CHAPTER 1: moment of death of the decedent notwithstanding the

actual transfer dated June 30, 2022.

 Ownership may be acquired through: Occupation,
Intellectual creation, Law, Donation, Tradition, Q2: When should the estate tax accrue?
Contract, Prescription, Succession.
- November 1, 2021 (estate tax accrues immediately at
the time of death, irrespective of actual date of filing the
Transfer taxes – are taxes imposed upon the gratuitous estate tax return)
disposition of private properties or rights. (types: Estate tax &
Donor’s tax) Note: the filing estate tax return is within 1 year from date
of death.
Gratuitous transfer – one that neither imposes burden nor
requires consideration from transferee or recipient. Essentially Q3: Assume the Pedro’s total outstanding liabilities as of the
donations. time of his death amounted to 12,000,000, how much of the
outstanding liabilities of the decedent should be assumed by
 Transfer of ownership is free because of the absence Juan?
of financial consideration.
- 10,000,000 (the amount of liability to be assumed by
Onerous transfer – where the transferee gives consideration in the heir(s) shall be limited only to the extent of the value
return for the property or right(s) received. Subject to business of properties and rights inherited.
taxes instead of transfer taxes.
Kinds of Succession
 Gratuitous transfer/donation may take effect at the time
Testate – if a person left a will upon death
of death of the donor or during the lifetime of both the
donor and the done. (Donation mortis cause – estate Intestate – if a person died not leaving a will
tax)
 Meanwhile donor’s tax is known as donation inter vivos a. Testamentary or testate succession – results from
subject to donor’s tax. the designation of an heir, made in a will executed in
the form prescribed by the law.
Succession – mode of acquisition by virtue of which, the b. Legal or intestate succession – is effected by
property, rights and obligations to the extent of the value of the operations of law since the decedent did not execute a
inheritance, of a person are transmitted through his death to will pr if the last will and testament executed by him is
another or others either by his will or by operation of law. void.
c. Mixed succession – is effected partly by will and
 The inheritance includes all the property, rights and
partly operation of law.
obligations of a person which are not extinguished by
his death. Causes of Legal Succession or Intestacy
 The rights to the succession are transmitted from the
moment of death of the decedent. 1. If a person dies w/out a will, or with a void will, or
 Transfer tax is an excise tax imposed on the act of one which has subsequently lost its validity.
passing the ownership of property and not on the value
Void will: Ghie devised in his will one of his parcels of land
of the property or right.
located in Bolinao to one of his daughters, Marcus. Ghie
 The estate tax accrues as the date of death of the
can neither write nor read Korean but it was the language
decedent and the accrual of the tax is distinct from the
used in his last will and testament. Will is void because it
obligation to pay the same. Upon the death of the
shall be executed in a language or dialect known to the
decedent, succession takes place and the right of the
testator to be considered valid.
state to the tax the privilege to transmit the estate vests
instantly upon death. Will which has subsequently lost its validity: On the eve of
November 1, 2021, a day after executing his last will and
Following the death of Pedro on November 1, 2021, Juan is the
testament, the testator accidentally obliterated the same.
only heir of the decedent. The executor of Pedro’s estate filed
The testator was not able to prepare a new will before his
the estate tax return and paid the corresponding tax on April 30,
death. Consequently, there is no more “last will and
2022. The properties left by the decedent were finally distributed
testament” to speak of. An intestate or legal succession
to Juan on June 30, 2022.
exist. At the time of the decedent’s death, his estate shall
Cash in bank: 1,000,000 be disposed of by operations of law.

Commercial building: 5,000,000 2. When the “Will” does not institute an heir.
3. Partial institution of heir. Consequently, intestacy
Cars: 1,000,000 takes place as to the undisposed portion.
- Partial institution of heir means the entire estate was
House and lot: 3,000,000 not disposed of in the last will and testament.
Therefore, a mixed succession exists.
Q1: When will the transfer of ownership from the decedent to the
4. Other causes of legal succession or intestacy:
heir take effect?
a. When the heir instituted is not capable of succeeding.
- November 1, 2021 (because the rights to the b. Non-fulfillment of the suspensive condition attached to
succession are immediately transmitted from the the institution of heir. Suspensive condition is a
 condition depending upon the happening of an RULE:
uncertain event which must be fulfilled before an
obligation arises. Primary Compulsory Secondary Compulsory
c. Preterition (omission in the testator’s will of one, some a. Legitimate children d. Legitimate parents
or all of the compulsory heirs in the direct line which and their legitimate and legitimate
descendants ascendants. (They
has the effect of annulling the institution of heir).
inherit only in
d. Fulfillment of “resolutory condition”. A resolutory
default of A)
condition refers to a condition whereby, upon fulfillment b. Surviving spouse e. Illegitimate parents
terminates an already enforceable obligation. (no other
e. Expiration of term or period of institution descendants). They
f. Non-compliance or impossibility of compliance with the inherit only in
will. default of A & C.
g. Repudiation of the instituted heir. c. Illegitimate children Note: brothers and sisters
and their are neither compulsory heirs
descendants, nor strangers. However, they
legitimate or may be voluntary heirs.
Elements of Succession illegitimate.
1. Decedent – applied to the person whose property is
transmitted through succession, whether or not he left b. Voluntary heirs – those instituted by the testator in his
a will. If he left a will, he is called a testator. will to succeed to the inheritance of the portion thereof
of which the testator can freely dispose. Free portion
Executor is a person designated in the last will and refers to the portion or value left in the estate after
testament to carry out the provisions of the decedent’s deducting the legitime of the compulsory heirs.
will. He also performs a fiduciary duty such as taking c. Legal or Intestate heirs – those who succeed to the
care of the decedent’s estate prior to final disposition estate of the decedent by operation law (decedent dies
to the heir. w/out a valid will or his estate was not entirely disposed
of by will).
Administrator is a person appointed by the court and
performs the same duty, in lieu of an executor, if the Legitime (75% of the estate) – to be inherited by Compulsory
latter refused to accept the appointment, failed to heirs regardless of whether a last will and testament was
qualify under the law or the last will and testament did prepared.
not appoint one.
2. Inheritance (Estate) – include all the property, rights Free portion (25% of the estate) – to be inherited by
and obligations of a person which are not extinguished Compulsory heirs and/or Voluntary heirs as provided in the last
by death and all which have accrued thereto since the will and testaments. Or in the absence of a will, this portion of
opening of succession. the estate shall be distributed to intestate heirs.
 Purely personal rights are not transmissible for they are
Legitime – part of a testator’s which he cannot dispose of
extinguished by death.
because the law has reserved it for certain heirs who are,
3. Successor – a person who is called to the succession
therefore, called compulsory heirs.
either the provision of a will or by operation of law.
 The compulsory heirs cannot be deprived of their
Devisees and legatees are persons to whom gifts of
legitime by the testator except by disinheritance
real and personal property are respectively given by
properly effected.
virtue of a will.
Free Portion – portion of the estate which the testator can freely
a. Compulsory heirs – who succeed by force of law to
dispose of.
some portion of the inheritance, in an amount
predetermined by law, known as the legitime. They  Anyone may inherit from free portion (compulsory or
succeed whether the testator likes it or not. voluntary heirs)
 Voluntary heirs may inherit only if mentioned in the will.
Kinds of compulsory heirs: In the absence of a provision in the will, voluntary heirs
 Primary – who have precedence over and exclude will not inherit anything.
other compulsory heirs (legitimate children and
descendants) Order of Intestate Succession:
 Secondary – who succeed only in the absence of the
primary compulsory heirs (legitimate parents and 1. Legitimate children or descendants
ascendants) 2. Legitimate parents or ascendants
3. Illegitimate children or descendants
 Concurring – who succeed together with the primary or
4. Surviving spouse
secondary compulsory heirs (illegitimate children and
descendants and surviving spouse) 5. Brothers and sisters, nephews and nieces
6. Other collateral relatives within the 5th degree
7. State or the government
Consanguinity – relation of persons descending from the same Grandparents and
stock or common ancestors. Also known as blood relatives. other ascendants
are excluded.
Lineal consanguinity – may be descending or ascending, is
that which subsists between persons of whom one is descended
in a direct line from the other. Nambabae Ka leaving an estate valued at 12,000,000. The
surviving heirs were his spouse, 2 legitimate children and 1
Collateral consanguinity – which subsists between persons illegitimate child.
who have the same ancestors, but who not descend (or ascend)
one from the other. Distribute the estate by applying the rules on legitime:

TABLE OF LEGITIMES Legitimate Children (1/2): P6,000,000

Survivor Legitime Notes
LC ½ Divide by the  Legitimate child #1 P3,000,000
number of LC,  Legitimate child #2 3,000,000
whether they
survive alone or Illegitimate child (1/2 of 1 LC) 1,500,000
with concurring
Surviving Spouse (1/4) 3,000,000
compulsory heir
(CH) Free Portion (remainder) 1,500,000
1 LC ½
SS ¼ Total P12,000,000
2 or more LC ½
SS Equal to 1 LC Assume the amount of estate is 12,000,000 and the decedent is
LC ½ All the concurring survived only by his 2 illegitimate children. The distribution of the
SS ¼ CH get from the estate under intestate succession should be:
IC ½ of 1 LC half free portion,
the share of the Illegitimate Child (1/2); (P3M per I.C,) P6,000,000
SS having
preference over Free Portion (1/2) 6,000,000
that of the IC,
whose share may Total P12,000,000
suffer reduction
Assume the same data in Case B except that the testator
pro-rata because
provided P8,000,000 to Ana (his secretary) through his last will
there is no
preference among and testament. Obviously, the legitimes of the 2 illegitimate
themselves. children were impaired. The amount of estate left after deducting
LPA ½ Whether they the P8,000,000 will not be enough to satisfy the legitimes of the
survive alone or compulsory heirs amounting to P6,000,000. Hence, the amount
with concurring to be given to the secretary should be modified or reduced to
CH P6,000,000 to satisfy the legitimes. The distribution of the
LPA ½ IC succeed in the decedent’s estate should be as follows:
IC ¼ ¼ in equal shares
Illegitimate Child (1/2); (P3M per I.C) P6,000,000
LPA ½
SS ¼ Secretary (free Portion); (1/2) 6,000,000

Total P12,000,000
LPA ½
SS 1/8
IC ¼
Will – an act whereby a person is permitted, with the formalities
IC ½ Divide equally prescribed by law, to control to a certain degree the disposition
among the IC of his estate to take effect after his death; a document whereby
SS 1/3 a person, called the testator, disposes of his or her properties or
IC 1/3 estate to take effect upon his or her death.
SS ½ 1/3 if marriage is
in articulo mortis  Strictly personal act meaning it cannot be left in whole
and deceased or in part of the discretion of a third person, or
spouse dies within accomplished through the instrumentality of an agent
3 months after the
or attorney.
marriage
IP ½  18 years old and below and those who are not of sound
IP Excluded Children inherit in mind at the time of its execution are prohibited to make
Any child It depends the amounts a will.
established in the  A married woman may make a will without the consent
foregoing rules of her husband, and without the authority of the court.
IP ¼ Only the parents A married woman may also dispose by will of all her
SS ¼ of IC are included.
 separate property as well as her share of the conjugal obliterated by some other person, without the express
partnership or absolute community property. direction of the testator, the will may still be
established, and the estate distributed in accordance
Kinds of Wills: therewith, if its contents, and due execution, and the
fact of its unauthorized destruction, cancellation, or
1. Notarial or Ordinary or Attested will
obliteration are established according to the Rules of
a. Must be in writing and executed in a language or
Court.
dialect known to the testator
b. It must be subscribed at the end thereof by the Institution of an heir – act by virtue of which a testator
testator himself or by the testator’s name written designates in his will the person or persons who are to succeed
by some other person in his presence and by his him in his property and transmissible rights and obligations.
express direction
c. It must be attested and subscribed by 3 or more  Disinheritance can be effected only through a will
credible witnesses in the presence of the testator wherein the legal cause therefore shall be specified.
and of one another.
Disinheritance – testamentary disposition by which a
Disqualified from being witnesses to a will: (a) any person not compulsory heir is deprived of, or excluded from the inheritance
domiciled in the Philippines (b) those who have been convicted to which he has a right. Not applicable to voluntary heirs.
of falsification of a document, perjury, or false testimony.
Requisites:
2. Holographic will – must be entirely written, dated and
signed by the hand of the testator himself. Subject to a. Effected only through a valid will
no other form and it may be made in or out of the b. For a cause expressly stated by law
Philippines and need not be witness. In case of any c. Cause must be stated in the will itself
insertion, cancellation, erasure or alteration in a d. Cause must be certain and true
holographic will, the testator must authenticate the e. Unconditional
same by his full signature. f. Total (no partial disinheritance)
g. The heir disinherited must be designated in such a
Codicil – a supplement or addition to a will. It shall be executed manner that there can be no doubt as to his identity.
as in the case of a will
Common Causes for Disinheritance of children or
Probate of a will – a court procedure by which a will is proved descendants, parents or ascendants, and spouse
to be valid or invalid.
1. When the heir has been found guilty of an attempt
 It shall be necessary that at least 1 witness who knows against the life of the testator, his/her descendants or
the handwriting and signature of the testator explicitly ascendants, and spouse in case of children and
declare that the will and the signature are in the parents.
handwriting of the testator. 2. When the heir has accused the testator of a crime for
 The proceedings in the absence of a last will and which the law prescribes imprisonment for 6 years or
testament is called intestate proceedings. more, if the accusation has been found groundless.
3. When the heir by fraud, violence, intimidation or undue
Foreign wills - the will of an alien who is abroad produces effect influence causes the testator to make a will or to
in the Philippines if made with the formalities prescribed by the change one already made
law of the place in which he resides, or according to the 4. Refusal without justifiable cause to support the testator
formalities observed in his country, or in conformity with those who disinherits such heir.
which the Philippine civil code prescribes.
Peculiar Causes for Disinheritance
 A will may be revoked by the testator at any time before
his death any waiver or restriction of this right is void. 1. Children/Descendants
 A revocation done outside the Philippines, by a person a. When the child or descendant has been convicted
who does not have his domicile in the Philippines, is of adultery or concubinage with the spouse of the
valid when it is done according to the law of the place testator
where the will was made, or according to the law of the b. Maltreatment of the testator by word or deed by
place in which the testator had his domicile at the time the child/descendant
and if the revocation takes place the Philippines when c. When the child or descendant leads a
it is accordance with the provisions of the new civil dishonorable or disgraceful life
code. d. When the child or descendant is convicted of a
crime which carries with it a penalty of civil
Mode of Revoking a Will interdiction.
2. Parents/Ascendants
1. By implication of law
a. When the parents have abandoned their children
2. By some will, codicil, or other writing executed as or induced their daughters to live a corrupt or
provided in case of wills
immoral life, or attempted against their virtue
3. By burning, tearing, cancelling, or obliterating the will b. When the parent or ascendant has been convicted
with the intention of revoking it, by the testator himself, of adultery or concubinage with the spouse of the
or by some other person in his presence, and by his testator
express direction. If burned, torn, cancelled, or
 c. Loss of parentals authority for causes specified in the progressive scheme of taxation is precisely motivated by the
the CC desire to mitigate the evils of inheritance in the present form.
d. Attempt by one of the parents against the life of
the other, unless there has been reconciliation  Value of the gross estate of the decedent should be
between them determined by including the value at the time of his
3. Spouse death of all property, real or personal, tangible or
a. When the spouse has given cause for legal intangible, wherever situated.
separation  In the case of a nonresident decedent who at the time
b. When the spouse has given grounds for loss of of his death was not a citizen of the Philippines, only
parental authority that part of the entire gross estate which is situated in
the Philippines shall be included in his taxable estate.
Right of Representation – right created by fiction of law where
the representative is raised to the place and degree of the DECEDENT GROSS ESTATE
person represented, and acquires the rights which the latter Citizen 1. Property (Real or
would have if he were living or could have inherited. Personal) wherever
situated
May arise because of: death, incapacity, and disinheritance.
Resident alien 2. Intangible personal
Representation is not available to: property wherever
situated
a. As to compulsory heirs: In case of repudiation, the one Nonresident alien 1. Real property
who repudiates his inheritance cannot be represented. situated in the
Their own heirs inherit in their own right. Philippines
b. As to voluntary heirs 2. tangible personal
c. Voluntary heirs, legatees and devisees who (a) property situated in
predecease the testator (b) renounce the inheritance the Philippines
cannot be represented by their own heirs, with respect
to their supposed inheritance. 3. Intangible personal
 Rights of representation takes place only in favor of property with situs
in the Philippines,
children of brothers or sisters, whether full or half blood
unless excluded on
and only if they concur with at least one uncle or aunt. the basis of
This rule applies only when the decedent does not reciprocity
have descendants.

CHAPTER 2: GROSS ESTATE There is reciprocity if:

Estate tax – a tax imposed on the privilege that a person is  The decedent at the time of his death was a resident
given in controlling to a certain extent, the disposition of his citizen of a foreign country which at the time of his
property to take effect upon death. death did not impose an estate tax of any character in
respect of intangible personal property of citizens of the
 Estate tax should not be construed as a direct tax on
Philippines not residing in the foreign country
the property of the decedent although the tax is based
thereon.  The laws of the foreign country of which the decedent
was a resident citizen at the time of his death allow a
Benefit-Received Theory – considers the service rendered by similar exemption from estate taxes of every character,
the government in the distribution of the estate of the decedent, in respect of intangible personal property owned by
either by law or in accordance with his wishes. For the citizens of the Philippines not residing in that foreign
performance of these services and other benefits that accrue to country.
the estate and the heirs, the State collects the tax.
Intangible assets with situs within the Philippines
Privilege or State Partnership Theory – inheritance is not a
right but a privilege granted by the State and legatees have been 1. Franchise which must be exercised in the Philippines
acquired only with protection of the state. Consequently, the 2. Shares, obligations or bonds issued by any corporation
state as a passive silent partner in the accumulation of property or Sociedad anonima organized or constituted in the
has the right to collect the share which is properly due to it. Philippines in accordance with its laws.
3. Shares, obligations or bonds issued by any foreign
Ability to Pay Theory – receipt of inheritance which is in the corporation, 85% of the business of which is located in
nature of an unearned wealth or windfall, are place assets into the Philippines.
the hands of the heirs and beneficiaries. This creates an ability 4. Shares, obligations, or bonds issued by any foreign
to pay the tax and thus contributes to government income. corporation if such shares, obligations or bonds have
acquired a business situs in the Philippines.
Redistribution of Wealth Theory – the receipt of inheritance is 5. Shares or rights in any partnership, business or
a contributing factor to the inequalities in wealth and incomes. industry established in the Philippines.
The imposition of estate tax reduces the property received by
the successor, thus helping to promote equitable distribution of
wealth in society. The tax base is the value of the property and
 PROPERTY SITUS Personal Property FMV at the time of death
 Real Property and Location of the property Shared of stock  Unlisted common
Tangible personal share: Book value
property per share of the
 Shares, franchise, Where the intangible is issuing
copyright, and the exercised regardless of corporation
like where the corresponding (Appraisal surplus
certificate is stored shall not be
considered, as
 Receivables Residence of the debtor well as the
 Bank deposit Location of the depository assigned amount
bank to preference
shares, if any)
 Unlisted
A nonresident alien decedent left the following estate: Preference share:
Par value per
House and Lot – Hongkong, inherited before marriage: P15M share
 Listed shares:
Car, acquired during the marriage in Cebu: 1.5M
FMV shall be
Shares of stock issued by a foreign corporation, 20% of its arithmetic mean
operation is in the Philippines: 250K between the
highest and
Bank deposit with PNB branch in New York, New York lowest quotation
representing income earned during the marriage: 500K at a date nearest
the date of death if
Shares of stocks issued by PLDT group of companies, a none is available
corporation organized under Philippine laws: 500K on the date of
death itself.
5-year, 12% promissory note, received 2 years ago, during Units of participation in The bid price nearest the
marriage. The debtor is a resident of Q.C: 500K any association, recreation date of death published in
or amusement club (i.e any newspaper or
Assume there is no reciprocity, what is the correct value of the golf, polo, similar clubs) publication for general
gross estate? P2,620,000 circulation.
Right to usufruct, use or In accordance with the
Solution: habitation and annuity latest Basic Standard
Mortality Table taking into
Car, acquired during marriage in Cebu: 1.5M account the probable life
of the beneficiary, to be
Shares of stocks – PLDT: 500K
approved by the Secretary
5-year, 10% Promissory Note: 500K of Finance upon
recommendation of the
Interest income (500K x 12% x 2): 120K Insurance Commissioner.

Gross Estate: P2,620,000

CASE A: Pedro bought a brand new car with a cash price of 3M.
Assume there is reciprocity, what is the correct value of the He bought the car on installment with the following terms: down
gross estate? P1,500,000 payment of 500K and annual installment of 700K for 4 years. On
his way home, he run over an approaching truck and died: 3M

CASE B: The decedent granted a 2M loan to his best friend 2

Valuation of Gross Estate years before his death with a 10% interest per annum evidenced
- The estate of the decedent shall be appraised at its fair by a note. Both the principal and interest are due after 3 years:
2.4M
market value at the time of his death.
CASE C: The decedent devised to his son a 1,000 square meter
In General: FMV at the time of death
lot in Global City, Taguig with the following valuation: 20M
Real Property The higher value between:
 FMV determined FV as determined by city assessors: P20K/sqm
by the
Commissioner Zonal value as determined by the CIR: 17M
 FMV as shown in
the schedule of FV determined by independent assessors: 18.5M
values fixed by the
provincial and city CASE D: Decedent owns 100K ordinary shares of Alpha
assessors (also Company at the time of his death. At that time, Alpha’s
known as outstanding shares were 1M with P10 par value and Retained
assessed value or Earnings amounting to 5M. The shares are not traded in the
FMV for real estate stock exchange: 1.5M
tax purposes)
CASE E: A decedent left 10K Pinoy Telecom shares. The shares usufruct to to naked title upon
were traded in the local stock exchange. At the time of death, Maureen for as Estate Juan’s death
the ff. were available: 5M long as Maureen Tax
lives. +in GE subject to
Highest quotation: P800 per share Estate Tax
 +in GE
Lowest quotation: P200 per share upon
death
Book value: P350 per share  Subject
to
Exemptions and Exclusions from the Gross Estate
Estate
a. Exclusions under Sections 85 and 104 Tax
1. Exclusive property of the surviving spouse

The gross estate in case if married decedents, is composed Transmission from the 1st heir, legatee or donee in favor of
of: another beneficiary (2nd heir), in accordance with the
desire of the predecessor (Transfer under Special Power
 Exclusive properties of the decedent; and of Appointment)
 Common properties of the decedent and the surviving
spouse - Special Power of Appointment exists when the done-
2. Property outside the Philippines of a non-resident alien decedent can appoint only from a restricted or
decedent designated class of persons other than himself.
3. Intangible personal property in the Philippines of a non- Ms. Marcus Maureen (1st Sharlyn (2nd heir)
resident alien under the Reciprocity Law heir)
Devised his The parcel of The intended
parcel of land as land is not beneficiary of
b. Exclusions under Section 87 follows: intended for Ms. Marcus
1. The merger of usufruct in the owner of the naked title Maureen
To Maureen,
2. The transmission or delivery of the inheritance or
thereafter to Acting only as
legacy by the fiduciary heir (1st heir) or legatee to the Sharlyn, upon trustee/fiduciary
fideicommisary (2nd heir) Maureen’s death. of Sharlyn
3. The transmission from the 1st heir, legatee or done in
favor of another beneficiary, in accordance with the + in GE Excluded in GE:
desire of the predecessor (transfer under special Subject to Estate Not subject to + in GE upon
power of appointment) Tax Estate Tax death
4. All bequest devises, legacies or transfers to social
welfare, cultural and charitable institutions, no part of Subject to Estate
the net income of which inures to the benefit of any Tax
individual: Provided, however, that not more than 30%
of the said bequest, devises, legacies or transfers shall
be used by such institutions for administration Transmission or Delivery of the inheritance or legacy by
purposes. the fiduciary heir/legatee (1st heir) to the fideicommisary
(2nd heir)
The merger of usufruct in the owner of the naked
title Elements of a fideicommissary substitution:

 The substitution must not go beyond one degree from

- The decedent in this particular case (done-decedent or
the heir originally instituted (father to son)
current decedent) only received from the prior
 The fiduciary (1st heir) and the fideicommissary (2nd
decedent (donor-decedent or prior decedent) usufruct
heir) must be both living at the time of the testator’s
over the latter’s property.
death.
- Usufruct pertains only to the right or privilege to enjoy
the use or advantages of another’s property. Thus, the
current decedent is not considered the owner of the c. Exclusions under Special Laws
property. Consequently upon his death, the usufruct
will be merged to the owner of the naked title, the 1. Proceeds of life insurance and benefits received by
intended beneficiary of the property. members of the GSIS
2. Accruals and benefits received by members from the
Mr. Marcus Maureen (1st Sharlyn (2nd heir) SSS by reason of death
heir) 3. Amounts received from Philippines and United States
Devised his Usufructuary but The intended governments for war damages
parcel of land as not the intended owner of the land 4. Amounts received from United States Veterans
follows: owner of the land (naked title) Administration
5. Payments from the Philippines of US government to
Naked Excluded in GE: The usufruct will the legal heirs of deceased of World War II Veterans
ownership to  Not be merged to his and deceased civilian for supplies/services furnished to
Sharlyn and subject the US and Philippine Army
 6. Retirement benefits of officials/employees of a private that the decedent had the power to revoke though he
firm did not exercise the power.
7. Personal Equity and Retirement Account (PERA) C. Transfers under a General Power of Appointment –
assets of the decedent-contributor refers to the right to designate the person or persons
8. Compensation paid to private and public health who will succeed to the property of the prior decedent.
workers who have contracted COVID-19 in case of  General is the power of appointment authorizes the
death, the said amount shall not be included as part of donee of the power to appoint any person he pleases.
the gross estate of the decedent subject to estate tax  Special power of Appointment exists when the done
as provided under Republic Act No. 11494 or the can appoint only from a restricted or designated class
“Bayanihan to Recover as One Act” of persons other than himself. Excluded from the gross
estate of the done of the power.

Composition of the Gross Estate The power of appointment may be exercised by the donor-
decedent through the following modes:
- Gross estate consists of all the property owned by a a. By will
decedent or which the decedent had an interest at the b. By deed to take effect in possession or enjoyment at or
time of death, such as: after his death
 real property c. By deed under which he has retained for his life or any
 personal tangible property period not ascertainable without reference to his death
 intangible personal property (shares of stock, ban or for any period which does not in fact end before his
deposit, dividends declared before his death but death.
received after death, partnership profit which have d. The possession or enjoyment of, or the right to the
accrued before his death, usufructuary & rights) income from the property.
e. The right, either alone, or in conjunction with any
1. Property owned by the decedent that are actually person to designate the persons who shall possess or
and physically present in his estate at the time of enjoy the property or the income therefrom.
his death such as land, buildings, shares of stock,
vehicles, bank deposit, and the like. D. Transfers for Insufficient Consideration – when a sale
or transfer (other than a bonafide or valid sale) was
Decedent’s Interest – included in the gross estate (at made for a price less than its FMV at the time of sale
the time of death). Refers to the extent of equity or or transfer, the excess of the FMV of the transferred
ownership participation of the decedent on any property at the time of death over the value of the
property physically existing and present in the gross consideration received should be included in the gross
estate, whether or not in his possession, control or estate. (FMV of the property at the time of sale or
dominion. Refers to the value of any interest in property transfer & FMV of the property at the time of death)
owned or possessed by the decedent at the time of his
death (interest having value or capable of being valued Rules on insufficient consideration
or transferred).
Consideration > or equal FMV at the time of transfer: Bonafide
2. Property NOT PHYSICALLY IN THE ESTATE but sale. Excluded from the decedent’s gross estate
are still subject to payment of estate tax
- These properties have already been transferred during Consideration < FMV at the time of transfer: Insufficient
the lifetime of the decedent, however, such properties consideration. Include in the gross estate the excess of FMV
shall still form part of his gross estate because the @ the time of death over the consideration received.
transfers were either intended to take effect only upon
his death or does not actually convey full ownership Sale was made in the ordinary course of trade: Bonafide sale
over the property transferred. regardless of the amount of consideration

