SUCCESSORS legal right to receive the estate

Compulsory Heirs cannot be deprived of their inheritance

LEGITIME

Primary 1st reserved by law

1. LC IC and their descendants
LC - conceived and born to legally married parents
2. Surviving legitimate spouse ( widow/ widower_

no spurious children

Illegitimate children - receive inheritance IC = 1/2 LC

Secondary Compulsory heirs

in the absence of a LC
1. Legitimate parents and legitimate ascendants

Adopting A, B legal heirs Legit P A, B

Decedent C Decedent C
No descendants No descendants

2. Illegitimate parents (no other descendants)

Absence of compulsory heirs 1 Parents

1. the decedent's relatives up to the 5th degree of consanguinity A (DECEDENT)
2. GOVERNMENT
3. If there is a will, the decedent may name other persons to Lolo/Lola
inherit the free portion of the net distributable estate. 2
Parent
WILLS TESTAMENTARY SUCCESSION 1
TESTATOR disposes his or her properties or estate to take effect A (Decedent)
permitting a person, with the formalities prescribed by the law,
to control to a certain degree the disposition of his estate
to take effect after his death

PERSONAL ACT (Cannot be delegated to others)

REGIME CONJUGAL PARTNERSHIP

REGIME ABSOLUTE COMMUNITY PROPERTY

default in the absence of pre-nuptial agreement
or if the regime agreed upon is not valid for
marriage starting August 3, 1988 and thereafter
 1. H and W are the co-owners of all the properties that:
they bring into the marriage.
those acquired by either or both of them
during the course of their marriage
(some exceptions)
2. The administration and enjoyment of the community
property shall belong to both the spouses
jointly.
3. Neither spouse may donate any community property
without the consent of the other.

Conjugal Partnership of Gains

1. H and W (Retains ownership) - separate properties
brought into marriage
exclusive inherited properties
2. proceeds, products, fruits and income obtained
H W shall be divided equally between them
unless, otherwise stated in the marriage settlement
3. upon dissolution of the marriage (net gains or benefits)
H W shall be divided equally between them
unless, otherwise stated in the marriage settlement
4. administration and enjoyment
CONJUGAL PARTNERSHIP SHALL BELONG
to BOTH SPOUSES JOINTLY
5. Neither spouse may donate any conjugal partnership property
without the consent of the other.

Regime of Complete separation of property

Right to vote

below 18 years old INCAPABLE OF GIVING CONSENT

Unless essentials
persons who are not of sound mind - at the time of execution
INCAPABLE OF GIVING CONSENT

after 1 month, testator becomes insane

Executor/testator will be burdened
to provide that the testator
 is of sound mind at the time of
execution.

KINDS of WILLS
1. Notarial will or ORDINARY or ATTESTED WILL
formalities of the law (Phil)
1 writing and executed at a language or dialect known to the testator
2 subscribed at the end thereof by the testator himself or by
the testator's name written by some other person in his presence
and by his express direction
3 it must be attested and subsribed by 3 or more credible
witnesses in the presence of the testator and of one another

2. Foreign will Foreigners - aliens

effective in the Philippines
if made with the formalities prescibed by the law
of place where he resides

Filipino is in a foreign country

any of the forms law Phil
Foreign country

Revocation of wills and testamentary dispositions

Will
Revocation before his death OBLITERATED
VOID
any waiver or restriction of this right (Will)

ALIEN Revoke Will VOID

Filipino in other country Done in accordance to the law
in which he/she resides
Law prescribed by the country (Phil)
MODES OF REVOKING A WILL
1 by implication of law
2 by will, codicil, or other writing executed as provided
in case of wills
3 by tearing, cancelling, burning, obliterating the will
with the intention of revoking it (testator)
or by some other person ( express direction - testator)

WILL Would still be VALID (Without express direction

testator)

Unauthorized destruction/cancellation/obliteration
(WiLL may be established /estate distributed in accordance
with the last WILL - rules of court)
 it does result in a legal succession
still remains as a testamentary succession

Disinheritance TESTAMENTARY - WILL

CH Denied
Requisites
1. Effected only through a valid will
2. For a cause expressly stated by law
3. Cause must be stated in the will itself
4. cause must be certain and true
5. Unconditional no condition - that he will become entitled again
6. Total (there is no partial disinheritance)
7. The heir disinherited must be designated CH
in such a manner that there can be no doubt as Juan Tamad,
to his identity Dodong Tamad

Common cause for disinheritance - CH

1 Heir is found guilty of an attempt against the life of the
testator, his descendants or ascendants, and the spouse
in case of children and parents.
2 Heir has acccused the testator of a crime for which
prescribes imprisonment for 6 years or more, if the accusation has
been found groundless
3 Heir by fraud, violence, intimidation or undue influence causes
the testator to make a will or to change one already made
4 Refusal without justifiable cause to support the testator who
disinherits such heir

Right of Representation
created by fiction of law
1 Death heir of C
2 Incapacity A B (son)
3 Disinheritance shall inherit more than
what the person they represent
would inherit

Representation is not available

1. CH, in case of repudiation
D Decedent
Died H Comp heir repudiates his inheritance
A (h son) is not qualified as a representative heir

2. Voluntary Heirs
third persons
5th degree of consanguinity
 2
BROTHERS 3
NEPHEW 4
Common ancestor Son of your nephew 5
3 Son
Uncle of the son
4 of your
1st Cousin Collateral nephew
5
Son of 1st cousin
6 XXXXX
Son of your 1st cousin's son
e will become entitled again

Juan Tamad,
Dodong Tamad

he life of the
nd the spouse

ore, if the accusation has

due influence causes

ne already made
rt the testator who
Gross Estate Estate Tax Liability

Estate - Properties of the testator/ Decedent at the time of death

1 Properties Owned R, P
2 Properties already transferred but still owned/
1. Revocable transfers
2. Transfers in contemplation of death
3. Transfer for insufficient consideration
4. property passing under GPA
5. Proceeds of life insurance policy payable to a revocable beneficiary
3. Decedents accrued interest

