fideicommissary paper: effects of nullity of first heir on the validity of the fideicommissary

8/10/2019 Fideicommissary Paper: Effects of Nullity of First Heir on the Validity of the Fideicommissary

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Effect of Nullity of the Fiduciary to the Validity of the

Fideicommissary Substitution

Int roduct ion

The law portrays two opposing roles in the field of

successionit is the authority that gives a man the power to freely

dispose of his property and it is also the authority which restricts or

controls to a certain point the extent of the enjoyment of this

privilege.

Though the law reserves an aliquot part of a persons wealth

to his or her compulsory heirs by way of legitime, a decedent is still

vested with the power and freedom to dispose of the free portion

of such wealth by way of a will.

Testamentary succession is that which is by virtue of a will, a

person is permitted, with the formalities prescribed by law, to

control to a certain degree the disposition of his estate (Article

783, NCC), to take effect after his death. It is through a will that a

person may appoint certain properties to be received as

inheritance by specific persons of interest and to prohibit others

from receiving through disinheritance.


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By virtue of instituting an heir in his or her will, the testator

may designate person or persons who are to succeed him in his

property, transmissible rights, and obligations (Article 840, NCC).

As a complement to the testators freedom to dispose of his

property, he may also designate a substitute to the primarily

instituted heir as a second preference to receive such inheritance.

The concept of a substitution is that in which an heir is instituted or

is called upon into succession and in default thereof a secondary

heir is to receive such inheritance in default of the first heir.

The main purpose of devising substitution is to prevent the

property from falling into the ownership of people not desired by

the testator and to prevent the effects of intestate succession (6

Manresa 116)1. The gist of this kind of order to appoint a dummy

heir in case the first heir is unable or unwilling to accept the

inheritance2.

Fideicommissary substitution has undergone various

transformations. It has been adapted by our country because the

16 Manresa 116; Paras, E. (2008). Civil Code of the Philippines Annotated. p. 228Rex Bookstore, Inc.2Kirilova and Bogdan. Institution of Hereditary Substitution in the Inheritance Law: ARather-Legal Analysis. World Applied Sciences Journal 27 (Education, Law,Economics, Language and Communication): 531-535, 2013,http://www.idosi.org/wasj/wasj27(elelc)13/109.pdf


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Civil Code of the Philippines is based on Spanish Civil Code which

provides the same. The overture of disadvantages on the practical

application of such in inheritance law such as that the property

may be locked up or entailed in a family for a long period3and that

the free circulation of property is somewhat curtailed, resulting in

suspended ownership has caused opposition to it.

One of the reason by which the practice of fideicommissary

is frowned upon can be traced back to history. By the 16th century

95% of the land in France was inalienable as a result of being

subject to fideicommissary substitutions. And thus, the France

devised means to limit of two lives which was then increased to

four lives for every fideicommissary substitutions devised.

However, the French Civil Code of 1804 instituted general

prohibitions on fideicommissary substitutions and on testamentary

dispositions and donations to persons not yet conceived4.

In France, however, later on, the prohibition of the

fideicommissary substitution was removed to allow broader

3Report of Code of Commission, p.1114MS Amos, "Perpetuities in French Law", (1934) 16 J Comp Legis & Int Law, 3rdseries, 18-24 at p 18.cited inScotland Law Commission. (2010). Discussion Paper on Accumulation of

Income and Lifetime of Private Trusts . Scotland Law Commission: Discussion Paper, 146-150.


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According to a study by Kirillovykh A.A., etc.7, it was stated

that the Civil Code of the Russian Federation did not recognize

fiduciarius substitution and such testamentary provisions were

considered invalid. In addition, Russian legislation contradicts with

the institution of fiduciarius substitution, ratiocinating that

It substantially restricts the rights of an owner, who cannot

dispose of the estate at his discretion, even though being the

property holder.

Dispos i t ive Character of the Wil l and

the Act of Subst i tut ion

One of the characteristics of a will is that it is dispositive in

character. And it is demonstrated through the act of instituting

designated property to appointed or chosen person.

Substitution refers to the designation by the testator of a

person or persons to take the place of the heir or heirs first

instituted.

7Kirilova and Bogdan. Institution of Hereditary Substitution in the Inheritance Law: ARather-Legal

Analysis. World Applied Sciences Journal 27 (Education, Law, Economics,Language and Communication): 531-535, 2013,http://www.idosi.org/wasj/wasj27(elelc)13/109.pdf


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In case there is a vacant portion in the estate, substitution is

one remedy provided by law to distribute this vacant portion.

