Atty. Franc D. Asis

June 19, 2007 BIR RULING [DA-333-07] Atty. Franc D. Asis 8A, LPL Mansion 122 L.P. Leviste Street Salcedo Village, Makati City S i r : This refers to your letter dated April 24, 2007 requesting a ruling that the renunciation or waiver by your mother of her right to inherit from the estate of your late father, Leocadio de Asis, in your favor is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997, as amended. It is represented that on December 18, 2006, Leocadio de Asis, your father, died intestate leaving you and your mother, Liliana L. de Asis, as his compulsory heirs: and that on January 22, 2007, you and your mother executed an Extra-Judicial Settlement of Estate of the Late Leocadio de Asis with Waiver of Rights and Special Power of Attorney wherein you agreed to adjudicate the entire estate of your late father in your favor with your mother waiving all her rights and interest therein. In reply, please be informed that as a rule, when a person renounces/repudiates his/her 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 renouncer shall accrue to his co-heirs in the same proportion that they inherit pursuant to Articles 1018 and 1019 of the 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 right of accretion. (Arts. 1018, 977, 969, Civil Code). In the instant case, when your mother waived her share in the inheritance in your favor, accretion had effectively taken place and the renounced share was added or incorporated to your share. Undoubtedly, when your mother renounced her share in the inheritance, she did not donate the property which had never became hers. Such being the case, the renunciation is not subject to donor's tax imposed under Section 98 of the Tax Code, as amended. LLpr Moreover, the inheritance renounced by your mother is an additional inheritance to you. Consequently, the corresponding estate tax computed in accordance with the schedule provided for under Section 84 of the Tax Code shall be imposed upon transfer of the net estate in your favor. (BIR Ruling Nos. DA-251-99 dated April 23, 1999 and DA-093-04 dated March 1, 2004). This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Commissioner of Internal Revenue