Scenario:

Around 2pm in the afternoon in September 1, 2012 a fire started in one of the
factory sites of LOW Inc. in Pasig City which resulted to a damage to the factory site and
death to hundreds of its employees. Included as one of the dead victims in the fire incident
was Mr. Apple Botom Jins, the head supervisor present in the factory during the fire
incident.
Mr. Apple Botom Jins is a head of the family and an unmarried man, who provides
chief support to his mom, brother and 2 sisters. When he died he left the ff. properties
valued at their FMV at time of death:

Cash in Bank BPI Savings

Car inherited from his father when he died
2 & a half years ago
Condominium unit (his dwelling place when he
is in the city for work)
Residential house & lot in Imus, Cavite (Family Home)
Jewelries and accessories
(2) gold watches
(1) bracelet
(1) necklace
Receivable against Mr. Buts Wid A. Fur, (solvent debtor)
Receivable against Ms. Ana Conda Dont, (insolvent debtor)
Insurance Premiums:
Life insurance, where the beneficiaries are his brother
and 2 sisters under irrevocable trust
Accident Insurance, beneficiary is Mr. Apple Botom Jins
Health Insurance, beneficiary is Mr. Apple Botom Jins
Vehicle Insurance, beneficiary is Mr. Apple Botom Jins
Check representing Separation Pay given by LOW Inc. to the
family of Mr. Apple Botom Jins due to his death
Other Personal Properties owned by Mr. Apple Botom Jins:
Laptop
Television
Refrigerator
Microwave
Sofa set
Bed

P250,000
1,300,000
1,280,000
1,800,000
13,500
2,500
3,000
1,500
15,000

50,000
6,000
15,000
10,000
150,000
20,000
28,700
2,500
2,800
4,500
5,500

Futhermore, in connection to Mr. Apple Botom Jins death, the ff. expenses were
incurred and the ff. liabilities exist at time of his death:
Funeral Expenses
Judicial Expenses
Claims against the estate with accrued interest
Unpaid Property Taxes

95,500
66,000
1,518,000
30,800

The ff. information were also found by the executor/administrator of Mr. Apple Botom
Jins estate:
a.) The car inherited from the father of Apple Botom Jins was valued 1,600,000 2 & a
half years ago.
b.) Ms. Anaconda Dont, an insolvent debtor, has a total of 150,000 assets and a
liability of 400,000. Additionally, included among her liabilities a value of 30,000 in
which she pledged 30,000 of her assets to her preferred creditor, Mr. Drake
Wapper while Mr. Apple Botom Jins happens to be just an ordinary creditor of Ms.
Ana Conda Dont.
c.) The claims against the estate is a note payabe to Ms. Ellen Degenerous at an
amount of 1,500,000 in November 1, 2009 payable in 25 annual installments and
subject to a 12% interest per annum. (see attached promissory note with CPA
statement for the account of loan proceeds)
d.) The available values for the real properties such as the condominium unit and
residential house & lot are the assessed value provided from the latest tax
declaration of real property and the zonal value. The zonal value of the
condominium unit and residential house & lot are both P1,000,000.00. Thus the
assessed value was the basis used for the price of the real properties because
they are higher than the zonal value. (see attached tax declaration form)
e.) Beginning 2012, the accrued property taxes were: 25,600 and 36,000 on the
condomium unit and residential house & lot respectively and such amount are
payable in quarterly installments. And for the property taxes payable in 2012, Mr.
Apple Botom Jins was able to pay only the first & second installment.
(Please see attachments for further details of the other properties.)

