Zuniega Olaso Macapundag & Salvador Law Offices

January 24, 2018 BIR RULING NO. 061-18 Section 85 of the National Internal Revenue Code of 1997, as amended; RA 6426; PD 1246; BIR Ruling No. 023-2012 Zuniega Olaso Macapundag & Salvador Law Offices Unit 103, 2/F First Capital Condominium (FCC) Bldg., 119 Rada (Thailand) St., Legaspi Village, Makati City Attention: AAA Gentlemen : This refers to your letter dated October 5, 2015 requesting that a ruling or authority be issued in favor of your clients, BBB and CCC , allowing them to withdraw their share on the deposits in their joint accounts with their deceased co-depositor DDD , at the Bank of the Philippine Islands, Science Park Cabuyao Branch, without having to pay the estate tax of their deceased co-depositor. It is represented that BBB, CCC, and DDD are Japanese nationals who are long term residents of the Philippines by virtue of Special Retiree Resident (SRRV) visas issued by the Philippine Retirement Authority; that on August 21, 2015, DDD died intestate; that when DDD died, she was already a widow and her only son EEE died ahead of her on April 9, 2005 at Calamba City, Laguna; that during the lifetime of the deceased, BBB and CCC, opened various accounts together with the deceased, at the Bank of the Philippine Islands, Science Park Cabuyao Branch, where each of them owns one third (1/3) of the Bank accounts under an "OR" joint account, more particularly described as follows: Account No. Balance Peso __________________ _______________ (PhP) Dollar _________________ _______________ (US$) Yen ___________________ _______________ (JPY) and that being senior residents and retirees who chose the Philippines to be their new home, BBB and CCC urgently need to withdraw from the accounts but the Bank refuses to allow them to withdraw/close the subject Peso, US Dollar, and Japanese Yen deposits unless there is a certification from the Bureau of Internal Revenue that the estate tax has been paid or that the estate is exempt from the payment of the said tax in compliance with Section 97 of the National Internal Revenue Code (NIRC) of 1997, as amended. In reply thereto, please be informed that pursuant to Section 85 of the National Internal Revenue Code (NIRC) of 1997, the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated. Moreover, interest on a deposit account maintained by two or more persons is deemed to be equally owned by them for income tax purposes. The same presumption may likewise apply for estate tax purposes. (BIR Ruling No. 023-2012 dated January 11, 2012) Thus, only one third (1/3) of the balance of the deposit should be reported for estate tax purposes pertaining to DDD, the decedent; and the two-thirds (2/3) portion of the balance of the said accounts shall not be included in the computation of the gross estate of the decedent. This shall also serve as authority for the aforementioned bank to release two thirds (2/3) of the balances in the joint accounts among BBB, CCC, and DDD. After the shares of BBB and CCC in the said bank accounts have been paid to them, the accounts shall cease to be "or" accounts and shall be converted to individual accounts in the name of DDD. The aforementioned bank is further required to submit reports to the Law Division, Bureau of Internal Revenue, National Office Building, that it has effected these changes within 30 days after the withdrawal by BBB and CCC of their share in said bank accounts. 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.) CAESAR R. DULAY Commissioner of Internal Revenue