ESTATE TAX

*due upon death but you are allowed to file and pay within 1 CAUSES OF LEGAL SUCCESSION OR INTESTACY 3.1. Compulsory Heirs - those who succeed by
Chapter 1 year without acquiring any interest or benefits 1. If a person dies without a will, or with a void will, force of law to some portion of the inheritance, in
*The amount of liability to be assumed by the heir(s) shall be or one which has subsequently lost its validity. an amount predetermined by law, known as
Under the Civil Code (Art. 712), ownership may be acquired limited only to the extent of the value of properties and rights 2. When the “Will” does not institute an heir. the legitime. They succeed whether the testator
through inherited. 3. Partial Institution of heir. Consequently, intestacy likes it or not. They cannot be deprived by the
takes place as to the undisposed portion. testator of their legitime except by disinheritance
1. Occupation
SUCCESSION 4. Other causes of legal succession or intestacy: properly effected.
2. Intellect creation
• A mode of acquisition by virtue of which, the a. When the heir instituted is not capable • Primary — those who have precedence over and
3. Law
Property, Rights and Obligations to the extent of of succeeding exclude other compulsory heirs
4. Donation
the value of inheritance, of a person transmitted b. Non-fulfillment of the suspensive
5. Tradition
condition attached to the institution of
• Secondary — those who succeed only in the
6. Contract through his death to another or others either by absence of the primary compulsory heirs;
his will or by operation of law (774) heir.
7. Prescription
c. Preterition (omission in the testator’s • Concurring — those who succeed together with
8. Succession • The inheritance includes all the PRO of a person will of one, some or all of the the primary or secondary compulsory heirs
which are not extinguished by his death ( 776)
compulsory heirs in the direct line
TRANSFER • The rights to the succession are transmitted which has the effect of annulling the
• Transfer taxes are taxes imposed upon the from the moment of death of the decedent not institution of heir).
gratuitous disposition of private properties or withstanding the postponement of the actual d. Fulfillment of resolutory condition
rights. possession or enjoyment of the estate by the e. Expiration of term or period of
• Gratuitous transfer is one that neither imposes beneficiary. (Art. 777 CC) institution.
burden nor requires consideration from • The “heirs succeed immediately to all the f. Non-compliance or impossibility of
transferee or recipient. property of the deceased ancestor at the moment compliance with the will.
• Onerous transfer - transferee gives of death as completely as if the ancestor had g. Repudiation of the instituted heir.
consideration in return of the property or rights executed and delivered to them a deed for the
received (subject to business taxes not transfer same before his death. ELEMENTS OF SUCCESSION
taxes) 1. Decedent is the general term applied to the 3.2. Voluntary Heirs - those instituted by the
*Cut-off Period: as of the date of death of the testator. person whose property is transmitted through testator in his will to succeed to the inheritance of
TYPES OF TRANSFER TAXES *The amount of obligation acquired/inherited by an heir succession, whether or not he left a will. If he left the portion thereof of which the testator can
1. Estate tax - donation mortis causa should not be more than the combined value of the properties a will, he is called a testator (Art. 775 CC). freely dispose. Free portion refers to the portion
2. Donor’s tax – donation inter-vivos and rights inherited. Executor is a person designated in the last will or value left in the estate after deducting the
KINDS OF SUCCESSION (Art. 778 CC) and testament to carry out the provisions of the legitime of the compulsory heirs. The share of a
NATURE OF TRANSFER TAXES • The inheritance is transmitted either through decedent's will. voluntary heir is determined through the last
last will and testament or by operations of law Administrator is a person appointed by the will and testament.
• The subject matter of a transfer tax is the court and performs the same duty, in lieu of an
privilege of the transferor to gratuitously (in the absence of a last will and testament, the
provisions of the CC on Succession shall apply). executor, if the latter refused to accept the 3.3. Legal or Intestate Heirs - those who succeed
transfer property or rights which takes effect at appointment, failed to qualify under the law or the
the date of death of the transferor or during the • A person is normally said to have died testate if to the estate of the decedent by operation of law
last will and testament did not appoint one. (decedent died without a valid will or his estate
lifetime of the donor and the donee. he left a will at the time of his/her death and a
person is said to have died intestate if such a was not entirely disposed of by will)
• Although the amount of transfer tax is based on 2. Inheritance (Estate) - Include all the property,
net estate or net gifts, it shall not be construed as person died without leaving a will. rights and obligations of a person which are not COMPOSITION OF GROSS ESTATE
a property tax. extinguished by death and all which have accrued
1. Testamentary or testate succession
• On this basis, transfer tax is classified as thereto since the opening of succession. Rights
“excise tax” or privilege tax imposed on the act of • A type of succession that results from which are purely personal are not
passing the ownership of property and not on the the designation of an heir, made in a transmissible for they are extinguished by
value of the property or right. will executed in the form prescribed by death (Art. 776)
law
LAW THAT GOVERNS ESTATE TAX – TRAIN LAW 2. Legal or intestate succession 3. Successor - An heir or successor is a person who
It is a well settled rule that estate taxation is governed by • A type of succession which is effected is called to the succession either the provision of a
the statute in force at the time of death of the decedent. The by operations of law since the will or by operation of law (Art. 782 CC). Devisees
estate tax accrues as the date of death of the decedent decedent did not execute a will or if the and legatees are persons to whom gifts of real and
and the accrual of the tax is distinct from the obligation to last will and testament executed by personal property are respectively given by
pay the same. Upon the death of the decedent, succession him is void. virtue of a will. Successors or heirs are Classified
takes place and the right of the State to the tax the privilege 3. Mixed succession under the law as follows:
to transmit the estate vests instantly upon death (Section • A type of succession which is effected
3, RR 2-2003). In the Philippines, succession itself partly by “will" and partly by
(excluding the tax aspect) is governed by the Civil Code. operation of law.

