18 September 2017

Marty Que

Dear Maam:

Value of Collated Property

We write regarding your questions about Collation of previously donated property

specifically the on what values are to be used in in case there is collation in case of shares
of stocks donated at different times within the lifetime of the decedent.

A. Concept of Collation

The term collation has two distinct concepts: first, it is a mere mathematical operation by
the addition of the value of donations made by the testator to the value of the hereditary
estate; and second, it is the return to the hereditary estate of property disposed of by
lucrative title by the testator during his lifetime.

The purposes of collation are to secure equality among the compulsory heirs in so far as is
possible, and to determine the free portion, after finding the legitime, so that inofficious
donations may be reduced

Philippine law considers all property given during the lifetime of the deceased as advances
from his/her estate. Thus, any property which the deceased gave or donated to other
persons before death must be returned to his/her estate. This is known as collation. The
actual gifts are not brought to collation, but only their value at the time they were
given.

Philippine rules of evidence apply, so that testimonial or documentary proof of the value of
each gift must be presented to the court. There is no limit, in time or size, to the gifts
considered. Even if the gifts were made before the compulsory heirs were born, they are
collated. However, in practice, it is difficult to prove the value of small gifts, and gifts made
a long time ago may be forgotten. Normally, collation only includes real estate (i.e. land,
buildings, condominium units, apartments) and valuable personal possessions (e.g. jewelry,
cars, stocks, shares, club memberships) for which documentary proof or evidence can be
presented to the court.

The values of gifts to compulsory heirs are chargeable against (i.e. deducted from) their
legitime, except if the donor has expressed that collation shall not take place which means
that the values of the gifts are deducted from the free portion. Gifts to persons who are not
compulsory heirs are always chargeable against the free portion. If the total value of the
gifts exceeds the free portion, then they are considered inofficious, in which case, the
excess must be returned to the compulsory heirs. The law contemplates the return of
property of the same nature, class and quality, as far as possible.

B. Value of Collated Property

It was declared in Imperial vs. Court of Appeals1 that what is brought to collation is not
the donated property itself, but the value of the property at the time it was
donated. The rationale for this is that the donation is a real alienation which conveys
ownership upon its acceptance, hence, any increase in value or any deterioration or loss
thereof is for the account of the heir or donee.

Consequently, even when the donation is found inofficious and reduced to the extent that it
impaired the compulsory heirs legitime.

Thus, in this case where the collatable property is an immovable, what may be received is:

(1) an equivalent, as much as possible, in property of the same nature, class

and quality;

(2) if such is impracticable, the equivalent value of the impaired legitime in

cash or marketable securities; or,

(3) in the absence of cash or securities in the estate, so much of such other
property as may be necessary, to be sold in public auction.

Hence, it is perfectly possible that one heir would owe another heir the difference in the
value of the donations received be both of them. But it is not necessarily the shares
of stock that should be returned but only its value at the time it was donated.

We hope the answers clarify the queries you have presented to us. Please do contact us if
you have any more questions.

Very truly yours,

KALAW SY SELVA & CAMPOS

by:

Shennan A. Sy

Daryl Jacob F. Bigay

1
G.R. No. 112483. October 8, 1999.