BIR Ruling [DA-495-04]

September 16, 2004 BIR RULING [DA-495-04] 1018, 977 969 Civil Code DA 143-01 Ms. Gilberta Antonio Bascara 10 V. Luna Road, Diliman Quezon City M a d a m : This refers to your letter dated August 30, 2004 stating that Gilberta Antonio, Antonio Antonio, Arsenio Antonio, Jr., and Aileen Nieves Antonio, all surnamed Bascara, are the sole heirs of the late Arsenio Crespo Bascara who died intestate on April 21, 2003 in Quezon City; that the deceased at the time of his death, left one-half ownership of certain real properties together with the improvements thereon covered by TCT Nos. T-37706, RT-43649(178732) PR-30392, 24325, 38743, 201587, 618624, 24325 and 187943, as well as certain personal properties which include stockholdings in Petron Corporation, Manila Electric Company and San Miguel Corporation; that on October 11, 2003, the heirs executed an Extra-Judicial Settlement of Estate of Arsenio Crespo Bascara, whereby the above-named parties agreed to divide, adjudicate, waive and transfer the aforesaid real and personal properties in the following manner: To Gilberta Antonio Bascara (1) TCT No. T-37706 together with the improvements thereon; (2) RT-43649(178732) PR-30392 together with the improvements thereon; (3) One-fourth (1/4) share of the parcel of land together with the improvements thereon covered by TCT no. 24325 of the Register of Deeds of Quezon City (thereby making her total share of the land and all the improvements thereon at three-fourth (3/4) after adding her 1/2 share of the conjugal partnership with the deceased; (4) TCT No. 38743 together with the improvements thereon; (5) TCT No. 201587 together with the improvements thereon; (6) TCT No. 618624 together with the improvements thereon; (7) All shares and certificates of stock, including those in Petron Corporation, Manila Electric Company and San Miguel Corporation. To Antonio Antonio Bascara (1) One-fourth (1/4) share of the parcel of land together with the improvements thereon covered by TCT No. 24325; To Aileen Nieves Antonio Bascara (1) The parcel of land together with the improvements thereon covered by TCT No. 187943 issued by the Registry of Deeds for Manila (Lot Nos. 27 and 28, Sub-Block 9 of the subd. Plan Pcs-2202, both being a portion of Lot No. 1 Block No. 2998 of the Cadastral Survey of the City of Manila, GLRC Cad. Rec. No. 271). Based on the foregoing representations, you now request for a ruling on the tax consequences of the renunciation and waiver of one of the heirs, Arsenio A. Bascara, Jr., in favor of the other heirs as contained in an Extra-Judicial Settlement of Estate executed on October 15, 2003. 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) In the instant case, when one of the children of the deceased, Arsenio Antonio Bascara, Jr., waived his share in the inheritance in favor of his mother, Gilberta Antonio Bascara and other siblings, Antonio and Aileen, accretion had effectively took place in the latter's favor and the renounced share was added or incorporated to the latter's (Gilberta, Antonio and Aileen) shares. Undoubtedly, when Arsenio Antonio, Jr., renounced his share in the inheritance, he did not donate the property which had never become his. Such being the case, the renunciation is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997. SDTIaE However, the inheritance renounced by Arsenio Antonio, Jr., is an additional inheritance to Gilberta, Antonio and Aileen, all surnamed Basacara. Consequently, the corresponding estate tax computed in accordance with the schedule provided for under Section 84 of the same Code shall be imposed upon transfer of the net estate to Gilberta, Antonio and Aileen, all surnamed Bascara. ( BIR Ruling No. DA143-04 dated August 30, 2001 ) 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group