BIR Ruling No. 455-93 Nov 19 1993

November 19, 1993 BIR RULING NO. 455-93 RENUNCIATION BY WIFE OF PROPERTIES INHERITED FROM HUSBAND IN FAVOR OF FIRST-BORN GRANDCHILDREN — TAX CONSEQUENCES 91 000-00 455-93 Mr. Pedro G. Asuncion 606 Gen. Malvar, Malate Manila This refers to your letter dated July 20, 1992 stating that an extrajudicial settlement was executed on December 23, 1968 by Mrs. Paciencia G. Asuncion and her children wherein it is shown that Mrs. Paciencia G. Asuncion inherited certain properties from her deceased husband, the late Felipe F. Asuncion; that she, however, renounced her inheritance of the said properties including that of her conjugal share in the properties left by her deceased husband in favor of her first-born grandchildren; as shown in a supplemental/amendatory extrajudicial settlement which she and her children executed on March 25, 1971 and notarized on January 25, 1973; that Mario G. Asuncion and his first-born cousins were the recipients or beneficiaries of the said properties of their grandmother; that said beneficiaries would now like to transfer and register the said properties in their names; that Mrs. Paciencia G. Asuncion availed of the Tax Amnesty under P.D. Nos. 23, 157 and 431, respectively, and that based on the foregoing, you are of the opinion that the renunciation of Mrs. Paciencia G. Asuncion of her inheritance of the said properties in favor of Mario G. Asuncion and his first-born cousins does not render her liable for any tax since the renunciation of her share in the inheritance does not tantamount to a gift considering that when she renounced her inheritance of the said properties in favor of her first-born grandchildren, the said properties became the properties of the latter (grandchildren) as their additional inheritance and not a donation from her which would render her liable to pay the donor's tax; and that for purposes of registering said properties a BIR clearance is not necessary since the supplemental/amendatory extrajudicial settlement or tax payment receipt or certification or the ruling of this Office to this effect would suffice. prll Based on the foregoing representation, you now in effect request for a ruling on the following queries: "1) Is Mrs. Paciencia G. Asuncion liable for any tax for renouncing her share or inheritance in favor of her first-born grandchildren? "2) If she is liable at all, would her availment of the tax amnesty cover up her tax obligations? "3)

Is a BIR clearance necessary for purposes of registering said properties?

In reply, please be informed that 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 a right of accretion among them, unlike in testamentary succession where there may or may not be a right of accretion (Arts. 1018, 977, 967, New Civil Code). However, if the renunciation by an heir or heirs is made in favor of one or more heirs but not all the other heirs, the act of renunciation is in effect an act of disposition inasmuch as the act of disposition and the benefits thereof are not enjoyed by everybody but by one or more heirs (Arts. 1050, 1051, 1016, New Civil Code). Accordingly, since the renunciation by Mrs. Paciencia G. Asuncion of the properties she inherited her late husband, Felipe F. Asuncion in favor of their first-born grandchildren who are not her co-heirs but are heirs of different degree as that of Mrs. Paciencia G. Asuncion as well as the disposition of her conjugal shares in said properties in favor of the same first-born grandchildren were made out of pure liberality on the part of Mrs. Asuncion, she shall be subject to the donor's tax imposed under then Section 108 (now Section 91) of the Tax Code, as amended, on such renunciation or disposition of properties. Moreover, the availment of Mrs. Paciencia G. Asuncion of the tax amnesties under Presidential Decree Nos. 23, 157 and 631 as implemented respectively by Revenue Regulations Nos. 15-72, 3-73 and 1-75 did not relieve her of her donor's tax liability on the aforesaid donation she made in favor of his first-born grandchildren as contained in the supplemental/amendatory extrajudicial settlement she and her children executed on March 25, 1971, considering that the tax amnesties under the aforesaid Presidential Decrees do not include tax liabilities arising from the disposition or transfer of property by reason of death or by donation [Sec. 4, Revenue Regulations No. 1-75, Sec. 1 & Sec. 2(a), Revenue Regulations No. 15-72, Sec. 1, Revenue Regulations No. 3-73]. Furthermore, under Section 49(a)(4) of the Tax Code, as amended, no registration of any document transferring real property shall be effected by the Registry of Deeds unless the Commissioner of Internal Revenue or his duly authorized representative has certified that such transfer has been reported, and the tax imposed under the Tax Code, if any, has been paid. Hence, a BIR clearance is necessary for purposes of registering the properties in the name of the first-born grandchildren of Mrs. Paciencia G. Asuncion as a consequence of the donation she made in their favor. cdta LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue