Jurisprudence has always stated that being a dual citizen is not by choice – it is involuntary. In the case of Mercado v. Manzano, it has been held:
[Dual Citizenship is] a result of the concurrent application of the different laws of two or more states, a person is simultaneously considered a national by the said states. For instance, such a situation may arise when a person whose parents are citizens of a state which adheres to the principle of jus sanguinis is born in a state which follows the doctrine of jus soli. Such a person, ipso facto and without any voluntary act on his part, is concurrently considered a citizen of both states.
If you are a dual citizen, you are afforded rights in either of your citizenship. If you are half-Filipino, Philippine laws apply to you following the nationality principle – one of which is successional rights and processes. This applies to decedents who were holding two citizenship, one being a Filipino citizenship.
As stated by the Bureau of Internal Revenue, estate tax is “a tax on the right of the deceased person to transmit his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition.” The law that was enforced at the time of the death of the decedent is the law that shall be followed for estate tax.
Under Republic Act No. 10963, which is effective from January 1, 2018 to present, provides for the amendment of Section 84 of the National Internal Revenue Code on the rate of estate tax. The provision provides, “There shall be levied, assessed, collected and paid upon the transfer of the net estate as determined in accordance with Sections 85 and 86 every decedent, whether resident or nonresident of the Philippines, a tax at the rate of six percent (6%) based on the value of such net estate.”
The following laws shall also be applicable at the time of death of the decedent for the imposable tax:
- Republic Act No. 8424 effective January 1, 1998 up to December 31, 2017;
- Section 77 of of the National Internal Revenue Code, as amended (Republic Act No. 7499) effective July 28, 1992 up to December 31, 1997;
- Section 85 of the National Internal Revenue Code, as amended (Presidential Decree No. 69) effective January 1, 1973 to July 27, 1992;
- Section 85 of the National Internal Revenue Code, as amended (Republic Act No. 579) effective September 15, 1950 to December 31, 1972; and
- Section 85 of the National Internal Revenue Code, as amended (Commonwealth Act No. 466) effective July 1, 1939 to September 14, 1950).
The National Internal Revenue Code provides for what shall constitute gross estate. Thus, Section 85 of the NIRC states that, “the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated:Provided, however, that in the case of a nonresident decedent who at the time of his death was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the Philippines shall be included in his taxable estate.”
This includes the decedent’s interest, transfer in contemplation of death, revocable transfer, property passing under general power of appointment, proceeds of life insurance, prior interests, transfers of insufficient consideration, and capital of the surviving spouse.
The underlying reason to file for an extrajudicial settlement (EJS) of estate is to record the transmission of rights, particularly, real estate, under the name of the heirs. This means cancellation of title under the name of the decedent and thereafter recording it under the name of the heirs before the Register of Deeds.
As an heir or administrator or executor, before you can approach the Register of Deeds, however, the estate tax must first be paid. Thus, payment of taxes is required of citizens, regardless of whether they are dual citizens or not.
Going back to the initial question above- do the heirs of a dual citizen (one being Filipino) decedent need to file an EJS? Yes, if there is no will, and no debt left behind. On top of that estate taxes also need to be paid.
Need further information and assistance regarding extrajudicial settlement of estate? Talk to our team at FILEDOCSPHIL to know more about the requirements and process. Call us today at (+632) 8478 5826 or send an email to info@filedocsphil.com for more information.
