1.

Basic principles, concept, and definition

Sections 84 and 88
Case(s) - G.R. No. L-43082, Lorenzo vs Posadas 18 June 1937

SEC. 84. Rate of Estate Tax. - There shall be levied, assessed, collected and paid upon the transfer of the
net estate as determined in accordance with Sections 85 and 86 of every decedent, whether resident or
nonresident of the Philippines, a tax at the rate of six percent (6%) based on the value of such net
estate.

SEC. 88. Determination of the Value of the Estate. -

(A) Usufruct. - To determine the value of the right of usufruct, use or habitation, as well as that of
annuity, there shall be taken into account the probable life of the beneficiary in accordance with the
latest Basic Standard Mortality Table, to be approved by the Secretary of Finance, upon
recommendation of the Insurance Commissioner.

(B) Properties. - The estate shall be appraised at its fair market value as of the time of death. However,
the appraised value of real property as of the time of death shall be, whichever is higher of -

(1) The fair market value as determined by the Commissioner; or

(2) The fair market value as shown in the schedule of values fixed by the Provincial and City Assessors.

Lorenzo v. Posadas, 64 Phil. 353, June 18, 1937

FACTS:

On May 27, 1992, Thomas Hanley died leaving a will and considerable amount of real and personal
properties. Under the will, the real properties were to pass to Thomas’ nephew Matthew ten years after
the two executors named in the will was appointed trustee. During petitioner Lorenzo’s incumbency as
trustee, the defendant Collector of Internal Revenue assessed against the estate an inheritance tax in
the amount of P1,434.24 which, together with the penalties for delinquency in payment, amounted to
P2,052.74. Lorenzo paid the said amount under protest, notifying defendant Posadas that unless the
amount was promptly refunded suit would be brought for its recovery. Posadas overruled Lorenzo’s
protest and refused to refund the said amount. Lorenzo went to the CFI but the latter dismissed his
complaint and Posadas’ counterclaim.

ISSUE:

When does the inheritance tax accrue and when must it be satisfied?

HELD:

The accrual of the inheritance tax is distinct from the obligation to pay the same. Section 1536 as
amended, of the Administrative Code, imposes the tax upon "every transmission by virtue of
inheritance, devise, bequest, gift mortis causa, or advance in anticipation of inheritance, devise, or
bequest." The tax therefore is upon transmission or the transfer or devolution of property of a
decedent, made effective by his death. From the fact, however, that Thomas Hanley died on May 27,
1922, it does not follow that the obligation to pay the tax arose as of the date. The time for the payment
on inheritance tax is clearly fixed by section 1544 of the Revised Administrative Code as amended by Act
No. 3031, in relation to section 1543 of the same Code. The two sections follow: SEC. 1543. Exemption
of certain acquisitions and transmissions. — The following shall not be taxed: (a) The merger of the
usufruct in the owner of the naked title. (b) The transmission or delivery of the inheritance or legacy by
the fiduciary heir or legatee to the trustees. (c) The transmission from the first heir, legatee, or donee in
favor of another beneficiary, in accordance with the desire of the predecessor. SEC. 1544. When tax to
be paid. — The tax fixed in this article shall be paid: (a) In the second and third cases of the next
preceding section, before entrance into possession of the property. (b) In other cases, within the six
months subsequent to the death of the predecessor; but if judicial testamentary or intestate
proceedings shall be instituted prior to the expiration of said period, the payment shall be made by the
executor or administrator before delivering to each beneficiary his share. The instant case does fall
under subsection (a), but under subsection (b), of section 1544 above-quoted, as there is here no
fiduciary heirs, first heirs, legatee or donee. Under the subsection, the tax should have been paid before
the delivery of the properties in question to P. J. M. Moore as trustee on March 10, 1924.

2. Classification of decedent
Section 84

SEC. 84. Rate of Estate Tax. - There shall be levied, assessed, collected and paid upon the transfer of the
net estate as determined in accordance with Sections 85 and 86 of every decedent, whether resident or
nonresident of the Philippines, a tax at the rate of six percent (6%) based on the value of such net
estate.

3. Determination of gross and net estate

Sections 85 and 104
Case(s)
- G.R. No. L-29204, Zapanta vs Posadas 29 December 1928
- G.R. No. L-30885, Tuason vs Posadas 23 January 1930
- G.R. No. L-36770, Dison vs Posadas 4 November 1932
- G.R. No. L-34937, Vidal de Roces vs Posadas 13 March 1933

SEC. 85. Gross Estate. - 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: Provided, however, that in the case of a nonresident decedent who at the time of his death
was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the
Philippines shall be included in his taxable estate.

(A) Decedent's Interest. - To the extent of the interest therein of the decedent at the time of his death;

(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.

(C) Revocable Transfer. -

(1) To the extent of any interest therein, of which the decedent has at any time made a transfer (except
in case of a bona fide sale for an adequate and full consideration in money or money's worth) by trust or
otherwise, where the enjoyment thereof was subject at the date of his death to any change through the
exercise of a power (in whatever capacity exercisable) by the decedent alone or by the decedent in
conjunction with any other person (without regard to when or from what source the decedent acquired
such power), to alter, amend, revoke, or terminate, or where any such power is relinquished in
contemplation of the decedent's death.

(2) For the purpose of this Subsection, the power to alter, amend or revoke shall be considered to exist
on the date of the decedent's death even though the exercise of the power is subject to a precedent
giving of notice or even though the alteration, amendment or revocation takes effect only on the
expiration of a stated period after the exercise of the power, whether or not on or before the date of
the decedent's death notice has been given or the power has been exercised. In such cases, proper
adjustment shall be made representing the interests which would have been excluded from the power if
the decedent had lived, and for such purpose if the notice has not been given or the power has not been
exercised on or before the date of his death, such notice shall be considered to have been given, or the
power exercised, on the date of death.

(D) Property Passing Under General Power of Appointment. - To the extent of any property passing
under a general power of appointment exercised by the decedent: (1) by will, or (2) by deed executed in
contemplation of, or intended to take effect in possession or enjoyment at, or after his death, or (3) by
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 (a) the possession or enjoyment of,
or the right to the income from, the property, or (b) the right, either alone or in conjunction with any
person, to designate the persons 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.

(E) Proceeds of Life Insurance. - To the extent of the amount receivable by the estate of the deceased,
his executor, or administrator, as insurance under policies taken out by the 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.

(F) Prior Interests. - Except as otherwise specifically provided therein, Subsections (B), (C) and (E) of this
Section shall apply to the transfers, trusts, estates, interests, rights, powers and relinquishment of
powers, as severally enumerated and described therein, whether made, created, arising, existing,
exercised or relinquished before or after the effectivity of this Code.
(G) Transfers for Insufficient Consideration. - If any one of the transfers, trusts, interests, rights or
powers enumerated and described in Subsections (B), (C) and (D) of this Section is made, created,
exercised or relinquished for a consideration in money or money's worth, but is not a bona fide sale for
an adequate and full consideration in money or money's worth, there shall be included in the gross
estate only the excess of the fair market value, at the time of death, of the property otherwise to be
included on account of such transaction, over the value of the consideration received therefor by the
decedent.

(H) Capital of the Surviving Spouse. - The capital of the surviving spouse of a decedent shall not, for the
purpose of this Chapter, be deemed a part of his or her gross estate.

SEC. 104. Definitions. - For purposes of this Title, the terms 'gross estate' and 'gifts' include real and
personal property, whether tangible or intangible, or mixed, wherever situated: Provided, however, That
where the decedent or donor was a nonresident alien at the time of his death or donation, as the case
may be, his real and personal property so transferred but which are situated outside the Philippines
shall not be included as part of his 'gross estate' or 'gross gift’: Provided, further, That franchise which
must be exercised in the Philippines; shares, obligations or bonds issued by any corporation or sociedad
anonima organized or constituted in the Philippines in accordance with its laws; shares, obligations or
bonds by any foreign corporation eighty-five percent (85%) of the business of which is located in the
Philippines; shares, obligations or bonds issued by any foreign corporation if such shares, obligations or
bonds have acquired a business situs in the Philippines; shares or rights in any partnership, business or
industry established in the Philippines, shall be considered as situated in the Philippines: Provided, still
further, that no tax shall be collected under this Title in respect of intangible personal property:

(a) if the decedent at the time of his death or the donor at the time of the donation was a citizen and
resident of a foreign country which at the time of his death or donation did not impose a transfer tax of
any character, in respect of intangible personal property of citizens of the Philippines not residing in that
foreign country, or

(b) if the laws of the foreign country of which the decedent or donor was a citizen and resident at the
time of his death or donation allows a similar exemption from transfer or death taxes of every character
or description in respect of intangible personal property owned by citizens of the Philippines not
residing in that foreign country.

The term 'deficiency' means:

(a) the amount by which tax imposed by this Chapter exceeds the amount shown as the tax by the donor
upon his return; but the amount so shown on the return shall first be increased by the amount
previously assessed (or Collected without assessment) as a deficiency, and decreased by the amounts
previously abated, refunded or otherwise repaid in respect of such tax, or

(b) if no amount is shown as the tax by the donor, then the amount by which the tax exceeds the
amounts previously assessed, (or collected without assessment) as a deficiency, but such amounts
previously assessed, or collected without assessment, shall first be decreased by the amount previously
abated, refunded or otherwise repaid in respect of such tax.
Zapanta vs. Posadas, 52 Phil. 557, December 29, 1928

FACTS:

Father Braulio Pineda instituted his sister Irene Pineda as the his sole heiress. During his lifetime, he
donated some of his property to the six plaintiffs in this case with the condition to pay him a certain
amount of rice, and others of money every year, and with the express provision that failure to fulfill this
condition would revoke the donations ipso facto. These plaintiffs, relatives of Fr. Pineda, filed an action
against the Collector of Internal Revenue as they were made to pay inheritance taxes on the properties
donated to them. They paid under protest and claimed that the donation was inter vivos, thus not
subject to inheritance tax.

ISSUE:

Whether or not the deeds of donation executed by Fr. Pineda was inter vivos.

RULING: The Supreme Court ruled in the affirmative. The court took notice of the fact that the nature of
the deeds of donation executed by Fr. Pineda were subject to certain conditions which were irrevocable.
The fact that these donations are revocable, give them the character of donations mortis causa,
inasmuch as the revocation is not the failure to fulfill the condition imposed. In relation to the donor's
will alone, these donations are irrevocable. Furthermore, the donation was given effect through the
acceptance of the donees during the lifetime of Fr. Pineda. The death of Fr. Pineda merely fixed the term
within which the condition must be fulfilled. Thus, since the deeds of donation were inter vivos, the
property donated to the plaintiffs should not be subject to inheritance tax, which is only applied to
donations mortis causa.

TUASON vs. POSADAS G.R. No. L-30885             January 23, 1930

Facts:

Esperanza Tuason y Chuajap made a donation inter vivos  of certain property to plaintiff Mariano Tuason
y Angeles. She made another donation inter vivos  to Alfonso Tuason y Angeles, the other plaintiff.

Furthermore, the defendant collected from plaintiffs Mariano Tuason y Angeles and Alfonso Tuason y
Angeles against their opposition and over their protest as inheritance tax upon the gifts inter vivos  made
to them.

Issue:

Whether the collection of these amounts as inheritance tax is authorized by the law.

Ruling:

When the law say all gifts, it doubtless refers to gifts inter vivos, and not mortis causa. Both the letter
and the spirit of the law leave no room for any other interpretation. It is the tenor of the language which
refers to donation that took effect before the donor's death, and not to mortis causa  donations, which
can only be made with the formalities of a will, and can only take effect after the donor's death.
Appearing that the appellees after the death of Esperanza Tuason y Chuajap, were found to be legatees
under her will, the donation inter vivos she had made to them in 1922 and 1923, must be added to the
net amount that is to be taxed.

Dison v. Posadas, G.R. No. 36770 November 4, 1932

FACTS:

 Plaintiff Luis Dison filed a suit against CIR to recover inheritance tax paid under protest amounting to
P2,808.73. Felix Dison, plaintiff's father executed a deed of gift which transferred 22 tracts of land,
reserving to himself during his lifetime the usufruct of 3 tracts. The donation was formally accepted by
plaintiff.  The plaintiff (herein petitioner) alleged in his complaint that the tax is illegal since he
received the property by a deed of gift inter vivos duly accepted and registered before the death of his
father. He also contended that Act 2601 being an inheritance tax statute, does not tax gifts. The
defendant answered in general denial with a countermand. The court dismissed the countermand. Both
sides appealed, but the CIR appeal was dismissed.

ISSUE:

Whether or not the gifts inter vivos are taxable (inheritance tax)

RULING:

YES. Inheritance tax is imposed upon the gift inter vivos that plaintiff received from his father as this was
really an advancement upon the inheritance to which he would be entitled upon the death of the latter.
Sec. 1540 of the Administrative Code did not tax gifts per se but only those which are made to those
who shall prove to be heirs, devisees, legatees and donees mortis causa of the donor. The term 'heirs'
include those given the status of heirs irrespective of the quantity of property they may receive as such.

Vidal de Roces v. Posadas, G.R. No. 34937 March 13, 1933

FACTS:

 Sometime in 1925, plaintiffs Concepcion Vidal de Roces and her husband, as well as one Elvira
Richards, received as donation several parcels of land from Esperanza Tuazon. They took possession of
the lands thereafter and likewise obtained the respective transfer certificates.

 The donor died a year after without leaving any forced heir. In her will, which was admitted to
probate, she bequeathed to each of the donees the sum of P5,000. After the distribution of the estate
but before the delivery of their shares, the CIR (appellee) ruled that plaintiffs as donees and legatees
should pay inheritance taxes. The plaintiffs paid the taxes under protest.

 CIR filed a demurrer on ground that the facts alleged were not sufficient to constitute a cause of
action. The court sustained the demurrer and ordered the amendment of the complaint but the
appellants failed to do so. Hence, the trial court dismissed the action on ground that plaintiffs, herein
appellants, did not really have a right of action.

 Plaintiffs (appellant) contend that Sec. 1540 of the Administrative Code does not include donation
inter vivos and if it does, it is unconstitutional, null and void for violating SEC. 3 of the Jones Law
(providing that no law shall embrace more than one subject and that the subject should be expressed in
its titles; that the Legislature has no authority to tax donation inter vivos; finally, that said provision
violates the rule on uniformity of taxation.

 CIR however contends that the word 'all gifts' refer clearly to donation inter vivos and cited the
doctrine in Tuason v. Posadas.

ISSUE:

Whether or not the donations should be subjected to inheritance tax

RULING:

YES. Sec. 1540 of the Administrative Code clearly refers to those donation inter vivos that take effect
immediately or during the lifetime of the donor, but made in consideration of the death of the
decedent. Those donations not made in contemplation of the decedent's death are not included as it
would be equivalent to imposing a direct tax on property and not on its transmission. The phrase 'all
gifts' as held in Tuason v. Posadas refers to gifts inter vivos as they are considered as advances in
anticipation of inheritance since they are made in consideration of death.

4. Deductions and exclusions from estate

Section 86
Case(s)
- G.R. No. L-11622, Collector of Internal Revenue vs Fisher 28 January 1961
- G.R. No. 123206, CIR vs CA and Pajonar 22 March 2000
- G.R. No. L-29276, Testate Estate of the Late Felix J. de Guzman vs de Guzman Carillo, May 18,
1978
- G.R. No. 140944, Dizon in his capacity as the Administrator vs CTA and CIR 30 April 2008

SEC. 86. Computation of Net Estate. - For the purpose of the tax imposed in this Chapter, the value of
the net estate shall be determined:

(A) Deductions Allowed to the Estate of Citizen or a Resident. - In the case of a citizen or resident of the
Philippines, by deducting from the value of the gross estate -

(1)  Standard Deduction. – An amount equivalent to Five million pesos (P5,000,000.00).

(2) For claims against the estate: Provided, That at the time of indebtedness was incurred that debt
instrument was duly notarized and, if the loan was contracted within three (3) years before the death of
the decedent, the administrator or executor shall submit a statement showing the disposition of the
proceeds of the loan.

(3) For claims of the deceased against the insolvent persons where the value of decedent’s interest
therein is included in the value of the gross estate.

(4) For unpaid mortgages upon, or any indebtedness in respect to, property where the value of
decedent’s interest therein, undiminished by such mortgage or indebtedness, is included in the value of
the gross estate, but not including any income tax upon income received after the death of the
decedent, or property taxes not accrued before his death, or any estate tax. The deduction herein
allowed in the case of claims against the estate, unpaid mortgages or any indebtedness shall, when
founded upon a promise or agreement, be limited to the extent that they were contracted bona fide
and for an adequate and full consideration in money or money’s worth. There shall also de deducted
losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other
casualties, or from robbery, theft, or embezzlement, when such losses are not compensated for by
insurance or otherwise, and if at the time of the filing of the return such losses have not been claimed as
deduction for the income tax purposes in an income tax return, and provided that such losses were
incurred not later than the last day for the payment of the estate tax as prescribed in Subsection (A) of
Section 91.

(5) Property Previously Taxed. - An amount equal to the value specified below of any property forming
part of the gross estate situated in the Philippines of any person who died within five (5) years prior to
the death of the decedent, or transferred to the decedent by gift within five (5) years prior to his death,
where such property can be identified as having been received by the decedent from the donor by gift,
or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as having
been acquired in exchange for property so received:

One hundred percent (100%) of the value, if the prior decedent died within one (1) year prior to the
death of the decedent, or if the property was transferred to him by gift, within the same period prior to
his death;

Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more than
two (2) years prior to the death of the decedent, or if the property was transferred to him by gift within
the same period prior to his death;

Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more than
three (3) years prior to the death of the decedent, or if the property was transferred to him by gift
within the same period prior to his death;

Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not more than
four (4) years prior to the death of the decedent, or if the property was transferred to him by gift within
the same period prior to his death;

Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not more
than five (5) years prior to the death of the decedent, or if the property was transferred to him by gift
within the same period prior to his death;

These deductions shall be allowed only where a donor's tax or estate tax imposed under this Title was
finally determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the
case may be, and only in the amount finally determined as the value of such property in determining the
value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such
property is included in the decedent's gross estate, and only to the extent that the value of such
property is included in the decedent’s gross estate, and only if in determining the value of the estate of
the prior decedent, no deduction was allowable under paragraph (5) in respect of the property or
properties given in exchange therefor. Where a deduction was allowed of any mortgage or other lien in
determining the donor's tax, or the estate tax of the prior decedent, which was paid in whole or in part
prior to the decedent's death, then the deduction allowable under said Subsection shall be reduced by
the amount so paid. Such deduction allowable shall be reduced by an amount which bears the same
ratio to the amounts allowed as deductions under paragraphs (2), (3), (4) and (6) of this Subsection as
the amount otherwise deductible under said paragraph (5) bears to the value of the decedent's estate.
Where the property referred to consists of two or more items, the aggregate value of such items shall
be used for the purpose of computing the deduction.

(6) Transfers for Public Use. - The amount of all the bequests, legacies, devises or transfers to or for the
use of the Government of the Republic of the Philippines, or any political subdivision thereof, for
exclusively public purposes.

(7) The Family Home. - An amount equivalent to the current fair market value of the decedent's family
home: Provided, however, That if the said current fair market value exceeds Ten million pesos (P10,
000,000), the excess shall be subject to estate tax.

(8) Amount Received by Heirs Under Republic Act No. 4917. – Any amount received by the heirs from
the decedent’s employee as a consequence of the death of the decedent-employee in accordance with
Republic Act No. 4917: Provided, That such amount is included in the gross estate of the decedent.

(B) Deductions Allowed to Nonresident Estates. - In the case of a nonresident not a citizen of the
Philippines, by deducting from the value of that part of his gross estate which at the time of his death is
situated in the Philippines:

(1)  Standard Deduction. – An amount equivalent to Five hundred thousand pesos (P500,000.00);

(2) That proportion of the deductions specified in paragraphs (2), (3), (4) of Subsection (A) of this Section
which the value of such part bears to the value of his entire gross estate wherever situated;

(3) Property Previously Taxed.- An amount equal to the value specified below of any property forming
part of the gross estate situated in the Philippines of any person who died within five (5) years prior to
the death of the decedent, or transferred to the decedent by gift within five (5) years prior to his death,
where such property can be identified as having been received by the decedent from the donor by gift,
or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as having
been acquired in exchange for property so received:

One hundred percent (100%) of the value if the prior decedent died within one (1) year prior to the
death of the decedent, or if the property was transferred to him by gift, within the same period prior to
his death;

Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more than
two (2) years prior to the death of the decedent, or if the property was transferred to him by gift within
the same period prior to his death;

Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more than
three (3) years prior to the death of the decedent, or if the property was transferred to him by gift
within the same period prior to his death;
Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not more than
four (4) years prior to the death of the decedent, or if the property was transferred to him by gift within
the same period prior to his death; and

Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not more
than five (5) years prior to the death of the decedent, or if the property was transferred to him by gift
within the same period prior to his death.

These deductions shall be allowed only where a donor's tax, or estate tax imposed under this Title is
finally determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the
case may be, and only in the amount finally determined as the value of such property in determining the
value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such
property is included in that part of the decedent's gross estate which at the time of his death is situated
in the Philippines; and only if, in determining the value of the net estate of the prior decedent, no
deduction is allowable under paragraph (2) of Subsection (B) of this Section, in respect of the property
or properties given in exchange therefore. Where a deduction was allowed of any mortgage or other
lien in determining the donor's tax, or the estate tax of the prior decedent, which was paid in whole or
in part prior to the decedent's death, then the deduction allowable under said paragraph shall be
reduced by the amount so paid. Such deduction allowable shall be reduced by an amount which bears
the same ratio to the amounts allowed as deductions under paragraphs (1) and (3) of this Subsection as
the amount otherwise deductible under paragraph (2) bears to the value of that part of the decedent's
gross estate which at the time of his death is situated in the Philippines. Where the property referred to
consists of two (2) or more items, the aggregate value of such items shall be used for the purpose of
computing the deduction.

(4) Transfers for Public Use. - The amount of all bequests, legacies, devises or transfers to or for the use
of the Government of the Republic of the Philippines or any political subdivision thereof, for exclusively
public purposes.

(C) Share in the Conjugal Property. - The net share of the surviving spouse in the conjugal partnership
property as diminished by the obligations properly chargeable to such property shall, for the purpose of
this Section, be deducted from the net estate of the decedent.

(D) Tax Credit for Estate Taxes paid to a Foreign Country. -

(1) In General. - The tax imposed by this Title shall be credited with the amounts of any estate tax
imposed by the authority of a foreign country.

(2) Limitations on Credit. - The amount of the credit taken under this Section shall be subject to each of
the following limitations:

(a) The amount of the credit in respect to the tax paid to any country shall not exceed the same
proportion of the tax against which such credit is taken, which the decedent's net estate situated within
such country taxable under this Title bears to his entire net estate; and
(b) The total amount of the credit shall not exceed the same proportion of the tax against which such
credit is taken, which the decedent's net estate situated outside the Philippines taxable under this Title
bears to his entire net estate.

CIR v. Fisher, 110 Phil 686, January 28, 1961

FACTS:

 Walter G. Stevenson was born in the Philippines of British parents, married in Manila to another British
subject, Beatrice. He died in 1951 in California where he and his wife moved to.

 In his will, he instituted Beatrice as his sole heiress to certain real and personal properties, among
which are 210,000 shares of stocks in Mindanao Mother Lode Mines (Mines).

 Ian Murray Statt (Statt), the appointed ancillary administrator of his estate filed an estate and
inheritance tax return. He made a preliminary return to secure the waiver of the CIR on the inheritance
of the Mines shares of stock.

 In 1952, Beatrice assigned all her rights and interests in the estate to the spouses Fisher.

 Statt filed an amended estate and inheritance tax return claiming additional exemptions, one of which
is the estate and inheritance tax on the Mines’ shares of stock pursuant to a reciprocity proviso in the
NIRC, hence, warranting a refund from what he initially paid. The collector denied the claim. He then
filed in the CFI of Manila for the said amount.

 CFI ruled that (a) the ½ share of Beatrice should be deducted from the net estate of Walter, (b) the
intangible personal property belonging to the estate of Walter is exempt from inheritance tax pursuant
to the reciprocity proviso in NIRC.

ISSUE:

WON the estate can avail itself of the reciprocity proviso in the NIRC granting exemption from the
payment of taxes for the Mines shares of stock.

HELD:

No. Reciprocity must be total, that is, with respect to transfer or death taxes of any and every character,
in the case of the Philippine law, and to legacy, succession, or death tax if any and every character, in
the case of the California law. If any of the two states collects or imposes or does not exempt any
transfer, death, legacy or succession tax of any character, the reciprocity does not work. In the
Philippines, upon the death of any citizen or resident, or non-resident with properties, there are
imposed upon his estate, both an estate and an inheritance tax. But, under the laws of California, only
inheritance tax is imposed. Also, although the Federal Internal Revenue Code imposes an estate tax, it
does not grant exemption on the basis of reciprocity. Thus, a Filipino citizen shall always be at a
disadvantage. This is not what the legislators intended.

*Reference:

Section122 of the NIRC provides that “No tax shall be collected under this Title in respect of intangible
personal property
(a) if the decedent at the time of his death was a resident of a foreign country which at the time of his
death did not impose a transfer of tax or death tax of any character in respect of intangible personal
property of citizens of the Philippines not residing in that foreign country, or

(b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow
a similar exemption from transfer taxes or death taxes of every character in respect of intangible
personal property owned by citizens of the Philippines not residing in that foreign country."

On the other hand, Section 13851 of the California Inheritance Tax Law provides that intangible personal
property is exempt from tax if the decedent at the time of his death was a resident of a territory or
another State of the United States or of a foreign state or country which then imposed a legacy,
succession, or death tax in respect to intangible personal property of its own residents, but either:

(a) Did not impose a legacy, succession, or death tax of any character in respect to intangible personal
property of residents of this State, or

(b) Had in its laws a reciprocal provision under which intangible personal property of a non-resident was
exempt from legacy, succession, or death taxes of every character if the Territory or other State of the
United States or foreign state or country in which the nonresident resided allowed a similar exemption
in respect to intangible personal property of residents of the Territory or State of the United States or
foreign state or country of residence of the decedent."

CIR vs CTA and Pajonar, G.R. No. 123206. March 22, 2000

FACTS:

 When Pedro Pajonar, who is part of the infamous Death March by reason of which he suffered shock
and became insane, his sister Josefina Pajonar became the guardian over his person, while his property
was placed under the guardianship of the Philippine National Bank (PNB) by the RTC.

 He died on January 10, 1988 and was survived by his two brothers Isidro P. Pajonar and Gregorio
Pajonar, his sister Josefina Pajonar, nephews Concordio Jandog and Mario Jandog and niece Conchita
Jandog.

 On May 11, 1988, the PNB filed an accounting of the decedent's property under guardianship valued
at P3,037,672.09 in Special Proceedings No. 1254. However, the PNB did not file an estate tax return,
instead it advised Pedro Pajonar's heirs to execute an extrajudicial settlement and to pay the taxes on
his estate.

 On April 5, 1988, pursuant to the assessment by the BIR, the estate of Pedro Pajonar paid taxes in the
amount of P2,557.  On May 19, 1988, Josefina Pajonar filed a petition with the RTC for the issuance in
her favor of letters of administration of the estate of her brother. The trial court appointed Josefina
Pajonar as the regular administratrix of Pedro Pajonar's estate.

 On December 19, 1988, pursuant to a second assessment by the BIR for deficiency estate tax, the
estate of Pedro Pajonar paid estate tax in the amount of P1,527,790.98.
 Josefina Pajonar, in her capacity as administratrix and heir of Pedro Pajonar's estate, filed a protest
with the BIR praying that the estate tax payment in the amount of P1,527,790.98, or at least some
portion of it, be returned to the heirs.

 However, without waiting for her protest to be resolved by the BIR, Josefina filed a petition for review
with the CTA, praying for the refund of P1,527,790.98, or in the alternative, P840,202.06, as erroneously
paid estate tax.

 CTA - ordered the CIR to refund Josefina Pajonar the amount of P252,585.59, representing
erroneously paid estate tax for the year 1988. Among the deductions from the gross estate allowed by
the CTA were the amounts of P60,753 representing the notarial fee for the Extrajudicial Settlement and
the amount of P50,000 as the attorney's fees in Special Proceedings No. 1254 for guardianship.

 On July 5, 1994, the CIR filed with the CA a petition for review  CA - denied the Commissioner's
petition.

ISSUE:

Whether or not the notarial fee paid for the extrajudicial settlement in the amount of P60,753.00 and
the attorney’s fees in the guardianship proceedings with the amount of P50,000.00 may be allowed as
deductions from the gross estate of decedent in order to arrive at the value of the net estate.

HELD:

Yes. In upholding the June 7, 1994 Resolution of the Court of Tax Appeals, the Court of Appeals held
that:

2. Although the Tax Code specifies "judicial expenses of the testamentary or intestate proceedings,"
there is no reason why expenses incurred in the administration and settlement of an estate in
extrajudicial proceedings should not be allowed. However, deduction is limited to such administration
expenses as are actually and necessarily incurred in the collection of the assets of the estate, payment of
the debts, and distribution of the remainder among those entitled thereto. Such expenses may include
executor's or administrator's fees, attorney's fees, court fees and charges, appraiser's fees, clerk hire,
costs of preserving and distributing the estate and storing or maintaining it, brokerage fees or
commissions for selling or disposing of the estate, and the like. Deductible attorney's fees are those
incurred by the executor or administrator in the settlement of the estate or in defending or prosecuting
claims against or due the estate. (Estate and Gift Taxation in the Philippines, T. P. Matic, Jr., 1981
Edition, p. 176 ).

It is clear then that the extrajudicial settlement was for the purpose of payment of taxes and the
distribution of the estate to the heirs. The execution of the extrajudicial settlement necessitated the
notarization of the same. Hence the Contract of Legal Services of March 28, 1988 entered into between
respondent Josefina Pajonar and counsel was presented in evidence for the purpose of showing that the
amount of P60,753.00 was for the notarization of the Extrajudicial Settlement. It follows then that the
notarial fee of P60,753.00 was incurred primarily to settle the estate of the deceased Pedro Pajonar.
Said amount should then be considered an administration expenses actually and necessarily incurred in
the collection of the assets of the estate, payment of debts and distribution of the remainder among
those entitled thereto. Thus, the notarial fee of P60,753 incurred for the Extrajudicial Settlement should
be allowed as a deduction from the gross estate.

3. Attorney's fees, on the other hand, in order to be deductible from the gross estate must be essential
to the settlement of the estate.

The guardianship proceeding in this case was necessary for the distribution of the property of the
deceased Pedro Pajonar. As correctly pointed out by respondent CTA, the PNB was appointed guardian
over the assets of the deceased, and that necessarily the assets of the deceased formed part of his gross
estate.

It is clear therefore that the attorney's fees incurred in the guardianship proceeding in Spec. Proc. No.
1254 were essential to the distribution of the property to the persons entitled thereto. Hence, the
attorney's fees incurred in the guardianship proceedings in the amount of P50,000.00 should be allowed
as a deduction from the gross estate of the decedent.

The deductions from the gross estate permitted under section 79 of the Tax Code basically reproduced
the deductions allowed under 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. Section 89 (a)
(1) (B) of CA 466 also provided for the deduction of the "judicial expenses of the testamentary or
intestate proceedings" for purposes of determining the value of the net estate.

Judicial expenses are expenses of administration. Administration expenses, as an allowable deduction

from the gross estate of the decedent for purposes of arriving at the value of the net estate, have been
construed by the federal and state courts of the United States to include all expenses "essential to the
collection of the assets, payment of debts or the distribution of the property to the persons entitled to
it." In other words, the expenses must be essential to the proper settlement of the estate. Expenditures
incurred for the individual benefit of the heirs, devisees or legatees are not deductible. This distinction
has been carried over to our jurisdiction.

Coming to the case at bar, the notarial fee paid for the extrajudicial settlement is clearly a deductible
expense since such settlement effected a distribution of Pedro Pajonar's estate to his lawful heirs.
Similarly, the attorney's fees paid to PNB for acting as the guardian of Pedro Pajonar's property during
his lifetime should also be considered as a deductible administration expense. PNB provided a detailed
accounting of decedent's property and gave advice as to the proper settlement of the latter's estate,
acts which contributed towards the collection of decedent's assets and the subsequent settlement of
the estate.

De Guzman vs. De Guzman Carillo, G.R. No. L-29276, May 18, 1978

FACTS:

This case is about the propriety of allowing as administration expenses certain disbursements made by
the administrator of the testate estate of the late Felix J. de Guzman. The deceased testator was
survived by eight children. His will was duly probated. Letters of administration were issued to his son,
Doctor Victorino G. de Guzman. One of the properties left was a residential house and lot which were
adjudicated to his eight children. The administrator submitted accounting reports which were objected
by three of the heirs. The probate court directed the administrator to refrain from spending the assets
of the estate for reconstructing and remodeling the house of the deceased and to stop spending any
asset of the estate without first during authority of the court to do so. The lower court allowed the items
as legitimate expenses of administration. The three oppositors appealed to the Supreme Court
contending that the lower court erred in approving the utilization of the income of the estate to defray
those expenditures which allegedly are not allowable under the Rules of Court.

ISSUE:

Whether or not the lower court erred in approving the use of the income of the estate to defray the
expenses

HELD:

NO. The probate court did not err in allowing those expenses categorized as administration expenses
because an administrator has the duty to "maintain in tenantable repair the houses and other structures
and fences belonging to the estate, and deliver the same in such repair to the heirs or devises" when
directed to do so by the court. But those expenses inuring only to the benefit of one should have been
disallowed.

Administration expenses should be those which are necessary for the management of the estate, for
protecting it against destruction or deterioration, and, possibly, for the production of fruits. They are
expenses entailed for the preservation and productivity of the estate and its management for purposes
of liquidation, payment of debts, and distribution of the residue among the persons entitled thereto.

The expenses the administrator incurred consisted of disbursements for the repair of the terrace and
interior of the family home, the renovation of the bathroom, and the construction of a fence. It is
obvious that the expenses in question were incurred to preserve the family home and to maintain the
family's social standing in the community. Obviously, those expenses redounded to the benefit of the
co- owners. They were necessary for the preservation and use of the family residence. As a result of
those expenses, the co-owners, including the three oppositors, would be able to use the family home in
comfort, convenience and security.

An executor or administrator is allowed the necessary expenses in the care, management, and
settlement of the estate. He is entitled to possess and manage the decedent's real and personal estate
as long as it is necessary for the payment of the debts and the expenses of administration. He is
accountable for the whole decedent's estate which has come into his possession, with all the interest,
profit, and income thereof, and with the proceeds of so much of such estate as is sold by him, at the
price at which it was sold.

One of the conditions of the administrator's bond is that he should render a true and just account of his
administration to the court. The court may examine him upon oath With respect to every matter
relating to his accounting and shall so examine him as to the correctness of his account before the same
is allowed, except when no objection is made to the allowance of the account and its correctness is
satisfactorily established by competent proof. The heirs, legatees, distributes, and creditors of the estate
shall have the same privilege as the executor or administrator of being examined on oath on any matter
relating to an administration account.
However, with respect to expenses incurred by de Guzman as occupant of the family residence without
paying rent. The probate court allowed the income of the estate to be used for those expenses on the
theory that the occupancy of the house by one heir did not deprive the other seven heirs from living in
it. Those expenses consist of the salaries of the house helper, light and water bills, and the cost of gas
expenses were personal expenses of Librada de Guzman, inuring only to her benefit. Those expenses,
not being reasonable administration expenses incurred by the administrator, should not be charged
against the income of the estate.

Rafael Arsenio S. Dizon, v. CTA and CIR, G.R. No. 140944; April 30, 2008

FACTS:

Jose P. Fernandez died in November 7, 1987. Thereafter, a petition for the probate of his will was filed.
The probate court appointed Atty. Rafael Arsenio P. Dizon as administrator of the Estate of Jose
Fernandez. An estate tax return was filed later on which showed ZERO estate tax liability. BIR thereafter
issued a deficiency estate tax assessment, demanding payment of Php 66.97 million as deficiency estate
tax. This was subsequently reduced by CTA to Php 37.42 million. The CA affirmed the CTA’s ruling,
hence, the instant petition. The petitioner claims that in as much as the valid claims of creditors against
the Estate are in excess of the gross estate, no estate tax was due. On the other hand, respondents
argue that since the claims of the Estate’s creditors have been condoned, such claims may no longer be
deducted from the gross estate of the decedent.

ISSUE:

Whether the actual claims of 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

HELD:

YES. Following the US Supreme Court’s ruling in Ithaca Trust Co. v. United States, the Court held that
postdeath developments are not material in determining the amount of deduction. This is because
estate tax is a tax imposed on the act of transferring property by will or intestacy and, because the act
on which the tax is levied occurs at a discrete time, i.e., the instance of death, the net value of the
property transferred should be ascertained, as nearly as possible, as of the that time. This is the date-of-
death valuation rule.

The Court, in adopting the date-of-death valuation principle, explained that: First. There is no law, nor
do we discern any legislative intent in our tax laws, which disregards the date-of-death valuation
principle and particularly provides that post-death developments must be considered in determining the
net value of the estate. It bears emphasis that tax burdens are not to be imposed, nor presumed to be
imposed, beyond what the statute expressly and clearly imports, tax statutes being construed
strictissimi juris against the government. Second. Such construction finds relevance and consistency in
our Rules on Special Proceedings wherein the term "claims" required to be presented against a
decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could
have been enforced against the deceased in his lifetime, or liability contracted by the deceased before
his death. Therefore, the claims existing at the time of death are significant to, and should be made the
basis of, the determination of allowable deductions.

5. Exemption of certain acquisitions and transmissions

Section 87

SEC. 87 Exemption of Certain Acquisitions and Transmissions. –-The following shall not be taxed:

(A) The merger of usufruct in the owner of the naked title;

(B) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the
fideicommissary;

(C) The transmission from the first heir, legatee or donee in favor of another beneficiary, in accordance
with the desire of the predecessor; and

(D) All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions, no
part of the net income of which inures to the benefit of any individual: Provided, however, That not
more than thirty percent (30%) of the said bequests, devises, legacies or transfers shall be used by such
institutions for administration purposes.

6. Estate tax returns and payment, and other administrative requirements

Sections 90-97

- BIR Form No. 1801, BIR Form No. 2118-EA

- Republic Act (RA) No. 11213

- Revenue Regulation (RR) 4-2019 and 6-2019

- Revenue Memorandum Circular (RMC) No. 103-2019

Case(s)

- G.R. No. L-22734, CIR vs Pineda 15 September 1967

- G.R. No. L-19495, CIR vs Gonzales and CTA 24 November 1966

SEC. 90. Estate Tax Returns.

(A) Requirements. - In all cases of transfers subject to the tax imposed herein, or regardless of the gross
value of the estate, where the said estate consists of registered or registrable property such as real
property, motor vehicle, shares of stock or other similar property for which a clearance from the Bureau
of Internal Revenue is required as a condition precedent for the transfer of ownership thereof in the
name of the transferee, the executor, or the administrator, or any of the legal heirs, as the case may be,
shall file a return under oath in duplicate, setting forth:

(1) The value of the gross estate of the decedent at the time of his death, or in case of a nonresident,
not a citizen of the Philippines, of that part of his gross estate situated in the Philippines;
(2) The deductions allowed from gross estate in determining the estate as defined in Section 86; and

(3) Such part of such information as may at the time be ascertainable and such supplemental data as
may be necessary to establish the correct taxes.

Provided, however, That estate tax returns showing a gross value exceeding Five million pesos
(P5,000,000) shall be supported with a statement duly certified to by a Certified Public Accountant
containing the following:

(a) Itemized assets of the decedent with their corresponding gross value at the time of his death, or in
the case of a nonresident, not a citizen of the Philippines, of that part of his gross estate situated in the
Philippines;

(b) Itemized deductions from gross estate allowed in Section 86; and

(c) The amount of tax due whether paid or still due and outstanding.

(B) Time for Filing. - For the purpose of determining the estate tax provided for in Section 84 of this
Code, the estate tax return required under the preceding Subsection (A) shall be filed within one (1) year
from the decedent's death.

A certified copy of the schedule of partition and the order of the court approving the same shall be
furnished the Commissioner within thirty (30) days after the promulgation of such order.

(C) Extension of Time. - The Commissioner shall have authority to grant, in meritorious cases, a
reasonable extension not exceeding thirty (30) days for filing the return.

(D) Place of Filing. - Except in cases where the Commissioner otherwise permits, the return required
under Subsection (A) shall be filed with an authorized agent bank, or Revenue District Officer, Collection
Officer, or duly authorized Treasurer of the city or municipality in which the decedent was domiciled at
the time of his death or if there be no legal residence in the Philippines, with the Office of the
Commissioner.

SEC. 91.  Payment of Tax. -

(A) Time of Payment. - The estate tax imposed by Section 84 shall be paid at the time the return is filed
by the executor, administrator or the heirs.

(B) 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 five (5) years, in case the
estate is settled through the courts, or two (2) years in case the estate is settled extrajudicially.

In such case, the amount in respect of which the extension is granted shall be paid on or before the date
of the expiration of the period of the extension, and the running of the Statute of Limitations for
assessment as provided in Section 203 of this Code shall be suspended for the period of any such
extension.
Where the taxes are assessed by reason of negligence, intentional disregard of rules and regulations, or
fraud on the part of the taxpayer, no extension will be granted by the Commissioner.

If an extension is granted, the Commissioner may require the executor, or administrator, or beneficiary,
as the case may be, to furnish a bond in such 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.

(C)  Payment by Installment. – In case the available cash of the estate is insufficient to pay the total
estate tax due, payment by installments shall be allowed within two (2) years from the statutory date
for its payment without civil penalty and interest.

(D) Liability for Payment - The estate tax imposed by Section 84 shall be paid by the executor or
administrator before delivery to any beneficiary of his distributive share of the estate. Such beneficiary
shall to the extent of his distributive share of the estate, be subsidiarily liable for the payment of such
portion of the estate tax as his distributive share bears to the value of the total net estate.

For the purpose of this Chapter, the term 'executor' or 'administrator' means the executor or
administrator of the decedent, or if there is no executor or administrator appointed, qualified, and
acting within the Philippines, then any person in actual or constructive possession of any property of the
decedent.

SEC. 92. Discharge of Executor or Administrator from Personal Liability. - If the executor or

administrator makes a written application to the Commissioner for determination of the amount of the
estate tax and discharge from personal liability therefore, the Commissioner (as soon as possible, and in
any event within one (1) year after the making of such application, or if the application is made before
the return is filed, then within one (1) year after the return is filed, but not after the expiration of the
period prescribed for the assessment of the tax in Section 203 shall not notify the executor or
administrator of the amount of the tax. The executor or administrator, upon payment of the amount of
which he is notified, shall be discharged from personal liability for any deficiency in the tax thereafter
found to be due and shall be entitled to a receipt or writing showing such discharge.

SEC. 93. Definition of Deficiency. - As used in this Chapter, the term 'deficiency' means:

(a) The amount by which the tax imposed by this Chapter exceeds the amount shown as the tax by the
executor, administrator or any of the heirs upon his return; but the amounts so shown on the return
shall first be increased by the amounts previously assessed (or collected without assessment) as a
deficiency and decreased by the amount previously abated, refunded or otherwise repaid in respect of
such tax; or

(b) If no amount is shown as the tax by the executor, administrator or any of the heirs upon his return,
or if no return is made by the executor, administrator, or any heir, then the amount by which the tax
exceeds the amounts previously assessed (or collected without assessment) as a deficiency; but such
amounts previously assessed or collected without assessment shall first be decreased by the amounts
previously abated, refunded or otherwise repaid in respect of such tax.
SEC. 94. Payment before Delivery by Executor or Administrator. - No judge shall authorize the executor
or judicial administrator to deliver a distributive share to any party interested in the estate unless a
certification from the Commissioner that the estate tax has been paid is shown.

SEC. 95. Duties of Certain Officers and Debtors. - Registers of Deeds shall not register in the Registry of
Property any document transferring real property or real rights therein or any chattel mortgage, by way
of gifts inter vivos or mortis causa, legacy or inheritance, unless a certification from the Commissioner
that the tax fixed in this Title and actually due thereon had been paid is show, and they shall
immediately notify the Commissioner, Regional Director, Revenue District Officer, or Revenue Collection
Officer or Treasurer of the city or municipality where their offices are located, of the nonpayment of the
tax discovered by them. Any lawyer, notary public, or any government officer who, by reason of his
official duties, intervenes in the preparation or acknowledgment 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, Revenue District Officer or Revenue Collection Officer of the place
where he may have his principal office, with copies of such documents and any information whatsoever
which may facilitate the collection of the aforementioned tax. Neither shall a debtor of the deceased
pay his debts to the heirs, legatee, executor or administrator of his creditor, unless the certification of
the Commissioner that the tax fixed in this Chapter had 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. 96. Restitution of Tax Upon Satisfaction of Outstanding Obligations. - If after the payment of the
estate tax, new obligations of the decedent shall appear, and the persons interested shall have satisfied
them by order of the court, they shall have a right to the restitution of the proportional part of the tax
paid.

SEC. 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights. - There shall not be
transferred to any new owner in the books of any corporation, sociedad anonima, partnership, business,
or industry organized or established in the Philippines any share, obligation, bond or right by way of gift
inter vivos or mortis causa, legacy or inheritance, unless a certification from the Commissioner that the
taxes fixed in this Title and due thereon have been paid is shown.

If a bank has knowledge of the death of a person, who maintained a bank deposit account alone, or
jointly with another, it shall allow any withdrawal from the said deposit account, subject to a final
withholding tax of six percent (6%). 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.

https://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/BIR%20Form
%20No.%201801%20Estate%20Tax%20Return.pdf

https://www.grantthornton.com.ph/contentassets/6e07ba663559420aa77f011afc3b833e/annex-a---
rmc-103-2019-revised-etar.pdf

REPUBLIC ACT No. 11213

An Act Enhancing Revenue Administration and Collection by Granting an Amnesty on All Unpaid
Internal Revenue Taxes Imposed by the National Government for Taxable Year 2017 and Prior Years
with Respect to Estate Tax, Other Internal Revenue Taxes, and Tax on Delinquencies

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

TITLE I
PRELIMINARY PROVISIONS

Section 1. Short Title. - This Act shall be known as the "Tax Amnesty Act".

Section 2. Declaration of Policy. - It is hereby declared the policy of the State to protect and enhance
revenue administration and collection, and make the country’s tax system more equitable, by
simplifying the tax compliance requirements. Towards this end, the State shall:

(a) Provide a one-time opportunity to settle estate tax obligations through an estate tax amnesty
program that will give reasonable tax relief to estates with deficiency estate taxes;

(b) Broaden the tax base by offering a general tax amnesty for all unpaid internal revenue taxes
that will help cleanse, organize, and improve the Bureau of Internal Revenue’s database;

(c) Enhance revenue collection by providing a tax amnesty on delinquencies that will minimize
administrative costs in pursuing tax cases and declog the dockets of the Bureau of Internal
Revenue and the courts; and

(d) Provide a more equitable tax system by adopting a comprehensive tax reform program that
will simplify the requirements on tax amnesties with the use of simplified forms, and utilization
of information technology in broadening the tax base.

Section 3. Definition of Terms. - As used in this Act:

(a) Basic tax assessed refers to the latest amount of tax assessment issued by the Bureau of
Internal Revenue against the taxpayer, exclusive of interest, penalties, and surcharges.

(b) Net estate refers to the gross estate less all allowable deductions as provided in the National
Internal Revenue Code of 1997, as amended, or the applicable estate tax laws prevailing at the
time of death of the decedent;

(c) Net undeclared estate refers to the difference between the total net estate valued at the
time of death and the net estate previously declared with the Bureau of Internal Revenue, if
any;

(d) Statement of Assets, Liabilities, and Networth refers to a declaration of the assets, liabilities,
and networth. as of December 31, 2017, as follows:

(1) Assets within or without the Philippines, whether real or personal, tangible or
intangible, whether or not used in trade or business: Provided, That property other than
 money shall be valued at the cost at which the property was acquired: Provided, further
That foreign currency assets and/or securities shall be valued at the rate of exchange
prevailing as of the date of the Statement of Assets, Liabilities, and Net worth;

(2) All existing liabilities which are legitimate and enforceable, secured or unsecured,
whether or not incurred in trade or business; and

(3) The networth of the taxpayer, which shall be the difference between the total assets
and total liabilities.

(e) Total asset refers to the amount of the aggregate assets whether within or without the
Philippines, real or personal, tangible or intangible, or ordinary or capital.

TITLE II
ESTATE TAX AMNESTY

Section 4. Coverage. - There is hereby authorized and granted a tax amnesty, hereinafter called Estate
Tax Amnesty, which shall cover the estate of decedents who died on or before December 31, 2017, with
or without assessments duly issued therefor, whose estate taxes have remained unpaid or have accrued
as of December 31, 2017: Provided, however, That the Estate Tax Amnesty hereby authorized and
granted shall not cover instances enumerated under Section 9 hereof.

Section 5. Entitlement Under Estate Tax Amnesty. - Except for instances covered by Section 9 hereof, the
estate may enjoy the immunities and privileges of the Estate Tax Amnesty and pay an estate amnesty
tax at the rate of six percent (6%) based on the decedent’s total net estate at the time of
death: Provided, That if an estate tax return was previously filed with the Bureau of Internal Revenue,
the estate tax rate of six percent (6%) shall be based on net undeclared estate. The provisions of the
National Internal Revenue Code of 1997, as amended, or the applicable estate tax laws prevailing at the
time of death of the decedent, on valuation, manner of computation, and other related matters shall
apply suppletorily, at the time of the entitlement: Provided, further, That if the allowable deductions
applicable at the time of death of the decedent exceed the value of the gross estate, the heirs,
executors, or administrators may avail of the benefits of tax amnesty under Title II of this Act, and pay
the minimum estate amnesty tax of Five thousand pesos (₱5,000).

Section 6. Availment of the Estate Tax Amnesty; When and Where to File and Pay. - The executor or
administrator of the estate, or if there is no executor or administrator appointed, the legal heirs,
transferees or beneficiaries, who wish to avail of the Estate Tax Amnesty shall, within two (2) years from
the effectivity of the Implementing Rules and Regulations of this Act, file with the Revenue District Office
of the Bureau of Internal Revenue, which has jurisdiction over the last residence of the decedent, a
sworn Estate Tax Amnesty Return, in such forms as may be prescribed in the Implementing Rules and
Regulations. The payment of the amnesty tax shall be made at the time the Return is
filed: Provided, That for nonresident decedents, the Estate Tax Amnesty Return shall be filed and the
corresponding amnesty tax be paid at Revenue District Office No. 39, or any other Revenue District
Office which shall be indicated in the Implementing Rules and Regulations:

Provided, further, That if the estate involved has properties which are still in the name of another
decedent or donor, the present holder, heirs, executors or administrators thereof shall only file one (1)
Estate Tax Amnesty Return and pay the corresponding estate amnesty tax thereon based on the total
net estate at the time of death of the last decedent covering all accrued taxes under the National
Internal Revenue Code of 1997, as amended, arising from the transfer of such estate from all prior
decedents or donors through which the property or properties comprising the estate shall pass:

Provided, furthermore, That the appropriate Revenue District Officer shall issue and endorse an
acceptance payment form, in such form as may be prescribed in the Implementing Rules and
Regulations of this Act for the authorized agent bank, or in the absence thereof, the revenue collection
agent or municipal treasurer concerned, to accept the tax amnesty payment. Proof of settlement of the
estate, whether judicial or extrajudicial, shall likewise be attached to said Return in order to verify the
mode of transfer and the proper recipients:

Provided, finally, That the avaiiment of the Estate Tax Amnesty and the issuance of the corresponding
Acceptance Payment Form do not imply any admission of criminal, civil or administrative liability on the
part of the availing estate.

Section 7. Presumption of Correctness of the Estate Tax Amnesty Returns. - The Estate Tax Amnesty
Returns shall be conclusively presumed as true, correct, and final upon filing thereof, and shall be
deemed complete upon full payment of the amount due.

The Acceptance Payment Form, and the Estate Tax Amnesty Return shall be submitted to the Revenue
District Office after complete payment. The completion of these requirements shall be deemed full
compliance with the provisions of this Act. A Certificate of Availment of the Estate Tax Amnesty shall be
issued by the Bureau of Internal Revenue within fifteen (15) calendar days from submission to the
Bureau of Internal Revenue of the Acceptance Payment Form and the Estate Tax Amnesty Return.
Otherwise, the duplicate copies of the Acceptance Payment Form, stamped as received, and the Estate
Tax Amnesty Return shall be deemed as sufficient proof of availment.

Section 8. Immunities and Privileges. - Estates covered by the Estate Tax Amnesty, which have fully
complied with all the conditions set forth in this Act, including the payment of the estate amnesty tax
shall be immune from the payment of all estate taxes, as well as any increments and additions thereto,
arising from the failure to pay any and all estate taxes for taxable year 2017 and prior years, and from all
appurtenant civil, criminal, and administrative cases and penalties under the National Internal Revenue
Code of 1997, as amended.

Without prejudice to compliance with applicable laws on succession as a mode of transfer, the Bureau
of Internal Revenue, in coordination with the applicable regulatory agencies, shall set up a system
enabling the transfer of title over properties to heirs and/or beneficiaries and cash withdrawals from the
bank accounts of the decedent, -when applicable.

Upon full compliance with all the conditions set forth in this Title and payment of the corresponding
estate amnesty tax, the tax amnesty granted under this Title shall become final and irrevocable.

Section 9. Exceptions. - The Estate Tax Amnesty under Title II of this Act shall not extend to estate tax
cases which shall have become final and executory and to properties involved in cases pending in
appropriate courts:
 (a) Falling under the jurisdiction of the Presidential Commission on Good Government;

(b) Involving unexplained or unlawfully acquired wealth under Republic Act No. 3019, otherwise
known as the Anti-Graft and Corrupt Practices Act, and Republic Act No. 7080 or An Act Defining
and Penalizing the Crime of Plunder;

(c) Involving violations of Republic Act No. 9160, otherwise known as the Anti-Money
Laundering Act, as amended;

(d) Involving tax evasion and other criminal offenses under Chapter II of Title X of the National
Internal Revenue Code of 1997, as amended; and

(e) Involving felonies of frauds, illegal exactions and transactions, and malversation of public
funds and property under Chapters III and IV of Title VII of the Revised Penal Code.

TITLE III
GENERAL TAX AMNESTY

Section 10. Coverage. - There is hereby authorized and granted a tax amnesty, hereinafter called
General Tax Amnesty, which, shall cover all national internal revenue taxes such as, but not limited to,
income tax, withholding tax, capital gains tax. donor’s tax, value-added tax, other percentage taxes,
excise tax and documentary stamp tax collected by the Bureau of Internal Revenue, including value-
added tax and excise taxes collected by the Bureau of Customs for taxable year 2017 and prior years,
with or without assessments duly issued therefor, that have remained unpaid: Provided, however, That
the General Tax Amnesty hereby authorized and granted shall not cover persons or cases enumerated
under Section 16 and Title IV hereof.

Section 11. Entitlement Under the General Tax Amnesty. - Except for the instances covered in Section 16
hereof, any person, whether natural or juridical, may enjoy the immunities and privileges of the General
Tax Amnesty by paying, at the taxpayers option, an amnesty tax at:

(i) the rate of two percent (2%) based on the taxpayer’s total assets as of December 31,2017, as
declared in the Statement of Total Assets; or

(ii) based on the taxpayer’s total networth as of December 31, 2017, as declared in the
Statement of Assets, Liabilities, and Networth filed pursuant to Section 12 hereof and in
accordance with the following schedule of amnesty tax rates and minimum amnesty tax
payments required:

(a) Individual (whether resident or nonresident citizens, including resident or

nonresident aliens), Trusts and Estates………5% or ₱75,000, whichever is higher.

(b) Corporations

(1) With subscribed capital of above ₱50 million………5% or ₱1,000,000,

whichever is higher.
 (2) With subscribed capital of above ₱20 million up to ₱50 million………5% or
₱500,000, whichever is higher.

(3) With subscribed capital of ₱5 million up to ₱20 million………5% or ₱250,000,

whichever is higher.

(4) With subscribed capital of below ₱5 million………5% or ₱100,000, whichever

is higher.

(c) Other juridical entities, including, but not limited to, cooperatives and foundations,
that have become taxable as of December 31, 2017………5% or ₱75,000, whichever is
higher:

Provided, That if the taxpayer opts to pay the amnesty tax based on total networth and the computed
networth is negative, the taxpayer may still avail of the benefits of tax amnesty under this Title, and pay
the minimum amnesty tax.

Section 12. Availment of the General Tax Amnesty; When and. Where to File and Pay. - Any person,
natural or juridical, who wishes to avail of the General Tax Amnesty shall, within one (1) year from the
effectivity of the Implementing Rules and Regulations, file with the appropriate office of the Bureau of
Internal Revenue, which has jurisdiction over the taxpayer, a sworn General Tax Amnesty Return
accompanied by a notarized Statement of Total Assets or notarized Statement of Asssets, Liabilities, and
Networth, as the case maybe, as of December 31, 2017. The payment of the amnesty tax shall be made
at the time the Return is filed:

Provided, That the Revenue District Officer shall issue and endorse an Acceptance Payment Form, in
such form as may be prescribed in the Implementing Rules and Regulations of this Act authorizing the
authorized agent bank, or in the absence thereof, the revenue collection agent or municipal treasurer
concerned, to accept the amnesty tax payment:

Provided, further, That the availment of the General Tax Amnesty and the issuance of the corresponding
Acceptance Payment Form do not imply any admission of criminal, civil or administrative liability on the
part of the availing taxpayer:

Provided, furthermore, That if the tax amnesty is availed based on the period indicated hereunder, the
taxpayer shall be entitled to the corresponding reduction in the total amnesty tax due:

(a) If paid on or before the end of the third calendar month from the effectivity of the
Implementing Rules and Regulations………20%;

(b) If paid after the end of the third calendar month until the end of the sixth calendar month
from the effectivity of the Implementing Rules and Regulations………15%; and

(c) If paid after the end of the sixth calendar month until the end of the ninth calendar month
from the effectivity of the Implementing Rules and Regulations………10%.
Section 13. Contents of the Statement of Total Assets and. Statement of Assets, Liabilities, and
Networth. -

(A) The Statement of Total Assets shall contain a declaration of the total assets as of December
31, 2017, as follows:

(1) Assets within or without the Philippines, whether real or personal, tangible or
intangible, whether or not used in trade or business:

(a) Real properties shall be accompanied by a description of their classification,

exact location, and valued at acquisition cost, if acquired by purchase, or the
zonal valuation or fair market value as shown in the schedule of values of the
provincial, city or municipal assessors at the time of inheritance or donation,
whichever is higher, if acquired through inheritance or donation;

(b) Personal properties other than money, shall be accompanied by a specific

description of the kind and number of assets (e.g. automobiles, shares of stock,
etc.) or other investments, indicating the acquisition cost less the accumulated
depreciation or amortization, or the corresponding book value for shares of
stock, in proper cases, if acquired by purchase, or the fair market price or value
at the date of the Statement of Total Assets, if acquired through inheritance or
donation;

(c) Assets denominated in foreign currency shall be converted into the

corresponding Philippine currency equivalent, at the rate of exchange prevailing
as of the date of the Statement of Total Assets; and

(d) Cash on hand and in bank in peso as of the date of the Statement of Total
Assets, as well as cash on hand and in bank in foreign currency, converted to
Philippine peso at the rate of exchange prevailing as of the date of the
Statement of Total Assets.

(B) The Statement of Assets, Liabilities, and Networth shall contain a true and complete
declaration of assets, liabilities, and networth of the taxpayer as of December 31, 2017, as
follows:

(1) Assets within or without the Philippines, whether real or personal, tangible or
intangible, whether or not used in trade or business:

(a) Real properties shall be accompanied by a description of their classification,

exact location, and valued at acquisition cost, if acquired by purchase, or the
zonal valuation or fair market value as shown in the schedule of values of the
provincial, city or municipal assessors, at the time of inheritance or donation,
whichever is higher, if acquired through inheritance or donation;

(b) Personal properties other than money, shall be accompanied by a specific

description of the kind and number of assets (e.g. automobiles, shares of stock,
 etc.) or other investments, indicating the acquisition cost less the accumulated
depreciation or amortization, or the corresponding book value for shares of
stock, in proper cases, if acquired by purchase, or the fair market price or value
at the date of the Statement of Assets, Liabilities, and Networth, if acquired
through inheritance or donation;

(c) Assets denominated in foreign currency shall be converted into the

corresponding Philippine currency equivalent, at the rate of exchange prevailing
as of the date of the Statement of Assets, Liabilities, and Networth; and

(d) Cash on hand and in bank in peso as of the date of the Statement of Assets,
Liabilities, and Networth, as well as cash on hand and in bank in foreign
currency, converted to Philippine peso at the rate of exchange prevailing as of
the date of the Statement of Assets, Liabilities, and Networth.

(2) All existing liabilities, which are legitimate and enforceable, secured or unsecured,
whether or not incurred in trade or business, disclosing or indicating clearly the name
and address of the creditor and the amount of the corresponding Lability.

(3) The total networth of the taxpayer, which shall be the difference between the total
assets and total liabilities.

Section 14. Presumption of Correctness of the Statement of Total Assets, and Statement of Assets,
Liabilities, and Networth. - The Statement of Total Assets or the Statement of Assets, Liabilities, and
Networth, filed at the option of the taxpayer, shall be conclusively presumed as true, correct, and final
upon filing thereof, and shall be deemed complete upon full payment of the amount due.

The Acceptance Payment Form, and the General Tax Amnesty Return shall be submitted to the Revenue
District Office after complete payment. The completion of these requirements shall be deemed full
compliance with the provisions of this Act. A Certificate of Availment of the General Tax Amnesty shall
be issued by the Bureau of Internal Revenue within fifteen (15) calendar days from submission to the
Bureau of Internal Revenue of the Acceptance Payment Form and the General Tax Amnesty Return.
Otherwise, the duplicate copies, stamped as received, of the Acceptance Payment Form, and the
General Tax Amnesty Return shall be deemed as sufficient proof of availment.

Section 15. Immunities and Privileges. - Those who avail of the General Tax Amnesty and have fully
complied with all the conditions set forth in this Act and upon payment of the amnesty tax shall be
entitled to the following immunities and privileges:

(a) With respect to the years covered by the tax amnesty, the taxpayer shall be immune from
the payment of taxes, as well as additions thereto, and from all appurtenant civil, criminal, and
administrative cases and penalties under the National Internal Revenue Code of 1997, as
amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2017
and prior years and from such other investigations or suits insofar as they relate to the assets,
liabilities, networth, and internal revenue taxes that are subject of the tax amnesty.
 (b) Any information or data contained in, derived from or provided by a taxpayer in the Tax
Amnesty Return, Statement of Total Assets or Statement of Assets, Liabilities, and Networth, as
the case may be, and appurtenant documents shall be confidential in nature and shall not be
used in any investigation or prosecution before any judicial, quasi-judicial, and administrative
bodies. However, the taxpayer may use this as a defense, whenever appropriate, in cases
brought against the taxpayer.

(c) The books of accounts and other records of the taxpayer for the years covered by the tax
amnesty availed of shall not be examined by the Bureau of Internal Revenue: Provided, That the
Commissioner of Internal Revenue may authorize in writing the examination of the said books of
accounts and other records to verify the validity or correctness of a claim for any tax refund, tax
credit (other than refund or credit of taxes withheld on wages), tax incentives, and/or
exemptions under existing laws.

All these immunities and privileges shall not apply when the taxpayer failed to file a General Tax
Amnesty Return and a Statement of Total Assets, or Statement of Assets, Liabilities, and Networth, as
the case may be.

Upon full compliance with all the conditions set forth in this Title and payment of the corresponding
general amnesty tax, the tax amnesty granted under this Title shall become final and irrevocable.

