Conjugal Property Computed Separately for Estate Tax Purposes

June 17, 1999 BIR RULING NO. 078-99 078-99 Mr. Manuel N. Najera 1916 P. Margal Sampaloc, Manila S i r : This refers to your letter dated May 31, 1999 requesting for a ruling that the parcel of land together with the improvements thereon classified as conjugal property of the late Emigdio N. Najera, Sr. and Rosalina N. Najera be computed separately for estate tax purposes. It appears that the late Emigdio N. Najera, Sr. and Rosalina N. Najera died intestate in Agno, Pangasinan on December 1, 1986 and May 16, 1997, respectively; that both estates have not filed estate tax returns and paid the estate tax due thereon; that the only property left by the decedents as certified to by the Office of the City Assessor dated May 12, 1999, was a parcel of land together with the improvements thereon located at No. 8 Calle Real, Real Village No. I, Tandang Sora, Quezon City covered by TCT No. 158889 and Tax Declaration No. D-122-07509; and that on March 8, 1997, a Deed of Extra-Judicial Settlement was executed by and among the ten (10) surviving heirs of the decedents adjudicating among themselves the aforesaid property in equal shares of 1/10 share on the property for each heir. In reply, please be informed that Article 116 of the Family Code provides, to wit: "ART. 116. All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved." It is clear from the above-cited article that indeed the aforestated parcel of land covered by TCT No. 158889 and registered in the name of both spouses, the late Emigdio N, Najera, Sr. and Rosalina N. Najera, in conjugal property having been acquired during the marriage. Following the rule then that proof of acquisition of the property during the marriage suffices to render the statutory presumption operative, it seems clear enough that the parcel of land covered by the Deed of Extra-Judicial Settlement pertains to conjugal partnership of the late Emigdio N. Najera, Sr. and Rosalina N. Najera. Accordingly, upon the death of the late Emigdio N. Najera, Sr. on December 1, 1986 only one-half of the property described therein shall form part of his gross estate for purposes of determining his net estate subject to estate tax which is governed by the statute in force at the time of his death (26 R.C.L., p. 206, 4 Cooley on Taxation) and based on the value of the property at the time of his death. (Sec. 78 of the Tax Code, as amended) It needs no emphasis to point out that under Article 996 of the Civil Code of the Philippines provides: "ART. 996. If the widow or widower and legitimate children or descendants are left, the surviving spouse has in the succession the same share as that of each of the children." It is clear from the foregoing article that upon the death of the decedent, the share of the surviving spouse should always be computed in relation to the share of their children, i.e., the surviving spouse should always be considered as one child in the division of the testate estate. Consequently, upon the death of the late Emigdio N. Najera, Sr. his wife, Rosalina N. Najera was entitled to a share equal to the share of his children from his estate. In so doing, the heirs of the late Rosalina N. Najera should include from her gross estate, her one-half part of the property, being a pro-indiviso owner of the property covered by the Deed of Extra-Judicial Settlement as well as her share in the estate of the late Emigdio N. Najera, Sr. In view of the foregoing, the Estates of Emigdio N. Najera, Sr. and Rosalina N. Najera should be computed separately for estate tax purposes in accordance with the statute in force at that time. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue