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Topics in Estate Tax
Basic Principles in Estate Tax
Revocable Transfers
General Power of Appointment
Determination and basis of valuation of GROSS and NET Estate
Deductions and Exclusions
Obligations of Executors, Administrators, Officers, Others
Payment of Estate Tax
Basic Principles
What is Estate tax? Estate Tax is a tax on the privilege to transmit
property at death and on certain transfers which are made equivalent of
testamentary dispositions by the statute.
Estate tax is paid by the estate represented by the administrator or
executor.
The law at the time of death of the decedent governs
The fair market value of the properties at the time of the death of the
decedent shall be used to determine the amount in his gross estate
Classification of Decedent
Resident, non -resident citizen, or a resident alien – All
properties, real or personal, tangible or intangible, wherever situated
Non-resident alien – Only properties situated in the Philippines
provided that, intangible personal property is subject to the rule on
reciprocity
Kinds of Property Embraced under
Decedent’s Interest
Property owned
Interest in property possessed
Property or interest transferred (Sec 25 of NIRC)
Transfer in Contemplation of Death
(Sec.85, NIRC)
General Rule: The transfer shall be considered as transfer in contemplation of death if,
during the lifetime of the decedent, he still retained in the property the following:

Possession or enjoyment thereof;

Receipt of the income of the fruits notwithstanding the transfer;

Right either alone or in conjunction with any person, to designate person who shall posses
or enjoy the said property or income therefrom.

Exception: Bona fide sale for an adequate and full consideration in money or money’s
worth
Circumstances taken into account during Transfers
in Contemplation of Death
Age and state of health of the decedent at the time of gift, especially where the
decedent was aware of a serious illness;

Length of time between the gift and date of death (Dizon v Posadas, 57 Phil
465)

Concurrent making of a will or a gift within a short time after the transfer
(Roces vs. Posadas 58 PH 108)
Dizon v Posadas (57 Phil 465)
Doctrine: Inheritance tax should be measured by the
estate’s value as it stood at the time of the decedent’s death,
regardless of any subsequent contingency causing an
increase or decrease in the value.
Roces v Posadas (58 Phil 108)
Doctrine: The expression “all gifts” refers to the gifts inter
vivos inasmuch as the law considered them as advances on
inheritance, in the sense that they are gifts inter vivos made in
contemplation or in consideration.
Topics in Estate Tax
Basic Principles in Estate Tax
Revocable Transfers
General Power of Appointment
Determination and basis of valuation of GROSS and NET Estate
Deductions and Exclusions
Obligations of Executors, Administrators, Officers, Others
Payment of Estate Tax
Revocable Transfers (Sec. 85, NIRC)
General Rule: Transfer is a revocable transfer where:

There is a transfer by trust or otherwise; and

The enjoyment thereof was subject at the date of his death to any chance through the exercise of power
by:

The decedent alone;

The decedent in conjunction with any other person;

Where any such power is relinquished in contemplation of the decedent’s death

Revocable Transfers (Sec. 85, NIRC)

Exception: Bona fide sale for an adequate and full

consideration in money or money’s worth.
Topics in Estate Tax
Basic Principles in Estate Tax
Revocable Transfers
General Power of Appointment
Determination and basis of valuation of GROSS and NET Estate
Deductions and Exclusions
Obligations of Executors, Administrators, Officers, Others
Payment of Estate Tax
Property passing under General Power of Appointment

Power of Appointment – refers to a right to designate the person or persons

who shall enjoy or posses certain property from the estate of a prior decedent.

May be General or Special

General Rule: Property over which the decedent held a power of appointment is
not includible in his gross estate unless such power is general

Exception: Bona fide sale for an adequate and full consideration in money or
money’s worth
Morgan vs. Commissioner, 209 US 78,
1940
Doctrine: To determine if the power is “general”, the
important consideration is the breadth of the control in
the donee of the power, whatever the nature or extend of
the appointee’s interest on the property may be.
Exercise of General Power of
Appointment
The general power of appointment may be exercised by the decedent by:

Will;

Deed executed in contemplation of, or intended to take effect in possession or

enjoyment, or after his death, or;

Deed under which he has retained for his life or any period not ascertainable
without reference to his death or for any period which does not in fact end before
his death.
Topics in Estate Tax
Basic Principles in Estate Tax
Revocable Transfers
General Power of Appointment
Determination and basis of valuation of GROSS and NET Estate
Deductions and Exclusions
Obligations of Executors, Administrators, Officers, Others
Payment of Estate Tax
DETERMINATION OF GROSS ESTATE AND NET ESTATE

Gross Estate - All properties and interests in properties of the decedent at the time of his death

Net Estate – Value of the estate after all deductions have been made against the gross estate

Gross estate is determined:

 Decedent is a resident, non -resident citizen, or a resident alien – All properties, real or
personal, tangible or intangible, wherever situated
 Decedent is a non-resident alien – Only properties situated in the Philippines provided that,
intangible personal property is subject to the rule on reciprocity
Basis on the Valuation of Gross Estate
As to Real Property
 Whichever is higher between the fair market value:
 As determined by the commissioner
 As shown in the schedule of values fixed by the provincial and city assessors.
As to personal property – Whether tangible or intangible, appraised at fair market
value.
As to right to usufruct, use or habitation as well as annuity – Take into account the
probably life of the beneficiary in accordance to basic standard mortality table.
Basis on the Valuation of Gross Estate
As to shares of stock
 Unlisted
Unlisted common – book value

Unlisted preferred – par value

 Listed – Arithmetic mean between the highest and lowest quotation at a date
nearest the date of death, if none is available on the date of death itself.
Topics in Estate Tax
Basic Principles in Estate Tax
Revocable Transfers
General Power of Appointment
Determination and basis of valuation of GROSS and NET Estate
Deductions and Exclusions
Obligations of Executors, Administrators, Officers, Others
Payment of Estate Tax
DEDUCTIONS FROM THE ESTATE
Allowable deductions from the gross estate:
Expenses, losses, indebtedness, and taxes;
Property previously taxed;
Transfer for public use;
Family home;
Standard deduction;
Medical expenses;
Amount received by the heirs under RA 4917
Dizon vs.CTA, G.R. No. 140944, April 30, 2008

Doctrine: The Court held that pursuant to the date-of-death

valuation value; where a lien claimed against the estate was certain
and enforceable on the date of the decedent’s death, the fact that the
claimant subsequently settled for lesser amount does not preclude
the estate from deduction the entire amount of the claim for estate
tax purposes.
Gutierrez vs. Baretto-Datu, 5 SCRA 757
Doctrine: The word “calims” requiring the presentation of
claims against the estate of the decedent is generally
construed to mean debts and demands of a pecuniary nature
which should have been enforced against the deceased
during his lifetime.
Aguas vs. Llemos, 5 SCRA 959

Doctrine: Actions from damages caused by tortious

conduct of a defendant survive the death of the
decedent – it is considered as part of the claims
against the estate.
Requisites for the Deductibility (Claims
against the Estate)
Requisites for the deductibility of claims against the estate:

The liability represents a personal obligation of the deceased existing at the

time of his death ;

Liability was contracted in good faith and for adequate and full consideration
in money;

The claims must be a debt or claim which is legally valid;

The indebtedness must not have been condoned by the creditor.

Requisites for the Deductibility (Taxes)
Requisites for the deductibility of taxes from the gross estate:

Said taxes must have been accrued at the time of the death of decedent;

Said taxes were unpaid as of the time of death;

Taxes does not include:

Income tax upon income tax received after death

Property taxes not accrued before his death; or

The estate tax due from the transmission of his estate

Requisites for the Deductibility (Losses)
Requisites for the deductibility of losses from the gross estate:

Losses must be incurred during the settlement of the estate;

Losses arose from fires, storms, shipwreck, or other casualties, or from robbery, theft or
embezzlement;

Said losses are not compensated for by insurance or otherwise;

Losses claimed must not have been claimed as deductions from gross income for income
tax purposes

Such losses were incurred not later than the last day for the payment of the estate tax.
 Property previously Taxed
Vanishing Deductions - Diminishing deductibility allowed from the gross estate of the decedent on the property left
behind by the decedent which he had acquired previously by inheritance or donation.
 Requisites:
 The present decedent died within 5 years from receipt of the property from the prior decedent or donor;
 The property formed part of the taxable estate of the prior decedent or of the taxable gift of the donor;
 The property formed part of the taxable estate of the prior decedent or of the taxable gift of the donor;
 The estate tax on the prior succession or donor’s tax on the gift must have been finally determined and paid;
 The property on which the vanishing deduction is taken must be identified as the one received or acquired;
 No vanishing deduction was allowed on the same property on the prior decedent’s estate.
Transfers for Public Use
Requisites for the deductibility of transfers for public use:
The disposition is in the last will and testament
Disposition should take effect after death
In favor of the Government of the Philippines
Exclusively for public purpose
The value of the property given is included in the gross estate
SPECIAL DEDUCTIONS
Family Home – A place where the family actually resides
 Conditions:
 The family home must be the actual residential home of the decedent and his
family at the time of death;
 The total value of the family home must be included as part of the gross
estate of the decedent.
 Allowable deduction – current market value but not exceeding 10 million
pesos
SPECIAL DEDUCTIONS
 Amount received by Heirs under R.A. No. 4917
 R.A. No. 4917
“An Act Providing that Retirement Benefits of Employees of Private Firms shall not be Subject to any tax
Whatsoever”

 Requisites for Deductibility:

 There is a reasonable private benefit plan maintained by the employer
 Retiring employee has been in the service of the same employer for at least 10 years and is not less than
50 years of age at the time of his retirement
 The amount must have been received by the heirs of the decedent employee as a consequence of the
latter’s death
 The amount is included in the gross estate of the decedent
STANDARD DEDUCTIONS
A deduction in the amount of 5 million pesos shall be allowed as
additional deduction from the gross estate without substantiation
(Resident estates)
Deduction in the amount of 500,000 pesos shall be allowed for
non-resident estates
ESTATE TAX RETURNS
An Estate tax return is required to be filed in the
following cases:
All cases of transfers subject to the estate tax
Where all estate consist of registered or registrable property
ESTATE TAX RETURNS
 Contents of Estate Tax Return:
The value of the gross estate of the decedent at the time of his death;
The deductions allowed from gross estate in determining the net taxable estate;
Such part of such information that may be ascertainable as well as supplemental data
necessary to establish correct taxes;
For gross estate exceeding 5million pesos, a statement duly certifies to by a CPA.

 Time of Filing
One (1) year from the decedent’s death (as amended by TRAIN law)
EXCLUSIONS FROM THE ESTATE
Proceeds of life insurance policy taken out by the decedent upon his own life
when the beneficiary is other than the estate, executor, administrator and the
designation of beneficiary is irrevocable;

Group life insurance policy by company for its employers

Life insurance policies issued by the GSIS to its employees

Death benefits received from SSS, by reason of death.

EXCLUSIONS FROM THE ESTATE
Amount received from the PH and US Governments from damages suffered during WW 2.

Benefits received by beneficiaries residing in the PH under laws administered by the US

