Gross Estate (January 17, 2019) 2. Personal
Personal property
Estate Tax
Tax on the right of the deceased person to
transmit his/her estate to his/her lawful heirs and
beneficiaries at the time of death and on certain
transfers which are made by law as equivalent
to testamentary disposition.
Not a tax on property nor on the transferor or
transferee. It is an excise tax and its object is to
tax the shifting of economic benefits.
Date of Accrual vs. Date of Payment
Accrual of the estate tax as of the date of the
death of the decedent is distinct from the
obligation to pay the same.
Special Rules on Intangible Properties
(WITH SITUS IN THE PHILIPPINES..)
1. Franchise which must be exercised in the
Philippines.
2. Shares, obligations or bonds issued by
any corporation or Sociedad anonima
organized or constituted in the
Philippines in accordance with its laws.
3. Shares, obligations or bonds issued by
any foreign corporation 85% of the
business of which is located in the
Philippines.
4. Shares, obligations or bonds issued by
any foreign corporation, if such shares,
obligations or bonds have acquired a
business situs in the Philippines.
5. Shares, rights in any partnership
business or industry established in the
Philippines.
Classification of Decedent
Resident & Non-
resident Citizen, Non-resident Alien
Resident Alien Decedent
Decedent
1. Real property 1. Real property situated
wherever situated in the Philippines
2.
property wherever a) Tangible property
situated situated in the
a) Tangible Philippines
b) Intangible b) Intangible personal
property with a situs in
the Philippines unless
exempted on the basis
of reciprocity.
Items in the Gross Estate (GE)
1. Decedent’s Interest - to the extent of the
interest in property of the decedent at the
time of his death.
In property owned or possessed; the law
contemplates any interest or right in the
nature of property, but less than title
having value or capable of being valued,
transferred by the decedent at his death
(e.g., dividend before death but paid after
death, partnership profits).
Deposit account of Decedent – In
general, included in the gross estate
including interest paid only after death.
Exception: amounts withdrawn
subjected to 6% final withholding tax –
excluded from gross estate (GE)
2. Transfer in Contemplation of Death –
transfers impelled by the thought of an
impending death (i.e., the motivating
factor controlling motives is the thought
of death), without regard of the state of
health of the transferor.
Transfer involving retention or
reservation of certain rights.
Exception: bona fide sale for an
adequate and full consideration in money
or money’s worth.
3. Revocable Transfer – a transfer whereby
the terms of enjoyment of the property
 may be altered, amended, revoked or
terminated by the decedent alone or in
conjunction with any other person, or
where any such power is relinquished in
the contemplation of the decedent’s
death. It is enough that the decedent had
the power to alter, amend or revoke
though he did not exercise such power.
Fictitious Sale
If the purported absolute sale inter vivos
by decedent is shown to be fictitious,
then the total value of the property
transferred is subject to inclusion in the
taxable estate.

4. What is a General Power of

Appointment? Power to designate,
without restrictions, the persons who
shall receive, succeed to, possess or
enjoy the property or its income received
from the estate of a prior decedent.

5. Prior Interests – all transfers, trusts,

estates, interest, rights, power and
relinquishment of powers made, created,
arising, existing, exercised or
relinquished before or after the effectivity
of the NIRC.

6. Proceeds from Life Insurance

Designation of
Proceeds from Beneficiary
Life Insurance
Revocable Irrevocable
From insurance
company with the
estate administrator
Taxable Taxable
as beneficiary
From insurance
Not
company with wife Taxable
as beneficiary Taxable

From SSS or GSIS

Not Not
with wife as
beneficiary Taxable Taxable

From group
Not Not
insurance with son
as beneficiary Taxable Taxable

7. Transfers for insufficient consideration –

amount includible in the gross estate is
the excess of the FMV at the time of
death over the value of consideration
received.