Alfonso, Christopher,
Angelo.

Alfonso had an affair with one, Teodora Riofero – petitioner in the case.
6 months later, Orfinada’s children found out that Teodora Riofero executed an extrajudicial settlement
over Alfonso’s properties and were able to obtain a loan using the properties.
As a response, the children filed for the annulment/rescission of the Extra judicial settlement.

Teodora Riofero argued that the properties indicated in the EJS originally belonged to her parents and that
Alfonso managed to register them under his name. Furthermore, she argued that Esperanza and kids are
not the parties-in-interest but rather Alfonso.
This motion was denied by the RTC and the CA.

ISSUE:

Whether the heirs may bring suit to recover property of the estate pending the appointment of an
administrator is the issue in this case. - YES

RULING:
The court held that the heirs without a doubt have legal personality to bring a suit in behalf of the estate of the
decedent. Art. 777 – the rights to succession are transmitted from the moment of death of the decedent.

5. Pasco v. Heirs of De Guzman, G.R. No. 165554, 26 July 2010

FACTS:
This case is about the loan that the Pascos obtained from Filomina. The Pascos obtained a loan of PHP 140,000 from
Filomina, securing the loan with their Isuzu Jeep. When Filomina died, her heirs wanted to collect either the debt of
the Pasco or the Jeep that was secured through a Chattel Mortgage. However, the Pascos did not respond to either
request. It was not until the heirs decided to file a case with the MTC that the parties agreed to sign a compromise
agreement where Paco will pay the 140,000 loan plus 18,700 for miscellaneous expenses incurred during the case.
The compromise agreement further included an instalment plan for payment and a monthly interest of 5%.

However, 3 months later, the Pascos contended the validity of the compromise agreement, arguing that (1) it was
written in a language they did not understand; (2) the heir, crescencia (who was representing her siblings) had no
authority to represent herself and her co-heirs because the Filomena’s estate had a personality of its own and they
don’t have the capacity to sue on behalf of the estate, and (3) a procedural argument that the MTC had no
jurisdiction over the amount being disputed

ISSUE:
The relevant issue is whether or not the heirs of Filomena have the capacity to sue for collection of the proceeds of
the loan, on behalf of the estate - YES
RULING:
Yes, they have the right to sue on behalf of the Estate of Filomena.
Article 777 of the Civil Code provides that the rights to the succession are transmitted from the moment of
death of decedent.
Here, while normally Filomena’s estate does have a different juridical personality, the right to sue for
collection of loan was transmitted to the heirs when Filomena passed away.
Therefore, the court denied Pasco’s petition and ruled that the heirs have the right to sue for the sum of
money, but the delivery of which may only be released once Filomena’s estate has been settled.

6. Balus v. Balus, G.R. No. 168970, 15 January 2010

FACTS:
In this case, Celestino Balus and Saturnino Balus are brothers. Their dad, Rufo, had a 3-hectare land with certain
improvements located in Illigan City. In 1979, Rufo mortgaged the land for a loan with the Rural Bank of Maigo.
However, Rufo failed to pay for the loan and his land was foreclosed. The redemption period lapsed and he was not
able to repurchase the land. Rufos died in 1984 and by 1989, the Balus brothers executed an Extrajudicial Settlement
of Estate. They knew about the parcel of land that was lost to the bank and still wanted to redeem it. They adjudged
that each of them would have one-thirds of the land. Three years later, Saturnino Balus repurchased the land from
the bank and wanted to assume possession of the property. But his brother, Celestino, was still occupying the land.
So Saturnino filed for a complaint for recovery of possession and damages. The RTC ruled in favor of Saturnino.
Celestino appealed and argued that when they executed the Extrajudicial Settlement of Estate, they intended to
maintain a co-ownership of the property (1/3 1/3)

ISSUE:

Whether Celestino had a right to 1/3 of the property - NO

RULING:
Celestino had no right to 1/3 of the property because it was never co-owned in the first place.
The law provides that the rights to a person’s succession are transmitted from the moment of his death. Furthermore,
the inheritance of a person consists of the property and transmissible rights and obligations existing at the time of his
death.
Here, when Rufo died, he no longer owned the parcel of land. Therefore, it was wrong to assume that ownership of
which, including the rights and obligations, would pass on from Rufo to his sons.

7. Coronel v. CA, G.R. No. 103577, 7 October 1996

FACTS:
In this case, the Coronels agreed to sell the house they inherited from their father to Ramona Alcaraz for 1,240,000.
The agreement was Ramona will make a down payment of 50,000 and once the property is under the names of the
Coronels, Ramona will pay the balance of 1,190,000 and the Coronels will execute a Deed of Absolute Sale.
However, when the property was transferred to the names of the Coronels, they didn’t follow through with the
agreement but instead decided to sell to a Catalina Mabanag for 1,580,000. (Higher than the amount agreed upon
with Ramona).
To rescind the sale, Coronels deposited the 50,000 that was paid to them back to the account of Ramona
and eventually executed a deed of absolute sale to Catalina. As a result, Ramona filed a case for specific
performance with the RTC – which ruled in her favor.
The Coronels appealed and the CA also ruled in favor of Ramona.
ISSUE:
Whether the Coronels had the right to engage in a contract concerning their inherited property. - YES

RULING:
There was a perfected contract between the Coronels and Ramona.
The law provides that succession is a mode of acquisition where the property, rights and obligations to be extent and
value of the inheritance of a person are transmitted through his death.
Here, the Coronels are compulsory heirs of their dad. So, the very moment that their dad died, the rights and
obligations, with regard to the property, became binding to them.

(Another discussion on ESTOPEL was also present. They are estopped from claiming that they had no right to
transfer ownership of the property because they were able to sell the property to Catalina)

8. Parulan v. Garcia, G.R. No. 184148, 9 June 2014

FACTS:

This case is about an annulment of sale and reconveyance of a property.

This started with Pedro Calalang’s parcel of land. Pedro contracted two marriages. The first one was with
Encarnacion Silevrio. Pedro and Encarnacion acquired this land through Encarnacion’s mother. They stayed in this
land but never got to have it registered. Later, Encarnacion died and Pedro remarried with Elvira Calalang, Nora
Calalang being one of their children. It was only during the second marriage that Pedro decided to have the property
registered and later selling it to Nora Calalang.

The Respondents here contested Pedro’s ownership of the land because, they claimed that they are compulsory heirs
of Encarnacion Silverio and therefore co-own the property.
Pedro responded by arguing that the land was only acquired during the second marriage and that’s why the title is
named: Pedro Calalang married to Elvira Berba-Calalang
The RTC ruled in favor of the respondents. The CA then modified the decision

ISSUE:
Whether Pedro was the exclusive owner of the property prior to its transfer to his daughter, Nora. - YES

RULING:
Pedro was the exclusive owner of the property until his death on December 27, 1989.
The law provides that the rights to the property may only be transmitted from the moment the decedent dies.
Here, the respondent heirs may only have rights to the property when these rights are transmitted to them upon the
death of Pedro. Otherwise, Pedro had total rights to alienate the property and had validly sold it to Nora.

f. Kinds – Testamentary, Interstate or Mixed – Arts. 778-780

g. Heirs – Fractional Heirs, Devisees, Legatees – Art. 782

II. Testamentary Succession

a. Wills, In General – Arts. 783 – 787

1. Rabadilla v. CA, G.R. No. 113725, 29 June 2000

FACTS:

In this case, Aleja Belleza died and left a last will and testament. In this last will, she left behind a certain parcel of
land to Dr. Jorge Rabadilla with the condition that Jorge Rabadilla will annually give 75 piculs of export sugar and
25 piculs of domestic sugar to a Maria Merlina Coscolluete y Belleza until she dies. If Jorge dies, his heirs will have
this obligation to still give sugar to Maria Merlina Coscolluete y Belleza. If they sell/lease/mortgage the property,
the buyer/lessee/mortgagee shall give sugar to Maria Merlina. If they fail to give her sugar, she will take the
property and give it to Aleja’s closest descendant.

Jorge died and was survived by his wife and children (including the petitioner)
Here, Maria Merlina filed a complaint that Jorge’s heirs did not comply with the conditions of the donation, with a
prayer that the property be conveyed to Aleja Belleza’s closest surviving heir

ISSUE:

RULING:

2. Herreros v. Gil, 88 Phil. 260

FACTS:

ISSUE:

RULING:

3. Montinola v. Herbosa, C.A. Rep. 2nd 377

FACTS: Montinola filed an action against the heirs of Dr. Jose Rizal for recovery of possession of personal
property (the RIZAL RELICS) allegedly sold to him by Doña Trinidad Rizal. The trial court held that neither party
is entitled to the possession of such property, relying principally on the fact that in Rizal's Mi Ultimo Adios, there is
a line where Rizal bequeathed all his property to the Filipino people. The court argued that the handwritten work of
Rizal constitutes a holographic will giving the State all his property.

ISSUE: Does Mi Ultimo Adios constitute a last will?

HELD: No. An instrument which merely expresses a last wish as a thought or advice but does not contain a
disposition of property, and executed without Animus Standi cannot be legally considered a will. Rizal's Mi Ultimo
Adios is but a literary piece of work, and was so intended. It may be considered a will in a grammatical sense but not
in a legal or juridical sense. Moreover, it also lacks the requirements of a holographic will such as a statement of the
year month and day of its execution and his signature.

4. Vitug v. CA, 183 SCRA 755 (1990)

FACTS:

Romarico Vitug and Nenita Alonte were co-administrators of Dolores Vitug’s (deceased) estate. Rowena Corona
was the executrix. Romarico, the deceased’s husband, filed a motion with the probate court asking for authority to
sell certain shares of stock and real properties belonging to the estate to cover alleged advances to the estate, which
he claimed as personal funds. The advances were used to pay estate taxes.

Corona opposed the motion on ground that the advances came from a savings account which formed part of the
conjugal partnership properties and is part of the estate. Thus, there was no ground for reimbursement. Romarico
claims that the funds are his exclusive property, having been acquired through a survivorship agreement executed
with his late wife and the bank.

The agreement stated that after the death of either one of the spouses, the savings account shall belong to and be the
sole property of the survivor, and shall be payable to and collectible or withdrawable by such survivor.

The lower court upheld the validity of the agreement and granted the motion to sell. CA reversed stating that the
survivorship agreement constitutes a conveyance mortis causa which did not comply with the formalities of a valid
will. Assuming that it was a donation inter vivos, it is a prohibited donation (donation between spouses).

ISSUE:

W/N the survivorship agreement was valid.

RULING:
YES. The conveyance is not mortis causa, which should be embodied in a will. A will is a personal, solemn,
revocable and free act by which a capacitated person disposes of his property and rights and declares or complies
with duties to take effect after his death. The bequest or devise must pertain to the testator.

In this case, the savings account involved was in the nature of conjugal funds. Since it was not shown that the funds
belonged exclusively to one party, it is presumed to be conjugal.

It is also not a donation inter vivos because it was to take effect after the death of one party. It is also not a donation
between spouses because it involved no conveyance of a spouse’s own properties to the other.

It was an error to include the savings account in the inventory of the deceased’s assets because it is the separate
property of Romarico.

Thus, Romarico had the right to claim reimbursement.

A will is a personal, solemn, revocable and free act by which a capacitated person disposes of his his property and
rights and declares or complies with duties to take effect after his death.

Survivorship agreements are permitted by the NCC. However, its operation or effect must not be violative of the law
(i.e. used as a cloak to hide an inofficious donation or to transfer property in fraud of creditors or to defeat the
legitime of a forced heir).