NIRC Codal Provisions Secs.

84 97 Estate Tax
FGL
Page 1
TITLE III
ESTATE AND DONOR'S TAX

CHAPTER I
ESTATE TAX

SEC. 84. Rates of Estate Tax. - There shall be levied, assessed, collected and paid upon the transfer of the net
estate as determined in accordance with Secs. 85 and 86 of every decedent, whether resident or nonresident of
the Philippines, a tax based on the value of such net estate, as computed in accordance with the following
schedule:

If the net estate is:

OVER BUT NOT OVER THE TAX SHALL BE PLUS OF THE EXCESS OVER

P 200,000 Exempt

P 200,000 550,000 0 5% P 200,000

500,000 2,000,000 P 15,000 8% 500,000

2,000,000 5,000,000 135,000 11% 2,000,000

5,000,000 10,000,000 465,000 15% 5,000,000

10,000,000 And Over 1,215,000 20% 10,000,000

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;

(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 bonafide sale for
an adequate and full consideration in money or money's worth.

(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
exerciseable) 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), t o 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
 NIRC Codal Provisions Secs. 84 97 Estate Tax
FGL
Page 2
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 his death.

(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.

(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, Subsecs. (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 of Insufficient Consideration. - If any one of the transfers, trusts, interests, rights or
powers enumerated and described in Subsecs. (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.

(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.

SEC. 86. Computation of Net Estate. - 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) Expenses, Losses, Indebtedness, and taxes. - Such amounts:

(a) For actual funeral expenses or in an amount equal to 5% of the gross estate, whichever is
lower, but in no case to exceed P200T;

(b) For judicial expenses of the testamentary or intestate proceedings;

(c) 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 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;
 NIRC Codal Provisions Secs. 84 97 Estate Tax
FGL
Page 3
(d) 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; and

(e) 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 Subsec.
(A) of Sec. 91.

(2) 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 5
years prior to the death of the decedent, or transferred to the decedent by gift within 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:

100% of the value, if the prior decedent died within 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;

80% of the value, if the prior decedent died more than 1 year but not more than 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;

60% of the value, if the prior decedent died more than 2 years but not more than 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;

40% of the value, if the prior decedent died more than 3 years but not more than 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;

20% of the value, if the prior decedent died more than 4 years but not more than 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 par. (2) 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
(1) and (3) of this Subsec. as the amount otherwise deductible under said par. (2) bears to
the value of the decedent's estate. Where the property referred to consists of 2 or more
items, the aggregate value of such items shall be used for the purpose of computing the
deduction.
 NIRC Codal Provisions Secs. 84 97 Estate Tax
FGL
Page 4
(3) 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.

(4) 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 P1M,
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.

(5) Standard Deduction. - An amount equivalent to P1M.

(6) Medical Expenses. - Medical Expenses incurred by the decedent within 1 year prior to his
death which shall be duly substantiated with receipts: Provided, That in no case shall the
deductible medical expenses exceed P500T.

(7) Amount Received by Heirs Under RA 4917. - Any amount received by the heirs from the
decedent - employee as a consequence of the death of the decedent-employee in accordance
with RA 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) Expenses, Losses, Indebtedness and Taxes. - That proportion of the deductions specified in
par. (1) of Subsec. (A) of this Section which the value of such part bears to the value of his
entire gross estate wherever situated;

(2) 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 5
years prior to the death of the decedent, or transferred to the decedent by gift within 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:

100% of the value if the prior decedent died within 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;

80% of the value, if the prior decedent died more than 1 year but not more than 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;

60% of the value, if the prior decedent died more than 2 years but not more than 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;

40% of the value, if the prior decedent died more than 3 years but not more than 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

20% of the value, if the prior decedent died more than 4 years but not more than 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 is 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 that part of the
decedent's gross estate which at the time of his death is situated in the Philippines; and only
if, in determining the value of the net estate of the prior decedent, no deduction is allowable
under par. (2) of Subsec. (B) of this Section, in respect of the property or properties given in
exchange therefore. Where a deduction was allowed of any mortgage or other lien in
 NIRC Codal Provisions Secs. 84 97 Estate Tax
FGL
Page 5
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 paragraph
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
(1) and (3) of this Subsec. as the amount otherwise deductible under par. (2) bears to the
value of that part of the decedent's gross estate which at the time of his death is situated in
the Philippines. Where the property referred to consists of 2 or more items, the aggregate
value of such items shall be used for the purpose of computing the deduction.

(3) 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) Miscellaneous Provisions. - No deduction shall be allowed in the case of a nonresident not a citizen
of the Philippines, unless the executor, administrator, or anyone of the heirs, as the case may be,
includes in the return required to be filed under Section 90 the value at the time of his death of that
part of the gross estate of the nonresident not situated in the Philippines.

(E) 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;

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

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

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

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.

(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

 NIRC Codal Provisions Secs. 84 97 Estate Tax
FGL
Page 6

(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. - In all cases of transfers subject to tax, or where, though exempt from tax,
the gross value of the estate exceeds P20T, the executor, administrator or any of the legal heirs, as the case may
be, within 2 months after the decedent's death, or within a like period after qualifying as such executor or
administrator, shall give a written notice thereof to the Commissioner.

SEC. 90. Estate Tax Returns.

(A) Requirements. - In all cases of transfers subject to the tax imposed herein, or where, though exempt
from tax, the gross value of the estate exceeds P200T, 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 P2M 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 Sec. 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 Sec. 84 of this Code,
the estate tax return required under the preceding Subsec. (A) shall be filed within 6 months 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 30 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 30 days for filing the return.

(D) Place of Filing. - Except in cases where the Commissioner otherwise permits, the return required
under Subsec. (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.

(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.
 NIRC Codal Provisions Secs. 84 97 Estate Tax
FGL
Page 7
(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 5 years, in case the estate
is settled through the courts, or 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 Sec. 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) Liability for Payment. - The estate tax imposed by Sec. 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, 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 1 year after the
making of such application, or if the application is made before the return is filed, then within 1 year after the
return is filed, but not after the expiration of the period prescribed for the assessment of the tax in Sec. 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 non payment 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
 NIRC Codal Provisions Secs. 84 97 Estate Tax
FGL
Page 8
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, unless the Commissioner
has certified that the taxes imposed thereon by this Title have been paid: Provided, however, That the
administrator of the estate or any 1 of the heirs of the decedent may, upon authorization by the Commissioner,
withdraw an amount not exceeding P20T without the said certification. For this purpose, all withdrawal slips
shall contain a statement to the effect that all of the joint depositors are still living at the time of withdrawal by
any one of the joint depositors and such statement shall be under oath by the said depositors.