[ REPUBLIC ACT NO. 579, September 15, 1950 ]
AN ACT TO AMEND SECTIONS EIGHTY-FIVE, EIGHTY-SIX, EIGHTY-NINE, ONE HUNDRED AND NINE AND ONE HUNDRED AND TEN OF COMMONWEALTH ACT NUMBERED FOUR HUNDRED AND SIXTY-SIX, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Section eighty-five of Commonwealth Act Numbered Four hundred and sixty-six, otherwise known as the National Internal Revenue Code, is hereby amended to read as follows:
"Section 85. Rates of estate tax. - There shall be levied, assessed, collected, and paid upon the transfer of the net estate of every decedent, whether a resident or nonresident of the Philippines, a tax equal to the sum of the following percentages of the value of the net estate determined as provided in sections eighty-eight and eighty-nine:
"One per centum of the amount by which the net estate exceeds five thousand pesos and does not exceed twelve thousand pesos;
"Two per centum of the amount by which the net estate exceeds twelve thousand pesos and does not exceed thirty thousand pesos;
"Two and one half per centum of the amount by which the net estate exceeds thirty thousand pesos and does not exceed fifty thousand pesos;
"Three per centum of the amount by which the net estate exceeds fifty thousand pesos and does not exceed seventy thousand pesos;
"Five per centum of the amount by which the net estate exceeds seventy thousand pesos and does not exceed one hundred thousand pesos;
"Seven per centum of the amount by which the net estate exceeds one hundred thousand pesos and does not exceed one hundred and fifty thousand pesos;
"Nine per centum of the amount by which the net estate exceeds one hundred and fifty thousand pesos and does not exceed two hundred and fifty thousand pesos;
"Eleven per centum of the amount by which the net estate exceeds two hundred and fifty thousand pesos and does not exceed five hundred thousand pesos;
"Thirteen per centum of the amount by which the net estate exceeds five hundred thousand pesos and does not exceed one million pesos; and
"Fifteen per centum, of the amount by which the net estate exceeds one million pesos."
Section 2. Section eighty-six of Commonwealth Act Numbered Four hundred and sixty-six, as amended by section one of Republic Act Numbered Eighty-three, is hereby further amended to read as follows:
"Section 86. Rates of inheritance tax. - In addition to the estate tax imposed by section eighty-five, there shall be levied, assessed, collected, and paid an inheritance tax equal to the sum of the following percentages of the value of the individual share of each heir or beneficiary in the net estate, after deducting the amount of the estate tax, of every decedent, whether a resident or nonresident of the Philippines:
"(a) When the surviving spouse, a legitimate, recognized natural, illegitimate or adopted child, or legitimate descendant, or ascendant, or either of the adopting parents is the beneficiary, or the father or mother who had recognized him as a natural child, and in every case where the beneficiary receives the property exclusively for educational or charitable purposes, there shall be collected upon the share which corresponds to each beneficiary in the inventoried property a tax according to the following schedule: Provided, however, That such portion of the share of a surviving spouse or a legitimate, recognized natural, illegitimate, or adopted child of a decedent who was a citizen or resident of the Philippines at the time of his death, which is not in excess of five thousand pesos shall be exempt from this tax;
"Two per centum of the amount of the share not in excess of twelve thousand pesos;
"Four per centum of the amount by which the share exceeds twelve thousand pesos and does not exceed thirty-thousand pesos;
"Six per centum of the amount by which the share exceeds thirty thousand pesos and does not exceed fifty thousand pesos;
"Eight per centum of the amount by which the share exceeds fifty thousand pesos and does not exceed seventy thousand pesos;
"Twelve per centum of the amount by which the share exceeds seventy thousand pesos and does not exceed one hundred thousand pesos;
"Fourteen per centum of the amount by which the share exceeds one hundred thousand pesos and does not exceed one hundred and fifty thousand pesos;
"Sixteen per centum of the amount by which the share exceeds one hundred and fifty thousand pesos and does not exceed two hundred and fifty thousand pesos;
"Eighteen per centum of the amount by which the share exceeds two hundred and fifty thousand pesos and does not exceed five hundred thousand pesos;
"Twenty per centum of the amount by which the share exceeds five hundred thousand pesos and does not exceed one million pesos; and
"Twenty-two per centum of the amount by which the share exceeds one million pesos.⚖ - ℒαɯρhi৷
"Where the property is received for educational or charitable purposes, it shall be the duty of the person or persons in charge thereof to submit from time to time a report of the administration and use of the property to the Collector of Internal Revenue and within twenty days after demand therefor has been made by the said Collector.
"(b) When a brother or sister, who is a legitimate or acknowledged natural child of a common father or mother or both, or the children of such brother or sister, or any descendant mentioned as such in the will and not included in subsection (a) hereof is the beneficiary, there shall be collected the same tax fixed in said subsection with an increase of seventy-five per centum.
