Chapter 1

Succession and Transfer Tax

Modes of Acquiring Ownership § Amount of transfer tax is based on net
1. Succession estate/net gifts
2. Contract
3. Occupation Estate tax accrues as the date of death of
4. Law decedent, accrual of the tax is distinct/different
5. Donation from the obligation to pay the same
6. Tradition § Under the TRAIN law, the filing of estate
7. Intellectual creation tax return is within one year from date of
8. Prescription death
§ The amount of liability to be assumed by
Transfer taxes – imposed upon gratuitous the heirs shall be limited only to the extent
disposition of private properties or rights of the value of the properties and gifts
§ Gratuitous transfer – neither imposes inherited
burden nor requires consideration from
transferee or recipient; there is absence of Kinds of Succession
financial consideration (essentially 1. Testamentary/testate succession – a type
donations) of succession that results from the
§ Onerous transfer – the transferee gives designation of an heir, made in a will,
consideration in return for the property or executed in the form prescribed by law
rights received; this transfer is subject to 2. Legal/intestate succession – a type of
business taxes, not transfer taxes succession which is effected by
operations of law, since the decedent did
Kinds of Gratuitous Transfers not execute, a will, or if the last will and
Mortis Causa Inter Vivos testament executed by him is void
Effectivity is time of Effectivity is during the 3. Mixed succession – a type of succession,
death of the donor lifetime of both the which is affected partly by will, and partly
donor and the donee by operation of law
Estate tax is Donor’s tax is imposed
imposed Causes of legal succession/intestacy:
succession donation 1. If a person dies without a will, or with a void
will, or one which has subsequently lost its
Succession – mode of acquisition by virtue of validity
which, the [PRO] property, rights, and 2. When the will does not institute an heir
obligations to the extent of the value of the 3. Partial institution of heir; intestacy
inheritance of a [person are transmitted (succession with no will) takes place to
through his death to another, or others, either undisposed portion, while part of it will he
by his will or by operation of law testate/succession with a will
- The inheritance includes all the PRO of a 4. Other causes of legal succession
person which are not extinguished by death a. When the heir is not capable of
succeeding [vice of consent?]
Nature of Transfer Taxes b. Non-fulfillment of suspensive condition
§ It is an excise tax; the subject matter of a attached to the institution of heir
transfer tax is the privilege of the c. preterition – omission in the testator’s
transferor to gratuitously transfer will of one, some, or all of the
property or rights compulsory heirs in the direct line which
o Transfer tax is classified as has the effect of annulling the institution
excise/privilege tax imposed on the act of heir
of passing the ownership or property, d. fulfillment of resolutory condition
and not on the value of property/right e. non-compliance/impossibility of
§ takes effect at the date of death or during compliance with the will
lifetime of the donor f. repudiation of the instituted heir
 Elements of succession Primary compulsory Secondary compulsory
A. decedent – person whose property is A. legitimate D. Legitimate parents
transmitted through succession whether he did children and their & legitimate
or did not leave a will, if he left a will – testator legitimate ascendants, if A is
§ executor – person designated in the last descendants absent
will to carry out the provisions of the B. surviving spouse E. illegitimate parents
decedent's will (if A and C are absent)
o performs a fiduciary duty of taking care C. illegitimate NOTE: Brothers and
of the decedent's estate prior to final children & their sisters are neither
disposition to the heirs descendants, compulsory heirs nor
§ administrator - person appointed by the whether legitimate strangers, however,
court to perform the executor's duty, if (1) or illegitimate they may be voluntary
no executor, (2) appointed executor did not heirs
accept the appointment, (3) executor failed
to qualify under the law, (4) will did not B. Voluntary heirs - Those instituted by the
appoint an executor testator in his/her will to succeed to the
inheritance of the portion thereof, which the
B. inheritance or estate – Includes all the PRO testator can freely dispose.
that are not extinguished by death § Free portion - refers to the portion or
§ purely personal rights are NOT value let in the estate after deducting
transmissible (extinguished by death) the legitimes of the compulsory heirs.
§ A voluntary heir is determined through
C. successor - person who is called to the the last will and testament.
succession either through provision of the will
or by operation of law C. Legal/Intestate heirs - Those who succeed
§ devisees or legatees – persons to whom to the estate of the decedent by operation of
gifts of real / personal property are law.
respectively given by virtue of a will § By operation of law occurs when the (a)
decedent died without a valid will or (b)
Classifications of Successors his/her estate was not entirely disposed
A. Compulsory heirs – those who succeed by of by will.
force of law to some portion of the
inheritance by legitime; succeeds whether Composition of Gross Estate
the testator likes it or not Legitime (i.e. 75% of estate) à reserved by law
§ They cannot be deprived unless there is specifically to compulsory heirs
a properly effected disinheritance
§ Legitime - an amount predetermined Free portion (i.e. 25% of estate) à provided in
which the testator cannot dispose of will; in absence of will, however, estate shall be
because the law has reserved it for distributed to intestate heirs based in order of
certain compulsory heirs priority

Types of Compulsory Heirs Order of Intestate Succession

§ Primary – has precedence over and 1. Legitimate children/descendants
exclude other compulsory heirs i.e. 2. Legitimate parents/ascendants
legitimate children and descendants 3. Illegitimate children/descendants
§ Secondary – those who succeed only in 4. Surviving spouse
the absence of primary heirs i.e. 5. Brothers and sisters, nephews and nieces
legitimate parents and ascendants 6. Other collateral relatives within the 5th
§ Concurring – those who succeed degree
together with the primary/secondary 7. State/government
heirs i.e. illegitimate children &
descendants & surviving spouses Consanguinity – relation of persons
descending from the same stock/common
ancestors
 § Blood relatives – may either be lineal or e. Signed by testator and the witnessed on
collateral each page, except the last page: on every
o Lineal consanguinity – subsists page they’ll sign on the left margin
between persons who have the same f. Collaterally paged in letters placed on the
ancestors in a direct line from the upper part;
other g. There has to be an attestation clause,
o Collateral consanguinity – subsists which must provide the following:
between persons who have the same • (1) the number of pages used upon
ancestors, but do not descend/ascend which the will is written;
one from the other • (2) that the testator signed the will and
§ Affinity – connection existing in every page thereof in the presence of
consequence of a marriage between the instrumental witnesses; and
each of the married spouse and the • (3) that the instrumental witnesses
kindred/siblings of the other witnessed and signed the will and all
the pages thereof in the presence of
Will – is a strictly personal act wherein a the testator and of one another.
person is permitted, with the formalities h. It must be acknowledged before a notary
prescribed by law, to control to a certain degree public;
the disposition of his estate to take effect after i. If testator is deaf or deaf-mute, he must
his death. personally read the will if able to do so, or
§ Cannot be left to the discretion of a third shall designate TWO persons to read it
person whether in whole or in part or and communicate to him; and
through the instrumentality of an j. If testator is blind, the will shall be read to
agent/attorney him twice (by the subscribing witness and
§ Those who are incapable of creating a by the notary public who acknowledged).
will include (1) below 18 years old (2)
those who are of not sound mind 2. Holographic will – A will which must be (a)
o The law presumes that every entirely written, (b) dated and (c) signed by
person is of sound mind, in the the hand of the testator himself. It is subject
absence of proof to the contrary to no other form.
§ Supervening incapacity does NOT a. It may be made in or out of the Philippines
invalidate an effective will, nor is the will and need not be witnessed.
of an incapable is validated by the b. In case of any insertion, cancellation,
supervening of capacity i.e. married erasure or alteration in a holographic will,
persons can create wills without consent the testator must authenticate the same
of their partners, including his/her by his full signature.
separate property as well as his/her
share of the conjugal 3. Foreign will - The will of an alien who is
partnership/absolute community abroad produces effect in the Philippines if
property made with the formalities by the law of the:
• Place in which he/she resides;
Kinds of Wills • Country of such alien; or
1. Notarial/Ordinary/Attested will – executed • New Civil Code of the Philippines
in accordance with the formalities in law; o A will made in the Philippines by a
requisites for a valid notarial will include: citizen or subject of another country,
a. At least 18 years of age and of sound mind which is executed in accordance with
b. In writing; in language/dialect known to the law of the country of which he/she
testator is a citizen or subject, and which might
c. Subscribed at the end by the testator be proved and allowed by the law of
himself his/her own country, shall have the
d. Attested and subscribed by three or more same effect as if executed according
credible witnesses in the presence of the to the laws of the Philippines.
testator and of one another (witnesses) o If a Filipino is in a foreign country,
he/she is authorized to make a will in
any of the forms established by the
 law of the country in which he/she
may be. Such will may be probated in Disinheritance – testamentary disposition by
the Philippines. which a compulsory heir is deprived of/excluded
from the inheritance
Codicil – is a supplement or addition to a will, § Disinheritance is not applicable to
made after the execution of the will and annexed voluntary heirs
to be taken as a part thereof § Requisites for disinheritance include the
§ Explains any disposition made in the original following:
will; additions or alterations o Effected only through a valid will
§ In order for it to be effective, it shall be o For a cause expressly stated by law
executed as in the case of a will o Cause must be certain and true
o Unconditional
Probate of a will – is a court procedure by o Total (no partial disinheritance)
which a will is proved to be valid or invalid o Heir disinherited must be designated in a
§ In probate of a holographic will, at least way that there can be no doubt as to his
one witness that knows the handwriting & identity
signature of the testator is necessary
Causes of disinheritance:
Intestate proceedings – proceedings in the Children/descendants
absence of a last will and testament 1. When a child or descendant has been
found guilty of an attempt against the life of
Revocation of Wills & Testamentary the testator, his or her spouse,
Dispositions descendants, or ascendants;
§ A will may be revoked by the testator at 2. When a child or descendant has accused
any time before his death, any waiver or the testator of a crime for which the law
restriction to this is void prescribes imprisonment for six years or
§ Revocation is still valid even if a person more, if the accusation has been found
does not have domicile in the Philippines groundless;
3. When a child or descendant has been
Modes of Revoking a Will convicted of adultery or concubinage with
1. By implication of law the spouse of the testator;
2. By some will, codicil, or other writing 4. When a child or descendant by fraud,
executed as provided in the case of wills violence, intimidation, or undue influence
3. By burning, tearing, cancelling or causes the testator to make a will or to
obliterating the will with intention of change one already made;
revoking it, either by: 5. A refusal without justifiable cause to
a. Testator himself destroys it support the parent or ascendant who
b. Some other person in his presence disinherits such child or descendant;
c. By his express direction 6. Maltreatment of the testator by word or
deed, by the child or descendant;
Institution of heir (Art. 840 CC) 7. When a child or descendant leads a
§ An act wherein a testator designates in dishonorable or disgraceful life;
their will the person/s who are to succeed 8. Conviction of a crime which carries with it
them in their properties, transmissible the penalty of civil interdiction.
rights, and obligations
§ A will is valid even if it does not name an Spouse
heir or if that heir does not receive the 1. When the spouse has been convicted of an
entire estate. It is also valid even if the attempt against the life of the testator, his or
person named in the will is incapable of her descendants, or ascendants;
inheriting or does not accept the 2. When the spouse has accused the testator
inheritance. of a crime for which the law prescribes
§ A compulsory heir is NOT automatically imprisonment of six years or more, and the
given a share in the estate because they accusation has been found to be false;
may be deprived of it due to 3. When the spouse by fraud, violence,
disinheritance intimidation, or undue influence cause the
 testator to make a will or to change one - The representative/s shall not inherit more
already made; than what person they represent would
4. When the spouse has given cause for legal inherit if he were living or could inherit.
separation; - Further, the law provides that representation
5. When the spouse has given grounds for the is not available to:
loss of parental authority; o Compulsory heirs in case of repudiation
6. Unjustifiable refusal to support the children (the one who repudiates/refuses his/her
or the other spouse. (Art. 921, NCC) inheritance cannot be represented)
o Voluntary heirs
Rights of Representation o Voluntary heirs, legatees and devisees
- A right created by fiction of law where the who:
representative is raised to the place and § Predecease the testator; or
degree of the person represented § Renounce the inheritance
- Acquires the rights which somebody would - The right of representation only takes place
have if they were living/could have inherited in favor of children of brothers or sisters
- Representation may arise either because of: (whether full blood or half blood) AND if they
o Death concur with at least one uncle or aunt
o Incapacity (meaning an uncle or aunt is also living).
