BIR Ruling [DA-437-03]

December 3, 2003 BIR RULING [DA-437-03] Mr. Manuel P. Roxas, Jr. 112 Congressional Avenue Quezon City S i r : This refers to your letter dated February 14, 2003 stating that on January 8, 1987 an Extra-Judicial Settlement of Estate was executed among the surviving spouse, legitimate children and grandchildren of the late Manuel V. Roxas, Sr. who died on October 19, 1982; that at the time of the death of the decedent, he left several real properties located in Manila, Malabon, Metro Manila, and Bustos, Bulacan; that on August 24, 1989, a Deed of Partition was executed by the heirs whereby they mutually agreed to partition and adjudicate among themselves the aforesaid properties; that as one of the heirs, you were adjudicated the property covered by TCT No. 6290 located in Gov. Pascual Avenue corner Sisa Street, Tinejeros, Malabon, Metro Manila containing an area of 992 square meters; that on January 15, 1992, you sold the aforesaid property by virtue of a Deed of Absolute Sale in favor of Elvis C. Del Mundo for and in consideration of P1,438,400.00; that you used the proceeds of the sale to buy another property from Spouses Teodoro C. Bito, Jr., as evidenced by a Deed of Absolute Sale dated April 21, 1993, located at No. 22 Congressional Avenue Extension, Project 6, Quezon City and covered by TCT No. 79790 issued by the Registry of Deeds for Quezon City, to which a TCT No. 83060 was issued in your name as Manuel P. Roxas, Jr. married to Elvira M. Roxas; that on March 26, 2000, your wife, Elvira M. Roxas died leaving several properties, excluding the aforesaid property, as conjugal with a net taxable estate of P6,651,605.28; and that the heirs availed of the Voluntary Assessment & Abatement Program (VAAP) pursuant to Revenue Regulations No. 17-2002 and paid the estate tax on November 29, 2002 in the amount of P22,113.70 excluding the penalty. Based on the foregoing representations, you now request for an opinion that the above-mentioned property be considered as your exclusive property and therefore need not form part of the estate of the late Elvira M. Roxas for purposes of estate tax. In reply thereto, please be informed that Article 109 of the Family Code provides that the following shall be the exclusive property of each spouse: 1) That which is brought to the marriage as his or her own; 2) That which each acquires during the marriage by gratuitous title; 3) That which is acquired by right of redemption, by barter or by exchange with property belonging to only one of the spouses; and 4) That which is purchased with exclusive money of the wife or of the husband . (emphases supplied) CacEID A meticulous study of the purpose and spirit of the above-cited article disclosed that the exclusive property of each spouse may take the character of direct acquisition or acquisition by substitution. In the instant case, the property which you have acquired from the late Manuel V. Roxas, Sr. by virtue of an Extrajudicial Settlement of Estate is a direct acquisition and therefore should be considered as your exclusive property although acquired during the marriage as prescribed in the above-mentioned article of the Family Code. Thus, the property covered by TCT No. 6290 located at Governor Pascual Avenue corner Sisa Street, Tinejeros, Malabon, Metro Manila is your exclusive property. On the other hand, your subsequent acquisition of a property during the marriage, now covered by TCT No. 83060 issued by the Registry of Deeds for Quezon City from Teodoro C. Bito, Jr., after the sale of your property which you have from the late Manuel V. Roxas, Sr. with money belonging exclusively to you did not transform the said property from exclusive to conjugal property as the money paid to Teodoro C. Bito, Jr. did not come from the common or conjugal funds. DTaAHS WHEREFORE, this Office holds that property covered by TCT No. 83060 is considered as your exclusive property and consequently should not form part of the gross estate of your wife, the late Elvira M. Roxas. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group