GUIDE NOTES ON DONORS TAX Diaz; (2) 1/3 was given to their grandson, Angel Diaz; and
(3) the last 1/3 was reserved and retained by the Gavino for
DONORS TAX
Q: What is donors tax?
* Donors tax is a tax imposed upon the right or privilege to
gratuitously transfer property, real or personal, tangible or
intangible, between two or more persons who are living at
the time of transfer.
** In the 1940s, Enrico Pirovano was President and General
Manager of de la Rama Steamship Co. The corporation
insured the life of Pirovano with various insurance
companies designating itself as the beneficiaries of said
policies. Pirovano died. The corporation received a certain
sum as proceeds of the life insurance policies. Such
amount was later donated by the corporation to Pirovanos
minor children. Ultimately, the issue was whether the sum
was subject to donors tax. According to Pirovano v. CIR, a
donation made by a corporation to the heirs of a deceased
officer out of gratitude for his past services is subject to the
donees gift tax. [Pirovano v. CIR, GR No. L-19865, 31 July
1965.]
Q: Differentiate between a donation inter vivos (subject to
donors tax) and a donation mortis causa (or a transfer in
contemplation of death, subject to estate tax).
* In the case of Alejandro v. Geraldez, the Gavino Spouses
owned a parcel of land which, in 1949, was the subject
matter of a deed of donation. As a result of the execution of
said deed, the parcel of land was divided into three equal
parts: (1) 1/3 was donated to their granddaughter, Andrea
TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018
their support. In dispute was the nature of the deed of
donation, i.e., whether it was inter vivos or mortis causa.
[NOTE: See the text of the decision for an extensive
differentiation between donations inter vivos and mortis
causa.] Relevant portion of the decision reads:
If the donation is made in contemplation of the donor's
death, meaning that the full or naked ownership of the
donated properties will pass to the donee only because of
the donor's death, then it is at that time that the donation
takes effect, and it is a donation mortis causa which should
be embodied in a last will and testament (Bonsato vs. Court
of Appeals, 95 Phil. 481).
But if the donation takes effect during the donor's lifetime or
independently of the donor's death, meaning that the full or
naked ownership (nuda proprietas) of the donated
properties passes to the donee during the donor's lifetime,
not by reason of his death but because of the deed of
donation, then the donation is inter vivos (Castro vs. Court
of Appeals, L-20122, April 28, 1969, 27 SCRA 1076).
The Supreme Court held that it was a donation inter vivos,
upon examination of the warranty, acceptance, and
reservation clauses of the deed. Particularly as regards the
acceptance clause, the Supreme Court said:
The acceptance clause is another indication that the
donation is inter vivos. Donations mortis causa, being in the
form of a will, are never accepted by the donees during the
donors' lifetime. Acceptance is a requirement for donations
1
 inter vivos. [Alejandro v. Geraldez, GR Nos. L-33849 & L-
33968, 18 Aug. 1977.]
** In the case of Gestopa v. CA, Diego Danlag owned six
parcels of land. With the consent of his wife, he executed a
deed of donation over said parcels of land in favor of his
illegitimate child, Mercedes Danlag. Controversy arose as
to whether the deed of donation was inter vivos or mortis
causa. The Supreme Court held that it was a donation inter
vivos for the following reasons: (1) the granting clause of
the deed showed that Diego donated the properties out of
love and affection for Mercedes; (2) the reservation clause
in respect of the lifetime usufruct indicated that Diego
intended to transfer the naked ownership over the
properties; (3) Diego reserved sufficient properties for his
maintenance in accordance with his standing in society;
and (4) Mercedes accepted the donation. [Gestopa v. CA,
GR No. 111904, 5 Oct. 2000.]
*** The case of Austria-Magat v. CA differentiated between
a donation inter vivos and donation mortis causa. Sometime
in 1975, Basilisa Comerciante, mother of 5, executed a
document entitled Donation in favor of her 4 living
children. The issue lies on the characterization of the
Donation. Citing jurisprudence, the Supreme Court laid out
the characteristics of a donation mortis causa, to wit:
(1) It conveys no title or ownership to the transferee before
the death of the transferor; or, what amounts to the same
thing, that the transferor should retain the ownership (full or
naked) and control of the property while alive;
(2) That before his death, the transfer should be revocable
by the transferor at will, ad nutum; but revocability may be
provided for indirectly by means of a reserved power in the
donor to dispose of the properties conveyed; and
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(3) That the transfer should be void if the transferor should
survive the transferee.
Essentially ruling that all the above characteristics were not
present, the Supreme Court categorized the Donation as
one inter vivos, and stated that the prohibition to alienate in
said Donation did not necessarily defeat the inter vivos
character of the donation. [Austria-Magat v. CA, GR No.
106755, 1 Feb. 2002.]
**** In del Rosario v. Ferrer, in August 1968, the Gonzales
Spouses executed a document entitled Donation Mortis
Causa in favor of their 2 children, Asuncion and Emiliano,
and 1 granddaughter, Jarabini covering a property. The
deed specifically stated that the donation was irrevocable
and contained an acceptance clause. In September 1968,
the wife died. In December 1968, the husband executed a
deed of assignment of his rights and interests in the subject
property to their daughter Asuncion. The husband died in
June 1972.
The Supreme Court ruled that although the deed was
denominated as Donation Mortis Causa, irrevocability is
a quality absolutely incompatible with the idea of
conveyances mortis causa, where revocability is precisely
the essence of the act. Given that the donation in this case
was irrevocable or one given inter vivos, the husbands
subsequent assignment of his rights and interests in the
property to Asuncion should be regarded as void for, by
then, he had no more rights to assign. He could not give
what he no longer had. Nemo dat quod non habet. [del
Rosario v. Ferrer, GR No. 187056, 20 Sept. 2010.]
2
 ****** In Puig v. Peaflorida, Doa Carmen Ubalde
expressly and consistently declared her conveyance to be
one of donation mortis causa and further forbade the
registration of the deed until after her death. The Supreme
Court held that [a]all these features concordantly indicated
that the conveyance was not intended to produce any
definitive effects, nor to finally pass any interest to the
grantee, except from and after the death of the grantor.
[Puig v. Peaflorida, GR No. L-15939, 31 Jan, 1966.]
******* BIR Ruling No. 089-2011 addressed the issue of
whether a general renunciation made by the sole heir of the
decedent, which made the four grandchildren the heirs next
in line as the direct heirs, created a taxable event for which
donors tax should be paid. The BIR ruled that in the
transaction above, there was no donation to speak of.
Hence, no donors tax could be assessed on the
transaction. [BIR Ruling No. 089-2011, 21 Mar. 2011.]
******** BIR Ruling No. 109-2011 interpreted certain
provisions of the Special Purpose Vehicle Act of 2002 in
relation to the 1997 Tax Code. It ruled that the transfer of
property from the Philippine Distressed Asset Asia Pacific,
Inc., pursuant to the SPV Law, as amended, was not
subject to donors tax. [BIR Ruling No. 109-2011, 7 Apr.
2011.]
Q: What is the law that governs the imposition of donors tax?
* The gift is perfected from the moment of acceptance by
the donee, and it is completed at the time of delivery. The
delivery can either be constructive or actual. Hence, it is
the law at the time of the perfection and/or completion that
will govern the imposition of the donors tax.
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** A gift that is incomplete because of reserved powers
becomes complete when either:
(i) The donor renounces the power; or
(ii) His right to exercise ceased because of the happening
of some event or contingency or the fulfillment of some
condition, other than the death of the donor. [RR No. 02-
03]
Q: What transfer may be considered as donations?
* The following transfers may be treated as donations:
(a) debt condoned or remitted (in which case the amount
of the debt is a gift from the creditor to the debtor and
need not be included in the latters gross income) [Sec.
