BIR Ruling [DA-494-06]

August 10, 2006 BIR RULING [DA-494-06] Section 90; DA-195-2003 Ms. Josette Sonia S. Holgado-Marcilla No. 35 Sta. Rosa Street, Bo. Kapitolyo, Pasig M a d a m : This refers to your letter dated January 10, 2006 requesting in behalf of the heirs of Francisco Santos Marcilla for an extension of time within which to file the estate tax return and pay the estate tax due thereon. It is represented that Francisco Santos Marcilla died on July 21, 2005 at St. Luke's Hospital in Quezon City; that the supporting documents needed in filing the Estate Tax Return have not been completed especially the receipts for the medical expenses; that you and your late husband have two minor children, and being a government employee, you are the only one responsible for their support; that you might not be able to meet the deadline for the payment of the estate tax; that you would also like to inquire if the Deed of Extrajudicial Settlement of the Estate has to be published or will the legal notice of the fact of the extrajudicial settlement suffice; that your late husband did not keep the official receipts of his dialysis sessions; that this involved a substantial amount that may be included in the medical expenses deductible from his estate; and that you would like to know if the official receipts which you can no longer locate can be replaced by the duplicate original of these receipts from the medical clinic where your husband had his dialysis. In reply, please be informed that under Section 90(B) and (C) of the Tax Code of 1997, the 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 exceed five 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. acSECT Based on the aforementioned justifiable reasons, your request for an extension is hereby granted. Accordingly, on the basis of the pay as you file system, payment of the estate tax may be made within two (2) years counted from the last day of the 6-month period of filing the return which is January 21, 2006 or until January 21, 2008, pursuant to Section 91(B) of the same Code as this must be done based on the "pay as you file" rule. Further, Rule 74 Section 1 of the Revised Rules of Court provides that: "SEC. 1. Extrajudicial settlement by agreement between heirs. . . . The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof." Based on the above Rule, the Deed of Extrajudicial Settlement of the Estate has to be published in a newspaper of general circulation and the Affidavit of the Publisher shall be attached to the Estate Tax Return. And lastly, since the original official receipts of the medical expenses incurred by your late husband cannot be located, the duplicate original of these receipts may be presented to substantiate such expenses pursuant to Rule 130 Section 4 of the same Rule. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service