o Disinheritance

Chapter 2
Gross Estate
The right of the state to tax the privilege to Non- 1. Real property situated in the
transmit the estate vests instantly upon the resident Philippines
death. Alien 2. Tangible personal property
situated in the Philippines
Justification for the Imposition of Estate Tax 3. Intangible personal property
1. Benefit received theory – services by the with situs in the Philippines
government requires funding unless excluded on the basis
2. Privilege/state partnership - inheritance is of reciprocity
a privilege and not a right; the State is a
passive silent partner in the accumulation of Intangible Asset
property having the right to collect the share • Not defined in the Tax Code.
which is properly due to it. • Accounting Standards: Identifiable
3. Ability to pay theory - as properties and nonmonetary assets without physical
assets are placed into the hands of the substance. These assets derive their value
heirs/beneficiaries, this creates an ability to from intellectual or legal rights, and from
pay the tax and contribute to the funding the value they add to other assets.
required by the government. • General Rule: The situs of intangible
a. Receipt of inheritance which is in the personal property is the domicile of the
nature of an unearned wealth or windfall owner.
4. Redistribution of wealth theory - • Exceptions:
imposition of estate tax reduces the property o If the intangible property has situs
received by the successor; thus, helping elsewhere; or
promote equitable distribution of wealth in o Where the intangible property has
the society. acquired a business situs in another
jurisdiction
Decedent Gross Estate
Citizen 1. Property (real/personal) Intangible Assets: Within the Philippines
wherever situated 1. Franchise, which must be exercised in the
Resident Intangible personal property, Philippines.
Alien wherever situated 2. Shares, obligations or bonds issued by any
corporation or Sociedad anonima
 organized and constituted in the 3. Listed share: FMV is the
Philippines in accordance with its laws arithmetic mean between the
3. Shares, obligations or bonds issued by any highest and lowest quotation at
foreign corporation, which 85% of its a date nearest the date of
business is located in the Philippines. death. If none is available, then
4. Shares, obligations or bonds issued by any at the date of death itself.
foreign corporation if such shares,
obligations or bonds have acquired a Valuation of the Gross Estate, continued
business situs in the Philippines. Units of The bid price nearest the
5. Share or rights in any partnership, participation in date of death published in
business or industry established in the any any newspaper or
Philippines. (Sec. 104, Tax Code) association, publication for general
recreation or circulation.
Reciprocity Clause amusement
• The Tax Code EXCLUDES intangible club (e.g. golf
personal property with situs in the clubs and polo
Philippines from the gross estate of a non- clubs)
resident alien decedent if there is Right to In accordance with the
reciprocity. usufruct, use or latest Basic Standard
• Accordingly, there is reciprocity if: habitation and Mortality Table, taking into
o The decedent at the time of his/her death annuity account the probable life of
was a resident citizen of a foreign country, the beneficiary, to be
which at the time of his/her death did not approved by the Secretary
impose an estate tax of any character to of Finance upon
the intangible personal property of citizens recommendation of the
of the Philippines no resident in that Insurance Commissioner
foreign country; OR
o The laws of the foreign country of which Exemptions and Exclusions from the Gross
the decedent was a resident citizen at the Estate
time of his death allow a similar exemption
from estate taxes of every character with Exclusions under Sections 85 and 86 of the
respect to the intangible personal property Tax Code
owned by Filipino citizen not residing in the 1. Exclusive property of the surviving
foreign country. spouse.
o These are properties not owned by the
Valuation of the Gross Estate decedent upon his/her death.
