BIR Ruling [DA-169-06]

March 27, 2006 BIR RULING [DA-169-06] Sec. 90 (D); 123-96 Atty. Dennis R. Manzanal 10/F, Ramon Magsaysay Center Roxas Boulevard, Manila S i r : This refers to your letter dated December 27, 2005 requesting in behalf of your client, Maximo K. Ilusorio, one of the heirs of the late Potenciano Ilusorio (the "Decedent"), for an approval to file the estate tax return of the estate of the decedent and pay the estate tax due thereon at the office of the Commissioner of Internal Revenue (CIR). The facts as represented are as follows: On December 8, 2005, the Commissioner of Internal Revenue, through his authorized representative, issued Ruling No. DA-495-2005, recognizing that the settlement of the estate of the decedent has been burdened with serious difficulties. Such difficulties resulted from the fact that the immediate members of the Ilusorio family have filed close to two hundred (200) cases against each other. In particular, there are two (2) probate cases involving the decedent's estate, one of which is pending in the Regional Trial Court of Paraaque City, Special Proceedings (SP) No. 01-0140, and the other in the Regional Trial Court of Baguio City, S.P. No. 01-1067. The petitioner in the Paraaque case claims that Potenciano Ilusorio's residence was in Paraaque City while the petitioner in the Baguio case claims that his residence was in Baguio City. The issue of which of these two courts should take cognizance of the probate of Potenciano Ilusorio's Last Will and Testament, to the exclusion of the other, is currently pending resolution before the Supreme Court in the case entitled " Erlinda I. Bildner, et al. vs. Erlinda Ilusorio, et al ." G.R. No. 164252. The primary issue being litigated in the above-mentioned controversy is the subject of venue as determined by the actual residence of the decedent at the time of his death. The residence of the decedent is a highly contentious matter and, as evidenced by the manner by which such issue has been addressed by the heirs, it is possible that the filing of the estate tax return and the payment of the estate tax in either contested venues would spawn another series of complaint or oppositions. As the heirs are in disagreement as to where the estate tax return should be filed, it is your position that it would be to the best interest of all concerned if the filing of the estate tax return and the payment of estate tax due on the decedent's estate be made at a valid and neutral office which, in this case would be the office of the CIR. Thus, to stop the interest from accruing, your client, together with some heirs, intend to file a tentative or preliminary estate tax return soonest and pay the taxes due thereon. aIcHSC In reply thereto, please be informed that except in cases where the Commissioner of Internal Revenue permits, the estate tax return shall be filed and the estate tax paid with the Revenue District Officer, Collection Agent or any authorized Treasurer of the city or municipality in which the decedent was domiciled at the time of his death or if there is no legal residence in the Philippines, then with the Office of the Commissioner of Internal Revenue (Sec. 90 (D) of the Tax Code of 1997; Sec. 9(C), Rev. Regs. No. 2-2003). Such being the case and based on the aforestated justifiable reason, your request that the estate tax return of the estate of Potenciano Ilusorio be filed and payment of the estate tax due thereon be made at the office of the CIR is hereby approved. Your client therefore is advised to file the estate tax return and pay the corresponding taxes at Revenue District Office (RDO) No. 39, South, Quezon City, as the office of the CIR is under its jurisdiction. (Revenue Memorandum Circular No. 66-99) In connection therewith, the RDO concerned shall issue a letter to the RDOs where herein decedent may have been considered as domiciled at the time of his death confirming that the tax due on the transmission of his estate has been paid already and to further check if there might still be some properties registered in the name of the decedent which were not included in the estate tax return filed with the above RDO. Moreover, under Revenue Regulations No. 11-96 dated August 7, 1996 amending Revenue Regulations No. 13-85, as amended, as amplified by Revenue Memorandum Order No. 34-96, dated November 15, 1996 and further revised by Revenue Memorandum Order No. 66-99 dated August 9, 1999, regarding the preparation and issuance of Tax Clearance Certificate (TCL) [formerly Certificate Authorizing Registration (CAR)] for registration of real estate transactions in line with the computerized tax administration, the estate tax clearance shall be issued by the RDO of the revenue district where the decedent was domiciled or registered, regardless of the location of his properties. If the decedent is not registered, the executor/administrator or any of the heirs shall register the Estate of the decedent with the Revenue District Office in the place of residence of the decedent at the time of his death, and the TCL/CAR shall be issued by the RDO of said district office. (BIR Ruling No. 123-96 dated November 21, 1996 citing BIR Ruling 100-96 dated September 13, 1996) However, since in the instant case, the domicile of the decedent is not yet determined, the TCL/CAR may, therefore, be issued at RDO No. 39, South, Quezon City, but only upon verification by the RDOs where the decedent was considered domiciled that there are no other properties registered in the name of the decedent which may be properly included in his estate. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. DHECac Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service