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 ruling that the renunciation or waiver
by the late Pacita V. Villa of her right to inherit from the Estate of Oscar J. Villa, her deceased husband,
in favor of her son Jesus S. Villa is not subject to donor's tax imposed under Section 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 the 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 takes place and the same is added or incorporated to that of his co-
heirs, 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 1018 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 effectively took place in the latter's favor and the renounced share was
added or incorporated to his share. Undoubtedly, 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 Section 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 accordance with the schedule provided for
under Section 84 of the 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