TAXATION II NOTES

ESTATE TAX

-tax on the privileged or excise tax

-is an excise tax imposed upon the privileged of transmitting property at the time of the death
and on the privilege that a person is given in controlling to a certain extent the disposition of his
property to take effect upon death

When do you consider a person dead?

Natural death

Presumptive death-refers to a judicial declaration presuming that an absentee is dead because

of prolonged years of absence and it is unknown whether the absentee is dead.

a. Ordinary presumptive death (Article 390 NCC)

After an absence of seven years, it being unknown whether or not the absentee
still lives, he shall be presumed dead for all purposes except for those succession.
The absentee shall not be presumed dead for the purpose of opening his
succession till after an absence of ten years. If he disappeared after the age of seventy
five years, an absence of five years shall be sufficient in order that his succession may
be opened.

Summary:

Absentee 75 or below

7 years for all purposes except succession

10 years for succession

4 consecutive years for purposes of remarriage

Absentee is over 75 years

5 years for all purposes including succession

b. Qualified presumptive death (Article 391 NCC) persons under danger of death
The following shall be presumed dead for all purposes including the division of the
estate:
1. Person on board vessel lost during a sea voyage, or an aeroplane which is
missing, who has not been heard of for four years since the loss of the vessel or
aeroplane;
2. Person in the armed forces who has taken part in war and has been missing for
four years;
3. Person who has been in danger of death under other circumstances and his
existence has not been known for four years
General rule: 4 years for all purposes including succession
Exception: 2 years for purposes of remarriage

Is it necessary for the court to declare presumptive death?

For purposes of remarriage, summary proceeding is required otherwise subsequent marriage is

void. In case of succession, a judicial declaration of presumptive death is also needed.
However, for purposes of claims of benefits of absent spouse, the court held that a judicial
declaration is not needed (Tadeo vs Republic)

Tadeo Matias vs Republic

In this case the court declared that a judicial declaration is not a requirement before the
Philippine Veterans Affairs Office or AFP can grant and pay benefits under PD No. 1638.

When will estate tax be imposed?

Requisites for imposition of estate tax

1. After the death of the decedent and in case of presumptive death after the judicial
declaration on presumption of death
2. The successors should be alive during the death of the decedent.
3. Successors should be qualified to inherit
Who should be liable to pay the estate tax?

Section 91(d) NIRC

1. by the executor or administrator before delivery to any beneficiary of his distributive
share of the estate.
2. the beneficiary to the extent of his distributive share of the estate, be subsidiarily
liable for the payment of such portion of the estate tax as his distributive share bears
to the value of the total net estate.
If the executor or administrator will be remised to pay the tax they can be held civilly or
criminally liable.
Note: estate tax is not a tax on property itself but to the privileged.
When does estate tax accrue?
The properties and rights are transferred to the successors at the time of death (Art 777, Civil
Code)
The statute in force at the time of death of the decedent governs the imposition of the estate tax.
Estate tax accrues at the time of death of decedent. As such, succession takes place and the
right of the state to tax vests instantly.
The tax is to be measured by the value of the estate as it stood at the time of the decedent's
death regardless of any postponement of actual possession or any subsequent increase or
decrease in value. (Lorenzo v. Posadas, 64 Phil 353)

How do you compute estate tax?

The net estate of every decedent, whether resident or non-resident of the Philippines, as
determined in accordance with the NIRC, shall be subject to an estate tax at the rate of six
percent.
Net estate-gross estate minus allowable deductions
Components of Gross Estate

Sec 85. 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.

Resident Non resident Resident Non resident

Citizens Citizen Alien alien

Within the
Philippines

Outside the
Philippines

ITEMS TO BE INCLUDED IN DETERMINING GROSS ESTATE: (SEC 85)

1. DECEDENTS INTEREST
2. TRANSFER IN CONTEMPLATION OF DEATH
3. REVOCABLE TRANSFER
4. PROPERTY UNDER GENERAL POWER OF APPOINTMENT
5. PROCEEDS OF LIFE INSURANCE
6. PRIOR INTEREST
7. TRANSFERS FOR INSUFFICIENT CONSIDERATION
8. SHARE OF THE SURVIVING SPOUSE

1. DECEDENT’S INTEREST
Refers to the value of any interest in property owned by the decedent at the time of his death.

What is the value to be computed?

Sec 5. RR 12-2018 provides that the gross estate shall be valued according to their fair market
value as of the time of decedent’s death.

