Domingo v.

Garlitos
Facts:
1. In Melecio Domingo v. Judge Moscoso SC declared as final and executor the
order of payment by the estate of Walter Scott Price of estate & inheritance taxes,
charges, andpenalties @P40K.
2. Petition for execution of this judgment was sought Atty Benedicto submitted:
a. Note by the then Pres. Carlos Garcia directing the Dir. Of Lands to pay Mrs. Price
(administratix of Walter Prices estate) @P369,140
b. RA 2700, page 765: appropriating P262,200 for payment to Mrs. Price.
3. CFI: Petition DENIED, execution is not justifiable since the Govt is indebted to the
estate. The payment of the claim of CIR deferred until the Govt has paid this debt.
Hence this petition to Set Aside the above order.
Issue: w/n the set-off/deferment of the claim of CIR is proper.
Held:
It is proper. Compensation/set-off of taxes may happen by operation of law when
bothdebts are due and demandable.
1. The ordinary procedure to settle claims before an estate is not a petition for
execution,but by presenting a claim before the probate court.
a. Aldamiz vs. Judge of CFI Mindoro- Execution may issue only where the devisees,
legatees or heirs have entered into possession of their respective portions in the
estate prior to settlement and payment of the debts and expenses of administration
and it is later ascertained that there are such debts and expenses to be paid, in
which case "the court having jurisdiction of the estate may, by order for that
purpose, after hearing, settle the amount of their several liabilities, and order how
much and in what manner each person shall contribute, and may issue execution if
circumstances require" (Rule 89, section 6; see also Rule 74, Section 4; Emphasis
supplied.)
b. Legal basis is the fact that the properties belonging to the state are under
custodia legis, which continues until said properties have been distributed among
the heirs.
2. Court having jurisdiction also found that the claim of the estate has been
recognized by the govt and has already appropriated the corresponding amount.
3. Claim of the Govt for inheritance taxes against the estate is due and
demandable. The claim of the estate against the Govt is also due, demandable and

is 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.