Mr. John Paul M. Sarmenta

July 23, 2009 BIR RULING [DA-(DT-039) 396-09] DA-251-99; DA-093-04; DA-387-03; DA-495-04; DA-561-06 Mr. John Paul M. Sarmenta 100 Sampaguita Avenue Mapayapa Village 1 Diliman, Quezon City Sir : This refers to your letter dated June 9, 2009 stating that your mother Teresita B. Macaspac-Sarmenta died intestate on April 3, 2008 in Quezon City; that at the time of her death she was an absolute owner of a parcel of land together with the improvements thereon located at 105 Mapayapa Village 1, Diliman, Quezon City, covered by TCT No. 124139 consisting of 401 square meters; that on September 29, 2008, a Deed of Extra-Judicial Settlement of Estate with Waiver of Rights was executed by Ceferino Q. Sarmenta and John Paul M. Sarmenta which was published in Manila Bulletin for three (3) consecutive weeks dated October 29, November 5 and 12, 2008; and that in the said Deed of Extra-Judicial Settlement of Estate, your father, Ceferino Q. Sarmenta, waived his rights and interest over the said property in your favour. Based on the foregoing representations, you now request for an opinion that the waiver of rights over the said property by your father in your favour by virtue of an Extra-Judicial Settlement of Estate is not subject to donor's tax. In reply thereto, please be informed that as a rule, when a person renounces/repudiates his/her 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 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 right of accretion. (Arts. 1018, 977, 969, Civil Code). In the instant case, when your father waived his share in the inheritance in your favor, accretion had effectively taken place and the renounced share was added or incorporated to your share. Undoubtedly, when your father renounced his share in the inheritance, he did not donate the property which had never became his. Such being the case, the renunciation is not subject to donors tax imposed under Section 98 of the Tax Code, as amended. Moreover, the inheritance renounced by your father is an additional inheritance to you. Consequently, the corresponding estate tax computed in accordance with the schedule provided for under Section 84 of the Tax Code shall be imposed upon transfer of the net estate in your favor. (BIR Ruling Nos. DA-251-99 dated April 23, 1999 and DA-093-04 dated March 1, 2004). 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service