BIR Ruling [DA-387-03]

October 28, 2003 BIR RULING [DA-387-03] Art. 1018 DA 251-99 Atty. Millard M. Manseguiao No. 71 Orbiter Street Moonwalk Village Las Pias City S i r : This refers to your letter dated October 18, 2003 requesting for a ruling that the waiver by Dolores S. Barcelona, the surviving spouses of the late Perfecto J. Barcelona, of her share in the inheritance in favor of her children, Dr. Edgardo S. Barcelona married to Alice Carlos and Josefina Barcelona married to Retired Col. Melchor M. Manseguiao, does not constitute donation and therefore not subject to donor's tax imposed under Section 98 of the Tax Code of 1997. It appears that on June 6, 2003, Perfecto J. Barcelona died intestate leaving as heirs his wife, Dolores S. Barcelona and two (2) legitimate children, Edgardo and Josefina; that at the time of his death, the deceased left several real properties covered by TCT No. S-104026 issued by the Registry of Deeds for Makati City and TCT Nos. DT-146673 and T-2951 issued by the Registry of Deeds for Nueva Ecija; that a Deed of Extra-Judicial Partition of the Estate with Waiver was executed by the above-named heirs, whereby Dolores S. Barcelona waived her undivided interest in the above-mentioned properties in favor of her co-heirs, Edgardo and Josefina; that on July 21, 2003, the estate tax due on the said estate had been paid in the amount of P189,668.00 as evidenced by the Estate Tax Return duly received by the Development Bank of the Philippines under BIR Tax Payment Deposit Slip with its machine validation; and that on August 20, 2003, a Certificate Authorizing Registration (CAR) was issued by the Revenue Region No. 8, Revenue District Office No. 48, West Makati. cIACaT 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 renouncer 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 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 a right of accretion. (Arts. 1018, 977, 969, New Civil Code) SUCH BEING THE CASE, this Office holds that the renunciation or waiver by Dolores S. Barcelona of her share in the estate of her late husband, Perfecto J. Barcelona, in favor of her children Edgardo S. Barcelona and Josefina Barcelona Manseguiao is not subject to donor's tax pursuant to Articles 1018, 1019 and 1021 of the Civil Code of the Philippines. (BIR Ruling No. DA251-99 dated April 23, 1999) 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.) MILAGROS V. REGALADO Assistant Commissioner Legal Service