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Chapter XVIII: Estate Tax (A) Decedent's Interest - To the extent of the (C) Revocable Transfer -

interest therein of the decedent at the time of


Sec. 84. Rates of Estate Tax - There shall be levied, his death; (1) To the extent of any interest therein, of which
assessed, collected and paid upon the transfer of the net the decedent has at any time made a transfer
estate as determined in accordance with Sections 85 and  Under Sec. 85(A), although ownership is not (except in case of a bona fide sale for an
86 of every decedent, whether resident or nonresident of vested in the decedent but he had interest adequate and full consideration in money or
the Philippines, a tax based on the value of such net therein at the time of his death, the interest shall money's worth) by trust or otherwise, where the
estate, as computed in accordance with the following be considered as part of the GE. enjoyment thereof was subject at the date of his
schedule: death to any change through the exercise of a
(B) Transfer in Contemplation of Death - To the power (in whatever capacity exerciseable) by the
If the net estate is: extent of any interest therein of which the decedent alone or by the decedent in
decedent has at any time made a transfer, by conjunction with any other person (without
Over But The tax Plus Of the trust or otherwise, in contemplation of or regard to when or from what source the
Not shall be Over excess intended to take effect in possession or decedent acquired such power), t o alter,
Over enjoyment at or after death, or of which he has amend, revoke, or terminate, or where any such
200K Exempt at any time made a transfer, by trust or power is relinquished in contemplation of the
200K 500K 0 5% 200K otherwise, under which he has retained for his decedent's death.
500K 2M 15K 8% 500K life or for any period which does not in fact end (2) For the purpose of this subsection, the power to
2M 5M 135K 11% 2M before his death (1) the possession or enjoyment alter, amend or revoke shall be considered to
5M 10M 465K 15% 5M of, or the right to the income from the property, exist on the date of the decedent's death even
10M And 1.215M 20% 10M or (2) the right, either alone or in conjunction though the exercise of the power is subject to a
Over with any person, to designate the person who precedent giving of notice or even though the
shall possess or enjoy the property or the alteration, amendment or revocation takes
The formula for this Estate Tax: income therefrom; effect only on the expiration of a stated period
after the exercise of the power, whether or not
Gross Estate – Deductions = Net Estate Except in case of a bonafide sale for an adequate on or before the date of the decedent's death
Net Estate x Rate = Taxable Net Estate and full consideration in money or money's notice has been given or the power has been
Taxable Net Estae – Tax Credit = Estate Tax Payable worth. exercised. In such cases, proper adjustment shall
be made representing the interests which would
A. Gross Estate (Sec. 85) Vidal de Roces v. Posadas. The BIR was correct in have been excluded from the power if the
assessing estate tax instead of donor’s tax. decedent had lived, and for such purpose if the
Sec. 85. Gross Estate - The value of the gross estate of the notice has not been given or the power has not
decedent shall be determined by including the value at the The donation was a transfer in contemplation of death been exercised on or before the date of his
time of his death of all property, real or personal, tangible since the deed of donation was executed simultaneously death, such notice shall be considered to have
or intangible, wherever situated: with the last will. been given, or the power exercised, on the date
of his death.
Provided, however, that in the case of a nonresident Further, the donees were also the heirs instituted in the
decedent who at the time of his death was not a citizen of last will. This last circumstance shows that the transfer was Q: Irrevocable transfers do not form part of the gross
the Philippines, only that part of the entire gross estate really a transfer in contemplation of death. estate. Why?
which is situated in the Philippines shall be included in
his taxable estate. Dizon v. Posadas. The donation made by the donor-father A: Revocable transfers are included in the gross estate
to his done-son was really a transfer in contemplation of because of the tremendous power and control which the
There are certain properties which although not owned by death since the donation was made a week prior to the transferor can exercise.
the decedent, still form part of the gross estate. These are death of the donor-father.
the following: The transferor can at any time revoke the transfer, hence
Such circumstance shows that the donation was made in it is as if there was no transfer made.
anticipation of the death of the decedent. Hence, estate
tax, not donor’s tax, should be paid. (D) Property Passing Under General Power of
Appointment - To the extent of any property
passing under a general power of appointment (2) The beneficiary is the estate, or if not the estate, the purpose of this Chapter, be deemed a part of
exercised by the decedent: the designation of the beneficiary must be his or her gross estate.
revocable.
(1) by will, or  This is an EXCLUSION to the GE
Note: When the beneficiary is other than the estate and  Applicable ONLY to spouses who are legally
(2) by deed executed in contemplation of, or the designation is irrevocable, the proceeds of life married
intended to take effect in possession or insurance is exempt from estate tax.  The term “capital” is used in its generic sense so
enjoyment at, or after his death, or as to include the paraphernal property of the
Reason: When the designation is irrevocable, the wife in case the husband is the decedent.
(3) by deed under which he has retained for his decedent loses the power and control to revoke the
life or any period not ascertainable without designation of the beneficiary. B. Computation of the Net Estate (Sec. 86)
reference to his death or for any period which
does not in fact end before his death: (F) Prior Interests - Except as otherwise specifically Sec. 86. Computation of Net Estate - For the purpose of
provided therein, subsections (B), (C) and (E) of the tax imposed in this Chapter, the value of the net estate
(a) the possession or enjoyment of, or the right this section shall apply to the transfers, trusts, shall be determined:
to the income from, the property, or estates, interests, rights, powers and
relinquishment of powers, as severally (A) Deductions Allowed to the Estate of Citizen or a
(b) the right, either alone or in conjunction with enumerated and described therein, whether Resident - In the case of a citizen or resident of
any person, to designate the persons who shall made, created, arising, existing, exercised or the Philippines, by deducting from the value of
possess or enjoy the property or the income relinquished before or after the effectivity of this the gross estate -
therefrom; Code.
(1) Expenses, Losses, Indebtedness, and taxes (ELIT)
Except in case of a bona fide sale for an (G) Transfers of Insufficient Consideration - If any - Such amounts -
adequate and full consideration in money or one of the transfers, trusts, interests, rights or
money's worth. powers enumerated and described in (a) For actual funeral expenses OR in an amount
subsections (B), (C) and (D) of this Sec. is made, equal to five percent (5%) of the gross estate,
 Similar to Sec. 86(B) Transfers in contemplation created, exercised or relinquished for a whichever is lower, but in no case to exceed Two
of Death consideration in money or money's worth, but is hundred thousand pesos (P200,000);
 The only difference is that under Sec. 86(D), the not a bona fide sale for an adequate and full
property was transferred under a general power consideration in money or money's worth, there Q: Suppose the funeral expenses incurred is only
of appointment executed by the decedent. shall be included in the gross estate only the P155,000, is the whole amount deductible?
excess of the fair market value, at the time of
(E) Proceeds of Life Insurance - To the extent of the death, of the property otherwise to be included A: It depends. If the 155K, is more than 5% of the GE, the
amount receivable by the estate of the on account of such transaction, over the value of whole amount is NOT deductible.
deceased, his executor, or administrator, as the consideration received therefor by the
insurance under policies taken out by the decedent. The amount allowed to be deducted is only up to 5% of
decedent upon his own life, irrespective of the GE.
whether or not the insured retained the power  Sec. 86(G) should be applied when the transfer
of revocation, or to the extent of the amount was due to an impending death, say, due to a Q: What does “funeral expenses” include?
receivable by any beneficiary designated in the terminal illness.
policy of insurance,  However, the Code provides that in case of a A: RR 2-2003 provides that the term funeral expenses
bonafide sale of an adequate and full include:
Except when it is expressly stipulated that the consideration in money or money’s worth, the
designation of the beneficiary is irrevocable. same shall not be considered as a transfer for a. The mourning apparel of the surviving spouse
inadequate consideration. and unmarried minor children of the deceased
Requirements: bought and used on the occasion of the burial.
(H) Capital of the Surviving Spouse - The capital of b. Expenses for the deceased’s wake, including
(1) The decedent insured himself the surviving spouse of a decedent shall NOT, for food and drinks
c. Publication charges for death notices
d. Telecommunication expenses incurred in Reason: Since the provision of the NIRC are copied from (d) For claims of the deceased against insolvent
informing relatives of the deceased the U.S., where extrajudicial expenses are considered as persons where the value of decedent's interest
e. Cost of burial plot, tombstones, monument or deduction from the gross estate, it is only proper for therein is included in the value of the gross
mausoleum but not their upkeep (in case the extrajudicial expenses to be considered as deductions in estate; and
deceased owns a family estate or several burial this jurisdiction.
lots only the value corresponding to the plot  Unlike Sec. 86(A)(c) where the deceased is the
where he is buried) Hence, extrajudicial expenses shall be allowed as debtor, in Sec. 86(A)(d) the deceased the credtor
f. Interment and/or cremation fees and charges deduction from the GE provided that these are incurred  Requisite: The indebtedness must be included in
g. All other expenses incurred for the performance for the settlement of the estate of the deceased the GE.
of the rites and ceremonies incident to
interment (c) For claims against the estate: Provided, That at (e) For unpaid mortgages upon, or any indebtedness
the time the indebtedness was incurred the debt in respect to, property where the value of
Q: Are expenses for the death anniversary included? instrument was duly notarized and, if the loan decedent's interest therein, undiminished by
was contracted within three (3) years before the such mortgage or indebtedness, is included in
A: No The expenses included in RR No. 2-2003 refer to death of the decedent, the administrator or the value of the gross estate, but not including
those incurred BEFORE and DURING the burial. executor shall submit a statement showing the any income tax upon income received after the
disposition of the proceeds of the loan; death of the decedent, or property taxes not
(b) For judicial expenses of the testamentary or accrued before his death, or any estate tax.
intestate proceedings; The word “claims” is generally construed to mean debts or
demands of a pecuniary nature which could have been The deduction herein allowed in the case of
Expenses allowed as deduction under this category are enforced against the deceased in his lifetime and could claims against the estate, unpaid mortgages or
those incurred in the inventory-taking of assets comprising have been reduced to simple money judgments. any indebtedness shall, when founded upon a
the gross estate, their administration, the payment of promise or agreement, be limited to the extent
debts of the estate, as well as the distribution of the estate Claims against the estate or indebtedness in respect of that they were contracted bona fide and for an
among the heirs. property may arise out of: adequate and full consideration in money or
money's worth.
In short, these deductible items are expenses incurred (1) Contract;
during the settlement of the estate but not beyond the (2) Tort; or There shall also be deducted losses incurred
last day prescribed by law, or the extension thereof, for (3) Operation of Law during the settlement of the estate arising from
the filing of the estate tax return. fires, storms, shipwreck, or other casualties, or
Requisites of Sec. 86(A)(c): from robbery, theft or embezzlement, when
Judicial expenses may include: such losses are not compensated for by
1. The amount of indebtedness must be included in insurance or otherwise, and if at the time of the
a. Fees of executor or administrator; the gross estate filing of the return such losses have not been
b. Attorney’s fees; 2. The debt instrument or the contract of loan must claimed as a deduction for the income tax
c. Court fees; be duly notarized at the time of the purposes in an income tax return, and provided
d. Accountant’s fees; indebtedness was incurred; that such losses were incurred not later than the
e. Appraiser’s fees; 3. If the loan was contracted within 3 years before last day for the payment of the estate tax as
f. Clerk hire; the death of the decedent, the administrator or prescribed in subsection (A) of Sec. 91.
g. Costs of preserving and distributing the estate; executor shall submit a statement showing the
h. Costs of storing or maintaining property of the disposition of the proceeds of the loan Expenses under Sec. 86(A)(e):
estate; and 4. A duly notarized certification as to the unpaid
i. Brokerage fees for selling property of the estate. balance of the debt from the creditor, if the 1. Mortgage indebtedness
creditor is a corporation, such sworn certification 2. Taxes which accrued before the death of the
Q: Are extrajudicial expenses deductible? shall be signed by the President or Vice- decedent
President, or other principal officer of the 3. Loss by virtue of natural calamities
A: Yes. Although the NIRC and RR 2-2003 are silent on the corporation.
matter, the SC in Pajunar v. Commissioner considered
extrajudicial expenses as deductible to the gross estate.
RR 2-2003. In case the loan of the decedent is only an prior to the death of the decedent, or if the property was
accommodation loan, it is required that the value of the transferred to him by gift within the same period prior to Within 1 year 100%
loan must be included as a receivable of the estate. his death; More than 1 year but not 80%
more than 2 years
Q: The tax referred to in Sec. 86(A)(e). Is estate tax Forty percent (40%) of the value, if the prior decedent died More than 2 years but not 60%
included? more than three (3) years but not more than four (4) years more than 3 years
prior to the death of the decedent, or if the property was More than 3 years but not 40%
A: No. The taxes accrued prior to the death of the transferred to him by gift within the same period prior to more than 4 years
decedent. Estate tax accrues upon the death of the his death; More than 4 years but not 20%
decedent, this it is not included in this section. more than 5 years
Twenty percent (20%) of the value, if the prior decedent
Requisites of Losses by virtue of Natural Calamities: died more than four (4) years but not more than five (5) (3) Transfers for Public Use - The amount of all the
years prior to the death of the decedent, or if the property bequests, legacies, devises or transfers to or for
a. Such losses are not compensated by insurance was transferred to him by gift within the same period prior the use of the Government of the Republic of
b. At the time of the filing of the return, such losses to his death; the Philippines, or any political subdivision
have not been claimed as a deduction for thereof, for exclusively public purposes.
income tax purposes These deductions shall be allowed only where a donor's
c. Such losses were incurred not later than the last tax or estate tax imposed under this Title was finally (4) The Family Home - An amount equivalent to the
day for the payment of the estate tax as determined and paid by or on behalf of such donor, or the current fair market value of the decedent's
provided in Sec. 91(A), 6 months after the death estate of such prior decedent, as the case may be, and family home: Provided, however, That if the said
of the decedent only in the amount finally determined as the value of such current fair market value exceeds One million
property in determining the value of the gift, or the gross pesos (P1,000,000), the excess shall be subject
(2) Property Previously Taxed (Vanishing estate of such prior decedent, and only to the extent that to estate tax. As a sine qua non condition for the
Deduction) - An amount equal to the value the value of such property is included in the decedent's exemption or deduction, said family home must
specified below of any property forming a part of gross estate, and only if in determining the value of the have been the decedent's family home as
the gross estate situated in the Philippines of any estate of the prior decedent, no deduction was allowable certified by the barangay captain of the locality.
person who died within five (5) years prior to the under paragraph (2) in respect of the property or
death of the decedent, or transferred to the properties given in exchange therefor. Requisites for Family Home to be Deductible:
decedent by gift within five (5) years prior to his
death, where such property can be identified as Where a deduction was allowed of any mortgage or other 1. The amount to be deducted should not exceed 1
having been received by the decedent from the lien in determining the donor's tax, or the estate tax of the Million, the excess shall be subject to estate tax
donor by gift, or from such prior decedent by prior decedent, which was paid in whole or in part prior to 2. There must be a certification from the Barangay
gift, bequest, devise or inheritance, or which can the decedent's death, then the deduction allowable under Captain that the said family home is the actual
be identified as having been acquired in said SubSec. shall be reduced by the amount so paid. Such residence of the decedent
exchange for property so received: deduction allowable shall be reduced by an amount which 3. The estate of the decedent claiming the
bears the same ratio to the amounts allowed as deduction must be legally married individual or a
One hundred percent (100%) of the value, if the prior deductions under paragraphs (1) and (3) of this SubSec. as head of the family
decedent died within one (1) year prior to the death of the the amount otherwise deductible under said paragraph (2) 4. The amount of the family home must be
decedent, or if the property was transferred to him by gift bears to the value of the decedent's estate. Where the included in the GE
within the same period prior to his death; property referred to consists of two or more items, the
aggregate value of such items shall be used for the (5) Standard Deduction - An amount equivalent to
Eighty percent (80%) of the value, if the prior decedent purpose of computing the deduction. One million pesos (P1,000,000).
died more than one (1) year but not more than two (2)
years prior to the death of the decedent, or if the property  Vanishing Deduction is applicable to both estate  Automatic, there is no conditions for claiming
was transferred to him by gift within the same period prior and donor’s tax this deduction
to his death;  Vanishing deduction refers to a property which
forms part of the GE situated in the Philippines (6) Medical Expenses - Medical Expenses incurred
Sixty percent (60%) of the value, if the prior decedent died of any person who died within 5 years prior to by the decedent within one (1) year prior to his
more than two (2) years but not more than three (3) years his death
death which shall be duly substantiated with transferred to him by gift, within the same donor's tax, or the estate tax of the prior
receipts: Provided, That in no case shall the period prior to his death; decedent, which was paid in whole or in part
deductible medical expenses exceed Five prior to the decedent's death, then the
Hundred Thousand Pesos (P500,000). Eighty percent (80%) of the value, if the prior deduction allowable under said paragraph shall
decedent died more than one (1) year but not be reduced by the amount so paid. Such
(7) Amount Received by Heirs under R.A. 4917 - Any more than two (2) years prior to the death of the deduction allowable shall be reduced by an
amount received by the heirs from the decedent decedent, or if the property was transferred to amount which bears the same ratio to the
- employee as a consequence of the death of the him by gift within the same period prior to his amounts allowed as deductions under
decedent-employee in accordance with R.A. death; paragraphs (1) and (3) of this SubSec. as the
4917: Provided, That such amount is included in amount otherwise deductible under paragraph
the gross estate of the decedent. Sixty percent (60%) of the value, if the prior (2) bears to the value of that part of the
decedent died more than two (2) years but not decedent's gross estate which at the time of his
 The retirement pay referred to is the one more than three (3) years prior to the death of death is situated in the Philippines. Where the
granted by the private sector to its employees. the decedent, or if the property was transferred property referred to consists of two (2) or more
 The private retirement plan must be duly to him by gift within the same period prior to his items, the aggregate value of such items shall be
approved by the BIR, the retiree must have death; used for the purpose of computing the
rendered at least 10 years of service and must deduction.
be at least 50 years old at the time of his Forty percent (40%) of the value, if the prior
retirement. decedent died more than three (3) years but not (3) Transfers for Public Use - The amount of all
more than four (4) years prior to the death of bequests, legacies, devises or transfers to or for
(B) Deductions Allowed to Nonresident Estates - In the decedent, or if the property was transferred the use of the Government of the Republic of
the case of a nonresident not a citizen of the to him by gift within the same period prior to his the Philippines or any political subdivision
Philippines, by deducting from the value of that death; and thereof, for exclusively public purposes.
part of his gross estate which at the time of his
death is situated in the Philippines: Twenty percent (20%) of the value, if the prior Expenses allowed for Nonresident Aliens:
decedent died more than four (4) years but not
(1) Expenses, Losses, Indebtedness and Taxes. - That more than five (5) years prior to the death of the 1. Expenses, Loses, Indebtedness and Taxes
proportion of the deductions specified in decedent, or if the property was transferred to 2. Vanishing Deductions
paragraph (1) of SubSec. (A) of this Sec. which him by gift within the same period prior to his 3. Transfers for Public Use
the value of such part bears to the value of his death.
entire gross estate wherever situated; Expenses NOT ALLOWED to Nonresident Aliens
(2) Property Previously Taxed. - An amount equal to These deductions shall be allowed only where a
the value specified below of any property donor's tax, or estate tax imposed under this 1. Family home
forming part of the gross estate situated in the Title is finally determined and paid by or on 2. Standard Deduction
Philippines of any person who died within five behalf of such donor, or the estate of such prior 3. Hospitalization Expenses
(5) years prior to the death of the decedent, or decedent, as the case may be, and only in the 4. Retirement Pay
transferred to the decedent by gift within five (5) amount finally determined as the value of such
years prior to his death, where such property property in determining the value of the gift, or (C) Share in the Conjugal Property - The net share
can be identified as having been received by the the gross estate of such prior decedent, and only of the surviving spouse in the conjugal
decedent from the donor by gift, or from such to the extent that the value of such property is partnership property as diminished by the
prior decedent by gift, bequest, devise or included in that part of the decedent's gross obligations properly chargeable to such property
inheritance, or which can be identified as having estate which at the time of his death is situated shall, for the purpose of this section, be
been acquired in exchange for property so in the Philippines; and only if, in determining the deducted from the net estate of the decedent.
received: value of the net estate of the prior decedent, no
deduction is allowable under paragraph (2) of Sec. 85(H) Sec. 86(C)
One hundred percent (100%) of the value if the SubSec. (B) of this Sec., in respect of the The capital of the surviving The share of the surviving
prior decedent died within one (1) year prior to property or properties given in exchange spouse is considered an spouse in the conjugal
the death of the decedent, or if the property was therefore. Where a deduction was allowed of exclusion partnership is considered as
any mortgage or other lien in determining the a deduction
Q: If the share of the surviving spouse is considered as a
deduction from the gross estate, why should it be  In Sec. 87(A), the usufruct is one without a fixed (A) Usufruct - To determine the value of the right of
included then deducted from the gross estate? period such that upon the death of the usufruct, use or habitation, as well as that of
usufructuary, the usufruct is then transferred to annuity, there shall be taken into account the
A: The relevance lies with the requirements under Sec. 89 the naked owner. probable life of the beneficiary in accordance
and 90: (1) written notice to the Commissioner; (2) Filing  The decedent is the usufructuary, hence no with the latest Basic Standard Mortality Table, to
an Estate Tax Return, and (3) a statement duly certified by property is included in his estate since upon his be approved by the Secretary of Finance, upon
a CPA. death, the usufruct is merged with the naked recommendation of the Insurance
owner. Commissioner.