50, RR No. 02-40];
(b) transfers made in trust for another person; and
(c) renunciation by the surviving spouse of his/her share in
the conjugal partnership or absolute community after the
dissolution of the marriage in favor of the heirs of the
deceases spouse or any other person.
** Further to item (c) above, note, however, that a 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 donors tax, unless the renunciation is
specifically and categorically done in favor of identified
heir/s to the exclusion or disadvantage of the other co-
heirs in the hereditary estate. [RR No. 02-03]
Sec. 98, Imposition of Tax
(A) There shall be levied, assessed, collected and paid
upon the transfer by any person, resident or nonresident,
3
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
(1) citizenship and residency of the donor at the time of
donation; and
(2) location of the property donated.
Q: How does one arrive at the valuation of a donation?
* The same rules apply as in valuation of a decedents
gross estate.

99(A) In General - The tax for each calendar year shall be (1) Gross gifts is computed on a cumulative basis.
computed on the basis of the total net gifts made during (2) Donors tax is based on the net gifts.
the calendar year in accordance with the following
schedule: Net gifts is computed as follows: gross gifts minus
allowable deductions. ZG Law 7/29/17 4:02 PM
If the net gift is: Formatted: Bullets and Numbering
99(B) Tax Payable by Donor if Donee is a Stranger - When ZG Law 7/29/17 4:02 PM
the donee or beneficiary is stranger, the tax payable by Formatted: Bullets and Numbering
Over But Not Over The Tax Shall Plus Ofdonor
the the Excess
shall be thirty percent (30%) of the net gifts. For ZG Law 7/29/17 4:02 PM
be Over
the purpose of this tax, a 'stranger,' is a person who is not Formatted: Bullets and Numbering
P 100,000 Exempt a: ZG Law 7/29/17 4:02 PM
P 100,000 200,000 0 2% P100,000 Formatted: Bullets and Numbering
200,000 500,000 2,000 4% (1) Brother, sister (whether by whole or half-blood),
200,000 ZG Law 7/29/17 4:02 PM
500,000 1,000,000 14,000 6% spouse, ancestor
500,000 and lineal descendant; or Formatted: Bullets and Numbering
1,000,000 3,000,000 44,000 8% (2) Relative by consanguinity in the collateral line within
1,000,000 ZG Law 7/29/17 4:02 PM
3,000,000 5,000,000 204,000 10% the fourth
3,000,000 of relationship.
degree
Formatted: Bullets and Numbering
5,000,000 10,000,000 404,000 12% 5,000,000 ZG Law 7/29/17 4:02 PM
Q: Who is a stranger?
10,000,000 1,004,000 15% 10,000,000 Formatted: Bullets and Numbering
* When the donee is a stranger, the tax payable by the ZG Law 7/29/17 4:02 PM
Q: What are the factors that affect the donor shall be 30% of the net gifts. Stranger shall be any Formatted: Bullets and Numbering
determination/computation of gross gift? person who is not: (1) a brother, sister (whether by whole or ZG Law 7/29/17 4:02 PM
half-blood) spouse, ancestor and lineal descendant; or (2) a Formatted: Bullets and Numbering
* These are: relative by consanguinity in the collateral line within the ZG Law 7/29/17 4:02 PM
fourth degree of relationship. Formatted: Bullets and Numbering

TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018 4

99(C) Political Contributions - 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.
Q: Are political contributions considered gifts and therefore
liable for donors tax?
* In the case of Abello v. CIR, partners of the ACCRA law
firm contributed amounts to the 1987 senatorial campaign
fund of Angara. The issue at bar was whether such political
contributions were subject to donors tax. The Supreme
Court found that all the elements of donation were present,
namely: (1) the reduction of the patrimony of the donor; (2)
the increase in the patrimony of the donee; and (3) the
intent to do an act of liberality or animus donandi. Hence,
the political or electoral contributions were subject to
donors tax. [Abello v. CIR, GR No. 120721, 23 Feb. 2005.]
