DR . FELISA L. VDA. DE SAN AGUSTIN, in substitution of JOSE Y.
FERIA, in his  24 February 1999, the CA granted the petition of the CIR and held that the CTA did
capacity as Executor of the Estate of JOSE SAN AGUSTIN, petitioner, vs.
COMMISSIONER OF INTERNAL REVENUE
G.R. No. 138485. September 10, 2001| Vitug, J.
Facts:
 PFR to set aside 24 Feb 1999 Decision and 27 Apr 199 Resolution w/c reversed that
of CTA (Jose y Feria, in his capacity as Executor of the Estate of Jose SA v. CIR. The
CTA modified the deficiency assessment of the CIR for SIP imposed against the E of
late JSA.
 21 April 1980: Atty. JSA executed a holographic will leaving all his estate to his
widow Dr. Felisa, and Ret. J. Jose Feria as Executor.
 27 June 1990: Atty. JSA of Kakarong St. Makati died.
 22 August 1990: Probate proceedings in RTC Makati B139 as SP.2554.
 30 Aug 1990: Notice of death sent to CIR.
 3 Sept 1990: An ETR reporting an est. of P1,673,432 was file don behalf of the
estate with Request for Extension of 2 years to pay tax; Dr. Felisa has no sufficient
funds; payment from estate proceeds.
 4 Sept. 1990: BIR Dep. Comm. Victor Deoferio Jr. granted the RFE only for 6
months, subject to imposition of PI under Secs. 248 and 249 of NIRC.
 11 Oct 1990: Probate court allowed the will and named Executor.
 5 March 1991: RTC granted the Executor’s Inventory of the Estate with Motion
for Authority to Withdraw Funds for payment of ET.
 8 March 1991: Executor paid the ET of P1.6M as reported in the ETC filed with BIR
(within the 6 months extension period).
 23 Sept 1991: Dr. Felisa received a PAN (29 August 1991) showing deficiency ET
of P538,509.50 which includes SIP of P976,540.
 1 Oct 1991: Within the 10 day period given in the PAN the Executor file d a letter to
CIR expressing readiness to pay the basic deficiency of P538K as soon as RTC
approves withdrawal thereof, but requested that the SIP of P438,040.38 be waived.
(Reason: Assessed deficiency arose n account of difference in zonal valuation used
by Estate and BIR; and ETD per return of P1.6M was already paid within the
extension period.
 4 October 1991: CIR issued AN reiterating demand in the PAN and requested
payment within 30 days.
 31 October 1991: Executor requested the CIR’s reconsideration of the P976K
assessment and waiver of SIP.
 31 Dec 1991: CIR accepted payment of BDT of P538K thru its Receivables Accounts
Billing Division. Request for reconsideration was not acted upon.
21 Sept 1992: Executor received a letter from CIR stating that no legal justification
for the waiver of the SIP and compromise penalty herein , and requested payment
of the P438K within 10 days.
 25 January 1993: Estate paid the P438K under protest.
 18 Feb 1993: PFR filed by Executor with CTA praying that Commissioner’s
letter/decision be reversed and a refund of the p438K be ordered.
 CIR opposed said PFR alleging that CTA’s jurisdiction was not properly invoked; no
claim for tax refund of the deficiency tax collected was filed with BIR before the PFR
was filed in violation of Secs. 204 & 230 of NIRC; and no statutory basis for the
refund.
 21 April 1994: CTA upheld its jurisdiction and modified CIR’s assessment for
SIP from P438K to P13,462.74, representing interest on the deficiency estate tax,
for which reason the CTA ordered the reimbursement to the respondent estate the
balance of P423,577.64. CIR appealed to the CA.
not acquire jurisdiction over the subject matter and that, accordingly, its decision
was null and void.
Issue:
1. The filing of a claim for refund [is] not essential before the filing of the
petition for review.
2. The imposition by the respondent of surcharge, interest and penalties on
the deficiency estate tax is not in accord with the law and therefore illegal.
Ruling and Ratio:
1. Court held the petition partly meritorious. It has a resemblance with Roman
Catholic Bishop of Cebu v. CIR: Herein the RCB of Cebu paid P5, 201.52 under
protest by way of IT, S, I and filed PFR before CTA. Collector (Commissioner
now) alleged that RCB failed to file a written claim for refund pursuant to
Sec.306 of Tax Code. Convinced, the CTA dismissed the petition for lack of
jurisdiction.
The Court finds no reason to abandon said ruling. RA 1125 creating the CTA. Herein,
the Decisions of the CIR in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, or other
matters arising under the NIRC or other law or part of the law administered by the BIR
--allows an appeal from a decision of the Collector in cases involving `disputed
assessments as distinguished from cases involving `refunds of internal revenue
taxes, fees or other charges, x x x; that the present action involves a disputed
assessment; because from the time petitioner received assessments Nos. 17-EC-00301-
55 and 17-AC-600107-56 disallowing certain deductions claimed by him in his income
tax returns for the years 1955 and 1956, he already protested and refused to pay the
same, questioning the correctness and legality of such assessments; and that the
petitioner paid the disputed assessments under protest before filing his petition for
review with the Court a quo, only to forestall the sale of his properties that had been
placed under distraint by the respondent Collector since December 4, 1957. To hold that
the taxpayer has now lost the right to appeal from the ruling on the disputed assessment
but must prosecute his appeal under section 306 of the Tax Code, which requires
a taxpayer to file a claim for refund of the taxes paid as a condition precedent
to his right to appeal, would in effect require of him to go through a useless and
needless ceremony that would only delay the disposition of the case, for the
Collector (now Commissioner) would certainly disallow the claim for refund in the
same way as he disallowed the protest against the assessment. The law, should
not be interpreted as to result in absurdities.
2. It would appear that, as early as 23 September 1991, the estate already
received a PAN indicating a DET of P538,509.50. Within the 10 period given in
the PAN, respondent Commissioner received a letter from petitioner expressing
the latters readiness to pay the basic DET of P538,509.50 as soon as the trial
court would have approved the withdrawal of that sum from the estate but
requesting that the surcharge, interests and penalties be waived. On 04
October 1991, however, petitioner received from the Commissioner notice
insisting payment of the tax due on or before the lapse of thirty (30) days from
receipt thereof. The DET of P538, 509.50 was not paid until 19 December
1991.
The delay in the payment of the deficiency tax within the time
prescribed for its payment in the notice of assessment justifies the
imposition of a 25% surcharge in consonance with Section 248A(3) of the
Tax Code. The basic deficiency tax in this case being P538, 509.50, the 25%
thereof comes to P134,627.37. Section 249 of the Tax Code states that any
deficiency in the tax due would be subject to interest at the rate of twenty
percent (20%) per annum, which interest shall be assessed and collected from
the date prescribed for its payment until full payment is made.
The computation of the CTA conforms with the law, i.e., computed on the
deficiency tax from the date prescribed for its payment until it is paid.
The CTA correctly held that the compromise penalty of P20,000.00
could not be imposed on petitioner, a compromise being, by its nature,
mutual in essence. The payment made under protest by petitioner could only
signify that there was no agreement that had effectively been reached between
the parties.
Regrettably for petitioner, the need for an authority from the probate court
in the payment of the deficiency estate tax, over which respondent
Commissioner has hardly any control, is not one that can negate the
application of the Tax Code provisions aforequoted. Taxes, the lifeblood of the
government, are meant to be paid without delay and often oblivious to
contingencies or conditions.
In sum, the tax liability of the estate includes a surcharge of P134,627.37
and interest of P13,462.74 or a total of P148,090.00.
FERDINAND R. MARCOS II, petitioner, vs. COURT OF APPEALS, THE
COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE and HERMINIA
D. DE GUZMAN, respondents.
G.R. No. 120880 | June 5, 1997 | Torres, Jr. J.
Fact No.1: Bongbong Marcos sought for the reversal of the ruling of the Court
of Appeals to grant CIR's petition to levy the properties of the late Pres. Marcos
to cover the payment of his tax delinquencies during the period of his exile in
the US. The Marcos family was assessed by the BIR, and notices were
constructively served to the Marcoses, however the assessment were not
protested administratively by Mrs. Marcos and the heirs of the late president
so that they became final and unappealable after the period for filing of
opposition has prescribed. Marcos contends that the properties could not be
levied to cover the tax dues because they are still pending probate with the
court, and settlement of tax deficiencies could not be had, unless there is an
order by the probate court or until the probate proceedings are terminated.
Issue: Is the contention of Bongbong Marcos correct?
Ruling and Ratio: No. The deficiency income tax assessments and estate tax
assessment are already final and unappealable -and-the subsequent levy of
real properties is a tax remedy resorted to by the government, sanctioned by
Section 213 and 218 of the National Internal Revenue Code. This summary tax
remedy is distinct and separate from the other tax remedies (such as Judicial
Civil actions and Criminal actions), and is not affected or precluded by the
pendency of any other tax remedies instituted by the government.
The approval of the court, sitting in probate, or as a settlement tribunal over
the deceased is not a mandatory requirement in the collection of estate taxes.
It cannot therefore be argued that the Tax Bureau erred in proceeding with the
levying and sale of the properties allegedly owned by the late President, on the
ground that it was required to seek first the probate court's sanction. There is
nothing in the Tax Code, and in the pertinent remedial laws that implies the
necessity of the probate or estate settlement court's approval of the state's
claim for estate taxes, before the same can be enforced and collected. On the
contrary, under Section 87 of the NIRC, it is the probate or settlement court
which is bidden not to authorize the executor or judicial administrator of the
decedent's estate to deliver any distributive share to any party interested in
the estate, unless it is shown a Certification by the Commissioner of Internal
Revenue that the estate taxes have been paid. This provision disproves the
petitioner's contention that it is the probate court which approves the
assessment and collection of the estate tax.
Fact No. 2: After the death of former President Marcos, Special audit team
disclosed that Marcoses failed to file a written notice of the death of the
decedent, an estate tax returns as well as several income tax returns covering
the years 1982 to 1986. BIR issued deficiency estate tax assessment among
others and were personally and constructively served to the last known
address of Marcoses. No administrative protest were served by Imelda or the
heir of the late President, thus notices of levy on real property were issued.
Having no response, properties were awarded in favor of the government.
Marcos II questioned the levy assailing that said properties were under probate
hearing thus, should not be summarily levied by BIR.
Issue: Whether or not the BIR has authority to collect by the summary remedy
of levying upon, and sale of real properties of the decedent, estate tax
deficiencies, without the cognition and authority of the court sitting in probate
over the supposed will of the deceased.
Ruling and Ratio: Yes. The approval of the curt, sitting in probate, or as a
settlement tribunal over the deceased is not a mandatory requirement in the
collection of estate taxes… there is nothing in the tax code, and in the pertinent
remedial laws that implies the necessity of the probate or estate settlement
court’s approval of the state’s claim for the estate taxes, before the same can
be enforced and collected. If there is any issue as to the validity of the BIR’s
decision to assess the estate taxes, this should have been pursued through the
proper administrative and judicial avenues provided for by law.
Facts No. 3: Ferdinand Marcos II assailed the decision of the CA declaring the
deficiency income tax assessments upon the estate and the properties of his
late father final despite the pendency of the probate proceedings of the will of
the late president. On the other hand, the BIR argued that the state authority
to collect taxes is paramount.
Issue: Is the approval of the court a mandatory requirement in the collection
of taxes?
Ruling and Ratio: No. The enforcement of tax laws and collection of taxes
are of paramount importance for the sustenance of government. Taxes
are the lifeblood of the government and should be collected without
unnecessary hindrance. However, such collection should be made in
accordance with law as any arbitrariness will negate the very reason for
government itself. It is therefore necessary to reconcile the apparently
conflicting interest of the authorities and the taxpayers so that the real
purpose of taxation, which is the promotion of the common good, may be
achieved.
(Ferdinand R. Marcos II assailed the decision of the Court of Appeals
declaring the deficiency income tax assessments and estate tax assessments
upon the estate and properties of his late father despite the pendency of the
probate proceedings of the will of the late President. On the other hand, the
BIR argued that the State’s authority to collect internal revenue taxes is
paramount.)
Petitioner further argues that "the numerous pending court cases questioning
the late president's ownership or interests in several properties (both real and
personal) make the total value of his estate, and the consequent estate tax due,
incapable of exact pecuniary determination at this time. Thus, respondents'
assessment of the estate tax and their issuance of the Notices of Levy and sale
are premature and oppressive." He points out the pendency of Sandiganbayan
Civil Case Nos. 0001-0034 and 0141, which were filed by the government to
question the ownership and interests of the late President in real and personal
properties located within and outside the Philippines. Petitioner, however,
omits to allege whether the properties levied upon by the BIR in the collection
of estate taxes upon the decedent's estate were among those involved in the
said cases pending in the Sandiganbayan. Indeed, the court is at a loss as to
how these cases are relevant to the matter at issue. The mere fact that the
decedent has pending cases involving ill-gotten wealth does not affect the
enforcement of tax assessments over the properties indubitably included in his
estate.