Section 16. Exceptions. - The General Tax Amnesty under this Act shall not extend to the following:

(a) Withholding tax agents who withheld taxes but failed to remit the same to the Bureau of
Internal Revenue:

(b) Taxpayers with cases pending in appropriate courts involving:

(1) Those that fall under the jurisdiction of the Presidential Commission on Good
Government;

(2) Unexplained or unlawfully acquired wealth under Republic Act No. 3019, otherwise
known as the Anti-Graft and Corrupt Practices Act, and Republic Act No. 7080 or An Act
Defining and Penalizing the Crime of Plunder;

(3) Violations of Republic Act No. 9160, otherwise known as the Anti-Money Laundering
Act, as amended;

(4) Tax evasion and other criminal offenses under Chapter II of Title X of the National
Internal Revenue Code of 1997, as amended; and

(5) Felonies of frauds, illegal exactions and transactions, and malversation of public
funds and property under Chapters III and IV of Title VTI of the Revised Penal Code;

(c) Tax cases that have become final and executory; and

(d) Delinquencies and assessments that have become final and executory.
 TITLE IV
TAX AMNESTY ON DELINQUENCIES

Section 17. Coverage. - There is hereby authorized and granted a tax amnesty herein called the Tax
Amnesty on Delinquencies, which shall cover all national internal revenue taxes such as, but not limited
to, income tax, withholding tax, capital gains tax, donor’s tax, value-added tax, other percentage taxes,
excise tax and documentary stamp tax collected by the Bureau of Internal Revenue, including value-
added tax and excise taxes collected by the Bureau of Customs for taxable year 2017 and prior years.

For purposes of this Act, the Tax Amnesty on Delinquencies may be availed of in the following instances:

(a) Delinquencies and assessments, which have become final and executory, including
delinquent tax account, where the application for compromise has been requested on the basis
of: (1) doubtful validity of the assessment; or (2) financial incapacity of the taxpayer, but the
same was denied by the Regional Evaluation Board or the National Evaluation Board, as the case
may be, on or before the Implementing Rules and Regulations take effect;

(b) Pending criminal cases with the Department of Justice or the courts for tax evasion and other
criminal offenses under Chapter II of Title X and Section 275 of the National Internal Revenue
Code of 1997, as amended, with or without assessments duly issued;

(c) Tax cases subject of final and executory judgment by the courts on or before the
Implementing Rules and Regulations take effect; and

(d) Withholding tax agents who withheld taxes but failed to remit the same to the Bureau of
Internal Revenue.

Section 18. Entitlement of Tax Amnesty on Delinquencies. - Any person may enjoy the immunities and
privileges of the Tax Amnesty on Delinquencies and pay the following tax amnesty rates:

(a) Delinquencies and assessments which have become final and executory……… 40% of the
basic tax assessed;

(b) Tax cases subject of final and executory judgment by the courts……… 50% of the basic tax
assessed;

(c) Pending criminal cases with criminal information filed with the Department of Justice or the
courts for tax evasion and other criminal offenses under Chapter II of Title X and Section 275 of
the National Internal Revenue Code of 1997, as amended, with assessments duly issued and
otherwise excluded in Titles II and III hereof……… 60% of the basic tax assessed; and

(d) Withholding agents who withheld taxes but failed to remit the same to the Bureau of
Internal Revenue……… 100% of the basic tax assessed.1âwphi1

Section 19. Availment of the Tax Amnesty on Delinquencies; When and Where to File and Pay. - Any
person, natural or juridical, who wishes to avail of the Tax Amnesty on Delinquencies shall, within one
(1) year from the effectivity of the Implementing Rules and Regulations of this Act, file with the
appropriate office of the Bureau of Internal Revenue, which has jurisdiction over the residence or
principal place of business of the taxpayer, a sworn Tax Amnesty on Delinquencies Return accompanied
by a Certification of Delinquency. The payment of the amnesty tax shall be made at the time the Return
is filed:

Provided, That the Revenue District Officer shall issue and endorse an Acceptance Payment Form, in
such form as may be prescribed in the Implementing Rules and Regulations of this Act authorizing the
authorized agent bank, or in the absence thereof, the revenue collection agent or municipal treasurer
concerned, to accept the amnesty tax payment:

Provided, further, That the availment of the Tax Amnesty on Delinquencies and the issuance of the
corresponding Acceptance Payment Form do not imply any admission of criminal, civil or administrative
liability on the part of the availing taxpayer.

Section 20. Immunities and Privileges. - The tax delinquency of those who avail of the Tax Amnesty on
Delinquencies and have fully complied with all the conditions set forth in this Act and upon payment of
the amnesty tax shall be considered settled and the criminal case under Section 18(c) and its
corresponding civil or administrative case, if applicable, be terminated, and the taxpayer shall be
immune from all suits or actions, including the payment of said delinquency or assessment, as well as
additions thereto, and from all appurtenant civil, criminal, and administrative cases, and penalties under
the National Internal Revenue Code of 1997, as amended, as such relate to the taxpayer’s assets,
liabilities, networth, and internal revenue taxes that are subject of the tax amnesty, and from such other
investigations or suits insofar as they relate to the assets, liabilities, networth and internal revenue taxes
that are subject of the tax amnesty: Provided, That any notices of levy, attachments and/or warrants of
garnishment issued against the taxpayer shall be set aside pursuant to a lifting of notice of
levy/garnishment duly issued by the Bureau of Internal Revenue or its authorized
representative: Provided, further, That the Authority to Cancel Assessment shall be issued by the Bureau
of Internal Revenue in favor of the taxpayer availing of the Tax Amnesty on Delinquencies within fifteen
(15) calendar days from submission to the Bureau of Internal Revenue of the Acceptance Payment Form
and the Tax Amnesty on Delinquencies Return. Otherwise, the duplicate copies, stamped as received, of
the Acceptance Payment Form, and the Tax Amnesty on Delinquencies Return shall be deemed as
sufficient proof of availment: Provided, furthermore, That the Tax Amnesty on Delinquencies Return and
the Acceptance Payment Form shall be submitted to the Revenue District Office after complete
payment. The completion of these requirements shall be deemed full compliance with the provisions of
this Act.

Upon full compliance with all the conditions set forth in this Title and payment of the corresponding tax
on delinquency, the tax amnesty granted under this Title shall become final and irrevocable.

TITLE V
CONFIDENTIALITY AND NON-USE OF INFORMATION AND DATA, AND AMENDMENT TO THE
STATEMENT OF TOTAL ASSETS AND STATEMENT OF ASSETS, LIABILITIES, AND NETWORTH

Section 21. Confidentiality and Non-use of Information and Data in the Statement of Total Assets and
Statement of Assets, Liabilities, and Networth. - Any information or data contained in, derived from or
provided by a taxpayer in the Tax A_mnesty Return, Statement of Total Assets or Statement of Assets,
Liabilities, and Networth, as the case may be and appurtenant documents shall be confidential in nature
and shall not be used in any investigation or prosecution before any judicial, quasijudicial, and
administrative bodies.

Any statement of assets, liabilities, and networth, financial statements, information sheets, and any such
other statements or disclosures that may have been previously submitted by the taxpayer as required by
existing laws are deemed to have been amended by the Tax Amnesty Return and/or the Statement of
Total Assets or Statement of Assets, Liabilities, and Networth., as the case may be, filed under this Act
and may not be the subject of any investigation or prosecution or be used in any investigation or
prosecution before any judicial, quasi-judicial, and administrative bodies.

TITLE VI
GENERAL PROVISIONS

Section 22. Information Management System. - For purposes of enhancing revenue administration,

revenue collection and policy formulation, the Department of Finance, in coordination with the Bureau
of Internal Revenue, Land Registration Authority, Department of Trade and Industry, Securities and
Exchange Commission, Land Transportation Office, and other agencies concerned, shall institute an
Information Management Program for the effective use of information declared or obtained from the
Tax Amnesty Returns and Statements of Total Assets or Statements of Assets, Liabilities, and Networth,
as the case may be, required to be filed under this Act.

All the statements and returns required under this Act shall be filed and processed separately from all
other records of the Bureau of Internal Revenue in accordance with the Implementing Rules and
Regulations of this Act.

If the data requirements consist of information found in the income tax return of taxpayers, the
requirements under Section 71 of the National Internal Revenue Code of 1997, as amended, shall still be
complied with. The Information Management System shall also comply with the provisions of Republic
Act No. 10173, otherwise known as the "Data Privacy Act" and such other law’s relating to
confidentiality of information.

Section 23. Disposition of Proceeds from the Tax Amnesty. - An amount equivalent to Five hundred
million pesos (₱500,000,000) of the collection from the tax amnesty herein granted shall accrue to the
Department of Finance and shall be used exclusively for purposes of establishing tax database under
Section 22 of this Act.

Any excess shall be allocated to augment the appropriations needed for the social mitigating measures
and the Build Build Build infrastructure projects as provided under Section 82 of Republic Act No. 10963,
otherwise known as the "Tax Reform for Acceleration and Inclusion (TRAIN)" Act.

TITLE VII
OFFENSES AND PENALTIES

Section 24. Section 270 of the National Internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:
"Section 270. Unlawful Divulgence of Information. - Except as provided in Sections 6(F) and 71 of this
Code and Section 26 of Republic Act No. 6388, any officer or employee of the Bureau of Internal
Revenue who divulges to any person or makes known in any other manner than may be provided by law
information regarding the business, income, or estate of any taxpayer, the secrets, operation, style or
work, or apparatus of any manufacturer or producer, or confidential information regarding the business
of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, shall,
upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos
(₱50,000) but not more than One hundred thousand pesos (₱100,000), or suffer imprisonment of not
less than two (2) years but not more than five (5) years, or both.

"Any officer or employee of the Bureau of Internal Revenue who divulges or makes known in any other
manner to any person other than the requesting foreign tax authority information obtained from banks
and financial institutions pursuant to Section 6(F), knowledge or information acquired by him in the
discharge of his official duties, shall, upon conviction, be punished by a fine of not less than Five hundred
thousand pesos (₱500,000) but not more than One million pesos (₱1,000,000), or suffer imprisonment
of not less than two (2) years but not more than five (5) years, or both."

Section 25. Unlawful Divulgence of Tax Amnesty Return and Appurtenant Documents. - It shall be
unlawful for any person having knowledge of the Tax Amnesty Return and appurtenant documents, to
disclose any information relative thereto, and any violation hereof shall be penalized a fine of One
hundred fifty thousand pesos (₱150,000) and imprisonment of not less than six (6) years but not more
than ten (10) years: Provided, That if the offender is an officer or employee of the Bureau of Internal
Revenue or any government entity, the penalties under Section 270 of the National Internal Revenue
Code of 1997, as amended, shall apply: Provided, further, That the offender shall likewise suffer an
additional penalty of perpetual disqualification to hold public office.

