C.A. No. 106

An Art to Amend Section Fifteen Hundred and Thirty-Six of Act Numbered Twenty-Seven Hundred and Eleven, as Amended, Relating to the Inheritance Tax

Commonwealth Act No. 106

Be it enacted by the National Assembly of the Philippines:

Section 1. Section fifteen hundred and thirty-six of Act Numbered Twenty-seven hundred and eleven as amended by section ten of Act Numbered Twenty-eight hundred and thirty-five and section one of Act .Numbered Thirty hundred and thirty-one, is hereby further amended to read as follows;

Sec. 1536. Conditions and rate of taxation.— Every transmission by a decedent, whether a resident or a non-resident, by virtue of inheritance, devise, bequest, gift mortis causa or advance in anticipation of inheritance devise or bequest of real property located in the Philippines and real rights in such property; of any franchise which must be exercised in the Philippines; of any shares, obligations, or bonds issued by any corporation or sociedad angnima organized or constituted in the Philippines in accordance with its laws; of any shares, obligations, or bonds issued by any foreign corporation the principal business of which is located in the Philippines; of any shares, obligations or bonds issued by any foreign corporation if such shares, obligations or bonds have acquired a business situs in the Philippines; of any shares or rights in any partnership, business or industry established in the Philippines or of any personal property, whether tangible or intangible, located in the Philippines shall be subject to the tax prescribed in this section: Provided, However, That in the case of a resident decedent, the transmission of any intangible personal property, regardless of its location, is likewise subject to the tax provided for in this section.

“Every transfer made directly or indirectly by the decedent in his lifetime, in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona fide sale for an adequate and full consideration in money or money’s worth, is likewise subject to the tax herein provided. Where within three years prior to his death, and without such prior consideration the decedent has made a transfer or transfers, by trust or otherwise, of any of his property, or an interest therein, not admitted or shown to have been made in contemplation of or intended to take effect in possession of enjoyment at or after his death, such transfer or transfers shall be deemed and held to have been made in contemplation of death within the meaning of this section.

“(a) When the surviving spouse, a legitimate, recognized natural or adopted child or legitimate descendant of any of them is the beneficiary, or either of the legitimate parents of the deceased 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:

“One per centum upon the first ten thousand pesos; two per centum upon the amount by which such share exceeds ten thousand pesos and does not exceed thirty thousand pesos; three per centum upon the amount by which such share exceeds thirty thousand pesos and does not exceed fifty thousand pesos; four per centum upon the amount by which such share exceeds fifty thousand pesos and does not exceed eighty thousand pesos; five per centum upon the amount by which such share exceeds eighty thousand pesos and does not exceed one hundred and ten thousand pesos; six per centum upon the amount by which such share exceeds one hundred and ten thousand pesos and does not exceed one hundred and fifty thousand pesos; seven per centum upon the amount by which such share exceeds one hundred and fifty thousand pesos and does not exceed one hundred and ninety thousand pesos; eight per centum upon the amount by which such share exceeds one hundred and ninety thousand pesos and does not exceed two hundred and forty thousand pesos; nine per centum upon the amount by which such share exceeds two hundred and forty thousand pesos and does not exceed two hundred and ninety thousand pesos; ten per centum upon the amount by which such share exceeds two hundred and ninety thousand pesos and does not exceed three hundred and fifty thousand pesos; eleven per centum upon the amount by which such share exceeds three hundred and fifty thousand pesos and does not exceed four hundred and twenty thousand pesos; twelve per centum upon the amount by which such share exceeds four hundred and twenty thousand pesos and does not exceed five hundred thousand pesos; thirteen per centum upon the amount by which such share exceeds five hundred thousand pesos and does not exceed six Hundred thousand pesos; fourteen per centum upon the amount by which such share exceeds six hundred thousand pesos and does not exceed seven hundred and twenty thousand pesos; fifteen per centum upon the amount by which such share exceeds seven hundred and twenty thousand pesos and does not exceed eight hundred and fifty thousand pesos; sixteen per centum upon the amount by which such share exceeds eight hundred and fifty thousand pesos and does not exceed one million pesos; seventeen per centum upon the amount by which such share exceeds one million pesos and does not exceed one million and two hundred thousand pesos; eighteen per centum upon the amount by which such share exceeds one million and two hundred thousand pesos and does not exceed one million and five hundred thousand pesos; nineteen per centum upon the amount by which such share exceeds one million and five hundred thousand pesos and does not exceed two million pesos; and twenty per centum upon the amount by which such share exceeds two 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: Provided, That every person or persons entrusted with the administration and custody of such property who shall make use or dispose thereof for purposes other than as provided in a will or grant, shall be guilty of violation of the provisions hereof and punished with a fine equivalent to not more than one-half of the value of such property at the discretion of the court.

“(b) When a legitimate brother or a sister of the deceased, or any descendant not included in the next preceding paragraph, is the beneficiary there shall be collected the same tax fixed in the paragraph next preceding with an increase of one hundred per centum.

“(c) When other relatives not included in the two next preceding subsections are beneficiaries there shall be collected the tax fixed in subsection (a) with an increase of two hundred per centum.

“(d) When strangers are beneficiaries there shall be collected the tax fixed in subsection (a) with an increase of one thousand per centum if the amount of the inheritance does not exceed one hundred and ten thousand pesos;

“Nine hundred per centum if the amount of the inheritance exceeds one hundred and ten thousand pesos and does not exceed one hundred and fifty thousand pesos;

“Eight hundred per centum if the amount of the inheritance exceeds one hundred and fifty thousand pesos and does not exceed one hundred and ninety thousand pesos;

“Seven hundred and fifty per centum if the amount of the inheritance exceeds one hundred and ninety thousand pesos and does not exceed two hundred and forty thousand pesos;

“Seven hundred per centum if the amount of the inheritance exceeds two hundred and forty thousand pesos and does not exceed two hundred and ninety thousand pesos;

“Six hundred and fifty per centum if the amount of the inheritance exceeds two hundred and ninety thousand pesos and does not exceed three hundred and fifty thousand pesos;

“Six hundred per centum if the amount of the inheritance exceeds three hundred and fifty thousand pesos and does not exceed four hundred and twenty thousand pesos;

“Five hundred and fifty per centum if the amount of the inheritance exceeds four hundred and twenty thousand pesos and does not exceed five hundred thousand pesos;

“Five hundred per centum if the amount of the inheritance exceeds five hundred thousand pesos and does not exceed six hundred thousand pesos;

“Four hundred and fifty per centum if the amount of the inheritance exceeds six hundred thousand pesos and does not exceed seven hundred and twenty thousand pesos;

“Four hundred and twenty per centum if the amount of the inheritance exceeds seven hundred and twenty thousand pesos and does not exceed eight hundred and fifty thousand pesos;

“Four hundred per centum if the amount of the inheritance exceeds eight hundred and fifty thousand pesos and does not exceed one million pesos;

“Three hundred and eighty per centum if the amount of the inheritance exceeds one million pesos and does not exceed one million and two hundred thousand pesos;

“Three hundred and fifty per centum if the amount of the inheritance exceeds one million and two hundred thousand pesos and does not exceed one million and five hundred thousand pesos;

“Three hundred and twenty per centum if the amount of the inheritance exceeds one million and five hundred thousand pesos and does not exceed two million pesos; and

“Three hundred per centum if the amount of the inheritance exceeds two million pesos.

“For the purposes of this tax, strangers are deemed those relatives by consanguinity of the seventh or more remote degree in the collateral line, and all relatives by affinity with the exception of the spouse.

“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 paragraph 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.

“(e) In addition to the tax provided for in this section there shall be collected an additional tax of five per centum upon the net inventoried property of the decedent in excess of five hundred thousand pesos, irrespective of the relation of the beneficiaries to the deceased.”

Section 2. This Act shall take effect upon its approval.