A. Transfers in Contemplation of Death – disposition of No consideration received: Either donation mortis cause or
property prompted by thought of death. donation inter-vivos
1. Transfer of property in favor of another person, but the
transfer was intended to take effect only upon the On January 2021, Juan sold for 5M an apartment with carrying
transferor’s death. value of 3.5M to Pedro. At the time of sale, the property has a
2. Transfer by gift intended to take effect at death, or after prevailing market price of 7M. Juan died on June 2021. At the
death, or under which the donor reserved the income time of death, the prevailing FMV of the property was 8M.
or the right to designate the persons who should enjoy
the income. What amount should be included in the gross estate of the
3. Transfer with retention or reservation of certain rights. decedent?
The decedent had transferred his property during his - 3M (8M-5M)
lifetime, but retained for himself beneficial enjoyment of
the thing or the right to receive income from the same. What amount should be included in the gross estate of the
decedent assuming the FMV of the property at the time of
Note: there is no transfer in contemplation of death when the death was 4M?
transfer of property is a bonafide sale for an adequate and full - 0
consideration in money or money’s worth.
Assume that the property sold is classified as an ordinary asset
B. Revocable Transfers – transfer where the terms of and the sale or transfer was made in the ordinary course of
enjoyment of the property may be altered, amended, trade or business. What amount should be included as part of
revoked or terminated by the decedent. It is sufficient the gross estate of the decedent? – 0
 3. MISCELLANEOUS ITEMS - The amount deductible is the value of the property
lost.
a. Claims against insolvent persons REQUISITES FOR DEDUCTIBILITY:
- An insolvent is a person whose properties are not
a. Arising exclusively from (1) acts of God such as fire,
sufficient to satisfy, whether fully or partially, his
debt(s). storm, shipwreck, and other similar casualty and (2)
- A judicial declaration of insolvency is not required but acts of man such as robbery, theft, embezzlement.
the incapacity of the debtor to pay his obligation should b. Not compensated by insurance or otherwise
be proven. c. Not claimed as a deduction in an income tax return of
- As a rule, regardless of the amount the debtor is unable the estate subject to income tax
to pay, the full amount of the claim against the insolvent d. Incurred during the settlement period of the estate.
person should be included in the gross estate of the
Settlement period refers to the period prescribed by
decedent.
- The portion of the claim which is not collectible should law to file and pay the estate tax which is under the
be allowed as a deduction from the gross estate. TRAIN law, within 1 year from the date of death.
b. Proceeds of life insurance
- Proceeds of life insurance taken out by the by the 2. Indebtedness or Claims against the Estate
decedent on his own life should be included in the - Claims is generally construed to mean debts or
gross estate if the following requisites are present: demands of a pecuniary nature which could have
1. It must be an insurance on the life of the decedent
2. The beneficiary must be either of the following: been enforced against the deceased in his lifetime
o His estate or executor/administrator and could have been reduced to simple money
(revocable or not) judgements.
o Any third person (other than estate or - The liability represents a personal obligation of the
administrator/executor) provided that the deceased existing at the time of his death,
designation is not irrevocable contracted in good faith (during his lifetime) for
o If the policy does not expressly say that
adequate and full consideration in money or
the designation of the beneficiary is
irrevocable, then it is presumed to be money’s worth.
revocable. - Claims against the estate (CAE) or indebtedness
in respect of property may arise out of the following
BENEFICIARY DESIGNATION GROSS ESTATE sources: Contract, Tort, Operation of Law.
Estate Revocable or Included REQUISITES FOR DEDUCTIBILITY:
Irrevocable a. The liability represents personal obligation of the
Executor Revocable or Included deceased existing at the time of his death.
Irrevocable
b. The liability was contracted in good faith and for
Administrator Revocable or Included
Irrevocable adequate and full consideration in money or money’s
3rd Party (i.e wife) Revocable or Included worth.
Irrevocable c. The liability must be a debt or claim which is valid in
3rd Party (i.e wife) Revocable or Excluded law or enforceable in court
Irrevocable d. The debt must not have been condoned by the creditor
or the action to collect from the decedent must not have
Estate Tax Rate been prescribed
- 6%
SUBSTANTIATION REQUIREMENTS:
- Estate tax shall be paid by the executor/administrator
or any of the legal heirs at the time the return is filed - All unpaid obligations and liabilities of the
- Primary responsibility to file and pay – executor or decedent at the time of his death are allowed as
administrator deduction from gross estate but the following
- Secondary responsibility to file and pay – any of the requirements/documents must be complied
heirs with/submitted:
In case of simple load (including advances):
REVIEW THE CONCEPT OF FILING AND ETC.
a. The debt instrument must be duly notarized at
the time the indebtedness was incurred such
CHAPTER 3: DEDUCTIONS FROM THE GROSS ESTATE as promissory note or contract of loan, except
for loans granted by financial institutions
Ordinary Deductions where notarization is not part of the business
A. LITE (Losses, Indebtedness, Taxes, etc.) practice/policy of the financial institution-
lender.
1. Losses (casualty losses) b. Duly notarized Certification from the creditor
- Casualty losses included losses arising from acts as to the unpaid balance of debt, including
of God such as losses due to storms, shipwreck interest as of the time of death.
and other casualties. IF THE CREDITOR IS:
- Includes losses arising from acts of man (robbery, a. Corporation – the sworn certification
theft or embezzlement) should be signed by the President, or
 Vice President, or other principal officer b. Partnership – should be signed by any of the general
of the corporation. partners.
b. Partnership – should be signed by any of c. Bank or other financial institutions – signed by the
the general partners. branch manager of the bank/financial institution which
c. Bank or other financial institutions – shall monitors and manages the loan of the decedent-
be signed by the branch manager of the debtor.
bank/financial institution which monitors d. Sole proprietorship – signed by the owner pf the
and manages the loan of the decedent- business
debtor.
d. Individual – be signed by him C. Certified true copy of the latest audited balance sheet
of the creditor with a detailed schedule of its receivable
c. In accordance with the requirements as showing the unpaid balance of the decedent-debtor.
prescribed in existing or prevailing internal Moreover, a certified true copy of the updated latest
revenue issuances, proof of financial capacity subsidiary ledgers/records of the debt of the debtor-
of the creditor to lend the amount at the time decedent (certified by the creditor i.e., certified by the
the loan was granted, as well as its latest officers in the preceding paragraphs) should likewise
audited balance sheet with a detailed be submitted.
schedule of its receivable showing the unpaid D. Where the settlement is made through the Court in a
balance of the decedent-debtor. testate or intestate proceeding, pertinent documents
filed with the Court evidencing the claims against the
In case the creditor is individual who is no estate, and the Court Order approving the said claims,
longer required to file an income tax return if already issued, in addition to the documents
with the Bureau, a duly notarized Declaration mentioned in the preceding paragraphs.
by the creditor of his capacity to lend at the
time when the loan was granted without  The following expenses are no longer allowed as
prejudice to verification that may be made by deduction from the gross estate of a decedent (funeral
the BIR to substantiate such declaration of the expenses, medical expenses, judicial expenses)
creditor.  Unpaid mortgages or indebtedness on property are
deductions allowed when a decedent leaves property
If the creditor is a non-resident, the encumbered by a mortgage or indebtedness
executor/administrator or any of the legal contracted in good faith and for adequate and full
heirs must submit a duly notarized declaration consideration. To be allowed as deduction, his gross
of his capacity to lend at the time when the estate must include the FMV of the property
loan was granted, authenticated or certified to encumbered. The amount allowed as deduction would
as such by the tax authority of the country be the outstanding debt or mortgage. In case unpaid
where the non-resident creditor is a resident. mortgage payable is being claimed by the estate,
verification must be made as to who was the
d. A statement under oath executed by the beneficiary of the loan proceeds.
administrator or executor of the estate  If the loan was found to be merely an accommodation
reflecting the disposition of the proceeds of loan where the loan proceeds went to another person,
the loan if said loan was contracted within 3 the value of the unpaid loan must be included as a
years prior to the death of the decedent. receivable of the estate. If there is a legal impediment
to recognize the same as receivable of the estate, said
If the unpaid obligation arose from purchase of goods or unpaid obligation/mortgage payable shall not be
services: allowed as a deduction from the gross estate. In all
instances, the mortgaged property, to the extent of the
A. Pertinent documents evidencing the purchase of goods decedent’s interest therein, should always form part of
or service, such as sales invoice/delivery receipt (for the gross estate.
sale of goods), or contract for the services agreed to
be rendered (for sale of service), as duly 3. Taxes
acknowledged, executed and signed by decedent- - Unpaid taxes that accrued prior to the death of the
debtor and creditor, and statement of account given by decedent.
the creditor as duly received by the decedent-debtor. - Income tax on income received after death,
B. Duly notarized Certification from the creditor as to the Property taxes accrued after death, Estate tax are
unpaid balance of the debt, including interest as of the not included as a deduction.
time of death. 4. Claims Against Insolvent Persons (CAIP)
IF THE CREDITOR IS: - Claims against the estate are “receivables due or
a. Corporation – should be signed by the president, vice owing from persons who are not financially
president, or other principal officer of the corporation. capable of meeting their obligations”.
 - These are claims by the decedent during his Vanishing Deduction Rates:
lifetime that are not collectible. Period (from receipt up to the decedent’s death)
- An insolvent is a person whose properties are not Within 1 year: 100%
sufficient to satisfy, whether fully or partially, his Beyond 1 year – 2 years: 80%
debt/s. Beyond 2 years – 3 years: 60%
REQUISITES FOR DEDUCTIBILITY (a judicial declaration of Beyond 3 years – 4 years: 40%
insolvency is not required but): Beyond 4 years – 5 years: 20%
a. The incapacity of the debtor to pay his obligation
should be proven
b. The full amount owed by the insolvent must first be
included in the decedent’s gross estate and the amount
uncollectible shall be allowed as a deduction
c. If the insolvent could only pay partial amount, the full
amount owed shall be included in the gross estate, and
the amount uncollectible shall be allowed as a
deduction.

B. TRANSFER FOR PUBLIC USE

- TFPU are dispositions in a last will and testament
or transfers to take effect after the death in favor
of the government of the Philippines or any of its
political subdivisions thereof (e.g. barangay,
province, city/municipality) for exclusively public
purposes.

C. VANISHING DEDUCTIONS (PROPERTY Special Deductions

PREVIOUSLY TAXED)
A. STANDARD DEDUCTIONS
- Is an amount allowed to reduce the taxable estate  If decedent is a citizen or resident – P5,000,000
of a decedent where a property included in his  If the decedent is a nonresident alien – P500,000
gross estate was previously received by him,
either (1) from a prior decedent by way of - This is the only special deduction allowed to a
inheritance or (2) from a donor by way of gift or nonresident alien decedent. The other special
donation. deductions (family home and RA 4917) can be
claimed only by citizens and resident decedents.
- Vanishing deduction is allowed as a deduction
from the gross estate to minimize the effect of or A. FAMILY HOME – the dwelling house, including the
as a remedy against indirect double taxation. land on which it is situated, where the husband and
REQUISITES FOR DEDUCTIBILITY (DILIPreNo) wife, or a head of the family, and members of their
1. Death – the present decedent died within 5 years from family reside, as certified to by the Barangay Captain
the date of death of the prior decedent or date of gift. of the locality.
2. Identity of property – the property with respect to which  The amount of family home allowable as a deduction
would be whichever is lower of P10,000,000 or the
deduction is sought can be identified as the one
FMV at the time of the decedent’s death, of the family
received from the prior decedent, or from the donor, or home and the land on which it stands.
as the property acquired in exchange for the original
property so received. Unmarried Head of a Family – an unmarried or legally man or
3. Location – the property on which vanishing deduction woman with one or both parents, or with one or more brothers
is being claimed must be located in the Philippines. or sisters, or with one or more legitimate, recognized natural or
4. Inclusion of the property – the property must have legally adopted children living with and dependent upon him or
her for their chief support where such brothers or sisters or
formed part of the gross estate situated in the
children are not more than 21 years of age, unmarried and not
Philippines of the prior decedent or have been included gainfully employed or where such children, brothers or sisters,
in the total amount of the gifts of the donor made within regardless of age are incapable of self-support because of
5 years prior to the present decedent’s death. mental or physical defect, or any of the beneficiaries mentioned
5. Previous taxation of the property – the estate tax on the in Article 154 of the Family Code who is living in the family home
prior succession or the donor’s tax on the gift must and dependent upon the head of the family for legal support.
have been finally determined and paid by the prior
BENEFICIARIES OF A FAMILY HOME:
decedent or by the donor as the case maybe and
 The husband and wife, or the head of a family
6. No previous vanishing deduction on the property – no  Their parents, ascendants, descendants including
such deduction on the property, or the property give in legally adopted children, brothers and sisters, whether
exchange therefore, was allowed in determining the the relationship be legitimate or illegitimate, who are
value of the net estate of the prior decedent. living in the family home and who depend upon the
head of the family for legal support.
 CHAPTER 4 & 5
LIMITATION: A person may constitute only 1 family home

REQUISITES FOR DEDUCTIBILITY: PROPERTY RELATIONS

1. The decedent was married or if single, was a head of
the family. ● Applicable to only married persons.
2. The family home as well as the land on which it stands ● Used to distinguish a conjugal or community property
must be owned by the decedent. Therefore, the FMV from an exclusive property.
of the family home should have been included in the
● The property relationship between husband and wife
computation of the decedent’s gross estate.
3. The family home must be the actual residential home shall be governed in the following order: (1) by
of the decedent and his family at the time of his death, marriage settlements executed before the marriage (2)
as certified by the Barangay Captain of the locality by the provisions of law (3) by the local custom
where the family homes is situated.
4. Allowable deduction must be in an amount equivalent The future spouses may, in the marriage settlements, agree
to the current FMV of the family home as declared or upon the following systems of property relationship:
included in the gross estate, or the extent of the
a. Absolute community of Property (ACoP)
decedent’s interest whichever is lower, but not
exceeding P10,000,000. b. Conjugal partnership of gains (CPG)
c. Complete separation of property
AMOUNTS RECEIVED BY HEIRS UNDER RA 4917- any d. Any other regime
amount received by heir/s from the decedent’s employer as a
consequence of the death of the decedent-employee in  In order that any modification in the marriage
accordance with R.A 4917 (an act of providing that retirement
settlements may be valid, it must be made before the
benefits of employees of private firms shall not be subject to
attachment, levy, execution, or any tax whatsoever), provided celebration of the marriage.
such amount is included as part of the gross  The marriage settlements and any modification thereof
shall be in writing, signed by the parties and executed
Net Share of the Surviving Spouse – equivalent to ½ or 505 before the celebration of the marriage.
of the conjugal property after deducting the obligations  They shall not prejudice third persons unless they are
chargeable (ordinary deductions only) to such property.
registered in the local civil registry where the marriage
contract is recorded as well as in the proper registries
of properties.
 If the couple had not adopted or agreed upon a system
before their marriage, the rule is (a) Before August 3,
1988; CPG is the property relationship and (b) On or
After August 3, 1988; ACoP is the property
relationship.
 Stipulations in the settlements or contracts in
consideration of a future marriage, including donations
between the prospective spouses made therein, shall
be rendered void if the marriage does not take place.
However, stipulations that do not depend upon the
celebration of the marriages shall be valid.
 If decedent was married with surviving spouse,
property in the gross estate need to be classified into
conjugal or exclusive property to facilitate the
computation of the ½ share of the surviving spouse on
the net conjugal property as well as the net taxable
estate of a married decedent.
 Conjugal property is owned by both spouses while
Exclusive property is owned either by the husband or
Estate Tax Return Preparation by the wife. The exclusive property of the husband is
known as capital while that of a wife is known as
Gross Estate, PH paraphernal property.
Less:
Ordinary Deduction
Standard Deduction
x Estate tax rate
= Estate Tax Due

ABSOLUTE COMMUNITY OF PROPERTY (ACoP)

