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:
"Sec. 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 exceeds 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."
Sec. 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:
"Sec. 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.
"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 the 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."
Sec. 3. Sub-paragraph (E) of paragraph (1) of
sub-section (a) of section eighty-nine of Commonwealth Act Numbered
Four hundred and sixty-six, is hereby amended to read as follows:
"Sec. 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 —
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"(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 embezzlement, 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 of the payment of the
estate tax as prescribed in subsection (a) of section ninety-five."
Sec. 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 not 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."
Sec. 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
purpose, 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 sub-sections (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."
Sec. 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.
Sec. 7. This Act shall take effect upon its
approval.
Approved: September 15, 1950
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