Myline Cordial

Melecio R. Domingo, as Commissioner of Internal Revenue vs. Hon. Lorenzo C. Garlitos, in his capacity as Judge of the Court of First Instance of Leyte, and Simeona K. Price, as Administratrix of the Intestate Estate of the late Walter Scott Price
G.R. No. L-18994 June 29, 1963

FACTS:
In special proceedings No. 14 entitled “In the matter of the Intestate Estate of the Late Walter Scott Price”, the Court of First Instance of Leyte ordered the payment of the estate and inheritance taxes, charges and penalties, amounting to P40,058.55 by the estate. It became final and executory so the fiscal applied for the execution of the judgment which was denied on the ground that the Government was indebted to the estate in the amount of P262,200 which had been appropriated for the purposes of R.A. No. 2700.
Furthermore, the Court ordered that the payment of the claim of the Collector of Internal Revenue be deferred until the Government shall have paid its accounts to the administratrix herein amounting to P262,200.00

ISSUE:
Are compensation and writ of execution the proper procedure for the payment of debts and expenses of administration?

RULING:
No, a writ of execution is not the proper procedure for the payment of debts and expenses of administration. The proper procedure is for the court to order the sale of personal estate or the sale or mortgage of real property of the deceased and all debts or expenses of administrator and with the written notice to all the heirs, legatees and devisees residing in the Philippines. And when sale or mortgage of real estate is to be made, the regulations contained in Rule 90, section 7, of the Rules of Court should be complied with.
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”

The Court allowed the compensation since the Government had not denied it owed the estate’s claim.  It considered that both the claim of the Government for inheritance taxes and the claim of the intestate for services rendered had already become overdue and demandable as well as fully liquidated. In fact, a law (Republic Act No. 2700) has appropriated a  fund for its payment.

Full Text: Domingo vs. Garlitos G.R. No. L-18994 June 29, 1963