· , 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S.B. Noill 7 
) 
) 
) 
Introduced by Senator Maria Lourdes Nancy S. Binay 
,~em1tr 
IOEf"r "I l~d;'''''I''~ 
'14 SEP -8 P6 :14 
AN ACT AMENDING SECTION 97 OF THE NATIONAL INTERNAL REVENUE CODE 
EXPLANATORY NOTE 
In the case of Romarico Vitug v. Court o(Appeais. G.R. No. 82027 March 29. 1990 ("Vitug 
Case "), the Supreme Court upheld the validity and enforceability of survivorship agreements 
among co-depositors in the case of joint accounts. Upon the death of a co-depositor, the 
funds in the joint account would become property of the living co-depositors. As a 
consequence, the living co-depositors may make use of it for any purpose they may deem 
necessary. 
However, Section 97 of the National Internal Revenue Code appeared to have qualified the 
rights of the living co-depositors discussed in the Vitug Case, as follows: 
"Section 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights. -
There shall not be transferred to any new owner in the books of any corporation, 
sociedad anonima, partnership, business, or industry organized or established in the 
Philippines any share, obligation, bond or right by way of gift inter vivos or mortis 
causa, legacy or inheritance, unless a certification from the Commissioner that the 
taxes fixed in this Title and due thereon have been paid is shown. 
If a bank has knowledge of the death of a person, who maintained a bank deposit 
account alone, or jointly with another. it shall not allow any withdrawal from the 
said deposit account, unless the Commissioner has certified that the taxes 
imposed thereon by this Title have been paid: Provided, however, That the 
administrator of the estate or anyone (1) of the heirs of the decedent may, upon 
authorization by the Commissioner, withdraw an amount not exceeding Twenty 
thousand pesos (P20,000) without the said certification. For this purpose, all 
withdrawal slips shall contain a statement to the effect that all of the joint depositors 
are still living at the time of withdrawal by anyone of the joint depositors and such 
statement shall be under oath by the said depositors" (Emphasis supplied.) 
In a Bureau of Internal Revenue ("BIR") ruling dated 9 September 2003 addressed to 
Ishiwata Gatmaytan and Associates ("Ishiwata BIR Ruling "), the BlR addressed a query on 
whether a bank may release funds from a joint account subject to a Survivorship Agreement. 


" 
The BIR therein explicitly held that the surviving depositor cannot withdraw the funds in the 
joint account.! 
The above-quoted Section 97 including the Ishiwata BIR Ruling in effect imposed an onerous 
provision upon living co-depositors by completely denying to the living co-depositors access 
to the funds in the joint account with survivorship agreement. Aside from being a clear 
contravention of the intent of the parties, the requirement of certification for joint accounts 
with survivorship agreement does not appear to be supported by any valid tax objective. If the 
intent of the law were to make sure that taxes have been paid, that intent is already served by 
including the presumed share of the deceased person's joint account in the computation ofthe 
deceased person's gross estate. 
Considering the circumstances, there are possibilities that legal controversies may arise, such 
as, the legitime of the heirs are impaired or if the estate is rendered unable to pay the taxes 
due to the government, the BlR will be left without legal remedies. On the other hand, to 
deprive the living co-depositors access to even their own presumed share to the funds in the 
joint account is manifestly unjust. 
foreg()ing, the passage of this bill is earnestly requested. 
lVlftKlf\.'LOururJES NANCY S. BINAY 
Senator 
1 A copy of the SIR Ruling is attached as Annex IIA". 


· . 
SIXTEENTH CONGRESS OF THE REPUBLIC 
).-il'natr 
OF THE PHILIPPINES 
) 
IOff,;, "r I~' j,mtbr~ 
Second Regular Session 
) 
SEN An;. 
'14 
SEP -8 P6 :14 
S.B. NO. ~_~_9 7 
RECEIVE!) BY: ... ~_' 
__ 
Introduced by Senator Maria Lourdes Nancy S. BinaY---Cr 
1 
AN ACT AMENDING SECTION 97 OF THE NATIONAL INTERNAL REVENUE CODE 
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Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
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assembled: 
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SECTiON 1. Section 97 of the National Internal Revenue Code is hereby amended to read 
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as follows: 
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"Section 97. Payment of Tax Antecedent to the Transfer of Shares. Bonds or 
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Rights. - There shall not be transferred to any new owner in the books of any 
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corporation, sociedad anonima, partnership, business, or industry organized or 
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established in the Philippines any share, obligation, bond or right by way of gift 
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inter vivos or mortis causa, legacy or inheritance, unless a certification from the 
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Commissioner that the taxes fixed in this Title and due thereon have been paid is 
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shown. 
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If a bank has knowledge of the death ofa person, who maintained a bank deposit 
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account alone, or jointly with another, it shall not allow any withdrawal from the 
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said deposit account, unless the Commissioner has certified that the taxes 
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imposed thereon by this Title have been paid: Provided, however, That the 
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administrator ofthe estate or anyone (1) of the heirs of the decedent may, upon 
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authorization by the Commissioner, withdraw an amount not exceeding Twenty 
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thousand pesos (P20,OOO) without the said certification. For this purpose, all 
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withdrawal slips shall contain a statement to the effect that all of the joint 
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depositors are still living at the time of withdrawal by anyone of the joint 
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depositors and such statement shall be under oath by the said depositors. 
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THE 
REQUIREMENT 
OF 
A 
CERTIFICATION 
FROM 
THE 
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COMMISSIONER UNDER THIS SECTION CAN BE DISPENSED WITH, IF 
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THE CO-DEPOSITORS IN A JOINT ACCOUNT HAVE EXECUTED AN 
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AGREEMENT THAT IN CASE ONE OF THEM DIES, THE FUNDS IN THE 
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ACCOUNT SHALL PERTAIN TO THE LIVING CO-DEPOSITORIS 
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EXCLUSIVELY. IT SHALL BE UNDERSTOOD THAT THIS PROVISION 
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IS WITHOUT PREJUDICE TO THE RIGHTS OF ACTION THE HEIRS OF 
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THE DECEDENT OR THE ESTATE MAY HAVE AGAINST THE LIVING 
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CO-DEPOSITORIS IN THE EVENT THAT THE LEGITIMES OF THE 
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HEIRS ARE IN DANGER OF BEING IMPAIRED OR WHEN THE ESTATE 
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WILL BE RENDERED INCAPABLE OF PAYiNG TAXES UPON THE 


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TRANSFER OF FUNDS IN THE JOINT DEPOSIT ACCOUNT TO THE 
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LIVING CO-DEPOSITORS." 
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SECTION 2. Effectivity. This Act shall take effect fifteen (\5) days after its complete 
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publication in at least two (2) newspapers of general circulation. 
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Approved,