1) Core Answer

No. Legacies and devises are generally not subject to donor’s tax in the Philippines. They are testamentary transfers (transfers that take effect upon death) and are ordinarily covered by estate tax, not donor’s tax.

However, donor’s tax can arise in transactions connected to inheritance, such as certain waivers/renunciations, unequal distributions by agreement, or post-death donations by heirs.

2) What Are “Legacies” and “Devises” in Philippine Law?

Under the Civil Code concepts on succession:

A will is a juridical act by which a person controls the disposition of property to take effect upon death, within the limits and formalities required by law.
A devise is a testamentary gift of real property (immovable property such as land or buildings).
A legacy is a testamentary gift of personal property (movable property, sums of money, specific personal items, credits, etc.).

In practice, “legacy” and “devise” are often treated together as specific testamentary gifts to a legatee (for legacies) or a devisee (for devises), distinct from an heir who may be instituted to receive the estate (or an aliquot part of it) in a more general sense.

Key characteristic: A legacy/devise is a mortis causa transfer—its legal effect is tied to the testator’s death and the will’s validity/probate.

3) The Philippine Transfer Tax Framework: Estate Tax vs Donor’s Tax

Philippine transfer taxes are primarily governed by the National Internal Revenue Code (NIRC), as amended (including major amendments under the TRAIN Law, RA 10963).

A. Estate Tax (Transfers at Death)

Estate tax is imposed on the privilege of transmitting property at death. It applies to property that passes:

by testate succession (through a will), including legacies and devises, or
by intestate succession (by operation of law, when there is no will or the will does not dispose of all property).

General features (post-TRAIN structure):

Rate: 6% of the net estate (after allowable deductions).
Common deductions: include a standard deduction (widely known as ₱5,000,000) and a family home deduction (widely known as up to ₱10,000,000), among others, subject to statutory requirements and documentation.
Filing deadline: generally within one (1) year from death, subject to rules on extensions in certain cases.
Who files/pays: typically the executor/administrator; if none, an heir or any person in possession/control of the property may be required to ensure compliance.

B. Donor’s Tax (Gratuitous Transfers During Life)

Donor’s tax is imposed on the privilege of transferring property by gift (inter vivos transfers).

General features (post-TRAIN structure):

Rate: 6% of net gifts exceeding the annual exemption (commonly ₱250,000 per calendar year).
Who pays: the donor (the person who makes the gift).
Filing deadline: generally within thirty (30) days from the date the donation is made.

Crucial dividing line:

Inter vivos (effective during the donor’s lifetime) → donor’s tax
Mortis causa (effective upon death) → estate tax

4) Why Legacies and Devises Are Not Subject to Donor’s Tax

A. They are not “donations” in the tax sense

A legacy or devise is not a gift made by a living donor. It is a disposition by will, taking effect at death, and is part of the settlement of the decedent’s estate.

B. The taxable event is death, not generosity during life

The transfer occurs because the person died, and the law treats the movement of wealth at death as an estate tax event. Even if the transfer is “gratuitous” from the recipient’s point of view, the applicable transfer tax is estate tax.

C. Tax administration aligns with estate settlement

Before title to many assets (especially real property) can be transferred to legatees/devisees, government systems typically require proof of estate tax compliance (e.g., BIR documentation such as an eCAR and related clearances), not donor’s tax returns—because the transfer traces to succession.

5) How Legacies and Devises Are Treated for Estate Tax Purposes

A. Included in the gross estate

Property disposed of by will—whether through a general institution of heirs or through particular legacies/devices—is generally part of the decedent’s gross estate, subject to rules on what property interests the decedent owned, controlled, or retained at death.

B. Valuation matters

Estate tax is driven by the value of estate assets. For real property, valuation typically considers statutory valuation rules used by tax authorities (commonly involving zonal values/fair market values and local assessor values, depending on applicable rules and issuances).

C. Marital property regime affects what is taxed

If the decedent was married under absolute community of property or conjugal partnership of gains, only the portion belonging to (or attributable to) the decedent is generally included in the taxable estate, after applying the proper regime rules and deductions.

D. The recipient is generally not taxed as income

Inheritances (including legacies/devices received by beneficiaries) are generally excluded from gross income for income tax purposes. But income generated by inherited property after transfer (e.g., rent, dividends, business income) is generally taxable to the recipient under the usual income tax rules.

6) “Donation Mortis Causa” and Why It Still Isn’t Donor’s Tax

A frequent source of confusion is the donation mortis causa—a document labeled as a “donation” but intended to take effect upon the donor’s death.

A. Substance over label

Philippine law looks at the nature and effect of the act, not merely the title of the document. If the transfer is designed to be effective only at death, it is mortis causa in nature.

B. Common indicators of a mortis causa disposition

Courts typically examine features such as:

whether the transfer takes effect only upon death,
whether the donor retains ownership/control during life,
whether the disposition is revocable and dependent on the donor’s death,
whether no rights vest in the recipient until death.

