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SIXTEENTH CONGRESS OF THE REPUBLIC 
, OF THE PHILIPPINES 
First Regular Session 
SENATE 
) 
) 
) 
S.B. No. 
2102 
Introduced by Sen,atot Juan Ponce Enrile 
AN ACT 
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'14 
FEB -4 P 6 :00 
AMENDING SECTION 86 (A) (4) OF REPUBLIC ACT NO. 8424, AS AMENDED, 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 
1997 
EXPLANATORY NOTE 
, 
This proposed bill seeks to amend Section 86 (A) (4) of Republic Act No. 8424 or 
the National Internal Revenue Code of 1997, as amended, by increasing the estate tax 
exemption for a family home from One million pesos (PI,OOO,OOO.OO) to Ten million 
pesos (PI 0,000,000.00). 
The prevailing provisions of Republic Act No. 8424, as amended, allow for the 
deduction from the gross estate an amount equivalent to the current fair market value of 
the decedent's family home up to PI ,000,000.00. Despite the deduction, the increasing 
value of the family home nowadays and its inclusion in the computation of the estate tax 
contribute significantly to the amount to be paid by the surviving spouse . 
Given the increasing cost of living and coupled with other taxes exacted by the 
government in the form of income tax, value-added tax and real property tax, among 
others, the proposed measure will give immediate relief to the decedent's family by 
allowing them, to spend the amount saved from the payment of estate tax on other basic 
necessities a\ld priority needs of the bereaved family. The bill also intends to lessen the 
pressure on the surviving spouse to sell their property to other interested parties instead of 
passing them on to the next generation. 
Senate Bill No. 132 and Senate Bill No. 2656, rushing for the same exemption, 
were filed by this Representation during the 15th and 14t Congresses, respectively. 
In view of these, the immediate passage of this bill is earnestly so ght. 
" ,., . 


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SIXTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHIUPPINES 
) 
SEnail' 
(t)HI~C llt t~e ~trrrbtt.t 
First Regular Session 
) 
'14 
FEB -4 P6 :QQ 
SENATE 
S.B. No. 2102 
Introduced by Senat\>r Juan Ponce Enrile 
AN ACT 
AMENDING SECTION 86 (A) (4) OF REPUBLIC ACT NO. 8424, AS AMENDED, 
OTIIERWISE KNOWN AS THE NATION:AL INTERNAL REVENUE CODE OF 1997 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 86 (A) (4) of Republic Act No. 8424, as amended, 
otherwise known as the National Internal Revenue Code of 1997, is hereby amended 
to read as follows: 
"SEC .. 86. Computation of Net Estate. - For the purpose of the tax 
imposed in this Chapter, the value of the net estate shall be determined: 
(A) Deductions Allowed to the Estate of Citizen or a Resident. -
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: 
(a) For actual funeral expenses or in an amount equal to 
five percent (5%) of the gross estate, whichever is lower, 
but in no case to exceed Two hundred thousand pesos 
(P200,000); 
(b) For judicial expenses of the testamentary or intestate 
proceedings; 
(c) For claims against the estate: Provided, That at the 
time the indebtedness was incurred the debt instrument 
was duly notarized· and, if the loan was contracted 
within three (3) years before the death of the decedent, 
the administrator or executor shall submit a statement 
showing the disposition of the proceeds of the loan; 
(d) For claims of the deceased against insolvent persons 
where the value of d(,cedent's interest therein is included 
in the value of the gross estate; and 


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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 tax upon income received 
after the death of the decedent, or property taxes not 
accrued before his' death, or any estate tax, The 
deduction herein allowed in the case 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 the 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 
91, , 
(2) Property Previously Taxed. - An amount equal to the 
value specified below of any property forming a part of the 
gross estate situated in the Philippines of any person who 
died within five (5) yea];s prior to the death of the decedent, 
or transferred w the, decedent by gift within five (5) years 
prior to his death, where such property can be identified as 
having been received by the decedent from the donor by 
gift, or from such prior decedent by gift, bequest, devise or 
inheritance, or which can be identified as having been 
acquired in exchange for property so received: 
One hundred percent (100%) of the value, if the prior 
decedent died within one (1) year prior to the death of the 
decedent, or if the property was transferred to him by gift 
within the same period prior to his death; 
Eighty percent (80%) of the value, if the prior decedent died 
more than one (1) year but not more than two (2) years prior 
'to the death of the decedent, or if the property was 
transferred to him by gift within the same period prior to his 
death; 
Sixty percent (60%) of the value, if the prior decedent died 
more than two (2) years but not more thal1 three (3) years 
prior to the death of the decedent, or if the property was 


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transferred to him by giff within the same period prior to his 
death; 
Forty percent (40%) of the value, if the prior decedent died 
more than three (3) years but not more than four (4) years 
prior to the death of the decedent, or if the property was 
transferred to him by gift within the same period prior to his 
death; 
Twenty percent (20%) of the v"lue, if the prior decedent 
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died more than four (4) years but not more than five (5) 
years prior to the death of the decedent, or if the property 
was transferred to him by gift within the same period prior 
to his death; 
These deductions shall be allowed only where a donor's tax 
or estate tax imposed under this Title was finally determined 
and paid by or on behalf of such donor, or the estate of such 
prior decedent, as the case may be, and only in the amount 
finally determined as the value of such property in 
determining the value of the gift, or the gross estate of such 
prior decedent, and only to the extent that the value of such 
property is included in the decedent's gross estate, and only 
if in determining the ,value. of the estate of the prior 
decedent, no deduction'was allowable under paragraph (2) 
in respect of the property or properties given in exchange 
therefor. Where a deduction was allowed of any mortgage or 
other lien in determining the donor's tax, or the estate tax of 
the prior'decedent, which was paid in whole or in part prior 
to the decedent's death, then the deduction allowable under 
said Subsection shall be reduced by the amount so paid. Such 
deduction allowable shall be reduced by an amount which 
bears the same ratio to the amounts allowed as deductions 
under paragraphs (1) and (3) of this Subsection as the 
amount otherwise deductible under said paragraph (2) bears 
to the value of the decedent's estate. Where the property 
referred to consists of two or more items, the aggregate value 
of such items shall be used for the purpose of computing the 
deduction. 
(3) Transfers for Public Use. - The amount of all the 
bequests, legacies, devises or transfers to or for the use of the 
Government of the Republic of the Philippines, or any 
, political subdivision thereof, for exclusively public purposes. 
(4) The Family Home. - An amount equivalent to the 
current fair market value of the decedent's family home: 
Provided, however, That if the said current fair market value 
exceeds TEN MILLION YESOS (PIO,OOO,OOO.OO), the excess 
shall be subject to estate tax. As a condition sine qua non for 
the exemption or deduction, said family home must have 


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been the decedent's family home as certified by the barangay 
captain ofthe locality." 
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Sec. 2. Repealing Clause. - All laws, decrees, orders, rules and regulations or 
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other issuances or parts thereof inconsistent with the provisions of this Act are here by 
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repealed and modified accordingly. 
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Sec. 3. Effectivity. - This Act shall take effect fifteen (15) days following the 
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completion of its publication either in the Official Gazette or in a newspaper of 
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general circulation in the Philippines. 
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Approved,