Taxation - one of the inherent power of the
Complex - both subject to income and transfer
government. Inherent means that a law is not
needed to impose the collecting of taxes.
Government has the right to collect because of the
Lifeblood theory.
Different Types of Taxes
Based on who collects
1. Taxes collected by the national government na
nasa International Revenue Code
2. Taxes collected by local government
3. Income taxation
4. Business and transfer taxes
Chapter 1: Transfer Taxation
Transfer - exchange of property from monetary
consideration.
Two types of transfer
1. Onerous transfer of property - may money
consideration, may kapalit incase of barter, subject
to business tax or capital gains tax
2. Gratuitous transfer of property - without
consideration, subject to transfer tax
Transfer taxes - are those impose on gratuitous
transfer of property without consideration. These
transfer taxes are considered excise tax or privileged
tax.
2 Major classification of transfer taxes
1. Estate tax
2. Donor's tax
Estate and donor's is considered privileged tax.
Types of transfer
1. Bilateral - subject to income tax, include sales
and barter
2. Unilateral - subject to transfer tax, include
inheritance and donation
3.
tax
Rationale of the transfer of taxation
- As a general rule, if there is a transfer there is a
benefit, and if you receive benefit, considered sya as
income, so you need to pay income tax.
1st reason. Redistribution of wealth theory. If you
receive mana or donation or gift, magkakaroon ng
unequal distribution of wealth and earnings.
Nakareceive ka pero wala kang ginawang work. So
need na magbayad ng estate tax.
2nd reason. Benefit received theory. Yung estate
tax na binabayad bilang kapalit sa protection na
binibigay doon sa nakareceive ng benefit and at the
same time yung protection na binigay nung
government don sa property.
3rd reason. State partnership theory.
4th reason. Ability to pay theory.
Justification of donor's tax - Some donate even
before death para mabawasan yung babayaran
nilang estate tax. What happen is donor's tax is
imposed to supplement estate tax for the loss of the
government revenue when estates are split by
donation.
Nature and Comparison of Transfer Taxes
a. As to nature of transfe
Estate tax - tax on privileged to transfer property
upon once death.
Donor's tax - tax on privileged to transfer property
during once lifetime.
b. As to person liable
Estate - binabayaran pag may namatay na tao or
natural death of a person, ang nagbabayad is estate
of deceased
Donor's - liable is individual or juridical entity (a
corporation or a partnership)
c. As to the rates applicable
Kung ano yung existing law at the time of the death
of the person, yun yung mag aapply. Example if
namatay si Mr. A prior to the effectivity of Train
Law, kahit na ngayon pa lang dinidistribute ang
property kung kelan may train law na, for the
determination of the payment of estate tax ang mag
aapply parin is yung dating rule or law.
d. Amount exemption
Estate - no exemption (TRAIN LAW abolish the
exemption of 200,000)
Donor's - first 250k of the amount of donation is
exempt from donor's tax. Computation is
cumulative donation for the calendar year which
means na in every donation, you pay tax. Example,
in January, you donate 210k, wala kang babayaran
since below sa threshold. Nung feb, nagdonate ka
ng 50k, may taxable ka na 10k then multiply sa
fixed tax rate na 6%, 600 pesos babayaran mo. In
march, nagdonate ng 100k, yung total na taxable mo
is 110,000 x 6%, 6600. Deduct mo yung binayad
mo nung nakaraang buwan. So babayaran mo
nalang is 6k.
e. Requirement of filing a return
Estate - need to file a return for transfers subject to
estate tax and estate consist of registered and
registrable property
Donor - as a rule, all transfer of gifts, you need to
file return. Except enumerated under Section 101 of
the NIRC. Example you donated in foreign
government, or you donated in one candidate in
election provided na nacomply mo yung
requirement na magfafile ka naman sa COMELEC.
f. Time of filing a return
Estate - old rule stated that filing of return is
required within 6 months after the death of the
descedent. After implementing train law, 1 year is
required.
Donor's - 30days after the gift is made.
e. As to extension of filing a return
Extendable ba ang time of filing a return sa estate?
Yes. However with limitations. Period of extension
is 30days for meritorious cases. Donor’s tax is not
extendable.
f. As to time of payment
PAY AS YOU FILE - same rule for estate and
donor.
g. As to Extension of Time for Payment
Point of distinction sa time of payment - estate is
allowed if payment and filing is not sabay for
meritorious cases. Donor's tax is hindi.
Ano ang example ng meritorious cases? – if
mostly si decedent yung property is mga real
property. Wala po syang tinirang cash. And sa
taxation, rule is payment of tax is pure money as a
general rule. So hirap magbayad ang heir, executor,
kasi wala silang sapat na cash and then hirap din
silang ibenta ang mga property. So ang mangyayari
is the BIR may allow the extension of time for the
payment of estate tax.
Classification of transfer taxpayers
Estate - individual or decedent
Donor – individual or corporation
Four kinds of decedent of donor
1. Resident citizen
2. Non-resident citizen
3. Resident alien
4. Non-resident alien
Bakit nga ba importante na iclassify natin yung
decedent at the time of his death?
- Kasi dito nakadepende kung anong property ang
included sa pagcocompute mo ng gross estate. Ang
rule kasi is if you are a resident of the Philippines at
the time of your death, your property within and
without the Philippines are considered in the
determination of your gross estate. Same sa non-
resident citizen and resident alien. While non
resident alien is kakaiba sa apat. Property lang
within ang kasali sa gross estate at computation for
estate tax.
VI. Situs of Transfer
Titingnan muna kung anong type of property.
Whether it is a real, personal, tangible personal
property or intangible personal property. Kasi ang
real and tangible personal property is kung saan
nakalocate ang property.
Example is if your property, at the time of the death
of the decedent or Mr. A, is located in the
Philippines. If Mr. A is a non-resident alien, then
included sya sa gross estate. Compared sa non-
resident alien tapos may property sa California, so
the property is not included in the gross estate.
Reminder: For the determination of the gross estate,
tinitingnan mo if anong type of taxpayer, then
number 2 is what kind of property it is, third is pag
real and tangible property, know where it is located.
Pag intangible personal property, may rule na
sinusunod especially pag non-resident alien yung
decedent.

Chapter 2: Succession