In General Fair Market Value (FMV) at the o For estate tax purposes, the exclusive
time of death. properties of a surviving spouse is
Real The HIGHER value between: called “paraphernal properties”
Property a. FMV determined by the o The property will be classified as
Commissioner; and b. FMV as “exclusive” or “common” depending on
shown in the schedule of values the property relations of the husband
fixed by the provincial and city and wife.
assessors 2. Property outside the Philippines of a
Personal FMV at the time of death. non-resident alien decedent
Property o Only properties situated or with situs
Shares of 1. Unlisted common share: within the Philippines are subject to
Stock book value per share of the estate tax for a non-resident alien.
issuing corporation. Take note 3. Intangible personal property in the
that appraisal surplus and Philippines of a non-resident alien under
assigned amount to preference the Reciprocity Law.
shares shall not be considered.
2. Unlisted preference share:
par value per share
Exclusions under Section 87 of the Tax Code Inclusions in the Gross Estate
1. Merger of the usufruct in the owner of the Items Included in the Gross Estate
naked title to the property; 1. Properties owned by the decedent actually
2. Fideicommissary substitution – where and physically present in his/her estate at
the inheritance/legacy is delivered or the time of his/her death. Examples are:
transmitted by the fiduciary heir or legatee o Land
to the second heir o Buildings
3. Transmission from the first heir, legatee o Shares of stock
or donee in favor of another beneficiary, in o Vehicles
accordance with the desire of the o Bank Deposit
predecessor; 2. Decedent’s interest
4. All bequests, devises, legacies, or o The extent of equity or ownership
transfers to social welfare, cultural and participation of the decedent on any
charitable institutions, no part of the property physically existing and present
income of which inures to the benefit of in the gross estate, whether or not in his
any individual. PROVIDED, however, that possession, control or dominion.
NOT MORE THAN 30% of said bequests, o Refers to the value of any interest in
devises, legacies or transfers shall be property owned or possessed by the
used by such institutions for administration decedent at the time of his/her death.
purposes. o Examples:
§ Dividends already declared before
Exclusions under Special Laws decedent’s death but only received
1. Proceeds of life insurance and benefits after his/her death
received by members of the GSIS; § Partnership profit, which have
2. Benefits received by members from the accrued before decedent’s death
SSS by reason of death; § Usufructuary rights
3. Life insurance proceeds on life insurance 3. Properties not physically in the estate
policy taken out by the decedent himself, o Already been transferred during the
upon his/her own life, where the beneficiary lifetime of the decedent but are still
is a third person and is irrevocably subject to the payment of tax.
designated.
4. Life insurance proceeds on insurance
3A. Transfer in Contemplation of Death
policy (group insurance) taken out by the
o This is donation mortis causa or donation
decedent’s employer on the decedent’s life,
whoever the beneficiary maybe, whether which takes effect upon the death of the
the designation of such beneficiary is donor, and therefore partakes of the
revocable or irrevocable. nature of a testamentary disposition.
5. Amounts received from the Philippine and o It is the thought of death as the
US governments for war damages; controlling motive, which induces the
6. Payments from the Philippines of US disposition of the property for the
government to the legal heirs of World War purpose of avoiding the estate tax.
II Veterans and deceased civilian for o Accordingly, the value of the property
supplies/services furnished to the US and transferred in anticipation of a decedent’s
Philippine Army death is included in his/her gross estate.
7. Amounts received from the US Veterans Examples are:
Administration; § Transfer of property in favor of
8. Transfer by way of bona fide sales another person, but the transfer was
9. Properties held in trust by the decedent intended to take effect only upon the
10. Acquisition and/or transfer expressly transferor’s death.
declared as not taxable § Transfer by gift intended to take effect
11. Personal Equity and Retirement Account at death, or after death or under which
(PERA) assets of the decedent contributor the donor reserved the income or the
right to designate persons who should
enjoy the income.
3B. Transfer with retention or reservation of o The right, either alone or in conjunction
certain rights with any person to designate the persons
o The decedent transferred his/her property who shall possess or enjoy the property or
during his/her lifetime; however, he/she the income therefrom.
retained for himself/herself the beneficial
enjoyment of the thing or the right to receive 3E. Transfer for Insufficient Consideration
income from the same. o When a sale or transfer (other than a valid
sale) was made for a price less than its FMV
3C. Revocable Transfer at the time of sale/transfer, the excess of the
o Transfer where the terms of enjoyment of FMV of the transferred property at the time
the property may be altered, amended, of death over the value of the consideration
revoked or terminated by the decedent. It is received should be included in the gross
sufficient that the decedent had the power to estate of the decedent. The following FMVs
revoke even though he did not exercise the are considered:
power. FMV of Used to determine whether or not
the the consideration was full and
3D. Transfers under a General Power of property adequate. If the consideration
Appointment at the received is substantially the
o The power of appointment is considered time of same with the FMV at the time of
“general” if it authorizes the donee of the sale or transfer, such sale or transfer is
power to appoint any person he/she transfer considered as a bonda fide sale;
pleases. This may be exercised in favor of hence, not subject to estate tax
anybody, including the donee-decedent. FMV of Used to determine the amount to
§ The donee of a GPA holds the appointed the be included in the gross estate. If
property with all the attributes of property the consideration received is
ownership. Thus the appointed property at the substantially lower or for less
shall form part of the gross estate of the time of than full and adequate
donee of the power upon his/her death. death consideration compared to the
o The power of appointment is considered FMV at the time of sale or
“special” when the donee can appoint only transfer, such sale or transfer
from a restricted or designated class of was made for insufficient
persons other than himself. consideration and the excess
§ Property transferred under a special should be included in the gross
power of appointment should be estate of the decedent.
excluded from the gross estate of the
donee of the power because the donee-
decedent only holds the property in trust. Consideration ≥ Transaction is a bona fide
§ The treatment is similar to a FMV at the time sale. Hence, excluded
fideicommissary substitution and of transfer from the decedent’s gross
transmission of rights from one heir to estate.
another. Consideration < Transfer for insufficient
o The power of appointment may be exercised FMV at the time consideration. Hence,
by the donor-decedent through the of transfer included in the gross estate
following: is the excess of FMV at
o By will; the time of death over the
o By deed to take effect in possession or consideration received.
enjoyment at or after his/her death; Sale was made Transaction is a bona fide
o By deed under which he/she has retained in the ordinary sale.
for his/her life or any period not course of trade
ascertainable without reference to his/her Non Either donation mortis
death or for any period, which does not in consideration causa or donation inter
fact end before his/her death; received vivos.
o The possession or enjoyment of, or the
right to the income from the property; or
3F. Claims Against Insolvent Persons 2018), the net estate of such decedent,
o An insolvent person is an individual whose resident or nonresident, shall be subject to
properties are not sufficient to satisfy (fully an estate tax rate of 6%.
or partially) his/her debt/s. § If the decedent died prior to the effectivity of
o A judicial declaration of insolvency is not the TRAIN Law, his/her net estate shall be
required but the incapacity of the debtor to subject to the old estate tax table, to wit:
pay his/her obligation should be proven.
o Rule: Regardless of the amount the debtor
is unable to pay, the full amount of the
claim against the insolvent person should be
included in the gross estate of the
decedent.
o The portion of the claim that is not collectible
should be allowed as a deduction from the Filing and Payment
gross estate. § The estate tax shall be paid by the
executor/administrator or any legal heirs at
3G. Proceeds of LIFE insurance the time the return is filed as the Philippines
§ Proceeds of life insurance taken out by the adhere to the “pay as you file” system.
decedent on his/her own life should be § Accordingly, an estate tax return shall be
included in the gross estate IF the following filed under oath in any of the following
requisites are present: situation:
1. It must be an insurance on the life of the 1. In cases of transfer subject to Estate
decedent; and Tax; and
2. The beneficiary must either be of the 2. The estate consists of registered or
following: registrable property (real property,
a. The decedent’s estate, his/her motor vehicle, shares of stock or other
executor or administrator (whether similar property), regardless of the
revocable or irrevocable); or gross value, for which a Certificate
b. Any third person provided that the Authorizing Registration (CAR) from
designation is irrevocable the BIR is required as a condition
§ Accordingly, the Insurance Code presumes precedent for the transfer of ownership
that the designation of a policy is revocable in the name of the transferee,
in case the designation of the beneficiary is executor/administrator or any of the
not clear or silent. legal heirs, as the case may be.
§ Estate tax return showing gross value
Beneficiary Designation Gross Estate exceeding P5,000,000 shall be supported
Estate Revocable or Included with a statement duly certified by a CPA.
Irrevocable § The said certification by a CPA shall contain
Executor Revocable or Included the following:
Irrevocable 1. Itemized asset of the decedent with their
Administrator Revocable or Included corresponding gross value at the time of
Irrevocable his/her death. In the case of a
3rd party (other Revocable Included nonresident alien, his/her itemized
than those assets that are only situated in the
mentioned Philippines.
above, e.g. 2. Itemized deductions allowed from the
spouse) gross estate.
3rd party (other Irrevocable Excluded 3. The amount of tax due, whether paid or
than those still due and outstanding.
mentioned
above, e.g. Deadline of Filing
spouse)
§ The estate tax return shall be filed within 1
year from the death of the decedent.
Tax Rate § The court approving partition shall furnish
§ If the decedent died during or after the the CIR a certified copy of the said court’s
effectivity of the TRAIN Law (i.e. January 1,
 order of partition within 30 days after Taxpayers’ Options: Cash Installment
promulgation of such order. § The cash installments shall be made within
§ Take note that the one-year deadline of filing 2 years from the date of the estate tax return
is the allowable period of filing of the return using BIR Form 0605 or a payment form
without surcharges/penalties and interest. dedicated for this transaction for succeeding
§ As to extension of the deadline: The CIR installment payments after filing the 1st
may extend the time for payment under the payment through the estate tax return.
following conditions: § The estate tax return shall be filed within 1
1. For meritorious cases only; year from the date of the decedent’s death.
2. The extension shall not exceed 30 § The frequency of payment (i.e. monthly,
days quarterly, semi-annually, annually) and the
§ The application for extension to file an amount of each installment shall be
estate tax return must be filed with the RDO indicated in the estate tax return subject to
where the estate is required to secure its TIN the approval of the BIR.
and file the estate tax return. § If there is lapse of 2 years without payment
of the entire estate tax due, the remaining
Deadline of Payment balance shall be due and demandable,
§ The estate tax shall be paid at the time the subject to applicable penalties and interest
estate tax return is filed by the executor, computed from the prescribed deadline for
administrator or the heir/s. the filing of the return and payment of estate
§ As to extension of the deadline: The CIR tax.
may extend the time for payment under the § No civil penalties or interest may be
following conditions: imposed on the estates that are permitted to
1. Payment would impose undue pay the estate tax due by installment.
hardship upon the estate or any of the However, nothing prevents the CIR from
heirs. executing enforcement action against the
2. The extension granted shall not estate tax due of the estate provide that all
exceed 5 years in case there is judicial the applicable laws and required procedures
settlement or not exceed 2 year in are observed.
case there is extrajudicial settlement.
Taxpayers’ Options: Partial Disposition
§ The application for extension to file an § Disposition: Conveyance of property (real or
estate tax return must be filed with the RDO personal; tangible or intangible) with the
where the estate is required to secure its TIN equivalent cash consideration
and file the estate tax return. Such § The estate tax return shall be filed shall be
application shall be approved by the CIR or filed within 1 year from the death of the
his/her duly authorized representative decedent.
§ If the request for extension is based on § The written request for the partial disposition
negligence, fraud or intentional disregard of of estate shall be approved by the CIR. The
the taxpayer, no extension will be granted. said request shall be filed together with a
§ If an extension is granted, the CIR or his duly notarized undertaking that the proceeds
authorized representative may require the thereof shall be exclusively used for the
executor, administrator or beneficiary, as payment of the total estate tax due.
the case may be, to furnish a bond NOT § The computed estate tax due shall be
exceeding double of the TAX and with such allocated in proportion to the value of each
sureties as the CIR deems necessary. property.
§ The estate shall pay to the BIR the
Taxpayers’ Options proportionate estate tax due of the property
§ If there is insufficiency of cash for the intended to be disposed of.
immediate payment of the total estate tax § An electronic Certificate Authorizing
due, the estate may be allowed to pay the Registration (eCAR) shall be issued upon
estate tax due through the following options: presentation of the proof of payment of the
1. Cash Installment proportionate estate tax due of the property
2. Partial Disposition of estate intended to be disposed. As such, multiple
eCARs shall be issued if there are multiple
Basis: RR No. 12-2018, as amended by RR No. 8-2019
 properties to be disposed to cover the total Commissioner through RDO No. 39
estate tax due. (South Quezon City).
§ If there is failure to pay the total tax due after § The CIR may exercise his/her power to
considering the proceeds of disposition, the allow a different venue/place in the filing of
estate tax due shall be immediately due and tax returns.
demandable subject to the applicable Liability for the Payment of Estate Tax
penalties and interest reckoned from the § The executor/administrator of an estate has
prescribed deadline for the filing the return the primary obligation to pay the estate tax;
and payment of the estate tax. however, the heir or beneficiary has the
§ This is without prejudice to the withholding subsidiary liability for the payment of that
the issuance of eCARs on the remaining portion of the estate which his/her
properties until the payment of the distributive share bears to the value of the
remaining balance of the estate tax due, net estate.
penalties and interest. § If there is no executor/administrator
appointed, qualified and acting within the
Taxpayers’ Options: Extension Philippines, then any person in actual or
§ Request for extension to file the return, pay constructive possession of any property of
the estate tax and payment by installment the decedent must file the return.
shall be filed with the RDO where the estate § Take note that the estate tax shall be paid
is required to secure its TIN and file the before the delivery of the distributive
estate tax return. share in the inheritance to any heir or
§ This request shall be approved by the CIR beneficiary.
or his duly authorized representative. § If there are 2 or more executor or
administrators, all of them are severally
Venue of Filing and Payment liable for the payment of the tax.
§ If the decedent is a resident, the § The estate tax clearance issued by the CIR
administrator/executor shall register the or RDO having jurisdiction over the estate
estate of the decedent and secure a new will serve as the authority to distribute the
TIN therefor from the RDO where the remaining properties in the inheritance to
decedent was domiciled at the the time of the heir or beneficiary.
his/her death
§ The filing of the estate tax return and Civil Penalties and Interest
payment of the estate tax due can be made § Any amount paid after the statutory tax due
in any of the following: date of the tax, but within the extension
o a. Accredited Agent Bank (AAB) period (if any), shall be subject to interest
o b. Revenue District Office but NOT to surcharge penalty.
§ If the decedent is a non-resident and o 25% surcharge penalty: if there is no
his/her administrator/executor is in the false or fraudulent intent on the
Philippines, the estate tax return shall be taxpayer.
filed to and the TIN for the estate be secured o 50% surcharge penalty: if there is false,
from the RDO where such malice or fraudulent intent on the
administrator/executor is registered. taxpayer.
o If the administrator/executor is not § Interest shall be computed on the unpaid
registered, the estate tax return shall be amount of tax from the date computed until
filed with and the TIN of the state shall fully paid.
be secured from the RDO having § Take note that under the TRAIN Law, the
jurisdiction over the interest is is double the legal interest rate set
administrator/executor’s legal by the BSP. Considering that the legal
residence. interest rate is currently at 6%, then the
o However, if the non-resident does not imposable interest now is at 12% per
have an executor or administrator in the annum.
Philippines, the estate tax return shall be
filed with and the TIN dor the estate shall Transfer of Shares, Bonds or Rights
be secured from the Office of the § There shall be no transfer of any share,
obligation, bond or right to any new owner in
 the books of any corporation, sociedad
anonima, partnership business or industry
organized or established in the Philippines
by way of donation or inheritance unless
there is a certification from the CIR that
the applicable tax have been paid.
§ If a bank has knowledge of the death of a
person, who maintained a bank deposit
account (alone or jointly owned with
another), the bank shall allow any
withdrawal from the said deposit account,
subject to a final withholding tax of 6%,
which is also the estate tax rate.
o 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.
o In case the available cash of the estate
is insufficient to pay the total estate tax
due, payment by installment shall be
allowed within 2 years from the statutory
date for its payment without civil penalty
and interest.