A.

Estate Tax
This what we call “date of death valuation.” So if you’ve encountered terms like “date of death valuation” we are talking about estate tax.
However, with in case of an NRA, only that part of the entire gross estate which is situated in the Philippines shall be included in the
taxable estate.

1. Section 84-97 NIRC as amended by TRAIN Law

SEC. 84. Rates of Estate Tax (As amended by Sec. 22 of TRAIN Law). - There shall be levied, assessed, collected and paid
upon the transfer of the net estate as determined in accordance with Sections 85 and 86 of every decedent, whether resident or
nonresident of the Philippines, a tax at a rate of 6% based on the value of such net estate.

Q: So again how do we compute for the net taxable estate?

A: So you have to determine what are the properties that have to be included in the gross estate. So what are the allowable
deductions and after you deduct that, it’s a simple minus lang you have your net taxable estate, and you apply (before, its
complicated because there are graduated rates) but now whatever the net taxable estate you multiply the six percent so you get
your net estate tax.

So lets discuss the items on the properties included in the gross estate.

SEC. 85. Gross Estate. - the value of the gross estate of the decedent shall be determined by including the value at the time of
his death of all property, real or personal, tangible or intangible, wherever situated: Provided, however, that in the case of a
nonresident decedent who at the time of his death was not a citizen of the Philippines, only that part of the entire gross estate
which is situated in the Philippines shall be included in his taxable estate.

(A) Decedent's Interest. - To the extent of the interest therein of the decedent at the time of his death;

So you have decedent’s interest, the extent of the interest therein of the decedent at the time of his death. So meaning example
of this is that if you have a stockholders in a company, let’s say namatay ka, you are the decedent, (may succession na kayo di ba
niloloko nyo pa ako ha).

So decedent, lets say my stockholdings ka in X company so that is your interest in that X company, so that is part of your gross
estate that is under the decedent’s interest.

(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.

So if the decedent transfer a property in contemplation of death and if it can be proven that the transfer was actually in
contemplation of death and that will be part of the gross estate, except, please take note except in case of a bona fide sale for an
adequate and full consideration in money or money’s worth.

Lets say nag ka cancer (simbako), nag ka cancer, dying, terminal one month before sa iyang death nag distribute na siya og
property. Now that transfer if it is found to be in contemplation of death and without a full and adequate consideration that will be
part of the gross estate.

Q: So how will you determine, how will you avoid for the property to be included in the gross estate?
A: You should transfer it under a bona fide sale for an adequate and full consideration and so even if it is made in contemplation
of death, if it is transferred in bona fide sale for an adequate and full consideration that will be excluded.

So please take note, now before kasi I don’t know if you’ve read your tax books, there is meron silang mga three months three
months after death considered presumed to be in contemplation of death but actually there is no specific rulings or specific period
to be considered transferred in contemplation of death.

We have BIR Ruling No. 26187 Issued Sept. 2, 1987. So BIR said the law does not specify the number of years prior to the
decedents death within which the transfer can be considered in contemplation of death is so it actually runs from the totality of
circumstances.

So it doesn’t mean because some books are saying of it is transferred within three months before the death of a decedent is
considered a transfer in contemplation of death, no no that is wrong, and even if it is transferred in contemplation of death, if it is
made through a sale, in a bona fide sale for an adequate and full consideration, it can still be excluded in the Gross Estate.

(C) Revocable Transfer. –

(1) To the extent of any interest therein, of which the decedent has at any time made a transfer (except in case of a bona
fide sale for an adequate and full consideration in money or money's worth) by trust or otherwise, where the enjoyment
thereof was subject at the date of his death to any change through the exercise of a power (in whatever capacity exercisable)

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 by the decedent alone or by the decedent in conjunction with any other person (without regard to when or from what source
the decedent acquired such power), to alter, amend, revoke, or terminate, or where any such power is relinquished in
contemplation of the decedent's death.

(2) For the purpose of this Subsection, the power to alter, amend or revoke shall be considered to exist on the date of the
decedent's death even though the exercise of the power is subject to a precedent giving of notice or even though the
alteration, amendment or revocation takes effect only on the expiration of a stated period after the exercise of the power,
whether or not on or before the date of the decedent's death notice has been given or the power has been exercised. In
such cases, proper adjustment shall be made representing the interests which would have been excluded from the power if
the decedent had lived, and for such purpose if the notice has not been given or the power has not been exercised on or
before the date of his death, such notice shall be considered to have been given, or the power exercised, on the date of
death.

Let say nag transfer kunwari si Neil, nag execute ng deed of sale (bona fide sale for full and accurate compensation). Tapos
may nakalagay doon na the decedent has the power to revoke, decedent has the power to amend, the decedent has the
power to use the property. So it does not really mean that it is a sale transaction just to make under the text of sale. But if
it is a bona fide sale, that is excluded. Please take note REVOCABLE TRANSFER, Pano kung irrevocable transfer? Then that
is excluded.

(D) Property Passing Under General Power of Appointment. - To the extent of any property passing under a general power of
appointment exercised by the decedent: (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in
possession or enjoyment at, or after his death, or (3) by deed under which he has retained for his life or any period not
ascertainable without reference to his death or for any period which does not in fact end before his death (a) the possession or
enjoyment of, or the right to the income from, the property, or (b) the right, either alone or in conjunction with any person, to
designate the persons 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.

Atty. Ong: What does this mean? Can you give me an example?
Caballero: For example sir there is a transfer of property between A and B so uhm there is a provision that if A transfers the
property, the transfer shall be made in favor of anybody.
Atty. Ong: So kaninong estate siya mapa-part?
Caballero: It shall be part of B’s property. So when B transfers the property to anybody, such property shall be included under
the gross estate of B.
Atty. Ong: So let’s say A made a transfer, but not really a transfer, it’s just let say right to use the property, but there is a
provision that B has a general power to give it to anyone. So in that sense, it would be subject to the gross estate of B, not to
A. But what if nauna namatay si A, would it be included in the gross estate of A?
Caballero: If A died ahead of B, and the property was already transferred through a general power of appointment, the property
will be reported under the estate of B.
Atty. Ong: Yah. In that particular case, it is no longer included in the estate of A. Now please take note that this is not your usual
SPA in front of a Deed of sale. This is a general power of appointment, to appoint kung kanino mapupunta yung property.
Because of if it is already sold, then it is no longer part of the estate. So you have prior interest in the transfer of a sufficient
consideration.

(E) Proceeds of Life Insurance. - To the extent of the amount receivable by the estate of the deceased, his executor, or
administrator, as insurance under policies taken out by the decedent upon his own life, irrespective of whether or not the insured
retained the power of revocation, or to the extent of the amount receivable by any beneficiary designated in the policy of
insurance, except when it is expressly stipulated that the designation of the beneficiary is irrevocable.

(F) Prior Interests. - Except as otherwise specifically provided therein, Subsections (B), (C) and (E) of this Section shall apply to
the transfers, trusts, estates, interests, rights, powers and relinquishment of powers, as severally enumerated and described
therein, whether made, created, arising, existing, exercised or relinquished before or after the effectivity of this Code.

(G) Transfers for Insufficient Consideration. - If any one of the transfers, trusts, interests, rights or powers enumerated and
described in Subsections (B), (C) and (D) of this Section is made, created, exercised or relinquished for a consideration in money
or money's worth, but is not a bona fide sale for an adequate and full consideration in money or money's worth, there shall be
included in the gross estate only the excess of the fair market value, at the time of death, of the property otherwise to be included
on account of such transaction, over the value of the consideration received therefor by the decedent.

So you have prior interest in the transfer of insufficient consideration. It is more contentious. So, if it is not for full and adequate
consideration, the excess will be considered as part of the property included in the gross estate of the decedent. Please take
note of that.

Pero contentious kasi to kasi hindi naman, like donation, diba there is requisite for donative intent. Kung ito binenta mo sya at a
lower than value, legally speaking, option mo naman yon na malugi ka and it is your right, but please take note that the tax code
is different, so for tax purposes, iba ang treatment than for legal purposes. It’s always an issue, kasi diba what are the… if you
want to give something, there must be donative intent, ito pag binenta mo sya at lower the value, it doesn’t really mean na
property mo pa yon cause not enjoying the property anymore, hindi naman consideration ang lower the value.

(H) Capital of the Surviving Spouse. - The capital of the surviving spouse of a decedent shall not, for the purpose of this Chapter,
be deemed a part of his or her gross estate.

Now under Section 4 of RR 12-2018

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 Section 4. Composition of the Gross Estate- The gross estate of a decedent shall be comprised of the following
properties and interest therein at the time of his/her death, including revocable transfers and transfers for
insufficient consideration, etc.:
1. Resident and citizens- all properties, real or personal, tangible or intangible, wherever situated.
2. Non-resident aliens- only properties situated in the Philippines provided, that, with respect to intangible
personal property, its inclusion in the gross estate is subject to the rule of reciprocity provided for under
Section 104 of the NIRC.

Q: Example of intangible personal property?

A: Shares of stocks? You have your IP (Intellectual Property), it is included, subject to the rule on reciprocity.

SEC. 86. Computation of Net Estate. (As amended by Sec. 23 of TRAIN Law) - For the purpose of the tax imposed in this
Chapter, the value of the net estate shall be determined:

(A) Deductions Allowed to the Estate of Citizen or a Resident. - In the case of a citizen or resident of the Philippines, by deducting
from the value of the gross estate –

(1) Standard Deduction. - An amount equivalent to Five million pesos (P5,000,000).

(2) For claims against the estate: Provided, That at the time the indebtedness was incurred the debt instrument was duly
notarized and, if the loan was contracted within three (3) years before the death of the decedent, the administrator or
executor shall submit a statement showing the disposition of the proceeds of the loan.

(3) For claims of the deceased against insolvent persons where the value of decedent's interest therein is included in the
value of the gross estate.

(4) For unpaid mortgages upon, or any indebtedness in respect to, property where the value of decedent's interest therein,
undiminished by such mortgage or indebtedness, is included in the value of the gross estate, but not including any income
tax upon income received after the death of the decedent, or property taxes not accrued before his death, or any estate tax.
The deduction herein allowed in the case of claims against the estate, unpaid mortgages or any indebtedness shall, when
founded upon a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate
and full consideration in money or money's worth. There shall also be deducted losses incurred during the settlement of the
estate arising from fires, storms, shipwreck, or other casualties, or from robbery, theft or embezzlement, when such losses
are not compensated for by insurance or otherwise, and if at the time of the filing of the return such losses have not been
claimed as a deduction for the income tax purposes in an income tax return, and provided that such losses were incurred not
later than the last day for the payment of the estate tax as prescribed in Subsection (A) of Section 91.

(5) Property Previously Taxed. - An amount equal to the value specified below of any property forming a part of the gross
estate situated in the Philippines of any person who died within five (5) years prior to the death of the decedent, or transferred
to the decedent by gift within five (5) years prior to his death, where such property can be identified as having been received
by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be
identified as having been acquired in exchange for property so received:

One hundred percent (100%) of the value, if the prior decedent died within one (1) year prior to the death of the decedent,
or if the property was transferred to him by gift within the same period prior to his death;

Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more than two (2) years prior
to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more than three (3) years prior
to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not more than four (4) years prior
to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not more than five (5) years prior
to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

These deductions shall be allowed only where a donor's tax or estate tax imposed under this Title was finally determined and
paid by or on behalf of such donor, or the estate of such prior decedent, as the case may be, and only in the amount finally
determined as the value of such property in determining the value of the gift, or the gross estate of such prior decedent, and
only to the extent that the value of such property is included in the decedent's gross estate, and only if in determining the
value of the estate of the prior decedent, no deduction was allowable under paragraph (5) in respect of the property or
properties given in exchange therefor. Where a deduction was allowed of any mortgage or other lien in determining the
donor's tax, or the estate tax of the prior decedent, which was paid in whole or in part prior to the decedent's death, then
the deduction allowable under said Subsection shall be reduced by the amount so paid. Such deduction allowable shall be
reduced by an amount which bears the same ratio to the amounts allowed as deductions under paragraphs (2), (3), (4) and
(6) of this Subsection as the amount otherwise deductible under said paragraph (5) bears to the value of the decedent's
estate. Where the property referred to consists of two or more items, the aggregate value of such items shall be used for
the purpose of computing the deduction.

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 (6) Transfers for Public Use. - The amount of all the bequests, legacies, devises or transfers to or for the use of the
Government of the Republic of the Philippines, or any political subdivision thereof, for exclusively public purposes.

(7) The Family Home. - An amount equivalent to the current fair market value of the decedent's family home: Provided,
however, That if the said current fair market value exceeds Ten million pesos (P10,000,000), the excess shall be subject to
estate tax.

(8) Amount Received by Heirs Under Republic Act No. 4917. - Any amount received by the heirs from the decedent’s employee
as a consequence of the death of the decedent-employee in accordance with Republic Act No. 4917: Provided, That such
amount is included in the gross estate of the decedent.

(B) Deductions Allowed to Nonresident Estates. - In the case of a nonresident not a citizen of the Philippines, by deducting from
the value of that part of his gross estate which at the time of his death is situated in the Philippines:

(1) Standard Deduction. - An amount equivalent to Five million pesos (P5,000,000);

(2) That proportion of the deductions specified in paragraphs (2), (3), and (4) of Subsection (A) of this Section which the
value of such part bears to the value of his entire gross estate wherever situated.

(3) Property Previously Taxed. – x x x

(4) Transfers for Public Use. - The amount of all bequests, legacies, devises or transfers to or for the use of the Government
of the Republic of the Philippines or any political subdivision thereof, for exclusively public purposes.

(C) Share in the Conjugal Property. - the net share of the surviving spouse in the conjugal partnership property as diminished by
the obligations properly chargeable to such property shall, for the purpose of this Section, be deducted from the net estate of
the decedent.

(D) Tax Credit for Estate Taxes paid to a Foreign Country. -

(1) In General. - The tax imposed by this Title shall be credited with the amounts of any estate tax imposed by the authority
of a foreign country.

(2) Limitations on Credit. - The amount of the credit taken under this Section shall be subject to each of the following
limitations:

(a) The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax
against which such credit is taken, which the decedent's net estate situated within such country taxable under this Title
bears to his entire net estate; and

(b) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which
the decedent's net estate situated outside the Philippines taxable under this Title bears to his entire net estate.

SEC. 87 Exemption of Certain Acquisitions and Transmissions. - The following shall not be taxed:

(A) The merger of usufruct in the owner of the naked title;

Now, what are the ways for the usufruct to determine if it is extinguished? In your law on properties? Death dba? Pagmamatay,
ma extinguish na ang usufruct so there will be a merger of the usufruct and the naked title. So ito yong ginasabi dito. So it is
not included as part of your gross estate.

(B) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary;

So What is a fiduciary? What is a fideicommissary? Syaro, fresh na fresh pa and law on succession… yong fiduciary,
fideicomissary…ano to?

[This is not part of the lecture, research lang: Fideicommissary Subsitution, also known as indirect substitution, it is a substitution
by virtue of which the fiduciary or first heir instituted is entrusted with the obligation to preserve and transmit to a second heir
the whole or part of the inheritance.

Notes:
1. For its validity and effectivity, such substitution does not go beyond one degree from the heir originally substituted and
provided further, that the fiduciary or first heir and the second heir are living at the time of death of the testator.
2. If the fideicommissary predeceases the fiduciary, but survives the testator, his rights pass to his own heirs.]

So that is not part of the gross estate, ito sya:

(C) The transmission from the first heir, legatee or donee in favor of another beneficiary, in accordance with the desire of the
predecessor; and

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 (Note: The discussion is more on the board and the audio is not so audible, so I improvised a discussion based on a book and
other sources.)

Exemptions

The following shall not be taxed:

(1) The merger of usufruct in the owner of the naked title;
(2) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary;
(3) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance with the desire of the
predecessor; and
(4) All bequests, devises, legacies or transfers to social welfare cultural or charitable institutions, no part of the net income of
which inures to the benefit of any individual, provided that not more than 30% of said bequests, devises, legacies or transfers
shall be used for administration purposes.

Note: The discussion here for both 2 and 3 was short and there is a thin line difference; I researched and made some illustrations
to clarify the difference.

(2) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the
fideicommissary;

Illustration:
Mr. A died leaving an inheritance consisting of several real estates to is favorite grandson, C. Because C is a minor, Mr. A
appointed B, an older brother of C, as fiduciary to the inheritance. Before transferring the property to C, B died.

A à B à C: Where A – Predecessor; B – Fiduciary heir (current decedent); C – Fideicommisary

The delivery of the inheritance upon the death of B to C shall not be included in the gross estate of B because the transfer does
not involve a transfer of ownership from B to C. B is merely a trustee. The delivery is a mere return of the property to the real
owner, C.

(3) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance with the
desire of the predecessor

Illustration:
Mr. A devised in his will a piece of land to B as the first heir and thereafter to C as the second heir. B subsequently died and
transmitted the property to C in accordance with Mr. A’s will.

A à B à C: Where A – Predecessor; B – First heir (current decedent); C – Second heir

The transfer from B to C is referred to as transfer under a special power of appointment. The same is not B’s donation mortis
causa. The transfer from B to C is merely an implementation of the transfer which was originally mandated by processor A.

The same rule applies even if B is given the power, solely or in conjunction with others, to appoint the second heir to the property
from a list drawn by the predecessor A.

In all previous illustrations, assuming B transferred the property during his lifetime to C, the same shall not be subjected to
donor’s tax because there is no gratuitous transfer of ownership.

Why it is excluded in the gross estate?

It is excluded because the inheritance was already subjected to estate tax during the death of the first transmission-from the
decedent to the first heir transfer. Otherwise, you would have double taxation.

(D) All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions, no part of the net income of
which inures to the benefit of any individual: Provided, however, That not more than thirty percent (30%) of the said bequests,
devises, legacies or transfers shall be used by such institutions for administration purposes.

2. SEC. 88. Determination of the Value of the Estate.

(A) Usufruct. - To determine the value of the right of usufruct, use or habitation, as well as that of annuity, there shall be taken
into account the probable life of the beneficiary in accordance with the latest Basic Standard Mortality Table, to be approved by
the Secretary of Finance, upon recommendation of the Insurance Commissioner.