However, the designation of the substitute must be expressly

provided by the testator in the will8.

Under substitutions in general, the testator may either (1)

provide for the designation of another heir to whom the property

shall pass in case the original heir should die before him/her,

renounce the inheritance or be incapacitated to inherit, as in a

simple substitution, or (2) leave his/her property to one person with

the express charge that it be transmitted subsequently to another

or others, as in a fideicommissary substitution. (Rabadilla vs. CA,

2000)9.

In simple substitutions, the second heir takes the inheritance

in default of the first heir by reason of incapacity, predecease or

renunciation (Article 859, NCC)10. In a fideicommissary

substitution, the first heir is strictly mandated to preserve the

property and to transmit the same later to the second heir11.

8Mison. (2010). Wills and Succession Better Eplained.Rex Bookstore, Inc.9Rabadilla vs. CA, GR No. 113725 (Supreme Court June 29, 2000).10Article 859, New Civil Code of the Philippines.11Arturo Tolentino, Commentaries and Jurisprudence on the Civil Code, Volume III,p. 212.


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The act of designating a substitute to the primarily instituted

heir is also considered as a conditional kind institution since a

person is called to succession by virtue of a will, similar to an

institution, however, the difference is that a condition a imposed

for the instituted heir to receive such inheritance and that is the

death of the primarily instituted heir or upon the default of the

latter.

The substitution of an heir maybe extinguished12 on certain

grounds, namely: that the substitute predeceases the testator; that

the substitute is incapacitated; that the substitute renounces the

inheritance that the institution of heir is annulled; that the

institution; that the substitution is revoked by the testator; or that a

will is void or disallowed or revoked. In default of these grounds,

substitution may still apply when the testator expressly stipulates

another ground or contingency in the will for substitution to apply.

12Article 859, The New Civil Code of the Philippines


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Fideicomm issary Subst i tut ion

The provision of Article 863 of the New Civil Code provides

for the definition of fideicommissary substitution or otherwise

called indirect substitution:

Art. 863. A fideicommissary substitution by virtue of

which the fiduciary or first heir instituted is entrusted

with the obligation to preserve and to transmit to a

second heir the whole or part of the inheritance, shall

be valid and shall take effect, provided such substitution

does not go beyond one degree from the heir originally

instituted, and provided, further, that the fiduciary or first

heir and the second heir are living at the time of the

death of the testator.

In contrast to the other aforementioned kind of substitution,

the most important difference is that while in the simple or

common substitution, where only one heir inherits or successively,

in fideicommissary substitution, both heirs inherit simultaneously13.

13Paras, E. (2008). Civil Code of the Philippines Annotated.Rex Bookstore, Inc.


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It basically designates an heir to an heir by providing a first

heir which is the fiduciary and a second heir which is the

fideicommissary.

A fideicommissary substitution may only be imposed on the

free disposal or free portion of the estate of the testator since the

law expressly prohibits, as provided in Article 864, the burden that

it may set upon the legitime of the compulsory heirs

Art. 864. A fideicommissary substitution can never

burden the legitime.

The legitime of the compulsory may not be burdened by the

act of appointing a fideicommissary substitute because the

legitime is part of the testators property which he cannot dispose

of because the law has reserved it for certain heirs who are,

therefore, called compulsory heirs (Article 886, NCC)14.

However, conditions or limitations are provided for in order

that there may be a valid fideicommissary substitution. Firstly,

there must be a first heir or called the fiduciary. The fiduciary

receives the property upon the testators death, or if in any case a

14Article 886, New Civil Code of the Philippines


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condition is imposed, then by the fulfilment of such suspensive

condition imposed in the will therewith.

Secondly, an absolute obligation is imposed upon the

fiduciary to preserve and to transmit to a second heir the property

at a given time.

In the case of Rabadilla vs. CA15, under the Codicil the

testator provided that the instituted heir is allowed to alienate the

property provided the negotiation is with the near descendants or

the sister of the testatrix. Thus, the Court found that the very

important element of a fideicommissary substitution is lacking; the

obligation clearly imposing upon the first heir the preservation of

the property and its transmission to the second heir."Without this

obligation to preserve clearly imposed by the testator in his will,

there is no fideicommissary substitution."

However, the obligation to transmit the property as

discussed by Mison, seeks to prevent the withdrawal of the

property from circulation. If the testator prohibits the alienation for

a definite period of time, it cannot exceed twenty years as

provided in Article 870.

15Rabadilla vs. CA, GR No. 113725 (Supreme Court June 29, 2000).


