Effect of Nullity of the Fiduciary to the Validity of the

Fideicommissary Substitution

Introduction
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.
Page 1 of 20

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

6 Manresa 116; Paras, E. (2008). Civil Code of the Philippines Annotated. p. 228
Rex Bookstore, Inc.
2
Kirilova and Bogdan. Institution of Hereditary Substitution in the Inheritance Law: A
Rather-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
Page 2 of 20

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 period3 and 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

Report of Code of Commission, p.111

MS Amos, "Perpetuities in French Law", (1934) 16 J Comp Legis & Int Law, 3rd
series, 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.
4

Page 3 of 20

inheritance planning was introduced in the adopted reforms

between 2001 and 20065.
The German Civil Code or Brgerliches Gesetzbuch, or
BGB dates from 1896 and has been highly influential, to a degree
matched only by the French Civil Code (1804), in many different
jurisdictions whose own codes draw on it.There are two main ways
in which a testator may create a perpetuity. The first is by means
of a fideicommissary substitution (Nacherbfolge) and the second is
through a fiduciary legacy (Nachvermchtnis) which both permit
the testator to pass property to a person who is under an
obligation to transmit it, either on death or on the occurrence of a
specified event, to a third person (and it is possible that this
person is in turn under a similar obligation)6.
On the other hand, not all countries in the world adapt the
practice of fideicommissary substitution and expressly provide for
it in their respective Civil Codes or Family Laws.

Fusaro. (2008). Legitimate portion and other techniques of protection of surviving

spouses and children. A comparison between civil law and common law systems.
13th World Conference of the International Society of Family Law Vienna
http://www.crdc.unige.it/docs/articles/ConferenzaInternazionaleVienna.pdf.
6
Arts 1030-1089 German Civil Code or Brgerliches Gesetzbuch, or BGB and
discussed in Scotland 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.

Dispositive Character of the Will and

the Act of Substitution
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.

Kirilova and Bogdan. Institution of Hereditary Substitution in the Inheritance Law: A

Rather-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
Page 5 of 20

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

fideicommissary

substitution, the first heir is strictly mandated to preserve the

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

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

12

Article 859, The New Civil Code of the Philippines

Page 7 of 20

Fideicommissary Substitution
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.

13

Paras, E. (2008). Civil Code of the Philippines Annotated. Rex Bookstore, Inc.
Page 8 of 20

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

14

Article 886, New Civil Code of the Philippines

Page 9 of 20

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.

15

Rabadilla vs. CA, GR No. 113725 (Supreme Court June 29, 2000).
Page 10 of 20

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.

16

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

17

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

18

Page 11 of 20

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 transfer rather than merely one degree of relationship
or one generation.
19

Ramirez vs. Vda. de Ramirez et al, G.R. No. L-27952 (Supreme Court February
15, 1982).
Page 12 of 20

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
20
21

Moreno. (1982). Philippine Law Dictionary. Rex Bookstore, Inc.

Mison. (2010). Wills and Succession Better Eplained. Rex Bookstore, Inc.
Page 13 of 20

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
Page 14 of 20

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 Nullity of Fideicommissary Substitution

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
22
23

Perez vs. Garchiterena, G.R. No. L-31703 (Supreme Court February 13, 1930).
Kilayko vs. Tengco, G.R. No. 45425 (Supreme Court March 27, 1992).
Page 15 of 20

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 of Nullity 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.
Page 16 of 20

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

24

Electronic Journal of Comparative Law, vol. 14.2 (October 2010),

http://www.ejcl.org
Page 17 of 20

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

Page 18 of 20

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.

25

Mison. (2010). Wills and Succession Better Eplained. Rex Bookstore, Inc.
Page 19 of 20

Therefore, the absence of statutory limitations or conditions

which shall render the invalidity of the fideicommissary shall render
the fideicommissary substitution a nullity while the invalidity if the
first heir or the fiduciary primarily instituted by the testator shall not
affect the validity of the fideicommissary heir and that the latter
shall receive the inheritance designated by the testator.

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