RAFAEL ARSENIO S. DIZON, in his capacity as the Judicial Administrator o the Estate o the deceased JOSE !. FERNANDEZ, ". #O$R% OF %A& A!!EALS and#O''ISSIONER OF IN%ERNAL RE(EN$E
).R. No. *+-++ April , /0
NO%ES3FF2
FA#%S2 1. November 7, 1987 - Jose P. Fernandez (Jose) died.
a. Petition for the probate of his wi was !ed w "#$ %ania. b. #he probate &o'rt then appointed retired 'preme $o'rt J'sti&e rsenio P. *izon (J'sti&e *izon) and
petitioner, tt+. "afae rsenio P. *izon (petitioner) as pe&ia and ssistant pe&ia dministrator, respe&tive+.
&. etter dated &tober 1, 1988 - J'sti&e *izon informed respondent $ommissioner of /" of the pe&Pro for the 0state.
. Petitioner ae2ed that severa re3'ests for e4tension of the period to !e the re3'ired estate ta4 ret'rn were 2ranted b+ the /" sin&e the assets of the estate, as we as the &aims a2ainst it, had +et to be &oated, determined and identi!ed.
a. #h's, in a etter dated %ar&h 15, 1996, J'sti&e *izon a'thorized tt+. Jes's %. onzaes (tt+. onzaes) to si2n and !e on behaf of the 0state the re3'ired estate ta4 ret'rn and to represent the same in se&'rin2 a $erti!&ate of #a4 $earan&e.
b. 0vent'a+, on pri 17, 1996, tt+. onzaes wrote a etter addressed to the /" "e2iona *ire&tor for an Pabo $it+ and !ed the estate ta4 ret'rn with the same /" "e2iona &e, showin2 therein a 0" estate ta4 iabiit+:
$%P;##/N F #< $on='2a "ea Propert+ (&h. 1) P16,8>>,66.66 $on='2a Persona Propert+ (&h.) ,5?6,>91.5  #a4abe #ransfer (&h. ) ross $on='2a 0state 15,1>,?11.5 @ess: *ed'&tions (&h. 5) 187,8,>7?.6? Net $on='2a 0state N/@ @ess: hare of 'rvivin2 po'se N/@ . Net hare in $on='2a 0state N/@ Net #a4abe 0state N/@ . 0state #a4 *'e N/@ .
. pri 7, 1996 - /" "e2iona *ire&tor for an Pabo $it+, sm'ndo . ;mai iss'ed $erti!&ation Nos. 6> and 6> statin2 that the ta4es d'e on the transfer of rea and persona properties of Jose had been f'+ paid and said properties ma+ be transferred to his heirs.
5. ometime in '2'st 1996, J'sti&e *izon passed awa+.  &tober - the probate &o'rt appointed petitioner as the administrator.
>. Petitioner re3'ested the probate &o'rtAs a'thorit+ to se severa properties formin2 part of the 0state, for the p'rpose of pa+in2 its &reditors, name+: 03'itabe anBin2 $orporation (P19,7>?,58.1), an3'e de @A/ndo&hine et. de 'ez
(;C5,88,96>.96 as of Jan'ar+ 1, 1988), %ania anBin2 $orporation (P85,199,1?6.5? as of Febr'ar+ 8, 1989) and tate /nvestment Do'se, /n&. (P?,86,66?.1). Petitioner manifested that %ania anB, a ma=or &reditor of the 0state was not in&'ded, as it did not !e a &aim with the probate &o'rt sin&e it had se&'rit+ over severa rea estate properties formin2 part of the 0state.
?. Nov ?, 1991 - the ssistant $ommissioner for $oe&tion of the /", #hemisto&es %ontaban, iss'ed an 0state #a4 ssessment Noti&e of P??,97,98>.56 as de!&ien&+ estate ta4, itemized as foows:
*e!&ien&+ 0state #a4- 1987 0state ta4 P1,8?8,515.58 >E s'r&har2e- ate !in2 7,9?7,16.?   ate pa+ment 7,9?7,16.?   /nterest 19,11,658.?8   $ompromise-non !in2 >,666.66   non pa+ment >,666.66   no noti&e of death 1>.66   no $P $erti!&ate 66.66  #ota amo'nt d'e &oe&tibe P??,97,98>.56
7. %"- denied, so he went to the $#. 8. /n the $#, petitioner did not present testimonia eviden&e b't mere+ do&'mentar+ eviden&e Gist omitted. 9. $# H denied petition for review. 16. (&itin2 Vda. de Oñate v. Court of Appeals) $# opined that the aforementioned pie&es of eviden&e introd'&ed b+
the /" were admissibe in eviden&e. #he $# ratio&inated: a. tho'2h the above-mentioned do&'ments were not forma+ oIered as eviden&e for respondent, &onsiderin2 that respondent has been
 
Properties H P55,?>,81.??   @ess: $apitaKParapherna   *ed'&tions 55,?>,81.?? Net #a4abe 0state P >6,>?9,81.?   LLLLLLLLLLLL   0state #a4 *'e P 9,9>,5.97 dd: >E 'r&har2e for @ate Fiin2 7,58,8>.75 dd: Penaties for-No noti&e of death 1>.66   No $P &erti!&ate 66.66  #ota de!&ien&+ estate ta4 P 7,519,59.71   LLLLLLLLLLLLL  
e4&'sive of 6E interest from d'e date of its pa+ment 'nti f' pa+ment thereof Me&. 8 (b), #a4 $ode of 1987. 1. $ - armed the $#As r'in2.
a. doptin2 in f' the $#As !ndin2s, the $ r'ed that the petitionerAs a&t of !in2 an estate ta4 ret'rn with the /" and the iss'an&e of /" $erti!&ation Nos. 6> and 6> d id not deprive the /" $ommissioner of her a'thorit+ to re-e4amine or re-assess the said ret'rn !ed on behaf of the 0state. %" H denied.
1. NO, #he petitioner &aims: a. that in as m'&h as the vaid &aims of &reditors a2ainst the 0state are in e4&ess of the 2ross estate, no estate ta4 was d'e that the a&B
of a forma oIer of eviden&e is fata to /"As &a'se b. that the do&trine aid down in Vda. de Oñate has aread+ been abandoned in a on2 ine of &ases in whi&h the $o'rt hed that eviden&e
not forma+ oIered is witho't an+ wei2ht or va'e &. that e&tion 5 of "'e 1 of the "'es on 0viden&e re3'irin2 a forma oIer of eviden&e is mandator+ in &hara&ter d. that, whie /"As witness berto 0nri3'ez (berto) in his testimon+ before the $# identi!ed the pie&es of eviden&e aforementioned s'&h
that the same were marBed, /"As fai're to forma+ oIer said pie&es of eviden&e and deprivin2 petitioner the opport'nit+ to &ross- e4amine berto, render the same inadmissibe in eviden&e
e. that ass'min2 arguendo that the r'in2 in Vda. de Oñate is sti appi&abe, /" faied to &omp+ with the do&trineAs re3'isites be&a'se the do&'ments herein remained simp+ part of the /" re&ords and were not d'+ in&orporated in the &o'rt re&ords
f. that the /" faied to &onsider that atho'2h the a&t'a pa+ments made to the 0state &reditors were ower than their respe&tive &aims, s'&h were &ompromise a2reements rea&hed on2 after the 0stateAs iabiit+ had been setted b+ the !in2 of its estate ta4 ret'rn and the iss'an&e of /" $erti!&ation Nos. 6> and 6> and
2. that the re&Bonin2 date of the &aims a2ainst the 0state and the settement of the estate ta4 d'e sho'd be at the time the estate ta4 ret'rn was !ed b+ the ='di&ia administrator and the iss'an&e of said /" $erti!&ations and not at the time the aforementioned $ompromise 2reements were entered into with the 0stateAs &reditors.
15. "espondent &o'nters H a. that the do&'ments, bein2 part of the re&ords of the &ase and d'+ identi!ed in a d'+ re&orded testimon+ are &onsidered eviden&e even
if the same were not forma+ oIered b. that the !in2 of the estate ta4 ret'rn b+ the 0state and the iss'an&e of /" $erti!&ation Nos. 6> and 6> did not deprive the /" of its
a'thorit+ to e4amine the ret'rn and assess the estate ta4 and
c. that the fa&t'a !ndin2s of the $# as armed b+ the $ ma+ no on2er be reviewed b+ this $o'rt via a petition for review.
ISS$E2 ON the a&t'a &aims of the aforementioned &reditors ma+ be f'+ aowed as ded'&tions from the 2ross estate of Jose despite the fa&t that the said &aims were red'&ed or &ondoned thro'2h &ompromise a2reements entered into b+ the 0state with its &reditors. 1ELD2 Q0. (ratio 7 onwards) RA%IO2 Procedural  1. ;nder e&tion 8 of " 11>, the $# is &ate2ori&a+ des&ribed as a &o'rt of re&ord. s &ases !ed before it are
iti2ated de novo, part+-iti2ants sha prove ever+ min'te aspe&t of their &ases. /nd'bitab+, no evidentiar+ va'e &an be 2iven the pie&es of eviden&e s'bmitted b+ the /", as the r'es on do&'mentar+ eviden&e re3'ire that these do&'ments m'st be forma+ oIered before the $#. Pertinent is e&tion 5, "'e 1 of the "evised "'es on 0viden&e whi&h reads:
SE#. +. Oer of evidence. R #he &o'rt sha &onsider no eviden&e whi&h has not been forma+ oIered. #he p'rpose for whi&h the eviden&e is oIered m'st be spe&i!ed.
. #he $# and the $ re+ soe+ on the &ase of Vda. de Oñate, whi&h reiterated this $o'rtAs previo's r'in2s in People v. Napat-a  and People v. Mate on the admission and &onsideration of e4hibits whi&h were not forma+ oIered d'rin2 the tria. tho'2h in a on2 ine of &ases man+ of whi&h were de&ided after Vda. de Oñate, we hed that &o'rts &annot &onsider eviden&e whi&h has not been forma+ oIered, nevertheess, petitioner &annot vaid+ ass'me that the do&trine aid down in Vda. de Oñate has aread+ been abandoned. "e&ent+, in Ramos v. Dion, this $o'rt, app+in2 the said do&trine, r'ed that the tria &o'rt ='d2e therein &ommitted no error when he admitted and &onsidered the respondentsA e4hibits in the reso'tion of the &ase, notwithstandin2 the fa&t that the same were not forma+ oIered. @iBewise, in !ar "ast #an$ % &rust Compan' v. Commissioner of (nternal Revenue, the $o'rt made referen&e to said do&trine in resovin2 the iss'es therein. /nd'bitab+, the do&trine aid down in Vda. De Oñate sti s'bsists in this ='risdi&tion. /n Vda. de Oñate, we hed that:
a. From the fore2oin2 provision, it is &ear that for eviden&e to be &onsidered, the same m'st be forma+ oIered. $oroari+, the mere fa&t that a parti&'ar do&'ment is identi!ed and marBed as an e4hibit does not mean that it has aread+ been oIered as part of the eviden&e of a part+. /n (nterpaci)c &ransit* (nc. v. Aviles M18? $" 8>, we had the o&&asion to maBe a distin&tion between identi!&ation of do&'mentar+ eviden&e and its forma oIer as an e4hibit. Oe said that the !rst is done in the &o'rse of the tria and is a&&ompanied b+ the marBin2 of the eviden&e as an e4hibit whie the se&ond is done on+ when the part+ rests its &ase and not before. part+, therefore, ma+ opt to forma+ oIer his eviden&e if he beieves that it wi advan&e his &a'se or not to do so at a. /n the event he &hooses to do the atter, the tria &o'rt is not a'thorized b+ the "'es to &onsider the same.
. Dowever, in People v. Napat-a M179 $" 56 &itin2 People v. Mate M16 $" 585, 4e rela5ed the ore6oin6 rule and allo4ed e"idence not ormally o7ered to 8e admitted and considered 8y the trial court pro"ided the ollo4in6 re9uirements are present, "i:.2 ;rst, the same must ha"e 8een duly identi;ed 8y testimony duly recorded and, second, the same must ha"e 8een incorporated in the records o the case.
5. From the fore2oin2 de&aration, however, it is &ear that Vda. de Oñate is mere+ an e4&eption to the 2enera r'e.  re3'irements to app+ the e4&eption were not satis!ed in this &ase.
 
e4amination b+ petitioner. 't bertos a&&o'nt and the e4&han2es between berto and petitioner did not s'&ient+ des&ribe the &ontents of the said pie&es of eviden&e presented b+ the /". /n fa&t, petitioner so'2ht that the ead e4aminer, one %a. nabea . b'o&, be s'mmoned to testif+, inasm'&h as berto was in&ompetent to answer 3'estions reative to the worBin2 papers. #he ead e4aminer never testi!ed. %oreover, whie bertoAs testimon+ identif+in2 the /"As eviden&e was d'+ re&orded, the /" do&'ments themseves were not in&orporated in the re&ords of the &ase.
b. &ommon fa&t threads thro'2h Vda. de Oñate and Ramos that does not e4ist at a in the instant &ase. /n the aforementioned &ases, the e4hibits were marBed at the pre-tria pro&eedin2s to warrant the prono'n&ement that the same were d'+ in&orporated in the re&ords of the &ase. Ramos:
i. /n this &ase, we !nd and so r'e that these re3'irements have been satis!ed. %he e5hi8its in 9uestion 4ere presented and mar<ed durin6 the pre=trial o the case thus, they ha"e 8een incorporated into the records. F'rther, 0pidio himsef e4pained the &ontents of these e4hibits when he was interro2ated b+ respondentsA &o'nse...