To determine the value of the right to usufruct, use or habitation, as well as that of annuity, there shall be taken into account
the probable life of the beneficiary in accordance with the latest basic standard mortality table, to be approved by the Secretary
of Finance, upon recommendation of the Insurance Commissioner.

If properties ka naman, it’s the fair market value at the time of death. This is the “Date of Death Valuation.”

(B) Properties. - The estate shall be appraised at its fair market value as of the time of death. However, the appraised value of
real property as of the time of death shall be, whichever is higher of -

(1) The fair market value as determined by the Commissioner; or

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 (2) The fair market value as shown in the schedule of values fixed by the Provincial and City Assessors.

SEC. 89. Notice of Death to be Filed. - As amended by Sec. 24 of the TRAIN Law, is hereby repealed.

SEC. 90. Estate Tax Returns. (As amended by Sec. 25 of TRAIN Law) –

(A) Requirements. - In all cases of transfers subject to the tax imposed herein, or regardless of the gross value of the estate,
where the said estate consists of registered or registrable property such as real property, motor vehicle, shares of stock or other
similar property for which a clearance from the Bureau of Internal Revenue is required as a condition precedent for the transfer
of ownership thereof in the name of the transferee, the executor, or the administrator, or any of the legal heirs, as the case may
be, shall file a return under oath in duplicate, setting forth:

(1) The value of the gross estate of the decedent at the time of his death, or in case of a nonresident, not a citizen of the
Philippines, of that part of his gross estate situated in the Philippines;

(2) The deductions allowed from gross estate in determining the estate as defined in Section 86; and

(3) Such part of such information as may at the time be ascertainable and such supplemental data as may be necessary to
establish the correct taxes.

Provided, however, That estate tax returns showing a gross value exceeding Five million pesos (P5,000,000) shall be
supported with a statement duly certified to by a Certified Public Accountant containing the following:

(a) Itemized assets of the decedent with their corresponding gross value at the time of his death, or in the case of a
nonresident, not a citizen of the Philippines, of that part of his gross estate situated in the Philippines;

(b) Itemized deductions from gross estate allowed in Section 86; and

(c) The amount of tax due whether paid or still due and outstanding.

(B) Time for Filing. - For the purpose of determining the estate tax provided for in Section 84 of this Code, the estate tax return
required under the preceding Subsection (A) shall be filed within one (1) year from the decedent's death.

A certified copy of the schedule of partition and the order of the court approving the same shall be furnished the Commissioner
within thirty (30) days after the promulgation of such order.

(C) Extension of Time. - The Commissioner shall have authority to grant, in meritorious cases, a reasonable extension not
exceeding thirty (30) days for filing the return.

(D) Place of Filing. - Except in cases where the Commissioner otherwise permits, the return required under Subsection (A) shall
be filed with an authorized agent bank, or Revenue District Officer, Collection Officer, or duly authorized Treasurer of the city or
municipality in which the decedent was domiciled at the time of his death or if there be no legal residence in the Philippines, with
the Office of the Commissioner.

SEC. 91. Payment of Tax. (As amended by Sec. 26 of TRAIN Law)-

(A) Time of Payment. - The estate tax imposed by Section 84 shall be paid at the time the return is filed by the executor,
administrator or the heirs.

(B) Extension of Time. - When the Commissioner finds that the payment on the due date of the estate tax or of any part thereof
would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part
thereof not to exceed five (5) years, in case the estate is settled through the courts, or two (2) years in case the estate is settled
extrajudicially.

In such case, the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the
period of the extension, and the running of the Statute of Limitations for assessment as provided in Section 203 of this Code
shall be suspended for the period of any such extension.

Where the taxes are assessed by reason of negligence, intentional disregard of rules and regulations, or fraud on the part of the
taxpayer, no extension will be granted by the Commissioner.

If an extension is granted, the Commissioner may require the executor, or administrator, or beneficiary, as the case may be, to
furnish a bond in such amount, not exceeding double the amount of the tax and with such sureties as the Commissioner deems
necessary, conditioned upon the payment of the said tax in accordance with the terms of the extension.

(C) Payment by Installment. – In case the available cash of the estate is insufficient to pay the total estate tax due, payment by
installment shall be allowed within two (2) years from the statutory date for its payment without civil penalty and interest.

(D) Liability for Payment. - The estate tax imposed by Section 84 shall be paid by the executor or administrator before delivery
to any beneficiary of his distributive share of the estate. Such beneficiary shall to the extent of his distributive share of the estate,

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 be subsidiarily liable for the payment of such portion of the estate tax as his distributive share bears to the value of the total net
estate.

For the purpose of this Chapter, the term 'executor' or 'administrator' means the executor or administrator of the decedent, or if
there is no executor or administrator appointed, qualified, and acting within the Philippines, then any person in actual or
constructive possession of any property of the decedent.

SEC. 92. Discharge of Executor or Administrator from Personal Liability. - If the executor or administrator makes a written
application to the Commissioner for determination of the amount of the estate tax and discharge from personal liability therefore,
the Commissioner (as soon as possible, and in any event within one (1) year after the making of such application, or if the
application is made before the return is filed, then within one (1) year after the return is filed, but not after the expiration of the
period prescribed for the assessment of the tax in Section 203 shall not notify the executor or administrator of the amount of the
tax. The executor or administrator, upon payment of the amount of which he is notified, shall be discharged from personal liability
for any deficiency in the tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.

SEC. 93. Definition of Deficiency. - As used in this Chapter, the term 'deficiency' means:

(a) The amount by which the tax imposed by this Chapter exceeds the amount shown as the tax by the executor, administrator
or any of the heirs upon his return; but the amounts so shown on the return shall first be increased by the amounts previously
assessed (or collected without assessment) as a deficiency and decreased by the amount previously abated, refunded or
otherwise repaid in respect of such tax; or

(b) If no amount is shown as the tax by the executor, administrator or any of the heirs upon his return, or if no return is made
by the executor, administrator, or any heir, then the amount by which the tax exceeds the amounts previously assessed (or
collected without assessment) as a deficiency; but such amounts previously assessed or collected without assessment shall first
be decreased by the amounts previously abated, refunded or otherwise repaid in respect of such tax.

SEC. 94. Payment before Delivery by Executor or Administrator. - No judge shall authorize the executor or judicial
administrator to deliver a distributive share to any party interested in the estate unless a certification from the Commissioner that
the estate tax has been paid is shown.

SEC. 95. Duties of Certain Officers and Debtors. - Registers of Deeds shall not register in the Registry of Property any
document transferring real property or real rights therein or any chattel mortgage, by way of gifts inter vivos or mortis causa,
legacy or inheritance, unless a certification from the Commissioner that the tax fixed in this Title and actually due thereon had been
paid is show, and they shall immediately notify the Commissioner, Regional Director, Revenue District Officer, or Revenue Collection
Officer or Treasurer of the city or municipality where their offices are located, of the nonpayment of the tax discovered by them.
Any lawyer, notary public, or any government officer who, by reason of his official duties, intervenes in the preparation or
acknowledgment of documents regarding partition or disposal of donation inter vivos or mortis causa, legacy or inheritance, shall
have the duty of furnishing the Commissioner, Regional Director, Revenue District Officer or Revenue Collection Officer of the place
where he may have his principal office, with copies of such documents and any information whatsoever which may facilitate the
collection of the aforementioned tax. Neither shall a debtor of the deceased pay his debts to the heirs, legatee, executor or
administrator of his creditor, unless the certification of the Commissioner that the tax fixed in this Chapter had been paid is shown;
but he may pay the executor or judicial administrator without said certification if the credit is included in the inventory of the estate
of the deceased.

SEC. 96. Restitution of Tax Upon Satisfaction of Outstanding Obligations. - If after the payment of the estate tax, new
obligations of the decedent shall appear, and the persons interested shall have satisfied them by order of the court, they shall have
a right to the restitution of the proportional part of the tax paid.

SEC. 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights. - There shall not be transferred to any
new owner in the books of any corporation, sociedad anonima, partnership, business, or industry organized or established in the
Philippines any share, obligation, bond or right by way of gift inter vivos or mortis causa, legacy or inheritance, unless a certification
from the Commissioner that the taxes fixed in this Title and due thereon have been paid is shown.

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, subject to a final withholding tax of 6%. For this purpose, all withdrawal
slips shall contain a statement to the effect that all of the joint depositors and such statement shall be under oath by the said
depositors.

3. Revenue Regulations 12- 2018

i. Valuation of Gross Estate

SEC. 5. VALUATION OF THE GROSS ESTATE. – The properties comprising the gross estate shall be valued according to their
fair market value as of the time of decedent’s death.

If the property is a real property, the appraised value thereof as of the time of death shall be, whichever is the higher of –

(1) The fair market value as determined by the Commissioner, or

(2) The fair market value as shown in the schedule of values fixed by the provincial and city assessors, whichever is higher.

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For purposes of prescribing real property values, the Commissioner is authorized to divide the Philippines into different zones or
areas and shall, upon consultation with competent appraisers, both from the private and public sectors, determine the fair market
value of real properties located in each zone or area.

