January 5, 2000 BIR RULING NO. 010-00 Sec. 86 (A)(4) 000-00 010-2000 Mr.

Luis Catriz Taa 534 Third Street. Sta. Mesa Manila Sir: You stated in your letter dated February 1, 1999 that your cousin bought a lot in 1957 and titled it in his name when he was still single; that in 1964 he got married in the church; that the couple (husband and wife) constructed a house in 1967 on the said lot where they stayed and lived up to the time of his death in May, 1998; that the couple are childless; and that the couple had not agreed on a property regime to govern them prior to the celebration of their marriage. cda In view of the foregoing, you now pose the following queries: 1. Who is the legal heir(s) of the property? 2. Is the property conjugal or exclusive? In reply, please be informed that since the couple got married in 1964, the provisions of the old Civil Code shall govern them. Under Article 119 of the same Code, relative community or conjugal partnership of gains shall govern the property relations between husband and wife in the absence of marriage settlement. Such being the case, the property regime of the couple shall be governed by relative community or conjugal, partnership of gains. The lot is a capital property of your cousin the same having been brought to the marriage as his own using his exclusive money prior to marriage pursuant to Article 148 (1) and (4) of the Civil Code. (Hartske vs. Frankel 54 Phil. 156; Gafes vs. Salvio, 36 Phil. 221; and Gonzales vs. Miller, 69 Phil. 341) cdtai On the issue of the legal heir(s), please be guided by Articles 995, 997 and 1001 of the Civil Code which provide, viz: "ART. 995. In the absence of legitimate descendants and ascendants, and illegitimate children and their descendants, whether legitimate or illegitimate, the surviving spouse shall inherit the entire estate, without prejudice to the rights of brothers and sisters, nephews and nieces, should there be any, under Article 1001." "xxx xxx xxx "ART. 997. When the widow or widower survives with legitimate parents or ascendants, the surviving spouse shall be entitled to one-half of the estate, and the legitimate parents or ascendants to the other half." prcd xxx xxx xxx "ART. 1001. Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half." Accordingly, where your cousin is survived by his legitimate parent(s) and his wife, they shall share equally in the inheritance: one-half to the legitimate parents and one-half to the wife. On the other hand, where you cousin is survived by his wife and his brother(s)/sister(s) or their children, one-half of the estate will go to the wife and the other half to the brothers(s)/sister(s) or their children. The nephew(s) and niece(s) shall inherit by right of representation. For purposes of the estate tax, the value of the house and lot shall be included as part of the gross estate. The one-half share of the surviving spouse in the conjugal dwelling is then deducted from the total gross estate to arrive at the total net estate of the decedent. Thereafter, the one-half share of the decedent to the family home (house and lot) is allowed as a deduction from the net estate provided that in the current fair market value of that one-half portion exceeds one million pesos, the excess shall be subject to estate tax. As a sine qua non condition for the exemption or deduction, said family home must have been the decedent's family home as certified by the barangay captain of the locality pursuant to Section 86(A)(4). cdlex Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue