Transfer and business taxes by ampongan 6th sol man 3

CHAPTER 3
3-1. DISCUSSION QUESTIONS / PROBLEMS
1. January 5, 2005 or ten years after his disappearance.
2. On January 5, 2005, the same date that he was presumed to be dead.
3.

3.

a. Nonresident alien ( with reciprocity)
House and lot, Manila

P2,000,000

b. Nonresident alien (no reciprocity)
House and lot, Manila
Shares of stock, Philippine corporation
Shares of stock, Hongkong Corporation with business situs
Accounts receivable, Philippine debtor
Proceeds of revocable life insurance
Savings deposit, Manila Bank
Gross estate
4.

P2,000,000
125,000
175,000
60,000
150,000
45,000
P2,555,000

a. Nonresident alien (with reciprocity)
No gross estate shall be subject to tax because all properties are
intangible personal within the Philippines. Only real properties and tangible
personal properties within are included in the gross estate of a nonresident
alien (with reciprocity) decedent.
b. Nonresident alien (no reciprocity)
Shares of stock, Po Lu Tan Corporation
Bonds, Tsi Tsa Company
Franchise, Philippines
Gross estate

P 225,000
60,000
200,000
485,000

3-2. DISCUSSION QUESTIONS / PROBLEMS
1.

No. Since the account is opened under "and/or signatures" the presumption is that
the bank deposits are jointly owned by the spouses. This rule holds whether the
conjugal partnership of gains or absolute community of property regime governs the
spouses.

2.

a. The amount includible in the estate is the salary from September 1 to 15 minus the
five- day cash advance.
b.

Included because the rent income for August had already accrued before the
death.

c. The interest is already included although it has not yet been withdrawn.
d. Not included because the decedent died before the date of record.
e. Included, but limited to his interest in the co-ownership.
f. Included. He had already inherited the property even if he did not take possession
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because his uncle had predeceased him.
g. The proceeds are included in the gross estate because the designation of the
beneficiary is revocable.
3.

a. Yes, the salary had already accrued to Cathay. Considerably, this is already part of
her gross estate.
b. The P5,000 benefit is includible in her gross estate because Cathay complied with
the condition set by the employer.

4.

a. This is a case of a transfer in contemplation of death because (1) it was the
thought of date that induced Mat Sr. to donate the property, and (2) of the
stipulation that Mat Takutin shall retain possession or enjoyment to the property
until his death. Hence, the transfer is subject to estate tax.
b. Even if the transfer of possession and enjoyment had already been made, it is still
a case of a transfer in contemplation of death. Therefore, subject to estate tax.

5.

6.

a.

Yes. In a revocable transfer, it is not necessary that the donor should exercise his
reserved right to alter, amend, revoke or terminate the transfer. What is important
is that he had made such reservation which can be exercised anytime he wanted
to.

b.

It does not change the nature of the transfer. Whether the decedent has
exercised the power of revocation or not, it shall always be a part of his estate.

a.

Yes, because it is a case of a revocable transfer. In a life insurance, if the
designation of the beneficiary is revocable, the proceeds thereof shall be part of
the gross estate.

b.

The proceeds shall be excluded from the gross estate because the designation of
the wife as beneficiary is irrevocable, provided that she is neither appointed as
executor or administrator.

7.

This is a case of a special power of appointment because Bakling, the trustee, cannot

choose the person whom he wants to succeed to the property. His power is restricted
because the appointment is limited only to his children. Therefore, the property shall
not form part of his gross estate.

8.

a.

Special power of appointment. Baldomero is disqualified to appoint his creditor.

b.

General power of appointment. There is no restriction on whomsoever he wants
to appoint as his heir.

c.

Special power of appointment. He is allowed only to appoint somebody from
among the descendants of Alacamo.

d.

Special power of appointment up to 40% because he is allowed only to appoint
his estate up to that extent. General power of appointment on the balance of
60% because there is no restriction on whomsoever he wants to designate as heir.

9.

10.

I will advise him that he should provide in his will the limitation on the persons to be
appointed by Maatik as his heirs thereby making it a special power of appointment.
In which case, the transfer of the property from Maatik to his family will not be subject
to estate tax.
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Case 1

Case 2

Case 3


a) FMV, time of transfer

P
950,000
b) Consideration received
-0c) FMV, time of death
1,000,00
0
Amount to be included in the Gross P1,000,00
Estate
0

P 950,000

P 950,000

950,000

1,000,000

800,000
1,000,000

None

P 200,000

Note: In Case 2, no amount is to be included in the gross estate because the property
transferred for a full and adequate consideration.
11.

a.

The amount to be included in the gross estate of Sigurista is P450,000 (P750,000
- 300,000).

b.

If the sale is discovered to be fictitious, the entire amount of P750,000 is to be
included in the gross estate of Sigurista because there was actually no payment
made to her at the time of sale.

12.

The action filed by Curiadora against Atacador will prosper. The donation made by
Bonador in favor of Atacador is a donation mortis causa due to a reservation of rights
over the property in favor of Bonador. Thus, the donation made during lifetime did
not prosper. There is also no donation mortis causa because in order to be effective, it

must have been provided in the will of Bonador that the property is being donated
mortis to Atacador.

13.

a. The proceeds of life insurance shall only be excluded from the gross estate if the
irrevocably designated beneficiary in the policy is not the estate of the deceased,
his executor or administrator.
These requisites are not satisfied. Therefore, the proceeds shall be part of
the gross estate of Bokdoy.
b. Even if the designation is irrevocable since the beneficiary named in the policy is
his estate, the proceeds shall form part of the gross estate of Bokdoy.
c. Since the problem does not clearly specify, it is presumed that Oyang is neither the
executor nor the administrator. However, if the designation is revocable the
proceeds of the life insurance policy shall still be part of the gross estate, subject
to estate tax.
It is shall only be exempt if (1) Oyang, the beneficiary, is not the estate, the
executor or the administrator and (2) his designation as the beneficiary is
irrevocable.

14.

Family home
Car
Jewelries
Shares of stocks, Malakas Corp.
Proceeds of life insurance payable to estate
Land (P450,000 – 150,000)
Motorbike
Apartment

Gross estate
Notes:

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1,450,000
525,000
60,000
78,000
350,000
300,000
40,000
3,000,000
5,803,000


1. The condominium unit is under special power of appointment because of the
restriction on the privilege of Mando to choose his heirs.
2. The motorbike is presumed to be transferred in contemplation of death because
the date of sale and the date of death were relatively close.
3. The resthouse in Tagaytay is revocably transferred to him by his friend. Therefore,
it should be a donation mortis causa to him. Considering that he was not named
in the will, Mando is not the proper heir to the property.
4. The donation of the apartment was a revocable transfer. Hence, its value should
be included in his gross estate.

EXERCISE 3-3.
For purposes of the corporation, there being no change in ownership of the
questioned shares in its stock and transfer book, the rightful owner of the dividends would
be the estate of the deceased Antero.

The corporation is bound, in so far as ownership of its shares is concerned, by its
stock and transfer book, and as far as the questioned shares are concerned, their owner is
still Antero, and it is therefore to his estate that the dividends should be paid.
Neither Banayo nor Corona would be entitled to the dividends.

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