Can Illegitimate Child Inherit Everything

Someone asked me, "I have a friend who...

owns a construction business. As of now, the business is still a sole proprietorship, but is in the process of becoming a corporation to be owned half half by the friend and his second wife. Before the completion of the process, the sole proprietor was diagnosed with stage 3 cancer. He announced he was leaving the entire business to his illegitimate child by his second wife . The child has been helping him run the business the past twenty years and, together with his mother, was instrumental in building the business to its present scale. The children from his first wife are all successful professionals abroad. He told them they can keep the real properties where their family home is located.

However, his first wife claims that they were the ones legally married and, even if they were living separately, they never legally separated hence these properties, including the business, should be given to the first wife and his children with his first wife. Is the first wife correct? What should the man do if he wants to give the business to the illegitimate son?

My answer is the illegitimate child cannot get everything. But, the first wife is wrong in relation to how the properties, including the business, should be divided amongst his heirs. The first family is also not entitled to all the properties the man will leave.

Art. 148 of the family code states that “in cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit. If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. ...”

Since the man remains legally married to the first wife, this means that he is not capacitated to marry the 2nd wife. Thus, Art. 148 of the Family Code shall govern. This article provides that the properties owned by the parties (the man and the 2nd wife) are based on the proportion of their actual contribution to the subject property. The case provides that the second wife was “instrumental” to the growth of the business as such, it can be presumed that a portion of the business belongs to the second wife. To establish the presumption and consider it as a fact, he would need to prove how much the second wife and their child has actually contributed in order to protect the share that he wants to leave with his second family. The remaining shares (the shares his name is entitled to) shall then accrue to the absolute community or conjugal partnership existing in his 1st marriage. 

Furthermore, with regard to the shares that will accrue to the absolute community or conjugal partnership, it does not necessarily mean that these shares will go to the first family. 
Art. 888 of the Civil Code provides “The legitime of legitimate children and descendants consists of one-half of the hereditary estate of the father and of the mother. The latter may freely dispose of the remaining half, subject to the rights of illegitimate children and of the surviving spouse as hereinafter provided.”

The law does not allow an illegitimate child to inherit everything in his father’s estate as it reserves half of the estate for compulsory heirs (the legitimate children), but the law gives a illegitimate child the right to inherit from the estate of his father ½ of what the legitimate children gets plus the free portion. Similarly, the first wife is only entitled to shares equal to what a legitimate child will get, subject to her right to the conjugal partnership of gains or absolute community of property. And before the estate is computed, the properties given to the first family, including the family home should be collated and included in the valuation. Hence if the business is not worth more than half the worth of the properties entitled to be given to his legitimate children or the first wife, he may still leave the business to the illegitimate son.

Answered by L. Go as modified

/KF