(D) Miscellaneous Provisions - No deduction shall
be allowed in the case of a nonresident not a (B) The transmission or delivery of the inheritance Sec. 87(A) Sec. 88(A)
citizen of the Philippines, unless the executor, or legacy by the fiduciary heir or legatee to the The usufruct referred to is Contemplates a situation
administrator, or anyone of the heirs, as the case fideicommissary; one without a fixed period where the usufruct is for a
may be, includes in the return required to be such that upon death of the fixed period such that upon
filed under Sec. 90 the value at the time of his  The decedent is the fiduciary heir usufructuary, the usufruct the death of the
death of that part of the gross estate of the  Upon his death, the inheritance received by him is extinguished usufructuary, the usufruct
nonresident not situated in the Philippines. during his lifetime is transferred to the forms part of his estate
fideicommissary heir, thus no property is since the period has not yet
(E) Tax Credit for Estate Taxes paid to a Foreign transferred to his estate. lapsed. Hence, it is material
Country. - to determine the value of
(C) The transmission from the first heir, legatee or the usufruct
(1) In General - The tax imposed by this Title shall donee in favor of another beneficiary, in
be credited with the amounts of any estate tax accordance with the desire of the predecessor; (B) Properties - The estate shall be appraised at its
imposed by the authority of a foreign country. and fair market value as of the time of death.
(2) Limitations on Credit - The amount of the credit However, the appraised value of real property as
taken under this section shall be subject to each  Same as fideicommissary substitution of the time of death shall be, whichever is higher
of the following limitations: of -
(D) All bequests, devises, legacies or transfers to
(a) The amount of the credit in respect to the tax social welfare, cultural and charitable (1) The fair market value as determined by the
paid to any country shall not exceed the same institutions, no part of the net income of which Commissioner, or
proportion of the tax against which such credit is insures to the benefit of any individual: (2) he fair market value as shown in the schedule of
taken, which the decedent's net estate situated Provided, however, That not more than thirty values fixed by the Provincial and City Assessors.
within such country taxable under this Title percent (30%) of the said bequests, devises,
bears to his entire net estate; and legacies or transfers shall be used by such GR: With respect to personal property, the value to be
(b) The total amount of the credit shall not exceed institutions for administration purposes. considered shall be the FMV of the property at the time of
the same proportion of the tax against which death of the decedent.
such credit is taken, which the decedent's net Requisites of Sec. 87(D):
estate situated outside the Philippines taxable XPN: RR 2-2003. Shares of stocks should be classified
under this Title bears to his entire net estate. 1. No part of the income of such institution inures whether listed or unlisted in the local stock exchange.
to the benefit of any individual
C. Exemption of Certain Acquisitions and 2. Not more than 30% of said bequest, devise, If listed, the book value shall be the highest value
Transmissions legacy, or transfer shall be used by such immediately before death of the decedent.
institution for administration purposes.
Sec. 87. Exemption of Certain Acquisitions and If unlisted, it must be determined if the shares are
Transmissions - The following shall not be taxed: D. Determination of the Value of the Estate (Sec. preferred or common.
88)
(A) The merger of usufruct in the owner of the If preferred, the value to be used shall be its par value
naked title; Sec. 88. Determination of the Value of the Estate -
If common, the book value shall be relevant.
(2) The deductions allowed from gross estate in Sec. 91. Payment of Tax -
GR: With respect to real property: determining the estate as defined in Sec. 86; and
(3) Such part of such information as may at the time (A) Time of Payment.- The estate tax imposed by
1. FMV or the zonal value be ascertainable and such supplemental data as Sec. 84 shall be paid at the time the return is
2. FMV as shown in the schedule of values fixed by may be necessary to establish the correct taxes. filed by the executor, administrator or the heirs.