If the property is real property, the appraised value thereof as of the time of death shall
be whichever is higher of

1. The fair market value as determined by the BIR commissioner, or

 2. The fair market value as shown in the schedule of values fixed by the provincial
and city assessors, whichever is higher.
In case of shares of stocks, the fair market value shall depend on whether the shares are
listed or unlisted in the stock exchange. Unlisted common shares are valued based on their
book value while unlisted preferred shares are valued at par value.

For shares which are listed in the stock exchanges, the fair market value shall be the arithmetic
mean between the highest and lowest quotation at a date nearest the date of death, if none is
available on the date of death itself.

2. TRANSFERS IN CONTEMPLATION OF DEATH

It is a transfer motivated by the thought of an impending death regardless of whether or not
death is imminent.

This takes place when:

1. When the decedent has, at any time, made a transfer in contemplation of or intended
to take effect in possession or enjoyment at or after death; or
2. When decedent has, at any time, made a transfer under which he has retained for
his life or for a period not ascertainable without reference to his death or any period
which does not in fact end before his death:
a. Possession, enjoyment or right to income from the property; or
b. The right, either alone or in conjunction with any other person, to designate the
person who will possess or enjoy the property or income therefrom.
Exception: in case of a bona fide sale for an adequate and full consideration in money or
money’s worth.

Note: The concept of transfer does not constitute any transfers made by a dying person. It is
not the mere transfer that constitutes a transfer in contemplation of death but the retention of
some type of control over the property transferred. In effect, there is no full transfer of all
interests in the property inter VIVOS.

BAR QUESTION:

Mr. Agustin, 75 years old and suffering from an incurable disease, decided to sell for
valuable and sufficient consideration a house and lot to his son. He died one year later.

In the settlement of Mr. Agustin's estate, the BIR argued that the house and lot were
transferred in contemplation of death and should therefore form part of the gross estate
for estate tax purposes. Is the BIR correct?

Answer: No, Pursuant to Section 85(B) of the NIRC, properties that are transferred in
contemplation of death form part of the gross estate of the decedent. An exception to this is a b
o n a fide sale for an adequate and full consideration in money. Therefore, the house and lot
which Mr. Agustin sold to his son for a valuable and sufficient consideration should not be
considered as forming part of Mr. Agustin's gross estate.
Q: A, aged 90 years and suffering from incurable cancer, on August 1, 2001 wrote a will
and, on the same day, made several inter-vivos gifts to his children. Ten days later, he
died. In your opinion, are the inter- vivos gifts considered transfers in contemplation of
death for purposes of determining properties to be included in his gross estate?

A: When the donor makes his will within a short time of, or simultaneously with, the making of
gifts, the gifts are considered as having been made in contemplation of death. (Roces v.
Posadas, 58 Phil. 108) Obviously, the intention of the donor in making the inter-vivos gifts is to
avoid the imposition of the estate tax and since the donees are likewise his forced heirs who are
called upon to inherit, it will create a presumption juris tantum that said donations were made
mortis causa, hence, the properties donated shall be included as part of A’s gross estate.

Circumstances to consider in determining that the transfer is in contemplation of death:

1. Age of the decedent at the time of transfers were made

2. Decedent’s health
3. The interval between the transfers and the decedent’s death
4. The retention of control
5. The relationship between the transferor and the transferee
6. Whether there is a desire on the part of the decedent to retain the enjoyment of the
property at his lifetime
7. Whether or not there is a preparation of a will

3. REVOCABLE TRANSFERS
It is a transfer by trust or otherwise, where the enjoyment thereof was subject at the date of
his death to any change through the exercise of a power to alter or amend or revoke or
terminated such transfer by:

1. Decedent alone;
2. By the decedent in conjunction with any other person (without regard to when or from
what source the decedent acquired such power), to alter, amend, revoke or terminate
or
3. Where any such power is relinquished in contemplation of the decedent’s death
other that a bona fide sale for an adequate and full consideration in money or
money’s worth. (sec 85 C)
Example:

Here is A, sabi ni A sa kanyang granddaughter “apo I am donating to you this parcel of land, I
will pay the necessary donor’s tax but in my lifetime I will retain the possession of this property
and I am still entitled to enjoy the fruits. Yong Usufruct ni retain ni A.

a. What kind of donation took place?

Donation inter vivos because it took place during the lifetime of the donor.
b. Based on the example is the property subject to Estate tax or not anymore because
donor’s tax was already paid?
Subject to estate tax because this will fall under transfer in contemplation of death.
 c. on the same example but merong condition that in case of failing the bar exam
pwede ko ma revoke yong transfer.
Note: it is not necessary that the decedent have exercised the right to revoke. It is sufficient that
the decedent has the power to revoke, though he did not exercise such power.

Xpn: in case of bona fide sale for an adequate and full consideration in money and money’s
worth.

4. PROPERTY PASSING UNDER A GENERAL POWER OF APPOINTMENT

1. will
2. deed executed in contemplation of death, or intended to take effect in possession or
enjoyment at, or after his death
3. deed under which he has retained for his life or for any period not ascertainable
without reference to his death or for any period which does not in fact end before his
death:
a. the possession, enjoyment or right to income from the property; or
b. the right to designated the person who will possess or enjoy the property income
therefrom.
GPA SPA
Done has the power to appoint any person he Done appoints successor to the property within
chooses or enjoy the property without restriction.a limited group or class of persons according to
he will of the donor.

Example: here’s a decedent receiving donation from someone else. Sabi ng donor “I a giving
this to you can transfer it kanino mo gusto. Then it is subject to the estate tax. Pero if it is
specifically stated sa will kung kanino ma tatransfer ang property after the death of the done. It
is not subject to estate tax.

5. PROCEEDS OF LIFE INSURANCE

The question in this provision is kapag ba natanggap na ng beneficiary yong life insurance will it
take part of the estate tax?

It will form part of the gross estate when the beneficiary is:

1. the estate of the decedent his executor or administrator taken out by the decedent
upon his own life regardless of whether the designation is revocable or irrevocable;
2. a third person other that the decedent’s estate, executor or administrator provided
that the designation is revocable
6. PRIOR INTEREST
Prior interest a real transfers, trusts, estates, interest, rights, powers and relinquishment of
powers made, created arising , existing, exercised or relinquished before or after the effectivity
of the NIRC.

7. TRANSFERS FOR INSUFFICIENT CONSIDERATION

When a transfer is for insufficient consideration, only the excess of the fair market value of the
property at the time of the decedent’s death over the consideration received shall be included in
the gross estate.

Applicable to:

1. transfer in contemplation of death

2. revocable transfers
3. transfers under GPA
note: the three transfers enumerated above is exclusive, hence if not included the transfer for
insufficient consideration is subject to donor’s tax

8. SHARE OF THE SURVIVING SPOUSE

The capital of the surviving spouse of a decedent shall not be deemed a part of his or her gross
estate.

1. absolute community property

a. default, when the marriage is celebrated after August 3, 1988
b. property acquired during the marriage by gratuitous title by either spouse shall
form part of the community property unless expressly provided
c. property for personal and exclusive use of either spouse. But, jewelries shall form
part of the community property
d. property acquired before the marriage by either spouse who has legitimate
descendants by a former marriage, and the fruits as well as the income, if any, of
such property
exclusive property under absolute property:

jewelries, personal property of either spouse, gifts received before and during the
marriage

2. conjugal partnership of gains- Before the effectivity of the family code

a. which is brough to the marriage as his or her own
b. acquires during the marriage by gratuitous title
c. which is acquired by right of redemption by barter or exchange belonging to only
one of the spouses
d. purchased with exclusive money of the wife or husband
3. complete separation of property

ALLOWABLE DEDUCTIONS (SEC 86)

A. standard deduction
-P5, 000, 000.00- for resident citizen, nonresident citizen and resident alien
-P500, 000.00- for non-resident alien
B. claims against the estate
(applicable only to citizen and resident of the Philippines
as for the nonresident alien only a proportion are allowed to be deducted (Phil
estate/worldwide gross estate)
-are debts or demands of pecuniary nature which could have been enforced against the
deceased in his lifetime and could have been reduced to simple money judgments.
Requirement to claim:
1. debt instrument must be notarized
2. the loan was contracted within 3 years before the death of the decedent, the
administrator or executor shall submit showing the disposition of the proceeds of
the loan
requisite:

1. personal obligation of the deceased existing at the time of his death;

2. contracted in good faith and for adequate and full consideration in money or
money’s worth;
3. debt or claim must be valid and enforceable in court;
4. indebtedness not condoned by the creditor or the action to collect must not have
prescribe;
5. duly substantiated;

C. claims against the insolvent persons ( In this case the decedent is the creditor)
-applicable to citizen, resident alien and non resident citizen
-for NRA only proportion
insolvent person- a debtor that is generally unable to pay its or his liabilities as they fall
due in the ordinary course of business or has liabilities that are greater than its or his
assets.
requisites for deductibility:
1. the full amount of the receivables be included first in the gross estate
2. the incapacity of the debtors to pay their obligation is proven not merely alleged.

D. Unpaid mortgages or indebtedness on property

-applicable to citizen, resident alien and non resident citizen
-for NRA only proportion
Requisites for deductibility:
1. The value of the property to the extent of the decedent’s interest undiminished by
such mortgage or indebtedness is included in the gross estate;
2. Mortgage indebtedness was contracted in good faith and for an adequate and full
consideration in money or money’s worth
Example: if meron kang biniling property secured by mortgage, the property is included
in the gross estate minus the unpaid indebtedness

Taxes

requisites for deductibility:

1. Taxes which have accrued as of or before the death of the decedent
2. Unpaid as of the time of his death
Casualty Losses:

requisites for deductibility for RC, NRC, and RA:

 1. Were incurred during settlement of the estate
2. Arise from fire, storm, shipwreck or other casualties, or from robbery, theft or
embezzlement
3. not compensable
4. not claimed as deduction from income tax
5. incurred not later than the last day or any extension for payment of estate tax
requisites for deductibility for NRA

same items with above but only for a proportion

E. vanishing deductions or property previously taxed\

-deduction allowed on the property left behind by the decedent which was previously
subject to donor’s or estate tax
-in this case there are 2 transfers of property. Within the period of 5 years, the same
property was transferred from the first to the second decedent or from a donor to the
decedent. The first transfer has been subject to a transfer tax, the second would be
subject to vanishing deductions.

period Deduction
1 day to 1 year 100%
1 year 1 day to 2 years 80%
2 years 1 day to 3 years 60%
3 years and 1 day to 4 years 40%
4 years and 1 day to 5 years 20%
More than 5 years No deductions allowed
-available to all types of taxpayer
F. transfer for public use
-the amount of all bequest, legacies, devises or transfers to or for the use of the
Government for public purposes

-applicable for all tax payer

G. family home
-applicable only to RC, NRC, RA
-a person may constitute only one family home
-is the dwelling house, including the land where it is situated where the married person
or an unmarried head of the family and his family resides.
-ownership is required
-characterized by permanency, hence whenever absent for business or pleasure, one
still intends to return

Unmarried head of a family-unmarried or legally separated man or woman with one or

both parents, or with one or more brothers or sister, or with one or more legitimate, recognized
natural or legally adopted children living with and dependent upon him or her for their chief
support, where brothers or sister or children are not more than 21 years of age, unmarried and
not gainfully employed or where children, brother or sister, regardless of age are incapable for
self support because of mental or physical defect

requisites for deductibility

1. actual resident of the decedent and his family at the time of his death certified by
the Barangay Captain of the locality where the family home is situated
2. the total value of the family home must be included in the gross estate
3. amount equivalent to the current fair market value of the decedents family home
provided that the current FMV does not exceed P10, 000, 000. The excess is
subject to estate tax

H. amount received by heirs under RA 4917

-benefits by private employee by their employees

Where to file estate tax?

Due to ease of payment of taxes we can now Pay anywhere, electronic or manual

when should the estate tax be filed?

1 year upon the death of the decedent. The 1 year period can be extended if judicial can be
extended up to 5 years if extra judicial can be extended up to 2 years.

You can also pay by installment but only up to 2 years.

TAX AMNESTY

-intentional condonation of the part of the congress with respect to the collection of the taxes
or the penalties, interest in relation thereto.

Under this law those who died on or before December 21, 2017 and who has accumulated
unpaid estate taxes they are given by the law a remedy to settle their estate taxes at a
uniform rate of 6%.

