TAX II-PINGU NOTES-ATTY.

DANTE MARANAN
TAXATION II decedent who at the time of his death was not a citizen
of the Philippines, only that part of the entire gross
TITLE III estate which is situated in the Philippines shall be
included in his taxable estate.
ESTATE AND DONOR’S TAXES
SEC. 4. COMPOSITION OF THE GROSS
CHAPTER I ESTATE. – The gross estate of a decedent shall be
ESTATE TAX comprised of the following properties and interest
therein at the time of his/her death, including
Definition of Estate Tax revocable transfers and transfers for insufficient
consideration, etc.:
Estate tax is the tax upon the transmission or transfer
or devolution of property of a decedent, made effective 1. Residents and citizens – all properties, real or
by his death. It is in reality an excise or privilege tax personal, tangible or intangible, wherever
imposed upon the right to succeed, to receive or to take situated.
property by or under a will or the intestacy law, or
deed, grant or gift to become operative at or after death 2. Non-resident aliens – only properties situated
(Lorenzo v. Posadas, GR 43082, June 18, 1937). – in the Philippines BUT with respect to
excise tax – not a personal nor personal property intangible personal property, its inclusion in
tax the gross estate is subject to the rule of
reciprocity provided for under Section 104
SEC. 84. Rate of Estate Tax. - There shall be levied, of the NIRC.
assessed, collected and paid upon the transfer of the
net estate as determined in accordance with Sections Provided, that amounts withdrawn from the deposit
85 and 86 of every decedent, whether resident or accounts of a decedent subjected to the 6% final
nonresident of the Philippines, a tax at the rate of six withholding tax imposed under Section 97 of the
percent (6%) based on the value of such net estate. NIRC, shall be excluded from the gross estate for
purposes of computing the estate tax.
RR 12-2018
SEC. 2. RATE OF ESTATE TAX. – The net estate of every
decedent, whether resident or non-resident of the Philippines, as
determined in accordance with the NIRC, shall be subject to an In Case of a Non-Resident Citizen
estate tax at the rate of six percent (6%).
Section 104 specifies that where the decedent or donor
SEC. 3. THE LAW THAT GOVERNS THE was a nonresident alien at the time of his death or
IMPOSITION OF ESTATE TAX. – donation, his real and personal property so transferred
It is a well-settled rule that estate taxation is which are situated outside the Philippines shall not be
governed by the statute in force at the time of death included as part of his gross estate or gross gift. But
of the decedent. The estate tax accrues as of the
Section 104 also provided an:
death of the decedent and the accrual of the tax is
distinct from the obligation to pay the same. Enumeration of Considered Situated in the
Upon the death of the decedent, succession takes Philippines
place and the right of the State to tax the
privilege to transmit the estate vests instantly 1. Franchise exercised in the Philippines;
upon death.
2. Shares, obligations or bonds, issued by any
At the time of death, nag accrue na, within 1 year Philippine Corporation
to file tax return from the date of death.
3. Shares, obligations or bonds by any foreign
Accordingly, the tax rates and procedures corporation – 85% of its business located in PH.
prescribed under these Regulations shall govern 4. Shares, obligations or bonds issued by any foreign
the estate of decedent who died on or after the corporation if such acquired a Business situs in PH.
effectivity date of the TRAIN Law.
5. Shares or rights in any Partnership, business, or
industry established in the Philippines.
SEC. 85. Gross Estate. - the value of the gross estate
of the decedent shall be determined by including the The following (1-5) are considered as situated in the
value at the time of his death of all property, real or Philippines, and thus even if held by a nonresident
personal, tangible or intangible, wherever situated: decedent or donor, it shall be considered as part of the
Provided, however, that in the case of a nonresident gross estate or gross gift.
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
b. intended to take effect in possession or enjoyment at
or after death,
Reciprocity Rule for Intangible Personal Property
2. or of which he has at any time made a transfer, by
(Also applicable to Donor’s Tax) No tax shall be
trust or otherwise, under which he has retained for
collected in respect of intangible personal property:
his life or for any period which does not in fact end
(a) If the decedent at the time of his death or the donor before his death:
at the time of the donation:
a. the possession or enjoyment of, or the right to the
1. Was a citizen and resident of a foreign country income from the property, or

2. And that country, at time of death or donation, did (b) the right, either alone or in conjunction with any
not impose any transfer tax of any character person, to designate the person who shall possess or
enjoy the property or the income therefrom;
3. With respect to the intangible personal property of
citizens of the Philippines not residing in that foreign except in case of a bona fide sale for an adequate and
country. full consideration in money or money's worth.

TRANSFERS CONTEMPLATED IN
SECTION 85 (B)
(b) If the laws of the foreign country
1. Transfers in contemplation of death
➢ Of which the decedent or donor was a citizen and
resident at the time of his death or donation 2. Transfers taking effect at death
➢ Allows a similar exemption from transfer or death 3. Transfers with retained interest
taxes
Factors to Consider
➢ Of every character or description
In determining whether the transfer is made in
➢ In respect of intangible property owned by citizens contemplation of death, the case of US v. Wells
of the Philippines not residing in the foreign country. emphasis on the state of mind that the transfer is
made in contemplation of death and not necessary
RECIPROCITY CLAUSE – if at the time at the death
of the decedent, the resident is a citizen of Malaysia that of imminent death. Some factors are also to
and he’s an NRA in the PH. If the laws of Malaysia be considered such as:
also allow the privilege to PH citizens, then we grant 1. Age
the same.
2. Health
3. Concurrence in making a will
PERTINENT ITEMS OF THE GROSS
ESTATE Transfer Taking Effect at Death

SECTION 85 (A) Decedent's Interest. - To the extent These transfers have same effect as testamentary
of the interest therein of the decedent at the time of his dispositions because it will take effect at death, just
death; like if there is a will.

➢ “Interest” refers to those which the decedent has Transfers with Retained Interest
either legal title or even beneficial interest or title When decedent has made a transfer, by trust or
➢ Ex. Owner uses dummies in a corporation. otherwise, under which he has retained for
1. his life or

SECTION 85 (B) Transfer in Contemplation of 2. for any period which does not in fact end
Death. - To the extent of any interest therein before his death
1. of which the decedent has at any time made a a. The possession or enjoyment of, or the right to the income from
the property, or
transfer, by trust or otherwise,
a. in contemplation of or
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b. The right (either alone or in conjunction with any person) to representing the interests which would have been
designate the person who shall possess or enjoy the property or the
income therefore
excluded from the power if the decedent had lived, and
for such purpose if the notice has not been given or the
power has not been exercised on or before the date of
his death, such notice shall be considered to have been
Tests to Determine
If the decedent has retained for his life or for any period which given, or the power exercised, on the date of death.
does not end before his death
1. The right to possession or enjoyment Actual Exercise of Right, Not Necessary
2. The right to income; and
3. The right to designate who shall receive the property GR: Actual exercise of right (like invade corpus) is
not required to consider such as a revocable transfer. It
is enough that one is given the right to do so. The law
The situation will still be the same
does not require that the decedent even benefit from
➢ If the retention was for 10 years but the decedent died before the
expiration because the right to control the property is still his. the exercise of power.