"(c) When other relatives within the degree of relationship recognized by law in intestate succession not included in the two next preceding subsections are beneficiaries, there shall be collected upon the share which corresponds to each beneficiary the same tax fixed in subsection (a) with an increase of one hundred and fifty per centum.
"(d) When a relative by affinity within the same degree as those mentioned in subsections (a) and (b), with the exception of the surviving spouse, is the beneficiary, there shall be collected the same tax fixed in subsection (a) with an increase of two hundred and twenty-five per centum.
"(e) When strangers are beneficiaries there shall be collected upon the share which corresponds to each beneficiary the same tax fixed in subsection (a) with an increase of four hundred per centum, provided that if such share exceeds five hundred thousand pesos, the excess shall be subject to tax at ninety-five per centum.
"For the purpose of this tax, strangers are deemed those relatives by consanguinity in the collateral line, not within the degree of relationship recognized by law in intestate succession, and all relatives by affinity with the exception of the spouse and those mentioned in subsection (d) of this section: Provided, however, That where the beneficiary is a domestic servant, or a trusted employee, there shall be collected on the first two thousand pesos and five thousand pesos, respectively, the tax fixed in subsection (a) of this section, and on the excess, the tax prescribed in this subsection. In cases of property which by the will of the testator should be divided among the poor, without the designation of any particular persons, or which should be disposed of for masses or other pious works, there shall be collected the tax at the rate fixed in this subsection upon the total amount of said property.
"In case the property is transmitted to the heirs subject to the usufructuary interest, use or habitation, or annuity of a third person, the tax shall be based on the value of the inventoried property less that of the usufruct, use or habitation, or annuity determined as hereinafter provided."
Section 3. Sub-paragraph (E) of paragraph (1) of subsection (a) of section eighty-nine of Commonwealth Act Numbered Four hundred and sixty-six, is hereby amended to read as follows:
"Section 89. Net estate. - For the purpose of the taxes imposed in this Chapter the value of the net estate shall be determined:
"(a) In the case of a citizen or resident of the Philippines, by deducting from the value of the gross estate—
"(1) Expenses, losses, indebtedness, and taxes. - Such amounts—
* * * * * * *
"(E) For unpaid mortgages upon, or any indebtedness in respect to, property where the value of decedent's interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate, but not including any income taxes upon income received after the death of the decedent, or property taxes not accrued before his death, or any estate or inheritance taxes. The deduction herein allowed in the cases of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded upon a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money's worth. There shall also be deducted losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualties, or from robbery, theft, or em-bezzelment, when such losses are not compensated for by insurance or otherwise, and if at the time of the filing of the return such losses have not been claimed as a deduction for income tax purposes in an income tax return, and provided that such losses were incurred not later than the last day for the payment of the estate tax as prescribed in subsection (a) of section ninety-five."
Section 4. Section one hundred and nine of Commonwealth Act Numbered Four hundred and sixty-six is hereby amended to read as follows:
"Section 109. Rates of tax payable by donor. - The tax for each calendar year shall be an amount equal to the excess of a tax, computed in accordance with the rate schedule hereinafter set forth, on the aggregate sum of the net gifts for such calendar year and for each of the preceding calendar years, over a tax computed in accordance with the rate schedule, on the aggregate sum of the net gifts for each of the preceding calendar years.
"Rate Schedule
"One per centum of the amount by which the net gifts exceed five thousand pesos and do not exceed twelve thousand pesos;
"Two per centum of the amount by which the net gifts exceed twelve thousand pesos and do not exceed thirty thousand pesos;
"Three per centum of the amount by which the net gifts exceed thirty thousand pesos and do not exceed fifty thousand pesos;
"Four per centum of the amount by which the net gifts exceed fifty thousand pesos and do not exceed seventy thousand pesos;
"Five per centum of the amount by which the net gifts exceed seventy thousand pesos and do not exceed one hundred thousand pesos;
"Seven per centum of the amount by which the net gifts exceed one hundred thousand pesos and do not exceed one hundred and fifty thousand pesos;
"Nine per centum of the amount by which the net gifts exceed one hundred and fifty thousand pesos and do not exceed two hundred and fifty thousand pesos;
"Eleven per centum of the amount by which the net gifts exceed two hundred and fifty thousand pesos and do no exceed five hundred thousand pesos;
"Thirteen per centum of the amount by which the net gifts exceed five hundred thousand pesos and do not exceed one million pesos;
"Fifteen per centum of the amount by which the net gifts exceed one million pesos.
"The tax provided in this section shall not apply in every case where the donor makes the gift in favor of an educational institution."
