Clarification as to Why the Donation Inter Vivos was Treated as a Donation Mortis Causa

February 13, 1992 BIR RULING NO. 050-92 78 (b) 000-00 050-92 Mr. Robert J. Bones c/o Josefino Fajanel P 19-04 10th 7th Street Villamor Air Base Pasay City S i r : This refers to your letter dated July 24, 1991 requesting information as to why the donation inter vivos of the late Brenda Y. Arceo of Angeles City was converted into a donation mortis causa and why said donation was registered in favor of the donee despite the non-issuance of a clearance authorizing registration by this Bureau. It appears that on December 6, 1988, the late Brenda Arceo, executed a Deed of Donation of six (6) parcels of land all located in Angeles City, in favor of her father and mother, spouses Victoriano G. Arceo and Josefina Y. Arceo, viz: TCT Nos. 73804, 80268, 80267, 55048, 58586 and 48852; that the amount of P17,714.80 as donor's tax has been paid under Payment Order No. 2016269 and Confirmation Receipt No. 16078775 dated December 19, 1988; but that, upon the death of the donor on December 26, 1988, the Revenue District Officer of Revenue District No. 18 upon instruction of the Regional Director, San Fernando, Pampanga caused the investigation of the estate; that as a result of which, the said donation inter vivos was treated as donation in contemplation of death under Section 78(b) of the Tax Code, and the donated properties were included in the gross estate of the decedent for estate tax purposes; that the estate was assessed in the amounts of P132,353.56 and P26,458.35 as deficiency estate and income taxes respectively, which were paid under Payment Order Nos. 7961019; 8158214 and 8158213 and Confirmation Receipt Nos. 20092370; 20092371 and 19903928 dated June 30, 1990 and June 4, 1990; and that notwithstanding payment of the estate tax for which estate tax clearance dated June 4, 1990 and June 30, 1990 were issued it was the Deed of Donation (executed on December 6, 1988) that was inscribed in the Registry of Deeds on June 13, 1990 at 3:00 p.m. In reply, please be informed that as already explained in the letter dated November 9, 1990 of the Revenue Officer to Atty. Reynaldo Laigo, Supervising Agent, NBI, San Fernando, Pampanga, the reason why the donation intervivos covering the aforementioned parcels of land, was treated as a donation mortis causa is that shortly after having executed the deed of donation on December 6, 1988, the donor died on December 26, 1988; hence, the donation was considered a transfer in contemplation of death under Section 78(b) of the Tax Code as amended, and the properties donated were included in the decedent's gross estate for estate tax purposes. The fact that the document annotated on June 13, 1990 was the deed of donation, not the transmission by way of conveyance mortis causa , for which the BIR estate tax clearance was intended, does not make the inscription of the instrument of donation on June 13, 1990 irregular. In other words, an inscription of a deed of donation based on an estate tax clearance properly issued after correct payment of estate tax was made for the same properties conveyed by way of donation intervivos and on which donor's tax has been paid likewise (but without clearance because the investigation for donor's gift tax purposes was overtaken by the death of the donor) is in accordance with Section 88 of the Tax Code, pertinent portion of which provides: "Sec. 88. Duties of Certain Officers and Debtors . Registers of deeds shall not register in the registry of property any document transferring real property or real rights therein or any chattel mortgage, by way of gifts intervivos or mortis causa , legacy or inheritance, unless a certification from the Commissioner that the tax fixed in this Title and actually due thereon had been paid is shown . . ." adc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue