This article explains how Philippine estate tax applies when the decedent died before 1 January 1998—i.e., under the pre-1998 National Internal Revenue Code (NIRC) regime—and how such estates are handled today (including via estate tax amnesty). It is written for lawyers, notaries, tax practitioners, and heirs administering older estates.

1) Why the date of death matters

Estate tax in the Philippines is governed by the law in force on the date of death. If a person died before 1 January 1998, the estate is generally taxed under the pre-1998 NIRC (the code prior to the Tax Reform Act of 1997). Later laws (1998 reforms; 2018 TRAIN; and the Estate Tax Amnesty laws) may still affect collection, penalties, compromise, and procedural relief, but they do not change the original tax base or rate schedule that applied at death unless a relief statute expressly says so (e.g., amnesty).

Practical effect. For pre-1998 deaths you have two tracks:

Regular assessment/settlement using the pre-1998 rules on gross estate, deductions, and graduated rates; or
Amnesty settlement (when available), which typically imposes a single percentage on the net estate at death and waives penalties, subject to statute-specific conditions.

2) Overview of the pre-1998 estate tax system

2.1 Taxpayer and scope

Resident citizens: Entire worldwide property.
Nonresident citizens / resident aliens: Usually worldwide property if resident; refer to actual status on death.
Nonresident aliens: Philippine-situs property only (e.g., Philippine real property; tangible personal property located in the Philippines; shares in domestic corporations; certain intangibles with Philippine situs under then-effective rules).

2.2 Valuation date and standard of value

Valuation is at the moment of death (“date-of-death value”).
Real property: Fair market value determined under whichever is higher of (a) the zonal value (if any) or (b) the assessor’s current fair market value on the date of death (zonal valuation coverage in earlier years varied; where none existed, resort to assessor’s schedule and comparable sales).
Shares and securities:
- Listed shares: market closing price on date of death (or nearest trading day).
- Unlisted shares: book value (common) or appraised value (preferred), subject to then-effective rules.
Personal property (vehicles, jewelry, artworks, etc.): replacement/market value at death.
Foreign assets: valued in local currency using date-of-death exchange rates.

2.3 Composition of the gross estate

Typical inclusions under the pre-1998 NIRC (broadly consistent with later law):

Real and personal property, wherever situated (subject to taxpayer’s status).
Transfers in contemplation of death; revocable transfers; transfers with retained interests.
Insurance proceeds where the estate is the beneficiary or where incidents of ownership were retained by the decedent.
Community/conjugal share: Only the decedent’s share in community/conjugal property enters the gross estate. Establish conjugal vs. exclusive character with titles, marriage regime, and acquisition documents.

3) Deductions under the pre-1998 regime

Exact deduction caps evolved over time. For a pre-1998 death, use the caps and conditions in force on the date of death. What follows is a practitioner’s checklist; verify amounts/limits from the contemporaneous NIRC provisions, revenue regulations, and jurisprudence.

Funeral expenses – deductible up to a percentage of the gross estate, subject to a maximum cap (the pre-1998 cap and percentage must be checked against the decedent’s death date).
Judicial/administration expenses – ordinary and necessary expenses actually and properly incurred in the administration, settlement, and distribution of the estate (executor’s/administrator’s fees; accountant’s and appraisal fees; court costs).
Claims against the estate – enforceable obligations of the decedent incurred in good faith and for adequate consideration, subsisting at death (must be properly evidenced; for related-party debts, strict proof is required).
Unpaid mortgages, taxes, and losses – subject to substantiation and timing tests.
Transfers for public use – bequests, legacies, or transfers to the Government or its subdivisions/instrumentalities for public purposes.
Losses – from casualties occurring before the estate tax return is filed and not compensated by insurance, arising during settlement.
Vanishing deduction (property previously taxed) – mitigates double taxation when the decedent received property from a prior decedent within a specified look-back period (commonly up to five years), with a sliding-scale deduction that “vanishes” over time.
Conjugal netting – only the decedent’s net conjugal share (after liabilities properly chargeable to conjugal property) remains in the taxable base.
Nonresident alien proration – for nonresident aliens, certain deductions are prorated by the ratio of Philippine-situs assets to worldwide assets.

Important contrasts with post-1997 law: Deductions like the family home deduction, the P1,000,000 standard deduction, and the medical expense deduction (as those were known in the post-1997, pre-2018 regime) were creations or features of the 1997 NIRC and not generally available for deaths before 1998. Do not import those allowances into a pre-1998 computation unless a transitional rule expressly allows it.

