TRANSFER TAX

- An excise tax.
- the subject matter being taxed is the privilege of the owner of the property to gratuitously transfer
his/her property through donation mortis causa (succession o mana) or donation inter vivos (donation
o regalo).
- Gratuitous (donation) o walang bayad sa disposisyon ng private properties o/at karapatan (rights).
- Gratuitous Transfer ay mga paglilipat na hindi nagpapabigat o nangangailangan ng consideration mula
sa transferee o tatanggap ng ari-arian.
- These transfers are essentially donations.
- If the transfer requires the transferee to give consideration in return, then the transfer is onerous
(heavy), and therefore subject to business tax.

Two types of Transfer Tax:

1. Estate Tax
2. Donor’s Tax

 Donation mortis causa – a donation that take effect at the time of death of the donor. It is subject to
estate tax.
 Donation inter vivos – a donation. It is subject to donor’s tax.

SUCCESSION

 Article 774 of Civil Code – Succession is 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 his will or operation of law.
 Article 776 of Civil Code – the inheritance includes all the property, rights and obligations of a person
which are not extinguished by his death.
 Article 777 of Civil Code – the rights to the succession are transmitted from the moment of death of
the decedent.
 Notwithstanding the postponement of the actual possession or enjoyment of the estate by the
beneficiary. The heirs (tagapagmana) succeed immediately to all the property of the deceased ancestor
at the moment of death as completely as if the ancestor had executed and delivered to them a deed for
the same before his death.
 Civil Code – where the law governing succession in the Philippines falls under.
 Sec. 3 of RR (Revenue Regulations) No. 2-2003 as repealed by Sec. 3 of RR No. 12-2018 – according to
it, the estate taxation is governed by the statute (law or regulation) in force at the time of death of the
decedent. The estate tax accrues as of the death of the decedent and the accrual of the tax is distinct
from the obligation to pay the same. Upon the death of the decedent, succession takes place and the
right of the State to tax the privilege to transmit the estate vests instantly upon death.