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• LEGITIME is part of a testator's property which SURVIVOR LEGITIME NOTE If the testator, one month, or less, before making his will was effective, it shall be executed as in the case of a
he cannot dispose of because the law has Legitimate Children ½ Divided equally among the LC, publicly known to be insane, the person who maintains the will (Arts.825 and 826 CC).
whether they survive alone or validity of the will must prove that the testator made it
reserved it for certain heirs who are, therefore,
with concurring compulsory during a lucid interval.
called compulsory heirs (Art. 886 CC). heir
• The compulsory heirs cannot be deprived of their 1 Legitimate Children ½
legitime by the testator except by disinheritance 1 Surviving Spouse ¼ Supervening incapacity does not invalidate an effective
properly effected. On the other hand, Free 2 or more LC Surviving ½ will, nor is the will of an incapable validated by the
Portion is that portion of the estate which the Spouse equal to 1 supervening of capacity. A married woman may make a will
LC without the consent of her husband, and without the
testator can freely dispose of Hence, anyone may
Legitimate Children ½ All the concurring Compulsory Heir
authority of the court. A married woman may dispose by
inherit from free portion (compulsory or Surviving Spouse ¼ get from the half free portion, the
voluntary heirs) share of SS having preference over will of all her separate property as well as her share of the
Illegitimate Children ½ of LC
that of the IC, whose share may conjugal partnership or absolute community property.
• Voluntary heirs may inherit only if mentioned suffer reduction pro-rata because
in the will. In the absence of a provision in the there is no preference among
themselves. KINDS OF WILLS
will, voluntary heirs will not inherit anything. In FOREIGN WILLS
Legitimate Parents or ½ Whether they survive alone or 1. NOTARIAL OR ORDINARY OR ATTESTED WILL
such cases, the free portion shall be disposed of to
intestate heirs based in the order of priority ag
Ascendants with concurring CH - is one which is executed in accordance • The will of an alien who is abroad produces effect
LPA ½ IC succeed in the ¼ in equal with the formalities prescribed by Art. 804 to 808 of in the Philippines if made with the formalities
presented below: Illegitimate children ¼ shares the New Civil Code. prescribed by the law of the place in which he
LPA ½
resides, or according to the formalities observed
SS ¼
Requisites for Valid Notarial Will: in his country, or in conformity with those which
LPA ½
SS 1/8 a. must be in writing and executed in a the Philippine civil code prescribes.
IC ¼ language or dialect known to the • A will made in the Philippines by a citizen or
Illegitimate Children ½ Divided equally among the IC testator; subject of another country, which is executed in
SS 1/3 b. must be subscribed at the end accordance with the law of the country of which
IC 1/3 thereof by the testator himself or by he is a citizen or subject, and which might be
Surviving Spouse ½ 1/3 if marriage is in articulo the testator's name written by some
mortis and deceased spouse
proved and allowed by the law of his own
other person in his presence and by his country, shall have the same effect as if executed
dies within 3 months after express direction;
marriage according to the laws of the Philippines.
*The distribution of free portion in intestate succession is c. must be attested and subscribed by
based on the order of priority because in every inheritance,
Illegitimate Parents ½
three or more credible witnesses in • When a Filipino is in a foreign country, he is
IP Excluded Children inherit in the authorized to make a will in any of the forms
the relative nearest in degree excludes the more distant ones, Any Child It depends amounts established in the the presence of the testator and of one
saving the right of representation when it properly takes another. established by the law of the country in which he
foregoing rules
place. IP ¼ Only the parents of IC are
may be. Such will may be probated in the
SS ¼ included. Grandparents and Philippines (Art. 815 CC).
other ascendants are excluded
REVOCATION OF WILLS AND TESTAMENTARY
WILLS DISPOSITIONS
- an act whereby a person is permitted, with the formalities • A will may be revoked by the testator at any time
prescribed by law, to control to a certain degree the before his death any waiver or restriction of this
disposition of his estate to take effect after his death (Art. right is void (Art. 828 CC).
783). It is a document whereby a person, called the • A revocation done outside the Philippines, by a
“testator”, disposes of his or her properties or “estate” to person who does not have his domicile in the
COLLATERAL RELATIVES take effect upon his or her death. Philippines, is valid when it is done according to
2. HOLOGRAPHIC WILL
• Consanguinity is the relation of persons the law of the place where the will was made, or
descending from the same stock or common The making of a will is a strictly personal act. It cannot be • is a written will which must be entirely written, according to the law of the place in which the
ancestors. These persons are known as blood left in whole or in part of the discretion of a third person, or dated and signed by the hand of the testator testator had his domicile at the time and if the
relatives, and are said to be related by blood or accomplished through the instrumentality of an agent or himself. It is subject to no other form and it may revocation takes place the Philippines when it is
consanguinity. It may be lineal or collateral. attorney. All persons who are not expressly prohibited be made in or out of the Philippines and need not in accordance with the provisions of the NCC.
by law may make a will. The persons prohibited by law to be witnessed (Art. 811 CC). In case of any
• Lineal consanguinity, which may be descending make a will are those below 18 years old and those who are insertion, cancellation, erasure or alteration in a Modes of Revoking a Will
or ascending, is that which subsists between not of sound mind at the time of its execution. holographic will, the testator must authenticate 1. By implication of law
persons of whom one is descended in a direct line
the same by his full signature. 2. By some will, codicil, or other writing executed as
from the other. The law presumes that every person is of sound mind, in the
• Collateral consanguinity is that which subsists • Codicil is a supplement or addition to a will, provided in case of wills
absence of proof to the contrary. The burden of proof that 3. By burning, tearing, cancelling, or obliterating the
made after the execution of a will and annexed to
between persons who have the same ancestors, the testator was not of sound mind at the time of making his
be taken as a part thereof, by which any will with the intention of revoking it, by the
but who do not descend (or ascend) one from the dispositions is on the person who opposes the probate of the
disposition made in the original will is explained, testator himself, or by some other person in his
other. will. presence, and by his express direction. If burned,
added to or altered. In order that a codicil may be

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torn, cancelled, or obliterated by some other Requisites for Disinheritance: d. When the child or descendant is Right of representation takes place only in favor of
person, without the express direction of the 1. Effected only through a valid will convicted of a crime which carries with children of brothers or sisters, whether full or half blood and
testator, the will may still be established, and the 2. For a cause expressly stated by law it a penalty of civil interdiction. only if they concur with at least one uncle or aunt. This rule
estate distributed in accordance therewith, if its 3. Cause must be stated in the will itself applies only when the decedent does not have
contents, and due execution, and the fact of its 4. Cause must be certain and true descendants.
unauthorized destruction, cancellation, or 5. Unconditional
obliteration are established according to the rules 6. Total (there is no partial disinheritance) 2. Parents/Ascendants Nephews and nieces already alive when the aunt or uncle
of Court. 7. The heir disinherited must be designated in such a. When the parents have abandoned died can inherit by representing their predeceased parents.
a manner that there can be no doubt as to his their children or induced their If the nephews and nieces are illegitimate, then they are
identity daughters to live a corrupt or immoral prohibited by Article 992 of the new civil code from
life, or attempted against their virtue; inheriting from the relatives of their father or mother like
As stated above, the ground(s) or cause(s) of disinheritance b. When the parent or ascendant has their uncles or aunts, or even from their grandparents.
shall be limited to those expressly stated by law. Under Art. been convicted of adultery or Grandnephews and grandnieces in the collateral line
850 of the Civil Code, the burden of proving the truth of concubinage with the spouse of the cannot inherit by right of representation.
the cause for disinheritance shall rest upon the other testator;
heirs of the testator, if the disinherited heir should deny it. c. Loss of parental authority for causes
Disinheritance without a specification of the cause, or for specified in the Civil Code; and Chapter 2: GROSS ESTATE
a cause the truth of which, if contradicted, is not proved, or d. Attempt by one of the parents against
which is not one of those set forth in civil code, shall annul the life of the other, unless there has ESTATE TAX – Definition and Nature
INSTITUTION OF HEIR (Art. 840 CC) the institution of heirs insofar as it may prejudice the been reconciliation between them. - a tax imposed on the privilege that a person is given in
• Institution of an heir is an act by virtue of which person disinherited. controlling to a certain extent, the disposition of his
a testator designates in his will the person or 3. Spouse property to take effect upon death
persons who are to succeed him in his property a. When the spouse has given cause for - an excise tax imposed on the act of passing the ownership
and transmissible rights and obligations. legal separation; of property of the decedent although the tax is based
b. When the spouse has given grounds for thereon
loss of parental authority. - since estate tax accrues as the time of death, the right of
• A will shall be valid even though it should not
the State to tax the privilege to transmit the estate vests
contain an institution of an heir, or such
RIGHT OF REPRESENTATION instantly upon death
institution should not comprise the entire estate,
- accrual of the tax is distinct from the obligation to pay the
and even though the person so instituted should • It is a “right” created by fiction of law where the same
not accept the inheritance or should be representative is raised to the place and degree of
incapacitated to succeed. COMMON CAUSES FOR DISINHERITANCE OF CHILDREN the person represented, and acquires the rights JUSTIFICATION FOR THE IMPOSITION OF ESTATE TAX
OR DESCENDANTS, PARENTS OR ASCENDANTS, AND which the latter would have if he were living or
• In such cases the testamentary dispositions made SPOUSE: could have inherited. Representation may arise 1. Benefit-Received Theory
in accordance with law shall be complied with 1. When the heir has been found guilty of an attempt either because of: - The law considers the service rendered by the
and the remainder of the estate shall pass to the against the life of the testator, his/her 1. Death government in the distribution of the estate of the decedent,
legal heirs. descendants or ascendants, and spouse In case of 2. Incapacity either by law or in accordance with his wishes. For the
children and parents; 3. Disinheritance performance of these services and other benefits that accrue
2. When the heir has accused the testator of a crime to the estate and the heirs, the State collects the tax.
for which the law prescribes imprisonment for 6 The representative(s) shall not inherit more than what the
• A compulsory heir may, in consequence of
years or more, if the accusation has been found person they represent would inherit, if he were living or
disinheritance, be deprived of his legitime, for 2. Privilege or State Partnership Theory
groundless; could inherit (Art. 974). - inheritance is not a right but a privilege granted
causes expressly stated by law. Disinheritance
3. When the heir by fraud, violence, intimidation or by the State and legatees have been acquired only with the
can be effected only through a will wherein
undue influence causes the testator to make a will The law further provides that “representation” is not protection of the State. Consequently, the State as a passive
the legal cause therefore shall be specified.
or to change one already made; available to: silent partner in the accumulation of property has the
The burden of proving the truth of the cause for
4. 4. Refusal without justifiable cause to support the 1. As to compulsory heirs: In case of repudiation, the right to collect the share which is properly due to it.
disinheritance shall rest upon the other heirs of
testator who disinherits such an heir. one who repudiates his inheritance cannot be
the testator, if the disinherited heir should deny
represented. Their own heirs inherit in their own 3. Ability to Pay Theory
it.
PECULIAR CAUSES FOR DISINHERITANCE right. - Receipt of inheritance which is in the nature of
1. Children/Descendants 2. As to voluntary heirs an unearned wealth or windfall, are place assets into the
DISINHERITANCE
a. When the child or descendant has been 3. Voluntary heirs, legatees and devisees who hands of the heirs and beneficiaries. This creates an ability
• is a testamentary disposition by which a convicted of adultery or concubinage a. Predecease the testator; or
compulsory heir is deprived of, or excluded from to pay the tax and thus contributes to government income.
with the spouse of the testator; b. Renouncing the inheritance cannot be
the inheritance to which he has a right. b. Maltreatment of the testator by word represented by their own heirs, with
Disinheritance is not applicable to voluntary or deed by the child/descendant; respect to their supposed inheritance.
heirs. c. When the child or descendant leads a
dishonorable or disgraceful life;

