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4. Deductions from Gross Estate [Sec. 86(A), NIRC]
a. Expenses, Losses, Indebtedness, and Taxes
i. Funeral Expenses
(a) For actual funeral expenses or in an amount
equal to five percent (5%) of the gross estate,
whichever is lower, but in no case to exceed Two
hundred thousand pesos (P200,000);
ii. Judicial Expenses for testate/intestate
proceedings
(b) For judicial expenses of the testamentary or
intestate proceedings;
Judicial Expenses are expenses of
administration. Administration expenses, as an
allowable deduction from the gross estate, have
been construed by the Federal and State Courts
of the USA to include all expenses “essential to
the collections of the assets, payment of debts or
distribution of the property to the person entitled
to it.” In other words, the expense 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. (CIR v. CA, 2000)
Lorenzo v. Posadas: Judicial expense does not
include the compensation paid to a trustee of the
decedent’s estate who was appointed for the
purpose of managing the decedent’s real estate
for the benefit of the testamentary heir.
Question: Can expenses incurred in the
extrajudicial settlement of the estate be allowed
as a deduction from the gross estate?
Answer: Yes. There is no requirement of formal
administration. It is sufficient that the expense
be a necessary contribution toward the
settlement of the case.
The expenses of administration should be those
necessary for the management of the property,
for protecting it against destruction or
deterioration, and possibly for the production of
fruits; but the sum expended by an administrator
of an extensive administration of the estates of
the decedent cannot be considered “expenses of
administration.” (De Lizarraga Hermanos v.
Abada, 1919)
Disbursements made by a duly appointed
administrator out of the funds of the estate of a
decedent which are necessary for the care,
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management, and settlement of the estate and
which redounded to the benefit of all the heirs
such as expenses to cover (1) the improvement
and necessary repairs of the family residence
which was partitioned among the eight heirs,
five of whom consented to the disbursement; (2)
the lawyer’s subsistence; (3) the cost of the gift
to the physician who attended to the testator
during his last illness; and (4) irrigation fees, are
allowable. (De Guzman v. De Guzman, 1978)
Note: Fair and reasonable attorney’s fees
constitute judicial expenses of the testamentary
or intestate proceedings. (Vera v. Navarro,
1977)
Attorney’s fees in order to be deductible from
the gross estate must be essential to the
collection of assets, payment of debts or the
distribution of the property to the persons
entitled to it. The services for which the fees are
charged must relate to the proper settlement of
the estate. (CIR v. CA, supra)
iii. Claims against the estate
(c) For claims against the estate: Provided, That at
the time the indebtedness was incurred the 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;
First, when the discovery of erroneous tax
returns is made within three years after the
date such returns should have been filed, and the
declarant dies, the claim for payment of the tax
assessed by the Collector of Internal Revenue
must be made in the testate or intestate
proceedings by filing a motion accompanied by
a statement of the taxes duly sworn to by the
Collector of Internal Revenue, and a competent
court may summarily order, without previous
trial, the judicial administrator to pay the claim
if funds are available, taking into consideration
the order of payment established in section 753
of the Code of Civil Procedure, and the
administrator may pay the claim under protest in
order to recover in a separate suit what he may
have erroneously paid; and, secondly, when the
discovery of erroneous return take place
after three years from the date the return are
filed, the Collector of Internal Revenue shall
present the claim by filing a motion
accompanied by a statement under oath of the
unpaid taxes, said motion being in the nature of
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a civil suit should be prosecuted through the
filing of a written answer and the presentation of
evidence. (Collector v. Haygood, 1938)
Government v. Pamintuan: Claims for taxes
may be collected even after the distribution of
the decedent’s estate among his heirs who shall
be liable therefor in proportion to their shares in
the inheritance.
iv. Claims against insolvent persons
(d) For claims of the deceased against insolvent
persons where the value of decedent's interest
therein is included in the value of the gross estate;
v. Unpaid Debts and Mortgages
(e) 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 be 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 a 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.
vi. Losses
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 a deduction for
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. (Vitug Acosta 2014, pp. 217-218)
b. Property previously taxed (Vanishing Deductions)
(2) Property Previously Taxed. - An amount equal to
the value specified below of any property forming a
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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 if in
determining the value of the estate of the prior
decedent, no deduction was allowable under paragraph
(2) 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 (1) and (3) of this
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Subsection as the amount otherwise deductible under
said paragraph (2) 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.
Re: the last paragraph
These deductions shall be allowed only under the
following conditions, to wit: (1) the donor’s tax or
estate tax is finally determined and paid by or on
behalf of such donor, or the estate of such prior
decedent, as the case may be; (2) 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; (3) only to the extent that
the value of such property is included in the
decedent’s gross estate; and (4) only if in
determining the value of the net estate of the prior
decedent no deduction was allowable in respect of
the property 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 were paid in whole or
in part prior to the decedent’s death, then the
deduction shall be reduced by the amount so paid.
The vanishing deduction, so-called because of
the diminishing exemption at the rate of 20%
until it is lost after the fifth year, is designed to
mitigate the harshness of successive taxation.
c. Family Home
(4) 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 One million pesos (P1,000,000),
the excess shall be subject to estate tax. As a sine qua
non condition for the exemption or deduction, said
family home must have been the decedent's family
home as certified by the barangay captain of the
locality.
November 11, 2011
BIR RULING NO. 440-11
Sec. 86 (A) (4) NIRC; RR 02-03; CIR vs. Isabela
Cultural Corp., G.R. No. 172231
Cynthia L. Tiotuyco
#14 S. Moldero, B.F. Homes
Capitol Site, Quezon City
Ma'am :
This refers to your letter dated February 4, 2011
requesting for a clarificatory ruling on whether the
family home of your father, the deceased Maximo B.
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Landrito, may be deducted from his gross estate for
purposes of estate tax. It can be gathered from the
documents submitted that Maximo Landrito and his
wife, Paz Landrito, ("Spouses Landrito") obtained a
loan from Zoilo and Primitiva Espiritu ("Spouses
Espiritu") in the amount of P350,000.00; that to secure
the loan, the Spouses Landrito executed a real estate
mortgage over their real property located in Alabang,
Muntinlupa covered by Transfer Certificate of Title
(TCT) No. S-48498,in favor of Spouses Espiritu; that
said property was being used by Spouses Landrito as
their residence. Furthermore, the Spouses Landrito
were unable to settle the loan when the same became
due and demandable. As a consequence, the mortgaged
property was foreclosed on October 31, 1990 and sold
to Spouses Espiritu as the sole bidder. The title of the
property was subsequently transferred in the name of
Spouses Espiritu under TCT No. 179802 of
the Registry of Deeds for Makati. Meanwhile, Spouses
Landrito were ejected from their property and rented an
apartment as their residence. On October 9, 1992, the
Spouses Landrito, represented by their son, Zoilo
Landrito, filed an action for annulment or
reconveyance of title of the subject property against
Spouses Espiritu. The Supreme Court, in its decision
promulgated on April 3, 2007, declared invalid the
foreclosure proceedings and ordered the Spouses
Espiritu to reconvey the property to the Spouses
Landrito. Pending the execution of the Court's decision,
Maximo Landrito died on December 20, 2007 in his
rented apartment in Sampaloc, Manila.
The sole issue is whether or not the family home
constituted on the lot that was foreclosed but
subsequently reconveyed to Spouses Landrito may be
deducted from the gross estate of Maximo Landrito. In
reply, please be informed that Section 6 (D) (b) of the
Revenue Regulations No. 02-2003, which implements
Section 86 (A) (4) of the Tax Code of 1997, provides,
to wit: "Conditions for the allowance of FAMILY
HOME as deduction from the gross estate
—
1. The family home must be the actual residential hom
e of the decedent and his family at the timeof his
death, as certified by the Barangay Captain of the
locality where the family home is situated;
2. The total value of the family home must be included
as part of the gross estate of the decedent; and
3. Allowable deduction mustbe in an amount equivale
nt to the current fair market value of the family home
as declared or included in the gross estate, or the extent
of the decedent's interest (whether conjugal/community
or exclusive property), whichever is lower, but not
exceeding P1,000,000."
Based from the above-quoted provision, it is clear
that the family home, in order to be allowed as a
deduction from the gross estate, must be the actual
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residential home of the decedent and his family at the
time of his death. In this case, Mr. Landrito and his
family were not actually residing at their family home
at the time of his death. Hence, the said family home
may not be allowed as a deduction from the gross estate
for purposes of estate tax.
It is a governing principle in taxation that tax
exemptions must be construed in strictissimi juris
against the taxpayer and liberally in favor of the taxing
authority. One who claims an exemption must be able
to justify the same by the clearest grant of organic or
statute law. An exemption from the common burden
cannot be permitted to exist upon vague implications.
And since a deduction for income tax purposes partakes
of the nature of a tax exemption, then it must also
be strictly construed. (CIR vs. Isabela Cultural
Corporation, G.R. No. 172231 dated February 12,
2007)
Very truly yours,
(SGD.) KIM S. JACINTO-HENARES
Commissioner of Internal Revenue
d. Standard Deduction
(5) Standard Deduction. - An amount equivalent to
One million pesos (P1,000,000).
e. Medical Expenses
(6) Medical Expenses. - Medical Expenses incurred by
the decedent within one (1) year prior to his death
which shall be duly substantiated with receipts:
Provided, That in no case shall the deductible medical
expenses exceed Five Hundred Thousand Pesos
(P500,000).
Note: Expenses to commemorate his death
anniversary do not constitute medical expenses. (De
Guzman v. De Guzman, supra)
f. Amount Received by Heirs under RA No. 4917
(7) Amount Received by Heirs Under Republic Act
No. 4917. - Any amount received by the heirs from
the decedent - 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.
REPUBLIC ACT No. 4917
AN ACT PROVIDING THAT RETIREMENT
BENEFITS OF EMPLOYEES OF PRIVATE
FIRMS SHALL NOT BE SUBJECT TO
ATTACHMENT, LEVY, EXECUTION, OR ANY
TAX WHATSOEVER.
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Section 1. Any provision of law to the contrary
notwithstanding, the retirement benefits received by
officials and employees of private firms, whether
individual or corporate, in accordance with a
reasonable private benefit plan maintained by the
employer shall be exempt from all taxes and shall not
be liable to attachment, garnishment, levy or seizure
by or under any legal or equitable process whatsoever
except to pay a debt of the official or employee
concerned to the private benefit plan or that arising
from liability imposed in a criminal action: Provided,
That the retiring official or employee has been in the
service of the same employer for at least ten (10) years
and is not less than fifty years of age at the time of his
retirement: Provided, further, That the benefits
granted under this Act shall be availed of by an
official or employee only once: Provided, finally, That
in case of separation of an official or employee from
the service of the employer due to death, sickness or
other physical disability or for any cause beyond the
control of the said official or employee, any amount
received by him or by his heirs from the employer as a
consequence of such separation shall likewise be
exempt as hereinabove provided.
As used in this Act, the term "reasonable private
benefit plan" means a pension, gratuity, stock bonus or
profit sharing plan maintained by an employer for the
benefit of some or all of his officials and employees,
wherein contributions are made by such employer or
officials and employees, or both, for the purpose of
distributing to such officials and employees the
earnings and principal of the fund thus accumulated,
and wherein it is provided in said plan that at no time
shall any part of the corpus or income of the fund be
used for, or be diverted to, any purpose other than for
the exclusive benefit of the said officials and
employees.
Section 2. This Act shall take effect upon its approval.
Approved: June 17, 1967
g. Transfers for Public Use
(3) 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.
5. Deductions Allowed to Non-Resident Estates [Sec.
86(B), NIRC]
(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:
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(1) Expenses, Losses, Indebtedness and Taxes. - That
proportion of the deductions specified in paragraph (1)
of Subsection (A) of this Section which the value of
such part bears to the value of his entire gross estate
wherever situated;
(2) 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
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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.
(3) 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.
However, pursuant of Sec. 86(D), it is required that
before any deduction can be availed by any non-
resident alien, the executor, administrator, or
anyone of the heirs must include in the estate return
that part of the gross estate of the non-resident alien
not situated in the Philippines. Accordingly,
pursuant to Sec. 86(C), the surviving spouse of the
non-resident alien may likewise claim his/her net
share in the conjugal partnership/community
property to be deducted from the net estate of the
deceased. (Vitug Acosta 2014, p. 220)
6. Tax Credits [Sec. 86(E), NIRC]
(E) 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
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credit is taken, which the decedent's net estate
situated outside the Philippines taxable under this
Title bears to his entire net estate.
A tax credit is granted for estate taxes paid to a
foreign country on the estate of citizens and
resident aliens subject to the above limitations.
Other provisions under Sec. 86, NIRC
(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
b. Filing of Notice of Death
this Section, be deducted from the net estate of the
decedent.
(D) Miscellaneous Provisions. - No deduction shall be
allowed in the case of a nonresident not a citizen of
the Philippines, unless the executor, administrator, or
anyone of the heirs, as the case may be, includes in the
return required to be filed under Section 90 the value
at the time of his death of that part of the gross estate
of the nonresident not situated in the Philippines.
c. Estate tax Returns
7. Exemption of Certain Acquisitions/ Transmissions
[Sec. 87, NIRC]
Section 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 insures 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.
8. Administrative Provisions
a. Tax Rates
Section 84. Rates of Estate Tax. There shall be
levied, assessed, collected and paid upon the
transfer of the net estate as determined in
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accordance with Sections 85 and 86 of every
decedent, whether resident or nonresident of the
Philippines, a tax based on the value of such net
estate, as computed in accordance with the
following schedule:
If the net estate is:
[SEE ATTACHED TABLE, Sec. 84]
Section 89. Notice of Death to be Filed. - In all
cases of transfers subject to tax, or where, though
exempt from tax, the gross value of the estate
exceeds Twenty thousand pesos (P20,000), the
executor, administrator or any of the legal heirs, as
the case may be, within two (2) months after the
decedent's death, or within a like period after
qualifying as such executor or administrator, shall
give a written notice thereof to the Commissioner.
Section 90. Estate Tax Returns. -
(A) Requirements. - In all cases of transfers
subject to the tax imposed herein, or where,
though exempt from tax, the gross value of the
estate exceeds Two hundred thousand pesos
(P200,000), 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 Two million
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pesos (P2,000,000) 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 six (6) months 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)
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.
d. Estate tax Payment
Section 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
FCGUINOO
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) 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.
e. Effect of Non-payment of Estate Tax
Section 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.
Note: A simpler discussion about the
Administrative Provisions is found on pp. 222-
224 of Vitug Acosta 2014.
9. Effect of Renunciation/Waiver of Inheritance by
Heirs
7