Mr. Jorge B. Aquino

December 16, 2008 BIR RULING [DA-(ET-014) 545-08] Sec. 85; P.D. 69; BIR Ruling Nos. 114-80; 173-84 Mr. Jorge B. Aquino No. 280, Tomas Morato Ave. Quezon City Sir : This refers to your letter dated November 20, 2008 requesting confirmation of your opinion that the transmission of several real properties from the decedents Constancio S. Lucio and Florencio Lucio (son of Constancio S. Lucio) in favor of their surviving heirs, namely; (1) Dolores D. Lucio (wife of Constancio), (2) Felimon Lucio (son of Constancio S. Lucio), (3) Teresita Lucio-Caluag (daughter of Constancio S. Lucio), and the children of Florencio Lucio; (1) Rufina G. Lucio, (2) Vicente G. Lucio and (3) Amado Lucio, is not subject to the inheritance tax since the estate taxes due on the respective estates of Constancio S. Lucio and Florencio Lucio have already been paid. Consequently, the respective Certificate Authorizing Registration pertaining to the real properties included in the estate of Constancio S. Lucio and Florencio Lucio may be issued on the basis of the estate tax payments made. It is represented that Constancio S. Lucio died on March 4, 1985 in Los Angeles, California leaving his surviving spouse Dolores D. Lucio and children, Felimon and Teresita Lucio and Florencio Lucio; that estate tax due on the estate of Constancio S. Lucio has been paid under Payment Order Nos. B-7692283 dated April 4, 1986 and B-8299646 and Confirmation Receipt No. 3909465 both dated November 14, 1986; that the schedule of real properties of the estate of Constancio S. Lucio includes, among others, a parcel of land covered by Transfer Certificate of Title No. T-157638 located in Cut-cut, Pulilan, Bulacan with an area of 147,455 square meters; that on May 4, 1985, Constancio S. Lucio's son, Florencio Lucio died a resident of Daang Hari, Navotas, Metro Manila; that the estate tax due on the latter's estate has already been paid under Payment Order No. 8299645 and Confirmation Receipt No. 3909466 both dated August 14, 1986; that both estate tax payments for the estates of Constancio S. Lucio and Florencio Lucio were certified by the BIR on November 14, 1986 and October 17, 1986, respectively, duly signed by then Deputy Commissioner Romulo M. Villa, which states: "In view thereof, this Office will interpose no objection to the final adjudication and transfer of all real properties including improvements erected thereon, left by the deceased as described and listed in the attached Annex "A" from the name of the deceased to that of his legal heirs and/or beneficiaries." In reply, please be informed that the law in force at the time of the death of both Constancio S. Lucio and his son Florencio Lucio is Presidential Decree No. (P.D.) 1158 1 promulgated on June 3, 1977. Previously, P.D. No. 69 "Amending Certain Sections of the National Internal Revenue Code" was enacted by President Marcos effective on January 1, 1973 which expressly repealed "Rates of Inheritance Tax" as stated in Section 86 thereof. Said Decree retained the provision on Estate Tax which was amended by P.D. 1158 and may be found under Section 77 of Chapter I (Estate Tax), Title III (Estate and Donor's Taxes) of P.D. 1158, to wit: HaTSDA "SEC. 77. Rates of Estate Tax. There shall be levied assessed, collected and paid upon the transfer of the net estate as determined in accordance with Section 78 and 79 of every decedent, whether resident or non-resident of the Philippines, a tax based on the value of such net estate, as computed in accordance with the following schedules: xxx xxx xxx" Thus, at the time of the death of Constancio Lucio and Florencio Lucio in 1985, there was no more tax provision for inheritance tax, only estate tax. Hence, the estates of said decedents were liable for estate taxes only. Since the estate taxes of Constancio Lucio and Florencio Lucio have been duly paid and confirmed by the BIR which, per certification, interposed no objection to the final adjudication and transfer of all real properties to their legal heirs and/or beneficiaries, their estates are not anymore liable for inheritance taxes. Based on the foregoing, this Office hereby confirms your opinion that the transmission of the real properties from decedents Constancio S. Lucio and Florencio Lucio in favor of their surviving heirs is not subject to the inheritance tax, provided that said properties are listed in their respective Schedule of Real Properties included in their estates. Accordingly, the respective Certificate Authorizing Registration pertaining to the real properties included in the estate of Constancio S. Lucio and Florencio Lucio can now be issued on the basis of the estate tax payments made. 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 Footnotes 1. "A Decree to Consolidate and Codify All the Internal Revenue Laws of the Philippines".