Introduced by Senator Juan Ponce Enrile 
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 (P1,000,000.00) to Ten 
million pesos (PlO,OOO,OOO.OO). 
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 P1,OOO,OO0.00. 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 and 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. 
In view of these, the immediate passage of this bill is earnestly sought 


FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
Second Regular Session 
1 
SENATE 
Senate Bill No. 252G 
__ 
Introduced by Senator Juan Ponce Enrile 
AN ACT 
AMENDING SECTION 86 (A) (4) OF REPUBLIC ACT NO. 8424, AS AMENDED, 
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assem bled: 
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 (%o) 
of the gross estate, whichever is lower, but in no 
case to exceed Two hundred thousand pesos (P200,OOO); 
(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; 
(dj For claims of the deceased against insolvent persons where 
the value of decedent's interest therein is included in the value 
of the gross estate; and 


(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) Prope&y Previously Taxed - An amount equal to the value 
specified below of any property forming a part of the gross emre 
situated in the Philippines of any person who died within five (5) 
years prior to the death of the decedent, or transferred to 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 than three (3) 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; 
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 value, if the prior decedent 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 fhally'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 
PESOS (PlO,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 been the decedent's family home as 
certified by the barangay captain of the locality." 
Sec. 2. Repealing Clause. - All laws, decrees, orders, rules and regulations or other 
issuances or parts thereof inconsistent with the provisions of this Act are hereby 
repealed and modified accordingly. 
Sec. 3. Effectivity. - This Act shall take effect fifteen (15) days following the 
completion of its publication 'either in the Official Gazette or in a newspaper of 
general circulation in the Philippines. 
Approved,