BIR Ruling [DA-436-05]

October 21, 2005 BIR RULING [DA-436-05] Atty. Maria Victoria Mercado Sarmiento Km. 19 Amang Rodriguez Avenue Cor. M.L. Quezon St., Pasig City M a d a m : This refers to your letter dated September 30, 2005 requesting on behalf of your clients, the heirs of Pacita Pio de Roda Rey Hipolito, an extension of thirty (30) days from October 10, 2005 or until November 10, 2005 to file the Estate Tax Return of the decedent and an extension of two (2) years from October 10, 2005 or until October 10, 2007 to pay the full amount of the tax due on the transmission of the estate of the decedent to the heirs. It is represented that the decedent died in Toronto, Canada on April 10, 2005, at the age of 80 years old. She is survived by her spouse, Cipriano Sr.,and their children, namely: Emmanuel P. Rey Hipolito, Cipriano P. Rey Hipolito, Jr.,Ma. Generosa RH Laurico, Ma. Concepcion RH Tuason, Ma. Victoria RH Caballero, Francis P. Rey Hipolito and Ricofredo P. Rey Hipolito, all living abroad. The estate of the decedent appears to comprise of her conjugal share in three (3) parcels of land with improvement located in San Juan, Metro Manila. The decedent passed away a non-resident of the Philippines but retaining her citizenship. Since all the heirs reside abroad, in different locations, it takes some time to complete the extra-judicial settlement of the estate of the decedent. The heirs have not met since the wake and the coordination, communication and consensus among eight (8) heirs leaving in different states in North America, as well as arrangements for the documentation of their extra-judicial settlement of partition, has not been an easy task for Ma. Victoria RH Caballero, who acted as coordinator among the heirs. Moreover, the approximate tax liability is not insignificant and each heir will transmit funds from North America to complete the payment of the tax liability. Hence, this request for an extension of thirty (30) days within which to file the Estate Tax Return and an extension of two (2) years to pay the estate tax due thereon. In reply thereto, please be informed that under Section 90(B) and (C) of the Tax Code of 1997, estate tax return is required to be filed within six (6) months from the decedent's death, and in meritorious cases, a reasonable extension not exceeding thirty (30) days for filing the return may be granted by the Commissioner of Internal Revenue. 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 pursuant to Section 91(B) of the Tax Code of 1997. cDAITS Based on 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. Accordingly, the estate tax due on the estate of Pacita Pio de Roda Rey Hipolito may be paid up to two (2) years counted from October 10, 2005 or until October 10, 2007. On the other hand, under Section 90(C) of the Tax Code, a thirty-day extension is granted within which to file the estate tax return. Thus, considering that the last day for filing the estate tax return on the estate of Pacita Pio de Roda Rey Hipolito is on October 10, 2005, the period within which to file the same is hereby extended up to November 9, 2005. Moreover, in view of the above favorable action on your request for an extension of two (2) years within which to pay the estate tax, this Office has decided to forego the imposition of the surcharge and penalties on the estate tax due on the transmission of the estate of Pacita Pio de Roda Rey Hipolito. However, it shall be understood that the estate shall be liable for the corresponding interest that has accrued thereon up to the time of payment of the aforesaid estate tax pursuant to Section 249 of the Tax Code of 1997. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service