Mr. Alfredo S. Ramos

June 8, 2009 BIR RULING [DA-(DT-034) 283-09] DA 333-07 Mr. Alfredo S. Ramos No. 23 Yakal Street Barangay Amihan, Project 3 Quezon City Sir : This refers to your letter dated March 27, 2009 stating that the late Romeo Ignacio Ramos, who died intestate on October 26, 2008 in Sta. Cruz, Laguna, left several real properties located in Laguna in co-ownership with his wife, Perla Samonteza Ramos, covered by TCT Nos. T-236610, T-235258, T-235259, T-235261, T-235263, T-243505, T-243506, T-243509, T-243508, T-243510, T-107718, T-107717, T-107717, T-107716, T-107726, T-107719, T-175069, T-175070, T-195287, T-226053, T-239540, T-238541, T-238547, T-238546, T-238545, T-238542, T-238543, T-235260 and unregistered properties bearing Tax Declaration Nos. 25-0010-01812, 25-0010-01814, 22-0008-00627, 22-0008-00624, 22-0008-00615 and 22-0008-00618; that he was survived by his wife, Perla Samonteza Ramos and legitimate children namely: Alfredo S. Ramos, Enrico S. Ramos and Wilma R. Lo; that on March 4, 2009, an Extra-Judicial Settlement of Estate with Waiver of Rights was executed by the above-mentioned heirs; and that the salient feature of the said deed states: "WHEREAS, We Enrico S. Ramos and Wilma R. Lo, hereby waive our interests, rights and claim over the above-mentioned real properties in favor of our mother, Perla S. Ramos and brother Alfredo S. Ramos . . . ." Based on the foregoing representations, you now request a ruling that the renunciation or waiver of inheritance by Enrico S. Ramos and Wilma R. Lo from the estate of their deceased father in favor of their mother, Perla S. Ramos, and brother, Alfredo S. Ramos, is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997. 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 renouncing heir 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, supra ) HDCTAc In the instant case, when the two legitimate children, namely: Enrico S. Ramos and Wilma R. Lo, waived their share in the inheritance, accretion effectively took place in their mother's and brother's favor as their co-heir and the renounced shares were added or incorporated to their mother and brother shares. Consequently, the waiver by Enrico S. Ramos and Wilma R. Lo of their respective shares, in the estate of their deceased father, in favor of Perla S. Ramos and Alfredo S. Ramos is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997. The above-mentioned stance is justified by the following ratiocination as held in BIR Ruling No. DA 089-08 dated February 13, 2008: "This is so because in legal succession accretion takes place in case of repudiation among heirs of the same degree. Undoubtedly, when the three (3) legitimate children renounced their share in the inheritance they did not donate the property/share to their mother, since the said property/share has never become their own." SUCH BEING THE CASE, this Office holds that the repudiation or waiver of inheritance by virtue of an Extra-Judicial Settlement of Estate with Waiver of Rights is not subject to donor's tax imposed in Section 98 of the Tax Code of 1997. 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.) GREGORIO V. CABANTAC Deputy Commissioner Legal & Inspection Group