I .

D E F I N I T I O N A N D P U R P O S E O F E S T A T E T A X Estate tax is a tax on the right of the

deceased person to transmit his estate to his lawful heirs and beneficiaries. It is not a tax on property. Estate tax is held to be an excise tax imposed
on the privilege of transmitting property upon the death of the owner. The estate tax is generated by the death and accrues at the time of death. It is
governed by the law in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of the estate by the
beneficiary.
Tax rates prescribed under RA 8424 apply to estate taxes falling due or have accrued beginning January 1,
1998, the affectivity of the said law otherwise known as The Law Reform Act of 1997
Aside from the reason that transfer taxes provide income to the government, there are other justifications for
their imposition. First is the benefit received theory that recognizes the role of the State in the distribution of
the estate of a decedent to the heirs whether it is in accordance with the decedents will or by operation of law.
Next is the privilege theory. Inheritance is a privilege granted by the State. Estate acquired and accumulated is
under the States protection. The next theory is the ability today theory that asserts that the heirs because of
the inheritance they received are able and capable to pay the taxes due the State. Last is the redistribution of
wealth theory that reduces the property received by the heirs through taxes.
II.
GROSS ESTATE Estate tax applies to citizen, resident, and Non resident Alien decedent with properties in the Philippines. Resident decedent
includes that resident alien decedent. According to the definition in an Estate Tax Return form, Gross Estate for citizens and resident aliens shall
include all the property of the decedent at the time of death, real or personal, tangible or intangible, where situated but excluding the exclusive
properties of the surviving spouse. For Non-resident alien, it shall include the property situated in the Philippines
.Gross Estate of Citizen and Resident Decedent
1.Real Property located within and without the Philippines
2.Tangible personal property located within and without thePhilippines
3.Intangible personal property located within and without thePhilippines
A.Gross Estate of a Non Resident Alien Decedent
1.Real Property located within the Philippines
2.Tangible personal property located within the Philippines
3.Intangible personal property located within the Philippines unlessthere is reciprocity in which case is not taxable in the Philippines
SITUS OR PLACE OF TAXATION
Property has a situs or location or a jurisdiction for tax purposes. Sites indecisive in determining the estate of a deceased person taxable in the
Philippines
.
The situs of a real property is the country where it is situated; while intangible personal property, the situs is the country where such is
actuallylocated at the time of the death of the decedent. In intangible personalproperty, the following are considered as intangible personal
propertiessituated in the Philippines: (for non resident alien decedent with propertywithin the Philippines)
a)Franchise which must be exercised in the Philippines
b)Shares and obligations or bonds issued by any corporationorganized in the Philippines
c)Shares and obligations or bonds issued by any foreign corporation85% of the business of which is located in the Philippines
d)Shares and obligations or bonds issued by a foreign corporation if such shares have acquired a business situs in the Philippines
e)Shares or rights in any partnership business or industry establishedin the Philippines
Properties includible in the Gross Estate Decedents Interest shall includeall properties, rights and interest which the decedent owns at the time
of death. It shall include:
1.Properties owned by the decedent actually and physically present inhis estate at the time of his death such as land, buildings, shares
of stock, vehicles, bank deposit, etc.
2.The value of any interest in property owned or possessed by thedecedent at the time of his death such as dividends declared beforehis death but
received after his death, partnership profits which haveaccrued before his death, usufructuary rights, etc
.3.The value of property, right or interest in the property, transferred bythe decedent during his lifetime which, under the law, are in
the natureof testamentary disposition such as insurance proceeds in favour of revocable beneficiary.