Estate Tax

The following are considered CITIZENS of the Phils.:

• Those who are citizens of the Philippines at the time of the adoption of the Constitution;

• Those whose fathers or mothers are citizens of the Philippines;

RESIDENCE AND CITIZENSHIP

• Those born before January 17, 1973 of Filipino mothers, who elect Philippine citizenship upon attaining the age of majority;

• Those who are naturalized in accordance with law.

• Not necessarily the actual place of residence

• Refers to the PERMANENT HOME, (the place to which whenever absent for business or pleasure, one intends to return),

RESIDENCE

The properties to be included in the gross estate will depend on the citizenship and residence of the decedent.

CLASSIFICATION OF

PROPERTY

RESIDENT OR

CITIZEN

NR ALIEN (NO

RECIPROCITY)

NR ALIEN (WITH

RECIPROCITY)

REAL PROPERTY:

- WITHIN YES YES YES

- OUTSIDE YES NO NO

PERSONAL PROPERTY:

TANGIBLE WITHIN YES YES YES

TANGIBLE OUTSIDE YES NO NO

INTANGIBLE WITHIN YES YES NO

INTANGIBLE OUTSIDE YES NO NO

ARTICLE 415 OF THE CIVIL CODE:• Land, buildings, roads and constructions of all

kinds adhered to the soil;

• Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable;

• 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;

REAL PROPERTIES (IMMOVABLES)

ARTICLE 415 OF THE CIVIL CODE:• 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;

• 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;

REAL PROPERTIES (IMMOVABLES)

ARTICLE 415 OF THE CIVIL CODE:• 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;

REAL PROPERTIES (IMMOVABLES)

ARTICLE 415 OF THE CIVIL CODE:• Fertilizer actually used on a piece of

land;

• Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;

REAL PROPERTIES (IMMOVABLES)

ARTICLE 415 OF THE CIVIL CODE:• 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;

• Contracts for public works, and servitudes and other real rights over immovable property.

REAL PROPERTIES (IMMOVABLES)

Personal properties are those that ARE NOT REAL.

1. Can the object be transported from place to place?

2. Can the change of location take place without injury to the immovable to which it may be attached?

3. Is it not included in the enumeration in ARTICLE 415?

PERSONAL PROPERTIES (MOVABLES)

ARTICLE 415 OF THE CIVIL CODE:• Those movables susceptible of appropriation

which are not included in the preceding article;

• Real property which by any special provision of law is considered as personal property;

PERSONAL PROPERTIES (MOVABLES)

ARTICLE 415 OF THE CIVIL CODE:• Forces of nature which are brought

under control by science; and

• In general, all things which can be transported from place to place without impairment of the real property to which they are fixed.

PERSONAL PROPERTIES (MOVABLES)

ARTICLE 415 OF THE CIVIL CODE:• Obligations and actions which have for

their object movables or demandable sums; and

• Shares of stock of agricultural, commercial and industrial entities, although they may have real estate.

PERSONAL PROPERTIES (MOVABLES)

Franchise which must be exercised within the Philippines;

Shares, Obligations, or Bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws;

Shares, obligations or bonds issued by any foreign corporation 85% of the business of which is located in the Philippines;

The following INTANGIBLE PERSONAL PROPERTIES are considered situated in the Philippines:

The following INTANGIBLE PERSONAL PROPERTIES are considered situated in the Philippines:

Shares, obligations or bonds issued by a foreign corporation if such shares, obligations or bonds have acquired a business situs in the Philippines; and

Shares or rights in any partnership, business or industry established in the Philippines.

The rule applies to NR Aliens (when the properties are INTANGIBLE PERSONAL located in the Phils.):

NO ESTATE TAX will be collected:1. If the decedent was a CITIZEN AND

RESIDENT of a foreign country which did impose a transfer tax in intangible personal property of Filipino citizens not residing in that foreign country.

RULE ON RECIPROCITY

The rule applies to NR Aliens (when the properties are INTANGIBLE PERSONAL located in the Phils.):

NO ESTATE TAX will be collected:2. If the laws of the foreign country allows a

similar exemption from transfer taxes in respect of intangible personal property owned by Filipino citizens not residing in that foreign country.

RULE ON RECIPROCITY

Vacation house in Hongkong 1,200,000

Land in Zamboanga City 80,000

House in Camarines Norte 3,000,000

Apartment in New York, USA 4,500,000

Car in Hongkong 700,000

Car in the Philippines 650,000

Jewelries in New York, USA 125,000

Franchise exercised in New York, USA 300,000

Franchise exercised in Hongkong 260,000

Accounts Receivable, debtor residing in the Philippines

380,000

Accounts Receivable, debtor residing in New York 275,000

Accounts Receivable, debtor residing in Hongkong 240,000

Dina Mathay, a decedent, single, left the following properties:

Investment in Mahal Company, partnership established in New York 730,000

Investment in Love Company, partnership established in the Philippines 300,000

Investment in Amor Company, partnership established in Hongkong 245,000

Domestic shares, certificate kept in the Philippines

140,000

Domestic shares, certificate kept in New York City 250,000

Foreign shares, 90% of business in the Philippines 100,000

Foreign shares, 30% of business in the Philippines but acquired business situs in the Philippines 270,000

Foreign shares, 60% of business in the Philippines 425,000

Compute for the gross estate if Dina is a:1. Resident or Citizen2. NRA (no reciprocity)3. NRA (with reciprocity)