4) Rates for pre-1998 deaths

The pre-1998 regime used a graduated rate schedule (not a flat tax).
Bracket amounts and top marginal rate changed across amendments in the late 1980s and early 1990s. In practice, you must apply the exact schedule that was in effect on the decedent’s date of death.
How to compute under graduated rates:
1. Compute Gross Estate at death.
2. Subtract allowable deductions to arrive at Net Estate.
3. Locate the Net Estate in the rate table effective on the date of death.
4. Compute tax using the bracket’s base tax + marginal rate on the excess.
5. Apply credits (e.g., foreign death taxes under applicable rules for residents) if available.

Because the precise brackets differed by amendment, practitioners should pull the NIRC text and revenue regulations effective on the exact date of death (plus any transitional rules) and attach the table used to the working papers.

5) Estate Tax Amnesty and why it matters for pre-1998 deaths

5.1 Core idea

The modern Estate Tax Amnesty laws allow estates of decedents who died on or before a statutory cut-off date to settle estate taxes by paying a single percentage (commonly 6%) of the net estate at the time of death, with all penalties, surcharges, and interest waived, and with broad immunities from further civil, criminal, and administrative liabilities for the estate tax covered by the amnesty.

5.2 Coverage and timing

Coverage always turns on: (a) the decedent’s date of death relative to the statute’s cut-off, and (b) the filing/payment window set (and sometimes extended) by later laws.
For pre-1998 deaths, the date-of-death condition is invariably satisfied under the amnesty statutes to date; what varies is whether the filing window is open.
If the window is open, amnesty is often preferable to recomputing under the graduated pre-1998 schedule, especially for estates with large penalty exposure or missing paperwork.

Practice note. Historically, the amnesty required an Estate Tax Amnesty Return (distinct from the regular estate tax return), a Statement of Total Assets as of death, and proof of settlement of delinquent accounts if any. Filing windows have been extended by subsequent laws; always confirm whether the amnesty period is still open at the time of settlement.

5.3 How the amnesty amount is computed (typical pattern)

Determine the Net Estate at death under the law at death (gross estate less allowable deductions as of that date).
Multiply by the amnesty rate (commonly 6% in recent statutes).
No penalties or interest are added; immunities and waivers attach once fully paid and the Certificate of Availment is issued.
Certain amnesty regimes allow per-property payment or payments per heir/parcel, especially to enable transfers and cancellations of encumbrances even if not all properties are ready.

5.4 What amnesty does not do

It does not revalue assets to current fair market value; we still use date-of-death values.
It does not cure defects outside estate tax (e.g., land titling defects, land reform issues, unpaid real property tax).
It does not override rules on situs, conjugal share, or documentary substantiation for deductions used to compute the net estate.

6) Step-by-step computation framework (pre-1998 death)

Establish the civil regime and property roster
- Identify exclusive vs. conjugal/community property.
- Compile a master list of assets (local and foreign) and liabilities as of death.
Value each asset at date of death
- Real property: compare assessor’s schedule vs. zonal value (if applicable at that time); use higher.
- Shares: listed closing price or book value for unlisted shares.
- Personalty: market/replacement value with appraisals where appropriate.
- Convert foreign assets using date-of-death FX.
Determine the gross estate
- Include transfers in contemplation of death, revocable transfers, retained interests, includible insurance proceeds, etc.
Compute allowable deductions (using pre-1998 rules)
- Funeral (apply cap/percentage then in force).
- Judicial/administration expenses actually incurred (with estimates for ongoing expenses supported by budget and later reconciled).
- Claims, mortgages, unpaid taxes; transfers for public use; casualty losses; vanishing deduction; nonresident alien proration, etc.
Arrive at the Net Estate
- For amnesty: multiply by the amnesty rate (commonly 6%) and prepare amnesty forms.
- For regular settlement: apply the graduated pre-1998 rate table (base tax + marginal rate) and compute penalties/interest for late filing/payment, unless compromised/abated.
Apportionment among heirs (civil law side)
- The tax is on the estate, but heirs’ shares matter for issuing electronic Certificates Authorizing Registration (eCARs), subdividing titles, and reporting passive income post-transfer.
File and pay
- Estate Tax Return (regular) or Estate Tax Amnesty Return (amnesty), with attachments: death certificate; TINs; titles and tax declarations; share certificates; appraisals; proofs of debts; bank certifications; FX computations; and civil status documents (marriage contract, birth certificates, will/probate orders, extrajudicial settlement).
- Obtain eCARs for each property to enable transfer and cancellation of liens.

7) Penalties, interest, compromise, and abatement

For regular settlement (no amnesty), surcharges and interest accrue from the original due date (generally within one year from death under the pre-1998 regime unless extended for good cause).
The BIR may grant compromise (financial incapacity or doubtful validity) or abatement (unjust assessments, errors, or where costs of collection exceed recoverable amounts) under the NIRC and revenue regulations in force when you apply (not when the decedent died).
Prescription: Estate tax assessment and collection are subject to statutes of limitation; however, late or non-filing often keeps the clock open or extends it. Amnesty statutes typically override prescription issues for covered liabilities.

8) Documentation checklist (legacy estates)

Death certificate; will/probate orders or extrajudicial settlement.
TINs for estate and heirs.
Property list with ownership character (exclusive vs. conjugal/community).
Real property: titles, latest tax declarations, assessor’s certifications, zonal values (if applicable at the time of death).
Bank accounts and securities: bank certifications as of death; brokerage statements; corporate secretary certificates for unlisted shares.
Debts and mortgages: original loan documents, ledgers, proof of consideration, notarization details, and evidence of enforceability at death.
Insurance: policies showing beneficiary and incidents of ownership.
Prior-transfer documents for vanishing deduction claims.
Foreign assets: proofs of ownership and valuations; FX computations for the death date.
Expense proofs: receipts/invoices for funeral and administration expenses.
If availing of amnesty: the prescribed Amnesty Return and Statement of Total Assets (as of death) and any additional forms required for per-property eCARs.

9) Special issues for very old estates

Missing records
- Reconstruct values via assessor archives, contemporaneous sales, bank certification recreations, or professional appraisals anchored to the death date.
Heirs’ deaths in the interim
- Consider successive estates and potential vanishing deductions across them. Sequence filings to maximize relief.
Illegitimate/omitted heirs and partition disputes
- Taxwise, the BIR focuses on the estate tax base and signatures of appearing heirs; civil disputes can delay eCARs. Consider filing with escrow or judicial settlement to avoid stalling tax compliance.
Foreign components
- Watch for foreign death tax credits (where available) and local situs tests for intangibles.

10) Worked example (methodology illustration)

Scenario. Filipino resident died in 1995. Assets at death:

Family residence (exclusive): ₱3,000,000 (assessor FMV; no zonal value in area at that time)

Lot (conjugal): ₱2,000,000

Unlisted shares: book value ₱1,200,000

Bank deposit: ₱300,000 Liabilities/expenses at death:

Mortgage on conjugal lot: ₱500,000 outstanding

Funeral expenses: ₱250,000 (subject to the pre-1998 cap/percentage)

Administration/legal fees (estimated): ₱180,000 (properly documented)

Valid personal loan: ₱200,000

Steps

Gross estate (exclusive + conjugal share of decedent)
- Exclusive house: ₱3,000,000
- Conjugal lot: decedent’s ½ share = ₱1,000,000
- Unlisted shares: ₱1,200,000
- Bank deposit: ₱300,000 Gross estate = ₱5,500,000
Deductions (use caps/conditions in force in 1995)
- Funeral: allowable up to the then-effective cap (say the cap binds—use the capped amount, not ₱250,000).
- Administration: ₱180,000 (if ordinary/necessary and documented).
- Mortgage on conjugal lot: only the decedent’s ½ of the debt (₱250,000) is chargeable to the gross estate, matched with the asset share brought in.
- Personal loan: ₱200,000 (substantiated).
- Other deductions (vanishing, public-use transfers, casualty) if applicable.
Net estate = Gross – Allowable deductions.
Tax due:
- Regular route: apply 1995 rate table (graduated).
- Amnesty route (if available): Net estate × amnesty rate (commonly 6%), no penalties.
eCARs: secure per property after payment.

(This example shows mechanics only; plug in the actual 1995 caps and the exact graduated table.)

11) Frequently asked practitioner questions

Can we revalue property to current market prices? No. Use date-of-death values.
If no estate tax return was filed in the 1990s, are we prescribed? Often no; non-filing tolls or extends prescription. Amnesty (when open) cures this upon payment.
Are interest and surcharges still running? Yes, under regular settlement; they are waived under amnesty.
Can we split payment by property? Many amnesty regimes permit per-property availment so you can transfer a parcel even if the whole estate is not yet finalized.
What if some heirs refuse to sign? Use judicial administration or court-approved compromise; BIR usually requires signatures of all heirs/administrator or a court order.

12) Action checklist (for a pre-1998 death)

Fix heirship and property character (exclusive vs. conjugal).
Build a date-of-death valuation file.
Identify allowable deductions as of the death date and gather proofs.
Decide amnesty vs. regular settlement (run both computations).
Prepare and file the appropriate return(s) with complete attachments.
Pay and secure eCARs; proceed to title transfers.

Final note

For pre-1998 deaths, the key to a correct computation is applying the exact statutory text and rate schedule that were in force on the date of death and documenting valuations and deductions to that same date. Where an amnesty window is (or was) available, it often provides the most efficient and least contentious path to clean title and tax compliance for long-unsettled estates.