Issue: Is the contention of Marcos correct?

Ruling and Ratio: No. The approval of the court, sitting in probate or as a
settlement tribunal over the deceased’s estate, is not a mandatory requirement
in the collection of estate taxes.

There is nothing in the Tax Code, and in the pertinent remedial laws
that implies the necessity of the probate or estate settlement court's approval
of the state's claim for estate taxes, before the same can be enforced and
collected.

The enforcement of tax laws and the collection of taxes are of

paramount importance for the sustenance of government. Taxes are the
lifeblood of government and should be collected without unnecessary
hindrance. However, such collection should be made in accordance with law
as any arbitrariness will negate the existence of government itself.

It is not the Department of Justice which is the government agency

tasked to determine the amount of taxes due upon the subject estate, but the
Bureau of Internal Revenue whose determinations and assessments are
presumed correct and made in good faith. The taxpayer has the duty of proving
otherwise. In the absence of proof of any irregularities in the performance of
official duties, an assessment will not be disturbed. Even an assessment based
on estimates is prima facie valid and lawful where it does not appear to have
been arrived at arbitrarily or capriciously. The burden of proof is upon the
complaining party to show clearly that the assessment is erroneous. Failure
to present proof of error in the assessment will justify the judicial affirmance
of said assessment. In this instance, petitioner has not pointed out one single
provision in the Memorandum of the Special Audit Team which gave rise to the
questioned assessment, which bears a trace of falsity. Indeed, the petitioner's
attack on the assessment bears mainly on the alleged improbable and
unconscionable amount of the taxes charged. But mere rhetoric cannot supply
the basis for the charge of impropriety of the assessments made.)
THE ESTATE OF HILARIO M. RUIZ, EDMOND RUIZ, Executor, petitioner,
vs. THE COURT OF APPEALS (Former Special Sixth Division), MARIA
PILAR RUIZ-MONTES, MARIA CATHRYN RUIZ, CANDICE ALBERTINE
RUIZ, MARIA ANGELINE RUIZ and THE PRESIDING JUDGE OF THE
REGIONAL TRIAL COURT OF PASIG, BRANCH 156, respondents.
G.R. No. 118671. January 29, 1996 | Puno, J.
Facts:
 June 27, 1987: Hilario M. Ruiz executed a holographic will naming as his
heirs his only son, Edmond Ruiz, his adopted daughter, private
respondent Maria Pilar Ruiz Montes, and his three granddaughters,
private respondents Maria Cathryn, Candice Albertine and Maria Angeline,
all children of Edmond Ruiz. The testator bequeathed to his heirs
substantial cash, personal and real properties and named Edmond Ruiz
executor of his estate.
 April 12, 1988: Hilario Ruiz died. The cash component of his estate was
distributed among Edmond Ruiz and private respondents, howvever,
executor Edmond did not take any action for the probate of his father’s
holographic will.
 June 29, 1992, after 4 years. It was Maria Pilar (adopted) who filed before
the RTC B156 Pasig, a petition for the probate and approval of Hilario Ruiz
will and for the issuance of LT to Edmond Ruiz who opposed the same on
the ground that the will was executed under undue influence.
 November 2, 1992: The H&L at No. 2 Oliva Street, Valle Verde
IV, Pasig which the testator bequeathed to 3 daughters of Maria Pilar - was
leased out by Edmond Ruiz to third persons.
 January 19, 1993; Probate court ordered Edmond to deposit with the CoC
the rental deposit and payments of P540, 000.00 for the 1-year lease of
the Valle Verde property. After deducting P191, 416.14 for repair and
maintenance expenses on the estate, Edmond turned over P348,
583.56, representing the balance of the rent.
 March 1993: Edmond moved for the release of P50K to pay the RET on the
RPE. RTC approved only P7,722.00
 May 14, 1993, Edmond withdrew his opposition to the probate of the will.
 May 18, 1993: RTC admitted the will to probate and ordered the issuance
of LT (23 June) to Edmond conditioned upon the filing of a bond in the
amount of P50K.
 July 28, 1993,Edmond filed an Ex-Parte Motion for Release of Funds –
rent payments deposited with the CoC. Maria Pilar opposed and filed a
Motion for Release of Funds to Certain Heirs and Motion for Issuance of
Certificate of Allowance of Probate Will (the distribution of the Valle Verde
property and the Blue Ridge apartments pursuant to the holographic will).
 August 26, 1993: RTC denied Edmond’s motion, but granted the
respondents’. It ordered the delivery of the titles to and possession of the
properties.
 Edmond moved for MR. Then withdraw motion to release fund since lease
contract is renewed for another year. RTC still ordered release of funds to
Edmond for necessary expenses of administration and allowances for
support of testator’s 3 granddaughters deductible from their inheritance;
hold in abeyance release of titles to Maria Pilar and 3 granddaughters until
lapse of 6 months.
 CA found no GADLEJ on the part of RTC judge, and upheld its ruling.
Issue: Whether the probate court, after admitting the will to probate but before
payment of the estates debts and obligations, has the authority: (1) to grant an
allowance from the funds of the estate for the support of the testators
grandchildren; (2) to order the release of the titles to certain heirs; and (3) to
grant possession of all properties of the estate to the executor of the will.
On the matter of allowance, Section 3 of Rule 83 of ROC provides that
“Allowance to widow and family. - The widow and minor or incapacitated
children of a deceased person, during the settlement of the estate, shall receive
therefrom under the direction of the court, such allowance as are provided by
law.”
It is settled that allowances for support under therein should not be limited to
the minor or incapacitated children of the deceased. Article 188 of the NCC,
applicable at ToD of Hilario, provides that during the liquidation of the conjugal
partnership, the deceaseds legitimate spouse and children, regardless of their
age, civil status or gainful employment, are entitled to provisional support from
the funds of the estate. The law is rooted on the fact that the right and duty to
support, especially the right to education, subsist even beyond the age of
majority.
Grandchildren are not entitled to provisional support from the funds
of the decedent’s estate. The law clearly limits the allowance to widow and
children. It was error for the CA to sustain the RTC’s order granting an
allowance to the grandchildren of the testator pending settlement of his estate.
RTC also erred in ordering the release of the titles of the bequeathed properties
to private respondents six months after the date of first publication of notice
to creditors. An order releasing titles to properties of the estate amounts to an
advance distribution of the estate which is allowed only under the following
conditions in Section 2 that part of the estate not affected by any controversy
or appeal may be distributed in advance by the court among the heirs or
legatees.
And Section 1 of Rule 90 provides for the order of distribution of residue
made. No distribution shall be allowed until the payment of the
obligations above-mentioned has been made or provided for, unless the
distributes, or any of them, give a bond, in a sum to be fixed by the court,
conditioned for the payment of said obligations within such time as the
court directs.
In settlement of estate proceedings, the distribution of the estate properties
can only be made: (1) after all the debts, funeral charges, expenses of
administration, allowance to the widow, and estate tax have been paid; or (2)
before payment of said obligations only if the distributees or any of them gives
a bond in a sum fixed by the court conditioned upon the payment of said
obligations within such time as the court directs, or when provision is made
to meet those obligations.

The lapse of six months from the date of first publication of the notice to
creditors speaks of notice to creditors, not payment of debts and obligations.
Hilario Ruiz allegedly left no debts when he died but the taxes on his estate
had not hitherto been paid, much less ascertained. The estate tax is one of
those obligations that must be paid before distribution of the estate. If
not yet paid, the rule requires that the distributees post a bond or make such
provisions as to meet the said tax obligation in proportion to their respective
shares in the inheritance. Notably, at the time the order was issued the
properties of the estate had not yet been inventoried and appraised.

The intrinsic validity of Hilarios holographic will was controverted by petitioner

before the probate court assailing the distributive shares of the devisees and
legatees inasmuch as his fathers will included the estate of his mother and
allegedly impaired his legitime as an intestate heir of his mother. The Rules
provide that if there is a controversy as to who are the lawful heirs of the
decedent and their distributive shares in his estate, the probate court shall
proceed to hear and decide the same as in ordinary cases

