Bar Question (1994) (1) What is the principle of mobilia sequuntur personam? (2) Are donations inter vivos and donations mortis causa subject to estate taxes? Suggested answer: (1) Principle of mobilia sequuntur personam refers to the principle that taxation of intangible personal property generally follows the residence or domicile of the owner thereof. (2) Donations inter vivos are subject to donor’s gift tax (Sec. 91[a}, Tax Code) while donations mortis causa are subject to estate tax (See. 77, Tax Code). However, donations inter vivos constituted lifetime like transfers in contemplationTRANSFER Taxgs 425 Estate Tax of death or revocable tre Code) may be taxed for being that the transfero the time of his death. insfers (Sec. ‘S[b] and [ce], Tax estate tax pur poses, the theory rs control thereon extends up toBar Question (2016) Jennifer is the only daughter of Janina who was a resident ‘1 Los Angeles, California, U.S.A. Janina died in the U.S. leaving to Jennifer one million shares of Sun Life (Philippines), Inc., a corporation organized and existing under the laws of the Republic of the Philippines. Said shares were held in trust for Janina by the Corporate Secretary of Sun Life and the latter can vote the shares and receive dividends for Janina. The Internal Revenue Service (RS) of the U.S. taxed the shares on the ground that Janina was domiciled in the U.S. at the time of her death. (a) Can the CIR of the Philippines also tax the same shares? Explain. Suggested answer: (a) Yes. The property Philippines, tt us su irrespective of the citizens (Sec. 85, NIRC). However, alien at the time of her dea shares of stock can only be taxe reciprocity (Sec. 104, NIRC). being a property located in the bject to the Philippine estate tax hip or residence of the decedent if Janina is a non-resident th, the transmission of the d applying the principle of Bar Question (2014) | sph X-a Flipino residingn AIADAMD OS chin to hi * 2013 after undergoing a major . He le fe and two (2) kids several pro (1) Family home in Makati City; perties,430 REVIEWER ON TAXATION (2) Condominium unit in Las Pinas City; (3) Proceeds of health insurance from Take Care, a health maintenance organization in the Philippines; and (4) Land in Alabama, U.S.A. The following expenses were paid: (1) Funeral expenses; (2) Medical expenses; and (3) Judicial expense in the testate proceedings. (A) What are the items that must be considered as part of the gross estate income of Mr. X? Suggested answer: (A) All the items of properties enumerated in the problem shall form part of the gross estate of Mr. X. The composition of the gross estate of a decedent who is a Filipino citizen shall include all of his properties, real or personal, tangible or intangible, wherever situated (Sec. 85, NIRC). (NOTE: It is suggested that if the examinee answered NONE, the same should be given full credit because there is no gross estate INCOME, in the problem. Likewise, it is suggested that any answer should be given full credit because the question is worded in a confusing manner].Bar Question (2008) Jose Cerna, Filipino citizen, married to Maria Cerna, died in a vehicular accident in NLEX on July 10, 2007. The spouses owned, among others a 100-hectare agricultural land in Sta. Rosa, Laguna with current fair market value of P20 million, which was subject matter of a Joint Venture Agreement about to be implemented with Star Land Corporation (SLC), a well-known real estate development company. He bought the said real property for P2 million 50 years ago. On January 5, 2008, the administrator of the estate and SLC jointly announced their big plans to start conversion and development of the agricultural lands in Sta. Rosa, Laguna into first-class residential and commercial centers. As a result, the prices of real properties in the locality have doubled. The administrator of the Estate of Jose Cernan filed the estate tax return on January 9, 2008, by including in the gross estate the real property at P2 million. After nine months, the BIR issued deficiency estate tax assessment, by valuing the real property at P40 million. (a) Is the BIR correct in valuing the real property at P40 million? (b) If you disagree, what is the correct value to be used for estate tax purposes? Suggested answers: a. No, the BIR is wrong in valuing the real property at P40 million. The P40 million represents the value of the real property in 2008, after the announcement by the joint venture partners that development plans would be pursued in the area. The value of the gross estate of the decedent shall be determined by including the value at the time of death in 2007 of all property, real or personal, tangible or intangible, wherever situated (Sec. 85, NIRC). —b. . Since the fair market va lue of th ty at the time of death of Mr. Jose f the real property Cerna in 2007 was £20 million, Property after hig death — 3 5 whether i crease ~ is of no moment t tncreases or de for estate tax Purposes.Bar Question (2005) Ralph Donald, an American citizen, was a top executive of a U.S. company in the Philippines until he retired in 1999. He came to like the Philippines so much that following his retirement, he decided to spend the rest of his life in the country. He applied for and was granted a permanent resident status the following year. In the spring of 2004, while vacationing in Orlando, Florida, USA, he suffered a heart attack and died. At the time of his death, he left the following properties: (a) bank deposits with Citibank Makati and Citibank Orlando, Florida; (b) a rest house in Orlando, Florida; (c) a condominium unit in Makati; (d) shares of stock in the Philippine subsidiary of the U.S. Company where he worked; (e) shares of stock in San Miguel Corp. and PLDT; (f) shares of stock in Disney World in Florida; (g) U.S. treasury bonds; and (h) proceeds from a life insurance policy issued by a U.S. corporation. Which of the foregoing assets shall be included in the taxable gross estate in the Philippines? Explain. Suggested answer: Being a resident of the Philippines at the time of his death, the gross estate of Ralph Donald shall include all his property, real or Personal, tangible or intangible, wherever situated at the time of his death (Sec. 85, NIRC). Thus, the following shall be included in his ble gross estate in the Philippines: a. bank deposits with Citiban Orlando, Florida 6. arest house in Orlando, Florida k Makati and Citibank C. acondominium unit in MakatiEWER ON TAXATION 436 a= shares of stock in the Philippine subsidiary of the U.g company e. shares in San Miguel Corp. and PLDT f. _ shares of stock in Disney world in Florida g. U.S. treasury bonds The proceeds from a life insurance policy issued by a US. corporation is included as part of the gross estate of Ralph Donald, if the designation of the beneficiary is revocable or irrespective of the nature of the designation, if the designated beneficiary js either the estate of the deceased, his executor or administrator. If the designated beneficiary is other than the estate, executor, or administrator and the designation is irrevocable, the proceeds shall not form part of his gross estate (Sec. 85[E], NIRC). Bar Question (1994) Jose Ortiz owns 100 hectares of agricultural land planted to coconut trees. He died on May 30, 1994. Prior to his death, the government, by operation of law, acquired under the Comprehensive Agrarian Reform Law all his agricultural lands except five hectares. Upon the death of Ortiz, his widow asked you how she will consider the 100 hectares of agricultural land in the preparation of the estate tax return. What advice will you give her? Suggested answer: The 100 hectares of land which J “ch prior to his death on May , ose Ortiz owned but whic Bar Question (1994) Cliff Rob os of the Philippines, Ren etican citizen, was a permanent resident of Meralco, a condomini, din Miami, Florida. He left 10,000 shares Pasig, Metro Manila ate unit at the Twin Towers Building 4 and a house and lot in Los Angeles, California. What assets filed with the it ea be included in the Estate Tax Return to beTRANSFER TAXES 437 Estate Tax Suggested answer: All of Mr. Robertson's assets, consisting of 10,000 shares in the Meralco, a condominium unit in Pasig, and his house and lot in Los Angeles. California, are taxable. The properties of a resident alien decedent like Mr. Robertson are taxable wherever situated (Secs. 77, 78 and 98, NIRC).Bar Question (2013) Mr. Agustin, 75 years old and suffering from an incurable disease, decided to sell for valuable and sufficient consideration, a house and lot to his son. He died one year later. In the settlement of Mr. Agustin’s estate, the BIR argued that the house and lot were transferred in contemplation of death and should therefore form part of the gross estate for estate tax purposes. Is the BIR correct? Suggested answer: No. The house and lot were not transferred in contemplation of death, therefore, these properties should not form part of the decedent’s440 REVIEWER ON TAXATION as a transfer in contemplation of death, he transfer must be either without consideration or for Nsufficiens consideration. Since the house and lot were sold for valuable and sufficient consideration, there is no transfer in contemplation of death for estate tax purposes (Sec. 85[B], NIRC). gross estate. To qualify Bar Question (2001) A, aged 90 years and suffering from incurable cancer, on Augugt 1, 2001 wrote a will and, on the same day, made several inter viyos 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 grogg estate? Explain your answer. Suggested 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 (De Roces v. Posadas, 58 Phils. 108 [1933]). 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 estate.Bar Question (2009) In 1999, Xavier purchased from his friend, Yuri, a painting for P500,000. The fair market value of the painting at the time ofEWER ON TAXATION 442 Rev ‘li - 2:4 all the corresponding taxes P1 million. Yur! paid all th or purchase on In 2001, Xavier died. In his last will and testament, Xavier bequest inting, already worth P1.5 million, to hig ier bequeathed the pal } way oe “Zaniliro. The will also granted Zandro the power to appoint his wife ‘Wilma, as successor to the painting 1n the event of Zandro’s death. Zandro died in 2007, and Wilma succeeded to the property, (a) Should the painting be included in the gross estate of Xavier in 2001 and thus, be subject to estate tax? (b) Should the painting be included in the gross estate of Zandro in 2007 and thus, be subject to estate tax? (c) May a vanishing deduction be allowed in either or both of the estates? Suggested answers: The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated (Sec. 85, NIRC). Accordingly, the fair market value of the painting in 2001, which was owned by Xavier at the time of his death, should be included in the gross estate of Xavier and be subject to estate tax. b. The value of the painting in 2007, which was bequeathed by Xavier to Zandro by will in 2001 with power to appoint his wife, Wilma, as successor to the painting, should not be included in the gross estate of Zandro. Only property passing under a general power of appointment is included in the gross estate of the decedent. In this case, the painting has to be transferred by Zandro to his wife, Wilma, based on the will of his father, Xavier, and since the power of appointment granted by Xavier to Zandro is specific (1.¢., only to his wife), such property should not be included in his gross estate in 2007. a. c. No, vanishing deduction is not available to both Estates of Xavier and Zandro because in the case of Xavier, he acquired the painting by purchase, and in the case of Zandro, the painting shall not be included in his gross estate; hence, there would be no double taxation of the same property, for estate tax Purposes. Moreover the two deaths must occur within a Period of five eure. In this case, the death of Zandro occurred in 2007, and more than five years have, therefore, el ; , th of Xavier in 2001. fore, elapsed from the date of deaBar Question (2003) In June 2000, X took out a life surance policy on his own life in the amount of P2,000,000. He designated his son, Z, as his beneficiary with respect to P1,000,000, reserving his right to substitute him for another. X died in September 2003. Are the proceeds of life insurance to form part of the gross estate of X? Explain. Suggested answer: Only the proceed of P1,000,000 given to the son, Z, shall form part of the gross estate of X. Under the Tax Code, proceeds of life insurance shall form part of the gross estate of the decedent to the extent of the amount receivable by the beneficiary designated in the policy of insurance except when it is expressly stipulated that the designation of the beneficiary is irrevocable. As stated in the problem, only the designation of Y is irrevocable, and the decedent reserved the right to substitute Z as beneficiary for another person. Accordingly, the proceeds received by Y shall be excluded, while the proceeds received by Z i edi y Z shall be included in the gross estate of X (Sec. 85[E];Bar Question (1999) A died, survived by his wife and three children. The estate tax was properly paid and the estate settled and divided and distributed among the four heirs. Later, the BIR found out that the estate failed to report the income received by the estate during administration. The BIR issued a deficiency income tax assessment plus interest, surcharges and penalties. Since the three children are residing abroad, the BIR sought to collect the full tax deficiency only against the widow. Is the BIR correct? Suggested answer: _ Yes. The BIR is correct. In a case where the estate has been distributed to the heirs, the collection remedies available to the BIR “aTRANSFER Taxes 449 Estate Tax cuneral expenses Amounts for actual funeral expenses or in an amount equal to five percent of the gross estate, whichever is lower, but in no case to exceed P200,000 shall be deducted from gross estate (Sec. S86/A] [1] NIRC). This deduction from a decedent’s gross estate has been removed under R.A. 10963 (TRAIN), effective J anuary 1, 2018. Bar Question (2014) Mr. X, a Filipino residing in Alabama. U.S.A., died on January 2, 2018 after undergoing a major heart surgery. He left behind to his wife and two kids several properties, to wit: (1) (2) (3) (4) Family home in Makati City; Condominium unit in Las Pijias City: Proceeds of health insurance from Take Care. a health maintenance organization in the Philippines: and Land in Alabama, U.S.A. The following expenses were paid: (B) (1) Funeral expenses; (2) Medical expenses; and (3) Judicial expense in the testate proceedings. What are the items that may be considered as deductions from the gross estate? Suggested answer: (B) All the items of expenses in the problem are deductible from his gross estate. However, the allowable amount of funeral expenses shall be five percent of the gross estate or actual, whoever is lower, but in no case shall the amount deductible to go beyond P200,000. Likewise, the deductible medical expenses must be limited to those incurred within one year prior to his death but not to exceed P500,000. In addition to the items of expenses mentioned in the problem, there is also allowed as a deduction from the gross estate the standard deduction amounting to PI million (Sec. 86, NIRC) (See amendments introduced by R.A. 10963 (TRAIN), effective January 1, 2018).450 REVIEWER ON TAXATION Bar Question (2014) During his lifetime, Mr. Sakitin obtained a loan amounting to P10 million from Bangko Uno for the purchase of a parcel of land located in Makati City, using such property as collateral for the loan. The loan was evidenced by a duly notarized promissory note. Subsequently, Mr. Sakitin died. The heirs of Mr. Sakitin deducted the amount of P2 million from the gross estate, as part of the “Claims against the Estate.” Such deduction was disallowed by the Bureay of Internal Revenue (BIR) Examiner, claiming that the mortgaged property was not included in the computation of the gross estate. Do you agree with the BIR? Explain. Suggested answer: Yes. Unpaid mortgages upon, or any indebtedness with respect to property are deductible from the gross estate only if the value of the decedent’s interest in said property, undiminished by such mortgage or indebtedness, is included in the gross estate (Sec. 86[A] [Ife], NIRC). In the instant case, the interest of the decedent in the property purchased from the loan where the said property was used as the collateral, was not included in the gross estate. Accordingly, the unpaid balance of the loan at the time of Mr. Sakitin’s death is not deductible as “Claims against the Estate.” Bar Question (2001) On the first anniversary of the death of Y, his heirs hosted a sumptuous dinner for his doctors, nurses, and others who attended to Y during his last illness. The 50,000. Compared to his gross esta percent of the estate. Is the Said co his one year death anniversary d Explain your answer, te, the 50,000 did not exceed five st of the dinner to commemorate eductible from his gross estate? Suggested answer: No. This expe ’ deductions from Pense will not fall under any of the allowable &T0SS estate. ; . . funeral expenses or medica! Whether viewed in the context of eitherjand are allowed only if incurred by i f , prior 0 his death (Sec. 86/Ajj6) NRC,” decedent within one year claims against the Estate Claims against the estate shall be deductible ¢ SL : . 2 ible fre $9 rovided that ay ae Tae thie Indebtedness was incurred, the win instrument be " tle dn ized and, if the loan wag contracted within three year’ i submit cath of the decedent, the administrator or executor § nh : 4 statemen ng the disposition of the proceeds of the loan (Sec. 86/[c], NIRC). The requirements for the ded 2 Uctibility of Claims against the 1. They were contract ed in good fait and full considerat; : h and for an adequate on 1n money or money's worth: Ng against the estate; They must be enforced by the claimants: They must be exist They must be reasonably certain in amount: and At the time the indebtedness instrument was duly notarize contracted within three years decedent, the administrator or statement showing the dispositi loan (P.D. 1994). oo fF & bt was incurred, the debt d and, if the loan was before the death of the executor shall submit a on of the proceeds of the An indebtedness that has been condoned or has prescribed may not be claimed as a deduction (Bocanegra v. Collector, CTA Case No. 420, October 12, 1959). Unpaid taxes such as income and real estate taxes that accrued after the death of the decedent are not deductible from gross estate as they are properly chargeable to the income of the estate (Dela Vina v. Collector, 65 Phil. 620 [1939]). In the testate or intestate proceedings to settle the estate of a deceased person, the properties of the estate are under the jurisdiction of the court until they have been distributed among the heirs entitled thereto (Domingo v. Garlitos, 8 SCRA 443 [1963]). Bar Question (2015) State the conditions for allowing the following as deductions from the gross estate of a citizen or resident alien for the purpose of ‘Mposing estate tax: a. Claims against the estate.452 REVIEWER ON TAXATION Suggested answer: a. In order that claims against the estate may be allowed deductions from the gross estate of a citizen or resiclens alien for purposes of imposing the estate tax, the lay requires that at the time the indebtedness was incurred the debt instrument was duly notarized. In addition, if the loan was contracted within three years before the death of the decedent, the executor or administrator shall submit a statement showing the disposition of the proceeds of the loan (Sec. 86[A][1][c], NIRC).Bar Question (2014) During his lifetime, Mr. Sakitin obtained a loan amounting to r the purchase of a parcel of land such pro ; Joan. The loan was evidenced by a duly ota eee ad the Subsequently, Mr. Sakitin died. At the time of his death ‘ie note. balance of the loan amounted to 2 million. The heirs Mr. unpai deducted the amount of 2 m ° - Sakitin ilion from the gross estate ary: , as part of the “Claims against the Estate.” Such deduction was disallowed by the Bureau of Internal Revenue (BIR) Examiner, claiming that the mortgaged property was not included in the computation of the gross estate. Do you agree with the BIR? Explain. Suggested answer: Yes. Unpaid mortgages upon, or any indebtedness with respect to property are deductible from the gross estate only if the value of the decedent’s interest in said property, undiminished by such mortgage or indebtedness, is included in the gross estate (Section 86[Aj[1][e], NIRC). In the instant case, the interest of the decedent in the property purchased from the loan where the said property was used as the collateral, was not included in the gross estate. Accordingly, the unpaid balance of the loan at the time of Mr. Sakitin’s death is not deductible as “Claims against the Estate.’Bar Question (2015) State the conditions for allowing the following as deductions from the gross estate of a citizen or resident alien for the purpose of imposing estate tax: b. Medical Expenses. Suggested answer: b. The conditions for the allowance of medical expenses as deductions from the gross estate of a citizen or resident alien are: (1) The medical expenses must have been incurred within one (1) year before the death of the decedent; (2) That the medical expenses are duly substantiated with hereof, whether paid receipts; and (3) The total amount t or unpaid does not exceed P500,000. 00 (Sec. 86{A][6], NIRC).Bar Question (2017) Casimira died on June 19, 2017, after three weeks ofconfinemen; due to an unsuccessful liver transplant. For her confinement, she had incurred substantial medical expenses that she financed through personal loans secured by mortgages on her real properties, Her heirs are still in the process of making an inventory of her assets that she can used to pay the estate taxes, if any, which are due on December 19, 2017. (a) Are the medical expenses, personal loans and mortgages (b) incurred by Casimira deductible from her gross estate? Explain your answer. May the heirs of Casimira file the estate tax return and pay the corresponding estate tax beyond December 19, 2017, without incurring interest and surcharge? Explain your answer Suggested answer: (a) (b) Yes, subject to certain conditions set by the NIRC. As for the medical expenses, they must be incurred within one year from death, whether paid or unpaid, and the amount must not exceed P500,000. As for the personal loans, it is required that the loan document must be notarized and if incurred within three years from date of death, the executor or administrator shall submit a statement showing the disposition of the proceeds of the loan. As to the mortgages, it is required that the fair market value of Casimira’s interest in said property, undiminished by such mortgage or indebtedness, is included in the value of the gross estate. The claims for personal loans an mortgages must have been contracted bona fide and for a” adequate consideration in , Sec. money or money’s worth ( 86, 1997 NIRC, as amended). » cL pears may file the estate tax returns beyond Decems! extension oe "8 as they filed a request for a ret ektenais : exceeding 30 days. Once the request , ” has been granted and the return filed within tTRANSFER TAXES “ws 459 Estate Tax extended period following the ‘pay-as-you-file” procedure only the interest on extended payment may be imposed but not the surcharge. Interest and surcharge, however, may be imposed upon failure of the heirs to file and pay the estate tax within the extended period granted by the CIR (Secs. 248[A] and 249[Dj, 1997 NIRC, as amended). Section 91, on the other hand, allows for the extension of time to pay the estate tax due, for a period not exceeding five years in case the estate is settled through the courts, or two years in case the estate is settled extrajudicially. If an extension is granted, the interest on extended payment may be imposed. The Commissioner may require the executor, or administrator, or beneficiary, as the case may be, to furnish a bond in an amount not exceeding double the amount of the tax and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance with the terms of the extension. Bar Question (2008) While driving his car to Baguio City last month, Pedro Asuncion, together with his wife, Assunta, and only son, Jaime, met an accident that caused the instantaneous death of Jaime. The following day, Assunta also died in a hospital. The spouses and their son had the following assets and liabilities at the time of death: Assunta Exclusive Conjugal Jaime Cash P10,000,000 ?1,200,000 Cars P2,000,000 500,000 Land 5,000,000 2,000,000 Residential house 4,000,000 Mortgage payable 2,500, 000 300,000 Funeral expenses a Is the Estate of Jaime Asuncion liable to estate tax? Explain. b Ig vanishing deduction ap Asuncion? Explain. plicable to the Estate of Assunta460 REVIEWER ON TAXATION Suggested answers: The Estate of Jaime Asuncion is not liable to estate tax. the time of death, his gross estate amounted to P] »200,000, Since his estate is entitled to standard deduction of pj million and funeral expenses equivalent to five percen; of his gross estate not exceeding P200,000, plus the fact tha; the first P200,000 of his net estate is exempt from estate tax, there would be no estate tax due on his net estate. da. b. No, there would be no vanishing deduction allowed to the Estate of Assunta Asuncion, since she did not inherit or receive any property from her deceased son, Jaime, tha; was previously subjected to estate tax or donor’s tax. While her estate could be entitled to receive one-half of P1.2 million (or P600,000) cash deposit from her deceased son, this is exempt from estate tax, as explained above. To be entitled to the vanishing deduction, it is important that the property (cash of P600,000 in the instant case) must have been taxed in the estate of a prior decedent. Bar Question (1994) What is vanishing deductions in estate taxation? Suggested answer: Vanishing deductions or property previously taxed in estate taxation refers to the diminishing deductibility/exemption, at the rate of 20% over a period of five years until it is lost after the fifth year, of any property (situated in the Philippines) forming part of the gross estate, acquired by the decedent from a prior decedent who died within a period of five years from the decredantic deathBar Question (2006) Varnishing deduction is availed of by taxpayers to: a. correct his accounting records to reflect the actual deductions made; b. reduce his gross income; c. reduce his output value-added tax liability; d. reduce his gross estate. Choose the correct answer. Explain. Suggested answer: I choose (d), reduce his gross estate. Vanishing deduction or property previously taxed is one of the items of deductions allowed ee the net estate of a decedent (Sec. 86{A][2] and 86/B][2], Di Bar Question (2000) a) Discuss the rule on situs of taxation with respect to the imposition of the estate tax on property left behind by a non-resident decedent. Suggested answer: The value of the gross estate of a non-resident decedent who is a Filipino citizen at the time of his death, shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated to the extent of the nserett therein of the decedent at the time of his death (Sec. 85 ee RC). These Properties shall have a situs of taxation in the ilippines; hence, subject to Philippine estate taxes. ee en ReTRANSFER TAXES 463 Estate Tax b) Mr. Felix de la Cruz, a bachelor resident citizen, suffered from a heart attack while on a business trip to the USA. He died intestate on June 15, 2000 in N ew York City, leaving behind real properties situated in New York; his family home in Valle Verde, Pasig City; an office condominium in Makati City; shares of stocks in San Miguel Corporation; cash in bank; and personal belongings. The decedent is heavily insured with Insular Life. He had no known debts at the time of his death. As the sole heir and appointed Administrator, how would you determine the gross estate of the decedent? What deductions may be claimed by the estate and when and where shall the return be filed and estate tax paid? Suggested answer: The gross estate shall be determined by including the value at the time of his death all of the properties mentioned, to the extent of the interest he had at the time of his death because he is a Filipino citizen (Sec. 85[A], NIRC). With respect to the life insurance proceeds, the amount includible in the gross estate for Philippine tax purposes would be to the extent of the amount receivable by the estate of the deceased, his executor, or administrator, under policies taken out by decedent upon his own. life, irrespective of whether or not the insured retained the power of revocation or to the extent of the amount receivable by any beneficiary designated in the policy of insurance, except when it is expressly stipulated that the designation of the beneficiary is irrevocable (Sec. 85[E], NIRC). The deductions (under R.A. 8424) that may be claimed by the estate are: I) The actual funeral expenses or in an amount equal to five percent of the gross estate, whichever is lower, but in no case to exceed two hundred thousand pesos (P200,000) (Sec. 86{A]f1][{a], NIRC); 2) The judicial expenses in the testate or intestate proceedings (Sec. 86{A][1], NIRC); 3) The value of the decedent’s family home located in Valle Verde, Pasig City in an amount not exceeding one million besos (P 1,000,000) and upon presentation of a certification