In the case of shares of stocks, the fair market value shall depend on whether the shares are listed or unlisted in the stock
exchanges. Unlisted common shares are valued based on their book value while unlisted preferred shares are valued at par value.
In determining the book value of common shares, appraisal surplus shall not be considered as well as the value assigned to
preferred shares, if there are any. On this note, the valuation of unlisted shares shall be exempt from the provisions of RR No. 06-
2013, as amended.

[This is very important] Shares of Stocks:

In the case of shares of stocks, the fair market value shall depend on whether the shares are listed or unlisted in the stock
exchanges:

1. Unlisted Common Shares

Unlisted common shares are valued based on their book value while unlisted preferred shares are valued at par value. In
determining the book value of common shares, appraisal surplus shall not be considered as well as the value assigned to
preferred shares, if there are any. On this note, the valuation of unlisted shares shall be exempt from the provisions of RR No. 06-
2013, as amended.

2. Listed in the Stock Exchange

For shares which are listed in the stock exchanges, the fair market value shall be the arithmetic mean between the highest and
lowest quotation at a date nearest the date of death, if none is available on the date of death itself.

For shares which are listed in the stock exchanges, the fair market value shall be the arithmetic mean between the highest and
lowest quotation at a date nearest the date of death, if none is available on the date of death itself.

If public company ka ba, you have to be listed? Anyway, pag listed ka, you are listed in the stocks exchange. So the value is the
arithmetic mean between the highest and lowest quotation of the thing nearest the date of death. So you have the opening and
the closing. Not necessarily opening and closing. It has to be the highest and lowest quotation. If none, it’s the available thing on
the date of death itself.

Kapag unlisted ka, eto. Why did I highlight this? Because how do we value selling of shares? Not for essay purposes ha, but for
purposes of computing net gain. In your income tax di ba… how do we value? kung nag benta ako ng shares of an unlisted, how
do you value? Paano?

Ok review. What are the stocks implications if you are selling shares? If you are selling shares… Let’s say may shares ka with
Davao Doc. Binenta mo. Ikaw si A. binenta mo kay B. what are the taxes involved? Pag listed: stock transaction tax. Pag
unlisted? We are talking about unlisted. Capital gains of? … based on? Selling price.

Your 15% because of the TRAIN Law of your net gain. How do you compute the net gain? Magkano yung binigay sayo? The
selling price less the acquisition cost. Tapos the selling price should be equivalent to the fair market value of the shares. Otherwise,
pag mas mababa eto sa fair market value this is considered … Let’s say selling price mo… let’s say the acquisition cost of your
share is P100.00. Tapos ang selling price is P120.00. But the fair market value talaga is P130.00. So this is subject to 15% of the
net gain. This is however is subject to what? kaya nga di ba the more property na binebenta ninyo, if you are selling real estate,
you have to look at the zonal value. And your selling price is approximately your zonal value.

Bakit anong mangyayari? Because the difference … pag masyadong mababa ang selling price … to avoid the capital gains tax, the
difference between the fair market value shall be considered as the donation. Because why would you sell it at lower than fair
market value? The only presumption that they get is that you would want to delete that portion. So that is why this should be
subject to donor’s tax. Kaya kailangan mo siyang malaman how much is the fair market value of the share, because your selling
price should be approximate to it. How do you know the fair market value of the share? Kasi we’re talking about valuation, fair
market value per estate and fair market value for selling. If quouting the market value per share, lets say Company X or lets say
Davao Doc there is this RR 6-2013 mentioned in the regulation. Ano ba ang nakalagay du’n? ang nakalagay du’n, if the company
has a real property, it has to be valued first before computing, kasi what’s the difference between the book value and fair market
value Let’s say si Davao Doc for purposes of illustration: Ang assets niya is 1 million, liabilities niya let’s say 500,000 (ito yung sa
financial statement niya ha)so ang capital niya magkano? – 500,000 tama, let’s say mayron din siyang 50,000 shares so ang book
value niya per share how much? -10 per share – so ito ang book value. Sabi naman ng RR 6–2013, pag may real estate ka you
have to appraise it first, why? what is the difference? Kasi itong assets mo in acquire yung land in acquire mo siya noong 2008 at
200,000 so ang naka record doon sa libro mo is the acquisition cost, do you think the value of your land would still be 200,000
comes 2018? Of course not that is why according to RR 6-2013 , you have to revalue the real property kasi nag a appreciate siya.
Lets say pag na revalue siya nalaman na 2 million. From 200,000 naging 1.2 million so in other words magkano total niya? 2 million
in other words magkano ang total niya minus yung 500,000 so it is 1.5 million divided by 50,000 share = P30. So ito ang fair
market value per share so this is the book value per share mo for purposes of selling, the fair market value should approximate to
the selling price to avoid donation.

But for purposes of estate ano ang nakalagay? For purposes of estate specifically provided: In determining the book value of
common share the appraisal (surplus) shall not be considered as far as the value of purchase is considered please take note the
valuation of unlisted share shall be exempt from the provision of RR 6 –2013. In other words for purposes of valuing the gross
estate, if you have the shares, it would be the book value not the appraised value (may specific provision) .

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 The fair market value of units of participation in any association, recreation or amusement club (such as golf, polo, or similar clubs),
shall be the bid price nearest the date of death published in any newspaper or publication of general circulation.

How about if you have units of participation or membership in association, recreation, amusement club (just like golf club) the fair
market value of that shall be the bid price nearest to the date of death publish in the newspaper of general circulation. Take note
of that.

To determine the value of the right to usufruct, use or habitation, as well as that of annuity, there shall be taken into account the
probable life of the beneficiary in accordance with the latest basic standard mortality table, to be approved by the Secretary of
Finance, upon recommendation of the Insurance Commissioner.

ii. Computation of the Net Estate of a Decedent Who is Either a Citizen or Resident of the Philippines

SEC 6. COMPUTATION OF THE NET ESTATE OF A DECEDENT WHO IS EITHER A CITIZEN OR RESIDENT OF THE
PHILIPPINES – The value of the net estate of a citizen or resident alien of the Philippines shall be determined by deducting from
the value of the gross estate the following items of deduction:

1. Standard deduction. – A deduction in the amount of Five Million Pesos (P5,000,000) shall be allowed without need of
substantiation. The full amount of P5,000,000 shall be allowed as deduction for the benefit of the decedent. The presentation of
such deduction in the computation of the net taxable estate of the decedent is properly illustrated in these Regulations.

Standard Deduction - is a deduction in the amount of 5 million shall be without need of substantiation.

Please take note that automatic ka nang may 5 million deduction. In other words if you are a decedent and yung gross estate mo
hindi naman mag e exceed ng 5 million so wala kang tax na babayaran. This is your basis in saying that dapat you have a property
higher than 5 million to be subjected to estate tax. Before the TRAIN law, the standard deduction was 1 million. Dati kung may
property ka na more than 1 million baka mag bayad ka ng tax. Pero madami pang deduction but right now you have a standard
deduction. Since standard sya, you don’t need to substantiate, automatic na sya across the board.

2. Claims against the estate. – The word “claims” is generally construed to mean debts or demands of a pecuniary nature which
could have been enforced against the deceased in his lifetime and could have been reduced to simple money judgements. Claims
against the estate or indebtedness in respect of property may arise out of: (1) Contract; (2) Tort; or (3) Operation of Law.

Claims against the estate - the word ‘claims’ is generally construed to mean debts or demands of a pecuniary nature which could
have been enforced against the deceased in his lifetime and could have been reduced to simple money judgments.

It may arise, what are your sources of obligations? (1) Law; (2) Contracts; (3) Quasi‐contracts; (4) Acts or omissions punished by
law; and (5) Quasi‐delicts. Yes it may arise from that. in other words, your next deduction is claims against the estate. Mga
kautangan.

So dapat ang ilagay mo sa gross estate is not the net. Let's say meron kang property na 2 million and naka mortgage ang 1 million,
ang ilalagay mo is the 2 million sa reportable gross estate then ilalagay mo ang 1 million sa deductions so the net effect could still
be 1 million kasi enforceable sya. Kung hindi sya namatay at hindi niya nabayaran ang utang mag fo foreclose sya. It is error to
put your gross estate at net realizable amount cause you have to claim it as a deduction.

2.1. Requisites for Deductibility of Claims Against the Estate –

2.1.1. The liability represents a personal obligation of the deceased existing at the time of his death;

Q: Now there is a situation, how about nung namatay sya may utang na 2 million tapos for a period of time naawa ang creditor so
na condone ang half? so instead of 2 million eh 1 million nalang ang utang. Question, magkano ang utang as deduction? Is it at 2
million or is it at 1 million?
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A: It is still at 2 million because it must be at the time of death regardless of the fact that it was condoned, it does not matter. That
is your “Date of Valuation.” So regardless of the fact that it was compromised or condoned, that would not matter.

2.1.2. The liability was contracted in good faith and for adequate and full consideration in money or money’s worth;

2.1.3. The claim must be a debt or claim which is valid in law and enforceable in court;

2.1.4. The indebtedness must not have been condoned by the creditor or the action to collect from the decedent must not
have prescribed.

2.2. Substantiation Requirements. – All unpaid obligations and liabilities of the decedent at the time of his death are allowed
as deductions from gross estate. Provided, however, that the following requirements/documents are complied with/submitted:

Kung si Standard Deduction ay walang need of substantiation, si Allowable Deduction, meron.