It was relevantly noted by the probate court that petitioner had deposited
with it only a portion of the one-year rental income from the Valle Verde
property. Petitioner did not deposit its succeeding rents after renewal of the
lease. Neither did he render an accounting of such funds.
Petitioner must be reminded that his right of ownership over the
properties of his father is merely inchoate as long as the estate has not been
fully settled and partitioned. As executor, he is a mere trustee of his father’s
estate. The funds of the estate in his hands are trust funds and he is held to
the duties and responsibilities of a trustee of the highest order. He cannot
unilaterally assign to himself and possess all his parents properties and the
fruits thereof without first submitting an inventory and appraisal of all real
and personal properties of the deceased, rendering a true account of his
administration, the expenses of administration, the amount of the obligations
and estate tax, all of which are subject to a determination by the court as to
their veracity, propriety and justness.
ILDEFONSO O. ELEGADO, as Ancillary Administrator of the Testate Estate
of the late WARREN TAYLOR GRAHAM, petitioner vs. HON. COURT OF TAX
APPEALS and COMMISSIONER OF INTERNAL REVENUE respondents.
G.R. No. L-68385 | May 12, 1989 | Cruz, J.
Facts:
 March 14, 1976, Warren Taylor Graham, an American national formerly
resident in the Philippines, died in Oregon, U.S.A. He left certain shares of
stock in the Philippines, his son, Ward Graham, filed an ETR on September
16, 1976, with the Philippine Revenue Representative in San Francisco,
U.S.A.
 9 Feb 1978: Basing on the ETR, CIR assessed the decedent's estate an
estate tax in the amount of P96, 509.35.
 March 7, 1978: This assessment was protested on by the law firm of Bump,
Young and Walker on behalf of the estate It was denied by the
Commissioner on July 7, 1978. No further action was taken by the estate
in pursuit of that protest.
 18 January 1977: Decedent's will was admitted to probate in the Circuit
Court of Oregon. Ward as Executor then appointed Ildefonso Elegado, the
herein petitioner, as his AIF for the allowance of the will in the Philippines
who commence probate proceedings in CFI Rizal.
 December 18, 1978: Will was allowed with Ildefonso as ancillary
administrator; who filed a 2nd ETR with the BIR on June 4, 1980.
 Therein, the CIR imposed an assessment on the estate in the amount of
P72,948.87. This was protested on behalf of the estate by the ALG Office
on August 13, 1980.
 While this protest was pending, the CIR filed in the probate proceedings a
motion for the allowance of the basic estate tax of P96,509.35 as assessed
on February 9, 1978. He said that this liability had not yet been paid
although the assessment had long become final and executory.
 Ildefonso regarded this motion as an implied denial of the protest filed on
August 13, 1980, against the 2nd assessment of P72, 948.87 so he filed
on September 15, 1981, a PFR with the CTA challenging the said
assessment.
 The Commissioner did not immediately answer (a delay of 195 days) and
in the end instead cancelled the protested assessment in a letter to the
decedent's estate; and notified to the CTA in a MTD on the ground that the
protest had become moot and academic.
 The MTD was granted and the petition dismissed on April 25, 1984. The
petitioner then came to this Court on certiorari under Rule 45 of the Rules
of Court.
Issue: Whether or not the respondent Court of Tax Appeals erred in dismissing
the petitioner's appeal on grounds of jurisdiction and lack of a cause of action.
(Appeal from what? That is the question)
The petitioner raises three basic questions, to wit, (1) whether the shares of
stocks left by the decedent should be treated as his exclusive, and not
conjugal, property; (2) whether the said stocks should be assessed as of the
time of the owner's death or six months thereafter; and (3) whether the appeal
filed with the respondent court should be considered moot and academic.
Ruling and Ratio:
1. It is obvious from the express cancellation of the 2nd assessment for P72,
948.87 that Ildefonso had been deprived of a cause of action as it was
precisely from this assessment that he was appealing.
In its decision, the CTA said that the petition questioning the
assessment of July 3, 1980, was "premature" since the protest to the
assessment had not yet been resolved. As a matter of fact it had: the said
assessment had been cancelled by virtue of the letter. The CTA was on
surer ground, however, when it followed with the finding that the said
cancellation had rendered the petition moot and academic. There was
really no more assessment to review.
The petitioner argues that the issuance of the 2nd assessment had the
effect of canceling the first assessment; and that the subsequent
cancellation of the 2nd assessment did not have the effect of automatically
reviving the first. Moreover, the 1st assessment is not binding on him
because it was based on a return filed by foreign lawyers who had no
knowledge of our tax laws or access to the CTA.
In imposing the second assessment of P72, 948.87, the Commissioner
made it clear that "the aforesaid amount is considered provisional only. It
