BIR Ruling [DA-258-05]

June 16, 2005 BIR RULING [DA-258-05] 98; DA 387-03 Ms. Fides S.C. Asensio No. 1 Meralco Line Narra Street, Monte Vista Subdivision Barangka, Marikina City M a d a m : This refers to your letter dated September 6, 2004 stating that the late Manuel D. Asensio died intestate on December 21, 2001, survived by his wife, Fides S.C. Asensio, and legitimate children namely Dennis S.C. Asensio and Manuel S.C. Asensio; that at the time of his death he left, together with his wife, several real properties, more particularly described as follows: TCT/CCT No. Area (sq. m.) Registry of Deeds 137811 727 sq. m. Marikina City 30494 25.32 sq. m. Makati City 30499 12.50 sq. m. Makati City 69449 48.90 sq. m. Makati City 69450 12.50 sq. m. Makati City 74197 12.50 sq. m. Makati City that a Partition Agreement with Waiver will be executed by the above-named heirs so that the existing community of ownership over the above-mentioned properties will be terminated and the respective shares and participation of the heirs determined and adjudicated; that however, Fides S.C. Asensio, as the surviving spouse, will waive her rights over the said properties in favor of her two (2) sons; and that pursuant to said Agreement, the parties will mutually and voluntarily agree to partition and adjudicate to themselves the said properties in equal shares. In connection therewith, you now request an opinion as to whether or not the renunciation and waiver of one of the heirs, Fides S.C. Asensio, of her share in the inheritance in favor of the other heirs is subject to donor's tax imposed under Section 98 of the Tax Code of 1997. In reply thereto, 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 denouncer shall accrue to his co-heirs in the same proportion that they inherit pursuant to Articles 1018 and 1019 of the New Civil Code of the Philippines. In the instant case, when Fides S.C. Asensio waives her share in the inheritance in favor of her two (2) children, accretion will effectively take place in the latters' favor and the renounced share will be added or incorporated to their share. Undoubtedly, when the surviving spouse renounces her share in the inheritance, she did not donate the property which had never become hers. Such being the case, the renunciation is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997. (BIR Ruling No. DA-387-03 dated October 28, 2003) CDHacE 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. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group