2.2.1. In case of simple loan (including advances):

2.2.1.1 The debt instrument must be duly notarized at the time the indebtedness was incurred, such as promissory
note or contract of loan, except for loans granted by financial institutions where notarization is not part of the business
practice/policy of the financial institution-lender;

So kailangan, notarized and utang. Otherwise, hindi yan maki-claim as deduction. Unless, it’s a policy of the lender
not to notarize loan. Mind you, kapag deduction dapat strict.

2.2.1.2. Duly notarized Certification from the creditor as to the unpaid balance of the debt, including interest as of
the time of death. If the creditor is a corporation, the sworn certification should be signed by the President, or Vice-
President, or other principal officer of the corporation. If the creditor is a partnership, the sworn certification should
be signed by any of the general partners. In case the creditor is a bank or other financial institutions, the Certification
shall be executed by the branch manager of the bank/financial institution which monitors and manages the loan of
the decedent-debtor. If the creditor is an individual, the sworn certification should be signed by him. In any of these
cases, the one who should certify must not be a relative of the borrower within the fourth civil degree, either by
consanguinity or affinity, except when the requirement below is complied with.

When the lender, or the President/Vice-president/principal officer of the creditor-corporation, or the general partner
of the creditor-partnership is a relative of the debtor in the degree mentioned above, a copy of the promissory note
or other evidence of the indebtedness must be filed with the RDO having jurisdiction over the borrower within fifteen
days from the execution thereof.

2.2.1.3. In accordance with the requirements as prescribed in existing or prevailing internal revenue issuances, proof
of financial capacity of the creditor to lend the amount at the time the loan was granted, as well as its latest audited
balance sheet with a detailed schedule of its receivable showing the unpaid balance of the decedent-debtor. In case
the creditor is an individual who is no longer required to file income tax returns with the Bureau, a duly notarized
Declaration by the creditor of his capacity to lend at the time when the loan was granted without prejudice to
verification that may be made by the BIR to substantiate such declaration of the creditor. If the creditor is a non-
resident, the executor/administrator or any of the legal heirs must submit a duly notarized declaration by the creditor
of his capacity to lend at the time when the loan was granted, authenticated or certified to as such by the tax
authority of the country where the non-resident creditor is a resident;

2.2.1.4. A statement under oath executed by the administrator or executor of the estate reflecting the disposition of
the proceeds of the loan if said loan was contracted within three (3) years prior to the death of the decedent;

2.2.2. If the unpaid obligation arose from purchase of goods or services:

2.2.2.1. Pertinent documents evidencing the purchase of goods or service, such as sales invoice/delivery receipt (for
sale of goods), or contract for the services agreed to be rendered (for sale of service), as duly acknowledged,
executed and signed by decedent debtor and creditor, and statement of account given by the creditor as duly received
by the decedent debtor;

2.2.2.2. Duly notarized Certification from the creditor as to the unpaid balance of the debt, including interest as of
the time of death. If the creditor is a corporation, the sworn Certification should be signed by the President, or Vice-
President, or other principal officer of the corporation. If the creditor is a partnership, the sworn certification should
be signed by any of the general partners. If the creditor is a sole proprietorship, the sworn certification should be
signed by the owner of the business. In any of these cases, the one who issues the certification must not be a relative
of the decedent-debtor within the fourth civil degree, either by consanguinity or affinity, except when the requirement
below is complied with.

When the lender, or the President/Vice-President/principal officer of the creditor-corporation, or the general partner
of the creditor-partnership is a relative of the debtor in the degree mentioned above, a copy of the promissory note
or other evidence of the indebtedness must be filed with the RDO having jurisdiction over the borrower within fifteen
days from the execution thereof.

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 2.2.2.3. Certified true copy of the latest audited balance sheet of the creditor with a detailed schedule of its receivable
showing the unpaid balance of the decedent-debtor. Moreover, a certified true copy of the updated latest subsidiary
ledger/records of the debt of the debtor-decedent, (certified by the creditor, i.e., the officers mentioned in the
preceding paragraphs) should likewise be submitted.

So dapat, since i-name mo sya as utang ni decedent, it should be a receivable of another party. Kailangan declared
doon as collectible sa’yo. Why do you think this is the requirement? Kasi pwede magpataka lang. Pwede mong sabihin
na “uy may utang ako sa’yp” (para mugamay ang estate tax).

2.2.3. Where the settlement is made through the Court in a testate or intestate proceeding, pertinent documents filed with
the Court evidencing the claims against the estate, and the Court Order approving the said claims, if already issued, in
addition to the documents mentioned in the preceding paragraphs.

3. Claims of the deceased against insolvent persons as defined under R.A. 10142 (“The Financial Rehabilitation and Insolvency Act
(FRIA) of 2010”) and other existing laws, where the value of the decedent’s interest therein is included in the value of the gross
estate.

4. Unpaid mortgages, taxes and casualty losses.

4.1. Unpaid mortgages upon, or any indebtedness in respect to, property where the value of the decedent’s interest therein,
undiminished by such mortgage or indebtedness, is included in the value of the gross estate. The deduction herein allowed in
the case of claims against the estate, unpaid mortgages or any indebtedness shall, when founded upon a promise or agreement,
be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money’s
worth.

4.2. Taxes which have accrued as of the death of the decedent which were unpaid as of the time of death. This deduction will
not include income tax upon income received after death, or property taxes not accrued before his death, or the estate tax due
from the transmission of his estate.

4.3. There shall also be deducted losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or
other casualties, or from robbery, theft or embezzlement, when such losses are not compensated for by insurance or otherwise,
and if at the time of the filing of the return such losses have not been claimed as a deduction for income tax purposes in an
income tax return, and provided that such losses were incurred not later than the last day for the payment of the estate tax as
prescribed in Subsection (A) of Section 91.

In case unpaid mortgage payable is being claimed by the estate, verification must be made as to who was the beneficiary of
the loan proceeds. If the loan is found to be merely an accommodation loan where the loan proceeds went to another person,
the value of the unpaid loan must be included as a receivable of the estate. If there is a legal impediment to recognize the
same as receivable of the estate, said unpaid obligation/mortgage payable shall not be allowed as a deduction from the gross
estate.

In all instances, the mortgaged property, to the extent of the decedent’s interest therein, should always form part of the gross
taxable estate.

5. Property previously taxed. – An amount equal to the value specified below of any property forming part of the gross estate
situated in the Philippines of any person who died within five (5) years prior to the death of the decedent, or transferred to the
decedent by gift within five (5) years prior to his death, where such property can be identified as having been received by the
decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as
having been acquired in exchange for property so received:

a. One hundred percent (100%) of the value if the prior decedent died within one (1) year prior to the death of the decedent,
or if the property was transferred to him by gift, within the same period prior to his death;

b. Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more than two (2) years prior
to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

c. Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more than three (3) years prior
to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

d. Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not more than four (4) years
prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;
and

e. Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not more than five (5) years
prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death.

These deductions shall be allowed only where a donor’s tax, or estate tax imposed under Title III of the NIRC was finally
determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the case may be, and only in the
amount finally determined as the value of such property in determining the value of the gift, or the gross estate of such prior
decedent, and only to the extent that the value of such property is included in the decedent’s gross estate, and only if, in
determining the value of the net estate of the prior decedent, no deduction is allowable under this Item, in respect of the
property or properties given in exchange therefore. Where a deduction was allowed of any mortgage or other lien in determining
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 the donor’s tax, or the estate tax of the prior decedent, which was paid in whole or in part prior to the decedent’s death, then
the deduction allowable under this Item shall be reduced by the amount so paid. Such deduction allowable shall be reduced by
an amount which bears the same ratio to the amounts allowed as deductions under Items 2, 3, 4 and 6 of this Subsection as
the amount otherwise deductible under this Item bears to the value of the decedent’s estate. Where the property referred to
consists of two (2) or more items, the aggregate value of such items shall be used for the purpose of computing the deduction.

Kunwari ito, namatay si X on 2019. If example heir sya of a prior decedent, si Y, so syempre pagkamatay ni Y, nakatanggap si
X ng lupa. On 2017, namatay si Y.

Q: Is the lot going to be a part of the Gross Estate of X in 2019?

A: Yes. Kasi na transfer sa kanya ang property.
Q: Is there a deduction (can we deduct the lot)?
A: Yun ang PPT. Since this is previously taxed, subject na sya ng estate tax, it can be deducted subject to the following
percentages. The purpose of this is actually to relieve the property of being taxed twice for the same period.
Q: Pwede bang hindi namatay si Y? Pwede ito, nag donate sya kay X on 2017 tapos pagka 2019 namatay si X?
A: Pwede. Provided that the donation was subject to donor’s tax. Apply the rates.

Let’s say the value of the lot is 1 million. So the deduction will be for PPT, more than 1 year but not more than 2 years, so you
will deduct 80% of the value of the property. Please take note that you can only deduct that when the taxes were properly
deducted and paid. Otherwise, you cannot deduct it.

6. Transfers for public use. – The amount of all bequests, legacies, devises or transfers to or for the use of the Government of the
Republic of the Philippines or any political subdivision thereof, for exclusively public purposes.

