September 8, 2003

BIR RULING NO. 010-03

85; 97; 98 000-00
Ishiwata Gatmaytan & Associates
No. 12, ADB Avenue, Ortigas Center
1550 Mandaluyong City, Metro Manila
Attention: Atty. Ma. Cecilia Salazar-Santos
Partner
Gentlemen :
This refers to your letter dated June 18, 2001 requesting on behalf of your
client, Banco de Oro Universal Bank, for a confirmation of your opinion that a
Survivorship Agreement executed by the joint depositors under a joint depositors
under a joint deposit account expressly stipulating that upon death of any one of the
joint depositors, the entire remaining balance of the deposit shall belong to the
surviving depositor/s and, in effect, may be forthwith withdrawn by the latter
notwithstanding the provisions of Section 97 of the 1997 Tax Code.
In reply, please be informed that the second paragraph of Section 97 of the
1997 Tax Code, which provides to wit:
If a bank has knowledge of the death of a person, who maintained a
bank deposit account alone, or jointly with another, it shall not allow any
withdrawal from the said deposit account, unless the Commissioner has
certified that the taxes imposed thereon by this Title have been paid; Provided,
however, That the administrator of the estate or any one (1) of the heirs of the
decedent may, upon authorization by the Commissioner; withdraw an amount
not exceeding Twenty thousand pesos (P20,000) without the said certification.
For this purpose, all withdrawal slips shall contain a statement to the effect that
all of the joint depositors are still living at the time of withdrawal by any one of
the joint depositors and such statement shall be under oath by the said
depositors.
Copyright 1994-2006

CD Technologies Asia, Inc.

Taxation 2005

(Emphasis supplied)

As can be readily gleaned from the Survivorship Agreement, the funds

deposited in the joint deposit account are under co-ownership because the ownership
or right over the same belong to different persons, the joint depositors. The share or
portion belonging to the joint depositors in the joint deposit account shall be
presumed equal and the benefits as well as the charges in the joint account shall be
proportional to their respective shares. [Arts. 484 and 485, Civil Code]
SICaDA

In the Survivorship Agreement, the joint depositors cannot withdraw any

portion of the said deposit account without the consent of the other. However, upon
death of any of them, the whole amount of the funds shall belong to the surviving
co-depositor/s, and may forthwith be withdrawn by the latter. The said provision
contained in the agreement is valid and binding between the joint depositors but it has
an effect of a gift or donation mortis causa made by the deceased co-depositor during
his lifetime but effective upon death because the acquisition by the survivor of the
share of the decedent in the joint account is considered to be acquired by bequest and
hence subject to estate tax under Section 84 of the 1997 Tax Code.
Considering that the joint account is co-owned by the depositors, there is a
presumption that they owned it equally or in 50/50 shares, in which case, the transfer
of the remaining balance of the whole deposit to the surviving co-depositor/s upon
death of the other co-depositor pursuant to the their Survivorship Agreement is a
transfer made by the said depositor in contemplation of death, as provided under
Section 85(B) of the 1997 Tax Code, viz:
"(B) Transfer in Contemplation of Death To the extent of any
interest therein of which the decedent has at any time made a transfer, by trust
or otherwise, in contemplation of or intended to take effect in possession or
enjoyment at or after death, or of which he has at any time made a transfer, by
trust or otherwise, under which he has retained for his life or for any period
which does not in fact end before his death (1) the possession or enjoyment of,
or the right to the income from the property, or (2) the right, either alone or in
conjunction with any person, to designate the person who shall possess or enjoy
the property or the income therefrom; except in case of a bona fide sale for an
adequate and full consideration in money or money's worth."

Thus, upon the death of the co-depositors, the 50% share of the deceased co-depositor
in the deposit shall be included in computing the value of his gross estate.
Hence, the funds in the joint deposit account cannot be withdrawn by the
Copyright 1994-2006

CD Technologies Asia, Inc.

Taxation 2005

surviving co-depositor/s unless the Commissioner has certified that the taxes imposed
thereon by Title III of the 1997 Tax Code have been paid; Provided, however, That
the administrator of the estate or any one (1) of the heirs of the deceased co-depositor
may, upon the authorization by the Commissioner, withdraw an amount not
exceeding Twenty thousand pesos (P20,000.00) without the said certification.
Very truly yours,
(SGD.) GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue

Copyright 1994-2006

CD Technologies Asia, Inc.

Taxation 2005