TAX COMPARED TO DEBT
Domingo vs. Garlitos
GR No. L-18994, June 29, 1963
Labrador, J.:
FACTS:
In a previous case, Melecio R. Domingo vs. Hon. Judge S. C. Moscoso (G.R. No.
L-14674, January 30, 1960), the Supreme Court declared as final and executory an
order for the payment of estate and inheritance taxes, charges, and penalties
to P40,058.55 against the estate of the late Walter Scott Price. Subsequently, a
for the execution of the judgment was filed by the Commissioner of Internal Revenue,
but it was denied by the Court of First Instance of Leyte. The court held that the
execution was not justifiable as the Government was allegedly indebted to the estate
the amount of P262,200.
ISSUES:
Whether or not the execution was proper
RULING:
No. The ground for denying the petition of the provincial fiscal is the fact that the
court having jurisdiction of the estate had found that the claim of the estate against the
Government has been recognized and an amount of P262,200 has already been
appropriated for the purpose by a corresponding law (Rep. Act No. 2700). Under the
above circumstances, both the claim of the Government for inheritance taxes and the
claim of the intestate for services rendered have already become overdue and
demandable is well as fully liquidated. Compensation, therefore, takes place by
operation of law, in accordance with the provisions of Articles 1279 and 1290 of the
Civil Code, and both debts are extinguished to the concurrent amount, thus:
ART. 1200. When all the requisites mentioned in article 1279 are present,
compensation takes effect by operation of law, and extinguished both debts to the
concurrent amount, even though the creditors and debtors are not aware of the
compensation.
It is clear, therefore, that the petitioner has no clear right to execute the judgment for
taxes against the estate of the deceased Walter Scott Price.
Where both the claims of the government and the taxpayer against each other have
already become due, demandable, and fully liquidated,compensation takes place by
operation of law and both obligations are extinguished to their concurrent amounts. In
the case of the taxpayer’s claim against the government, the government must have
appropriated the amount thereto.