REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
Quezon City

Bureau of Internal Revenue Ruling

85; 97; 98 000-00 010-2003 Person to Contact: Chief, Law Division

Tel. Nos. 926-55-36 / 927-09-63
September 08, 2003
Date: ___________________

ISHIWATA GATMAYTAN & ASSOCIATES

No. 12, ADB Avenue, Ortigas Center
1550 Mandaluyong City, Metro Manila

Attention: Atty. Ma. Cecilia Salazar-Santos

Partner

Gentlemen:

This refers to your letter dated June 18, 2001 requesting on behalf of your client,
Banco de Oro Universal Bank, for a confirmation of your opinion that a Survivorship
Agreement executed by the joint depositors under a joint deposit account expressly
stipulating that upon death of any one of the joint depositors, the entire remaining balance of
the deposit shall belong to the surviving depositor/s and, in effect, may be forthwith
withdrawn by the latter notwithstanding the provisions of Section 97 of the 1997 Tax Code.

In reply, please be informed that the second paragraph of Section 97 of the 1997 Tax
Code, which provides to wit:

If a bank has knowledge of the death of a person, who

maintained a bank deposit account alone, or jointly with another, it
shall not allow any withdrawal from the said deposit account, unless
the Commissioner has certified that the taxes imposed thereon by this
Title have been paid; Provided, however, That the administrator of the
estate or any one (1) of the heirs of the decedent may, upon
authorization by the Commissioner, withdraw an amount not exceeding
Twenty thousand pesos (P20,000) without the said certification. For
this purpose, all withdrawal slips shall contain a statement to the effect
that all of the joint depositors are still living at the time of withdrawal
by any one of the joint depositors and such statement shall be under
oath by the said depositors.

(Emphasis supplied)

As can be readily gleaned from the Survivorship Agreement, the funds deposited in
the joint deposit account are under co-ownership because the ownership or right over the
same belong to different persons, the joint depositors. The share or portion belonging to the
joint depositors in the joint deposit account shall be presumed equal and the benefits as well
as the charges in the joint account shall be proportional to their respective shares. [Arts. 484
and 485, Civil Code]

In the Survivorship Agreement, the joint depositors cannot withdraw any portion of
the said deposit account without the consent of the other. However, upon death of any of
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010-2003 September 08, 2003

them, the whole amount of the funds shall belong to the surviving co-depositor/s, and may
forthwith be withdrawn by the latter. The said provision contained in the agreement is valid
and binding between the joint depositors but it has an effect of a gift or donation morits
causa made by the deceased co-depositor during his lifetime but effective upon death
because the acquisition by the survivor of the share of the decedent in the joint account is
considered to be acquired by bequest and hence subject to estate tax under Section 84 of the
1997 Tax Code.

Considering that the joint account is co-owned by the depositors, there is a

presumption that they owned it equally or in 50/50 shares, in which case, the transfer of the
remaining balance of the whole deposit to the surviving co-depositor/s upon death of the
other co-depositor pursuant to their Survivorship Agreement is a transfer made by the said
depositor in contemplation of death, as provided under Section 85(B) of the 1997 Tax Code,
viz:

“(B) Transfer in Contemplation of Death – To the extent of any interest therein

of which the decedent has at any time made a transfer, by trust or otherwise, in
contemplation of or intended to take effect in possession or enjoyment at or after death,
or of which he has at any time made a transfer, by trust or otherwise, under which he has
retained for his life or for any period which does not in fact end before his death (1) the
possession or enjoyment of, or the right to the income from the property, or (2) the right,
either alone or in conjunction with any person, to designate the person who shall possess
or enjoy the property or the income therefrom; except in case of a bona fide sale for an
adequate and full consideration in money or money’s worth.”

Thus, upon the death of the co-depositors, the 50% share of the deceased co-depositor in the
deposit shall be included in computing the value of his gross estate.

Hence, the funds in the joint deposit account cannot be withdrawn by the surviving
co-depositor/s unless the Commissioner has certified that the taxes imposed thereon by Title
III of the 1997 Tax Code have been paid; Provided, however, That the administrator of
the estate or any one (1) of the heirs of the deceased co-depositor may, upon the
authorization by the Commissioner, withdraw an amount not exceeding Twenty thousand
pesos (P20,000.00) without the said certification.
Very truly yours,

(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue

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