Solution:
Cash in Bank BPI Savings
Car inherited from his father when he died 2 & a half years ago
Condominium unit (his dwelling place when he is in the city for work)
Residential house & lot in Imus, Cavite (Family Home)
Jewelries and accessories
(2) gold watches
(1) bracelet
(1) necklace
Receivable against Mr. Buts Wid A. Fur, (solvent debtor)
Receivable against Ms. Ana Conda Dont, (insolvent debtor)
Insurance Premiums:
Accident Insurance, beneficiary is Mr. Apple Botom Jins
Health Insurance, beneficiary is Mr. Apple Botom Jins
Vehicle Insurance, beneficiary is Mr. Apple Botom Jins
Check representing Separation Pay given by LOW Inc. to the family of
Mr. Apple Botom Jins due to his death
Other Personal Properties owned by Mr. Apple Botom Jins:
Laptop
Television
Refrigerator
Microwave
Sofa set
Bed
Gross Estate
Less: Allowed Deductions
Ordinary Deductions
Funeral Expenses*
Judicial Expenses
Claims against the estate**
Claims against Ms. Ana Conda Dont (insolvent debtor)***
Accrued Property Taxes at time of death (amount unpaid)****
Total Ordinary Deductions before Vanishing Deductions
Vanishing Deduction*****
Special Deductions
R.A 4917 - Separation pay from Low Inc.
Standard Deduction
Family Home******
Net Estate
More than 500,000 but not exceeding 2,000,000
Tax amount
Add: 8% of the excess of 500,000 (517610.07-500,000)
Total Estate Tax Due from the estate of Mr. Apple Botom Jins

250,000
1,300,000
1,280,000
1,800,000
13,500
2,500
3,000
1,500
15,000
6,000
15,000
10,000
150,000
20,000
28,700
2,500
2,800
4,500
5,500
4,910,500

95,500
66,000
1,518,000
10,135.14
30,800
1,720,435
522,454.79
150,000
1,000,000
1,000,000

15,000
1,408.81
16,408.81

*Funeral Expenses
5% of Gross estate (4,910,500*.05)

245,525

Actual Funeral Expense

Statutory Maximum

95,500
200,000

-2,242,889.93

-2,150,000
517,610.07

**Claims against the estate

Notes Payable (Nov. 2009)
Principal payments made (Nov 2010 & 2011)
Carrying Value of the Note outstanding as of Nov. 2011
Interest (1,380,000 * 12% * 10/12) 10mos - Nov.2011-Sept2012
Total claims outstanding as of Sept. 1, 2012
***Claims against Ms. Ana Conda Dont (insolvent debtor)
Assets (150,000 less 30,000 asset pledged to preferred creditor)
Less: Liabilities (400,000 less 30,000 liability to preferred creditor)
Value of Liabilities that cannot be paid
Ratio of claims that shall not be paid (250/370)
Allowed deduction against claims to insolvent debtor

1,500,000
-120,000
1,380,000
138,000
1,518,000
15,000
120,000
-370,000
250,000
0.676
10135.14

****Assessed Value of Condominium Unit, as of Dec. 31 2011

Real Property Tax
Property Tax Accrued Beginning of 2012
Quarterly Installments Due (25600/4) * 2 -Paid Prop. Tax 1st & 2nd
installment
Property Tax Due on Condominium Unit existing at time of death

1,280,000
x 2%
25600

Assessed Value of Residential House and Lot, as of Dec. 31, 2011

Real Property Tax
Property Tax Accrued Beginning of 2012
Quarterly Installments Due (36000/4) * 2 -Paid Prop. Tax 1st & 2nd
installment
Property Tax Due on Residential House & Lot existing at time of death
Total Property Tax Due at time of death

1,800,000
x 2%
36000

*****Value to take(lower between FMV at time of inheritance or at time

of death)
Less: Any mortgage/lien paid
Initial Basis
Less:( 1,300,000/5,210,500)*1,720,435
Final Basis
Percentage (2-3 years before death)
Vanishing deduction allowed

-12800
12800

-18000
18000

1,300,000
1,300,000
-429242.01
870757.99
x 60%
522454.79

******Family Home
FMV at time of Death

1,800,000

Statutory Maximum

1,000,000

12,800

18,000
30800