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TRANSFER TAXES

A. Estate Tax

1. Definition

NIRC, §84, as amended by RA 10963, §22

RR No. 12-2018 (January 25, 2018), §2.

2. Nature

Knowlton v. Moore, 178 U.S. 41 (1900)

New York Trust Co. v. Eisner, 256 U.S. 345 (1921)

3. Purpose or object

Gregg v. Commissioner, 315 Mass. 704 (1944)

4. Basic principles

a) Accrual of the Estate Tax

RR No. 12-2018 (January 25, 2018), §3.

New Civil Code, art. 777
Lorenzo v. Posadas, G.R. No. L-43082, June 18, 1937; 64 Phil. 353
Knowlton v. Moore, 178 U.S. 41 (1900)

b) Governing law

RR No. 12-2018 (January 25, 2018), §3.

Lorenzo v. Posadas, G.R. No. L-43082, June 18, 1937; 64 Phil. 353
Beam v. Yatco, G.R. No. 48122, October 29, 1948; 28. Phil. 30

5. Definition

Gregg v. Commissioner, 315 Mass. 704 (1944)

Ann Ward & others v. Commissioner, 369 Mass. 3 (1975)
Estate of Week, 169 Wis. 316 (1919)
Estate of Stevens, 266 Wis 331 (1954)

6. Nature

Knowlton v. Moore, 178 U.S. 41 (1900)

Estate of Week, 169 Wis. 316 (1919)
Estate of Stevens, 266 Wis 331 (1954)

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7. Purpose or object

8. Time and transfer of properties

New Civil Code, art. 777

NIRC, §94-95

9. Classification of decedent

NIRC, §85

10. Gross estate vis-à-vis net estate

NIRC, §85
NIRC, §86, as amended by RA 10963, §23

11. Determination of gross estate and net estate

NIRC, §85
NIRC, §86, as amended by RA 10963, §23

12. Composition of gross estate

a. Gross Estate

NIRC, §85
RR No. 12-2018 (January 25, 2018), §4.

b. Situs of Intangible personal property of Non-Resident Aliens

(Reciprocity Rule)

NIRC, §104
RR No. 12-2018 (January 25, 2018), §4
Commissioner v. Fisher, G.R. No. L-11622, January 28, 1961
Commissioner v. Campos-Rueda, G.R. No. L-13250, October 29, 1971
Commissioner v. de Lara, G.R. Nos. L-9456 & L-9481, January 6,
1958

c. Valuation of the Gross Estate

NIRC, §88
RR No. 12-2018 (January 25, 2018), §5
Ithaca Trust Co. v. United States, 279 U.S. 151 (1929)
Dizon v. Court of Tax Appeals, G.R. No. 140944, April 30, 2008

13. Items to be included in gross estate

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NIRC, §85

a. Decedent’s interest

NIRC, §85(A)

b. Transfer in contemplation of death

NIRC, §85(B)
Estate of Ogden, 209 Wis. 162 (1932)
Estate of Perry, 35 Wis. 2d 412 (1967)
Alejandro v. Geraldez, G.R. No. L-33849, August 18, 1977
Vidal de Roces v. Posadas, G.R. No. L-34937, March 13, 1933
Gestopa v. Court of Appeals, G.R. No. 111904, October 5, 2000
Tuason v. Posadas, G.R. No. L-30885, January 23, 1930
Dizon v. Posadas, G.R. No. L-36770, November 4, 1933
Zapanta v. Posadas, G.R. No. L-29204, December 29, 1928

c. Revocable Transfers

NIRC, §85(C)
Lober v. United States, 346 U.S. 335 (1953)
Jennings v. Smith, 161 F.2d 74 (2d Cir. 1947)
Leopold v. United States, 510 F.2d 617 (9th Cir. 1975)

d. Property under General Power of Appointment

NIRC, §85(D)
Morgan v. Commissioner, 309 U.S. 78 (1940)
United States v. Field, 255 U.S. 257 (1921)
Helvering v. Safe Deposit & Trust Co., 316 U.S. 56 (1942)
Helvering v. Grinnell, 294 U.S. 153 (1935)

e. Proceeds of Life Insurance

BPI v. Posadas, G.R. No. L-34583, October 22, 1931

Estate of Tully, 528 F.2d 1401 (1976)
Goodman v. Grainger, 243 F.2d 264 (1957)

f. Transfers for insufficient consideration

14. Items not to be included in gross estate

a. Capital of the surviving spouse

NIRC, §85(H)

