PEREZ, PRINCESS CHARISMA V.

27. BIR Ruling No. 10-03, Sept. 8, 2003

FACTS:
This is a ruling in reply to a letter requesting on behalf of Banco de Oro
Universal Bank, for a confirmation whether a Survivorship Agreement
executed by the joint depositors under a joint deposit account expressly
stipulating that upon death of any one of the joint depositors, the entire
remaining balance of the deposit shall belong to the surviving depositor/s
and, in effect, may be forthwith withdrawn by the latter notwithstanding the
provisions of Section 97 of the 1997 Tax Code.
RULING: NO.
In the Survivorship Agreement, the joint depositors cannot withdraw any
portion of the said deposit account without the consent of the other.
However, upon death of any of them, the whole amount of the funds shall
belong to the surviving co-depositor/s, and may forthwith be withdrawn by
the latter. The said provision contained in the agreement is valid and binding
between the joint depositors but it has an effect of a gift or donation mortIs
causa made by the deceased co-depositor during his lifetime but effective
upon death because the acquisition by the survivor of the share of the
decedent in the joint account is considered to be acquired by bequest and
hence subject to estate tax under Section 84 of the 1997 Tax Code.
Considering that the joint account is co-owned by the depositors, there is a
presumption that they owned it equally or in 50/50 shares, in which case, the
transfer of the remaining balance of the whole deposit to the surviving codepositor/s upon death of the other co-depositor pursuant to their
Survivorship Agreement is a transfer made by the said depositor in
contemplation of death, as provided under Section 85(B) of the 1997 Tax
Code.
Thus, upon the death of the co-depositors, the 50% share of the deceased
co-depositor in the deposit shall be included in computing the value of his
gross estate.
Hence, the funds in the joint deposit account cannot be withdrawn by the
surviving co-depositor/s unless the Commissioner has certified that the taxes
imposed thereon by Title III of the 1997 Tax Code have been paid; Provided,
however, That the administrator of the estate or any one (1) of the heirs of
the deceased co-depositor may, upon the authorization by the
Commissioner, withdraw an amount not exceeding Twenty thousand pesos
(P20,000.00) without the said certification.