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treatment of claims for taxes charged against the estate of the decedent. Such taxes were exempted from the application ofthe statute of non-claims, and this isjustified by the necessity of government funding, immortalized in the maxim that

taxes are the lifeblood of the government. Vectigalia nervi sunt rei publicae taxes are the sinews of the state.

VERA v. FERNANDEZ

GR No. L-31364 March 30, 1979

89 SCRA 199

FACTS: The BIR filed on July 29, 1969 a motion for allowance of claim and for payment of taxes representing the

estate's tax deficiencies in 1963 to 1964 in the intestate proceedings of Luis Tongoy. The administrator opposed arguing

that the claim was already barred by the statute of limitation, Section 2 and Section 5 of Rule 86 of the Rules of Court

which provides that all claims for money against the decedent, arising from contracts, express or implied, whether the

same be due, not due, or contingent, all claims for funeral expenses and expenses for the last sickness of the decedent, and

judgment for money against the decedent, must be filed within the time limited in the notice; otherwise they are barred

forever.

ISSUE: Does the statute of non-claims of the Rules of Court bar the claim of the government for unpaid taxes?

HELD: No. The reason for the more liberal treatment of claims for taxes against a decedent's estate in the form of

exception from the application of the statute of non-claims, is not hard to find. Taxes are the lifeblood of the Government

and their prompt and certain availability are imperious need. (CIR vs. Pineda, 21 SCRA 105). Upon taxation depends the

Government ability to serve the people for whose benefit taxes are collected. To safeguard such interest, neglect or

omission of government officials entrusted with the collection of taxes should not be allowed to bring harm or detriment

to the people, in the same manner as private persons may be made to suffer individually on account of his own negligence,

the presumption being that they take good care of their personal affairs. This should not hold true to government officials

with respect to matters not of their own personal concern. This is the philosophy behind the government's exception, as a

general rule, from the operation of the principle of estoppel.

DIZON vs. CTAApril 30, 2008G.R. No. 140944

FactsJose P. Fernandez died in November 7, 1987. Thereafter, a pet it ion for the proba te of his will

was filed. Theprobatec o u r t a p p o i n t e d A t t y . R a f a e l A r s e n i o P . D i z o n a s administrator ofthe Estate of Jose Fernandez. .An estate tax return was filed later on which showed ZERO estate tax liability. BIR thereafterissued a deficiency estate tax assessment, demanding payment of Php 66.97 million as deficiency estate tax. This wassubsequently reduced by CTA to Php 37.42 million. The CA affirmed the CTAsruling, hence, the instant petition. The

petitioner claims that in as much as the valid claims

of c r e d i t o r s a g a i ns t t h e E s t a t e a r e i n e x c e s s o f t h e g r o s s e s t a t e , n oe s t a t e t a x w a s du e . O n t h e o t h e r h a nd , r esponden ts argue t ha t s ince t he c laims o f t he Estatescreditors have been condoned, such claims may no longer be deducted from the gross estate of the decedent.IssueWhether 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 withits creditors.

Ruling:YES.Following the US Supreme Courtsruling in Ithaca Trust Co.v . U n i t e d S t a t e s

, t h e C o u r t h e l d t h a t p o s t - d e a t h developments are not material in determining the amountof deduction. This is because estate tax is a tax imposed on the act of transferr ing property by willor int estacy and, b e c a use t he a c t o n w h ic h t h e t ax i s l e vi ed oc cu r s a t a discrete time, i.e., the instance ofdeath, the net value of the property trans ferred should be asc erta ined, as nearly aspossible, as of the t hattime. This is the date-of-death valuation rule. The Court, in adopting the date-of-death valuation principle, explained that:

First.T h e r e i s n o l a w , n o r d o w e d i s c e r n a n y legis la tive intent in our tax laws, which d is regards

the date-of-death valuation principle and particularlyprovides that post -death developments must beco ns id er ed i n de te r mi ni ng th e ne t va lu e of th eestate. It bears emphasis

that tax burdens are not to be imposed, nor presume d to be imposed, beyond what the statute expressly and clearlyimports, tax statutes being construedstrictissimi juris against the government.

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Second

. Such construction finds relevance andconsistency in our Rules on Special Proceedings wherein theterm "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 agains t the de ceased in his lifetime, or liability contracted bythe deceased before his death. Therefore, the claims existing at the time of death are significant to, and should be madet h e b a s i s o f , t h e d e t e r m i n a t i o n o f a l l o w a b l e deductions.