>. Ohie the $# is not 2overned stri&t+ b+ te&hni&a r'es of eviden&e, as r'es of pro&ed're are not ends in themseves and are primari+ intended as toos in the administration of ='sti&e, the presentation of the /"As eviden&e is not a mere pro&ed'ra te&hni&ait+ whi&h ma+ be disre2arded &onsiderin2 that it is the on+ means b+ whi&h the $# ma+ as&ertain and verif+ the tr'th of /"As &aims a2ainst the 0state. #he /"As fai're to forma+ oIer these pie&es of eviden&e, despite $#As dire&tives, is fata to its &a'se. '&h fai're is a22ravated b+ the fa&t that not even a sin2e reason was advan&ed b+ the /" to ='stif+ s'&h fata omission. #his, we taBe a2ainst the /".
?. Per the re&ords of this &ase, the /" was dire&ted to present its eviden&e  in the hearin2 of Febr'ar+ 1, 199?, b't /"As &o'nse faied to appear. #he $# denied petitionerAs motion to &onsider /"As presentation of eviden&e as waived, with a warnin2 to /" that s'&h presentation wo'd be &onsidered waived if /"As eviden&e wo'd not be presented at the ne4t hearin2. 2ain, in the hearin2 of %ar&h 6, 199?, /"As &o'nse faied to appear. #h's, in its "eso'tion dated %ar&h 1, 199?, the $# &onsidered the /" to have waived presentation of its eviden&e. /n the same "eso'tion, the parties were dire&ted to !e their respe&tive memorand'm. Petitioner &ompied b't /" faied to do so. /n a of these pro&eedin2s, /" was d'+ noti!ed. Den&e, in this &ase, we are &onstrained to app+ o'r r'in2 in +eirs of Pedro Pasag v. Paroc,a 
a. forma oIer is ne&essar+ be&a'se ='d2es are mandated to rest their !ndin2s of fa&ts and their ='d2ment on+ and stri&t+ 'pon the eviden&e oIered b+ the parties at the tria. /ts f'n&tion is to enabe the tria ='d2e to Bnow the p'rpose or p'rposes for whi&h the proponent is presentin2 the eviden&e. n the other hand, this aows opposin2 parties to e4amine the eviden&e and ob=e&t to its admissibiit+. %oreover, it fa&iitates review as the appeate &o'rt wi not be re3'ired to review do&'ments not previo's+ s&r'tinized b+ the tria &o'rt.
b. tri&t adheren&e to the said r'e is not a trivia matter. #he $o'rt in Constantino v. Court of Appeals r'ed that the ormal o7er o one>s e"idence is deemed 4ai"ed ater ailin6 to su8mit it 4ithin a considera8le period o time. It e5plained that the court cannot admit an o7er o e"idence made ater a lapse o three ?@ months 8ecause to do so 4ould condone an ine5cusa8le la5ity i not non=compliance 4ith a court order 4hich, in e7ect, 4ould encoura6e needless delays and derail the speedy administration o Bustice.S
&.   pp+in2 the aforementioned prin&ipe in this &ase, we !nd that the tria &o'rt had reasonabe 2ro'nd to &onsider that
petitioners had waived their ri2ht to maBe a forma oIer of do&'mentar+ or ob=e&t eviden&e. *espite severa e4tensions of time to maBe their forma oIer, petitioners faied to &omp+ with their &ommitment and aowed amost !ve months to apse before !na+ s'bmittin2 it. !etitioners> ailure to comply 4ith the rule on admissi8ility o e"idence is anathema to the eCcient, e7ecti"e, and e5peditious dispensation o Bustice.
Merits of the case 7. rdinari+, the $#As !ndin2s, as armed b+ the $, are entited to the hi2hest respe&t and wi not be dist'rbed
on appea 'ness it is shown that the ower &o'rts &ommitted 2ross error in the appre&iation of fa&ts. /n this &ase, however, we !nd the de&ision of the $ armin2 that of the $# tainted with papabe error.
8. /t is admitted that the &aims of the 0stateAs aforementioned &reditors have been &ondoned. s a mode of  e4tin2'ishin2 an obi2ation, &ondonation or remission of debt is de!ned as:
a. an a&t of iberait+, b+ virt'e of whi&h, witho't re&eivin2 an+ e3'ivaent, the &reditor reno'n&es the enfor&ement of the obi2ation, whi&h is e4tin2'ished in its entiret+ or in that part or aspe&t of the same to whi&h the remission refers.
b. /t is an essentia &hara&teristi& of remission that it be 2rat'ito's, that there is no e3'ivaent re&eived for the bene!t 2iven &. on&e s'&h e3'ivaent e4ists, the nat're of the a&t &han2es. d. /t ma+ be&ome dation in pa+ment when the &reditor re&eives a thin2 diIerent from that stip'ated or e. novation, when the ob=e&t or prin&ipa &onditions of the obi2ation sho'd be &han2ed or f. &ompromise, when the matter reno'n&ed is in iti2ation or disp'te and in e4&han2e of some &on&ession whi&h the &reditor re&eives.
