AN ACT TO TAX INHERITANCES, LEGACIES AND OTHER ACQUISITIONS

• Number: Act No. 2601
• Sections: 19

Section 1

SECTION 1. Every transmission by virtue of inheritance, devise, bequest, gift mortis causa, or advance in anticipation of inheritance, devise, or bequest shall be subject to the following tax:

(a) When the surviving spouse, a legitimate, recognized natural, or adopted child, or legitimate descendant of any of them, is the beneficiary, one per centum on the inventoried property if not exceeding fifty thousand pesos; one and one-half per centum, upon the inventoried property if it is of the amount of fifty thousand pesos and not in excess of two hundred and fifty thousand pesos; two and one-half per centum, upon the inventoried property if it is of the amount of two hundred and fifty thousand pesos and not in excess of five hundred thousand pesos, and four per centum, upon all inventoried property in an amount in excess of five hundred thousand pesos;

(b) When either of the legitimate parents of the deceased, or a legitimate brother or sister of the same, or the father or mother who had recognized him as a natural child, 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 three hundred per centum.

Section 2

SEC. 2. This tax shall fall:

(a) On all real property located in the Philippine Islands, and real rights in such property;

(b) On any franchise which must be exercised in the Philippines;

(c) On shares, obligations or bonds issued by any corporation or sociedad

anonima organized or constituted in the Philippine Islands in accordance with its laws;

(d) On shares or rights in any partnership, business or industry established in the Philippine Islands;

(e) On any personal property located in the Philippines.

Section 3

SEC. 3. Notwithstanding the provisions of subsection (a) of section one the portions of the surviving spouse, a legitimate child and a recognized natural or adopted child, shall be wholly exempt from tax in so far as not in pxcess of three thousand pesos each.

Section 4

SEC. 4. In order to determine the net sum which must bear the tax, when an inheritance is concerned, there shall be deducted the expenses of the funeral and burial of the deceased, the proper capital of the surviving spouse, anr" his or her part of the gains (gananciales), the proven debts the judicial expenses of the testamentary or intestate proceedings, and claims against insolvent persons. Aftevrhe aforementioned deductions have been made, there shall be added to the resulting amount the value of all gifts or advances made by the predecessor to any of those who, after his death, shall prove to be his heirs, devisees, legatees, or donees mortis causa.

Section 5

SEC. 5. When divers persons not included in the same class or group of section one, are beneficiaries, each share shall be subject to the scale of taxation which corresponds to the person taking.

Section 6

SEC. 6. In order to determine the value of the right of usufruct, use or habitation, as well as that of annuity, there shall be taken into account the probable life of the beneficiary in accordance with the American Tropical Experience Table, calculated at eight per centum annual interest.

Section 7

SEC. 7. The following shall not be taxed:

(a) The merger of the usufruct in the owner of the naked title;

(b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the trustees;

(c) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance with the desire of the predecessor.

In the last two cases, if the scale of taxation appropriate to the new beneficiary is greater than that paid by the first, the former must pay the difference.

Section 8

SEC. 8. The tax fixed in this Act shall be paid:

(a) In the cases (b) and (c) of the next preceding section, before entrance into possession of the property.

(b) In other cases, within the six months subsequent to the death of the predecessor; but if judicial testamentary or intestate proceedings shall be instituted prior to the expiration of said period, the payment shall be made by the executor or administrator before delivering each beneficiary his share.

Section 9

SEC. 9. The Government shall have a right to the collection of the tax fixed in this Act, on the property transmitted, with preference over any real right created on the same subsequent to the death of the predecessor, but this preference will be extinguished at the end of five years from the date when the tax becomes payable upon real property, and three years upon any other kind of property.

Section 10

SEC. 10. In the absence of contrary disposition by the predecessor, there shall be charged to the account of each beneficiary the part of the tax which pertains to him, inproportion to the value of the benefit received, and in accordance with the scale fixed for the class or group to which he pertains.

Section 11

SEC. 11. No judge shall authorize the executor or judicial administrator to deliver a distributive share to any party interested in the estate unless it shall appear this tax has been paid.

Section 12

SEC. 12. The executor or judicial administrator who shall deliver to an heir, legatee, or donee, any real or personal property, credit, right, or franchise, pertaining to an inheritance subject to this tax, without its payment being shown, shall be punished by a fine of not more than five thousand pesos or imprisonment for not more than, six months, or by both penalties.

Section 13

SEC. 13. There shall not be registered in the registry of property any document transferring real property or real rights therein or any chattel mortgage, by way of gift mortis causa, legacy, or inheritance, unless the payment of the tax fixed in this Act shall be shown. The violation of this provision shall be punished in accordance with ttife provisions of the next preceeding section.

Section 14

SEC. 14. A donee, legatee, or heir who conceals any goods, rights, credits, or transfers, subject to this tax shall be punished by a fine of not less than twenty-five per centum of the value of that which he may have concealed, nor more than said value, or by imprisonment for not more than one year, or by both penalties.

Section 15

SEC. 15. If, after the payment of the tax, new obligations of the testator shall appear, and the persons interested shall have satisfied them by order of the court, they shall have a right to the restitution of the proportional part of the tax paid.

Section 16

SEC. 16. Against the decisions of the Collector of Internal Revenue, relative to the tax fixed in this Act, the interested vi persons may make use of the remedies given in Act Numbered Twenty-three hundred and thirty-nine, within the periods, in the manner, and under the conditions prescribed by the same.

Section 17

SEC. 17. The collections resulting from this tax shall pertain entirely to the Insular Government.

Section 18

SEC. 18. The Collector of Internal Revenue shall be charged with the collection of the tax fixed in this Act, and shall prescribe the regulations which he may consider suitable for the due enforcement of the same, which regulations shall not be in conflict with said Act, and shall become effective with the force of law after being approved by the Secretary of Finance and Justice.

Section 19

SEC. 19. This Act shall take effect on July first, nineteen hundred and sixteen.

Enacted, February 4, 1916.