TITLE VIII
CONGRESSIONAL OVERSIGHT COMMITTEE AND FINAL PROVISIONS

Section 26. Report to Oversight Committee. - The Commissioner shall submit to the Oversight
Committee referred to in Section 290 of the National Internal Revenue Code of 1997, as amended,
through the Chairpersons of the Committee on Ways and Means of the Senate of the Philippines and the
House of Representatives, a detailed report on the implementation of this Act within six (6) months after
the two (2)-year period of availment of the Estate Tax Amnesty and one (l)-year period of availment of
the General Tax Amnesty and Tax Amnesty on Delinquencies.

Section 27. Implementing Rules and Regulations. - The Secretary of Finance shall, in coordination with
the Commissioner of Internal Revenue, promulgate and publish the necessary rules and regulations of
this Act within ninety (90) days from its effectivity.

The failure of the Secretary of Finance to promulgate the said rules and regulations shall not prevent the
implementation of this Act upon its effectivity.

Section 28. Separability Clause. - If any provision of this Act is subsequently declared invalid or
unconstitutional, the other provisions hereof which are not affected thereby shall remain in full force
and effect.
Section 29. Repealing Clause. - All other laws, acts, presidential decrees, rules and regulations or parts
thereof inconsistent with the provisions of this Act are hereby expressly repealed, amended or modified
accordingly.

Section 30. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication in the
Official Gazette or in at least one (1) newspaper of general circulation.

https://assets.kpmg/content/dam/kpmg/ph/pdf/InTAX/2019/RR%204-2019.pdf

https://assets.kpmg/content/dam/kpmg/ph/pdf/InTAX/2019/RR%20No.%206-2019.pdf

https://machicagroup.com/wp-content/uploads/2019/10/BIR-RMC-No-103-2019.pdf

CIR v. PINEDA, GR No. L-22734, September 15, 1967

FACTS:

Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and 15 children, the eldest of whom is Atty.
Manuel Pineda. Estate proceedings were had in Court wherein the surviving widow was appointed
administratrix and so that the estate was divided among and awarded to the heirs. Atty Pineda's share
amounted to about P2,500.00. After the estate proceedings were closed, the Bureau of Internal
Revenue investigated the income tax liability of the estate for the years 1945, 1946, 1947 and 1948 and
it found that the corresponding income tax returns were not filed. Thereupon, the representative of the
Collector of Internal Revenue filed said returns for the estate on the basis of information and data
obtained from the aforesaid estate proceedings and issued an assessment and charged the full amount
to the inheritance due to Atty. Manuel Pineda who appealed to the Court of Tax Appeals that he is liable
only to extent of his proportional share in the inheritance. The Court of Tax Appeals rendered judgment
holding Manuel B. Pineda liable for the payment corresponding to his share. The Commissioner argued
that Atty. Pineda be liable for the payment of all the taxes found to be due from the estate instead of
only for the amount of taxes corresponding to his share in the estate. Manuel B. Pineda opposes the
proposition on the ground that as an heir he is liable for unpaid income tax due the estate only up to the
extent of and in proportion to any share he received.

ISSUE:

Can BIR collect the full amount of estate taxes from an heir's inheritance.

RULING:

Yes. The Government can require Atty. Pineda to pay the full amount of the taxes assessed.

Pineda is liable for the assessment as an heir and as a holder-transferee of property belonging to the
estate/taxpayer. As an heir he is individually answerable for the part of the tax proportionate to the
share he received from the inheritance. His liability, however, cannot exceed the amount of his share As
a holder of property belonging to the estate, Pineda is liable for the tax up to the amount of the
property in his possession.

The reason is that the Government has a lien on the P2,500.00 received by him from the estate as his
share in the inheritance, for unpaid income taxes for which said estate is liable. By virtue of such lien,
the Government has the right to subject the property in Pineda's possession to satisfy the income tax
assessment. After such payment, Pineda will have a right of contribution from his co-heirs, to achieve an
adjustment of the proper share of each heir in the distributable estate.

The Government has two ways of collecting the tax in question. One, by going after all the heirs and
collecting from each one of them the amount of the tax proportionate to the inheritance received; and
second, is by subjecting said property of the estate which is in the hands of an heir or transferee to the
payment of the tax due.

Another remedy, pursuant to the lien created by Section 315 of the Tax Code upon all property and
rights to property belonging to the taxpayer for unpaid income tax, is by subjecting said property of the
estate which is in the hands of an heir or transferee to the payment of the tax due, the estate. This
second remedy is the very avenue the Government took in this case to collect the tax.

The Bureau of Internal Revenue should be given, the necessary discretion to avail itself of the most
expeditious way to collect the tax as may be envisioned in the particular provision of the Tax Code above
quoted, because taxes are the lifeblood of government and their prompt and certain availability is an
imperious need.

CIR vs GONZALES and CTA

FACTS:

 On May 13, 1948, Matias Yusay died intestate with two heirs Jose S. Yusay and Lilia Yusay Gonzales.
Intestate proceedings for the settlement of his estate were instituted wherein Jose was therein
appointed as administrator.

 On May 11, 1949 Jose filed with the BIR an estate and inheritance tax return with a total gross estate
of P187,204.00, however, the return mentioned no heir. Upon investigation, BIR found the following
properties with a total assessed value of P219,584.32. The fair market value of the real properties was
computed by increasing the assessed value by forty percent.

 Based on the above findings, the BIR assessed on October 29, 1953 estate and inheritance taxes in the
sums of P6,849.78 and P16,970.63, respectively.

 On January 25, 1955 the BIR increased the assessment to P8,225.89 as estate tax and P22,117.10 as
inheritance tax plus delinquency interest and demanded payment thereof on or before February 28,
1955.

 On February 16, 1955, the RTC of Iloilo required Jose to show proof of payment of said estate and
inheritance taxes. He then requested an extension of time within which to pay the tax however, the CIR
denied the request.

 On May 30, 1956 the commissioner submitted a reamended project of partition with a total of
P356,699.67.

 The Internal Revenue Commissioner then caused the estate of Matias to be reinvestigated for estate
and inheritance tax liability. Accordingly, he issued an assessment with regard to the total estate and
inheritance taxes amounting to P97,723.96. Like in previous assessments, the fair market value of the
real properties was arrived at by adding 40% to the assessed value.
 Despite repeated demands, no payment was made whereupon the CIR filed a proof of claim for the
estate and inheritance taxes due and a motion for its allowance with the settlement court in voting
priority of lien pursuant to Section 315 of the Tax Code.

 Lilia filed an answer alleging non-receipt of the assessment, the existence of two administrators,
namely namely Florencia Piccio Vda. de Yusay who administered two-thirds of the estate, and Lilia
Yusay, who administered the remaining one-third, and her willingness to pay the taxes corresponding to
her share, and praying for deferment of the resolution on the motion for the payment of taxes until
after a new assessment corresponding to her share was issued.

 Moreover, Lilia disputed the legality of the assessment dated February 13, 1958 and claimed that the
right to make the same had prescribed inasmuch as more than five years had elapsed since the filing of
the estate and inheritance tax return on May 11, 1949.

 CIR – denied the request and state that: (1) that the right to assess the taxes in question has not been
lost by prescription since the return which did not name the heirs cannot be considered a true and
complete return sufficient to start the running of the period of limitations of five years under Section
331 of the Tax Code and pursuant to Section 332 of the same Code he has ten years within which to
make the assessment counted from the discovery on September 24, 1953 of the identity of the heirs;
and (2) that the estate's administrator waived the defense of prescription when he filed a surety bond
on March 3, 1955 to guarantee payment of the taxes in question and when he requested postponement
of the payment of the taxes pending determination of who the heirs are by the settlement court.

 CTA – reversed the decision and declared the CIR to assess the estate and inheritance taxes in
question to have prescribed.

ISSUE:

Whether or not the right of the CIR to assess the estate and inheritance taxes in question already
prescribed.

HELD:

No. Paragraph (a) of Section 93 of the Tax Code lists the requirements of a valid return. It states:

(a) Requirements.—In all cases of inheritance or transfers subject to either the estate tax or the
inheritance tax, or both, or where, though exempt from both taxes, the gross value of the estate
exceeds three thousand pesos, the executor, administrator, or anyone of the heirs, as the case
may be, shall file a return under oath in duplicate, setting forth (1) the value of the gross estate
of the decedent at the time of his death, or, in case of a nonresident not a citizen of the
Philippines ; (2) the deductions allowed from gross estate in determining net estate as defined in
section eightynine; (3) such part of such information as may at the time be ascertainable and
such supplemental data as may be necessary to establish the correct taxes.

A return need not be complete in all particulars. It is sufficient if it complies substantially with the
law. There is substantial compliance (1) when the return is made in good faith and is not false or
fraudulent; (2) when it covers the entire period involved; and (3) when it contains information as to
the various items of income, deduction and credit with such definiteness as to permit the
computation and assessment of the tax.
There is no question that the state and inheritance tax return filed by Jose S. Yusay was substantially
defective.

First, it was incomplete. It declared only ninety-three parcels of land representing about 400
hectares and left out ninety-two parcels covering 503 hectares. Second, the return mentioned no
heir. Thus, no inheritance tax could be assessed. As a matter of law, on the basis of the return, there
would be no occasion for the imposition of estate and inheritance taxes. When there is no heir - the
return showed none - the intestate estate is escheated to the State.12 The State taxes not itself.

The return filed in this case was so deficient that it prevented the Commissioner from computing the
taxes due on the estate. It was as though no return was made. The Commissioner had to determine
and assess the taxes on data obtained, not from the return, but from other sources. We therefore
hold the view that the return in question was no return at all as required in Section 93 of the Tax
Code.

Accordingly, for purposes of determining whether or not the Commissioner's assessment of

February 13, 1958 is barred by prescription, Section 332(a) which is an exception to Section 331 of
the Tax Code finds application. We quote Section 332(a):

SEC. 332. Exceptions as to period of limitation of assessment and collection of taxes.— (a) In the
case of a false or fraudulent return with intent to evade tax or of a failure to file a return, the tax
may be assessed, or a proceeding in court for the collection of such tax may be begun without
assessment, at any time within ten years after the discovery of the falsity, fraud or omission.

As stated, the Commissioner came to know of the identity of the heirs on September 24, 1953 and
the huge under declaration in the gross estate on July 12, 1957. From the latter date, Section 94 of
the Tax Code obligated him to make a return or amend one already filed based on his own
knowledge and information obtained through testimony or otherwise, and subsequently to assess
thereon the taxes due. The running of the period of limitations under Section 332(a) of the Tax Code
should therefore be reckoned from said date for, as aforesaid, it is from that time that the
Commissioner was expected by law to make his return and assess the tax due thereon. From July 12,
1957 to February 13, 1958, the date of the assessment now in dispute, less than ten years have
elapsed. Hence, prescription did not abate the Commissioner's right to issue said assessment.