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15. Deductions from estate

NIRC, §86, as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §6.

a. Deductions allowed to Estates of a Citizen or Resident

Decedent

i. Standard Deduction

NIRC, §86(A)(1), as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §6-1.

ii. Claims against the Estate

NIRC, §86(A)(2), as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §6-2.
Dizon v. Court of Tax Appeals, G.R. No. 140944, April 30, 2008;
553 SCRA 111

iii. Claims of the deceased against insolvent persons

NIRC, §86(A)(3), as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §6-3.

iv. Unpaid mortgages or any indebtedness in respect to

property, taxes and casualty losses

NIRC, §86(A)(4), as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §6-4.

v. Property Previously Taxed

NIRC, §86(A)(5), as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §6-5.

vi. Transfers for public use

NIRC, §86(A)(6), as amended by RA 10963, §23

vii. Family Home

NIRC, §86(A)(7), as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §6-7.

b. Deductions allowed to Estates of a Non-resident Alien

Decedent

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NIRC, §86(B), as amended by RA 10963, §23

RR No. 12-2018 (January 25, 2018), §7.

16. Exclusions from estate

a. Net share of the surviving spouse in the conjugal partnership

or community property

NIRC, §86(C), as amended by RA 10963, §23

17. Tax credit for estate taxes paid in a foreign country

NIRC, §86(E), as amended by RA 10963, §23

18. Exemption of certain acquisitions and transmissions

NIRC, §84
NIRC, §87

19. Filing of notice of death

Repealed by RA 10963, §24

20. Estate tax return

NIRC, §90, as amended by RA 10963, §25

RR No. 12-2018 (January 25, 2018), §9-1.

a. When is an estate tax return required to be filed

NIRC, §90(A), as amended by RA 10963, §25

RR No. 12-2018 (January 25, 2018), §9-2 to §9-3.

b. Time of filing estate tax returns

NIRC, §90(B), as amended by RA 10963, §25

NIRC, §90(C)
Section 9(A), Rev. Reg. 2-2003 (Jan. 17, 2003)

c. Consequence of non-filing of estate tax returns

Marcos II v. CA, G.R. No. 120880, June 5, 1997

d. Payment of Estate Tax

NIRC, §91, as amended by RA 10963, §26

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RR No. 12-2018 (January 25, 2018), §9-4 to §9-8.

i. Persons liable to pay estate tax

NIRC, §91(D), as amended by RA 10963, §26

RR No. 12-2018 (January 25, 2018), §9-9.
Commissioner v. Gonzales, G.R. No. L-19495, November 24,
1996

21. Discharge of Executor or Administration from Personal

Liability

NIRC, §92

22. Estate Tax Deficiency

NIRC, §93
NIRC, §94

a. Estate tax may be collected even after distribution of the

estate to the heirs

Government v. Pamintuan, G.R. No. L-33139, October 11, 1930

Commissioner v. Pineda, G.R. No. L-22734, September 15, 1967
Vera v. Fernandez, G.R. L-31354, March 39, 1979, 89 SCRA 199
Pastor v. Court of Appeals, G.R. No. L-56340, June 24, 1983

b. Approval of the probate court is not necessary to collect

estate tax

Marcos II v. CA, G.R. No. 120880, June 5, 1997

Montemayor v. Heirs of Gutierrez, G.R. No. L-16959, July 24, 1962

c. Ways to collect unpaid estate tax liabilities

Commissioner v. Pineda, G.R. No. L-22734, September 15, 1967

d. Consequence of delayed payment of deficiency estate tax

Agustin v. Commissioner, G.R. No. 138485, September 10, 2001

23. Other Administrative Requirements

a. Duty of the Register of Deeds in case of unpaid estate tax

NIRC, §95

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b. Duty of the bank of a decedent-depositor in case of unpaid

estate tax

NIRC, §97, as amended by RA 10963, §27

RR No. 12-2018 (January 25, 2018), §10
Polido v. Court of Appeals, G.R. No. 170632, July 10, 2007)

B. Donor’s Tax

1. Basic principles

a. Donations inter vivos

RR No. 12-2018 (January 25, 2018), §12

Alejandro v. Geraldez, G.R. No. L-33849, August 18, 1977
Gestopa v. Court of Appeals, G.R. No. 111904, October 5, 2000
Austria-Magat v. Court of Appeals, G.R. No. 106755, February 1,
2002
Del Rosario v. Ferrer, G.R. No. 187056, September 20, 2010

b. Perfected and completed gift

RR No. 12-2018 (January 25, 2018), §12

Estate of Sanford v. Commissioner, 308 U.S. 39 (1939)

c. Governing law

RR No. 12-2018 (January 25, 2018), §12

2. Definition

NIRC, §99, as amended by RA 10963

3. Nature

Lladoc v. Commissioner, G.R. L-19201, June 16, 1965

Bromley v. McCaughn, 280 U.S. 124 (1929).