the Provincial and City Assessors. (B) Extension of Time - When the Commissioner
Provided, however, That estate tax returns finds that the payment on the due date of the
E. Notice of Death to be Filed (Sec. 89) showing a gross value exceeding Two million estate tax or of any part thereof would impose
pesos (P2,000,000) shall be supported with a undue hardship upon the estate or any of the
Sec. 89. Notice of Death to be Filed - In all cases of statement duly certified to by a Certified Public heirs, he may extend the time for payment of
transfers subject to tax, or where, though exempt from Accountant containing the following: such tax or any part thereof not to exceed five
tax, the gross value of the estate exceeds Twenty (5) years, in case the estate is settled through
thousand pesos (P20,000), the executor, administrator or (a) Itemized assets of the decedent with their the courts, or two (2) years in case the estate is
any of the legal heirs, as the case may be, within two (2) corresponding gross value at the time of his settled extrajudicially. In such case, the amount
months after the decedent's death, or within a like period death, or in the case of a nonresident, not a in respect of which the extension is granted shall
after qualifying as such executor or administrator, shall citizen of the Philippines, of that part of his gross be paid on or before the date of the expiration
give a written notice thereof to the Commissioner. estate situated in the Philippines; of the period of the extension, and the running
(b) Itemized deductions from gross estate allowed in of the Statute of Limitations for assessment as
Instances when transfer mortis causa requires a written Sec. 86; and provided in Sec. 203 of this Code shall be
notice to be filed: (c) The amount of tax due whether paid or still due suspended for the period of any such extension.
and outstanding.
1. When the transfer is subject to tax Where the taxes are assessed by reason of
2. When the GE exceeds 20,000 (B) Time for filing - For the purpose of determining negligence, intentional disregard of rules and
the estate tax provided for in Sec. 84 of this regulations, or fraud on the part of the taxpayer,
F. Estate Tax Returns (Sec. 90) Code, the estate tax return required under the no extension will be granted by the
preceding SubSec. (A) shall be filed within six (6) Commissioner.
Sec. 90. Estate Tax Returns - months from the decedent's death.
If an extension is granted, the Commissioner
(A) Requirements - In all cases of transfers subject A certified copy of the schedule of partition and may require the executor, or administrator, or
to the tax imposed herein, or where, though the order of the court approving the same shall beneficiary, as the case may be, to furnish a
exempt from tax, the gross value of the estate be furnished the Commissioner within thirty (30) bond in such amount, not exceeding double the
exceeds Two hundred thousand pesos after the promulgation of such order. amount of the tax and with such sureties as the
(P200,000), or regardless of the gross value of Commissioner deems necessary, conditioned
the estate, where the said estate consists of (C) Extension of Time - The Commissioner shall have upon the payment of the said tax in accordance
registered or registrable property such as real authority to grant, in meritorious cases, a with the terms of the extension.
property, motor vehicle, shares of stock or other reasonable extension not exceeding thirty (30)
similar property for which a clearance from the days for filing the return. (C) Liability for Payment - The estate tax imposed
Bureau of Internal Revenue is required as a (D) Place of Filing - Except in cases where the by Sec. 84 shall be paid by the executor or
condition precedent for the transfer of Commissioner otherwise permits, the return administrator before delivery to any beneficiary
ownership thereof in the name of the transferee, required under SubSec. (A) shall be filed with an of his distributive share of the estate. Such
the executor, or the administrator, or any of the authorized agent bank, or Revenue District beneficiary shall to the extent of his distributive
legal heirs, as the case may be, shall file a return Officer, Collection Officer, or duly authorized share of the estate, be subsidiarily liable for the
under oath in duplicate, setting forth: Treasurer of the city or municipality in which the payment of such portion of the estate tax as his
decedent was domiciled at the time of his death distributive share bears to the value of the total
(1) The value of the gross estate of the decedent at or if there be no legal residence in the net estate.
the time of his death, or in case of a nonresident, Philippines, with the Office of the Commissioner.
not a citizen of the Philippines, of that part of his For the purpose of this Chapter, the term
gross estate situated in the Philippines; G. Payment of Tax (Sec. 91) 'executor' or 'administrator' means the executor
or administrator of the decedent, or if there is
no executor or administrator appointed, amount by which the tax exceeds the amounts L. Restitution of Tax Upon Satisfaction of
qualified, and acting within the Philippines, then previously assessed (or collected without Outstanding Obligations (Sec. 96)
any person in actual or constructive possession assessment) as a deficiency; but such amounts
of any property of the decedent. previously assessed or collected without Sec. 96. Restitution of Tax Upon Satisfaction of
assessment shall first be decreased by the Outstanding Obligations - If after the payment of the
GR: “Pay-as-you-file system” The time of paying the amounts previously abated, refunded or estate tax, new obligations of the decedent shall appear,
estate tax is at the time the return is filed. otherwise repaid in respect of such tax. and the persons interested shall have satisfied them by
order of the court, they shall have a right to the restitution
XPN: Extension of time by the Commissioner. J. Payment Before Delivery by Executor or of the proportional part of the tax paid.
Administrator (Sec. 94)
H. Discharge of Executor or Administrator from M. Payment of Tax Antecedent to the Transfer of
Personal Liability (Sec. 92) Sec. 94. Payment before Delivery by Executor or Shares, Bonds or Rights
Administrator - No judge shall authorize the executor or
Sec. 92. Discharge of Executor or Administrator from judicial administrator to deliver a distributive share to any Sec. 97. Payment of Tax Antecedent to the Transfer of
Personal Liability - If the executor or administrator makes party interested in the estate unless a certification from Shares, Bonds or Rights - There shall not be transferred to
a written application to the Commissioner for the Commissioner that the estate tax has been paid is any new owner in the books of any corporation, sociedad
determination of the amount of the estate tax and shown. anonima, partnership, business, or industry organized or
discharge from personal liability therefore, the established in the Philippines any share, obligation, bond
Commissioner (as soon as possible, and in any event K. Duties of Certain Officers and Debtors (Sec. 95) or right by way of gift inter vivos or mortis causa, legacy or
within one (1) year after the making of such application, or inheritance, unless a certification from the Commissioner
if the application is made before the return is filed, then Sec. 95. Duties of Certain Officers and Debtors - Registers that the taxes fixed in this Title and due thereon have been
within one (1) year after the return is filed, but not after of Deeds shall not register in the Registry of Property any paid is shown.
the expiration of the period prescribed for the assessment document transferring real property or real rights therein
of the tax in Sec. 203 shall not notify the executor or or any chattel mortgage, by way of gifts inter vivos or If a bank has knowledge of the death of a person, who
administrator of the amount of the tax. The executor or mortis causa, legacy or inheritance, unless a certification maintained a bank deposit account alone, or jointly with
administrator, upon payment of the amount of which he is from the Commissioner that the tax fixed in this Title and another, it shall not allow any withdrawal from the said
notified, shall be discharged from personal liability for any actually due thereon had been paid is show, and they shall deposit account, unless the Commissioner has certified
deficiency in the tax thereafter found to be due and shall immediately notify the Commissioner, Regional Director, that the taxes imposed thereon by this Title have been
be entitled to a receipt or writing showing such discharge. Revenue District Officer, or Revenue Collection Officer or paid: Provided, however, That the administrator of the
Treasurer of the city or municipality where their offices are estate or any one (1) of the heirs of the decedent may,
I. Definition of Deficiency (Sec. 93) located, of the non payment of the tax discovered by upon authorization by the Commissioner, withdraw an
them. Any lawyer, notary public, or any government amount not exceeding Twenty thousand pesos (P20,000)
Sec. 93. Definition of Deficiency - As used in this Chapter, officer who, by reason of his official duties, intervenes in without the said certification. For this purpose, all
the term 'deficiency' means: the preparation or acknowledgment of documents withdrawal slips shall contain a statement to the effect
regarding partition or disposal of donation intervivos or that all of the joint depositors are still living at the time of
(a) The amount by which the tax imposed by this mortis causa, legacy or inheritance, shall have the duty of withdrawal by any one of the joint depositors and such
Chapter exceeds the amount shown as the tax furnishing the Commissioner, Regional Director, Revenue statement shall be under oath by the said depositors.
by the executor, administrator or any of the District Officer or Revenue Collection Officer of the place
heirs upon his return; but the amounts so shown where he may have his principal office, with copies of such
on the return shall first be increased by the documents and any information whatsoever which may
amounts previously assessed (or collected facilitate the collection of the aforementioned tax. Neither
without assessment) as a deficiency and shall a debtor of the deceased pay his debts to the heirs,
decreased by the amount previously abated, legatee, executor or administrator of his creditor, unless
refunded or otherwise repaid in respect of such the certification of the Commissioner that the tax fixed in
tax; or this Chapter had been paid is shown; but he may pay the
(b) If no amount is shown as the tax by the executor or judicial administrator without said certification
executor, administrator or any of the heirs upon if the credit is included in the inventory of the estate of the
his return, or if no return is made by the deceased.
executor, administrator, or any heir, then the