Exception XPN: In case of a bona fide sale for an adequate and

The rules above would not apply if it is shown that the full consideration in money and money’s worth.
transfer was a bona fide sale for an adequate and full
consideration in money or money’s worth. (D) Property Passing Under General Power of
Appointment. - To the extent of any property passing
under a general power of appointment exercised by the
(C) Revocable Transfer. – decedent: (1) by will, or (2) by deed executed in
contemplation of, or intended to take effect in
Revocable Transfers possession or enjoyment at, or after his death, or (3) by
deed under which he has retained for his life or any
Revocable transfers are part of the gross estate of the
period not ascertainable without reference to his death
decedent because the transferor can revoke the transfer
or for any period which does not in fact end before his
at any time and such person wield tremendous
death (a) the possession or enjoyment of, or the right to
amounts of power such that he can revoke the transfer
the income from, the property, or (b) the right, either
as if none was actually made. In revocable transfers
alone or in conjunction with any person, to designate
the decedent has the right to alter, amend, revoke or
the persons who shall possess or enjoy the property or
terminate such transfer. Thus subjecting to change the
the income therefrom; except in case of a bona fide
enjoyment of the property that was transferred.
sale for an adequate and full consideration in money or
(1) To the extent of any interest therein, of which the money's worth.
decedent has at any time made a transfer (except in
(E) Proceeds of Life Insurance. - To the extent of the
case of a bona fide sale for an adequate and full
amount receivable by the estate of the deceased, his
consideration in money or money's worth) by trust or
executor, or administrator, as insurance under policies
otherwise, where the enjoyment thereof was subject at
taken out by the decedent upon his own life,
the date of his death to any change through the
irrespective of whether or not the insured retained the
exercise of a power (in whatever capacity exercisable)
power of revocation, or to the extent of the amount
by the decedent alone or by the decedent in
receivable by any beneficiary designated in the policy
conjunction with any other person (without regard to
of insurance, except when it is expressly stipulated
when or from what source the decedent acquired such
that the designation of the beneficiary is
power), to alter, amend, revoke, or terminate, or where
irrevocable.
any such power is relinquished in contemplation of the
decedent's death.
(2) For the purpose of this Subsection, the power to
alter, amend or revoke shall be considered to exist on
the date of the decedent's death even though the Proceeds of Life Insurance
exercise of the power is subject to a precedent giving The following proceeds of life insurance are
of notice or even though the alteration, amendment or considered as part of the gross estate of the decedent
revocation takes effect only on the expiration of a
stated period after the exercise of the power, whether 1. The amount receivable by the estate of the decedent
or not on or before the date of the decedent's death or executor or administrator upon the life of the
notice has been given or the power has been exercised. decedent whether irrevocable or revocable
In such cases, proper adjustment shall be made
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2. The amount receivable by any beneficiary provided interest therein, undiminished by such mortgage or
that the designation is revocable. a. If the designation indebtedness, is included in the value of the gross
of the beneficiary is one that is irrevocable, the estate, but not including any income tax upon income
proceeds shall not form part of the gross estate of the received after the death of the decedent, or property
decedent. taxes not accrued before his death, or any estate
tax. The deduction herein allowed in the case of claims
against the estate, unpaid mortgages or any
(F) Prior Interests. - Except as otherwise specifically indebtedness shall, when founded upon a promise or
provided therein, Subsections (B), (C) and (E) of this agreement, be limited to the extent that they were
Section shall apply to the transfers, trusts, estates, contracted bona fide and for an adequate and full
interests, rights, powers and relinquishment of powers, consideration in money or money’s worth. There shall
as severally enumerated and described therein, whether also de deducted losses incurred during the settlement
made, created, arising, existing, exercised or of the estate arising from fires, storms, shipwreck, or
relinquished before or after the effectivity of this Code. other casualties, or from robbery, theft, or
embezzlement, when such losses are not compensated
(G) Transfers for Insufficient Consideration. - If any for by insurance or otherwise, and if at the time of the
one of the transfers, trusts, interests, rights or powers filing of the return such losses have not been claimed
enumerated and described in Subsections (B), (C) and as deduction for the income tax purposes in an income
(D) of this Section is made, created, exercised or tax return, and provided that such losses were incurred
relinquished for a consideration in money or money's not later than the last day for the payment of the estate
worth, but is not a bona fide sale for an adequate and tax as prescribed in Subsection (A) of Section 91.
full consideration in money or money's worth, there
shall be included in the gross estate only the excess of (5) Property Previously Taxed. - An amount equal to
the fair market value, at the time of death, of the the value specified below of any property forming part
property otherwise to be included on account of such of the gross estate situated in the Philippines of any
transaction, over the value of the consideration person who died within five (5) years prior to the death
received therefor by the decedent. of the decedent, or transferred to the decedent by gift
within five (5) years prior to his death, where such
(H) Capital of the Surviving Spouse. - The capital of property can be identified as having been received by
the surviving spouse of a decedent shall not, for the the decedent from the donor by gift, or from such prior
purpose of this Chapter, be deemed a part of his or her decedent by gift, bequest, devise or inheritance, or
gross estate. which can be identified as having been acquired in
SEC. 86. Computation of Net Estate. [70] - For the exchange for property so received:
purpose of the tax imposed in this Chapter, the value One hundred percent (100%) of the value, if the prior
of the net estate shall be determined: decedent died within one (1) year prior to the death of
(A) Deductions Allowed to the Estate of Citizen or a the decedent, or if the property was transferred to him
Resident. [71]- In the case of a citizen or resident of the by gift, within the same period prior to his death;
Philippines, by deducting from the value of the gross Eighty percent (80%) of the value, if the prior
estate - decedent died more than one (1) year but not more
(1) Standard Deduction. – An amount equivalent to than two (2) years prior to the death of the decedent, or
Five million pesos (P5,000,000.00).[72] if the property was transferred to him by gift within the
same period prior to his death;
(2) For claims against the estate: Provided, That at the
time of indebtedness was incurred that debt instrument Sixty percent (60%) of the value, if the prior decedent
was duly notarized and, if the loan was contracted died more than two (2) years but not more than three
within three (3) years before the death of the decedent, (3) years prior to the death of the decedent, or if the
the administrator or executor shall submit a statement property was transferred to him by gift within the same
showing the disposition of the proceeds of the loan. period prior to his death;

(3) For claims of the deceased against the insolvent Forty percent (40%) of the value, if the prior decedent
persons where the value of decedent’s interest therein died more than three (3) years but not more than four
is included in the value of the gross estate. (4) years prior to the death of the decedent, or if the
property was transferred to him by gift within the same
(4) For unpaid mortgages upon, or any indebtedness in period prior to his death;
respect to, property where the value of decedent’s
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
Twenty percent (20%) of the value, if the prior his gross estate which at the time of his death is
decedent died more than four (4) years but not more situated in the Philippines:
than five (5) years prior to the death of the decedent, or
(1) Standard Deduction. – An amount equivalent to
if the property was transferred to him by gift within the
Five hundred thousand pesos (P500,000.00); [73]
same period prior to his death;
(2) That proportion of the deductions specified in
These deductions shall be allowed only where a
paragraphs (2), (3), (4) of Subsection (A) of this
donor's tax or estate tax imposed under this Title was
Section which the value of such part bears to the value
finally determined and paid by or on behalf of such
of his entire gross estate wherever situated; [74]
donor, or the estate of such prior decedent, as the case
may be, and only in the amount finally determined as (3) Property Previously Taxed.- An amount equal to
the value of such property in determining the value of the value specified below of any property forming part
the gift, or the gross estate of such prior decedent, and of the gross estate situated in the Philippines of any
only to the extent that the value of such property is person who died within five (5) years prior to the death
included in the decedent's gross estate, and only to the of the decedent, or transferred to the decedent by gift
extent that the value of such property is included in the within five (5) years prior to his death, where such
decedent’s gross estate, and only if in determining the property can be identified as having been received by
value of the estate of the prior decedent, no deduction the decedent from the donor by gift, or from such prior
was allowable under paragraph (5) in respect of the decedent by gift, bequest, devise or inheritance, or
property or properties given in exchange therefor. which can be identified as having been acquired in
Where a deduction was allowed of any mortgage or exchange for property so received:
other lien in determining the donor's tax, or the estate
tax of the prior decedent, which was paid in whole or One hundred percent (100%) of the value if the prior
in part prior to the decedent's death, then the deduction decedent died within one (1) year prior to the death of
allowable under said Subsection shall be reduced by the decedent, or if the property was transferred to him
the amount so paid. Such deduction allowable shall be by gift, within the same period prior to his death;
reduced by an amount which bears the same ratio to Eighty percent (80%) of the value, if the prior
the amounts allowed as deductions under paragraphs decedent died more than one (1) year but not more
(2), (3), (4) and (6) of this Subsection as the amount than two (2) years prior to the death of the decedent, or
otherwise deductible under said paragraph (5) bears to if the property was transferred to him by gift within the
the value of the decedent's estate. Where the property same period prior to his death;
referred to consists of two or more items, the aggregate
value of such items shall be used for the purpose of Sixty percent (60%) of the value, if the prior decedent
computing the deduction. [4] died more than two (2) years but not more than three
(3) years prior to the death of the decedent, or if the
(6) Transfers for Public Use. - The amount of all the property was transferred to him by gift within the same
bequests, legacies, devises or transfers to or for the use period prior to his death;
of the Government of the Republic of the Philippines,
or any political subdivision thereof, for exclusively Forty percent (40%) of the value, if the prior decedent
public purposes. died more than three (3) years but not more than four
(4) years prior to the death of the decedent, or if the
(7) The Family Home. - An amount equivalent to the property was transferred to him by gift within the same
current fair market value of the decedent's family period prior to his death; and
home: Provided, however, That if the said current fair
market value exceeds Ten million pesos (P10, Twenty percent (20%) of the value, if the prior
000,000),[72] the excess shall be subject to estate tax. decedent died more than four (4) years but not more
than five (5) years prior to the death of the decedent, or
(8) Amount Received by Heirs Under Republic Act if the property was transferred to him by gift within the
No. 4917. – Any amount received by the heirs from same period prior to his death.
the decedent’s employee as a consequence of the death
of the decedent-employee in accordance with Republic These deductions shall be allowed only where a
Act No. 4917: Provided, That such amount is included donor's tax, or estate tax imposed under this Title is
in the gross estate of the decedent. finally determined and paid by or on behalf of such
donor, or the estate of such prior decedent, as the case
(B) Deductions Allowed to Nonresident Estates. - In may be, and only in the amount finally determined as
the case of a nonresident not a citizen of the the value of such property in determining the value of
Philippines, by deducting from the value of that part of the gift, or the gross estate of such prior decedent, and
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only to the extent that the value of such property is the Philippines taxable underH this Title bears to his
included in that part of the decedent's gross estate entire net estate.
which at the time of his death is situated in the
SEC. 87. Exemption of Certain Acquisitions and
Philippines; and only if, in determining the value of
Transmissions. –-The following shall not be taxed:
the net estate of the prior decedent, no deduction is
allowable under paragraph (2) of Subsection (B) of (A) The merger of usufruct in the owner of the naked
this Section, in respect of the property or properties title;
given in exchange therefore. Where a deduction was
allowed of any mortgage or other lien in determining (B) The transmission or delivery of the inheritance or
the donor's tax, or the estate tax of the prior decedent, legacy by the fiduciary heir or legatee to the
which was paid in whole or in part prior to the fideicommissary;
decedent's death, then the deduction allowable under (C) The transmission from the first heir, legatee or
said paragraph shall be reduced by the amount so paid. donee in favor of another beneficiary, in accordance
Such deduction allowable shall be reduced by an with the desire of the predecessor; and
amount which bears the same ratio to the amounts
allowed as deductions under paragraphs (1) and (3) of (D) All bequests, devises, legacies or transfers to
this Subsection as the amount otherwise deductible social welfare, cultural and charitable institutions, no
under paragraph (2) bears to the value of that part of part of the net income of which inures to the benefit of
the decedent's gross estate which at the time of his any individual: Provided, however, That not more than
death is situated in the Philippines. Where the property thirty percent (30%) of the said bequests, devises,
referred to consists of two (2) or more items, the legacies or transfers shall be used by such institutions
aggregate value of such items shall be used for the for administration purposes.
purpose of computing the deduction.
SEC. 88. Determination of the Value of the Estate. -
(4) Transfers for Public Use. - The amount of all
(A) Usufruct. - To determine the value of the right of
bequests, legacies, devises or transfers to or for the use
usufruct, use or habitation, as well as that of annuity,
of the Government of the Republic of the Philippines
there shall be taken into account the probable life of
or any political subdivision thereof, for exclusively
the beneficiary in accordance with the latest Basic
public purposes.
Standard Mortality Table, to be approved by the
(C) Share in the Conjugal Property. - The net share of Secretary of Finance, upon recommendation of the
the surviving spouse in the conjugal partnership Insurance Commissioner.
property as diminished by the obligations properly
(B) Properties. - The estate shall be appraised at its
chargeable to such property shall, for the purpose of
fair market value as of the time of death. However,
this Section, be deducted from the net estate of the
the appraised value of real property as of the time
decedent.
of death shall be, whichever is higher of -
(D) Tax Credit for Estate Taxes paid to a Foreign
(1) The fair market value as determined by the
Country. -
Commissioner; or
(1) In General. - The tax imposed by this Title shall be
(2) The fair market value as shown in the schedule of
credited with the amounts of any estate tax imposed by
values fixed by the Provincial and City Assessors.
the authority of a foreign country.
It depends on the zonal valuation
(2) Limitations on Credit. - The amount of the credit
taken under this Section shall be subject to each of the SEC. 89. REPEALED [75]
following limitations:
SEC. 90. Estate Tax Returns. [4]-
(a) The amount of the credit in respect to the tax paid
to any country shall not exceed the same proportion of (A) Requirements. - In all cases of transfers subject to
the tax against which such credit is taken, which the the tax imposed herein, or regardless of the gross value
decedent's net estate situated within such country of the estate, [76] where the said estate consists of
taxable under this Title bears to his entire net estate; registered or registrable property such as real property,
and motor vehicle, shares of stock or other similar property
for which a clearance from the Bureau of Internal
(b) The total amount of the credit shall not exceed the Revenue is required as a condition precedent for the
same proportion of the tax against which such credit is transfer of ownership thereof in the name of the
taken, which the decedent's net estate situated outside transferee, the executor, or the administrator, or any of
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the legal heirs, as the case may be, shall file a return (A) Time of Payment. - The estate tax imposed by
under oath in duplicate, setting forth: Section 84 shall be paid at the time the return is filed
by the executor, administrator or the heirs.
(1) The value of the gross estate of the decedent at the
time of his death, or in case of a nonresident, not a (B) Extension of Time. - When the Commissioner
citizen of the Philippines, of that part of his gross finds that the payment on the due date of the estate tax
estate situated in the Philippines; or of any part thereof would impose undue hardship
upon the estate or any of the heirs, he may extend the
(2) The deductions allowed from gross estate in
time for payment of such tax or any part thereof not to
determining the estate as defined in Section 86; and
exceed five (5) years, in case the estate is settled
(3) Such part of such information as may at the time be through the courts, or two (2) years in case the estate is
ascertainable and such supplemental data as may be settled extrajudicially.
necessary to establish the correct taxes.
In such case, the amount in respect of which the
Provided, however, That estate tax returns showing a extension is granted shall be paid on or before the date
gross value exceeding Five million pesos of the expiration of the period of the extension, and the
(P5,000,000) [77] shall be supported with a statement running of the Statute of Limitations for assessment as
duly certified to by a Certified Public Accountant provided in Section 203 of this Code shall be
containing the following: suspended for the period of any such extension.