FORMS OF PROPERTIES IN THE GE

Real immovable land, bldg, permanently attached to land (equip)
Tangible personal movable properties with physical form
Intangible personal without physical substance
rights and privileges (VALUE)
cash, bank deposit, interest and rights, usufruct
receivables, insurance, goodwill, franchise, patents
trademarks, bonds, stocks and other investment securities

Compositions and Classifications of the gross estate - all properties

Exclusion from GE Regimes
1. Separate (exclusive ) properties of the SS
on or bef 2. INCOME, PROPERTIES, RIGHTS accruing after his death
3.Properties or transfer exempt by law from estate tax.
donation of properties to government
BIR FORM 1801 or EBIRFORMS 1801v2018 - within 1 year from the date of death
file returns and pay taxes

On October 1, 2014, TULOG died with a will appointing his WIFE, Gising, as the
executor. On Dece 31,2014, after the burial Tulog, the properties of the spouses
were accounted for as follows
ACP FMV
Particulars Oct 1, 2014 Dec 31, 2014
Real Inherited House and Lot - T 5,000,000.00 5,500,000.00
Mix Business Establish HW 3,000,000.00 1,500,000.00
Int-Personal Invest in share of stock 500,000.00 600,000.00
Int-Personal Div declared on Oct 1 receiv Dec 15 20,000.00 20,000.00
Int-Personal 12% notes receivable 100,000.00 100,000.00
Int-Personal Accrued int NR 10,000.00 12,000.00

How much is the reportable GE -T? 8,630,000.00

Properties and interest accruing to him - Death
Particulars EXCLUSIVE COMMUNAL
Inherited House and Lot - T 5,000,000.00
Business Establish HW 3,000,000.00
Invest in share of stock 500,000.00
Div declared on Oct 1 receiv Dec 15 20,000.00
12% notes receivable 100,000.00
Accrued int NR 10,000.00
Total GE 5,000,000.00 3,630,000.00

WIFE 1,815,000.00
SITUS OF GE
CITIZEN Within Subject to estate tax - Part of GE
RA where located outside Subject to estate tax - Part of GE

With reciprocity without reciprocity

NRA within outside within
Real included X included
Tangible included X included
Intangible excluded X included

the following properties are listed as part of Dina Gising:

Properties situated in the PH
REAL Condo 5,000,000.00
TAN Jewelries 4,000,000.00
INT Certificate of Indebtedness (Bond) 3,000,000.00
INT bank deposits 2,000,000.00

Properties situated outside the Philippines

Real apartment 6,000,000.00
Tan Car in USA 2,000,000.00
Int Shares of stock 4,000,000.00

COMPUTE GE;
1 DINA GISING is a Citizen (fil) or RA 26,000,000.00
2 NRA with R 9,000,000.00
3 NRA without R 14,000,000.00

VALUATION OF GE
at the time of death (mortis causa) estate tax accrues
file estate return and pay within 1yr
GE FMV @ time of death

Gross amount of the properties shall not be diminished by:

1 encumbrances or mortgages attached to the property
2 portion of claims that are worthless like bad debts
 3 taxes, and other permissible deductions
4 share of the SS in the conjugal or communal property
5 any subsequent contigency affecting the estate.

Mr. juan tamad

Acquisition FMV time of death
House and Lot 2M 5M
Mortgage - House and Lot 1M
Car 1M 400K
Receivables 500K 600K
Uncollectibe Receivable 50K

If after 2 months of Tamad's death, the car was stolen

How much would be the reportable amount of GE? 6M

Specific Valuation Method

1. usufruct
2. Real properties
3. Personal properties
4. Stock, bonds, and other securities

USUFRUCT
legal right to use and enjoy benefits, profits of property belonging
to another

using habitation, as well as that of annuity

Life of the beneficiary
BSMT Basic Standard Mortality table

Real properties
FMV at the time of death
Land 500K Cost
1M Assessed value (Assessor's office) whichever is
2M FMV determined by the BIR Commissioner (zonal value) higher

2M will be used as the FMV of the property since it is higher thn

assessed value for the property
Per item basis

Mr. Todas FMV Higher FMV

Bagiuo Asses. Of BIR Comm Reportable on GE
H and L 10,000,000.00 12,000,000.00 12,000,000.00
Subdivision Lots 20,000,000.00 19,000,000.00 20,000,000.00
 Totals 30,000,000.00 31,000,000.00 32,000,000.00

individually

Personal Property Valuation AT THE OF THE DEATH

1 CMP Purchase Value for the recently acquired personal
properties
2 Second hand market price for previously acquired
personal properties and used prop
3 Grossed up loan value for loaned or pawned personal
properties
4 Fair value plus accrued int for interest earning personal properties
5 Discounted value non interest bearing notes receivables
6 Face value peso (money) PHP
7 converted peso value money (foreign currencies)

A, resident alien
GE
1,000,000 Brand new car, at CMP (recently) 1,000,000.00
Used Personal computer (previously)
Acquisition 100,000.00
20,000 Second hand value 20,000.00
150,000.00 Jewelries at Palawan, at 40% pawn value 60,000.00
Time deposit at 3% interest per year
202,000.00 (deposited 4 months before death) 200,000.00
2 year non-interest bearing notes
454,545.45 (effective int 10%, 1 year remaining period) 500,000.00
80,000 Cash on hand, PHP 80,000.00
Cash on hand, USD
150,000 Conversion rate P50 to $1 $3,000
at the time of death
2,056,545 Total Ge

Shares of stocks
Ordinary/Common Stock Traded in Stock Market - Listed
Preference/ Preferred Stock Untraded - Unlisted
unlisted OS BVPS X Number of Stocks
unlisted PS PAR VALUE X Number of Stock

Listed Share average highest and lowest value at a date nearest

to the death

Decedent owns 200,000 shares of DITO Company at the time of his death
 at that time DITO's oustanding shares were 10,000,000 with a par value
of P2 per share and retained earnings of P500,000,000.
shares are not traded in the market.

Decedent (Filipino or RA)

DITO COMPANY - Stocks are not traded - Location, within the Philippines
SHE - OS (10M x P2)+ SP for OS + R/e OS of 500,000,000
x 200K
OS outstanding 10M

BVPS os 52 x 200,000.00 10,400,000.00

Total 10,400,000.00
amount reportable to the GE for this Stocks

if the stocks are preference shares

P2 par value x Number of stocks 200,000
400,000 total amount reportable to the GE for this Stocks

Decedent owns 200,000 shares of DITO Company at the time of his death
at that time DITO's oustanding shares were 10,000,000 with a par value
of P2 per share and retained earnings of P500,000,000.
shares are traded in the PSE
April 29, 2021 At the time of death Average Price/Sh
High 10.48 10.33 200,000.00 2,066,000.00
Low 10.18
Total 20.66
Average 10.33

EXEMPTIONS AND EXCLUSION FROM GROSS ESTATE

SEC 85 86 TAX CODE
1 Exclusive property of the surviving spouse
2 Properties outside the Ph of NRA decedent
3 Intagible Properties of NRA Decedent located within PH
under Reciprocity Law

SEC 87 1 merger of usufruct in the owner of the naked title

Naked title Title of the ownership of the property
Usufruct legal right to use and enjoy benefits of properties belonging
to others

LOLO, he assigned the usufruct of his parcel

of land to his Son (PAPA) while his grandson (APO - gwapo) was named the owner
of the naked title
 LOLO land GE

PAPA USUFRUCT right to use

APO Naked Title Owner

PAPA dies Land - GE? NO USUFRUCT right to use

TRUSTEE Not included as part of GE
Ipamana or matransfer ang USUFRUCT kay Apo
APO USUFRUCT & NAKED TITLED

2 transmission or delivery of the inheritance or legacy by the fiduciary heir

or legatee to the fideicommisary

(LOLO)
Land PAPA
condition that if PAPA dies, SON heir within 1 degree of consanguinity

LOLO Dies land GE

PAPA dies land X GE
SON

3 Transmission from the 1st heir, legatee or donee in favor of another

beneficiary, in accordance with the desire of the predecessor (SPA)

Condition subject to the desire of lolo

Lolo
papa utod ni papa
Pamangkin

LOLO Dies land GE

TRUSTEE PAPA dies land X GE
Pamangkin Owner

4 All bequest devises, legacies or transfers to social welfare, cultural

and charitable institutions
no part of the net income of which inure to the benefit
of any individual, not more than 30% of the said bequestm devises, legacies
or transfers shall be used by such for admin purposes

Exemptions under special laws

1, proceeds of life insurance and benefits received by members of the GSIS
(RA728)
2, accruals and benefits received by members of the SSS by reason of death
(RA1792)
 3, proceeds of life insurance and benefits taken out by the decedent himself
, upon his own life, where the beneficiary is a third person and is irrevocably
designated.
4. proceeds of life insurance on Insurance policy (group insurance policy)
employer on the employees life, whoever the beneficiary, whether designation
is revocable or irrevocable
5 Amounts received from US Ph for war damages (RA227)
6 Amounts received from US to the legal heirs of deceased WWII veterans
and deceased civilian for supplies/services furnished tp the US and PH Army
(R136)
7 Amounts received from US Veterans Admin
8 transfer by way of bona fide sales, transfer for full consideration
9 Properties held in trust by the decedent
10 acquisition and/or transfer expressly declared as not taxable
11 PERA assets the contributor - RETIREMENT ACCT

2 Properties already transferred but still owned/

Not physically present in the the estate

1. Revocable transfers
enjoyment Revoke, alter, terminate
by the decedent
2. Transfers in contemplation of death
Donation mortis causa
1. Transfer - effectivty upon the death of the transferor
2. Transfer by gift- effectivty upon the death of the transferor

Adequate consideration - sale transaction

not a transfer in comtemplation of death

3. Transfer for insufficient consideration

Jan-15
Juan sold Selling price P5M apartment to pedro with a CV of P3.5M
FMV P7M

Jun-15 Juan died

FMV P8M

At the time of transfer At the time of death

SP VS FMV at time transfer FMV at death VS CR or SP
SP 5M < FMV P7M P8M > P5M
Insufficient by 2M 3M GE

Jan-15
 Juan sold Selling price P5M apartment to pedro with a CV of P3.5M
FMV P4M

Jun-15 Juan died

FMV P8M

At the time of transfer At the time of death

SP VS FMV at time transfer FMV at death VS CR or SP
P5M > P 4M ZERO GE
Sufficient - gain P1M

Jan-15
Juan transferwithout any consideration apartment to pedro with a CV of P3.5M
FMV P4M

Jun-15 Juan died

FMV P8M

At the time of transfer At the time of death

Consideration zero
GE
Transfer Donation inter vivos ZERO
requiring that Donor's Tax paid
Transfer Donation mortis causa P8M

4. property passing under GPA

SPA LOLO died - transfer land to PAPA, and if papa dies (land to nephew J)
PAPA Land TRUSTEE
J Land

GPA LOLO died - transfer land to PAPA, and if papa dies he is free to choose who would
PAPA Land GE the heir of the land
X Land

5. Proceeds of life insurance policy payable to a revocable beneficiary

Life insurance taken the decedent on his life

3rd person - revocably designated

6 Claims against insolvent person

Tax rates notice of death

Prior 2018 required
NIRC Graduated tax tables 6 months
 January1,2018 and onwards not required
TRAIN LAW 6% 1 year

Filed under oath:

1. Transfer subject to tax; and
2. it includes registrable properties/registered properties
CAR - condition required for the transfer of ownership

Estate tax returns showing gross value exceeding 5M

Statement duly certified to by CPA containing the ff:
1 itemized assets
2 itemized deductions
3 amount of tax due

CIVIL PENALTIES and INTEREST

Additional amount to be paid
failure to pay at statutory due date

Penalties 25% of the tax due No fraudulent intent

Interest 20% of the unpaid tax

Penalties 50% of the tax due fraudulent intent

Interest 20% of the unpaid tax

PLACE OF FILING
RESIDENT -A or C executor or administrator
register the estate NEW TIN
RevDisOff where the decedent was domiciled at the time of his death
pay tax AAB/ RevDisOff/ RevColOff - RDO jurisdiction

RDO 109 Tacurong

NON RESIDENT - A or C
RDO office where the executor is registered

RDO with jurisdiction - legal residence ni executor/adminstrator

time of death

decedent remains to control

attached to land (equip)

tment securities

Absolute Community of Property

Conjugal Partnership of Gains
Separation of Property

(TRAIN LAW)

ACP
Exclusive
Communal
Communal
Communal
Communal
Communal
 TOTAL
5,000,000.00
3,000,000.00
500,000.00
20,000.00
100,000.00
10,000.00
8,630,000.00

ct to estate tax - Part of GE

ct to estate tax - Part of GE

without reciprocity
outside
X
X
X

14,000,000.00

12,000,000.00

e tax accrues
tate return and pay within 1yr

Bldg 1M
Mortgage Payable 200K
Accounts Rec 100K
 Bad Debts 50k

time of death

shall not diminish H and L

shall not diminish Receivables

table on GE
sonal properties
tes receivables

60000/40%

(200,000X3%X4/12) 2000

=500000/(1.1)^1 454,545.45

=3000X50 150,000.00
consanguinity
decedent remains to control
oose who would

extension

30 days
Meritorious
cases
 Meritorious
cases
30 days

time of his death

DEDUCTIONS

NIRC
death TRAIN LAW Sec 22 - 27
prior 2018 2018 onwards
RR 02-2003
EXPENSES XXX

Citizen/ Resident
Funeral XX
Expenses
Judicial XX
losses losses
indebtedness indebtedness
Taxes Taxes
Claims against insolv Claims against insolv

Transfers for public use Transfers for public use

Vanishing Deduction Vanishing Deduction

Special deductions
Standard deduction Standard deduction
Family home Family home
medical expenses XXXX
RA 4917 4917

S of SS ( S of SS (
conjugal properties) conjugal properties)

ORDINARY DEDUCTIONS
ELITe
Funeral Expense - XX deductible TRAIN LAW

Deductible Tax code NIRC (OLD)

paid or unpaid
up to the time of interment
Actual amount 5% of the GE whichever is lower
250,000 300,000 but not more than 200,000
100,000 50,000
With receipts/invoices

JUDICIAL EXPENSES Attorney's Fees

Tax code (OLD)

Incurred from the moment of death

up the date of prescribed filing, and if may extension then up to
extended filing date

JE - prior 2018
6 months after death
30 days 30 days
1/1/2017 1/7/2017 7/31/2017
Death Filing if extended

XX JE Conflicting claims heirs XX

premiums paid by judicial administrator on his bond
expenses for the benefit of beneficiaries

CASUATLY LOSSES NIRC TRAIN

Natural
man-made

Not compensated by insurance

Not claimed as a deduction in an ITR of the estate subject to
 income tax

occurred during the settlement (not beyond the last day prescribed
by law to file and pay the estate tax)
OLD 6 mos + 30 days (mer cases)
TRAIN 1 yr + 30 days (mer cases)

MR A 100,000,000

Property 10,000,000
FMV 500,000 after typhoon

Insurance 0
G/E 10,000,000
Deduction 9,500,000

INDEBTEDNESS OR CLAIMS AGAINST THE ESTATE

Contracts
TORTS Damages/Injuctions
Operation Law

Personal obligation of the deceased existing at the time of his death

obligation was contracted in good faith and for adequate and full consideration
debt or claim which is valid in law and enforceable in court
debt must not have been condoned by the creditor or action to collect
from the decedent must not have been prescribed

SIMPLE LOAN
PROMISSORY NOTE
CONTRACT OF LOAN
Duly Notarized certification from the creditor as to unpaid balance of the debt
CORPORATION Sworn certification signed by the Pres or VP
Partnership Sworn certification signed by the gen partners
Bank or financial inst Sworn certification signed by gen mgr
Individual Sworn certification signed by him

CLAIMS AGAINST INSOLVENT PERSONS

1 incapacity of the debtor to his obligations is proven
2 the full amount owed by the insolvent person must first be included in the
decedent's GE and the amount uncollectible shall be allowed as deduction
3 if the insolvent person could only pay partial amount, the full amount
owed shall included in the GE and the amount uncollectible shall be allowed as
deduction
 Receivable from A 10,000,000 GE 10M
A insolvent
Recoverable amount 0 Deduction 10M

Receivable from A 10,000,000 GE 10M

A insolvent
Recoverable amount 6,000,000 Deduction 4M

Transfer for public use

beneficiary - PH Government
exclusively public purposes

VEHICLE 1,000,000
GE 1,000,000
TPU (DEDUCTIONS) 1,000,000

PRC Phil Red Cross

Independent, autonomous
Deductions estate
Deductions gifts (donor's tax)

VANISHING DEDUCTIONS X
Deduction for property previously taxed A
Donor's tax Heir B
Estate Tax
B GE
Requisites Land was previously subjected to
1. Death current decedent Land is again subjected to estate
within 5 years from the date
of death of the prior decedent or B can claim vanishing deduction
date of gift XXXXX

2. Identity of property C
identifiable as the one received D
from the prior decedent or from
the donor

3. Location in the Philippines

4. Inclusion of the property

5. Previous taxation of the property

Donor's tax
 estate tax

of the previous decedent or donor

has been determined and paid

6. No previous vanishing deduction on the property

(once lang maclaim as vanishing deduction)
Current
Cannot be claimed as deduction by the prior decedent

VANISHING DEDUCTION RATES

PERIOD FROM RECEIPT TO DECEDENT'S DEATH Rate
Within 1 year 100%
Beyond 1 yr to 2 yrs 80%
Beyond 2yrs to 3yrs 60%
3yrs to 4yrs 40%
4yrs to 5yrs 20%
Beyond 5yrs 0%

PROFORMA COMPUTATION OF VANISHING DEDUCTION 2016 2019

Death Death
Value to take XX A B
(lower amount between the value of the 1M 2M
property in GE of the prior decedent or value of
gift and the value of the same property in the
GE of the present decedent.)

Less: Mortgage Paid

Paid by the present decedent (xx)
assumed when the property was
inherited or received as donation
INITIAL BASIS XX

LESS PROPORTIONAL DEDUCTION

Initial basis ELIT + TPU
x
GE (ordinary exc VD) (XX)

Final Basis xx
Rate X%
Vanishing deduction XX

P received a car as gift from J in December 2012.

CAR December 2012 = 1M December ,2012
P paid 200,000 mortgage on the car. January 1, 2015
P paid additional mortgage of 100,000 in 2013 and 2014.

P died January 1, 2015

GE 5,000,000
Including car from J 700,000

Deductions claimed by his beneficiaries

Funeral Exp 250,000 200,000
Loss 100,000 100,000
Unpaid Mortgage exc Car 200,000 200,000
Unpaid taxes before death 100,000 100,000
Unpaid taxes after death 25,000 X
Unpaid medical exp 300,000 X SPEC
TPU 500,000 500,000
1,100,000 ELIT + TPU
Steps
1. determine the law applicable
NIRC RR 02-2003

2. Determine the initial basis Donation Death - P

Value to take 700,000 1M 700,000
Less. Mortgage Paid -300,000
Initial Basis 400,000

3. ELIT plus TPU, FINAL Initial Basis 400,000

Initial Basis 400,000 PROPORTIONATE DEDUCTION 88000
x 1,100,000
GE 5,000,000 Final Basis 312,000
0.08 X 1,100,000 88,000.00 Rate 60%
VD 187,200.00

P received a car as gift from J in December 2012.

CAR December 2012 = 1M
P assume 200,000 mortgage on the car.

P paid additional mortgage of 100,000 in 2013 and 2014.

P died January 1, 2015

GE 5,000,000
Including car from J 700,000

Deductions claimed by his beneficiaries

Funeral Exp 250,000 200,000
Loss 100,000 100,000
Unpaid Mortgage inc Car 200,000 200,000
Unpaid taxes before death 100,000 100,000
Unpaid taxes after death 25,000 X 0
Unpaid medical exp 300,000 X 0
TPU 500,000 500,000
1,100,000
Steps
1. determine the law applicable
NIRC RR 02-2003

2. Determine the initial basis

Value to take 700,000 Paid (2013 and 2014)+F194
Less. Mortgage paid -100,000 100,000
Initial Basis 600,000

3. ELIT plus TPU, FINAL FINAL BASIS

600,000
x 1,100,000
5,000,000 Prop Ded 132000

600,000
-132000
Final basis 468,000
Rate 60%
VD 280,800
P received a car as gift from J in December 2015.
CAR December 2015 = 1M
P assume 200,000 mortgage on the car.
P died January 1, 2018
GE 5,000,000
Including car from J 700,000
LIT + TPU
Deductions claimed by his beneficiaries
Funeral Exp 250,000 0
Loss 100,000 100,000
Unpaid Mortgage inc Car 200,000 200,000
Unpaid taxes before death 100,000 100,000
Unpaid taxes after death 25,000 X 0
Unpaid medical exp 300,000 X 0
TPU 500,000 500,000
900,000
Steps
1. determine the law applicable
TRAIN LAW LIT + TPU
Proportional deduction
2. Determine the initial basis
Value to take 700,000 Paid (2016 and 2017)
 Less. Mortgage paid -100,000 100,000
Initial Basis 600,000

3. LIT plus TPU, FINAL FINAL BASIS

600,000
x 900,000
5,000,000 Prop Ded 108,000.00

600,000
- 108,000.00
Final basis 492,000
RATE 60%
VD 295200

SPECIAL DEDUCTIONS

1. STANDARD DEDUCTION
RR 02 2003 TRAIN LAW
1M 5M

2. FAMILY HOME
H&L HW, or a UM head of the family HW
Balay including the land Brgy Cert of Residency Regime
RR 02 2003 TRAIN LAW Husband as the decedent
1M 10M Travel Exclusive
or or Work abroad 10M
FMV FMV Studies
whichever is lower Permanency

Requisites UM HOF
Married or if the decedent is single. (head of the family)
Beneficiaries must be dwelling in the family home UM or legally (age) Man or wom
Owned by the decedent (excl or communal/conjug)
Actual residential home of the family at the time of his death
certified the Brgy Captain
Part of the GE

FH valued at 15M 2018 TRAIN LAW

Case a. Decedent was single.

