BIR Ruling [DA-357-00]

October 18, 2000 BIR RULING [DA-357-00] The Heirs of Agapito Simpliciano, et al. 12 Fabiana de la Rosa St., Loyola Heights Quezon City Attention: Mauro C . Simpliciano Attorney-in-Fact Gentlemen : This has reference to your letter dated September 15, 2000, requesting for abatement of penalties on the estate tax due from five estates (Agapito V. Simpliciano, Luis C. Simpliciano), herein referred to as the Simpliciano Estates. It is represented that all the ricelands comprising the Simpliciano Estates located at Muoz, Nueva Ecija fall under the Comprehensive Agrarian Reform Program (CARP) of the government; that at present the heirs are in the process of satisfying all requirements prior to the release of their claim for compensation for the Operation Land Transfer scheme of the government's CARP; that one of such requirements is the submission of the titles to the properties in the name of the living heirs of the above five (5) decedents; that the delays in the filing of the estate tax returns and the payment of the estate taxes due were caused by an issue on the valuation of the gross estate, that is, whether to use the market value of the ricelands or the compensation therefor under the agrarian reform law which remained unsettled for a long time; that an officer at the concerned revenue district office initially computed the combined estate tax liabilities at P889,482.70, inclusive of penalties; that you requested the Land Bank of the Philippines (LBP) to deduct from the proceeds of your claim the payment for the estate taxes, to which LBP agreed; that unfortunately though, the cash for release totalling P313,336.93 using the Landbank formula of 10% cash and 90% bonds, fall short of the amount of the combined estate tax liabilities; and that since the cash portion of the payment is just sufficient to cover the basic estate tax due, you are prompted to request for the condonation of all penalties accruing due to late payment of taxes. IHSTDE In reply, please be informed that in view of the difficulty in determining the value of the gross estates of the above decedent whether to use the market value of the ricelands or the compensation pegged by the government under the agrarian reform laws, your request for the waiver of the surcharges and penalties for late payment of the estate taxes due is hereby granted, but you are liable to pay the corresponding interest from the date prescribed for payment until the amount is fully paid, except that of the Estate of Agapito V. Simpliciano which carries a maximum interest period of three (3) years. The concept of succession is for the heirs to succeed over the properties and at the same value placed thereon at the time of death. Since the heirs are not receiving the same value of properties as included in the Simpliciano Estates, considering that the compensation initially pegged by the government is considerably lower than their market values, the foregoing assessment appears to be unjust and excessive which can be the basis for abatement of the 25% surcharge and compromise fees pursuant to the provisions of Section 204(B) of the Tax Code of 1997. In view thereof, you are hereby advised to pay the basic taxes, together with the corresponding interest, within ten (10) days from your receipt hereof in full settlement of your estate tax liabilities on the transmission of the properties comprising the said estates. This ruling is issued on the basis of the foregoing representations. 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.) DAKILA B. FONACIER Commissioner of Internal Revenue