is illogical to suggest that a provisional assessment can supersede an
earlier assessment which had clearly become final and executory.
In view of the finality of the first assessment, the petitioner cannot now
raise the question of its validity before this Court any more than he could
have done so before the Court of Tax Appeals. What the estate of the
decedent should have done earlier, following the denial of its protest on
July 7, 1978, was to appeal to the Court of Tax Appeals within the
reglementary period of 30 days after it received notice of said denial. It was
in such appeal that the petitioner could then have raised the first two
issues he now raises without basis in the present petition.
2. The question of whether or not the shares of stock left by the decedent
should be considered conjugal property or belonging to him alone is immaterial
in these proceedings. So too is the time at which the assessment of these
shares of stock should have been made by the BIR. These questions were not
resolved by the CTA because it had no jurisdiction to act on the petitioner's
appeal from an assessment that had already been cancelled. The assessment
being no longer controversial or reviewable, there was no justification for the
respondent court to rule on the petition except to dismiss it.
If indeed the CIR committed an error in the computation of the estate tax, as
the petitioner insists, that error can no longer be rectified because the original
assessment has long become final and executory.
RAFAEL ARSENIO S. DIZON, in his capacity as the Judicial Administrator
of the Estate of the deceased JOSE P. FERNANDEZ, v. COURT OF TAX
APPEALS and COMMISSIONER OF INTERNAL REVENUE.
G.R. No. 140944 | April 30, 2008| Nachura, J.
Facts:
 Estate Taxation – Allowable Deductions, Date-of-Death Valuation Principle
 Jose P. Fernandez died in November 7, 1987. Thereafter, a petition for the
probate of his will was filed. The probate court appointed Atty. Rafael
Arsenio P. Dizon as administrator of the Estate of Jose Fernandez.
 An estate tax return was filed later on which showed ZERO estate tax
liability. BIR thereafter issued a deficiency estate tax assessment,
demanding payment of Php 66.97 million as deficiency estate tax. This
was subsequently reduced by CTA to Php 37.42 million. The CA affirmed
the CTA’s ruling, hence, the instant petition.
 The petitioner claims that in as much as the valid claims of creditors
against the Estate are in excess of the gross estate, no estate tax was due.
On the other hand, respondents argue that since the claims of the Estate’s
creditors have been condoned, such claims may no longer be deducted
from the gross estate of the decedent.
Issue: Whether the actual claims of creditors may be fully allowed as
deductions from the gross estate of Jose despite the fact that the said claims
were reduced or condoned through compromise agreements entered into by
the Estate with its creditors
Ruling and Ratio: Yes.
Following the US Supreme Court’s ruling in Ithaca Trust Co. v. United States,
the Court held that post-death developments are not material in determining
the amount of deduction. This is because estate tax is a tax imposed on the
act of transferring property by will or intestacy and, because the act on which
the tax is levied occurs at a discrete time, i.e., the instance of death, the net
value of the property transferred should be ascertained, as nearly as possible,
as of the that time. This is the date-of-death valuation rule.
the deceased in his lifetime, or liability contracted by the deceased before
his death. Therefore, the claims existing at the time of death are significant
to, and should be made the basis of, the determination of allowable
deductions
Issue: Whether or not the CTA and the CA gravely erred in allowing the
admission of the pieces of evidence which were not formally offered by the BIR.
YES. The CTA is categorically described as a court of record. As cases filed
before it are litigated de novo, party-litigants shall prove every minute aspect
of their cases. As such, those evidence submitted by the BIR has no evidentiary
weight, as the rules on documentary evidence require that these documents
must be formally offered before the CTA. The Revised Rules on Evidence which
reads:
SEC. 34. Offer of evidence. The court shall consider no evidence which has not
been formally offered. The purpose for which the evidence is offered must be
specified.
The CTA and the CA rely solely on the case of Vda. de Oate, which reiterated
this Court's previous rulings in People v. Napat-a and People v. Mate on the
admission and consideration of exhibits which were not formally offered during
the trial.
The Court reiterates that Vda. de Oate is merely an exception to the general
rule. Being an exception, it may be applied only when there is strict compliance
with the requisites mentioned therein; otherwise, the general rule in Section
34 of Rule 132 of the Rules of Court should prevail.
A common fact threads through Vda. de Oate and Ramos that does not exist
at all in the instant case. In the aforementioned cases, the exhibits were
marked at the pre-trial proceedings to warrant the pronouncement that the
same were duly incorporated in the records of the case.

