Dizon v. CTA
G.R. No. 140944, 30 April 2008
Facts:
1.
Jose P. Fernandez (Jose) died.
Thereafter, a petition for the probate of
his will was filed.
2.
The probate court then appointed retired Justice Dizon and petitioner, Atty. Rafael
Arsenio P. Dizon as Special and Assistant Special Administrator.
3.
Justice Dizon informed respondent Commissioner of the Bureau of
Internal Revenue (BIR) of the special proceedings for the Estate.
4.
Petitioner alleged that several requests for extension of the period to
file the required estate tax return were granted by the BIR since the assets of
the estate, as well as the claims against it, had yet to be collated, determined
and identified.
5.
Justice Dizon authorized Atty. Gonzales) to sign and file on behalf of
the Estate the required estate tax return and to represent the same in securing
a Certificate of Tax Clearance.
6.
Atty. Gonzales wrote a letter addressed to the BIR Regional Director
and filed the estate tax return with the same BIR Regional Office, showing therein
a NIL estate tax liability.
7.
BIR Regional Director issued Certification stating that the taxes due
on the transfer of real and personal properties of Jose had been fully paid and
said properties may be transferred to his heirs.
8.
Petitioner requested the probate court's authority to sell several
properties forming part of the Estate, for the purpose of paying its creditors.
However, the Assistant Commissioner for Collection of the BIR, issued Estate
Tax Assessment Notice demanding the payment of P66,973,985.40 as deficiency
estate tax.
9.
Atty. Gonzales moved for the reconsideration of the said estate tax
assessment but the BIR Commissioner denied the request. So petitioner filed a
petition for review before the CTA.
10.
During the hearings conducted,
petitioner did not present testimonial evidence but merely documentary evidence
consisting of the following:
a. Letter to CIR informing them of
the probate proceedings
b. Petition for probate of will and
issuance of letter of administration
c. Inventory
d. Several claims against the estate
e. Estate tax return
f. Certification of Payment of Taxes
11.
Respondent's [BIR] counsel presented one witness in the person of
Alberto Enriquez, who was one of the revenue examiners who conducted the
investigation on the estate tax case of Jose. In the course of the direct
examination of the witness, he identified the following:
a. Estate tax return prep by BIR
b. Demand Letter
c. Assessment Notice
d. Etc…..
12.
CTA: denied pet. For review Citing this Court's ruling in Vda. de Oñate
v. Court of Appeals, the CTA opined that the aforementioned pieces of evidence
introduced by the BIR were admissible in evidence.
a. Although the above-mentioned documents were not formally offered as
evidence for respondent, considering that respondent has been declared to have
waived the presentation thereof during the hearing on March 20, 1996,
still they could be considered as evidence for respondent since they were
properly identified during the presentation of respondent's witness, whose
testimony was duly recorded as part of the records of this case.
Besides, the documents marked as respondent's exhibits formed part of the BIR
records of the case.
b. the CTA did not fully adopt the
assessment made by the BIR and it came up with its own computation of the
deficiency estate tax.= P 37,419,493.7
13.
Petitioner filed a pet. For review with the CA. CA: Affirmed CTA; the
petitioner's act of filing an estate tax return with the BIR and the issuance
of BIR Certification Nos. 2052 and 2053 did not deprive the BIR Commissioner of
her authority to re-examine or re-assess the said return filed on behalf of the
Estate. MR denied
Issue:
WON the CTA and the CA gravely erred in allowing the
admission of the pieces of evidence which were not formally offered by the BIR
Contentions:
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; that the lack of a formal offer of evidence is fatal to BIR's
cause; that the doctrine laid down in Vda. de Oñate has already been abandoned
in a long line of cases in which the Court held that evidence not formally
offered is without any weight or value; that Section 34 of Rule 132 of the
Rules on Evidence requiring a formal offer of evidence is mandatory in
character; that, while BIR's witness Alberto Enriquez (Alberto) in his
testimony before the CTA identified the pieces of evidence aforementioned such
that the same were marked, BIR's failure to formally offer said pieces of
evidence and depriving petitioner the opportunity to cross-examine Alberto,
render the same inadmissible in evidence; that assuming arguendo that the
ruling in Vda. de Oñate is still applicable, BIR failed to comply with the
doctrine's requisites because the documents herein remained simply part of the
BIR records and were not duly incorporated in the court records
Respondent- counters that the documents, being part of
the records of the case and duly identified in a duly recorded testimony are
considered evidence even if the same were not formally offered;
Held: Yes
No evidentiary value can be given the pieces of
evidence submitted by the BIR, as the rules on documentary evidence require
that these documents must be formally offered before the CTA.
The CTA and the CA rely solely on the case of Vda. de
Oñate, 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. Although in a long line of cases many
of which were decided after Vda. de Oñate, we held that courts cannot consider
evidence which has not been formally offered, nevertheless, petitioner cannot
validly assume that the doctrine laid down in Vda. de Oñate has already been abandoned.
