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A “due date” refers to the last day for filing tax return and payment of tax. The following
are the due dates prescribed by law for filing of return and payment of Internal Revenue
Taxes that a typical business has to comply with:
6. Non-VAT percentage tax (monthly return) 20th day after month’s end
(BIR Form 2551)
2). Gratuitous transfer – is the conveyance or property which is not conditioned or reciprocated by any consideration in exchange for the value of the
property given away.
The gratuitous transfer of properties may be made through:
A. Donation – a transfer of property to the done during the lifetime of the donor. The property is given for free, the done has no obligation to give
any consideration.
B. Succession – other wise known as donation mortis causa because the effectivity of gratuituously transferring properties to the heirs is caused by
the death of the property owner either through the operation of law or by a written will.
3). Partially gratuitous transfer – this conveyance of property is made possible for an inadequate consideration. It is usually called “disguised sale”
because the intent of property transfer is partly sale and partly gift.
Donation Inter Vivos
(subject to Donor’s Tax)
Effectivity – during the lifetime of donor
Gratuitous
Transfers
(subject to Transfer Donation Mortis Causa
Taxes) Testamentary Transfer
Intestate Transfer
(Subject to Estate Tax)
Effectivity – upon the death of property
owner
Distinction between Donor’s Tax and Estate Tax
Effectivity of transfer of During the lifetime of donor Upon the death of the
property and done decedent
Taxpayer The donor Estate of the deceased person
Exempt amount Prior to train law – Net gift of Prior to train law – Net estate
P100,000 and below of P200,000 and below
2018 – refer to train law 2018 – refer to train law
Filing and payment Within thirty (30) days after Within six(6) months from the
the date gift is made. decedent’s death
Justification of Transfer Taxes
Redistribution of wealth theory
Benefit-received theory
Privilege or state partnership theory
Ability to pay theory
Equitable or recoupment theory
Redistribution of wealth theory
This theory views that the properties given for free contributes to the unequal distribution
of wealth and earnings because the recipient (their donor0 has not actually worked for it.
The imposition of donor’s tax or estate tax helps the equitable distribution of wealth to
attain social progress and stability.
Benefit received theory
According to this theory, the government protects and provides services in the
accumulation of properties transferred gratuitously. These services resulted to benefits
received by the estate and the recipient (heirs or donee).
Consequently, it is fair that the government collects equivalent compensation for giving
protection and services to individual persons, properties or rights who gained from the
benefits.
Privilege or state partnership theory
This theory asserts that the State is a “passive and silent” in the accumulation of wealth as
it protects every individual within its territory. Hence, it has the right to collect the share
which is properly due to it.
Ability to pay theory
According to this theory, every inheritance received by an heir is in the nature of unearned
wealth. The effect of inheritance increases the wealth of the heir thereby creating an ability
to pay the tax and thus contributing to governmental income.
Equitable recoupment theory
The intended purpose of this doctrine is to prevent “unjust enrichment” by either the
taxpayer or the government.
There is unjust enrichment on the part of the taxpayer if properties are gratuitously
transferred without payment of transfer taxes.
Properties that are distributed to the heirs or donees would reduce the taxes on reportable
current and future earnings as they are now subjected to individual personal exemptions
(per property recipient) and lesser graduated tax rates.
Consequently, the Sovereign State imposes transfer taxes to counter-act tax evasion, or to
reasonable recover the current and future anticipated reduction of the government’s income
tax collections.
Succession
Defined as a mode of acquisition by virtue of which the property, rights and obligations to
the extent of the value of the inheritance, of a person are transmitted through his death to
another or others either by will (testate) or by operation of law (intestate).
Elements of Succession
Decedent – The person who died and whose property is transmitted through succession. “Decedent is the general term
applied to the person whose property is transmitted through succession, whether or not he left a will.
Testator – is the decedent who made the last Will and Testament
Estate - The properties or property rights of the decedent, which is the subject matter of succession
Inheritance – includes all properties, rights and obligations of a person which are not extinguished by his death. It
also includes those which have accrued thereto since the opening of the succession.
Successor – The heir or the person to whom the property or property rights is to be transferred.
Other Basic Concepts of Succession
Will – it is a document that determines the disposition of an inheritance; an act whereby a
person is permitted with the formalities prescribed by law, to control to a certain degree the
disposition of his estate.
Holographic Will – one entirely written, dated and signed in the very handwriting of the
testator and witnesses.