7. The Family Home. – An amount equivalent to the current fair market value of the decedent’s family home: Provided, however,
that if the said current fair market value exceeds Ten million pesos (P10,000,000), the excess shall be subject to estate tax.

Let’s say meron kang Family Home in Wood Ridge, ilagay mo sya as part of Gross Estate then include it as a deduction sa baba.

Q: If your family home is 9 million, how much is the deduction?

A: 9 Million.
Q: If your family home is 11 million, how much is the deduction?
A: 10 million.

7.1. Definition of terms:

Family home – The dwelling house, including the land on which it is situated, where the husband and wife, or a head of the
family, and members of their family reside, as certified to by the Barangay Captain of the locality. The family home is deemed
constituted on the house and lot from the time it is actually occupied as a family residence and is considered as such for as
long as any of its beneficiaries actually resides therein. (Arts. 152 and 153, Family Code)

For purposes of these Regulations, however, actual occupancy of the house or house and lot as the family residence shall not
be considered interrupted or abandoned in such cases as the temporary absence from the constituted family home due to
travel or studies or work abroad, etc.

In other words, the family home is generally characterized by permanency, that is, the place to which, whenever absent for
business or pleasure, one still intends to return.

The family home must be part of the properties of the absolute community or of the conjugal partnership, or of the exclusive
properties of either spouse depending upon the classification of the property (family home) and the property relations prevailing
on the properties of the husband and wife. It may also be constituted by an unmarried head of a family on his or her own
property. (Art. 156, Ibid.)

For purposes of availing of a family home deduction to the extent allowable, a person may constitute only one family home.
(Art. 161, Ibid.)

Q: So let’s say 2 ang family home mo, pwede ba yun?

A: You have to pick one kung saan ka may intention to reside.

Husband and Wife – Legally married man and woman.

Unmarried Head of a Family – An unmarried or legally separated man or woman with one or both parents, or with one or more
brothers or sisters, or with one or more legitimate, recognized natural or legally adopted children living with and dependent
upon him or her for their chief support, where such brothers or sisters or children are not more than twenty one (21) years of
age, unmarried and not gainfully employed or where such children, brothers or sisters, regardless of age are incapable of self-
support because of mental or physical defect, or any of the beneficiaries mentioned in Article 154 of the Family Code who is
living in the family home and dependent upon the head of the family for legal support.

The beneficiaries of a family home are:

(1) The husband and wife, or the head of a family; and

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 (2) Their parents, ascendants, descendants including legally adopted children, brothers and sisters, whether the relationship
be legitimate or illegitimate, who are living in the family home and who depend upon the head of the family for legal support.
(Art. 154, Ibid)

7.2. Conditions for the allowance of family home as deduction from the gross estate:

7.2.1. The family home must be the actual residential home of the decedent and his family at the time of his death, as
certified by the Barangay Captain of the locality where the family home is situated;

7.2.2. The total value of the family home must be included as part of the gross estate of the decedent; and

7.2.3. Allowable deduction must be in an amount equivalent to the current fair market value of the family home as
declared or included in the gross estate, or the extent of the decedent’s interest (whether conjugal/ community or
exclusive property), whichever is lower, but not exceeding P10,000,000.

8. Amount received by heirs under Republic Act No. 4917. – Any amount received by the heirs from the decedent’s employer as a
consequence of the death of the decedent-employee in accordance with Republic Act No. 4917 is allowed as a deduction provided
that the amount of the separation benefit is included as part of the gross estate of the decedent.

What is RA 4917? RA 4917. AN ACT PROVIDING THAT RETIREMENT BENEFITS OF EMPLOYEES OF PRIVATE FIRMS SHALL NOT
BE SUBJECT TO ATTACHMENT, LEVY, EXECUTION, OR ANY TAX WHATSOEVER. So the general rule here is that if you are going
to deduct properties under the allowable deduction, it must be included in the gross estate. Hindi pwedeng mag deduct ka lang.

9. Net share of the surviving spouse in the conjugal partnership or community property. – After deducting the allowable deductions
appertaining to the conjugal or community properties included in the gross estate, the share of the surviving spouse must be
removed to ensure that only the decedent’s interest in the estate is taxed.

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iii. Computation of the Net Estate of a Decedent Who is a Non- Resident Alien of the Philippines

SEC. 7. COMPUTATION OF THE NET ESTATE OF A DECEDENT WHO IS A NON-RESIDENT ALIEN OF THE PHILIPPINES.
– The value of the net estate of a decedent who is a non-resident alien in the Philippines shall be determined by deducting from
the value of that part of his gross estate which at the time of his death is situated in the Philippines the following items of deductions:

Now how about an NRA,so we all know how to compute a resident and citizen, how about a NRA, namatay si NRA who is an non
resident alien in the Philippines, the value of the estate who is a non resident in the Philippines shall determined by deducting the
value from the value of that part of the gross estate from which at that time is situated in the Philippines. So in other words you
only consider the gross estate situated in the Philippines.

1. Standard deduction. – A deduction in the amount of Five Hundred Thousand Pesos (P500,000) shall be allowed without need
of substantiation. The full amount of P500,000 shall be allowed as deduction for the benefit of the decedent.

2. The proportion of the total losses and indebtedness which the value of such part bears to the value of his entire gross estate
wherever situated. Losses and indebtedness shall include the following:

2.1. Claims against the estate.

2.2. Claims of the deceased against insolvent persons where the value of the interest therein is included in the value of the
gross estate.

2.3. Unpaid mortgages, taxes and casualty losses.

The allowable deduction under this subsection shall be computed using the following formula:

[Phil Gross Estate / World Gross Estate] x [Item No. 2] = Allowable Deduction

3. Property previously taxed.

4. Transfers for public use.

5. Net share of the surviving spouse in the conjugal property or community property.

Unless otherwise provided in this section, the rules for the availment of deductions in the preceding section shall apply.

Alin yung walang deduction for NRA, which one? Family Home, wala siyang family home because precisely he can’t own a family
home kasi alien siya. For purposes of tax the family home is considered to be the land and the house.
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iv. Allowable Deduction

a. Standard Deduction
b. Claims Against Estate
c. Unpaid Mortgage/ Indebtedness
d. Property Previously Taxed
e. Transfers for Public use
f. Family Home
g. Amount Received under RA 4917

v. Time and Place of Filing Estate Tax Return and Payment of Estate Tax Due

Okay..so, estate tax return, if you try to think of it, given you have the family home and the standard deduction, for you to be able
to pay estate tax or be subject of estate tax, you would have a gross estate with a minimum of 15 Million, provided you have the
minimum family home. You have the 15 Million threshold to be exempted from estate tax. So okay lang ba ang kayaman na 15
Million provided na may family home.

SEC. 9. TIME AND PLACE OF FILING ESTATE TAX RETURN AND PAYMENT OF ESTATE TAX DUE. –

1. Estate Tax Returns. – In all cases of transfers subject to the tax imposed herein, or regardless of the gross value of the estate,
where the said estate consists of registered or registrable property such as real property, motor vehicle, shares of stock or other
similar property for which a Certificate Authorizing Registration from the Bureau of Internal Revenue is required as a condition
precedent for the transfer of ownership thereof in the name of the transferee, the executor, or the administrator, or any of the
legal heirs, as the case may be, shall file a return under oath.

Estate tax returns showing a gross value exceeding Five million pesos (P5,000,000) shall be supported with a statement duly
certified to by a Certified Public Accountant containing the following:

1.1 Itemized assets of the decedent with their corresponding gross value at the time of his death, or in the case of a
nonresident, not a citizen of the Philippines, of that part of his gross estate situated in the Philippines;

1.2. Itemized deductions from gross estate allowed in Section 86; and

1.3. The amount of tax due whether paid or still due and outstanding.

2. Time for filing estate tax return. – For purposes of determining the estate tax, the estate tax return shall be filed within one
(1) year from the decedent’s death. The Court approving the project of partition shall furnish the Commissioner with a certified
copy thereof and its order within thirty (30) days after promulgation of such order.

Then filing of estate tax, now for purposes of estate tax, before it was within 6 months, but now it is already 1 year from the
decedent’s death.

3. Extension of time to file estate tax return. – The Commissioner or any Revenue Officer authorized by him pursuant to the NIRC
shall have authority to grant, in meritorious cases, a reasonable extension, not exceeding thirty (30) days, for filing the return.
The application for the extension of time to file the estate tax return must be filed with the Revenue District Office (RDO) where
the estate is required to secure its Taxpayer Identification Number (TIN) and file the tax returns of the estate, which RDO,
likewise, has jurisdiction over the estate tax return required to be filed by any party as a result of the distribution of the assets
and liabilities of the decedent.

Q: Can you extend the filing of the estate?

A: Yes, the Commissioner or any Revenue Officer authorized by him pursuant to the NIRC shall have the authority to grant, in
meritorious cases, a reasonable extension, not exceeding thirty (30) days, for filing the return.

4. Time for payment of the estate tax. – As a general rule, the estate tax imposed under the NIRC shall be paid at the time the
return is filed by the executor, administrator or the heirs.

So when do you pay the estate tax, generally the estate tax imposed under the NIRC shall be paid at the time the return is filed
because we have a self-assessing tax system.

5. Extension of time to pay estate tax. – When the Commissioner finds that the payment of the estate tax or of any part thereof
would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part
thereof not to exceed five (5) years in case the estate is settled through the courts, or two (2) years in case the estate is settled
extrajudicially. In such case, the amount in respect of which the extension is granted shall be paid on or before the date of the
expiration of the period of the extension, and the running of the statute of limitations for deficiency assessment shall be suspended
for the period of any such extension.

Extension, pwede ba if wala akong pera ngayon pang bayad sa estate tax, pwede bang extend the time to pay? When the
Commissioner find that the payment of the estate tax, please take note of this, or of any part thereof would impose undue
hardship, please take note of the ground, UNDUE HARDSHIP, upon the estate or any of the heirs, he may extend the time for
payment of such tax or any part thereof not to exceed five (5) years in case the estate is settled through the courts. So meaning
judicial settlement five years right? tapos pag extra judicial 2 years.
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Of course liable for interest, that is why alam niyo, when you talk about insurance it’s really, it complements estate planning, kasi
insurance gives you the proceeds of the cash to pay for estate tax, kasi kung sobrang yaman yaman mo na let’s say you meron
kang 50 million gross estate, ang laki ng tax nun so at the time mamatay na kayo, hindi niyo naman mafoforsee kailan mamatay
ka so di mo alam na sa time na mamatay ka, meron ka bang sufficient cash to pay for the estate tax, tingnan mo you have 1
year to produce that amount. So ang nangyari, ito yung nangyari sa Samsung, isa sa mga official ng Samsung, namatay siya,
wala silang pambayad ng tax, so ang mangyayari kasi niyan di magtratransfer ang property sa eredero pag di makabayad ng
tax, so ang nangyayari, parang walang choice ang kanyang heirs but to sell the shares at a very very low price, kasi wala silang
choice, kasi pag kailangan mo ng pera eh wala kang choice eh, kaya nag benta siya, ang nangyari binili, binuy-out siya kaya yun,
that’s one of the advantage of having insurance because kung mamatay ka meron kang cash proceeds that could be used to pay
for your taxes, that’s why your insurance should be proportionate to your gross estate.

Ano pa? kung wala ka namang pera pero may mga land ka na prime lot. Ibebenta mo na lang at a lower price para makabayad
ka ng tax, kasi otherwise ma tetengga, di matratransfer ang property. Kasi di ka nakabayad ng tax, please take note that under
the provisions of our tax code, you cannot transfer the property unless you secure the CAR (Certificate Authorizing Restriction)
and you can only secure that if you have paid the taxes. That is why one of the requisites of estate planning is the availability
of cash bonds at the time of death.

Where the request for extension is by reason of negligence, intentional disregard of rules and regulations, or fraud on the part
of the taxpayer, no extension will be granted by the Commissioner.

If an extension is granted, the Commissioner or his duly authorized representative may require the executor, or administrator,
or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the amount of the tax and with such
sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance with the terms of
the extension.

Any amount paid after the statutory due date of the tax, but within the extension period, shall be subject to interest but not to
surcharge.

6. Payment of the estate tax by installment and partial disposition of estate. – In case of Insufficiency of cash for the immediate
payment of the total estate tax due, the estate may be allowed to pay the estate tax due through the following options, including
the corresponding terms and conditions:

6.1. Cash installment

i. The cash installments shall be made within two (2) years from the date of filing of the estate tax return;

ii. The estate tax return shall be filed within one year from the date of decedent’s death;

iii. The frequency (i.e., monthly, quarterly, semi-annually or annually), deadline and amount of each installment shall be
indicated in the estate tax return, subject to the prior approval by the BIR;

iv. In case of lapse of two years without the payment of the entire tax due, the remaining balance thereof shall be due and
demandable subject to the applicable penalties and interest reckoned from the prescribed deadline for filing the return and
payment of the estate tax; and

v. No civil penalties or interest may be imposed on estates permitted to pay the estate tax due by installment. Nothing in
this subsection, however, prevents the Commissioner from executing enforcement action against the estate after the due
date of the estate tax provided that all the applicable laws and required procedures are followed/observed.

6.2. Partial disposition of estate and application of its proceeds to the estate tax due

i. The disposition, for purposes of this option, shall refer to the conveyance of property, whether real, personal or intangible
property, with the equivalent cash consideration;

ii. The estate tax return shall be filed within one year from the date of decedent’s death;

iii. The written request for the partial disposition of estate shall be approved by the BIR. The said request shall be filed,
together with a notarized undertaking that the proceeds thereof shall be exclusively used for the payment of the total
estate tax due;

iv. The computed estate tax due shall be allocated in proportion to the value of each property;

v. The estate shall pay to the BIR the proportionate estate tax due of the property intended to be disposed of;

vi. An electronic Certificate Authorizing Registration (eCAR) shall be issued upon presentation of the proof of payment of
the proportionate estate tax due of the property intended to be disposed. Accordingly, eCARs shall be issued as many as
there are properties intended to be disposed to cover the total estate tax due, net of the proportionate estate tax(es)
previously paid under this option; and

vii. In case of failure to pay the total estate tax due out from the proceeds of the said disposition, the estate tax due shall
be immediately due and demandable subject to the applicable penalties and interest reckoned from the prescribed deadline
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 for filing the return and payment of the estate tax, without prejudice of withholding the issuance of eCAR(s) on the
remaining properties until the payment of the remaining balance of the estate tax due, including the penalties and interest.

7. Request for Extension of Time, Installment Payment and Partial Disposition of Estate. – For purposes of these Regulations,
the request for extension of time to file the return, extension of time to pay estate tax and payment by installment shall be filed
with the Revenue District Officer (RDO) where the estate is required to secure its TIN and file the estate tax return. This request
shall be approved by the Commissioner or his duly authorized representative.

8. Place of filing the return and payment of the tax. – In case of a resident decedent, the administrator or executor shall register
the estate of the decedent and secure a new TIN therefor from the Revenue District Office where the decedent was domiciled
at the time of his death and shall file the estate tax return and pay the corresponding estate tax with the Accredited Agent Bank
(AAB), Revenue District Officer or Revenue Collection Officer having jurisdiction on the place where the decedent was domiciled
at the time of his death, whichever is applicable, following prevailing collection rules and procedures.

In case of a non-resident decedent, whether non-resident citizen or non-resident alien, with executor or administrator in the
Philippines, the estate tax return shall be filed with and the TIN for the estate shall be secured from the Revenue District Office
where such executor or administrator is registered: Provided, however, that in case the executor or administrator is not registered,
the estate tax return shall be filed with and the TIN of the estate shall be secured from the Revenue District Office having
jurisdiction over the executor or administrator’s legal residence. Nonetheless, in case the non-resident decedent does not have
an executor or administrator in the Philippines, the estate tax return shall be filed with and the TIN for the estate shall be secured
from the Office of the Commissioner through RDO No. 39-South Quezon City.

The foregoing provisions notwithstanding, the Commissioner of Internal Revenue may continue to exercise his power to allow a
different venue/place in the filing of tax returns.

9. Liability for payment. – The estate tax imposed under the NIRC shall be paid by the executor or administrator before the
delivery of the distributive share in the inheritance to any heir or beneficiary. Where there are two or more executors or
administrators, all of them are severally liable for the payment of the tax. The eCAR pertaining to such estate issued by the
Commissioner or the Revenue District Officer (RDO) having jurisdiction over the estate, will serve as the authority to distribute
the remaining/distributable properties/share in the inheritance to the heir or beneficiary. The executor or administrator of an
estate has the primary obligation to pay the estate tax but the heir or beneficiary has subsidiary liability for the payment of that
portion of the estate which his distributive share bears to the value of the total net estate. The extent of his liability, however,
shall in no case exceed the value of his share in the inheritance.

4. Cases and Rulings

i. Dizon VS CA, GR No. 140944, 30 April 2008

Facts:
On November 7, 1987, Jose P. Fernandez (Jose) died afterwards a petition for the probate of his will was filed. The probate court
then appointed retired Supreme Court Justice Arsenio P. Dizon (Justice Dizon) and petitioner, Atty. Rafael Arsenio P. Dizon
(petitioner) as Special and Assistant Special Administrator, respectively, of the Estate of Jose (Estate). On April 17, 1990, Atty.
Gonzales as authorized by Justice Dizon filed the estate tax return with the same BIR Regional Office, showing therein a NIL estate
tax liability.

On April 27, 1990, BIR Regional Director for San Pablo City, Osmundo G. Umali issued Certification Nos. 2052 and 2053 stating
that the taxes due on the transfer of real and personal properties of Jose had been fully paid and said properties may be transferred
to his heirs. Petitioner requested the probate court's authority to sell several properties forming part of the Estate, for the purpose
of paying its creditors.

However, on November 26, 1991, the Assistant Commissioner for Collection of the BIR, Themistocles Montalban, issued Estate Tax
Assessment Notice demanding the payment of P66,973,985.40 as deficiency estate tax. Atty. Gonzales moved for the
reconsideration which was denied by the Commissioner. On June 2, 1994, petitioner filed a petition for review before respondent
CTA. The respective parties presented the following pieces of evidence.

