Tax Implication for the Renunciation of Inheritance and the Right of Foreign Nationals to Own Land through Succession

Revenue Memorandum Circular No. 94-2021 from the Bureau of Internal Revenue, issued on July 21, 2021, provides for the Clarifying the Computation of Donor’s Tax in Case the Heir Waives/ Renounces His Share from the Specific Property Forming Part of the Estate of the of the Decedent. The memorandum states that if thereis a general renunciation of an heir on his share from the inheritance,  this not subject to Donor’s Tax. However, if there is a partial renunciation,  there shall be a donor’s tax on top of the estate tax. An explanation was given in the memorandum stating that, 


There are instances where in the settlement of the estate of the decedent, instead of all the heirs receiving their respective shares in all the properties of the decedent, the heirs will agree among themselves for a specific property that each one of them will receive. In this scenario, there will definitely be an heir who will receive a share lower or higher than the value of what should have been his rightful share in all the properties of the decedent. In this case, there is actually a partial renunciation of inheritance since the heir is waving his share to only identified properties but not to the entire properties of the decedent. Hence, the donor’s tax shall be imposed on the value forgone as a result of such waiver/ renunciation.”


Now we go to the discussion of the ability of foreigners to inherit land. As a general rule, the 1987 Philippine Constitution provides limitations to ownership of land, such that foreigners cannot acquire nor purchase land located in the Philippines. However, there are certain exemptions to this provision. One of which is that foreigners can own land through succession. Article XII, Section 7 of the 1987 Philippine Constitution provides that, “save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.” To be able to be included in hereditary succession, one must be considered as a compulsory heir. Article 887 of the Civil Code provides: 

Art. 887. “The following are compulsory heirs: 

  • Legitimate children and descendants, with respect to their legitimate parents and ascendants; 
  • In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and descendants; 
  • The widow or widower; 
  • Acknowledged natural children, and natural children by legal fiction; 
  • Other illegitimate children referred to in Article 287.


Compulsory heirs mentioned in Nos. 3,4, and 5 are not excluded by those in Nos. 1 and 2; neither do they exclude one another. 


In all cases of illegitimate children, their filiation must be duly proved. 


The father or mother of illegitimate children of the three classes mentioned, shall inherit from them in the manner and to the extent established by this Code.


Thus, the foreign national must fall under any of the enumerated compulsory heirs. Note, however, that what the law expressly provides is that foreign nationals can only own through hereditary or intestate succession. This means that ownership of land through testate succession is not allowed.      


Need further information and assistance regarding tax implication for renunciation of inheritance or for foreign nationals owning land through succession?  Talk to our team at Duran & Duran-Schulze Law to know more about the requirements and process. Call us today at (+632) 8478 5826 or send an email to for more information.

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