Ms. Margarita D. Generoso

February 13, 2008 BIR RULING [DA-089-08] DA-105-99; DA-251-99 Ms. Margarita D. Generoso No. 8875 Sampaloc Avenue Makati City M a d a m : This refers to your letter dated September 17, 2007, which was forwarded to this Office by Revenue Region No. 8 (Makati City) last 13 November 2007, requesting for exemption from the payment of donor's tax. It is represented that you are the surviving spouse of the late Herculano B. Generoso who died intestate on October 8, 1992; that he is also survived by his three (3) children; that on February 4, 1996, you and your children executed an "Extra Judicial Settlement of the Estate of the Late Herculano B. Generoso with Self Adjudication"; that a provision in the aforesaid document states: "That, we, the heirs, namely: MARIA LOURDES LEAH D. GENEROSO, RACHEL IRENE D. GENEROSO, AND JUAN MANUEL D. GENEROSO, the legitimate children of the late HERCULANO B. GENEROSO, hereby WAIVE ANY AND ALL OUR INTEREST ON THE ESTATE OF HERCULANO B. GENEROSO, in favor of our mother, MARGARITA D. GENEROSO. . . ." that the estate tax was paid on December 2, 2002; that the Certificate Authorizing Registration was issued on December 10, 2003 for two (2) real properties covered by TCT No. S-110086 (101027) and OCT No. P-27628 belonging to the estate of Herculano D. Generoso; that when these properties were being processed for transfer, the Register of Deeds of Batangas declared that the donor's tax should be paid. IaSAHC It is your opinion that the waiver made by your children in your favor of their proportionate share in the aforementioned properties is not subject to donor's tax. In reply, please be informed that as a rule, when a person renounces/repudiates his part of the inheritance, the right of accretion takes place and the same is added or incorporated to that of his co-heirs, co-devisees or co-legatees. The share of the renouncing heir shall accrue to his co-heirs in the same proportion that they inherit pursuant to Article 1018 and 1019 of the New Civil Code of the Philippines. In legal succession, accretion takes place in case of repudiation among heirs of the same degree. This is so because there is no right of representation. The co-heirs in legal succession are co-owners of the inheritance, for which reason there is always right of accretion among them, unlike in testamentary succession where there may or may not be a right of accretion. (Arts 1018, 977, 969, New Civil Code). In the instant case, when the three (3) legitimate children, namely: Maria Lourdes Leah D. Generoso, Rachel Irene D. Generoso, and Juan Manuel D. Generoso, simultaneously waived their share in the inheritance, accretion effectively took place in their mother's favor as their co-heir and the renounced shares were added or incorporated to her share. Hence, the waiver by Maria Lourdes Leah D. Generoso, Rachel Irene D. Generoso, and Juan Manuel D. Generoso, of their respective shares in the above mentioned estate in favor of their mother, Margarita D. Generoso, is not subject to donor's tax as provided under Section 98 of the Tax Code of 1997. This is so because in legal succession accretion takes place in case of repudiation among heirs of the same degree. Undoubtedly, when the three (3) legitimate children renounced their share in the inheritance they did not donate the property/share to their mother, since the said property/share has never become their own. (BIR Ruling No. DA-105-99 dated July 13, 1999, DA-251-99 dated April 23, 1999) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. DTEIaC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service