SEC. 88. Determination of the Value of the Estate.

(A) Usufruct. - To determine the value of the right of usufruct, use or habitation, as well as that of annuity, there shall be taken
into account the probable life of the beneficiary in accordance with the latest Basic Standard Mortality Table, to be approved
by the Secretary of Finance, upon recommendation of the Insurance Commissioner.

(B) Properties. - The estate shall be appraised at its fair market value as of the time of death. However, the appraised value of
real property as of the time of death shall be, whichever is higher of -

(1) The fair market value as determined by the Commissioner; or

(2) The fair market value as shown in the schedule of values fixed by the Provincial and City Assessors.

RAMO 12-2018 Stocks:

In the case of shares of stocks, the fair market value shall depend on whether the shares are listed or unlisted in the stock
exchanges. Unlisted common shares are valued based on their book value while unlisted preferred shares are valued at par
value. In determining the book value of common shares, appraisal surplus shall not be considered as well as the value assigned
to preferred shares, if there are any. On this note, the valuation of unlisted shares shall be exempt from the provisions of RR
No. 06-2013, as amended.

SEC. 85. Gross Estate. - the value of the gross estate of the decedent shall be determined by including the value at the time of
his death of all property, real or personal, tangible or intangible, wherever situated: Provided, however, that in the case of a
nonresident decedent who at the time of his death was not a citizen of the Philippines, only that part of the entire gross estate
which is situated in the Philippines shall be included in his taxable estate.

(H) Capital of the Surviving Spouse. - The capital of the surviving spouse of a decedent shall not, for the purpose of this Chapter,
be deemed a part of his or her gross estate.

SEC. 86. Computation of Net Estate. - For the purpose of the tax imposed in this Chapter, the value of the net estate shall be
determined:

(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 this Section, be deducted from the net estate of
the decedent.

RM 12-2018

Net share of the surviving spouse in the conjugal partnership or community property.
After deducting the allowable deductions appertaining to the conjugal or community properties included in the gross estate,
the share of the surviving spouse must be removed to ensure that only the decedent’s interest in the estate is taxed.

(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 credit is taken,
which the decedent's net estate situated outside the Philippines taxable under this Title bears to his entire net estate.

SEC. 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 inures 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.

What is fideicommissary substitution?

Also known as indirect substitution, it is a substitution by virtue of which the fiduciary or first heir instituted is entrusted with the
obligation to preserve and transmit to a second heir the whole or part of the inheritance.

Note: For its validity and effectivity, such substitution does not go beyond one degree from the heir originally substituted and
provided further, that the fiduciary or first heir and the second heir are living at the time of death of the testator.

What are the conditions for a valid fideicommissary substitution?

1. That the institution does not go beyond one degree from the heir originally instituted;
2. That the substitution be expressly made;
3. That both the fiduciary and beneficiary be living at the time of the testator’s death;
4. That it should be imposed on the free portion and not on the legitime.

What are the elements/requisites of fideicommissary substitution?

1. There must be a first heir or fiduciary;
2. An absolute obligation is imposed upon the fiduciary to preserve and to transmit to a second heir the property at a given
time;
3. There is a second heir who must be one degree from the first heir;
4. The first and second heir must both be living and qualified at the time of the death of the testator.

What is the effect if the fideicommissary predeceases the fiduciary?

If the fideicommissary predeceases the fiduciary, but survives the testator, his rights pass to his own heirs.

What is the effect of the nullity of the fideicommissary substitution?

The nullity of the fideicommissary substitution does not prejudice the validity of the institution of the heirs first designated; the
fideicommissary clause shall simply be considered as not written.

SEC. 90. Estate Tax Returns. – 12-2009 Sec 9

Inhibitions, Responsibilites and Obligations in the Enfocement of Estate Tax

SEC. 92. Discharge of Executor or Administrator from Personal Liability. - If the executor or administrator makes a written
application to the Commissioner for determination of the amount of the estate tax and discharge from personal liability therefore,
the Commissioner (as soon as possible, and in any event within one (1) year after the making of such application, or if the
application is made before the return is filed, then within one (1) year after the return is filed, but not after the expiration of the
period prescribed for the assessment of the tax in Section 203 shall not notify the executor or administrator of the amount of the
tax. The executor or administrator, upon payment of the amount of which he is notified, shall be discharged from personal liability
for any deficiency in the tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.

SEC. 93. Definition of Deficiency. - As used in this Chapter, the term 'deficiency' means:

(a) The amount by which the tax imposed by this Chapter exceeds the amount shown as the tax by the executor, administrator
or any of the heirs upon his return; but the amounts so shown on the return shall first be increased by the amounts previously
assessed (or collected without assessment) as a deficiency and decreased by the amount previously abated, refunded or
otherwise repaid in respect of such tax; or

(b) If no amount is shown as the tax by the executor, administrator or any of the heirs upon his return, or if no return is made
by the executor, administrator, or any heir, then the amount by which the tax exceeds the amounts previously assessed (or
collected without assessment) as a deficiency; but such amounts previously assessed or collected without assessment shall
first be decreased by the amounts previously abated, refunded or otherwise repaid in respect of such tax.

SEC. 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.

SEC. 95. Duties of Certain Officers and Debtors. - Registers of Deeds shall not register in the Registry of Property any document
transferring real property or real rights therein or any chattel mortgage, by way of gifts inter vivos or mortis causa, legacy or
inheritance, unless a certification from the Commissioner that the tax fixed in this Title and actually due thereon had been paid is
show, and they shall immediately notify the Commissioner, Regional Director, Revenue District Officer, or Revenue Collection
Officer or Treasurer of the city or municipality where their offices are located, of the nonpayment of the tax discovered by them.
Any lawyer, notary public, or any government officer who, by reason of his official duties, intervenes in the preparation or
acknowledgment of documents regarding partition or disposal of donation inter vivos or mortis causa, legacy or inheritance, shall
have the duty of furnishing the Commissioner, Regional Director, Revenue District Officer or Revenue Collection Officer of the
place where he may have his principal office, with copies of such documents and any information whatsoever which may facilitate
the collection of the aforementioned tax. Neither shall a debtor of the deceased pay his debts to the heirs, legatee, executor or
administrator of his creditor, unless the certification of the Commissioner that the tax fixed in this Chapter had been paid is shown;
but he may pay the executor or judicial administrator without said certification if the credit is included in the inventory of the estate
of the deceased.

SEC. 96. Restitution of Tax Upon Satisfaction of Outstanding Obligations. - If after the payment of the estate tax, new
obligations of the decedent shall appear, and the persons interested shall have satisfied them by order of the court, they shall have
a right to the restitution of the proportional part of the tax paid.

SEC. 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights. - There shall not be transferred to any new
owner in the books of any corporation, sociedad anonima, partnership, business, or industry organized or established in the
Philippines any share, obligation, bond or right by way of gift inter vivos or mortis causa, legacy or inheritance, unless a certification
from the Commissioner that the taxes fixed in this Title and due thereon have been paid is shown.

If a bank has knowledge of the death of a person, who maintained a bank deposit account alone, or jointly with another, it shall not
allow any withdrawal from the said deposit account, unless the Commissioner has certified that the taxes imposed thereon by this
Title have been paid: Provided, however, That the administrator of the estate or any one (1) of the heirs of the decedent may, upon
authorization by the Commissioner, withdraw an amount not exceeding Twenty thousand pesos (P20,000) without the said
certification. For this purpose, all withdrawal slips shall contain a statement to the effect that all of the joint depositors are still
living at the time of withdrawal by any one of the joint depositors and such statement shall be under oath by the said depositors.

DONORS TAX

CHAPTER II

DONOR'S TAX

SEC. 98. Imposition of Tax. -

(A) There shall be levied, assessed, collected and paid upon the transfer by any person, resident or nonresident, of the property by
gift, a tax, computed as provided in Section 99.

(B) The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property
is real or personal, tangible or intangible.

