Bir Ruling [Da 251 99]

BIR RULING [DA-251-99] SGV & Co. 6760 Ayala Avenue 1226 Makati City Attention: Atty. E. C . Alcantara Gentlemen : This refers to your letter dated August 21, 1998 requesting for a r uling that the renunciation or waiver by the late Pacita V. Villa of her right to inherit from t he Estate of Oscar J. Villa, her dec eased husband, in favor of her son Jesus S. Villa is not subject to donor's tax imposed under S ection 98 of the Tax Code of 1997. aisadc It is represented that on November 9, 1961, Oscar J. Villa died intestate leaving Pacita V. Villa, surviving spouse, and Jesus J. Villa, legitimate son, as his sole and compulsory heirs; and that on March 15, 1993, Pacita V. Villa and Jesus S. Villa executed an Extra-Judicial Settlement of Estate wherein t he parties agreed to adjudicate the entire Estate of the late Oscar J. Villa to Jesus S. Villa with Pacita V. Villa waiving all her rights and interest therein. In reply, please be informed that as a rule, when a person renounces/repudiates his part of the inheritance, the right of accretion accret ion takes place and the same is added or incorporated to that of his coheirs, 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 Article 1 018 and 1019 of the New 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 a right of accretion. (Arts. 1018, 977, 969, New Civil Code). In the instant case, when Pacita V. Villa waived her share in the inheritance in favor of the legitimate son, Jesus S. Villa, accretion had effec tively took place in the latter's favor and the r enounced share was added or incorporated to his share. U ndoubtedly, when the surviving spouse renounced her share in the inheritance, she did not donate the property which had never became hers. Such being the case, the renunciation is not subject to donors tax imposed under S ection 98 of the Tax Code. Moreover, the inheritance renounced by Pacita V. Villa is an additional inheritance to Jesus S. Villa. Consequently, the corresponding estate tax computed in ac cordance with the schedule provided for under Section 84 of t he same Tax Code, shall be imposed upon transfer of the net estate to Jesus S. Villa, (BIR Ruling No. 65-092 dated August 20, 1965) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. cdasia Very truly yours, (SGD.) BEETHOVEN L. RUALO

Commissioner Bureau of Internal Revenue