(a) Itemized assets of the decedent with their Where the taxes are assessed by reason of negligence,
corresponding gross value at the time of his death, or intentional disregard of rules and regulations, or fraud
in the case of a nonresident, not a citizen of the on the part of the taxpayer, no extension will be
Philippines, of that part of his gross estate situated in granted by the Commissioner.
the Philippines;
If an extension is granted, the Commissioner may
(b) Itemized deductions from gross estate allowed in require the executor, or administrator, or beneficiary,
Section 86; and as the case may be, to furnish a bond in such amount,
not exceeding double the amount of the tax and with
(c) The amount of tax due whether paid or still due and such sureties as the Commissioner deems necessary,
outstanding. conditioned upon the payment of the said tax in
(B) Time for Filing. [4]- For the purpose of accordance with the terms of the extension.
determining the estate tax provided for in Section 84 of (C) Payment by Installment. – In case the available
this Code, the estate tax return required under the cash of the estate is insufficient to pay the total estate
preceding Subsection (A) shall be filed within one (1) tax due, payment by installments shall be allowed
year [78] from the decedent's death. within two (2) years from the statutory date for its
A certified copy of the schedule of partition and the payment without civil penalty and interest. [79]
order of the court approving the same shall be (D) Liability for Payment - The estate tax imposed by
furnished the Commissioner within thirty (30) days Section 84 shall be paid by the executor or
after the promulgation of such order. administrator before delivery to any beneficiary of his
(C) Extension of Time. - The Commissioner shall distributive share of the estate. Such beneficiary shall
have authority to grant, in meritorious cases, a to the extent of his distributive share of the estate, be
reasonable extension not exceeding thirty (30) days for subsidiarily liable for the payment of such portion of
filing the return. the estate tax as his distributive share bears to the
value of the total net estate.
(D) Place of Filing. - Except in cases where the
Commissioner otherwise permits, the return required For the purpose of this Chapter, the term 'executor' or
under Subsection (A) shall be filed with an authorized 'administrator' means the executor or administrator of
agent bank, or Revenue District Officer, Collection the decedent, or if there is no executor or administrator
Officer, or duly authorized Treasurer of the city or appointed, qualified, and acting within the Philippines,
municipality in which the decedent was domiciled at then any person in actual or constructive possession of
the time of his death or if there be no legal residence in any property of the decedent.
the Philippines, with the Office of the Commissioner. SEC. 92. Discharge of Executor or Administrator
SEC. 91. Payment of Tax. - from Personal Liability. - If the executor or
administrator makes a written application to the
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Commissioner for determination of the amount of the discovered by them. Any lawyer, notary public, or any
estate tax and discharge from personal liability government officer who, by reason of his official
therefore, the Commissioner (as soon as possible, and duties, intervenes in the preparation or
in any event within one (1) year after the making of acknowledgment of documents regarding partition or
such application, or if the application is made before disposal of donation inter vivos or mortis causa, legacy
the return is filed, then within one (1) year after the or inheritance, shall have the duty of furnishing the
return is filed, but not after the expiration of the period Commissioner, Regional Director, Revenue District
prescribed for the assessment of the tax in Section 203 Officer or Revenue Collection Officer of the place
shall not notify the executor or administrator of the where he may have his principal office, with copies of
amount of the tax. The executor or administrator, upon such documents and any information whatsoever
payment of the amount of which he is notified, shall be which may facilitate the collection of the
discharged from personal liability for any deficiency in aforementioned tax. Neither shall a debtor of the
the tax thereafter found to be due and shall be entitled deceased pay his debts to the heirs, legatee, executor or
to a receipt or writing showing such discharge. administrator of his creditor, unless the certification of
the Commissioner that the tax fixed in this Chapter had
SEC. 93. Definition of Deficiency. - As used in this
been paid is shown; but he may pay the executor or
Chapter, the term 'deficiency' means:
judicial administrator without said certification if the
(a) The amount by which the tax imposed by this credit is included in the inventory of the estate of the
Chapter exceeds the amount shown as the tax by the deceased.
executor, administrator or any of the heirs upon his
SEC. 96. Restitution of Tax Upon Satisfaction of
return; but the amounts so shown on the return shall
Outstanding Obligations. - If after the payment of the
first be increased by the amounts previously assessed
estate tax, new obligations of the decedent shall
(or collected without assessment) as a deficiency and
appear, and the persons interested shall have satisfied
decreased by the amount previously abated, refunded
them by order of the court, they shall have a right to
or otherwise repaid in respect of such tax; or
the restitution of the proportional part of the tax paid.
(b) If no amount is shown as the tax by the executor,
SEC. 97. Payment of Tax Antecedent to the Transfer
administrator or any of the heirs upon his return, or if
of Shares, Bonds or Rights. [4]- There shall not be
no return is made by the executor, administrator, or
transferred to any new owner in the books of any
any heir, then the amount by which the tax exceeds the
corporation, sociedad anonima, partnership, business,
amounts previously assessed (or collected without
or industry organized or established in the Philippines
assessment) as a deficiency; but such amounts
any share, obligation, bond or right by way of gift inter
previously assessed or collected without assessment
vivos or mortis causa, legacy or inheritance, unless a
shall first be decreased by the amounts previously
certification from the Commissioner that the taxes
abated, refunded or otherwise repaid in respect of such
fixed in this Title and due thereon have been paid is
tax.
shown.
SEC. 94. Payment before Delivery by Executor or
If a bank has knowledge of the death of a person, who
Administrator. - No judge shall authorize the executor
maintained a bank deposit account alone, or jointly
or judicial administrator to deliver a distributive share
with another, it shall allow any withdrawal from the
to any party interested in the estate unless a
said deposit account, subject to a final withholding tax
certification from the Commissioner that the estate tax
of six percent (6%).[80] For this purpose, all withdrawal
has been paid is shown.
slips shall contain a statement to the effect that all of
SEC. 95. Duties of Certain Officers and Debtors. - the joint depositors are still living at the time of
Registers of Deeds shall not register in the Registry of withdrawal by any one of the joint depositors and such
Property any document transferring real property or statement shall be under oath by the said depositors.
real rights therein or any chattel mortgage, by way of
 
