BIR Ruling [DA-282-98]

July 1, 1998 BIR RULING [DA-282-98] MEMORANDUM TO: Ms. Myrna E. Sobremonte Chief, Accounting Division This refers to your letter dated February 6, 1998 requesting clarification as to the proper distribution of the retirement benefits of the late Jose P. Gapas, who availed of the optional retirement on February 1, 1997 and who died on July 19, 1997, taking into consideration the Renunciation of Inheritance executed by his first wife, Gloria L. Gapas. cdtech Based on the records of the Personnel Division, the following persons are the designated heirs of the late Jose P. Gapas: 1. Jocelyn C. Gapas wife 2. Joselito L. Gapas son 3. Maria Victoria L. Gapas daughter 4. Josephine C. Gapas daughter Please recall that the first wife of the late Jose P. Gapas, Gloria L. Gapas, filed an Action for Divorce on June 13, 1969 in the District Court of the Virgin Islands, USA; that on March 22, 1996, the late Jose P. Gapas married Jocelyn S. Cruel in Sta. Ignacia, Tarlac, Tarlac; and that on November 12, 1997, Gloria L. Gapas, the first wife executed a Renunciation of Inheritance of whatever retirement benefits she might be entitled to receive in favor of her children with the late Jose P. Gapas, namely: Joselito L. Gapas and Maria Victoria L. Gapas. In reply thereto, please be informed that a foreign divorce between Filipino citizens sought and decreed after the effectivity of the New Civil Code (R.A. No. 386) is not entitled to recognition as valid in the Philippines and neither is the marriage contracted with another party subsequently to the foreign decree of divorce entitled to validity (Tenchavez vs. Escano, 15 SCRA 355). Accordingly, even if a decree of divorce on the Action for Divorce filed by the first wife, Gloria L. Gapas, on June 13, 1969 had been granted by the District Court of the Virgin Islands, USA, the said decree of divorce is not valid in the Philippines. Thus, the first marriage still subsists. The second marriage which was contracted during the subsistence of the first marriage is therefore null and void. Article 41 of the Family Code states: casia "ARTICLE 41. A marriage contracted by any person during the subsistence of a previous marriage shall be null and void . . ." Such being the case, Josephine C. Gapas, who was born out of Jose P. Gapas' illicit union with Jocelyn S. Cruel, is considered illegitimate, and as such the retirement benefits should be divided in the following proportions: (1) the share of Gloria L. Gapas shall be equal to the share of one legitimate child, meaning that she and her children with Jose P. Gapas shall receive equal shares; (2) the illegitimate child shall receive an amount equal to one-half of the share of one legitimate child pursuant to Article 176 of the Family Code. On the other hand, Jocelyn S. Cruel is not entitled to any share in the estate of the late Jose Gapas pursuant to Article 739(1) of the Civil Code of the Philippines. In view of the fact that Gloria L. Gapas executed a Renunciation of Inheritance in favor of her children with the late Jose P. Gapas, her share shall be divided equally between the two legitimate children, namely: Joselito L. Gapas and Maria Victoria L. Gapas. Furthermore, 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 such reason there is always a right of accretion among them, unlike in testamentary succession where there may or may not be a right of accretion (Arts. 1018, 977, 967, New Civil Code). However, if the renunciation by an heir or heirs is made in favor of one or more heirs but not all the other heirs, the act of renunciation, is in effect an act of disposition inasmuch as the benefits thereof are not enjoyed by everybody but by one or more heirs (Arts. 1050, 1051, 1016, New Civil Code). Such being the case, the renunciation by Gloria L. Gapas in favor of her children with the late Jose P. Gapas, namely: Joselito L. Gapas and Maria Victoria L. Gapas shall be subject to the donor's tax imposed under then Section 91 of the Tax Code, as amended. cdta Please be guided accordingly. (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)