On June 17, 1997, the CTA denied the said petition for review. Nevertheless, the CTA did not fully adopt the assessment made by
the BIR and it came up with its own computation of the deficiency estate tax amounting to P 37,419,493.71. Aggrieved, petitioner,
on March 2, 1998, went to the CA via a petition for review. On April 30, 1999, the CA affirmed the CTA's ruling.

Issue:
WON the actual claims of the aforementioned creditors may be fully allowed as deductions from the gross estate of Jose.

Ruling:
Yes. It is admitted that the claims of the Estate's aforementioned creditors have been condoned through compromise agreements
entered into by the Estate with its creditors. Philippine tax laws were based on the federal tax laws of the United States. The U.S.
court ruled that the appropriate deduction is the value that the claim had at the date of the decedent's death.

As held in Propstra v. U.S., where a lien claimed against the estate was certain and enforceable on the date of the decedent's
death, the fact that the claimant subsequently settled for lesser amount did not preclude the estate from deducting the entire
amount of the claim for estate tax purposes.

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 The court express their agreement with the date-of-death valuation rule, made pursuant to the ruling of the U.S. Supreme Court
in Ithaca Trust Co. v. United States.

First. There is no law, nor do we discern any legislative intent in our tax laws, which disregards the date-of-death valuation principle
and particularly provides that post-death developments must be considered in determining the net value of the estate.

Second. Such construction finds relevance and consistency in our Rules on Special Proceedings wherein the term "claims" required
to be presented against a decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could
have been enforced against the deceased in his lifetime, or liability contracted by the deceased before his death.

Therefore, the claims existing at the time of death are significant to, and should be made the basis of, the determination of
allowable deductions.

In this case, the court find that these requirements have not been satisfied. The assailed pieces of evidence were presented and
marked during the trial particularly when Alberto took the witness stand.

Alberto identified these pieces of evidence in his direct testimony. But Alberto’s account and the exchanges between Alberto and
petitioner did not sufficiently describe the contents of the said pieces of evidence presented by the BIR.

In fact, petitioner sought that the lead examiner, one Ma. Anabella A. Abuloc, be summoned to testify, inasmuch as Alberto was
incompetent to answer questions relative to the working papers. The lead examiner never testified.

Moreover, while Alberto's testimony identifying the BIR's evidence was duly recorded, the BIR documents themselves were not
incorporated in the records of the case.

ii. Estate of Ruiz VS CA, GR No. 118671, 29 January 1996

Facts:
Hilario Ruiz executed a holographic will where he named as heirs: Edmond Ruiz (only son); Maria Pilar (adopted daughter); Maria
Cathryn, Candice Albertine and Maria Angeline (three granddaughters). The testator bequeathed to his heirs substantial cash,
personal and real properties and named Edmond Ruiz as executor of his estate. Hilario Ruiz died and the cash component of his
estate was immediately distributed among Ruiz and respondents. Edmond, the named executor, did not take any action for the
probate of his father’s holographic will.

Four years later, Pilar filed before the Regional Trial Court a petition for probate and approval of the deceased’s will and for the
issuance of letters testamentary to Edmond Ruiz. Edmond opposed on the ground that the will was executed under undue influence.
The house and lot in Valle Verde, Pasig which the testator bequeathed to the three granddaughters was leased out by Edmond to
third persons. The probate court ordered Edmond to deposit with the branch clerk of court the rental deposit and payments totaling
P540,000 representing the one-year lease of the Valle Verde property. Edmond moved for the release of P50,000 to pay the real
estate taxes on the real properties of the estate. The probate court approved the release of P7,722,009. Edmond withdrew his
opposition then the probate court admitted the will to probate and ordered the issuance of letters testamentary to Edmond
conditioned upon the filing of a bond in the amount of P50,000. The testate estate of Hilario Ruiz, with Edmond Ruiz as executor,
filed an Ex-Parte Motion for Release of Funds, praying for release of rent payments be given to the three granddaughters.

The probate court denied the motion for release of funds and granted the motion of Montes due to Edmond’s lack of opposition.
The court ordered release of the funds to Edmond but only “such amount as may be necessary to cover the expenses of
administration and allowances for support” of the testator’s three granddaughters subject to collation and deductible from their
share in the inheritance.
The Court of Appeals sustained the order of the probate court.

Issue:
Whether the probate court, after admitting the will to probate but before payment of the estate’s debts and obligations, has the
authority to order the release of the titles to the Valle Verde property and the Blue Ridge Apartments to private respondents

Ruling:
The probate court ordered the release of the titles to the Valle Verde property and the Blue Ridge Apartments to the private
respondents after the lapse of six months from the date of the first publication of the notice to creditors. The questioned order
speaks of “notice” to creditors, not payment of debts and obligations. Hilario Ruiz allegedly left no debts when he died but the
taxes on his estate had not hitherto been paid, much less ascertained. The estate tax is one of the obligations that must be paid
before distribution of the estate. If not yet paid, the rule requires that the distributes post a bond or make such provisions as to
meet the said tax obligation in proportion to their respective shares in the inheritance. Notably, at the time the order was issued
the properties of the estate had not yet been inventoried and appraised.

So next, we have the case of the Estate of Ruiz vs CA, that’s the computation of the procedural aspect, ako na lang ha, computation
of progressive tax due, BIR Ruling 10-10, which states that the value of the house and lot shall be included in the computation of
the gross estate and shall be deducted from the total gross estate to be deducted. The one-half share of the surviving spouse in
the conjugal dwelling is then deducted from the total gross estate to arrive at the total net estate of the decedent. So we’ve discuss
that the family home whether conjugal or communal should be deducted by the share of the surviving spouse.

iii. Computation of Proper Estate Tax Due, BIR Ruling No. 010-00, 5 January 2000

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 For purposes of the estate tax, the value of the house and lot shall be included as part of the gross estate. The one-half share of
the surviving spouse in the conjugal dwelling is then deducted from the total gross estate to arrive at the total net estate of the
decedent. Thereafter, the one-half share of the decedent to the family home (house and lot) is allowed as a deduction from the
net estate provided that if the current fair market value of that one-half portion exceeds one million pesos, the excess shall be
subject to estate tax. As a sine qua non condition for the exemption or deduction, said family home must have been the decedent's
family home as certified by the barangay captain of the locality pursuant to Section 86(A)(4).

iv. Request for Extension of Time to File Estate Tax Return and to Pay Estate Tax (Dominga A. Villaluiz), BIR Ruling
No. 344-16, 29 June 2016

The estate tax return shall be filed within six (6) months from the decedent’s death [Section 90 (B), Tax Code of 1997]. The
Commissioner shall have authority to grant, in meritorious cases, a reasonable extension not exceeding thirty (30) days for filing
the return [Section 90 (C), Tax Code of 1997].

On payment of tax, when the Commissioner finds that the payment on the due date of the estate tax or of any part thereof would
impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof
not to exceed five (5) years, in case the estate is settled through the courts, or two (2) years in case the estate is settled
extrajudicially. In such case, the amount in respect of which the extension is granted shall be paid on or before the date of the
expiration of the period of the extension, and the running of the Statute of Limitations for assessment as provided in Section 203
of this Code shall be suspended for the period of any such extension. If an extension is granted, the Commissioner may require
the executor, or administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the
amount of the tax and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in
accordance with the terms of the extension [Section 91 (B), Supra.]

The BIR finds justifiable reason to grant the request for an extension to file the estate tax return of thirty (30) days counted from
December 19, 2015, which is the last day for filing of the estate tax return of Mrs. A. Thus, the filing of the said estate tax return
of the decedent is hereby extended up to January 18, 2016.

Furthermore, since the children are to collate all documents and information necessary for the preparation of the said return, they
have two (2) years (where the estate will be settled extra-judicially) within which to pay the estate tax. Thus, the heirs shall pay
the estate tax within 2 years reckoned from actual filing of the return or on January 18, 2016, whichever comes first, provided that
the executor, or administrator, or beneficiary, shall furnish a bond in such amount, not exceeding double the amount of the tax
and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance with
the terms of the extension.

It shall be understood, however, that the estate shall be liable for the corresponding interest that shall have accrued from January
18, 2016 up to the time of payment of the estate tax due on the transmission by the said estate of its properties in favor of the
heirs pursuant to Section 249 of the Tax Code of 1997. (BIR Ruling No. 344-16, dated June 29, 2016; BIR Ruling No. 506-14 dated
December 29, 2014)

So we have the request for extension to file for the estate of Dominga A. Villaluiz, in this particular case the heirs request, ang
kanilang ground is during their mother’s long term illness, they have incurred substantial expenses in which they financed their
personal debts which they are still paying. So wala silang pera pambayad ng tax, so the BIR granted to them the extension. This
is one of the example of what we call UNDUE HARDSHIP.

v. Estate of Concordia Paredes, BIR Ruling No. 475-17, 12 October 2017

They filed for extension to file and pay estate tax on the ground they have been living the heirs and mga anak no, they were living
in different places in the Philippines and in the different states of the United States, thereby hampering their coordination for the
filing and payment of the estate tax. Did the BIR grant them their request? Yes. However please take note that kung igrant ka to
belatedly file your return you shoulder the interests.

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