gifts inter vivos or mortis causa, legacy or inheritance,
unless a certification from the Commissioner that the CHAPTER II
tax fixed in this Title and actually due thereon had
DONOR'S TAX
been paid is show, and they shall immediately notify
the Commissioner, Regional Director, Revenue SEC. 98. Imposition of Tax. –
District Officer, or Revenue Collection Officer or
Treasurer of the city or municipality where their (A) There shall be levied, assessed, collected and paid
offices are located, of the nonpayment of the tax upon the transfer by any person, resident or
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
nonresident, of the property by gift, a tax, computed as trust or philanthropic organization and/or research
provided in Section 99. institution or organization' is a school, college or
university and/or charitable corporation, accredited
(B) The tax shall apply whether the transfer is in trust
nongovernment organization, trust or philanthropic
or otherwise, whether the gift is direct or indirect, and
organization and/or research institution or
whether the property is real or personal, tangible or
organization, incorporated as a non-stock entity,
intangible.
paying no dividends, governed by trustees who receive
SEC. 99. Rates of Tax Payable by Donor. [4] - no compensation, and devoting all its income, whether
students' fees or gifts, donation, subsidies or other
(A) In General. - The tax for each calendar year shall forms of philanthropy, to the accomplishment and
be six percent (6%) computed on the basis of the total promotion of the purposes enumerated in its Articles
gifts in excess of Two hundred fifty thousand pesos of Incorporation. [4]
(P250,000) exempt gift made during the calendar year.
[81] (B) In the Case of Gifts Made by a Nonresident not a
Citizen of the Philippines. –
(B) Any contribution in cash or in kind to any
candidate, political party or coalition of parties for (1) Gifts made to or for the use of the National
campaign purposes shall be governed by the Election Government or any entity created by any of its
Code, as amended. agencies which is not conducted for profit, or to any
political subdivision of the said Government.
SEC. 100. Transfer for Less Than Adequate and
Full Consideration. [4] - Where property, other than (2) Gifts in favor of an educational and/or charitable,
real property referred to in Section 24(D), is religious, cultural or social welfare corporation,
transferred for less than an adequate and full institution, foundation, trust or philanthropic
consideration in money or money's worth, then the organization or research institution or organization:
amount by which the fair market value of the property Provided, however, That not more than thirty percent
exceeded the value of the consideration shall, for the (30%) of said gifts shall be used by such donee for
purpose of the tax imposed by this Chapter, be deemed administration purposes.
a gift, and shall be included in computing the amount
(C)Tax Credit for Donor's Taxes Paid to a Foreign
of gifts made during the calendar year. Provided,
Country.–
however, That a sale, exchange, or other transfer of
property made in the ordinary course of business (a (1) In General. - The tax imposed by this Title upon a
transaction which is a bona fide, at arm’s length, free donor who was a citizen or a resident at the time of
from any donative intent), will be considered as made donation shall be credited with the amount of any
for an adequate and full consideration in money or donor's tax of any character and description imposed
money’s worth.[82] by the authority of a foreign country.
SEC. 101. Exemption of Certain Gifts. - The (2) Limitations on Credit. - The amount of the credit
following gifts or donations shall be exempt from the taken under this Section shall be subject to each
tax provided for in this Chapter:
of the following limitations:
(A) In the Case of Gifts Made by a Resident.  –[83]
(a) The amount of the credit in respect to the tax paid
(1) Gifts made to or for the use of the National to any country shall not exceed the same proportion of
Government or any entity created by any of its the tax against which such credit is taken, which the
agencies which is not conducted for profit, or to any net gifts situated within such country taxable under
political subdivision of the said Government; and this Title bears to his entire net gifts; and
(2) Gifts in favor of an educational and/or charitable, (b) The total amount of the credit shall not exceed the
religious, cultural or social welfare corporation, same proportion of the tax against which such credit is
institution, accredited nongovernment organization, taken, which the donor's net gifts situated outside the
trust or philanthropic organization or research Philippines taxable under this title bears to his entire
institution or organization: Provided, however, That net gifts.
not more than thirty percent (30%) of said gifts shall
SEC. 102. Valuation of Gifts Made in Property. - If
be used by such donee for administration purposes. For
the gift is made in property, the fair market value
the purpose of this exemption, a 'non-profit
thereof at the time of the gift shall be considered the
educational and/or charitable corporation,
amount of the gift. In case of real property, the
institution, accredited nongovernment organization,
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
provisions of Section 88(B) shall apply to the if such shares, obligations or bonds have acquired a
valuation thereof. business situs in the Philippines; shares or rights in any
partnership, business or industry established in the
SEC. 103. Filing of Return and Payment of Tax. -
Philippines, shall be considered as situated in the
(A) Requirements. - any individual who makes any Philippines: Provided, still further, that no tax shall be
transfer by gift (except those which, under Section collected under this Title in respect of intangible
101, are exempt from the tax provided for in this personal property:
Chapter) shall, for the purpose of the said tax, make a
(a) if the decedent at the time of his death or the donor
return under oath in duplicate. The return shall set
at the time of the donation was a citizen and resident of
forth:
a foreign country which at the time of his death or
(1) Each gift made during the calendar year which is to donation did not impose a transfer tax of any character,
be included in computing net gifts; in respect of intangible personal property of citizens of
the Philippines not residing in that foreign country, or
(2) The deductions claimed and allowable;
(b) if the laws of the foreign country of which the
(3) Any previous net gifts made during the same decedent or donor was a citizen and resident at the
calendar year; time of his death or donation allows a similar
(4) The name of the donee; and exemption from transfer or death taxes of every
character or description in respect of intangible
(5) Such further information as may be required by personal property owned by citizens of the Philippines
rules and regulations made pursuant to law. not residing in that foreign country.
(B)Time and Place of Filing and Payment -The return The term 'deficiency' means:
of the donor required in this Section shall be filed
within thirty (30) days after the date the gift is made (a) the amount by which tax imposed by this Chapter
and the tax due thereon shall be paid at the time of exceeds the amount shown as the tax by the donor
filing. Except in cases where the Commissioner upon his return; but the amount so shown on the return
otherwise permits, the return shall be filed and the tax shall first be increased by the amount previously
paid to an authorized agent bank, the Revenue District assessed (or Collected without assessment) as a
Officer, Revenue Collection Officer or duly authorized deficiency, and decreased by the amounts previously
Treasurer of the city or municipality where the donor abated, refunded or otherwise repaid in respect of such
was domiciled at the time of the transfer, or if there be tax, or
no legal residence in the Philippines, with the Office of (b) if no amount is shown as the tax by the donor, then
the Commissioner. In the case of gifts made by a the amount by which the tax exceeds the amounts
nonresident, the return may be filed with the Philippine previously assessed, (or collected without assessment)
Embassy or Consulate in the country where he is as a deficiency, but such amounts previously assessed,
domiciled at the time of the transfer, or directly with or collected without assessment, shall first be
the Office of the Commissioner. decreased by the amount previously abated, refunded
SEC. 104. Definitions. - For purposes of this Title, the or otherwise repaid in respect of such tax.
terms 'gross estate' and 'gifts' include real and personal
CASES *ang recit lang is ang summary
property, whether tangible or intangible, or mixed,
wherever situated: Provided, however, That where the Marcos v. CA (276 SCRA 47)
decedent or donor was a nonresident alien at the time
of his death or donation, as the case may be, his real The deficiency income tax assessments and estate tax
and personal property so transferred but which are assessment, are already final and unappealable-and-
situated outside the Philippines shall not be included as the subsequent levy of real properties is a tax remedy
part of his 'gross estate' or 'gross gift’: Provided, resorted to by the government, sanctioned by Section
further, That franchise which must be exercised in the 213 and 218 of the National Internal Revenue Code.
Philippines; shares, obligations or bonds issued by any This summary tax remedy is distinct and separate from
corporation or sociedad anonima organized or the other tax remedies (such as Judicial Civil actions
constituted in the Philippines in accordance with its and Criminal actions), and is not affected or
laws; shares, obligations or bonds by any foreign precluded by the pendency of any other tax remedies
corporation eighty-five percent (85%) of the business instituted by the government.
of which is located in the Philippines; shares,
obligations or bonds issued by any foreign corporation
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
SUMMARY: The BIR issued several tax deficiency from proceeding with the auction of the real
assessments against the estate of Marcos and then properties covered by the said notices.
levied on several properties to satisfy said tax
deficiencies. Marcos seeks to nullify the assessments
and levy saying that the same was done without the CA: Denied the petition as the deficiency assessments
cognition of the probate court.(properties are in the on the sale have become final and unappealable,
custody of the probate court) He further alleges that therefore enforceable by the summary remedy of levy.
any claim against the estate should be brought to the
probate court who should order the payment of the
taxes to the administrator. Arguments of the Petitioner (Marcos II):
DOCTRINE: The approval of the court, sitting in (1) The notices of levy, notices of sale, and
probate or as a settlement tribunal over the deceased subsequent sale of properties of the late
is not a mandatory requirement in the collection of President Marcos effected by the BIR are null
estate taxes. and void for disregarding the established
procedure for the enforcement of taxes due
upon the estate of the deceased which was for
FACTS: the claimant to present the claim before the
probate court so that the court may order the
Marcos died on September 1989. In June 1990, a
administrator to pay.
special tax audit team was created for the purpose of
conducting investigations and examinations of tax The case of Domingo vs. Garlitos is
liabilities of former president Marcos. Upon the specifically cited to bolster the argument that
conclusion of their investigation, they issued a "the ordinary procedure by which to settle
memorandum in 1991 stating that the Marcoses failed claims of indebtedness against the estate of a
to file several tax returns from 1982-86 and a written deceased, person, as in an inheritance (estate)
notice of death in violation of the National Internal tax, is for the claimant to present a claim
Revenue Code. before the probate court so that said court may
order the administrator to pay the amount
Criminal charges were filed against Imelda Marcos
therefor." This remedy is allegedly, exclusive,
and the Commission on Internal Revenue (CIR) caused
and cannot be effected through any other
the preparation of the Income Tax Return of the
means.
Marcoses. The BIR then issued several deficiency tax
assessments. The CIR claimed that these were Further, he argued that the probate court is not
personally and constructively received delivered to the precluded from denying a request by the
Marcoses (THRU CARETAKER Mr. Martinez and government for the immediate payment of
was also sent to Dean Coronel – counsel of Imelda taxes, and should order the payment of the
Marco) but these deficiency tax assessments were not same only within the period fixed by the
protested administratively within the 30 days probate court for the payment of all the debts
following receipt of assessments. of the decedent. In this regard, petitioner cites
the case of Collector of Internal Revenue
From February to May 1993, the BIR issued numerous
vs. The Administratrix of the Estate of
notices of levy on real properties of the Marcoses.
Echarri (67 Phil 502),
Ferdinand Marcos II, eldest son of former President
(2) "the numerous pending court cases
Marcos filed a petition for certiorari and prohibition
questioning the late president's ownership or
with an application for writ of preliminary injunction,
interests in several properties (both real and
questioning the actuations of the Commission on
personal) make the total value of his estate,
Internal Revenue in assessing and collecting through
and the consequent estate tax due, incapable of
the summary remedy of Levy on Real Properties,
exact pecuniary determination at this time.
estate and income tax delinquencies upon the estate
Thus, respondents' assessment of the estate tax
and properties of former President Marcos despite the
and their issuance of the Notices of Levy and
pendency of the probate proceedings on the will of the
sale are premature and oppressive."
former’s father. He prayed for the (1) annulment and
setting aside of notices on levy of real property (2) Argument of BIR:
enjoining the Head Revenue Executive Assistant
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
(1) The state’s authority to collect internal from the application of the statute of non-claims, and
revenue taxes is paramount. Thus, the this is justified by the necessity of government
pendency of probate proceedings over the funding, immortalized in the maxim that taxes are the
estate of the deceased does not preclude the lifeblood of the government. Vectigalia nervi sunt rei
assessment and collection, through summary publicae — taxes are the sinews of the state.
remedies, of estate taxes over the same.
Taxes assessed against the estate of a deceased
Claims for payment of estate and income taxes person, after administration is opened, need not be
due and assessed after the death of the submitted to the committee on claims in the ordinary
decedent need not be presented in the form of course of administration. In the exercise of its control
a claim against the estate. These can and over the administrator, the court may direct the
should be paid immediately. The probate payment of such taxes upon motion showing that the
court is not the government agency to taxes have been assessed against the estate.
decide whether an estate is liable for
TWO WAYS OF COLLECTION:
payment of estate of income taxes. Well-
settled is the rule that the probate court is a 1. going after all the heirs and collecting from each
court with special and limited jurisdiction. one of them the amount of the tax proportionate to
the inheritance received.
2. Another remedy, pursuant to the lien created by
Issues:
Section 315 of the Tax Code upon all property and
1. Whether or not the BIR has authority to rights to property belong to the taxpayer for
collect by the summary remedy of levying unpaid income tax, is by subjecting said property of
upon, and sale of real properties of the the estate which is in the hands of an heir or
decedent, estate tax deficiencies, without the transferee to the payment of the tax due the estate.
cognition and authority of the court sitting (Commissioner of Internal Revenue vs. Pineda, 21
in probate over the supposed will of the SCRA 105, September 15, 1967.)
deceased. YES.
The approval of the court, sitting in probate, or as a
settlement tribunal over the deceased is not a
mandatory requirement in the collection of estate
RATIO:
taxes. There is nothing in the tax code, and in the
NATURE OF THE PROCESS OF ESTATE TAX pertinent remedial laws that implies the necessity of
COLLECTION: the probate or estate settlement court’s approval of the
state’s claim for the estate taxes, before the same can
the hearing and determination of the cash value of the be enforced and collected. If there is any issue as to the
assets and the determination of the tax are adversary validity of the BIR’s decision to assess the estate taxes,
proceedings. The proceeding has been held to be this should have been pursued through the proper
necessarily a proceeding in rem.  administrative and judicial avenues provided for by
The enforcement and collection of estate tax, is law.
executive in character, as the legislature has seen it fit Even an assessment based on the estimate is prima
to ascribe this task to the Bureau of Internal Revenue. facie valid and lawful where it does not appear to have
Section 3 of the National Internal Revenue Code been arrived at arbitrarily or capriciously. The burden
attests to this: of proof is upon the complaining party to show clearly
Sec. 3. Powers and duties of the Bureau. — The powers and duties that the assessment is erroneous.
of the Bureau of Internal Revenue shall comprehend the
assessment and collection of all national internal revenue taxes,
fees, and charges, and the enforcement of all forfeitures, penalties,
and fines connected therewith, including the execution of
judgments in all cases decided in its favor by the Court of Tax
Appeals and the ordinary courts. Said Bureau shall also give effect
to and administer the supervisory and police power conferred to it
by this Code or other laws.