Notarial Will – A will written in public instruments, notarized by a lawyer, signed by the
testator and witnesses.
Codicil – A supplement or an addition to a will, made after the execution of a will and
annexed to be taken as a part thereof, by any disposition made in the original will is
explained, added to, or altered.
A codicil is a written change made to a document. It does not replace the entire
document. Instead, if clarifies, adds to, or nullifies something in the original document. A
codicil is useful because it reduces the amount of work required to change a legal
document, such as a will. The codicil must be signed and dated by the person making the
change to the document. It may also need to be witnessed by a notary.
Testate Estate
An estate of a deceased person which is settled or to be settled with a valid last will and
testament.
Intestate Estate
An estate of a deceased person without a will
Probate
A special proceeding to establish the validity of Will. Probate is mandatory, which means
that no Will passes either real or personal property unless it is proved and allowed in a
proper court.
Reprobate
A special proceeding to establish the validity of a will previously proved in a foreign country.
Philippine law requires that a will must be proved and allowed by the proper court in order for it to pass real or personal
property.[1]
This means that all wills must go through probate in order for them to transfer property from the testator to an heir.
This has implications for a foreign will which has already been probated abroad.
The question of probate must be addressed by a Philippine court in order for that foreign will to dispose of property located in the
Philippines.
The law provides two options in the case of a foreign will already probated abroad.
The will can either be independently probated in the Philippines as if for the first time (under Rules 75 and 76 of the Rules of
Court) or it may be reprobated under Rule 77.
Through reprobate, a will which has already proved and allowed in a foreign country — in accordance with that country’s laws —
may be allowed in the Philippines.
Legatee
One who is given personal property through a Will.
Devisee
One who is given real property in a Will.
Executor
The person named in the Will who is entrusted to implement its provisions.
To prepare for the task, you should do the following before the testator dies:
Make sure the testator keeps an updated list of assets and debts, including bank and investment accounts, insurance
policies, real estate, etc.
Know where the original will and the asset list is being held and how to access them.
Know the names and contact details of attorneys or agents named by the testator, and what their functions are.
Discuss the testator's wishes as far as a funeral or memorial service, including instructions for burial or cremation.
Discuss the will with the testator and, if possible, with the beneficiaries in order to minimize problems in the future.
Have a copy of important documents such as the will, letter of intent, and any powers of attorney. It may be helpful to
consult an estate planning checklist to make sure you have everything you need.
Executrix
A female executor
Administrator
The person entrusted and assigned by court for the care, custody and management of the
estate of a decedent until the estate is partitioned and distributed to the heirs, legatees and
devisees, if any.
A person who administers an estate is known either as an executor or administrator.
An executor is appointed in a Will; if there is no Will then an administrator must be
appointed by the Court.
Administratrix
A female administrator
Special Proceedings
A remedy by which a party seeks to establish a status, a right, or a particular fact.
Escheat
A proceeding whereby the State, by virtue of its sovereign , steps in and claims the real or
personal property of a person who dies intestate without heir. In the absence of a lawful
owner, a property is claimed by the State to forestall an open invitation to self-service by
the first comers.
Bases of Succession
Public Order – Immediately, upon the person’s death, his property becomes without ownership. To avoid
chaotic conflicts, the heirs are protected by law to succeed the rights of the decedent.
Family Relations – The principle of the natural law necessitates a person to provide for those he left
behind. As a result, the decedent’s wealth which he acquired during this lifetime is reserved for the benefit
of his heirs.
Implicit Ownership – As a consequence of death, heirs assume ownership of property left by the decedent
because they have the primary rights over the inheritance.
Socio-economic – The wealth left by the decedent should be actively used to provide economic benefit to
the community. The successor should continue to utilize the resources left by the decedent in order that
the wealth shall be preserved.
Personal Debts of the Decedent
The heirs are not liable for the value of the decedent’s personal obligations existing at the
time of death. The amount of inheritance distributed to the heirs is the net estate after the
payment of the decedent’s obligations and estate tax
Contractual Obligations of the Decedent
The following shall be sufficient causes to disinherit the testator’s children and
descendants, legitimate as well as illegitimate.
When
1. A child or descendant has been found guilty of an attempt against the life of the testator, his
or her spouse, descendants or ascendants.
2. A child is descendant has accused the testator for a crime for which the law prescribes
imprisonment for six years or more, if the accusations has been found groundless.
3. A child or descendant has been convicted of adultery or concubinage with the spouse of the
testator.
4. A child or descendant by fraud, violence, intimidation, or undue influence causes the testator to
make a will or to change one already made.
5. There is a refusal without justifiable cause to support the parent or ascendant who disinherits such
child or descendant.
6. There is maltreatment of the testator by word or deed, by the child or descendant;
Disinheritance of Parents and Ascendants
The following shall be sufficient causes to disinherit the testator’s parents or ascendants,
whether legitimate or illegitimate.
When:
1. The parents have abandoned their children or induced their daughters to live a corrupt or
immoral life or attempted against their virtue.
2. The parent or ascendant has been convicted of an attempt against the life of the testator, his/her
spouse, descendants, or ascendants.
3. The parent or ascendant has accused the testator of a crime for which the law prescribes
imprisonment for six years or more, if the accusation has been found to be false.
4. The parent or ascendant has been convicted of adultery or concubinage with the spouse of the
testator.
5. The parent or ascendant by fraud, violence, intimidation or undue influence causes the testator to
make a will or to change one already made.
6. The loss of parental authority for causes is specified in the Code.
Relevance of Net Distributable Estate in Transfer
Taxation
The following reasons justify the discussion of disinheritance, renunciation of inheritance
and share of each heir in the net hereditary estate:
1. The specific and categorical renunciation of inheritance may result to the payment of
donor’s tax aside from the payment of estate tax. In this case, the net distributed share of the
heirs from the net hereditary estate should properly be determined to compute the appropriate
amount of donor’s tax.
2. The computation of the net distributable estate and the determination of each share of the heirs
shall properly distinguish the different kinds of successions (testamentary, intestate or mixed) from
each other.
3. It is vital for Accounting students who would become accounting practitioners to at least have
knowledge of the concept of property succession and the more importantly be able to compute the
share of heir for estate tax planning and estate distribution purposes.
Intestate Succession
A person who died without leaving a will is said to have died intestate.
A legal succession because it takes effect through the operation of law because the
decedent has no last will and testament to dispose the estate according to his wishes.
In case of doubt, testamentary succession is preferred over legal or intestate succession.
Circumstances of Intestate Succession
An intestate succession happens a person dies under the following circumstances:
1. Without a written Will, or with a void Will, or one which subsequently lost its validity.
An oral Will is null and void. A written Will is void when it does not meet the formal and
essential necessities. A valid Will losses its effectiveness when all instituted heirs renounce their
inheritance or reject it.
2. With a Will but no one was named as successor.
When the testator did not designate any heir, devisee, or legatee, intestacy will govern the
disposition of the estate.
If some inheritance is not covered by Will, the property not disposed off in the Will shall be
distributed by legal succession. This results to mixed succession whereby the disposition of
inheritance is partly testate and partly intestate.
3. If the suspensive condition attached to the institution of heir does not happen or is not fulfilled, or
if heir dies before the testator, or repudiates the inheritance.
4. When the heir instituted is incapable of succeeding.
Intestate Heirs Distinguish from Compulsory Heirs
The right to inherit without a Will shall not extend beyond the fifth degree of relationship
in the collateral line.
Observe that there is no limit on the direct lines or lineal relatives. The provides a limit
only to the collateral line.
In default of the persons entitled to succeed in accordance with the provisions of the
preceding Sections, the State shall inherit the whole estate.
Mixed Succession
This kind of succession is effected partly by will and partly by operation of law. A testator
made a will but omitted some properties, rights, or has acquired some properties after the
execution of his last will and testament. Accordingly, not all of his properties shall be
disposed based on the will.
Persons Incapable of Succeeding
Article 1027 of the Civil Code provides that following persons are incapable of
succeeding:
1. The priest who heard the confession of the testator during his illness, or minister of the
gospel who extended spiritual aid to him during the same period.
2. The relatives of such priest or minister of the gospel within the fourth degree, the church, order,
chapter, community, organization, or institution to which such priest or minister may belong.
3. A guardian with respect to testamentary dispositions given by a ward in his favor before the final
accounts of the guardianship have been approved, even if the testator should die after the approval
thereof; nevertheless, any provision made by the ward in favor of the guardian when the latter is his
ascendant, descendant, brother, sister, or spouse, shall be valid;
4. Any attesting witness to the execution of a will, the spouse, parents, or children or any one
claiming under such witness, spouse, parents, or children;
5. Any physician, surgeon, nurse, health officer, or druggist who took care of the testator during his
last illness; and
6. Individuals, associations, and corporation not permitted by law to inherit.
End of the