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4. Shares, obligations, or bonds issued by any foreign
4. Redistribution of Wealth Theory corporation if such shares, obligations or bonds have
- The receipt of inheritance is a contributing acquired a business situs in the Philippines.
factor to the inequalities in wealth and incomes. The 5. Shares or rights in any partnership, business or industry
imposition of estate tax reduces the property received by established in the Philippines.
the successor, thus helping to promote equitable
distribution of wealth in society. The tax base is the value
of the property motivated and the progressive scheme of
taxation is precisely motivated by the desire to mitigate the
evils of inheritance in the present form.

COMPOSITION OF DECEDENTS AND GROSS ESTATE

RECIPROCITY CLAUSE (Section 104 of the Tax Code)

The Tax Code excludes “intangible” personal
property with situs in the Philippines from the gross estate
of a non-resident alien decedent if there is reciprocity. There
is reciprocity if:

a. The decedent at the time of his death was a

resident citizen of a foreign country which at VALUATION OF GROSS ESTATE
the time of his death did not impose an estate
tax of any character in respect of intangible In General FMV at the time of death
personal property of citizens of the Philippines Real Property Higher between:
not residing in that foreign country; or - FMV determined by Commissioner
b. The laws of the foreign country of which the - Assessed Value or FMV of Real Estate Tax
decedent was a resident citizen at the time of Personal Prop. FMV at the time of death
his death allow a similar exemption from estate EXEMPTIONS & EXCLUSIONS FROM GROSS ESTATE
Shares of stock Unlisted CS – Book value per share
taxes of every character, in respect of Unlisted PS – Par value per share
intangible personal property owned by citizens A. Exclusions under Sec. 85 & 104 of the Tax Code
Listed Shares – arithmetic mean between 1. Exclusive property of the surviving spouse
of the Philippines not residing in that foreign highest and lowest quotation
country. - because these properties are not owned by the
Units of The bid price nearest the date of death decedent upon his death. For estate tax purposes, exclusive
participation in published in any newspaper or publication properties of the husband are known as “capital” while exclusive
INTANGIBLE ASSETS any assoc., for general circulation. properties of the wife are known as “paraphernal” properties (Article
- As a tule, the situs of intangible personal property is the recreation, or 135 of the Civil Code). Whether such property is: exclusive or
domicile of the owner, also known as “mobilia sequntur amusement club
common will depend on the type of property relations or marriage
personam”. Right to In accordance with the latest Basic Standard settlement of the husband and wife.
- However, it must be yield to the actual situs of such usufruct, use Mortality Table taking into account the probable
or habitation life of the beneficiary, to be approved by the
property 2. Properties outside the PH of NRA decedent
Secretary of Finance upon recommendation of
and annuity the Insurance Commissioner - for NRA decedents, only his properties situated or with
Intangible Assets with situs WITHIN the PH situs within the PH shall be included in his gross estate.
1. Franchise which must be exercised in the Philippines. Consequently, properties outside of the Philippines are excluded. in
determining the gross estate of a nonresident alien decedent.
2. Shares, obligations or bonds issued by any corporation or
sociedad anonima organized or constituted in the
3. Intangible personal property in the PH of NRA under
Philippines in accordance with its laws.
Reciprocity Law
3. Shares, obligations or bonds issued by any foreign
- “intangible” personal property in the Philippines of a
corporation, 85% of the business of which is located in PH nonresident alien decedent shall be excluded from the gross estate if
there is reciprocity.

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B. Exclusions under Sec 87 of the Tax Code C. Exclusions under Sec 87 of the Tax Code b. Revocable Transfers
1. Merger of usufruct in the owner of naked title 1. Proceeds of life insurance and benefits from GSIS - a transfer where the terms of enjoyment of the
- usufruct is the right to use another’s property 2. Accruals and benefits from SSS by reason of death property may be altered, amended, revoked or terminated by the
- the donee-decedent only received property from the 3. Amounts received by PH and US gov’t for war damages decedent. It is sufficient that the decedent had the power to revoke
donor-decedent, hence the donee-decedent is not the owner 4. Amounts received from US Veterans Administration though he did not exercise the power.
2. Transmission or delivery of the inheritance or legacy 5. Payments from the PH of US gov’t to the legal heirs of
by the fiduciary/1st heir/legatee to the 2nd heir or deceased of WWII and deceased civilian for
fideicommissary supplies/services furnished to US and PH army
3. Transfer under Special Power of Appointment 6. Retirement benefits of official/employees of private
- transmission from the first heir, legatee or donee in
favor of another beneficiary, in accordance with the
firms
desire of the predecessor 7. PERA assets of the decedent-contributor
4. All bequest devises, legacies or transfers to social 8. Compensation paid to private and public health
welfare, cultural and charitable institutions, no part of workers who have contracted COVID-19 in case of
the net income of which inures to the benefit of any death (Bayanihan to Recover as One Act)
individual: Provided, however, that not more than
thirty percent (30%) of the said bequest, devises,
legacies or transfers shall be used by such institutions
COMPOSITION OF GROSS ESTATE
for administration purposes.

MERGER OF USUFRUCT IN THE OWNER OF NAKED TITLE

- The decedent in this particular case (donee-decedent
or current decedent) only received from the prior
decedent (donor-decedent or prior decedent)
usufruct over the latter’s property.

SEC 85 of Tax Code: Composition of Gross Estate

1. Property owned by the decedent that are actually and
physically present in his estate at the time of his death
Decedent’s Interest – to the extent of the interest therein of
the decedent at the time of death shall included
- refers to the extent of equity or ownership participation
of the decedent on any property physically existing and present in
the gross estate, whether or not in his possession, control or
dominion.
- it also refers to the value of any interest in property
owned or possessed by the decedent at the time of his death (interest
having value or capable of being valued or transferred).

2. Property NOT PHYSICALLY IN THE ESTATE but are still

subject to payment of estate tax
a. Transfers in Contemplation of Death
- is a disposition of property prompted by thought of
death. It is the thought of death, as a controlling motive which
induces the disposition of the property. Included within this concept
is donation mortis causa.
c. Transfers under a General Power of Appointment
- refers to the right to designate the person or persons
who will succeed to the property of the prior decedent. The power of
appointment may be “general” or “special”. It is considered “general”
when the power of appointment authorizes the donee of the power
to appoint any person he pleases. The power may be exercised in
favor of anybody including the donee-decedent. The donee of a
general power of appointment holds the appointed property with all
the attributes of ownership thus, the appointed property shall form
part of the gross estate of the donee (beneficiary) of the power upon
his death.

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Special Power of Appointment (SPA) exist when the donee Filing and Payment: - written request for the partial disposition shall be
can appoint only from a restricted or designated class of persons - Primary : Executor or Administrator approved by the BIR; written request shall be filed,
other than himself. Property transferred under a special power of - Secondary : any of the heirs together with a notarized undertaking
appointment should be excluded from the gross estate of the donee
of the power because the donee-decedent only holds the property in
- computed estate tax due shall be allocated in proportion
trust. The power of appointment may be exercised by the donor- Estate tax return shall be filed under oath in: to the value of each property
decedent through the following modes: - in cases of transfer subject to Estate tax - estate shall pay to the BIR the proportionate estate tax
a. by will - if the gross value exceeds 5,000,000, the estate tax return due of the property intended to be disposed of
b. by deed to take effect in possession/enjoyment after shall be supported with a statement duly certified to by a - electronic Certificate Authorizing Registration(eCAR)
death CPA containing the following: shall issue as many as there are properties to be
c. by deed under which he has retained for his life or a. Itemized assets with their corresponding gross value disposed to cover the total estate tax due
any period not ascertainable w/o reference to his
death or for any period which does not in fact end
b. Itemized deductions allowed from the gross estate - in case of failure to pay, the estate tax due shall be
before his death c. The amount of tax due, whether paid or still due and immediately due and demandable subject to the
d. the possession or enjoyment of, or the right to the outstanding applicable penalties and interest reckoned from the
income from the property prescribed deadline for filing the return and payment of
e. the right, either alone, or in conjunction with any Time for Filing the Estate Tax Return estate tax
person to designate the persons who shall possess - required to be filed within 1 year from the decedents death
or enjoy the property or the income therefrom. Request for Extension of time, installment payment and
d. Transfers for Insufficient Consideration Extension of time to file the Estate Tax Return partial disposition of estate
- must be authorized by the Commissioner or any Revenue - shall be filed with the RDO where the estate is required to
Consideration >= FMV at Bonafide Sale. Excluded from the Officer and shall grant a reasonable extension not exceeding secure its TIN and file ETR; must be approved by the
the time of transfer decedent’s gross estate 30 days for filing the return Commissioner or his duly authorized representative
Consideration < FMV at Insufficient consideration. Include in - must be filed with the Revenue District Office (RDO)
the time of transfer the gross estate (FMV @ the time of
death – Consideration received Place of Filing the Return – Prior to EOPTA
Time for Payment of the Estate Tax
Sale in ordinary course of Bonafide sale regardless of the
- GR: shall be paid at the time the return is filed by the
trade/business amount of consideration. Excluded
No consideration received Included if donation mortis causa
executor, administrator, or the heir(s)