0
Case b Decedent single and head of the family
10M
Case c FH valued at 5M. Decedent was head of the family
5M
Cased D FH valued at 15M (EXCLUSIVE). Married
10M
Cased E FH valued at 15M (COMMUNAL/CONJUGAL). Married
7.5M
Cased F FH valued at 21M (COMMUNAL/CONJUGAL). Married
10M

Cased G FH includes P10,000,000 Land(COMMUNAL/CONJUGAL), 5,000,000 house (Exclusive). Married

DECEDENT
Land 10M Com 5M
House 5M eX 5M
FH Deduction 10M

Cased G FH includes P10,000,000 Land(ex), 5,000,000 house (conjugal). Married

DECEDENT
Land 10M ex 10M
House 5M conjugal 2.5M
12.5M

10M Deduction

C. MEDICAL EXPENSES
RR 02 - 2003 (OLD)
Actual amount Incurred (paid or unpaid)
within 1 year before the death of the decedent
subtantiated by the receipts/invoices
DR
Must exceed P500,000

TRAIN LAW Does not allow anymore ME as part of special deductions

D. Amounts received by the HEIRS (RA 4917)

Old and Train law

Rec by the heirs from the decedent's employer

bc of the death of the decedent employee

allowed as deduction provided that the amount is included in GE

Share of SS
1/2 on conjugal estate/Communal
deducted in order to tax only the decedent's interest
NRA
Prior 2018 2018 onwards

ELIT (Proportion) LIT (PROPORTION)

GE PH GE PH
Elit LIT
GE World GE World

TPU TPU SD = 500,000

Vanishing deduction Vanishing deduction
Net Share of SS Net Share of SS

NOT ALLOWED SPECIAL DEDUCTIONS

 2011
Died 2016
Inherited 1M 2019

1M
nd was previously subjected to estate tax (2016)
nd is again subjected to estate tax (2019)

can claim vanishing deduction

XXXX XXX

died 2026 Feb-26 11 2026

Land 2M died 2028 Jan-28 12 2027
1 2028
D can claim vanishing deduction 24 2

2.17 yrs 2 - 3 yrs 60%

2 years 1 - 2yrs 80%
 1M 2M
Value of Prop GE - PD Reportable
Value of prop - Donation CURRENT

1 2012
12 2013
 12 2014
0 2015
25
2.083333

LOWER
 sband as the decedent
Communal/Conjugal
10M
5M

M or legally (age) Man or woman w/ 1 or both parents

1 or more brother/sis unmarried minor
1 or more legitmate children mental or physical defect
natural
adopted
living with and dependent upon him
for CHIEF SUPPORT
ve). Married
REGIME ABSOLUTE COMMUNITY PROPERTY
default in the absence of pre-nuptial agreement
or if the regime agreed upon is not valid for
marriage starting August 3, 1988 and thereafter
COMMUNAL
1. H and W are the co-owners of all the properties that:
they bring into the marriage.
those acquired by either or both of them
during the course of their marriage
(some exceptions) Inheritance from Decedent - Parent
2. The administration and enjoyment of the community
property shall belong to both the spouses
jointly.
3. Neither spouse may donate any community property
without the consent of the other.

Exclusive Properties ACP of each spouse

1. Property acquired during marriage through gratuitous title by either
spouse, and as well as the fruits (income)
unless it expressly provided by the donor/testator/grantor that they
shall form part of the community property.

2. Property for personal and exclusive use of either spouse:

however, jewelry - community property

3. Property acquired before marriage by either spouse who has legitimate

descendants by former marriage, and the fruits as well as the income

A - Husband
was married before to B
B died leaving A and C, their child as her survivors
A - Husband - became entitled to received inheritance
from the properties of B

A married D, new wife

4. acquired by purchase with the use of exclusive property

Conjugal Partnership of Gains

1. H and W (Retains ownership) - separate properties Exclusive
brought into marriage
exclusive inherited properties
2. proceeds, products, fruits and income obtained Conjugal
H W shall be divided equally between them
unless, otherwise stated in the marriage settlement
 3. upon dissolution of the marriage (net gains or benefits)
H W shall be divided equally between them
unless, otherwise stated in the marriage settlement
4. administration and enjoyment
CONJUGAL PARTNERSHIP PROPERTIES SHALL BELONG
to BOTH SPOUSES JOINTLY
5. Neither spouse may donate any conjugal partnership property
without the consent of the other.

Exclusive properties under CPG

1. that which is brought to marriage as his/her own
2. during marriage, acquired through gratuitous transfer
donation inheritance
3. acquired by right of redemption or by exchange with other
property belonging to only one of the spouse.
4. properties purchased with the exclusive money of the wife or husband

Regime of Complete separation of property

A, made the following transfers inter-vivos:
To B To C To D To E
Cost 100,000.00 100,000.00 100,000.00 100,000.00
FMV, Time of Transfer 140,000.00 100,000.00 100,000.00 80,000.00
Consideration Rec 100,000.00 140,000.00 80,000.00 10,000.00
FMV, Time of Death of A 120,000.00 200,000.00 70,000.00 90,000.00

The amount to be included in the gross estate of A is

To B To C To D To E
Insuf Suf Insuf Suf Insuf Insuf
120K-100K 70K-80K 90K-10K
20,000.00 0 80,000.00
Answer; 100,000

A decedent left the following properties C or RA NRA w/o

Land in Italy, (1M mortgage) 2,000,000.00 2,000,000.00 0
Land in Laguna, Phil 500,000.00
Franchise in US 100,000.00 100,000.00 0
Receivable from debtor in PH 70,000.00 70,000.00 70,000.00
Receivable from debtor in US 100,000.00 100,000.00 0
Bank deposits in USA 80,000.00 80,000.00 0
Shares of stocks PLDT, PH 75,000.00 75,000.00 75,000.00
Shares of stock of ABC, foreign corp, 75% 125,000.00 125,000.00 0
of business in the PH
Other Personal Properties 300,000.00 300,000.00 300,000.00
Zonal Value of land in Laguna 750,000.00 750,000.00 750,000.00

If the decedent is non-resident citizen, his gross estate is 3,600,000.00 1,195,000.00

ANSWER:
If the decedent is non-resident alien, his gross estate is
ANSWER:
If in the preceding question there is reciprocity, the gross estate is
ANSWER:

CIR, in meritorious cases may grant reasonable extension to file the return, not exceeding