Vera v. Fernandez: Court recognized the liberal

treatment of claims for taxes charged against the estate
of the decedent. Such taxes, we said, were exempted
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
Moreover, the payment and assessment of inheritance were among those involved in the said cases pending
tax does not directly involve the administration of the in the Sandiganbayan. Indeed, the court is at a loss as
decedent’s estate although it may be viewed as an to how these cases are relevant to the matter at issue.
incident to the complete settlement of an estate, and The mere fact that the decedent has pending cases
under some statutes, it is made the duty of the probate involving ill-gotten wealth does not affect the
court to make the amount of the inheritance tax a part enforcement of tax assessments over the properties
of the final decree of distribution of the estate. It is not indubitably included in his estate.
against the property of decedent, nor it is a claim
As to the matter of the DOJ findings not in line
against the estate as much, but it is against the interest
with BIR:
or property right which the heir has in the property
formerly held by decedent. Petitioner also expresses his reservation as to the propriety
of the BIR's total assessment of P23,292,607,638.00,
Apart from failing to file the required estate tax return stating that this amount deviates from the findings of the
within the time required for the filing of the same, Department of Justice's Panel of Prosecutors as per its
petitioner, and the other heirs never questioned the resolution of 20 September 1991. Allegedly, this is clear
assessments served upon them, allowing the same to evidence of the uncertainty on the part of the Government as
lapse into finality, and prompting the BIR to collect to the total value of the estate of the late President.
the said taxes by levying upon the properties left by
It is not the Department of Justice which is the
President Marcos.
government agency tasked to determine the amount of
taxes due upon the subject estate, but the Bureau of
Internal Revenue, 16 whose determinations and
Petition denied and CA decision is affirmed. assessments are presumed correct and made in
The omission to file an estate tax return, and the good faith. 17 The taxpayer has the duty of proving
subsequent failure to contest or appeal the assessment otherwise. In the absence of proof of any irregularities
made by the BIR is fatal to the petitioner's cause, as in the performance of official duties, an assessment
under the above-cited provision, in case of failure to will not be disturbed. Even an assessment based on
file a return, the tax may be assessed at any time estimates is  prima facie valid and lawful where it
within ten years after the omission, and any tax so does not appear to have been arrived at arbitrarily
assessed may be collected by levy upon real property or capriciously. The burden of proof is upon the
within three years following the assessment of the tax. complaining party to show clearly that the assessment
Since the estate tax assessment had become final and is erroneous. Failure to present proof of error in the
unappealable by the petitioner's default as regards assessment will justify the judicial affirmance of said
protesting the validity of the said assessment, there is assessment. 18 In this instance, petitioner has not
now no reason why the BIR cannot continue with the pointed out one single provision in the Memorandum
collection of the said tax. Any objection against the of the Special Audit Team which gave rise to the
assessment should have been pursued following the questioned assessment, which bears a trace of falsity.
avenue paved in Section 229 of the NIRC on protests Indeed, the petitioner's attack on the assessment bears
on assessments of internal revenue taxes. mainly on the alleged improbable and unconscionable
amount of the taxes charged. But mere rhetoric cannot
Petitioner further argues that "the numerous pending supply the basis for the charge of impropriety of the
court cases questioning the late president's ownership assessments made.
or interests in several properties (both real and
personal) make the total value of his estate, and the Moreover, these objections to the assessments should
consequent estate tax due, incapable of exact have been raised, considering the ample remedies
pecuniary determination at this time. Thus, afforded the taxpayer by the Tax Code, with the
respondents' assessment of the estate tax and their Bureau of Internal Revenue and the Court of Tax
issuance of the Notices of Levy and sale are premature Appeals, as described earlier, and cannot be raised
and oppressive." He points out the pendency of now via Petition for Certiorari, under the pretext of
Sandiganbayan Civil Case Nos. 0001-0034 and 0141, grave abuse of discretion
which were filed by the government to question the ESTATE OF THE DECEDENT DAPAT AND NOT
ownership and interests of the late President in real THE PETITIONER for the notice.
and personal properties located within and outside the
Philippines. Petitioner, however, omits to allege
whether the properties levied upon by the BIR in the
Estate of Hilario Ruiz (252 SCRA 541)
collection of estate taxes upon the decedent's estate
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
THE ESTATE OF HILARIO M. RUIZ, EDMOND 8. Edmond moved for the release of P50,000.00
RUIZ, Executor, petitioner,  vs. THE COURT OF to pay the real estate taxes on the real
APPEALS (Former Special Sixth Division), properties of the estate.
MARIA PILAR RUIZ-MONTES, MARIA
CATHRYN RUIZ, CANDICE ALBERTINE RUIZ, a. The probate court approved the release
MARIA ANGELINE RUIZ and THE PRESIDING of P7,722.00
JUDGE OF THE REGIONAL TRIAL COURT OF
PASIG, respondents. 9. Edmond withdrew his opposition to the
probate of the will
[G.R. No. 118671, January 29, 1996, PUNO, J.:]
a. Probate court admitted the will to
probate and ordered the issuance of
FACTS: letters testamentary to Edmond
conditioned upon the filing of a bond
1. Hilario Ruiz executed a holographic will in the amount of P50,000.00
where he named the following as his heirs
10. Testate Estate of Hilario Ruiz, with Edmond
a. Edmond Ruiz – only son Ruiz as executor, filed an "Ex-Parte Motion
for Release of Funds
b. Maria Pilar Ruiz-Montes – adopted
daughter a. Prayed for release of the rent
payments deposited with the Branch
c. Maria Cathryn, Candice Albertine and
Clerk of Court
Maria Angeline - 3 granddaughters, all
daughters of Pilar Ruiz b. Pilar Ruiz-Montes opposed and
praying that the release of rent
2. Testator bequeathed to his heirs substantial
payments be given to the 3
cash, personal and real properties and named
granddaughters
Edmond Ruiz executor of his estate.
c. Probate court denied the release of
3. Hilario Ruiz died and the cash component of
funds and granted the motion of Pilar
his estate was immediately distributed among
Ruiz-Montes due to Edmond’s lack of
Ruiz and respondents.
opposition
4. Edmond, the named executor, did not take any
VALLE VERDE PROPERTY contract WAS
action for the probate of his father's
RENEWED
holographic will.
d. Probate Court ordered the release of
5. 4 years after – Pilar filed before the RTC a
the funds to Edmond but only "such
petition for the probate and approval of the
amount as may be necessary to cover
deceased’s will and for the issuance of letters
the expenses of administration and
testamentary (authority issued to the executor)
allowances for support" of the
to Edmond Ruiz
testator's three granddaughters subject
a. Edmond opposed the petition on the to collation and deductible from their
ground that the will was executed share in the inheritance
under undue influence.
11. CA sustained probate court’s order.
6. The house and lot in Valle Verde, Pasig which
ISSUE: W/N the probate court, after admitting the will
the testator bequeathed to the 3
to probate but before payment of the estate's debts and
granddaughters was leased out by Edmond to
obligations, has the authority:
third persons.
1. to grant an allowance from the funds of the
7. Probate court ordered Edmond to deposit with
estate for the support of the testator's
the Branch Clerk of Court the rental deposit
grandchildren - NO
and payments totalling P540,000.00
representing the one-year lease of the Valle 2. to order the release of the titles to certain heirs
Verde property.
3. to grant possession of all properties of the
estate to the executor of the will.
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
HELD: i. If not yet paid, the rule requires
that the distributees post a bond
The estate tax is one of those obligations that must
or make such provisions as to
be paid before distribution of the estate. If not yet
meet the said tax obligation in
paid, the rule requires that the distributees post a
proportion to their respective
bond or make such provisions as to meet the said
shares in the inheritance.
tax obligation in proportion to their respective
shares in the inheritance. ii. at the time the order was issued
the properties of the estate had
not yet been inventoried and
1. No, grandchildren are not entitled to provisional appraised.
support from the funds of the decedent's estate.
4. The probate of a will is conclusive as to its due
a. The law clearly limits the allowance to execution and extrinsic validity and settles only
"widow and children" and does not the question of whether the testator, being of
extend it to the deceased's grandchildren, sound mind, freely executed it in accordance with
regardless of their minority or incapacity the formalities prescribed by law

b. Section 3 of Rule 83 of the Revised a. Questions as to the intrinsic validity and

Rules of Court provides: efficacy of the provisions of the will, the
legality of any devise or legacy may be
Sec. 3. Allowance to widow and family. — The widow raised even after the will has been
and minor or incapacitated children of a deceased authenticated
person, during the settlement of the estate, shall
receive therefrom under the direction of the court, such i. The intrinsic validity of Hilario's
allowance as are provided by law. holographic will was
controverted by petitioner before
2. In settlement of estate proceedings, the the probate court in his Reply to
distribution of the estate properties can only be Montes' Opposition to his motion
made: for release of funds and his
a. after all the debts, funeral charges, motion for reconsideration of the
expenses of administration, allowance to August 26, 1993 order of the said
the widow, and estate tax have been paid; court.
or ii.  Therein, petitioner assailed the
b. before payment of said obligations only if distributive shares of the devisees
the distributees or any of them gives a and legatees inasmuch as his
bond in a sum fixed by the court father's will included the estate of
conditioned upon the payment of said his mother and allegedly
obligations within such time as the court impaired his legitime as an
directs, or when provision is made to intestate heir of his mother.
meet those obligations iii. The Rules provide that if there is
3. In the case at bar, the probate court ordered the a controversy as to who are the
release of the titles to the Valle Verde property lawful heirs of the decedent and
and the Blue Ridge apartments to the private their distributive shares in his
respondents after the lapse of six months from the estate, the probate court shall
date of first publication of the notice to creditors proceed to hear and decide the
same as in ordinary cases.
a. Hilario Ruiz allegedly left no debts when
he died but the taxes on his estate had not 5. NO, the right of an executor or administrator to
hitherto been paid, much less ascertained. the possession and management of the real and
personal properties of the deceased is not absolute
b. The estate tax is one of those obligations and can only be exercised "so long as it is
that must be paid before distribution of necessary for the payment of the debts and
the estate. expenses of administration
TAX II-PINGU NOTES-ATTY. DANTE MARANAN
Sec. 3. Executor or administrator to retain whole reveals the intention to attach them permanently to the
estate to pay debts, and to administer estate not willed. tenements;
— An executor or administrator shall have the right to
(5) Machinery, receptacles, instruments or implements
the possession and management of the real as well as
intended by the owner of the tenement for an industry
the personal estate of the deceased so long as it is
or works which may be carried on in a building or on a
necessary for the payment of the debts and expenses
piece of land, and which tend directly to meet the
for administration.
needs of the said industry or works;
a. When petitioner moved for further
(6) Animal houses, pigeon-houses, beehives, fish
release of the funds deposited with the
ponds or breeding places of similar nature, in case
clerk of court, he had been previously
their owner has placed them or preserves them with the
granted by the probate court certain
intention to have them permanently attached to the
amounts for repair and maintenance
land, and forming a permanent part of it; the animals in
expenses on the properties of the estate,
these places are included;
and payment of the real estate taxes
thereon, but he moved again for the (7) Fertilizer actually used on a piece of land;
release of additional funds for the same
reasons he previously cited (8) Mines, quarries, and slag dumps, while the matter
thereof forms part of the bed, and waters either
i. It was correct for the probate running or stagnant;
court to require him to submit an
accounting of the necessary (9) Docks and structures which, though floating, are
expenses for administration intended by their nature and object to remain at a fixed
before releasing any further place on a river, lake, or coast;
money in his favour (10) Contracts for public works, and servitudes and
ii. petitioner had deposited with it other real rights over immovable property. (334a)
only a portion of the one-year
rental income from the Valle
Verde property.
CHAPTER 2
iii. As executor, he is a mere trustee
Movable Property
of his father's estate. The funds of
the estate in his hands are trust Article 416. The following things are deemed to be
funds and he is held to the duties personal property:
and responsibilities of a trustee of
(1) Those movables susceptible of appropriation which
the highest order.
are not included in the preceding article;
(2) Real property which by any special provision of
law is considered as personalty;
Immovable Property
(3) Forces of nature which are brought under control
Article 415. The following are immovable property: by science; and
(1) Land, buildings, roads and constructions of all (4) In general, all things which can be transported from
kinds adhered to the soil; place to place without impairment of the real property
to which they are fixed. (335a)
(2) Trees, plants, and growing fruits, while they are
attached to the land or form an integral part of an
immovable;
(3) Everything attached to an immovable in a fixed
manner, in such a way that it cannot be separated
therefrom without breaking the material or
deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or
ornamentation, placed in buildings or on lands by the
owner of the immovable in such a manner that it