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Article 870 provides that the disposition of the testator

declaring all or part of the estate inalienable for more than twenty

years is void. Therefore, what is declared void is the testamentary

disposition prohibiting alienation after the twenty-year period. In

the interim, the provision is not invalid. The will should be

interpreted liberally and in favor of making the disposition

operative (Rodriguez vs. CA, 1969)16.

While the law prohibits the disposition or alienation of the

property and requires the first heir to deliver to the second heir all

that is subject to the substitution, the law allows the fiduciary such

deductions as may arise from legitimate expenses, credits, and

improvements17.

Thirdly, there is a second heir who must be one degree from

the first heir. The term degree refers to degree of relationship

(Palacios vs. Ramirez, 1982)18. In the case of Rabadilla vs. CA, a

fideicommissary substitution is therefore, void if the first heir is not

related by first degree to the second heir.

16Rodriguez vs. CA, G.R. No. L-28734 (Supreme Couty March 28, 1969).

17Mison. (2010). Wills and Succession Better Eplained. Rex Bookstore, Inc.18Palacios vs. Ramirez, G.R. No. L-27952 (Supreme Court February 18, 1982).


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As explained by Tolentino, Scaevola Maura, and Traviesas

construe "degree" as designation, substitution, or transmission.

The Supreme Court of Spain has decidedly adopted this

construction. From this point of view, there can be only one

tranmission or substitution, and the substitute need not be related

to the first heir. Manresa, Morell and Sanchez Roman, however,

construe the word "degree" as generation, and the present Code

has obviously followed this interpretation. by providing that the

substitution shall not go beyond one degree "from the heir

originally instituted." The Code thus clearly indicates that the

second heir must be related to and be one generation from the

first heir. From this, it follows that the fideicommissary can only be

either a child or a parent of the first heir. These are the only

relatives who are one generation or degree from the fiduciary

(Ramirez vs. Vda. de Ramirez et al, 1982)19.

However, in considering the other interpretation or if the

provision is liberally construed, one degree is considered to

connote one transferrather than merely one degree of relationship

or one generation.

19Ramirez vs. Vda. de Ramirez et al, G.R. No. L-27952 (Supreme Court February15, 1982).


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According to one school of thought, the word degree in Art.

863, Civil Code, on fideicommissary substitution, means llamiento

or one transfer, one transmission, or one substitution20.

In a comment by Mison21, the one degree rule also requires

that there shall only be one transfer. While it is permissible to have

a fideicommissary substitution to ones spouse and their

childrenas a whole, it is not permissible to have a fi deicommissary

substitution in favor of the spouse and the fi rst child then to the

second child and so on.

Lastly, the first and second heir must both be living and

qualified at the time of the death of the testator. According to

Paras, the reason for this requirement is to reduce as much as

possible the number of years the property will have to be entailed.

In addition, in a situation where in the heir is still not conceived

upon the death of the testator, a longer time may elapse before

the fideicommissary may hold on or receive to such inherited

property from the testator.

Thus, what is merely required by the law is that both first heir

and second heirs be conceived and has complied with the rest of

20Moreno. (1982). Philippine Law Dictionary.Rex Bookstore, Inc.21Mison. (2010). Wills and Succession Better Eplained. Rex Bookstore, Inc.


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the requirements prescribed by law. It is because at the time of the

testator's death, right of the first and second heir become vested.

For that reason, the heirs of the fideicommissary shall

receive what is intended to be given to the later in case the

fideicommissary predeceases the first heir or fiduciary, as provided

in Art. 866, NCC:

The second heir shall acquire a right to the succession

from the time of the testator's death, even though he

should die before the fiduciary. The right of the second

heir shall pass to his heirs.

All the requisites of a fideicommissary substitution, are

present in the case of substitution now under consideration, to wit:

that a first heir primarily called to the enjoyment of the estate and

in this case the plaintiff was instituted an heiress, called to the

enjoyment of the estate; An obligation clearly imposed upon the

heir to preserve and transmit to a third person the whole or a part

of the estate; and that the will institutes second heir. As a matter of

fact, however, clause XI provides for the administration of the

estate in case the heiress instituted should die after the testatrix

and while the substitute heirs are still under age. It should also be


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noted that said clause IX vests in the heiress only the right to

enjoy but not the right to dispose of the estate. It says, she may

enjoy it, but does not say she may dispose of it (Perez vs.

Garchiterena, 1930)22.

It should be remembered that when a testator merely names

an heir and provides that if such heir should die a second heir also

designated shall succeed, there is no fideicommissary substitution.