Recently, in Ramos v. Dizon, this Court, applying the
said doctrine, ruled that the trial court judge therein committed no error when
he admitted and considered the respondents' exhibits in the resolution of the
case, notwithstanding the fact that the same were not formally offered.
Indubitably, the doctrine laid down in Vda. De Oñate
still subsists in this jurisdiction. In Vda. de Oñate, we held that:
From the foregoing provision, it is clear that for
evidence to be considered, the same must be formally offered. Corollarily, the
mere fact that a particular document is identified and marked as an exhibit
does not mean that it has already been offered as part of the evidence of a
party. Xxx
However, in People v. Napat-a citing People v. Mate,
we relaxed the foregoing rule and allowed evidence not formally offered to be
admitted and considered by the trial court provided the following requirements
are present, viz.: first, the same must have been duly identified by testimony
duly recorded and, second, the same must have been incorporated in the records
of the case.
From the foregoing declaration, however, it is clear
that Vda. de Oñate 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.
In this case, we find that these requirements have not
been satisfied. The assailed pieces of evidence were presented and marked
during the trial particularly when Alberto took the witness stand. Alberto
identified these pieces of evidence in his direct testimony. He was also
subjected to cross-examination and re-cross examination by petitioner. But
Alberto's account and the exchanges between Alberto and petitioner did not
sufficiently describe the contents of the said pieces of evidence presented by
the BIR. In fact, petitioner sought that the lead examiner, one Ma. Anabella A.
Abuloc, be summoned totestify, inasmuch as Alberto was incompetent to answer questions
relative to the working papers. The lead examiner never testified. Moreover,
while Alberto's testimony identifying the BIR's evidence was duly recorded, the
BIR documents themselves were not incorporated in the records of the case.
A common fact threads through Vda. de Oñate 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.
Thus, we held in Ramos:
In this case, we find and so rule that these
requirements have been satisfied.
The exhibits in question were presented and marked
during the pre-trial of the case thus, they have been incorporated into the records.
Further, Elpidio himself explained the contents of these exhibits when he was
interrogated by respondents' counsel...
While the CTA is not governed strictly by technical
rules of evidence, as rules of procedure are not ends in themselves and are primarily
intended as tools in the administration of justice, the presentation of the
BIR's evidence is not a mere procedural technicality which may be disregarded
considering that it is the only means by which the CTA may ascertain and verify
the truth of BIR's claims against the Estate. The BIR's failure to formally
offer these pieces of evidence, despite CTA's directives, is fatal to its
cause. Such failure is aggravated by the fact that not even a single reason was
advanced by the BIR to justify such fatal omission. This, we take against the
BIR.
Per the records of this case, the BIR was directed to
present its evidence[48] in the
hearing of February 21, 1996, but BIR's counsel failed
to appear.[49] The CTA denied petitioner's motion to consider BIR's
presentation of evidence as waived, with a warning to BIR that such
presentation would be considered waived if BIR's evidence would not be
presented at the next hearing. Again, in the hearing of March 20, 1996, BIR's
counsel
failed to appear.[50] Thus, in its Resolution[51]
dated March 21, 1996, the CTA considered the BIR to have waived presentation of
its evidence. In the same Resolution, the parties were directed to file their
respective memorandum. Petitioner complied but BIR failed to
do so.[52] In all of these proceedings, BIR was duly
notified. Hence, in this case, we are constrained to apply our ruling in Heirs
of Pedro Pasag v. Parocha:[53]
A formal offer is necessary because judges are
mandated to rest their findings of facts and their judgment only and strictly
upon the evidence offered by the parties at the trial. Its function is to
enable the trial judge to know the purpose or purposes for which the proponent
is presenting the evidence. On the other hand, this allows opposing parties to
examine the evidence and object to its admissibility. Moreover, it facilitates
review as the appellate court will not be required to review documents not
previously scrutinized by the trial court.
Strict adherence to the said rule is not a trivial
matter. The Court in Constantino v. Court of Appeals ruled that the formal
offer of one's evidence is deemed waived after failing to submit it within a
considerable period of time. It explained that the court cannot admit an offer
of evidence made after a lapse of three (3) months because to do so would
"condone an inexcusable laxity if not non-compliance with a court order
which, in effect, would encourage needless delays and derail the speedy
administration of justice."
Applying the aforementioned principle in this case, we
find that the trial court had reasonable ground to consider that petitioners
had waived their right to make a formal offer of documentary or object
evidence. Despite several extensions of time to make their formal offer,
petitioners failed to comply with their commitment and allowed almost five
months to lapse before finally submitting it. Petitioners' failure to comply
with the rule on admissibility of evidence is anathema to the efficient,
effective, and expeditious dispensation of justice.
*other issue:
It is admitted that the claims of the Estate's
aforementioned creditors have been condoned. Verily, the second issue in this case involves the construction of
Section 79 of the NIRC which provides for the allowable deductions from the
gross estate of the decedent.
The specific question is whether the actual claims of
the aforementioned 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.
We express our agreement with the date-of-death
valuation rule. Xxx the claims existing at the time of death are significant
to, and should be made the basis of, the determination of allowable deductions.
