Mrs. Gloria Salazar-Formarejo

July 3, 2007 BIR RULING [DA-360-07] 91 (B); RR 2-2003; DA-488-2006; DA-508-99 Mrs. Gloria Salazar-Formarejo Blk. 2, Lot 14, IWHA Village Dumoy, Toril, Davao City M a d a m : This refers to your letter dated June 4, 2007 requesting for an authority to pay the estate tax due on the estate of your late husband, Tomas Rodicol Formarejo, who died on February 5, 2007, in installment in accordance with Section 9 (F) of Revenue Regulations (RR) No. 2-2003 and to sell properties part of the estate in order to defray the estate tax liability. It is represented that the estate of Tomas Rodicol Formarejo has no available cash to settle its total estate tax liability and that the legal heirs, likewise, have difficulty in raising the amount. Hence, on behalf of the heirs, you are requesting that you will be allowed to sell portion of the estate and to pay the estate tax due thereon in installment. Moreover, in view of the possible delay in the payment of the estate tax, it is also your request that you will be allowed to file a tentative estate tax return and that the penalties, surcharge and interest imposed for late filing of the estate tax return and payment of the estate tax be waived. Furthermore, it is your request that the payment of the estate tax will be extended up to two (2) years reckoned from the expiration of the six-month period within which to pay the estate tax as provided for under Section 91 of the Tax Code and Section 9 (E) of RR No. 2-2003. THcaDA In reply, please be informed that under Section 91 (B) of the Tax Code of 1997, the payment of the estate tax or any part thereof shall be made upon the filing of the return or on such date as fixed if an extension is granted by the Commissioner, but in no case to exceed five (5) years in case the estate is settled through the courts, or two (2) years in case the estate is settled extrajudicially. On the other hand, Section 9 (F) of RR No. 2-2003 provides, viz.: "(F) Payment of the estate tax by installment. In case the available cash of the estate is not sufficient to pay its total estate tax liability, the estate may be allowed to pay the tax by installment and a clearance shall be released only with respect to the property the corresponding/computed tax on which has been paid. There shall, therefore, be as many clearances (Certificates Authorizing Registration) as there are as many properties released because they have been paid for by the installment payments of the estate tax. The computation of the estate tax, however, shall always be on the cumulative amount of the net taxable estate. Any amount paid after the statutory due date of the tax shall be imposed the corresponding applicable penalty thereto. However, if the payment of the tax after the due date is approved by the Commissioner or his duly authorized representative, the imposable penalty thereon shall only be the interest. Nothing in this paragraph, however, prevents the Commissioner from executing enforcement action against the estate after the due date of the estate tax provided that all the applicable laws and required procedures are followed/observed." Based on the foregoing and the aforestated justifiable reason, your request for an extension of time within which to pay the estate tax is hereby granted pursuant to Section 91 (B) of the Tax Code of 1997, as amended, and as implemented by Section 9 (E) of RR No. 2-2003. Accordingly, the estate tax due on the estate of Tomas Rodicol Formarejo may be paid up to two (2) years counted from August 7, 2007 or until August 7, 2009. On the other hand, your request that you will be allowed to file a tentative estate tax return for the estate of Tomas Rodicol Formarejo is hereby granted. aCcSDT Moreover, your request that you will be allowed to pay the estate tax in installment is hereby granted. In that connection, you are therefore directed to file together with the estate tax return, a running inventory of the properties of the estate every time you will make an installment payment. Finally, your request for an authority to sell properties part of the estate is hereby granted. In view thereof, the Revenue District Office (RDO) concerned is hereby authorized to issue a partial tax clearance (TCL) or Certificate Authorizing Registration (CAR) covering the properties sold so that the sale thereof can be effected and the proceeds thereof will be used for the payment of the estate tax liability of the Estate of the late Tomas Rodicol Formarejo. (BIR Ruling No. DA-488-2006 dated August 9, 2006 citing DA-580-99 dated October 6, 1999) Please be guided accordingly. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service