C. Consequence

A true donation mortis causa is treated like a testamentary disposition and generally must comply with will formalities to be valid. For tax purposes, the transfer is generally approached as part of the estate, pointing to estate tax, not donor’s tax.

7) When Donor’s Tax Can Enter the Picture Around Inheritance

Even though legacies/devices themselves are not donor-taxable, actions by heirs/beneficiaries or agreements during settlement can produce a donation for tax purposes.

Scenario 1: Waiver/Renunciation of Inheritance

Heirs sometimes “waive” or “renounce” their shares.

A practical tax distinction is often drawn between:

General (pure) renunciation — a repudiation that does not specify a favored person and simply allows the share to pass according to succession rules (e.g., to co-heirs by accretion, or to substitutes).

Often treated as part of the succession process and not as a taxable donation by the renouncing heir, depending on how it is structured and documented.

Renunciation in favor of a specific person — where the heir effectively directs his/her share to a particular individual.

This can be treated as a gratuitous transfer by the heir (a “donation” by the renouncer), which may trigger donor’s tax on the part renounced/assigned, subject to exemptions and valuation rules.

Why this matters: The decedent did not donate; the heir is the one making a transfer of a right or share that would otherwise go to the heir.

Scenario 2: Unequal Partition/Distribution by Agreement

During extrajudicial settlement or family agreements, heirs sometimes agree that one heir receives more than his/her hereditary share without paying the difference.

Tax risk: the “excess” portion can be viewed as a donation by the other heirs to the favored heir, potentially triggering donor’s tax.

This is especially important when:

the will is absent/invalid, or
the will provides a distribution, but the heirs alter it by agreement and someone ends up with an uncompensated excess.

Scenario 3: Post-Death Donations by Beneficiaries

After receiving property by inheritance, a beneficiary may later donate it (or a portion of it) to another person. That later transfer is a separate inter vivos donation and can be subject to donor’s tax, independently of the earlier estate tax.

Scenario 4: Assignment of Inheritance Rights

An heir may assign hereditary rights:

For consideration (sale): may trigger income tax/capital gains tax and documentary stamp tax issues depending on structure and asset type.
Without consideration: may be treated as a donation, potentially subject to donor’s tax.

Scenario 5: Transfers for Less Than Adequate Consideration

If property is transferred for insufficient or no consideration, Philippine tax rules may deem the difference a gift, potentially triggering donor’s tax, even if the parties label the transaction a “sale.” This concept is frequently relevant when families transfer assets among themselves during estate planning.

8) Compliance Reality: What Usually Happens in Practice for Legacies/Devises

A. Probate and settlement are central (for wills)

For a will to control distribution, it generally must go through probate (court recognition of validity), after which distribution is made under court supervision.

B. Estate tax compliance is typically a gatekeeper

Before registries and institutions transfer assets (especially real property, shares of stock, bank accounts), they commonly require proof of estate tax compliance (and corresponding BIR clearances).

C. Real property transfers commonly involve other charges beyond estate tax

Even though the question is donor’s tax, practitioners recognize that transferring inherited real property often involves:

estate tax and BIR clearances,
local transfer tax (imposed by LGUs under local tax ordinances),
registration fees,
and documentation requirements (e.g., settlement instruments, court orders, CAR/eCAR, tax clearances).

The mix depends on the facts (testate vs intestate, court vs extrajudicial settlement, location of property, and local rules).

9) Common Misconceptions

Misconception 1: “Because it’s free, it must be donor’s tax.”

Not in succession. Gratuitous does not automatically mean donor’s tax. Gratuitous transfers are split into:

at death → estate tax
during life → donor’s tax

Misconception 2: “The estate is the donor.”

An estate is not a living person making an inter vivos gift. Distribution to heirs/legatees/devisees is generally viewed as implementation of succession, not a donation.

Misconception 3: “Calling a document ‘Donation’ makes it donor-taxable.”

Labels are not controlling. A transfer intended to take effect at death may be treated as mortis causa (and may even be invalid if it bypasses will formalities), pointing away from donor’s tax.

Misconception 4: “Waiving an inheritance never has donor’s tax.”

A waiver can be structured in ways that look like a gift by the heir, especially if it is in favor of a specific person or results in an uncompensated excess to someone.

10) Practical Takeaways

Legacies and devises are ordinarily subject to estate tax, not donor’s tax, because they are testamentary and effective upon death.
Donor’s tax becomes relevant when a living person (often an heir/beneficiary) makes a gratuitous inter vivos transfer of inherited property or inheritance rights, or when settlement arrangements create a deemed donation (e.g., unequal partition without compensation).
For real property and other registrable assets, estate tax clearance is typically central to completing transfers to legatees/devisees.

11) Conclusion

In the Philippine setting, legacies and devises are not treated as donor-taxable gifts. They are part of the transmission of a decedent’s estate and are therefore generally within the scope of estate tax. Donor’s tax issues usually appear not because of the will itself, but because of what heirs and beneficiaries do during or after settlement—particularly waivers, assignments, unequal distributions, and later donations.