30 Days

PAYMENT
Judicial 5yrs
Extrajudicial settlement 2yrs
NRA w/
0

0
-
0
0
-
0

300,000.00
750,000.00

1,050,000.00
Mr A, a resident of SOUTH KOREA and Korean Citizen Died on
July 4, 2018 leaving the properties: NRA
TRAIN LAW 6%
Condo in Makati 4,500,000.00 TRAIN LAW
FH, Seoul 7,000,000.00
Rest House, Australia 2,750,000.00 NET TAXABLE ESTATE
Jewelries received as gift dated - PH 500,000.00
August 25,2016 GE
Car in Makati 1,000,000.00 Condo
The heirs of Mr A claimed the ff deductions Jewelries
Funeral Exp 300,000.00 Car
Claims against insolvent persons - PH 500,000.00 Claims again
Judicial expenses 100,000.00 GE
Medical Exp 200,000.00
Family Home 1,500,000.00 Ordinary Deductions
Standard Ded 1,200,000.00 LIT

Claims

GE 6,500,000.00 Total

Proportionate ELIT 200,000.00 Proportionate LIT

VD 387,692.31
Special 500,000.00 Vanishing Deduction
Total Deductions 1,087,692.31

Net Taxable Estate 5,412,307.69

Rate 0.06 TRAIN LAW Proportional deduction

IB 500,000
Estate Tax 324,738 GE Phil 6,500,000
 Compute the following
1 Compute for GE
2 Net Taxable Estate
TRAIN LAW GE 3 Estate Tax (TRAIN LAW) 6% of NTE
Net Taxable
NET TAXABLE ESTATE Estate Tax
Solutions must uploaded in GC

4,500,000.00
500,000.00 VD
1,000,000.00
500,000.00
6,500,000.00

Ordinary Deductions SD
500,000
GE Phil 6,500,000.00
500,000.00 GE World 16,250,000.00

500,000.00 0.40

Proportionate LIT 200,000.00

Vanishing Deduction
Value to Take 500,000
Mortgage Payme 0
Initial Basis 500,000

Proportional deduction
200,000.00
15,384.62

Final Basis 484,615.38

Rate 80% Aug-16 Donation
VD 387,692.31 Jul-18 Died
Beyond 1 yr up to 2yrs
the following

x (TRAIN LAW) 6% of NTE

must uploaded in GC
Mr A, a resident of PH and Korean Citizen Died on
July 4, 2017 leaving the properties: RA
TRAIN LAW 6% RR 02-2003
Condo in Makati 4,500,000.00
FH - Ph 7,000,000.00
Rest House, Australia 2,750,000.00 GE(ALL)
Jewelries received as gift dated - PH 500,000.00
August 25,2016
Car in Makati 1,000,000.00 Deductions
The heirs of Mr A claimed the ff deductions ELIT + TPU + VD
Funeral Exp 300,000.00 200,000
Claims against insolvent persons - PH 500,000.00
Judicial expenses 100,000.00 100,000
Medical Exp 200,000.00
Family Home 1,500,000.00
Standard Ded 1,200,000.00

GE 16,250,000.00
Deductions Proportionate deduction
ELIT 800,000.00 IB
VD 475,384.62 1,275,384.62 GE

STD 1,000,000.00 Threshold Actual

FH 1,000,000.00 1M 7M
Medical 200,000.00 500,000 200,000
Special 2,200,000.00

SS 0

NTE 12,774,615.38
Tax base 1,215,000.00
Estate Tax table Excess 554,923.08
Estate Tax 1,769,923.08
RR 02-2003

16,250,000.00

Deductions
ELIT + TPU + VD
Funeral Exp 200,000.00
Claims against ins 500,000.00
Judicial expenses 100,000.00
ELITE 800,000.00
VD
Value to take 500,000
Mort pay 0
Initial basis 500,000

Proportionate deduction
500,000.00
800,000.00 24,615.38
16,250,000.00

Final Basis 475,384.62

Rate 100%
VD 475,384.62
Mr A, a resident of PH and Korean Citizen Died on
July 4, 2018 leaving the properties: RA
TRAIN LAW 6% Train Law
Condo in Makati 4,500,000.00
FH - Ph 7,000,000.00
Rest House, Australia 2,750,000.00 GE(ALL)
Jewelries received as gift dated - PH 500,000.00
August 25,2016
Car in Makati 1,000,000.00 Deductions
The heirs of Mr A claimed the ff deductions LIT + TPU + VD
Funeral Exp 300,000.00
Claims against insolvent persons - PH 500,000.00
Judicial expenses 100,000.00
Medical Exp 200,000.00
Family Home 1,500,000.00
Standard Ded 1,200,000.00

GE 16,250,000.00
Deductions Proportionate deduction
LIT 500,000.00 IB
VD 387,692.31 887,692.31 GE

STD 5,000,000.00
FH 7,000,000.00 10M 7M
4917
Special 12,000,000.00

SS 0

NTE 3,362,307.69
Tax Rate 6% 201,738.46
 16,250,000.00

Deductions
LIT + TPU + VD

LIT 500,000.00

VD
Value to take 500,000
Mort pay 0
Initial basis 500,000

Proportionate deduction
500,000.00
500,000.00 15,384.62
16,250,000.00

Final Basis 484,615.38

Rate 80%
VD 387,692.31
Mr A, a resident of SOUTH KOREA and Korean Citizen Died on NRA
July 4, 2017 leaving the properties: RR 02 -2003

Condo in Makati 4,500,000.00

FH, Seoul 7,000,000.00
Rest House, Australia 2,750,000.00 9,750,000.00
Jewelries received as gift dated - PH 500,000.00
August 25,2016
Car in Makati 1,000,000.00
The heirs of Mr A claimed the ff deductions
Funeral Exp 300,000.00
Claims against insolvent persons - PH 500,000.00
Judicial expenses 100,000.00
Medical Exp 200,000.00
Family Home 1,500,000.00
Standard Ded 1,200,000.00

GE 6,500,000.00

Proportionate ELIT 320,000.00

VD 475,384.62
Special 0
Total Deductions 795,384.62

Net Taxable Estate 5,704,615.38

Base 465,000
excess 105,692.31 IB
Estate Tax 570,692 GE Phil
NRA

OLD (RR 02 -2003)

GE Phil
Condo 4,500,000.00
Jewelries 500,000.00 VD
Car 1,000,000.00
Claims against insolvent persons 500,000.00 GE Outside Total
GE 6,500,000.00 9,750,000.00 16,250,000.00

Ordinary Deductions
Proportionate ELIT
Funeral 200,000.00 GE Phil 6,500,000.00
Claims 500,000.00 GE World 16,250,000.00
Judicial 100,000.00
Total 800,000.00 0.40

Proportionate ELIT 320,000.00

Vanishing Deduction
Value to Take 500,000
Mortgage Payment 0
Initial Basis 500,000

Proportional deduction
500,000
320,000.00
6,500,000 24,615.38

Final Basis 475,384.62

Rate 100%
VD 475,384.62
 Old Estate Tax Law

Exclusive (DECEDENT)
Gross Estate
1 Family Home
2 Jewelry
3 Vacation House /Transfer in Contemplation of Death
4 Investment in Bonds
5 Marketable Securities
6 Farm
7 Income from Farm
10 Property brought to marriage - W
11 Death Benefits RA 4917

Claims against insolvent person

Total Gross Estate

Less: Ordinary Deductions (ELITe)

Funeral Expense, LIMIT
Judicial Expense
Claims against common property
Claims against insolvent person
Donation to National Gov
Unpaid mortage

Vanishing Deduction
Total Ordinary Deductions
Net Estate After Ordinary Deductions

Less: Special Deductions

Standard Deduction
Family Home, limit
Medical Expenses, Limit
RA 4917
Total Special Deductions

Net Estate After Special Deductions

Less: Share of Surviving Spouse
Net Taxable Estate
 Ord and Spec

Exclusive (DECEDENT)Communal (H & W) Total

5,000,000.00 5,000,000.00
500,000.00 500,000.00 Vanishing deduction
in Contemplation of Death 5,000,000.00 5,000,000.00
600,000.00 600,000.00
400,000.00 400,000.00 Value to take
2,800,000.00 2,800,000.00 Mortgage Paid
800,000.00 800,000.00 Initial Basis
6,000,000.00 6,000,000.00
1,100,000.00 1,100,000.00 Proportionate Ded
-
800,000.00 800,000.00 IB 2,000,000.00
X
GE 23,000,000.00
4,700,000.00 18,300,000.00 23,000,000.00

- Final Basis
200,000.00 200,000.00
900,000.00 900,000.00 Rate
8,900,000.00 8,900,000.00
800,000.00 800,000.00 Vanishing Deduction
1,000,000.00 1,000,000.00
200,000.00 200,000.00
-
573,913.04 573,913.04
1,773,913.04 10,800,000.00 12,573,913.04
2,926,086.96 7,500,000.00 10,426,086.96

1,000,000.00
1,000,000.00
500,000.00
1,100,000.00
3,600,000.00

6,826,086.96
3,750,000.00
3,076,086.96
Base 135,000.00
Excess 118,369.57

Estate Tax of 253,369.57

OLD ESTATE TAX LAW
Surcharge 25%
Late filing 1,000.00
Interest of 20% on the tax due

Estate tax amnesty

lowers tax liability
 2,500,000.00 2,800,000.00 AT the time of death current decedent
- 500,000.00 2,500,000.00 at the time of inheritance
2,000,000.00
700,000 Mortage assumed at the time of inheritance
200,000 AT the time of death current decedent
ELIT + TPU
500,000 Paid
12,000,000.00 - 1,043,478.26

956,521.74

60% beyond 2yrs and up to 3yrs

573,913.04
e of inheritance
 TRAIN LAW

Gross Estate
1 Family Home
2 Jewelry
3 Vacation House

6 Farm
7 Income from Farm
10
11 Death Benefits RA 4917

** Claims against insolvent person

Total Gross Estate

Less: Ordinary Deductions

XXX EXPENSES

Claims against common property

** Claims against insolvent person
Donation to National Gov
Unpaid mortage

Vanishing Deduction
Total Ordinary Deductions
Net Estate After Ordinary Deductions

Less: Special Deductions

Standard Deduction
Family Home

RA 4917
Total Special Deductions

Net Estate After Special Deductions

Less: Share of Surviving Spouse
Net Taxable Estate

Estate Tax
 Exclusive Communal Total

5,000,000.00 5,000,000.00
500,000.00 500,000.00 Vanishing deduction
5,000,000.00 5,000,000.00
Value to take
Farm
2,800,000.00 2,800,000.00 Mortgage Paid
800,000.00 800,000.00 Initial Basis
6,000,000.00 6,000,000.00
1,100,000.00 1,100,000.00 Proportionate Ded
-
800,000.00 800,000.00 2,000,000.00
X
22,000,000.00
4,700,000.00 17,300,000.00 22,000,000.00

LIT + Tpu + VD - Final Basis

Rate
8,900,000.00 8,900,000.00
800,000.00 800,000.00 Vanishing Deduction
1,000,000.00 1,000,000.00
200,000.00 200,000.00
-
605,454.55 605,454.55
1,805,454.55 9,700,000.00 11,505,454.55
2,894,545.45 7,600,000.00 10,494,545.45

5,000,000.00 Share Decedent, FH

2,500,000.00 LIMIT

1,100,000.00
8,600,000.00

1,894,545.45
3,800,000.00
-
 2,500,000.00
- 500,000.00
2,000,000.00

LIT + TPU
10,900,000.00 - 990,909.09

1,009,090.91

60%

605,454.55

2,500,000.00
10,000,000.00