9. T$aims a2ainst the estate,U as aowabe ded'&tions from the 2ross estate 'nder e&tion 79 of the #a4 $ode, are basi&a+ a reprod'&tion of the ded'&tions aowed 'nder e&tion 89 (a) (1) ($) and (0) of $ommonweath &t No. 5?? ($ 5??), otherwise Bnown as the Nationa /nterna "even'e $ode of 199, and whi&h was the !rst &odi!&ation of Phiippine ta4 aws. Phiippine ta4 aws were, in t'rn, based on the federa ta4 aws of the ;nited tates. #h's, p'rs'ant to estabished r'es of stat'tor+ &onstr'&tion, the de&isions of meri&an &o'rts &onstr'in2 the federa ta4 &ode are entited to 2reat wei2ht in the interpretation of o'r own ta4 aws.
16. /t is noteworth+ that even in the ;nited tates, there is some disp'te as to whether the ded'&tibe amo'nt for a &aim a2ainst the estate is !4ed as of the de&edentAs death whi&h is the 2enera r'e, or the same sho'd be ad='sted to reVe&t post-death deveopments, s'&h as where a settement between the parties res'ts in the red'&tion of the amo'nt a&t'a+ paid.  
11. n one hand, the ;.. &o'rt r'ed that the appropriate ded'&tion is the Tva'eU that the &aim had at the date of the de&edentAs death. so, as hed in Propstra v. ./.* where a ien &aimed a2ainst the estate was &ertain and enfor&eabe on the date of the de&edentAs death, the fa&t that the &aimant s'bse3'ent+ setted for esser amo'nt did not pre&'de the estate from ded'&tin2 the entire amo'nt of the &aim for estate ta4 p'rposes.#hese prono'n&ements essentia+ &on!rm the 2enera prin&ipe that post-death deveopments are not materia in determinin2 the amo'nt of the ded'&tion.
 
enfor&eabe &aims a2ainst the estate. s we interpret (t,aca &rust , when the 'preme $o'rt anno'n&ed the date-of-death va'ation prin&ipe, it was maBin2 a ='d2ment abo't the nat're of the federa estate ta4 spe&i!&a+, that it is a ta4 imposed on the a&t of transferrin2 propert+ b+ wi or intesta&+ and, be&a'se the a&t on whi&h the ta4 is evied o&&'rs at a dis&rete time, i.e., the instan&e of death, the net va'e of the propert+ transferred sho'd be as&ertained, as near+ as possibe, as of that time. #his ana+sis s'pports broad appi&ation of the date-of-death va'ation r'e.
15. Oe e4press o'r a2reement with the date-of-death va'ation r'e, made p'rs'ant to the r'in2 of the ;.. 'preme $o'rt in (t,aca &rust Co. v. nited /tates.
1>. !irst . #here is no aw, nor do we dis&ern an+ e2isative intent in o'r ta4 aws, whi&h disre2ards the date-of-death va'ation prin&ipe and parti&'ar+ provides that post-death deveopments m'st be &onsidered in determinin2 the net va'e of the estate.
1?. /t bears emphasis that ta4 b'rdens are not to be imposed, nor pres'med to be imposed, be+ond what the stat'te e4press+ and &ear+ imports, ta4 stat'tes bein2 &onstr'ed strictissimi 0uris a2ainst the 2overnment.
17. n+ do'bt on whether a person, arti&e or a&tivit+ is ta4abe is 2enera+ resoved a2ainst ta4ation. 18. /econd. '&h &onstr'&tion !nds reevan&e and &onsisten&+ in o'r "'es on pe&ia Pro&eedin2s wherein the term
S&aimsS re3'ired to be presented a2ainst a de&edentAs estate is 2enera+ &onstr'ed to mean debts or demands of  a pe&'niar+ nat're whi&h &o'd have been enfor&ed a2ainst the de&eased in his ifetime, or iabiit+ &ontra&ted b+ the de&eased before his death. 
19. #herefore, the &aims e4istin2 at the time of death are si2ni!&ant to, and sho'd be made the basis of, the determination of aowabe ded'&tions.