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.
Q: Cite an example of a transfer for less than adequate and
full consideration.
TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018
* The case of CIR v. B.F. Goodrich Phils., Inc. dealt with
the sale by B.F. Goodrich to Siltown Realty of a rubber
plantation in Basilan for a price less than its declared fair
market value. The BIR wanted to assess BF Goodrich for
deficiency donors tax representing the difference between
the fair market value and the actual purchase price of the
property. The BIR also contended that BF Goodrich filed a
false income tax return.
The Supreme Court said that real property may be sold for
less than adequate consideration for a bona fide purpose
and that in such event, the sale remains an arms length
transaction. On the issue of falsity of the return filed, the
Supreme Court ruled that although donors tax is different
from capital gains tax (as reported in the income tax
return), the 1974 income tax return was sufficient
compliance with the legal requirement to file a donors tax
return. In other words, the fact that the sale transaction
may have partly resulted in a donation does not change
the fact that [BF Goodrich] already reported its income for
1974 by filing an income tax return. [CIR v. B.F. Goodrich
Phils., Inc., GR No. 104171, 24 Feb. 1999.]
Sec. 101, Exemption of Certain Gifts
The following gifts or donations shall be exempt from the
tax provided for in this Chapter:
* BIR Ruling No. 124-2011 ruled that the donation of lots
by Diamond Cement and Industrial Corporation Ayala
Corporation (DCIC-AC) to relocatees of the Department
of Transportation and Communications Laguindingan
International Airport Project in Misamis Oriental was not
included among those donations exempt from donors
5
 tax under Section 101 of the 1997 Tax Code. [BIR Ruling
No. 124-2011, 12 Apr. 2011]
101(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 the
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 nonstock 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.
TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018
Q: What are the tax implications of a donation 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?
* (1) Such donation is exempt from payment of donors tax
subject to the condition that not more than 30% of said
donation shall be used by the done for administration
purposes. In case of donation of real property, the
Register of Deeds shall annotate this condition at the back
of the TCT/OCT because failure to comply with said
condition shall be a ground for the revocation of the
exemption from the payment of the donors tax.
(2) The deed of donation is likewise not subject to
documentary stamp tax prescribed under Section 196 of
the 1997 Tax Code (Stamp Tax on Deeds of Sale and
Conveyances of Real Property), but only to the
documentary stamp tax of PhP 15 imposed under Section
188 of the same code (Stamp Tax on Certificates).
(3) If the donor is a VAT-registered person and the
donation is an ordinary asset, the donation is subject to
VAT pursuant to RR No. 16-2005, as amended, the same
being considered a transaction deemed sale. If the donor
is not a VAT-registered person, the donation is exempt
from VAT.
(4) If the same property acquired by donation is
subsequently conveyed by way of sale or exchange, the
sale will be subject to corporate income tax on the gain
realized which is determined by deducting from the gross
6
 selling price the historical cost or the adjusted basis
thereof, as it would be in the hands of the donor, pursuant
to Sections 27 and 101 of the 1997 Tax Code, and
consequently to creditable expanded withholding tax
under Section 2-98, as amended.
If the donee-institution donates the subject property to a
non-exempt done, it shall be liable for donors tax
pursuant to Section 98 of the 1997 Tax Code. [BIR Ruling
No. 128-2013, 4 Apr. 2013.]
Q: What is the benefit derived by a donor in case the donee is
accredited by the Philippine Council for NGO Certification
(PCNC)?
Q: What are the requirements for the above?
* Gifts, donations, and other contributions made by
residents to an educational institution or a foundation are
exempt from donor's tax, subject to the condition that not
more than 30% of said gift shall be used for administration
purposes. [Sec. 101(A)(3), 1997 Tax Code.]
