Published — June 1, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Aside from this article regarding future inheritance to secure loan, you may also read: WHAT IS LEGITIME?
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A future heir cannot enter into a contract regarding his future inheritance
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Contracts entered into regarding future inheritance is void
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A future inheritance cannot be waived
Most businessmen today are probably affected by the inevitable consequences of the COVID-19 pandemic. In effect, some entrepreneurs may have to secure loans to save the operation of their business establishments.
Some may have no choice but to temporarily shutdown the operation of their businesses while others may still want to take risks in the hope of favorable outcomes. A businessman may opt to secure a loan from either the government or some private entities. Securing a loan using one’s own personal or real properties as a collateral is fine as it is allowed under the law.
But, instead of using one’s own personal or real property as collateral, a businessman opted to secure a loan relying on his future inheritance. In other words, he used his future inheritance as collateral.
Is such action valid?
The law says:
No.
In the case of Atty. Pedro M. Ferrer vs. Spouses Alfredo Diaz and Immelda Diaz, Reina Comandante and Spouses Bienvenido Pangan and Elizabeth Pangan, G.R. No. 165300, April 23, 2010, the Supreme Court said that entering into a contract waiving a future inheritance is not allowed by law.
To be enlightened, please see the following facts:
Reina is the daughter of Spouses Diaz. She sought the help of Atty. Ferrer (Ferrer) with regard to the mortgage with a bank of her parent’s lot covered by TCT No. RT-6604. She also sought financial accommodations from Ferrer on several occasions with a total amount of Five Hundred Thousand Pesos (Php 500, 000.00).
When Reina could not practically comply with her obligation, she entered into a contract with Ferrer while her parents were alive. The contract was entitled “Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided). The contract basically states that Reina is waiving her future inheritance over the above-mentioned lot of her living parents.
Accordingly, the purpose of the contract is to secure Reina’s loan with Ferrer which at that time had already ballooned to Php 600, 000.00. Thus, she is waiving her future inheritance in favor of Ferrer. On the basis of the said waiver, Ferrer executed an Affidavit of Adverse Claim which he caused to be annotated at the back of the above-stated TCT covering the lot of Reina’s parents.
A year later, Reina and Ferrer again entered into a contract. Reina signed the following documents: (1) a Real Estate Mortgage Contract over her parents’ same lot and (2) an undated Promissory Note, both corresponding to the amount of Php 1, 118, 228.00 which Ferrer claimed to be the total amount of Reina’s monetary obligation to him exclusive of charges and interests.
The question is, “Is the Waiver of Hereditary Rights executed by Reina in favor of Ferrer valid?”
The law says:
No.
Take note that the Waiver of Hereditary Rights was executed by Reina while her parents were living. The contract they have entered into is classified as a contract upon future inheritance which is not allowed by law. Clearly, Reina, is not yet the owner of the subject lot. She may be a future owner of a part of the said lot but mere expectancy is not enough to validate the contract she has entered into with Ferrer.
As a result, the Waiver of Hereditary Rights cannot be a source of any right of obligation in favor of Ferrer. In other words, it produces no effect. The Supreme Court eventually said that the Adverse Claim of Ferrer annotated at the back of the title of the said lot is also void.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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Is a waiver of hereditary rights executed after the death of the decedent but before the property is subdivided and transferred to the heirs allowed by law?