Doctrine of equitable recoupment

The doctrine of equitable recoupment is a principle which allows a taxpayer, whose claim for refund has been barred due to prescription, to recover said tax by setting off the prescribed refund against a tax that may be due and collectible from him. Under this doctrine, the taxpayer is allowed to credit such refund to his existing tax liability. However, the Supreme Court rejected this doctrine in Collector v. UST (G.R. No. L‐11274, Nov. 28, 1958), since it may work to tempt both parties to delay and neglect their respective pursuits of legal action within the period set by law.