(kung namatay on or before December 21, 2017 you can go to BIR and settle the estate tax.
The government will not impose interest or penalties, you just need to pay estate tax)

Conditions to avail tax amnesty:

1. Submit the documents required by the BIR such as birth certificate, extra judicial
settlement, birth certificate to prove that you are the heir or any other documents for
that matter
2. The applicable deductions on the gross estate tax shall be the law on the death of
the decedent
3. If ever the deductions will exceed the value of the gross estate you have to pay the
minimum amount of P5,000.00
4. The tax amnesty is extended until June 14, 2025
 5. RA 11956 also expanded the coverage of the tax amnesty to decedent who died on
or before May 31, 2022
6. BIR issued Revenue Regulations 10-2023 list the documents needed to avail the tax
amnesty
7. Under the new law the installment payment is allowed
When and where to file tax amnesty

1. Go to the nearest Revenue District office having jurisdiction over the last residence
of the decedent at the time of his death
2. After the Bir will check, fill out the tax amnesty form
3. Pay the tax amnesty due using the estate tax acceptance payment form
DONORS TAX

Donation – an act of liberally whereby a person disposes gratuitously of a thing or right in

favor of another who accepts it. (Art 725 NCC)

Donor’s tax-it is an excise tax imposed on the privilege of transferring property by way of a
gift inter vivos.

Requisites of a valid donation (CIDAF)

1. Legal Capacity of donor to donate

-the donor’s capacity shall be determined as of the time of the making of the donation

Note: as a rule the legal capacity of the donee is required however there are certain
circumstances wherein the donee can accept donation even if without legal capacity.
Example:
a. Donation to unborn child- Donations made to conceived and unborn children may
be accepted by those persons who would legally represent them if they were
already born.
b. In case of minors Art. 741 NCC. Minors and others who cannot enter into a
contract may become donees but acceptance shall be done through their parents
or legal representatives.
c. Donations between spouses are prohibited except moderate gifts or gifts
during occasions- Every donation or grant of gratuitous advantage, direct or
indirect, between the spouses during the marriage shall be void, except moderate
gifts which the spouses may give each other on the occasion of any family
rejoicing (Art 87 NCC)
-extended to common law spouses
d. The following donations shall be void:
1) Those made between persons who were guilty of adultery or concubinage at the
time of the donation;
(2) Those made between persons found guilty of the same criminal offense, in
consideration thereof;
(3) Those made to a public officer or his wife, descedants and ascendants, by reason
of his office.
Art 738 NCC provides that all those who are not specifically disqualified by law thereof may
accept donations.

2. Intent to donate
-donative intent is necessary only in cases of direct gift. If the gift is indirectly taking
place by way of sale, exchange, or other transfer of property as contemplated in cases of
transfers for less that adequate and full consideration, not always essential to constitute
a gift
-donative intent is not necessary that it is express, manifest or apparent
-there can be a presumption of donation

3. Delivery of gift
-there is delivery if the subject matter is within the dominion and control of the donee
whether constructive or actual

4. Acceptance by the donee

-acceptance by the donee is necessary because nobody is obliged to receive a gift
against his will
- the acceptance should be made during the lifetime of both the donor and the donee.
- if either the donee or donor dies before acceptance is perfected there is no longer a
valid donation
-acceptance can be either express or implied

5. Form prescribed by law

a. In case of real property, donation must be in a public instrument.
b. If personal property, may be made:
i. Oral with simultaneous delivery if value does not exceed P5000
ii. In writing if value exceed P5000 (ART 748 NCC)
iii.

Computation

-compute the gross gifts (lahat ng gifts na ginawa whether real or personal, within or outside the
Philippines) less deduction= net gifts

-the net gifts is subject to 6% donors tax in excess of P250, 000

-the first P250,000 is exempt from donors tax

Classification of taxpayer

1. Resident citizen
2. Non-resident citizen
3. Resident alien
4. Non-resident alien
DONOR GROSS GIFT
RC, NRC, RA All real properties, tangible and
ntangible personal properties
wherever located

NRA Located in the Philippines only

Xpn: if what is donated is
ntangible property (copyright)
may be exempt from donors
ax subject on reciprocity

Reciprocity example

A Japanese making donation of intangible personal property in the Philippines, in Japan in their
tax laws if a filipino donates intangible property in Japan exempted, in order to reciprocate the
donation made in the Philippines will also be exempted from tax.

GROSS GIFTS

RULE REGARDING TRANSFER FOR LESS THAN ADEQUATE AND FULL

CONSIDERATION Sec 100

GR: where a property is transferred for less than adequate and full consideration in money or
money’s worth, the amount by which the fair market value exceeds the consideration shall be
deemed a gift and be included in computing the amount of gifts made during the calendar year.
It is as if the property was donated but in order to avoid paying donor’s tax, the donor opted to
transfer the property for inadequate consideration.