4. Purpose or object

5. Requisites of valid donation

a. Definition

New Civil Code, art. 725

Pirovano v. CIR, G.R. No. L-19865, July 31, 1965

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b. General Requisites

New Civil Code, art. 735 to 747

c. Requisites for donation of a movable property

New Civil Code, art. 748

d. Requisites for donation of an immovable property

New Civil Code, art. 749

6. Transfers which may be constituted as donation

a. Sale/exchange/transfer of property for insufficient

consideration

NIRC, §100, as amended by RA 10963

RR No. 12-2018 (January 25, 2018), §12
Commissioner v. Wemyss, 325 U.S. 303 (1945)
Merill v. Fahs, 324, U.S. 308 (1945)

b. Condonation/Remission of debt

c. Interest-free and low-interest loans

Dickman v. Commissioner, 465 U.S. 330 (1984)

d. Indirect gifts

Spouses Evono v. CIR, CTA EB No. 705, June 4, 2012

e. Renunciation of an heir of share in the hereditary estate

RR No. 12-2018 (January 25, 2018), §12

BIR Ruling No. 089-2011 (Mar. 21, 2011)

7. Transfer for less than adequate and full consideration

NIRC, §100, as amended by RA 10963

RR No. 12-2018 (January 25, 2018), §16
CIR v. B.F. Goodrich Phils, G.R. No. 104171, February 24, 1999
Philippine American Life and General Insurance Company v. The
Secretary of Finance and Commissioner of Internal Revenue, G.R. No.
210987, November 24, 2014

8. Classification of donor

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NIRC, §98(A)

9. Determination of gross gift

NIRC, §98(B) in relation to NIRC, §85 to §104

RR No. 12-2018 (January 25, 2018), §14

10. Composition of gross gift

NIRC, §98(B) in relation to NIRC, §85 to §104

RR No. 12-2018 (January 25, 2018), §14

11. Valuation of gifts made in property

NIRC, §102 in relation to NIRC, §88(B)

RR No. 12-2018 (January 25, 2018), §13

12. Tax credit for donor’s taxes paid in a foreign country

NIRC, §101(C)

13. Exemptions of gifts from donor’s tax

NIRC, §100, as amended by RA 10963, §30

RR No. 12-2018 (January 25, 2018), §17

a. Dowries or gifts on account of marriage

Repealed by RA 10963, §30

b. Gifts to National Government

NIRC, §101(A)(1), as amended by RA 10963, §30

RR No. 12-2018 (January 25, 2018), §17-1

c. Gifts in favour or educational/and or charitable institutions

NIRC, §101(A)(2), as amended by RA 10963, §30

RR 13-98 (December 14, 1998)
RR No. 12-2018 (January 25, 2018), §17-2

d. Exemptions allowed to non-resident aliens

NIRC, §101(B)

e. Political contributions

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NIRC, §99(C)
Section 13, RA 7166 (Omnibus Election Code)
RR. 7-2011 (June 14, 2011)
RR 8-2009 (Oct. 22, 2009)
Abello v. CIR, G.R. No. 120721, February 23, 2005 (no longer
applicable)

f. Prizes and awards given to athletes

RA 7549 (exempting prizes and awards gained from local and

international sport’s tournament from income and donor’s tax)

14. Filing and Payment of Donor’s Tax

a. Person’s liable

NIRC, §103(A)

b. Time of filing and payment of donor’s tax

RR No. 12-2018 (January 25, 2018), §15

Sumipat v. Banga, G.R. 155810, August 13, 2004

15. Tax basis

a. Basis in computing donor’s tax

NIRC, §99(A)
RR No. 12-2018 (January 25, 2018), §14

b. Rates of tax payable by donors

NIRC, §99(A) to (B)

RR No. 12-2018 (January 25, 2018), §11

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