TRANSFER TAX AND TYPES OF DECEDENT
MORE THAN ONE (1) YEAR.
01/31/23 – First Discussion
• TRANSFER TAX
- Taxes imposed upon the gratuitous
disposition of private property.
2 Kinds of Transfer Tax under NIRC:
(1) ESTATE TAX
- Donation Mortis Causa
- Tax levied on the transmission of
properties from a decedent to his heirs
- Tax on the privilege to transmit
property at death and on certain transfers
which are made the equivalent of
testamentary dispositions by the statute
- The term privilege here provides that
even though you’re dead, you can still
transmit property.
(2) DONOR’S TAX
CLASSIFICATION OF DECEDENT
Decedent – refers to a deceased person who is
the source of the hereditary property or estate
which is to be distributed.
(1) Resident citizens (RC)
- Citizens of the PH who are residing
therein
(2) Non-resident citizens (NRC)
- Citizens of the PH who are physically
present abroad for an uninterrupted
period covering an entire taxable year.
- One who establishes to the
satisfaction of the BIR Commissioner
the fact of his physical presence
abroad with definite intention to
reside therein
(3) Resident alien (RA)
- Non-citizens who reside in the PH for
(4) Non-resident alien (NRA)
- Neither a citizen nor resident of the
Philippines who comes and stays in the
PH for an AGGREGATE PERIOD OF
MORE THAN 180 DAYS.
- aggregate – total; formed or calculated by
the combination of many separate units
or items
GROSS ESTATE BASED ON CITIZENSHIP
AND RESIDENCY
Decedent Estate
RC, RA All properties real or
personal, wherever
situated
NRA Real property situated in
the Philippines
NRC All properties, real or
personal, situated in the
Philippines
Real properties are immovable property.
Art. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of
all kinds adhered to the soil;
(2) Trees, plants, and growing fruits, while they
are attached to the land or form an integral part
of an immovable;
(3) Everything attached to an immovable in a
fixed manner, in such a way that it cannot be
separated therefrom without breaking the
material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for
use or ornamentation, placed in buildings or on
lands by the owner of the immovable in such a
manner that it reveals the intention to attach
them permanently to the tenements;
(5) Machinery, receptacles, instruments or
implements intended by the owner of the
tenement for an industry or works which may be
carried on in a building or on a piece of land, and
which tend directly to meet the needs of the said
industry or works;
(6) Animal houses, pigeon-houses, beehives, fish
ponds or breeding places of similar nature, in
case their owner has placed them or preserves
them with the intention to have them
permanently attached to the land, and forming a
permanent part of it; the animals in these places
are included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the
matter thereof forms part of the bed, and waters
either running or stagnant;
(9) Docks and structures which, though floating,
are intended by their nature and object to
remain at a fixed place on a river, lake, or coast;
(10) Contracts for public works, and servitudes
and other real rights over immovable property.
UPON DISCUSSION:
- Estate tax speak of consideration
Consideration in donation – love
Consideration in Estate Tax – death
If someone died, these are the two questions that
the lawyers will ask:
(1) Is there a will?
Two types of will:
1. Holographic – written document which is
dated and signed by the hand of the testator
himself
2. Notarial - requires an attestation clause, an
acknowledgement before a notary public
Both are valid as long as it conforms to form or
substance.
Probate - required to implement the provisions
of a will; proceedings in court wherein heirs
present the will to court
Testamentary succession - succession
govern by a testament or a will
(2) Or none?
Intestate succession – if decedent did not leave
a will and the probate court will determine the
distribution of his or her property to heirs
according to a priority statute
Two ways to determine distribution:
(a) Extrajudicial Settlement of Estate (EJSE)
- procedure for dividing the Estate of the
decedent among his heirs, without
having to go to court
- applicable if and only if ALL heirs agreed
(if not then proceed to JSE)
- extrajudicial – out of court
- Requirements:
(a) The decedent left no will
(b) The decedent has no debts or his
debts have been fully paid;
(c) The heirs are all of legal
age or the minors are duly represented by
their judicial or legal representatives; and
(d) A public instrument is duly executed
by the heirs and filed with the Register of
Deeds (i.e. the “Deed of Extrajudicial
Settlement of Estate.”
- Preterition - if a testator totally omits a
compulsory heir (i.e. illegitimate child)
from the will, and essentially gives
nothing to the said compulsory heir,
whether by will, by devise, legacy or even
donation, essentially depriving him of his
legitime
Remedy of the compulsory heir: could file
against the heirs to nullify the will
(proceeds on probate)
(b) Judicial Settlement of Estate (JSE)
- when the decedent left a last will and
testament or when the decedent does not
leave a will but the heirs are unable to
agree on how to divide and distribute the
properties among themselves
is