Extension of time to Pay Estate Tax

3. MISCELLANEOUS ITEMS - may extend the time for payment of such tax or any part
a. Claims against insolvent persons thereof not to exceed five (5) years in case the estate is
- A judicial declaration of insolvency is not required but settled through the courts (Judicial Settlement), or two (2)
the incapacity of the debtor to pay his obligation should be proven. years in case the estate is settled extrajudicially
- As a rule, regardless of the amount the debtor is unable (extrajudicial settlement)
to pay, the full amount of the claim against the insolvent person
should be included in the gross estate of the decedent. The portion of
the claim which is not collectible should be allowed as a deduction
from the gross estate. Payment of Estate Tax by installment and partial
Collectible Portion = Debtor’s Assets/Debtor’s Liab x Claims disposition of estate
Uncollectible Portion = Claims – Collectible Portion
1. Cash Installment
b. Proceeds of Life Insurance
- shall be made within 2 years from the date of filing of
the state tax return using BIR Form 0605
- shall be filed within 1 year from the date of decedent’s
death
- frequency and the amount of each installment shall be
indicated, subject to the approval of BIR
- in case of lapse of 2 years without payment of entire tax
due, the remaining balance shall be due and demandable
subject to applicable penalties and interest reckoned
ESTATE TAX RATE from the prescribed deadline for filing
- the net estate of every decedent, whether resident or non- - no civil penalties or interest may be imposed on the
resident of the Philippines, shall be subject to an estate tax estates permitted to pay the estate tax due by
rate of 6% installment

FILING OD ESTATE TAX RETURN AND PAYMENT OF 2. Partial disposition of estate and application of its
ESTATE TAX DUE proceeds to the estate tax due
- Pay as you file System - disposition shall refer to the conveyance of property
with equivalent cash consideration

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FILING OF ESTATE TAX RETURN and PAYMENT OF THE LIABILITY FOR THE PAYMENT OF ESTATE TAX
TAX DUE UNDER RA 11976 OR THE EOPTA

PAYMENT BY INSTALLMENT
- In case the available cash of the estate is insufficient to pay
the 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, using the payment form
(BIR Form 0605) or a payment form dedicated for this
transaction for succeeding installment payments after filing
the first (1°') payment through the estate tax return.

CIVIL PENALTIES AND INTEREST

- Any amount paid after the statutory due date of the tax, but
within the extension period, shall be subject to interest but
not to surcharge. Penalty of 25% if there is no false or
fraudulent intent on the taxpayer. Penalty of 50% if there is
PROCESSING OF eCAR false, malice or fraudulent intent on the taxpayer, Interest
- regardless of where the tax returns and tax payments were shall be computed on the unpaid amount of tax from the
made, shall still be the RDO which has jurisdiction over the date computed until fully paid (20% prior to TRAIN Law;
issued TIN of the estate of the decedent 12% upon effectivity of the TRAIN Law).
PAYMENT OF ESTATE TAX
Payment of Tax Antecedent to the Transfer of Share,
Bonds or Rights (Sec. 97, as amended)