The substitution should then be construed as a vulgar or simple

substitution under Art. 859 of the Civil Code but it shall be effective

only if the first heir dies before the testator (Kilayko vs. Tengco,

1992)23.

Effect of Nul li ty of Fideicomm issary Subst i tut ion

The causes for the nullification of a fideicommissary may be

due to the failure to satisfy the conditions required for the validity

of a fideicommissary substitution, namely; that the institution does

not go beyond one degree from the heir originally instituted; that

the substitution be expressly made (Article 865, NCC); that both

the fiduciary and beneficiary be living at the time of the testators

22Perez vs. Garchiterena, G.R. No. L-31703 (Supreme Court February 13, 1930).23Kilayko vs. Tengco, G.R. No. 45425 (Supreme Court March 27, 1992).


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death; that it should be imposed on the free portion and not on the

legitime (Article 864, NCC).

The absence of one or any of the aforementioned conditions

or limitations for a valid fideicommissary shall render the

appointment or institution of a fideicommissary null or void.

However, when any or all of the conditions aforementioned

are not satisfied, it shall, in effect, not prejudice the validity of the

institutions of the first heirs or fiduciary and it will only be deemed

as not written in the institution of the fideicommissary substitution

re provided for in the will.

Art. 868. The nullity of the fideicommissary substitution

does not prejudice the validity of the institutions of the

heirs first designated; the fideicommissary clause shall

simply be considered as not written.

Effect o f Nul l i ty of First Heir

The law expressly provides for the effect of the nullity of the

fideicommissary substitution on the validity of the first heir or the

fiduciary, however, it does not, in any case, provide for the effect

conversely.


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The nullity of the fideicommissary substitution does not

prejudice the validity of the institution of the heirs first designated;

the fideicommissary clause shall simply be considered as not

written.

The effect of the nullity of the first heir or the fiduciary on the

validity of the fideicommissary substitution is not expressly

provided for among the provisions of the New Civil Code of the

Philippines.

Lapuente (2010), in a comparative study of old Spanish laws

and reforms included under new Spanish Laws, stated that the law

allows the entire forced share of descendants to be subject to a

fideicommissary substitution in favour of the descendant

disqualified as unable by judgment of the Court (articles 808, 818

and 782 Cc.); thus, forced heirs who are fideicommissary

substitutes will not receive anything until the disqualified fiduciary

dies24.

In contrast to Philippine laws which prescribe that the

testator cannot impair the legitime because the legitime is

24Electronic Journal of Comparative Law, vol. 14.2 (October 2010),http://www.ejcl.org


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reserved to the compulsory heirs by law and is passed by

operation of law.

Art. 872 provide that the testator cannot impose any

charge, condition or substitution whatsoever upon the

legitimes prescribed in this Code. Should he do so, the

same shall be considered as not imposed.

Though the first heir or the fiduciary has been nullified to

hold the property entrusted, to preserve, and at a given time, to

transmit the property to a second heir provided for by the testator,

the Spanish Civil Code allows the subsistence of the

fideicommissary substitution and that the second hair may still

receive the inheritance upon the death of the fiduciary even

though he has already been considered an invalid first heir.

Since the fideicommissary is actually inheriting from the

testator upon the opening of the succession or upon his death and

his possession, enjoyment and ownership of the property is merely

halted by the temporary designation of such inheritance to a

fiduciary, who is vested with the obligation to preserve and at a

given time to transmit the property to the fideicommissary, then the


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nullity of the institution of the first heir or the fiduciary shall not in

point of fact affect or nullify the fideicommissary as well.

In the discussion of Mison25 of Article 866 of the New Civil

Code, he explained that the preference between the fiduciary and

the fideicommissary can be seen in two views--from the point of

view of permanency and from the point of view of immediate

benefit. From the point of view of permanency, the

fideicommissary appears to be the preferred heir. From the point

of view of immediate benefit, the fiduciary may well be considered

as the preferred heir.

At the time of the testator's death, right of the first and

second heir become vested. It shall only seem as if the inheritance

is immediately transmitted to the fideicommissary since the true

intent of the testator is to dispose of such property and designate

its recipient upon his death. The fideicommissary shall directly

succeed to the testator without the intermission of setting the

property to the hand of the fiduciary or the necessity of satisfying

the condition of the transfer which is the happening death of the

fiduciary.

25Mison. (2010). Wills and Succession Better Eplained. Rex Bookstore, Inc.


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fideicommissary paper: effects of nullity of first heir on the validity of the fideicommissary

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