If the estate cannot cover our legitimes, which is cut down first — my father's lifetime donations or the legacies in his will?

Why the will gives way before the donations

The order looks counter-intuitive until you see the reasoning. A donation made during the donor's lifetime was completed, accepted and acted upon while he lived; the donee may have built on the land or spent years treating it as his own. A legacy in a will is only a projected disposition that takes effect at death and has been carried out by nobody. Between an executed gift and an unexecuted intention, the law disturbs the unexecuted one first. So the article provides that Donations shall be respected as long as the legitime can be covered, reducing or annulling, if necessary, the devises or legacies made in the will — the will absorbs the shortfall until it has nothing left to give.

Working out the shortfall in the first place

None of this begins until the legitime has been computed, and the article says so expressly — the reduction follows After the legitime has been determined in accordance with the three preceding articles. In practice that means taking the property left at death, deducting debts and charges, and then adding back the value of collationable donations to arrive at the notional estate against which the compulsory heirs' shares are measured. This is why lifetime giving cannot quietly defeat a legitime: the gifts are counted back in for the arithmetic even though they are physically gone. Only once that figure shows a deficiency does the order of reduction come into play.

How the legacies themselves are cut

Within the will, the article requires that The reduction of the devises or legacies shall be pro rata, without any distinction whatever. Every legatee takes the same proportionate haircut; nobody's gift is favoured because it is larger, sentimental or given to a closer relation. There is one exception the testator himself can create: where he directed that a particular devise or legacy be paid in preference to others, that preferred gift suffers no reduction until the rest have been applied in full to the legitime. Note this is a different exercise from the order of payment used when an estate simply cannot fund all legacies, which Article 950 governs.

If a legacy is a usufruct or a life annuity

The article deals separately with the awkward case where what was left is a usufruct or a life annuity whose value may exceed the free portion. Rather than force a valuation fight, it gives the compulsory heirs a choice: comply with the testamentary provision as written, or hand the devisee or legatee the part of the inheritance the testator could freely dispose of. The election belongs to the heirs, not to the legatee. Reductions of this kind turn heavily on valuation dates and on which gifts are collationable, so get the inventory and the donation deeds together early — general information here is no substitute for advice on your father's actual figures.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Ricky Q. Quilala vs. Gliceria Alcantara, et al, G.R. No. 132681, December 3, 2001 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 911 — Order Of Reduction