SEC. 99. Rates of Tax Payable by Donor. -

(A) In General. - The tax for each calendar year shall be computed on the basis of the total net gifts made during the calendar year
in accordance with the following schedule:

If the net gift is:

Over But Not Over The Tax Shall be Plus Of the Excess Over
P 100,000 Exempt
P 100,000 200,000 0 2% P100,000
200,000 500,000 2,000 4% 200,000
500,000 1,000,000 14,000 6% 500,000
1,000,000 3,000,000 44,000 8% 1,000,000
3,000,000 5,000,000 204,000 10% 3,000,000
5,000,000 10,000,000 404,000 12% 5,000,000
10,000,000 1,004,000 15% 10,000,000

(B) Tax Payable by Donor if Donee is a Stranger. - When the donee or beneficiary is stranger, the tax payable by the donor shall
be thirty percent (30%) of the net gifts. For the purpose of this tax, a 'stranger', is a person who is not a:

(1) Brother, sister (whether by whole or half-blood), spouse, ancestor and lineal descendant; or

(2) Relative by consanguinity in the collateral line within the fourth degree of relationship.

(C) Any contribution in cash or in kind to any candidate, political party or coalition of parties for campaign purposes shall be
governed by the Election Code, as amended.

SEC. 100. Transfer for Less Than Adequate and Full Consideration. - Where property, other than real property referred to in
Section 24(D), is transferred for less than an adequate and full consideration in money or money's worth, then the amount by which
the fair market value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this
Chapter, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.

SEC. 101. Exemption of Certain Gifts. - The following gifts or donations shall be exempt from the tax provided for in this
Chapter:
(A) In the Case of Gifts Made by a Resident. -

(1) Dowries or gifts made on account of marriage and before its celebration or within one year thereafter by parents to each
of their legitimate, recognized natural, or adopted children to the extent of the first Ten thousand pesos (P10,000):

(2) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted
for profit, or to any political subdivision of the said Government; and

(3) Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited
nongovernment organization, trust or philanthropic organization or research institution or organization: Provided, however,
That not more than thirty percent (30%) of said gifts shall be used by such donee for administration purposes. For the purpose
of this exemption, a 'non-profit educational and/or charitable corporation, institution, accredited nongovernment
organization, trust or philanthropic organization and/or research institution or organization' is a school, college or
university and/or charitable corporation, accredited nongovernment organization, trust or philanthropic organization and/or
research institution or organization, incorporated as a non-stock entity, paying no dividends, governed by trustees who
receive no compensation, and devoting all its income, whether students' fees or gifts, donation, subsidies or other forms of
philanthropy, to the accomplishment and promotion of the purposes enumerated in its Articles of Incorporation.

(B) In the Case of Gifts Made by a Nonresident not a Citizen of the Philippines. -

(1) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted
for profit, or to any political subdivision of the said Government.

(2) Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation,
trust or philanthropic organization or research institution or organization:Provided, however, That not more than thirty
percent (30%) of said gifts shall be used by such donee for administration purposes.

(C)Tax Credit for Donor's Taxes Paid to a Foreign Country. -

(1) In General. - The tax imposed by this Title upon a donor who was a citizen or a resident at the time of donation shall
be credited with the amount of any donor's tax of any character and description 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 net gifts situated within such country taxable under this Title bears to his
entire net gifts; and

(b) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken,
which the donor's net gifts situated outside the Philippines taxable under this title bears to his entire net gifts.

SEC. 102. Valuation of Gifts Made in Property. - If the gift is made in property, the fair market value thereof at the time of the
gift shall be considered the amount of the gift. In case of real property, the provisions of Section 88(B) shall apply to the valuation
thereof.

SEC. 103. Filing of Return and Payment of Tax. -

(A) Requirements. - any individual who makes any transfer by gift (except those which, under Section 101, are exempt from the
tax provided for in this Chapter) shall, for the purpose of the said tax, make a return under oath in duplicate. The return shall set
forth:

(1) Each gift made during the calendar year which is to be included in computing net gifts;
(2) The deductions claimed and allowable;
(3) Any previous net gifts made during the same calendar year;
(4) The name of the donee; and
(5) Such further information as may be required by rules and regulations made pursuant to law.