Moreover, for income tax purposes, an accreditation of the
educational institution or foundation by accrediting entities,
such as the PCNC, allows a donor to deduct the charitable
contribution as a business expense. [RR No. 13-98 dated 8
Dec. 1998; BIR Ruling No. 029-10, 12 Aug. 2010; BIR
Ruling No. [NSNP-(S30H-010)061-10], 5 July 2010; BIR
Ruling No. 017-10, 1 July 2010]
The PCNC is a private, voluntary, non-stock, non-profit
corporation established by six of the country's largest NGO
networks.
"The PCNC, duly registered with the Securities and
TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018
Exchange Commission, shall be the government's partner
in a system of accreditation, to determine the qualification
of domestic corporations or associations or NGOs
organized and operated exclusively for religious, charitable,
scientific, youth and sports development, cultural or
educational purposes, or for the rehabilitation of veterans,
or to NGOs for accreditation as donee institutions." [EO No.
720, 11 Apr. 2008]
A PCNC accreditation endows an entity with a "donee
institution status" such that charitable contributions to these
qualified donee institutions are allowed as business
deductions for income tax purposes.
* A donor engaged in business shall give a Notice of
Donation on every donation worth at least PhP 50,000 to
the Revenue District Office which has jurisdiction over his
place of business within 30 days after receipt of the
qualified donee institutions duly issued Certificate of
Donation, which shall be attached to said Notice of
Donation.
On the other hand, the Certificate of Donation states that
not more than 30% of the donation/gifts for the taxable year
shall be used by the qualified donee institution for
administration purposes.
** The Certificate of Donation must indicate/contain (1)
donee certification, and (2) donors certificate of values.
(RMC No. 86-14]
7
101(B) In the Case of Gifts Made by a Nonresident not a
Citizen
(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.
101(C) Tax Credit for Donors Taxes Paid to a Foreign
Country
101(C)(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.
101(C)(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
TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018
(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.
* The case of CIR v. Central Luzon Drug Corporation dealt
with the 20% discount required by law to be given to
senior citizens. The Supreme Court held that the 20%
discount is a tax credit for the establishment concerned.
[NOTE: This was the old doctrine. Today, the 20%
discount is a tax deduction from the gross income or gross
sales of the establishment concerned. However, the
discussion on tax credit for donors taxes paid to a foreign
country remains instructive.] It stated:
While a tax liability is essential to the availment or use of
any tax credit, prior tax payments are not. On the
contrary, for the existence or grant solely of such credit,
neither a tax liability nor a prior tax payment is needed.
The Tax Code is in fact replete with provisions granting or
allowing tax credits, even though no taxes have been
previously paid.
For example, in computing the estate tax due, Section
86(E) allows a tax credit -- subject to certain limitations --
for estate taxes paid to a foreign country. Also found in
Section 101(C) is a similar provision for donors taxes --
again when paid to a foreign country -- in computing for
the donors tax due. The tax credits in both instances
allude to the prior payment of taxes, even if not made to
our government. [CIR v. Central Luzon Drug Corporation,
GR No. 159647, 15 Apr. 2005.]
Sec. 102, Valuation of Gifts Made in Property
8
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
103(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 se 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.
103(B) Time and Place of Filing and Payment. - The return
of the donor required in this Section shall be filed within
thirty (30) days after the date the gift is made and the tax
due thereon shall be paid at the time of filing. Except in
cases where the Commissioner otherwise permits, the
return shall be filed and the tax paid to an authorized
agent bank, the Revenue District Officer, Revenue
Collection Officer or duly authorized Treasurer of the city
or municipality where the donor was domiciled at the time
of the transfer, or if there be no legal residence in the
Philippines, with the Office of the Commissioner. In the
case of gifts made by a nonresident, the return may be
TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018
filed with the Philippine Embassy or Consulate in the
country where he is domiciled at the time of the transfer,
or directly with the Office of the Commissioner.
Q: How and when are donors tax returns filed?
* The case of CIR v. B.F. Goodrich Phils., Inc. dealt with
the sale by B.F. Goodrich to Siltown Realty of a rubber
plantation in Basilan for a price less than its declared fair
market value. The BIR wanted to assess BF Goodrich for
deficiency donors tax representing the difference between
the fair market value and the actual purchase price of the
property. The BIR also contended that BF Goodrich filed a
false income tax return. ZG Law 7/29/17 4:02 PM
The Supreme Court said that real property may be sold for Formatted: Bullets and Numbering
less than adequate consideration for a bona fide purpose
and that in such event, the sale remains an arms length
transaction. On the issue of falsity of the return filed, the
Supreme Court ruled that although donors tax is different
from capital gains tax (as reported in the income tax
return), the 1974 income tax return was sufficient
compliance with the legal requirement to file a donors tax
return. In other words, the fact that the sale transaction
may have partly resulted in a donation does not change
the fact that [BF Goodrich] already reported its income for
1974 by filing an income tax return. [CIR v. B.F. Goodrich
Phils., Inc., GR No. 104171, 24 Feb. 1999.]
** The case of Sumipat v. Banga discussed the time and
place of filing and payment of donors tax. Sumipat, with
the consent of his wife, executed a document entitled
Deed of Absolute Transfer and/or Quitclaim over three
parcels of land, in favor of his five illegitimate children with
another woman. The Supreme Court found that the deed
9
 was actually a deed of donation, but that it was patently
void for non-compliance with certain requirements. There
was also no proof of filing of a donors tax return and
payment of the applicable donors taxes, which the
Supreme Court considered as mandatory. In fact, the
registrar of deeds is mandated not to register in the
registry of property any document transferring real
property by way of gifts inter vivos unless a certification
that the taxes fixed and actually due on the transfer has
been paid or that the transaction is tax exempt from the
Commissioner of Internal Revenue, in either case, is
presented. [Sumipat v. Banga, GR No. 155810, 13 Aug.
2004.]
Sec. 104, Definitions - For purposes of this Title, the terms
'gross estate' and 'gifts' include real and personal
property, whether tangible or intangible, or mixed,
wherever situated: Provided, however, That where the
decedent or donor was a nonresident alien at the time of
his death or donation, as the case may be, his real and
personal property so transferred but which are situated
outside the Philippines shall not be included as part of his
'gross estate' or 'gross gift': Provided, further, That
franchise which must be exercised in 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 by any foreign corporation eighty-
five percent (85%) of the business of which is located in
the Philippines; shares, obligations or bonds issued by
any foreign corporation if such shares, obligations or
bonds have acquired a business situs in the Philippines;
shares or rights in any partnership, business or industry
established in the Philippines, shall be considered as
TAX 2 SYLLABUS ASSOCIATE DEAN LILY K. GRUBA S/Y 2017-2018
situated in the Philippines: Provided, still further, that no
tax shall be collected under this Title in respect of
intangible personal property: (a) if the decedent at the
time of his death or the donor at the time of the donation
was a citizen and resident of a foreign country which at
the time of his death or donation did not impose a transfer
tax of any character, in respect of intangible personal
property of citizens of the Philippines not residing in that
foreign country, or (b) if the laws of the foreign country of
which the decedent or donor was a citizen and resident at
the time of his death or donation allows a similar
exemption from transfer or death taxes of every character
or description in respect of intangible personal property
owned by citizens of the Philippines not residing in that
foreign country.
The term 'deficiency' means: (a) the amount by which tax
imposed by this Chapter exceeds the amount shown as
the tax by the donor upon his return; but the amount so
shown on the return shall first be increased by the
amount previously assessed (or Collected without
assessment) as a deficiency, and decreased by the
amounts previously abated, refunded or otherwise repaid
in respect of such tax, or (b) if no amount is shown as the
tax by the donor, 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 amount previously abated,
refunded or otherwise repaid in respect of such tax.
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