Veteran Admin

Properties held in trust by the decedent

Capital or exclusive property of the surviving spouse

Share of the surviving spouse in the conjugal property

Jurisprudence
Dizon vs Court of Tax Appeals G.R. No. 140944 (April 30, 2008)
Issue: The issue in this case involves the construction of Section 79 of the National
Internal Revenue Code (Tax Code) which provides for the allowable deductions from
the gross estate of the decedent. The specific question is whether the actual claims of
the aforementioned creditors may be fully allowed as deductions from the gross
estate of Jose despite the fact that the said claims were reduced or condoned
through compromise agreements entered into by the Estate with its creditors.
Jurisprudence
Dizon vs Court of Tax Appeals G.R. No. 140944 (April 30, 2008)
Doctrines: Claims against the estate, as allowable deductions from the gross estate
under Section 79 of the Tax Code, are basically a reproduction of the deductions
allowed under Section 89 (a) (1) (C) and (E) of Commonwealth Act No. 466 (CA 466),
otherwise known as the National Internal Revenue Code of 1939, and which was the
first codification of Philippine tax laws. Philippine tax laws were, in turn, based on the
federal tax laws of the United States. Thus, pursuant to established rules of statutory
construction, the decisions of American courts construing the federal tax code are
entitled to great weight in the interpretation of our own tax laws.
Jurisprudence
Ferdinand Marcos II vs Court of Appeals, G.R. No. 120880 June 5,
1997
Levy shall be effected by writing upon said certificate a description of the
property upon which levy is made. At the same time, written notice of the levy shall
be mailed to or served upon the Register of Deeds of the province or city where the
property is located and upon the delinquent taxpayer, or if he be absent from the
Philippines, to his agent or the manager of the business in respect to which the
liability arose, or if there be none, to the occupant of the property in question.
Jurisprudence
Ferdinand Marcos II vs Court of Appeals, G.R. No. 120880 June 5,
1997
Doctrine: In the case of notices of levy issued to satisfy the delinquent estate tax, the
delinquent taxpayer is the Estate of the decedent, and not necessarily, and
exclusively, the petitioner as heir of the deceased. In the same vein, in the matter of
income tax delinquency of the late president and his spouse, petitioner is not the
taxpayer liable. Thus, it follows that service of notices of levy in satisfaction of these
tax delinquencies upon the petitioner is not required by law, as under Section 213 of
the NIRC, which pertinently states:
Topics in Estate Tax
Basic Principles in Estate Tax
Revocable Transfers
General Power of Appointment
Determination and basis of valuation of GROSS and NET Estate
Deductions and Exclusions
Obligations of Executors, Administrators, Officers, Others
Payment of Estate Tax
Obligations of executor, administrator, officers, others

Executor or administrator must ensure that payment shall be made of the amount of which
he is notified before he shall be discharged from personal liability (Sec. 92)
Judge will not issue authorization to deliver distributive share until certification of payment
is shown (Sec. 94)
Lawyer, notary public, or any government officer, intervening in the preparation or
acknowledgement of documents regarding partition or disposal of donation inter vivos or
mortis causa, legacy or inheritance, shall have the duty of furnishing the Commissioner,
Regional Director, RDO, or Revenue Collection Officer of such documents (Sec. 95)
Obligations of executor, administrator, officers, others

Debtor of the deceased shall not pay his debt to the heirs, legatee, executor or administrator
of his creditor, unless the certification of the Commissioner that the estate tax imposed by
NIRC has been paid is shown, but he may pay the executor or judicial administrator without
said certification if the credit is included in the inventory of the estate of the deceased (Sec.
95)
Corporation will not transfer to new owners of shares, bonds, obligation or rights without
certification from the Commissioner that the tax actually due thereon had been paid (Sec.
97)
Obligations of executor, administrator, officers, others

Before TRAIN law: When a Bank has knowledge of the death of a person who
maintained a joint account, it shall not allow any withdrawal by the surviving
depositor without the above certification

TRAIN law: Allowed subject to final withholding tax of six percent (6%) (Sec.
97)
Topics in Estate Tax
Basic Principles in Estate Tax
Revocable Transfers
General Power of Appointment
Determination and basis of valuation of GROSS and NET Estate
Deductions and Exclusions
Obligations of Executors, Administrators, Officers, Others
Payment of Estate Tax
Payment of Estate Tax
Time of Payment
At the time the return is filed by the executor, administrator or the heirs.
(within 1 year from death)

Extension of Time
When the Commissioner finds that the payment on the due date of the estate tax or of any part thereof
would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of
such tax or any part thereof not to exceed:
a.) Five (5) years, in case the estate is settled through the courts, or
b.) Two (2) years in case the estate is settled extrajudicially.
Payment of Estate Tax
Before TRAIN Law
 No payment by installments