XPN:

1. Where the sale, exchange or transfer is made in the ordinary course of business
which is:
a. Bona fide;
b. Made at arms length;
c. Free from any donative intent
2. where property transferred is real property located in the Philippines considered as
capital asset, the asset is not subject to donor’s tax but to a capital gains tax, which
is a final income tax of 6% of the fair market value or gross selling price, whichever is
higher, and therefore, there can be no instance where the seller can avoid any tax by
selling his capital assets below its fair market value
Atty Azores Example:

Let’s say for example you have a jewelry worth 10 million you sold it to A for the amount
of 2million. There is a presumption that you have the intention to donate the 8 million
 because benenta mo ng palugi yong jewelry. Hence, the 8 million is subject to donor’s
tax.
Exemption: if it is a sale made in the ordinary course of business. Like in the example,
benenta mo siya ng palugi but your business is involved in selling of jewelry. Your reason
is ganun talaga sa business sometimes kumita ka sometimes lugi ka.

CONDONATION OR REMISSION OF DEBT

Rule regarding condonation/remission of debt

If the creditor condones the indebtedness of the debtor, the following rules shall apply:

on account of debtor’s services to the creditor the same is in taxable income to the debtor;
or

● if no services were rendered but the creditor simply condones the debt, it is taxable
gift and not taxable income.
Atty Azores Example:

Pinautang ni A si B ng 2 million pesos. After 2 years di nakabayad si A, sabi ni A “in

consideration of our friendship sige wag mo ng bayaran” in this case this is presumed that the 2
million is a donation subject to donor’s tax. However, if in exchange in condonation the debtor
performs a service it is not subject to donor’s tax but taxable income. So If si B nag render ng
service kay A like nag prepare ng tax return sa lahat ng business ni A in exchange na di ba
babayaran ang utang.

RENUNCIATION OF INHERITANCE

1. general renunciation by an heir, including the surviving spouse, of his/her share in

the hereditary estate left by the decedent is not subject to donor’s tax, unless
specifically and categorically done in favor of identified heir/s to the exclusion or
disadvantage of the other co-heirs in the hereditary estate.
2. Renunciation by the surviving spouse of his or her share in the conjugal
partnership or absolute community after the dissolution of marriage in favor of the
heirs of the deceased spouse or any other person/s is subject to donor’s tax.
Example:

A and B mag asawa, namatay si B the husband. During the settlement of the estate, sabi ni A
hindi na ako kukuha ng mana ko ibigay nlang sa mga anak ko.

Ruling of BIR:

●if the renunciation of the heir is specific, so tinukoy niya kung kanino mapupunta
yong share niya it is subject to donor’s tax. However , if the renunciation is only in
general o hindi niya piningalanan then it is not subject to donor’s tax.
DONATION FOR POLITICAL CAMPAIGN PURPOSES

SEC 99 (B) 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.
Note: you have to qualify if when did the donation took place.

1. The political campaign contribution will be exempt from donors tax if:
a. It is made during campaign period
b. It must be declared in the SOCE or the Statement of Contributions and
Expenditures of the political candidate
Note: domestic corporation can now donate

2. On the part of the candidate it is not subject to income tax if:

a. It is made for political campaign purposes;
b. It should be utilized for the campaign used during the campaign period
c. In case of excess you have to report it for income tax purposes
EXEMPTION OF CERTAIN GIFTS (SEC 101)

A. In the case of gifts made by a resident

1. Specific exemption-net gift of the amount of P250, 000 or less are exempt
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
3. Gifts in favor of
a. Charitable
b. Accredited NGOs
c. Religious
d. Trust foundations
e. Educational institutions
f. Research institutions
g. Cultural institutions
h. Philanthropic organizations
i. Social welfare corporation
Requisites:

1. Done is incorporated as a non-stock, non profit entity

2. Governed by trustees;
3. Trustees receive no compensation;
4. Donee devotes 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; and
5. Not more than 30% of the donation is used for administrative purposes.
Note: the NGO should be accredited by PCNC to be exempt from donor’s tax.

Other donation exempt from donor’s tax

a. Donation of intangible subject to reciprocity

b. Donation for athlete’s prizes and awards
1. Donation must be prizes and awards given to athletes in local and international
tournaments and competitions;
2. Held in Philippines or abroad;
 3. Sanctioned by their respective sports association (important)
c. Donation to IBP
d. Donation under the “adopt a school program” (nagpagawa ng classroom)

B. In the case of Gifts made by a Nonresident not a Citizen of the Philippines.

1. Specific exemption-net gifts of the amount of P250, 000 or less are exempt
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.
3. 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 30% of
said gifts shall be used by such donee for administration purposes