The Court, in adopting the date-of-death valuation principle, explained that:

 First. There is no law, nor do we discern any legislative intent in our tax
laws, which disregards the date-of-death valuation principle and
particularly provides that post-death developments must be considered in
determining the net value of the estate. It bears emphasis that tax burdens
are not to be imposed, nor presumed to be imposed, beyond what the
statute expressly and clearly imports, tax statutes being construed
strictissimi juris against the government.
 Second. Such construction finds relevance and consistency in our Rules
on Special Proceedings wherein the term "claims" required to be presented
against a decedent's estate is generally construed to mean debts or
demands of a pecuniary nature which could have been enforced against
APOLINARIA AUSTRIA-MAGAT, petitioner, vs. HON. COURT OF APPEALS document as a donation inter vivos. The other provisions therein which
and FLORENTINO LUMUBOS, DOMINGO COMIA, TEODORA CARAMPOT, seemingly make the donation mortis causa do not go against the irrevocable
ERNESTO APOLO, SEGUNDA SUMPELO, MAMERTO SUMPELO and character of the subject donation.
RICARDO SUMPELO, respondents.
The Court disagree with the petitioner’s contention that the provisions which
G.R. No. 106755 |February 1, 2002 | De Leon, Jr. J state that the same will only take effect upon the death of the donor and that
there is a prohibition to alienate, encumber, dispose, or sell the same, are
Facts: proofs that the donation is mortis causa. The said provisions should be
 Basilisa Comerciante is a mother of five (5) children, namely, Rosario harmonized with its express irrevocability.
Austria, Consolacion Austria, herein petitioner Apolinaria Austria-Magat,
Leonardo, and one of herein respondents, Florentino Lumubos. Leonardo If the donor intended to maintain full ownership over the said property until
died in a Japanese concentration camp at Tarlac during World War II. her death, she could have expressly stated therein a reservation of her right to
 Basilisa bought a parcel of residential land together with the improvement dispose of the same. The prohibition on the donor to alienate the said property
thereon covered and described in Transfer Certificate of Title No. RT-4036 during her lifetime is proof that naked ownership over the property has been
(T-3268) and known as Lot 1, Block 1, Cavite Beach Subdivision, with an transferred to the donees. It also supports the irrevocable nature of the
area of 150 square meters, located in Bagong Pook, San Antonio, Cavite donation considering that the donor has already divested herself of the right
City. to dispose of the donated property.
 Basilisa executed a document designated as Kasulatan sa Kaloobpala
(Donation). Another indication in the deed of donation that the donation is inter vivos is
 Few years after, Basilisa executed a Deed of Absolute Sale of the subject the acceptance clause therein of the donees. We have ruled that an acceptance
house and lot in favor of herein petitioner Apolinaria Austria-Magat for clause is a mark that the donation is inter vivos. Acceptance is a requirement
(P5,000.00). for donations inter vivos. On the other hand, donations mortis causa, being in
 As the result of the registration of that sale, Transfer Certificate of Title the form of a will, are not required to be accepted by the donees during the
(TCT for brevity) No. RT-4036 in the name of the donor was cancelled donors lifetime
and in lieu thereof TCT No. T-10434 was issued by the Register of Deeds
of Cavite City in favor of petitioner Apolinaria Austria-Magat. The four-year prescriptive period is not applicable to the case at bar for the
 Respondents Teodora Carampot, Domingo Comia, and Ernesto Apolo reason that there is no fraud in this case. There being no fraud in the trust
(representing their deceased mother Consolacion Austria), Ricardo, relationship between the donor and the donees including the herein petitioner,
Mamerto and Segunda, all surnamed Sumpelo (representing their the action for reconveyance prescribes in ten (10) years.
deceased mother Rosario Austria) and Florentino Lumubos filed before the
RTC of Cavite an action against the petitioner for annulment of TCT and The appealed decision is AFFIRMED.
other relevant documents, and for reconveyance and damages.
 RTC dismissed the case. According to the trial court, the donation is a
donation mortis causa pursuant to Article 728 of the New Civil Code
inasmuch as the same expressly provides that it would take effect upon
the death of the donor; that the provision stating that the donor reserved
the right to revoke the donation is a feature of a donation mortis
causa which must comply with the formalities of a will; and that inasmuch
as the donation did not follow the formalities pertaining to wills, the same
is void and produced no effect whatsoever. Hence, the sale by the donor of
the said property was valid since she remained to be the absolute owner
thereof during the time of the said transaction.
 The decision of the trial court was reversed by the CA and held that it is a
Donation Inter Vivos. Hence, this appeal.

Issue: Whether CA ignored the rules of interpretation of contracts when it

considered the donation in question as Inter Vivos?

Ruling and Ratio: No. The donation is inter vivos. The express irrevocability
of the same (hindi na mababawi) is the distinctive standard that identifies that
JARABINI G. DEL ROSARIO v. ASUNCION G. FERRER, substituted by her
heirs, VICENTE, PILAR, ANGELITO, FELIXBERTO, JR., all surnamed G.
FERRER, and MIGUELA FERRER ALTEZA,
G.R. No. 187056 | September 20. 2010 | Abad, J.
Facts:
 Spouses Gonzales executed document entitled "Donation Mortis Causa" in
favor of their 2 children, Asuncion and Emiliano and their granddaughter,
Jarabini (Daughter of predeceased son, Zoilo) covering 126 sg.m lot and
house on it in equal shares.
 Although denominated as a donation mortis causa, which in law is the
equivalent of a will, the deed had no attestation clause and was witnessed
by only two persons. The named donees, however, signified their
acceptance of the donation on the face of the document.
 Guadalupe, the donor wife, died in September 1968. A few months
later or on December 19, 1968, Leopoldo, the donor husband, executed
a deed of assignment of his rights and interests in subject property to
their daughter Asuncion. Leopoldo died in June 1972.
 In 1998, Jarabini filed a "petition for the probate of the August 27, 1968
deed of donation mortis causa" before the RTC.
 Asuncion opposed the petition, invoking his father Leopoldo's
assignment of his rights and interests in the property to her.
 After trial, the RTC rendered a decision dated June 20, 2003, 5
finding that the donation was in fact one made inter vivos, the donors'
intention being to transfer title over the property to the donees during
the donors' lifetime, given its irrevocability. Consequently, said the RTC,
Leopoldo's subsequent assignment of his rights and interest in the
property was void since he had nothing to assign. The RTC thus directed
the registration of the property in the name of the donees in equal
shares.
 CA - reversed RTC. The CA held that Jarabini cannot, through her
petition for the probate of the deed of donation mortis causa,
collaterally attack Leopoldo's deed of assignment in Asuncion's favor . CA
held that the donation, being one given mortis causa, did not comply with
the requirements of a notarial will, rendering the same void.
Issue: Whether or not the spouses Leopoldo and Guadalupe’s donation to
Asuncion, Emiliano, and Jarabini was a donation mortis causa, as it was
denominated, or in fact a donation inter vivos.
Ruling and Ratio:
The document in question in this case was captioned "Donation Mortis
Causa" is not controlling. This Court has held that, if a donation by its terms
is inter vivos, this character is not altered by the fact that the donor styles it
mortis causa.
The Court thus said in Austria-Magat that the express
"irrevocability" of the donation is the "distinctive standard that identifies
the document as a donation inter vivos." Here, the donors plainly said
that it is "our will that this Donation Mortis Causa shall be irrevocable
and shall be respected by the surviving spouse." The intent to make the
donation irrevocable becomes even clearer by the proviso that a surviving
donor shall respect the irrevocability of the donation. Consequently, the
donation was in reality a donation inter vivos.
The donors in this case of course reserved the "right, ownership,
possession, and administration of the property" and made the donation
operative upon their death. But this Court has consistently held that such
reservation (reddendum) in the context of an irrevocable donation simply
means that the donors parted with their naked title, maintaining only
beneficial ownership of the donated property while they lived.
The three donees signed their acceptance of the donation, which
acceptance the deed required. This Court has held that an acceptance
clause indicates that the donation is inter vivos, since acceptance is a
requirement only for such kind of donations. Donations mortis causa, being
in the form of a will, need not be accepted by the donee during the donor's
lifetime.
As Justice J. B. L. Reyes said in Puig v. Peñaflorida, in case of doubt, the
conveyance should be deemed a donation inter vivos rather than mortis
causa, in order to avoid uncertainty as to the ownership of the property
subject of the deed.
Since the donation in this case was one made inter vivos, it was
immediately operative and final. The reason is that such kind of donation is
deemed perfected from the moment the donor learned of the donee's
acceptance of the donation. The acceptance makes the donee the absolute
owner of the property donated. Given that the donation in this case was
irrevocable or one given inter vivos, Leopoldo's subsequent assignment
of his rights and interests in the property to Asuncion should be regarded
as void for, by then, he had no more rights to assign.
The trial court cannot be faulted for passing upon, in a petition for probate of
what was initially supposed to be a donation mortis causa, the validity of the
document as a donation inter vivos and the nullity of one of the donor's
subsequent assignment of his rights and interests in the property. The ruling
of the trial court is REINSTATED.

SPS. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA, petitioners, vs.
COURT OF APPEALS and MERCEDES DANLAG y PILAPIL, respondents.
G.R. No. 111904| October 5, 2000 | QUISUMBING, J.
Facts:
 Spouses Diego and Catalina Danlag were the owners of the 6 parcels of
unregistered lands and they executed three deeds of donation mortis causa,
two of which are in favor of private respondent Mercedes Danlag-Pilapil
which were embodied in a deed: The first deed pertained to parcels 1 & 2;
second deed pertain to parcel 3 and the last deed contained parcel 4. The
spouses have maintained that in all the deeds they have executed, it has
the reservation of the rights of the donors (1) to amend, cancel or revoke the
donation during their lifetime, and (2) to sell, mortgage, or encumber the
properties donated during the donors' lifetime, if deemed necessary.
 Subsequently, Diego with the consent of his wife executed a deed of
donation inter vivos (January 16, 1973) covering the aforementioned
parcels of land plus two other parcels still in favor of Mercedes. This
contained two conditions, that (1) the Danlag spouses shall continue to
enjoy the fruits of the land during their lifetime, and that (2) the donee can
not sell or dispose of the land during the lifetime of the said spouses, without
their prior consent and approval. Mercedes caused the transfer of the
parcels' tax declaration to her name and paid the taxes on them.
 Sometime in 1979, the spouses Danlag sold parcels 3 and 4 (same lands
covered in the two donations made) to herein petitioners, Mr. and Mrs.
Agripino Gestopa. On September 29, 1979, the Danlags executed a deed
of revocation recovering the six parcels of land subject of the aforecited
deed of donation inter vivos.
Respondent’s contention:
-filed against the Gestopas and the Danlags, for quieting of title over the above
parcels of land; that she was an illegitimate daughter of Diego Danlag; that she
lived and rendered incalculable beneficial services to Diego and his mother,
Maura Danlag, when the latter was still alive and in recognition of the services
she rendered, Diego executed a Deed of Donation conveying to her the parcels
of land; that she accepted the donation in the same instrument, openly and
publicly exercised rights of ownership over the donated properties, and caused
the transfer of the tax declarations to her name; that she had complied all the
conditions in the donation or she has not been guilty of any act of ingratitude,
and; that Diego had no legal basis to revoke the donation and to sell it to the
petitioners.
Petitioner’s contention:
-the donation made on January 16, 1973 (referring to the inter vivos or the
second donation) was null and void because it was obtained by Mercedes
through machinations and undue influence and it left the donor without any
property at all; that even assuming it was validly executed, the intention was
for the donation to take effect upon the death of the donor.
-that the donor did not only reserve the right to enjoy the fruits of the
properties, but also prohibited the done from selling or disposing the land
without the consent and approval of the Danlag spouses which implies that
the donor still had control and ownership over the donated properties. Hence,
the donation was post mortem.
 Ruling of the Trial Court: favored the plaintiff and ruled that the
reservation clause in all the deeds of donation indicated that Diego did not
make any donation and the purchase by Mercedes of the two parcels of
land covered by the Deed of Donation Inter Vivos bolstered this conclusion,
and; that Mercedes committed fraud and machination in preparing all the
deeds of donation without explaining to Diego their contents.
 Ruling of the Court of Appeals: reversed the trial court and ruled that the
deed of donation inter vivos dated January 16, 1973 as not having been
revoked and consequently the same remains in full force and effect; that
the reservation by the donor of lifetime usufruct indicated that he
transferred to Mercedes the ownership over the donated properties; that
the right to sell belonged to the donee, and the donor's right referred to
that of merely giving consent; that the donor changed his intention by
donating inter vivos properties already donated mortis causa; that the
transfer to Mercedes' name of the tax declarations pertaining to the
donated properties implied that the donation was inter vivos; and that
Mercedes did not purchase two of the six parcels of land donated to her.
Issue:
Whether or not the donation was inter vivos or mortis causa?
SUPREME COURT:
It is a donation inter vivos.
Crucial in resolving whether the donation was inter vivos or mortis causa
is the determination of whether the donor intended to transfer the
ownership over the properties upon the execution of the deed. In
ascertaining the intention of the donor, all of the deed's provisions must
be read together.
In this case, first, the granting clause shows that Diego donated the
properties out of love and affection for the done and this is a mark of a
donation inter vivos. Second, the reservation of lifetime usufruct indicates
that the donor intended to transfer the naked ownership over the
properties. Third, the donor reserved sufficient properties for his
maintenance in accordance with his standing in society, indicating that
the donor intended to part with the six parcels of land. Lastly, the donee
accepted the donation. An acceptance clause is a mark that the donation
is inter vivos. Acceptance is a requirement for donations inter vivos.
Donations mortis causa, being in the form of a will, are not required to be
accepted by the donees during the donors' lifetime.

A limitation on the right to sell during the donors' lifetime implied that
ownership had passed to the donees and donation was already effective
during the donors' lifetime. The attending circumstances in the execution
of the subject donation also demonstrated the real intent of the donor to
transfer the ownership over the subject properties upon its execution.
Prior to the execution of donation inter vivos, the Danlag spouses already
executed three donations mortis causa.

Lastly, a valid donation, once accepted, becomes irrevocable, except on

account of officiousness, failure by the donee to comply with the charges
imposed in the donation, or ingratitude. The donor-spouses did not invoke
any of these reasons in the deed of revocation. Furthermore, the records
do not show that the donor-spouses instituted any action to revoke the,
consequently, the supposed revocation on September 29, 1979, had no
legal effect.

WHEREFORE, the instant petition for review is DENIED. The assailed

decision of the Court of Appeals, is AFFIRMED.