Gross Estate – consists of all property owned by a decedent at the time of his death excluding the

exclusive properties of the surviving spouse.

Forms of Properties in Gross Estate
1. Real properties – are immovable properties such as land, building or any structure or even
equipment permanently attached to the land.
2. Tangible personal properties – are movable properties with physical form that could be
seen or touched such as vehicles, artwork, jewelry, clothing, equipment and furniture.
3. Intangible personal properties – are properties other than real and tangible personal
properties. They have no physical form and their reportable values are determined by the
rights and privileges conveyed in them.
Gross Estate SHALL NOT INCLUDE:
1. Separate(exclusive) properties of the surviving spouse
2. Properties, interests, rights and all income accruing after the death of the decedent
3. Properties or transfers exempt by law from estate tax

Estate Tax Return (BIR Form 1801) provides the prescribed presentation of decedent’s properties
in the gross estate using the schedule of specific properties in the following order of classifications

Compositions and Classifications of Gross Estate

Summary Application
Particular Properties Property Categories
Exclusive Conjugal/Communal
Personal Properties  
Real Properties  
Taxable Transfers  

Exclusive or separate properties – those that are solely owned by the spouses
Conjugal or communal properties – are properties both owned by the spouses (applicable only
to married decedent)
In general, all properties, real or personal, tangible or intangible, WHEREVER LOCATED, in the
case of Filipino citizens and resident aliens, SHALL BE INCLUDED as a part of gross estate.
In case of non-resident aliens, ONLY PROPERTIES LOCATED IN THE PHILIPPINES upon
death are SUBJECT to Philippine Estate Tax. When there is a reciprocity, intangible properties
with Philippine situs are excluded from the gross estate.
Reciprocity- a tax exemption principle arising from mutual agreement between or among
Sovereign States to free from tax some objects of taxation.
SITUS OF REPORTABLE GROSS ESTATE
Summary of Application

DECEDENT

Filipino Citizen or Resident Non-resident Alien

Alien

Properties in the Gross Estate Properties in the Gross Estate

Properties Within Outside Properties Within Outside
Real Yes Yes Real Yes Yes
Personal Personal
Tangible Yes Yes Tangible Yes Yes
Intangible Yes Yes Intangible Yes Yes

SUMMARY OF PROPERTIES INCLUDED IN THE GROSS ESTATE

Resident/Filipino Nonresident Alien
No Reciprocity With
Reciprocity
1. Real or immovable property
a. In the Philippines   
b. Outside the Philippines 

2. Tangible personal property

a. In the Philippines   
b. Outside the Philippines 

3. Intangible personal property

a. In the Philippines  
b. Outside the Philippines 

 Franchise exercised
a. In the Philippines  
b. Outside the Philippines 

 Shares, obligations or bonds issued

by corporations organized or  
constituted under the Philippine
laws
  Shares, obligations or bonds issued
by Foreign Corporations (85% of  
business located in the Philippines)

 Shares, obligations or bonds issued

by any Foreign Corporation that  
acquired business situs in the
Philippines

 Shares or rights in partnership

business or industry established in  
the Philippines

The date of valuation is at the time of death because the transfer of properties from the dead to
the living takes effect at the moment of death.
General Valuation Rule: the gross estate shall be valued at its fair market value at the time of the
decedent’s death.
In reporting the gross estate, the gross amount of properties shall not be diminished by:
1. Encumbrances or mortgage loans attached to the property
2. Portion of claims that are worthless like bad debts
3. Taxes, and other permissible deductions
4. Share of the surviving spouse in conjugal or communal property
5. Any subsequent contingency affecting the estate.
SPECIFIC VALUATION METHODS
1. Usufruct – the legal right to use and enjoy the benefits and profits of property belonging
to another.
2. Real properties – should be valued at the current fair market value (FMV) as shown in the
schedule of values fixed by the Provincial/City Assessors (assessed value) or the fair
market value as determined by the BIR Commissioner (zonal value), whichever is higher.
3. Personal (movable) properties – should be reported at the following values at the time of
death:
a. Current market price (purchase value) – for the recently newly acquired personal
properties.
b. Second-hand market price (second-hand value) – for the previously acquires
personal and used properties.
c. Grossed-up loan value – for loaned or pawned personal properties.
d. Fair value plus accrued interest – for interest-earning receivables and bank deposits
e. Discounted value – for non-interest bearing notes receivables.
f. Face value – for Philippine peso currency
 g. Converted Philippine peso value – for foreign currency.
4. Stocks, bonds and other securities:
i. If listed in the local stock exchange – FMV is shall be
a. Closing price on the date of death – this is the preferred valuation method.
b. Trading price at the date nearest to the date of death, if none is available on
the date of death – this is the alternative valuation method.
ii. If not listed in the local stock exchange – the fair market value of shares of stock
not listed and traded in the local stock exchanges is determined using the Adjusted
Net Asset Method at the date of death.
Exclusive properties of the decedent
1. Unmarried decedent. If a man or a woman is unmarried, it is presumed that all of his or her
properties are exclusive properties.
2. Married decedent. If a man or woman is married, their exclusive properties would depend
on their property relations whether under the regime of
a. Absolute Community Property;
b. Conjugal Partnership of Gains; or
c. Complete Separation of Property.
Exclusive properties under Absolute Community Property Relations
Marriage on or after August 3, 1998

1. Property acquired during marriage through gratuitous title by either spouse, and the fruits
as well as income thereof, it there are any, unless it is expressly provided by the donor,
testator, or grantor that they shall form part of the community property.
2. Property for personal and exclusive use of either spouse; however jewelry shall form part
of the communal property.
3. Property acquired before the marriage by either spouse who has legitimate descendants by
former marriage, and the fruits as well as the income, if there are any, of such property.
4. In general, properties acquired by purchase with exclusive money, or by exchange with
exclusive property, shall be considered exclusive.

Exclusive properties under Conjugal Partnership of Gains Property Relations

Marriage before August 3, 1998

1. That which is brought to the marriage as his/her own

2. That which each acquires during the marriage through gratuitous transfer
3. That which is acquired by right of redemption or by exchange with other property
belonging to only one of the spouses; and
4. That which is purchased with the exclusive money of the wife or husband.
Regime of Complete Separation Property
If a man or woman before getting married agreed that their property relations shall be governed by
complete separation of property, their respective properties are his/her exclusive properties.
PROPERTY RELATIONS BETWEEN SPOUSES
This system of property relationship is applicable only to married persons. Also known as property
regime; the set of rules agreed upon by the properties, before getting married, which would govern
their property relations during the course of their married life.
1. By Marriage Settlement executed before the marriage
- A marriage settlement or pre-nuptial agreement is a contract executed between two
parties who plan to get married, in preparation for the property regime that would
govern their marital properties during marriage.
- Must be made before the celebration of the marriage.

2. By Absolute Community of Property

- The default system of property relationship between husband and wife in the
absence of pre-nuptial agreement, or when the regime agreed upon is not valid for
marriage celebration starting August 3, 1998.
a. The husband and the wife become co-owners of all the properties that:
i. They bring into marriage; and
ii. Those acquired by either or both of them during the course of their marriage,
save for some exceptions.
b. The administration and enjoyment of the community property shall belong to both
the spouses jointly.
c. Neither spouse may donate any community property without the consent of the
other.
3. By Conjugal partnership of Gains
a. The husband and wife retain ownership over their respective separate (exclusive)
properties
b. The parties place in a common fund the proceeds, products, fruits and income from
their separate properties and those acquired by either or both spouses through their
efforts or by chance.
c. Upon dissolution of the marriage or of the partnership, the net gains or benefits
obtained by either or both spouses shall be divided equally between them, unless
otherwise stated in the marriage settlements.
d. The administration and enjoyment of the conjugal partnership shall belong to both
spouses jointly.
e. Neither spouse may donate any conjugal partnership property without the consent
of the other.
4. By Local Customs
Outside marriage property relationship. When a man and a woman who are capacitated to marry
each other live exclusively with each other as husband and wife without the benefit of marriage or
under a void marriage, properties acquired by them, during their living together as husband and
wife, shall be owned by them in equal shares and the properties acquired by both of them through
their work or industry shall be governed by the rules on co-ownership.
ADDITIONS TO THE GROSS ESTATE
1. Taxable transfers.
a. Revocable transfers
b. Transfers in contemplation of death
c. Property passing under general power of appointment
d. Transfers for insufficient consideration; and
e. Proceeds of life insurance with revocable beneficiary.
2. Others:
a. Decedent’s interest accrued at the date of death
b. Usufruct right transferrable to the decedent’s heirs
c. Claims against and insolvent person; and
d. Amount received by heirs under RA No 4917