Section 5. Section one hundred and ten of Commonwealth Act Numbered Four hundred and sixty-six, as amended by section three of Republic Act Numbered Eighty-three, is hereby further amended to read as follows:
"Section 110. Rates of tax payable by donee. - In addition to the gift tax imposed under the preceding section, there shall be levied a tax in the amount equal to the excess of a tax, computed in accordance with the rate schedule hereinafter set forth, on the aggregate sum of the net gifts received by each donee for such calendar year and for each of the preceding calendar years, over a tax, computed in accordance with the rate schedule, on the aggregate sum of the net gifts for each of the preceding calendar years received by each donee.
"Rate Schedule
"(a) When the donee or beneficiary is a spouse, a legitimate, recognized natural, illegitimate or adopted child, or a legitimate descendant or ascendant, or either of the adopting parents of the donor, or the father or mother who had recognized such donor as a natural or illegitimate child, and in every case where the donee receives the property exclusively for educational or charitable purposes, there shall be collected from the donee upon the gifts received by him a tax equal to the sum of the following: Provided, however, That such portion of the gifts in favor of a spouse, or a legitimate, recognized natural, illegitimate or adopted child of the donor who is a citizen or resident of the Philippines, which is not in excess of five thousand pesos shall be exempt from this tax:
"Two per centum upon the first twelve thousand pesos;
"Four per centum of the amount by which the net gifts exceed twelve thousand pesos and do not exceed thirty thousand pesos;
"Six per centum of the amount by which the net gifts exceed thirty thousand pesos and do not exceed fifty thousand pesos;
"Eight per centum of the amount by which the net gifts exceed fifty thousand pesos and do not exceed seventy thousand pesos;
"Twelve per centum of the amount by which the net gifts exceed seventy thousand pesos and do not exceed one hundred thousand pesos;
"Fourteen per centum of the amount by which the net gifts exceed one hundred thousand pesos and do not exceed one hundred and fifty thousand pesos;
"Sixteen per centum of the amount by which the net gifts exceed one hundred and fifty thousand pesos and do not exceed two hundred and fifty thousand pesos;
"Eighteen per centum of the amount by which the net gifts exceed two hundred and fifty thousand pesos and do not exceed five hundred thousand pesos;
"Twenty per centum of the amount by which the net gifts exceed five hundred thousand pesos and do not exceed one million pesos; and
"Twenty-two per centum of the amount by which the net gifts exceed one million pesos.
"Where the property is received for educational or charitable purposes, it shall be the duty of the person or persons in charge thereof to submit from time to time a report of the administration and use of the property to the Collector of Internal Revenue and within twenty days after demand therefor has been made by the said Collector.
"(b) When the donee or beneficiary is a brother or sister who is a legitimate, acknowledged natural or illegitimate child of a common father or mother, or both, of the donor, or the children of such brother or sister, or any descendant mentioned as such in the deed and not included in subsection (a) hereof, there shall be collected the same tax fixed in said subsection with an increase of seventy-five per centum.
"(c) When the donee or beneficiary is a relative within the sixth degree and not included in subsections (a) and (b), there shall be collected the same tax fixed in subsection (a) with an increase of one hundred and fifty per centum.
"(d) When the donee or beneficiary is a relative by affinity within the same degree as those mentioned in subsections (a) and (b), with the exception of the spouse, there shall be collected the same tax fixed in subsection (a) with an increase of two hundred and twenty-five per centum.
"(e) When the donee or beneficiary is a stranger, there shall be collected the same tax fixed in subsection (a) with an increase of four hundred per centum, provided that if the gifts received by him exceed five hundred thousand pesos, the excess shall be subject to tax at ninety-five per centum.
"For the purpose of this tax, strangers are deemed those relatives by consanguinity in the collateral line, not within the degree of relationship recognized by law in intestate succession, and all relatives by affinity not included in subsections (a) and (d) : Provided, however, That where the beneficiary is a domestic servant or a trusted employee, there shall be collected on the first two thousand pesos and five thousand pesos, respectively, the tax fixed in subsection (a) of this section and, on the excess, the tax prescribed in this subsection. In cases of property which by the desire of the donor should be divided among the poor, without the designation of any particular persons, or which should be disposed of for masses or other pious works, there shall be collected from the donee the tax at the rate fixed in this subsection upon the total aggregate amount of such gifts.
"In case the property donated is subject to the usufructuary interest, use or habitation or annuity of a third person, the tax shall be based on the value of the net gifts less that of the usufruct, use or habitation or annuity determined in accordance with the provisions of section ninety-one."
Section 6. The increases in the schedules provided for in this Act shall not apply to cases wherein the decedent died before the approval of this Act.
Section 7. This Act shall take effect upon its approval.
Approved, September 15, 1950.
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