DIZON VS CA

facts:
jose p. fernandez died (nov. 7, 1987), thereafter, a petition for probate of his will was
filed with the probate court of manila. the probate court appointed retired sc justice
arsenio dizon and petitioner, atty. rafael dizon as special and assistant special
administrator, of the estate of jose fernandez. justice dizon informed commissioner of
bir(respondent) of the special proceeding of the estate.
petitioner alleged that several requests for extension of the period to file the required
estate tax return were granted by the bir since the assests of estate as well as claims
against it, had yet to be collated, determined and identified. in a letter, 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 cert. of tax clearance. so, atty. gonzales
wrote a letter to bir and filed etr (estate tax return). justice dizon passed away and the
petitioner in this case was appointed as administrator of the estate of jose fernandez.
petitioner requested the probate court to sell several properties forming part of the
estate for the payment of the creditors.
however, BIR issued estate tax assessment notice demanding a deficiency estate tax. mr
was filed for the estate tax assessment but the request was denied.
petitioner filed petition for review before the cta (respondent). denied stating that
evidence presented were not formally offered as also the cta did not fully adopt the
assessment made by the bir and it came up with its own computation of the deficiency
tax.
aggrieved, petitioner went to ca via petition for review. ca affrimed ctas ruling adopting
the full ctas ruling.

Issue: whether the actual claims of creditors may be fully allowed as deductions from
gross estate despite the fact that the said claims were reduced or condoned by
compromise agreements
The issue speaks of the construction of section 79 of NIRC which provides the allowable
deductions from the gross estate of the decedent. The specific question is whether the
actual claims of the creditors may be fully allowed as deductions despite the fact that
said claims were reduced or condoned through compromise agreement.
It was held that, where a lien claimed against the estate is certain and enforceable on
the date of the decedents death, the fact that the claimant subsequently settled for
lesser amount did not preclude that estate from deducting the entire amount of the
claim for estate tax purposes. Therefore, the claims existing at the time of death are
significant to, and should be made the basis of, the determination of allowable
deductions.

In other words, post-death developments are not material in determining the amount of
deductions.
*date of death valuation rule-