Gift giving
Epi breathed his last. His widow, Luz, is his only surviving compulsory heir. He left a will, which was admitted to probate. Among the assets listed in his will were three lots which are his exclusive properties.
At the time of his death, however, these lots were no longer owned by him—he, having donated them the year before he died to his favorite foundation, TFI, which had thereafter obtained title to said lots.
Feeling that the said donation left her practically destitute of any inheritance, Luz filed a case against TFI. She claimed that the donation must be reduced because it is inofficious as it prejudiced her legitime. Consequently, she argues that the resulting deduction be restored and conveyed or delivered to her.
Q: Does a person have an unrestricted right to donate all his properties during his lifetime?
A: No, a person’s prerogative to make donations is subject to certain limitations, one of which is that he cannot give by donation more than he can give by will (Art. 752, Civil Code). If he does, so much of what is donated as exceeds what he can give by will is deemed inofficious and the donation is reducible to the extent of such excess, though without prejudice to its taking effect in the donor’s lifetime or the donee’s appropriating the fruits of the thing donated (Art. 771, Civil Code).
Such a donation is, moreover, collationable that is, its value is imputable into the hereditary estate of the donor at the time of his death for the purpose of determining the legitime of the forced or compulsory heirs and the freely disposable portion of the estate. This is true as well of donations to strangers as of gifts to compulsory heirs, although the language of Article 1061 of the Civil Code would seem to limit collation to the latter class of donations.
Q: What is legitime?
A: Legitime is that part of the testator’s property which he cannot dispose of because the law has reserved it for certain heirs who are, therefore, called compulsory heirs. (Art. 886, Civil Code).
Q: What is the remedy of a compulsory heir if a donation made during the lifetime of the donor impaired their legitimes?
A: The compulsory heir is entitled to have the donation set aside in so far as inofficious: i.e., in excess of the portion of free disposal (Civil Code of 1889, Articles 636, 645), computed as provided in Articles 818 and 819, and bearing in mind that collationable gifts’ under Article 818 should include gifts made not only in favor of the forced heirs, but even those made in favor of strangers in computing the legitimes, the value of the property donated should be considered part of the donor’s estate.
Thus, the fact that the donated property no longer actually formed part of the estate of the donor at the time of his death cannot be asserted to prevent its being brought to collation. Indeed, it is an obvious proposition that collation contemplates and particularly applies to gifts inter vivos (those during made one’s lifetime).
The further fact that the lots donated were admittedly capital or separate property of the donor is of no moment, because a claim of inofficiousness does not assert that the donor gave what was not his, but that he gave more than what was within his power to give.
Q: What is the procedure in determining whether a donation made during the lifetime of the decedent is inofficious or not?
A: Pursuant to Articles 908, 909 and 910 of the Code, the procedure is as follows:
determination of the value of the property which remains at the time of the testator’s death;
determination of the obligations, debts and charges which have to be paid out or deducted from the value of the property thus left;
the determination of the difference between the assets and the liabilities, giving rise to the hereditary estate;
the addition to the net value thus found, of the value, at the time they were made, of donations subject to collation; and
the determination of the amount of the legitimes by getting from the total thus found the portion that the law provides as the legitime of each respective compulsory heir.
Deducting the legitimes from the net value of the hereditary estate leaves the freely disposable portion by which the donation in question here must be measured. If the value of the donation at the time it was made does not exceed that difference, then it must be allowed to stand.
But if it does, the donation is inofficious as to the excess and must be reduced by the amount of said excess. In this case, if any excess be shown, it shall be returned or reverted to Luz, the sole compulsory heir of the deceased Epi.
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Merry Christmas and a Happy New Year to All!!!
(Source: Vda de Tupas vs. Branch XLIII of the Hon. Regional Trial Court of Negros Occidental, No. L-65800 October 3, 1986)
Ma. Soledad Deriquito-Mawis is Dean, College of Law, Lyceum of the Philippines University; Chairperson of Philippine Association of Law Schools; and founder of Mawis Law Office
