SOLON, Donnie Ray O Taxation 2

20-1-01343 Atty Dela Rosa

Seatwork No. 3

1. The Concept of Donation for donor’s Tax purposes is broader in scope that
its civil law concept because the provisions of the civil code in terms of
donation only cover’s the act of liberality whereby a person disposes
gratuitously of a thing or right in favour of another who accepts it. As
compared to the Donation for Donor’s Tax purposes which considered as
supplement the estate tax by preventing the avoidance of the latter through
the device of donating the property during the lifetime of the deceased
(donor). In Addition, donor’s tax also prevent the avoidance of income taxes.
Without donor’s tax, the donor may escape the progressive rates of income
taxation through the simple expedient of splitting his income among
numerous donees.

2. Donor’s Tax, being a tax being imposed on the privilege of the donor to give
a property as a way of gift, and can only be imposed when such gift was
received, is an excise tax that was imposed upon the right of a person to
transfer property gratuitously during his lifetime.

3. a tax on the privilege of the donor to

give; it is not a property tax but is a tax
4. imposed on the transfer of property by
way of gift during the life time of the donor.
The donor’s tax shall
5. not apply unless and until there is a
completed gift. It is an excise tax imposed
upon the right of a person
6. to transfer property gratuitously during
his lifeti
3. No, the condonation made by Mr Y on the debt of Mr. X cannot be
considered as a donation or gift. For a condonation of debt to be subjected
to donor’s tax, any consideration should not exist between the creditor and
SOLON, Donnie Ray O Taxation 2
20-1-01343 Atty Dela Rosa

Seatwork No. 3
the debtor. Considering that the condonation was wade after Mr X repaired
the Car of Mr Y, there is a service rendered on the part of Mr X, thus the
condonation is made as a consideration and not gratuitously given

If there will be a tax imposed on this case, Mr X will be subjected to income

tax and not of a donor’s tax.

4. The general renunciation by an heir, in this case the surviving spouse, of

his share in the hereditary estate left by the deceased is not subject to
donor’s tax. Because of this renunciation, right of accretion arises and, the
heir who renounces or cannot receive his share is added or incorporated to
that of his co-heirs, co-devisees or co-legatees. His share accrues to his co-
heirs in the same proportion that they inherit. Consequently, the heir can
never be considered to have owned his share in the inheritance that he
renounced. He could not donate a property that he never owned. As a
result, the heir who renounces his inheritance is not subject to donor’s tax

5. No. the property of a non-resident alien located outside the Philippines is

not subject to donor’s Tax

6. Even if donation and inheritance has same tax rates, donation is considered
to be a more efficient means to transfer the property. Donation has a wider
range of individuals it can transfer property to, and also the quicker in
terms of process considering that inheritance still go through the needed
court proceedings to probate the will.