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Tax Compensation in Estate Claims

This case discusses whether estate and inheritance taxes can be offset by claims the deceased person's estate has against the government. The Supreme Court ruled that compensation by operation of law is permissible. The facts were that the estate administrator owed estate and inheritance taxes, but the government also owed money to the deceased person's estate for cadastral survey work. The court had previously ordered the government to pay the estate the money it owed. As both the tax debt and the debt for survey work were already due and demandable, compensation took place automatically according to the Civil Code to offset the amounts owed. The Court affirmed this ruling.

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Ivan Luzuriaga
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91 views1 page

Tax Compensation in Estate Claims

This case discusses whether estate and inheritance taxes can be offset by claims the deceased person's estate has against the government. The Supreme Court ruled that compensation by operation of law is permissible. The facts were that the estate administrator owed estate and inheritance taxes, but the government also owed money to the deceased person's estate for cadastral survey work. The court had previously ordered the government to pay the estate the money it owed. As both the tax debt and the debt for survey work were already due and demandable, compensation took place automatically according to the Civil Code to offset the amounts owed. The Court affirmed this ruling.

Uploaded by

Ivan Luzuriaga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MELECIO

R. DOMINGO v. HON. GARLITOS and SIMEONA K. PRICE


JUNE 29, 1963; G.R. No. L-18994
TOPIC: GENERAL PRINCIPLES OF TAXATION

Facts:
In the case of Domingo v. Hon. Moscoso, the Supreme Court declared as final and executory the
order for the payment of estate and inheritance taxes, charges, and penalties issued by the CFI
in a special proceeding. To enforce the claims against the estate, the fiscal presented a petition
to the court for the execution of the judgement. The petition was denied by the court by stating
that the execution is not justifiable as the Government is indebted to the estate under
administration.

The order of the court stated that Director Zoilo Castrillo, Director of the Bureau of Lands, pay
Mrs. Simeona K. Price, Administratrix of the estate of her late husband Walter Scott Price, the
sum of Php 368, 140.00 ad a sum of Php 262, 200.00, in accordance with RA 2700, for the
payment to the Leyte Cadastral Survey, Inc. represented by the aforementioned administratrix.
The Court also orders the payment of inheritance taxes due to the Collector of Internal Revenue
to be deducted from the amount Php 262, 000.000 due and payable to Mrs. Price, in this estate,
the balance to be paid by the Government to her.

Issue/s:
Whether or not the estate and inheritance taxes may be compensated by the claims of the
intestate?

Held/Doctrine:
YES, it is capable of being compensated by operation of law.

The fact that the court having jurisdiction of the estate had found that the claim of the estate
against the Government has been appropriated for the purpose by a corresponding law (Rep Act
No. 2700) shows that both the claim of the Government for inheritance taxes and the claim of
the intestate for services rendered have already become overdue and demandable as 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.

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