TRAIN LAW
 Payment by Installment. – In case the available cash of the estate is insufficient to
pay the total estate tax due, payment by installment shall be allowed within two (2)
years from the statutory date for its payment without civil penalty and interest.
-END -
is t eni n g!
ou f or l
Thank y
DO NO R ’ S
TAX
Sections 98 - 104
tio
 Definition
• An excise tax
• imposed on the privilege to transfer property
by way of gift inter vivos
• based on a pure act of liberality
• without any or less than adequate
consideration and without any legal
compulsion to give
 Nature of Donor’s Tax
• Excise tax on the privilege of the donor
to give or on the transfer of property by
way of gift inter vivos. [Sec 11, RR 2-2003
citing Lladoc v. CIR (1965)]
Purposes of Donor’s Tax
To raise revenues
To tax the wealthy and reduce
certain of other excise tax
LAW THAT GOVERNS THE IMPOSITION OF
DONOR´S TAX

Governed by the statute in force at the

time of the transfer.
 Requisites
Of A Valid Donation
Capacity of Donor
Donative Intent
Delivery, whether actual or constructive,
of the subject gift
Acceptance by the donee
In the form prescribed by law
 Requisites For A Donation Of A
Movable
1. May be oral or in writing
2. If oral, the donation must be
accompanied with delivery
3. If the value is MORE THAN Php5,000.00,
the donation must be in writing and accepted in
writing
 Requisites For A Donation
Of An Immovable
1.
1. ItIt must
must be
be in
in aa public
public document
document

2.
2. The
The property
property donated
donated and
and the
the value
value of
of the
the
charges
charges which
which the
the donee
donee must
must satisfy
satisfy must
must be
be
specified
specified
3.
3. The
The donee
donee must
must accept
accept through
through aa deed
deed or
or
similar
similar instrument
instrument
Transfers Which May Be Constituted
As Donations

Sales/exchange/transfer of property (real

property other than capital assets) for less than
adequate and full consideration.

Condonation /remission of debt

 Transfer For Less Than Adequate And Full
Consideration
A transfer of real or personal property will be
considered a donation and subject to donor’s tax
when:

(1) The transfer was for less than adequate

and full consideration;
2) Such transfer was effective during his lifetime
(inter vivos); and

(3) Other than real property classified as capital

asset within the Philippines as defined in Sec.
24(D). [Sec. 100, NIRC]
CLASSIFICATION OF DONOR

Resident Citizen
Non-Resident Citizen
Non-Resident Alien
Domestic Corporation
Foreign Corporation
If the Donor is:
RC/NRC/RA
(a)


liable for donor’s tax REGARDLESS of where
the gift was made or where property is located
NRA
(b)

liable for donor’s tax only if the property

donated is within the Philippines.
Donor’s tax shall apply whether the transfer is
by trust or otherwise, and whether the gifts is
direct or indirect, and whether the property is
real of personal, tangible or intangible [Sec.
98(B), NIRC].
 Valuation Of Gifts Made
In Property
For Real Property
Fair market value as determined by the CIR, or;

Fair market value as shown in the schedule of values

fixed by the provincial and city assessors;

At the time the gift was made, whichever is HIGHER.

 For all other Property…
the fair market value at that time will be
considered the amount of gift.
 Determination
Of Gross Gift
RC/NRC/RA____________________
REAL PROPERTY
-wherever situated
TANGIBLE PERSONAL PROPERTY
-wherever situated
INTANGIBLE PERSONAL PROPERTY
-wherever situated
 Determination
Of Gross Gift
NRA___________________________
REAL PROPERTY
-located in the Phil.
TANGIBLE PERSONAL PROPERTY
-located in the Phil.,
INTANGIBLE PERSONAL PROPERTY
-with a situs in the Phil. (subject to the rule of reciprocity)
NOTE: If there is reciprocity, intangible assets are
excluded from gross gifts
 Exemptions Of Gifts From
Donor´s Tax
1. Dowries (Sec. 101 (A), NIRC)
Under the TRAIN law, this provision was repealed.
 Exemptions Of Gifts From
Donor´s Tax

Athlete´s Prizes and Awards (Sec. 1, R.A.

7549).
Requisites
a. In local and international sports
tournaments and competitions
b.Held in the Philippines or abroad
c. Sanctioned by their respective national
sports association
 Exemptions Of Gifts From Donor
´s Tax

Any contribution in cash or in kind to any

candidate, political party, or coalition of parties
for campaign purposes.
 Exemptions Of Gifts From Donor
´s Tax

Gifts made to or for the use of the national

government or any entity created by any of its
agencies which is not conducted for profit or any
political subdivision of the said government.
 Exemptions Of Gifts From Donor´s Tax

Gifts in favor of an education and/or

charitable, religious, cultural or social welfare
corporation, institution, accredited NGO, trust or
philanthropic organization or research institution
or organization,
Provided not more than 30% of said gifts will be
used by such donee for administration purposes
 PERSON LIABLE

Every person, whether natural or juridical,

resident or non-resident, who transfers or
causes to transfer property by gift, whether
in trust or otherwise, whether the gift is
direct or indirect and whether the property is
real or personal, tangible or intangible. (Sec.
98, NIRC)
 Period for Filing

General Rule:
The return must be filed within 30 days after
the date when the gift was made or
completed. The tax due thereon shall be paid
at the same time that the return is filed.
 Who will file:

Any person who made a gift, such must

be filed under oath.
 WHERE TO FILE
Resident:
Unless the CIR permits otherwise, the return shall be filed and tax
paid to:

(1)To Authorized Agent Bank (AAB) or the Revenue District

Officer having jurisdiction over the place of the domicile of
the donor at the time of the transfer.
(2) If
no AAB
 to the Revenue Collection Officer or duly Authorized
City or Municipal Treasurer where the donor was
domiciled at the time of the transfer,

(3) if
no legal residence in Phil or NRA
 with Revenue District No. 39 - South Quezon City or
with the Philippine Embassy or Consulate in the country
where donor is domiciled at the time of the transfer.
Non - Resident:
(1) The Philippine Embassy or Consulate in the
country where he is domiciled at the time of the
transfer, or

(2) Directly with the Office of the Commissioner.

PAYMENT: Pay as you file.
 TAX BASIS

The tax for each calendar year shall be computed

on the basis of the total net gifts made during the
calendar. (Sec. 99, NIRC)
 R ’ S T A X
DO N O
ha n g e s i n
c
A I N L A W
T R
 Donor’s Tax Rate

Fixes the rate of donor’s tax to 6% on the total gifts

in excess of P250,000 during the calendar year.
 Uniform Computation of Donor’s Tax
whether Donation to a Relative or a Stranger

Removes distinction of computation of

donor’s tax between a donation made to a
relative and one made to a stranger.
Sale, Exchange, Or Other Transfer Of Property Made In
The Ordinary Course Of Business

No donor’s tax shall be imposed on sale,

exchange, or other transfer of property made in the
ordinary course of business, i.e. transactions which
are (i) bona fide, (ii) made at arm’s length, and (iii)
free from any donative intent.
 Cases
PPL
APPL
A IICCA
ABBLLEE
 Tang Ho vs. Board of Tax Appeals

A donation of property belonging to the conjugal

partnership, made during its existence, by the
husband alone in favor of the common children,
is taxable to him exclusively as donor.
To be a donation by both spouses, taxable to both,
the wife must expressly join the husband in making
the gift.

Her participation cannot be implied.