  The most common regime in Philippine marital marriage:
property relations.
 If spouses do not have a valid marriage
settlement, this system will govern the property All properties Community
relations of the couple and it is more in keeping owned before
with Philippine custom and family unity. marriage or
 In general, the provisions on co-ownership shall brought to the
apply to the absolute community of property marriage
between the spouses. In a nutshell, the spouses
become co-owners of all property they bring into Acquired
the marriage and those acquired by each or both DURING
of them during marriage. marriage:

EXCLUSIVE PROPERTY under ACoP

Property Community
 In general, property will be presumed to belong to the acquired during
community, unless it can be proven to be exclusive marriage (other
property. than inheritance
or donation)
The following shall be excluded from the community property:

1. ART. 92(1) of the Family Code – property acquired Property Exclusive

during marriage by gratuitous title by either spouse and acquired during
the fruits as well as the income thereof, if any, unless marriage through
the donor, testator, or grantor expressly provided that
gratuitous
it be part of community.
transfer
It shall be noted that under absolute community of (inheritance or
property, the classification of fruits or income shall donation)
depend on the classification of the principal or source
of the fruits. Thereof, if the income or fruit came from
exclusive property, the fruits or income shall likewise Property Community
be classified as exclusive property. However, fruits acquired during
from labor of either spouse shall always form par of marriage through
community or conjugal property. gratuitous
transfer
2. Art. 92(2) of the Family Code – property for personal (inheritance or
and exclusive use of either spouse. However, jewelry donation) where
shall form part of the community property. the donor,
3. Art. 92(3) of the Family Code – property acquired testator or
before the marriage by either spouse who has grantor provided
legitimate descendants by a former marriage, and the that they shall
fruits as well as the income, if any of such property.
form part of the
community
 Property acquired during the marriage is presumed to
belong to the community, unless it is proved that it is property
one of those excluded therefrom.
Property Community
acquired using
common fund

Property for Exclusive

personal and
exclusive use

 Except,
Jewelry
EXCLUSIVE AND COMMON PROPERTY UNDER ACoP  Community
PROPERTY CLASSIFICATION

Acquired
BEFORE
 PROPERTY CLASSIFICATION
CONJUGAL PARTNERSHIP OF GAINS (CPG)
Acquired
 One of the property relations between the spouses, BEFORE
under which the husband and wife place in a common
marriage:
fund the proceeds, products, fruits and income from
their separate properties and those acquired by either
or both spouses through their efforts or by chance, and, All properties Exclusive
upon dissolution of the marriage or of the partnership,
owned before
the net gains or benefits obtained by either or both
spouses shall be divided equally between them, unless marriage or
otherwise agreed in the marriage settlements. brought to the
 Applies (1) when the future spouses agree to it in the marriage
marriage settlement or (2) to conjugal partnerships of
gains already established between spouses before the
effectivity of the Family Code (August 3, 1988), without Acquired
prejudice to vested rights. DURING
marriage:
Exclusive property under CPG:
1. That which is brought to the marriage as his or her own
2. That which each acquires during the marriage by Property Conjugal
gratuitous title acquired through
3. That which is acquired by right of redemption or by onerous title
exchange with property belonging to only one of the using common
spouses fund
4. That which is purchased with the exclusive money of
the wife or of the husband.
Property through Exclusive
CONJUGAL PROPERTY - CPG gratuitous
transfer
 All property acquired during the marriage, whether the (inheritance or
donation)
acquisition appears to have been made, contracted or
registered in the name of one or both spouses, is
presumed to be conjugal unless the contrary is proved. Property Exclusive
acquired using
ARTICLE 117 provides that the following are conjugal exclusive fund
partnership properties:
1. That which is acquired by onerous title during the
marriage at the expense of the common fund, whether
the acquisition be for the partnership or for only one of CONJUGAL DEDUCTIONS
the spouses.
2. That which is obtained by labor, industry, or work or  Whether under absolute community or property or
profession of either or both of the spouses. conjugal partnership of gains
3. The fruits received or due during the marriage coming
from the common property or from the exclusive 1. The support of the spouses, their common children,
and the legitimate children of either spouse.
property of each spouse. 2. All debts and obligations contracted during marriage by
- Under the conjugal partnership of gains, “fruits” the designated administrator – spouse for the benefit
regardless of the source (either from exclusive or of the conjugal partnership, or by both spouses, or by
conjugal property including fruits from labor0 are one of them with the consent of the other.
classified as conjugal property. 3. Debts and obligations contracted by either spouse
4. The share in the hidden treasure discovered during without the consent of the other to the extent that the
family may have benefited.
marriage which the law awards to the spouses or to
4. All taxes, liens, charges, and expenses including major
either of them as finder or proprietor and minor repairs upon conjugal property.
5. Property acquired by occupation such as hunting or 5. All taxes and expenses for mere preservation, made
fishing by spouses or by either of the, during the marriage, upon the separate property of
6. Livestock existing upon the dissolution of the either spouse.
partnership in excess of the number of each kind 6. Expenses to enable either spouse to commence or
brought to the marriage by either spouse complete a professional, vocational, or other activity for
self-improvement.
7. Those which are acquired by chance, such as winnings
7. Debts before marriage of either spouse in so far as they
from gambling or betting. However, losses therefrom have redounded to the benefit of the family.
shall be borne exclusively by the loser-spouse. 8. The value of what is donated or promised by both
spouses in favor of their common legitimate children for
EXCLUSIVE AND COMMON PROPERTY UNDER CPG the exclusive purpose of commencing or completing a
 professional or vocational course or activity for self-
improvement.
9. Expenses of litigation between spouses, unless the suit
is found to be groundless.

 Obligations contracted during marriage are presumed

to have benefited the family and therefore conjugal
deductions. While obligations contracted by either
spouse before marriage are exclusive deductions
unless shown that the family gained benefits from the
said obligations.
 Share of the surviving spouse (1/2 of net conjugal
property), family home, medical expenses, and
standard deduction are deductions to be made from
the net estate (total of net conjugal estate and net
exclusive estate) to arrive at the net taxable estate.
 Other deductions either conjugal or exclusive
deductions depending on whether chargeable against
conjugal property or exclusive property, or depending
on whether the property to which the deduction is
related is conjugal or exclusive property.
 Wagering loss during marriage shall be borne by the
loser. Winnings, however, shall form part of conjugal
property.
 Fines and pecuniary damages or indemnities imposed
upon either spouse shall be charged against exclusive
property.