Mr. Oscar S. Labrador, CPA

November 4, 2009 BIR RULING [DA-(DT-061) 643-09] Sec. 98; DA-251-99; DA-093-04; DA-143-04; DA-291-06; DA-003-07 Mr. Oscar S. Labrador, CPA 1413 Batangas St., Sta. Cruz Manila Sir : This refers to your letter dated May 4, 2009 requesting, in effect, for a ruling that the renunciation or waiver of rights made by majority of the heirs of deceased Tan Lian Shiong is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997, as amended. STaIHc It is represented that Tan Lian Shiong died on October 11, 2006 and left as compulsory heirs his widow Loo Sui Kien, his children, Henry Loo Tiat Kiong, George Loo Tiat Hiong, Betty Loo Asuncion, Andrew Loo Tiat Kiong, Charlie Loo Tiat Liu, Eddie Loo Tiat Eng. By his children he has 15 grandchildren, namely: Roselyn Grace Go Loo, Kevin Go Loo, John Derrick Ti Loo, Anne Charisse Ti Loo, Carla Tricia Ti Loo, Loucille Suarez Loo, Michael Suarez Loo, Kristofferson Suarez Loo, Charles Patrick Loo, Lyndon Timothy Edward Go Loo, Leonard Christian Go Loo, Louie Alfred Go Loo, Camille Ann Loo Asuncion, Althan John Loo Asuncion, Aaron John Loo Asuncion. In an extrajudicial settlement signed by the above named parties, the widow, all the children and grandchildren, except John Derrick Loo, waived/renounced their individual shares into the estate left by the decedent and thereupon John Derrick Loo became the sole beneficiary of the net estate of the decedent, consisting of a parcel of land covered by Transfer Certificate of Title No. 22745 (208531) PR-25913 of the Registry of Deeds of Quezon City, in his own right. It is your view that John Derrick Loo inherited the estate of the decedent "in his own right", meaning that as second degree compulsory heir there is no other condition such as donative intent to entitle John Derrick Loo to the inheritance, he being already entitled to it by legal succession. In this regard, you are requesting a ruling that the transmission of the net estate of decedent Tan Lian Shiong to John Derrick Loo should not be subject to the donor's tax imposed under Section 98 of the Tax Code of 1997, as amended. In reply, 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 the co-heirs, co-devisees or co-legatees. The share of the one who renounces his part of the inheritance 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 the instant case, when the surviving wife, Loo Sui Kien, her children with the decedent, namely: Henry Loo Tiat Kiong, George Loo Tiat Hiong, Betty Loo Asuncion, Andrew Loo Tiat Kiong, Charlie Loo Tiat Liu, and Eddie Loo Tiat Eng; and the grandchildren, namely: Roselyn Grace Go Loo, Kevin Go Loo, Anne Charisse Ti Loo, Carla Tricia Ti Loo, Loucille Suarez Loo, Michael Suarez Loo, Kristofferson Suarez Loo, Charles Patrick Loo, Lyndon Timothy Edward Go Loo, Leonard Christian Go Loo, Louie Alfred Go Loo, Camille Ann Loo Asuncion, Althan John Loo Asuncion, Aaron John Loo Asuncion, except for John Derrick Ti Loo, waived their shares in the inheritance, accretion had effectively taken place in favor to the heir who did not renounce his share, in this case, to the only remaining heir, John Derrick Ti Loo. Consequently, the entire estate of herein decedent shall accrue to him. Undoubtedly, when the surviving wife and the other co-heirs renounced their shares in the inheritance, they did not donate the property which had never become theirs. Such being the case, the renunciation/waiver of rights is not subject to donor's tax imposed under Section 98 of the Tax Code of 1997, as amended. Consequently, the corresponding estate tax computed in accordance with the schedule provided for under Section 84 of the same Tax Code, shall be imposed upon transfer of the net estate to John Derrick Loo. (BIR Ruling Nos. DA-251-99 dated April 23, 1999, DA-093-04 dated March 1, 2004, DA-143-04 dated August 30, 2004, DA-291-06 dated May 3, 2006 & DA-003-07 dated January 5, 2007) aTcSID 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service