Commissioner vs. Church of Jesus Christ "New Jerusalem,"
113 Phil. 368

This Court has already held that the

following requisites must concur in order
that a taxpayer may claim exemption under
the law;
(1) the imported articles must have been
donated;

(2) the donee must be a duly incorporated or

established international civic organization,
religious or charitable society, or institution
for civic, religious or charitable purposes; and
(3) the articles so imported must have been
donated for the use of the organization, society
or institution or for free distribution and not
for barter, sale or hire.
Herrera vs. Quezon City Board of Assessment
Appeals, 113 Phil. 177
It should be enough to point out that the
admission of pay patients does not detract from
the charitable character of a hospital, if, as in the
case of St. Luke's Hospital, its fund are devoted
exclusively to the maintenance of the institution
 Abello vs. CIR
G.R. No. 120721, February 23, 2005
Donative intent is a creature of the mind. It
cannot be perceived except by the material and
tangible acts which manifest its presence. This
being the case, donative intent is presumed
present when one gives a part of ones patrimony
to another without consideration.
Second, donative intent is not negated when the
person donating has other intentions, motives or
purposes which do not contradict donative
intent.
 MARIA CARLA PIROVANO Et Al. v. CIR
G.R. No. L-19865. July 31, 1965
The court ruled that the consideration for the
donation was, therefore, the company's gratitude
for his services, and not the services themselves and
whether the donation was simple or remuneratory,
it was still a gift taxable under the law.
 Lladoc vs. CIR, 1965

The phrase “exempt from taxation” should not be

interpreted to mean exemption from all kinds of
taxes. The exemption is only from the payment of
taxes assessed on such properties as property taxes
as contradistinguished from excise taxes.
A donee’s gift tax is not a property tax but an excise tax
imposed on the transfer of property by way of gift inter
vivos. It does not rest upon general ownership, but an
excise upon the use made of the properties, upon the
exercise of the privilege of receiving the properties. The
imposition of such excise tax on property used for
religious purpose do not constitute an impairment of
the Constitution.
 PhilAm LIFE vs. Sec. of Finance,
G.R. No. 210987
Petitioner’s substantive arguments are unavailing. The
absence of donative intent, if that be the case, does not
exempt the sales of stock transaction from donor’s tax
since Sec. 100 of the NIRC categorically states that the
amount by which the fair market value of the property
exceeded the value of the consideration shall be deemed a
gift.
Thus, even if there is no actual
donation, the difference in price
is considered a donation by
fiction of law.
Q and A
 Question # 1
A, aged 90 years and suffering from incurable
cancer, on August 1, 2001 wrote a will and, on the
same day, made several inter-vivos gifts to his
children. Ten days later, he died. In your opinion,
are the inter-vivos gifts considered transfers in
contemplation of death for purposes of determining
properties to be included in his gross estate?
Explain your answer.
 Answer:
Yes. When the donor makes his will within a
short time of, or simultaneously with, the
making of gifts, the gifts are considered as
having been made in contemplation of death.
(Roces v. Posadas, 58 Phil. 108).
Obviously, the intention of the donor in making the
inter-vivos gifts is to avoid the imposition of the
estate tax and since the donees are likewise his
forced heirs who are called upon to inherit, it
will create a presumption juris tantum that said
donations were made mortis causa, hence, the
properties donated shall be included as part of A's
gross estate. (2001 Bar)
 Question # 2
Your bachelor client, a Filipino residing in
Quezon City, wants to give his sister a gift of
Php200, 000.00. He seeks your advice, for purposes
of reducing if not eliminating the donor’s tax on
the gift, on whether it is better for him to give
all of the Php200, 000.00 on Christmas 2001 or to
give Php100, 000.00 on Christmas 2001 and the other
Php100,000.00 on January 1, 2002. Please explain
your advice.
 Answer:
I would advice him to split the donation.
Giving the Php200, 000 as a one-time donation
would mean that it will be subject to a
higher tax bracket under the graduated tax
structure thereby necessitating the payment
of donor's tax.
On the other hand, splitting the donation into two
equal amounts of Php100, 000 given on two different
years will totally relieve the donor from the
donor’s tax because the first Php100,000 donation
in the graduated brackets is exempt. (Section 99,
NIRC) While the donor’s tax is computed on the
cumulative donations, the aggregation of all
donations made by a donor is allowed only over one
calendar year. (2001 Bar)
-END -
is t eni n g!
ou f or l
Thank y