BIR Ruling [DA-589-04]

November 22, 2004 BIR RULING [DA-589-04] Renunciation/Waiver 105-99; DA-573-99 Ubano Ancheta Sianghio & Lozada 5/F, COCOFED Building, 144 Amorsolo Street Legaspi Village, Makati City Attention: Atty. Maria Teresa S. Sianghio Gentlemen : This refers to your letter dated November 18, 2003 stating that Leona C. Oquias died on November 28, 2000 without any will at the age of 83; that she left a parcel of land situated in Talon, Las Pias City and another parcel of land with improvements situated in Tondo, Manila; that she left no debt; that she is survived by her nine (9) children, namely: Angelina O. Westwater, Trinidad O. Buna, Josefina O. Aruta, Felixberto C. Oquias, Renato C. Oquias, Nicanor C. Oquias, Hilario C. Oquias, Manolito C. Oquias and Ricardo C. Oquias; that a Deed of Extrajudicial Settlement and Partition of the Estate among the Heirs was executed by her children in 2003; that in the said deed, Angelina O. Westwater, Trinidad O. Buna, Josefina O. Aruta, Felixberto C. Oquias, Renato C. Oquias, Nicanor C. Oquias, Hilario C. Oquias and Manolito C. Oquias, who are all citizens of Canada, except for Trinidad O. Buna, who is an American citizen, renounced their rights over their respective share in the estate in favor of their only remaining Filipino brother, Ricardo C. Oquias; and that based on the foregoing, you are requesting for a ruling whether all the sisters and brothers of Ricardo C. Oquias, who renounced all their rights over their respective share in the estate of their late mother to the effect that the entire estate will be wholly inherited by Ricardo, are liable for donor's tax. In reply thereto, please be informed that 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 a right of accretion among them, unlike in testamentary succession where there may or may not be a right of accretion (Arts. 1018, 977, 967, Civil Code of the Philippines). However, if the renunciation by an heir or heirs is made in favor of one or more heirs but not all the other heirs, the act of renunciation is in effect an act of disposition inasmuch as the act of disposition and the benefits thereof are not enjoyed by everybody but by one or more heirs (Arts. 1050, 1051, 1016, Civil Code). Considering that in the instant case, when the above-mentioned heirs waived their corresponding shares in the estate of their mother in favor of the remaining heir, Ricardo C. Oquias, accretion had in fact taken place and the renounced shares were added or incorporated to the share of Ricardo C. Oquias. Accordingly, when the co-heirs of Ricardo C. Oquias renounced their shares in the inheritance, they did not donate property for the same never became their own. Such being the case, the foregoing renunciation of inheritance by the co-heirs is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997 (BIR Ruling Nos. 105-99 dated July 13, 1999; DA-573-99 dated October 6, 1999). Needless, the estate tax return still has to be filed and the corresponding estate taxes, if any, paid. ADCEaH 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, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group