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Adelaida Soriano V People of The Philippines

Petitioner loaned Alagao P51,730 which was to be paid back within two years. Alagao delivered 398 sacks of corn to the petitioner but only received P3,000 despite the corn being worth P85,607. The court ruled that legal compensation was proper, as both parties were creditors and debtors to each other for determinable sums of money (P85,607 owed by petitioner for corn, P51,730 owed by Alagao from the loan). These concurrent debts of equal amounts were extinguished through compensation under the Civil Code.

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106 views2 pages

Adelaida Soriano V People of The Philippines

Petitioner loaned Alagao P51,730 which was to be paid back within two years. Alagao delivered 398 sacks of corn to the petitioner but only received P3,000 despite the corn being worth P85,607. The court ruled that legal compensation was proper, as both parties were creditors and debtors to each other for determinable sums of money (P85,607 owed by petitioner for corn, P51,730 owed by Alagao from the loan). These concurrent debts of equal amounts were extinguished through compensation under the Civil Code.

Uploaded by

Raina Phia Pantaleon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TOPIC: Legal Compensation

Adelaida Soriano v. People of the Philippines


G.R. No. 181692, August 14, 2013

Facts: Evelyn Alagao (Evelyn), daughter of private complainant Consolacion Alagao


(Alagao), as borrower-mortgagor, executed a “Contract of Loan Secured by Real Estate
Mortgage with Special Power hn.h
np0 q11qqqsscto Sell Mortgage Property without Judicial Proceedings” in favor of
petitioner as lender-mortgagee. The instrument provides for a P40,000 loan secured by a
parcel of land registered in Evelyn’s name. It likewise provides that the loan was to be
paid two years from the date of execution of the contract and that Evelyn agrees to give
petitioner ¼ of every harvest from her cornland until the full amount of the loan has been
paid, starting from the first harvest. Based on Alagao’s testimony, the first harvest was
made only in September 1994. Petitioner on the other hand claims that from the time the
loan was obtained until September 1994, there were already four harvests. During pre-
trial, it was admitted by Alagao that she did not only receive P40,000 as provided in the
contract of loan but P51,730 in the form of fertilizers and cash advances.

Alagao and some companions delivered 398 sacks of corn grains to petitioner. Petitioner
prepared a voucher indicating that Alagao had received the amount of P85,607 as full
payment for the 398 sacks of corn grains. Alagao signed said voucher even if she only
received P3,000. According to Alagao, 64 of the 398 sacks will serve as partial payment
of her P40,000 loan with petitioner while the remaining balance will come from the
P85,607 cash she was supposed to receive as payment for the corn grains delivered so she
can redeem her daughter’s land title.

The Regional Trial Court (RTC) of Misamis Oriental, Branch 40, rendered a decision
finding petitioner guilty beyond reasonable doubt of the crime of estafa. However, the
CA set petitioner’s conviction aside in the assailed decision. The CA ruled that the
prosecution failed to establish that petitioner made false pretenses, fraudulent acts or
fraudulent means to induce Alagao to deliver to her the 398 sacks of corn grains. In fact,
in Alagao’s testimony, she admitted that she delivered the corn grains to petitioner
because the latter was demanding payment from her and she wanted to pay her obligation
of P40,000 to petitioner so that she could get back the title of her daughter’s mortgaged
property and the balance of the total cash value of the 398 sacks of corn. Thus, the CA
held, in the absence of deceit, petitioner’s liability is only civil. Unsatisfied, petitioner is
now before the Supreme Court questioning her civil liability.

Issue: Whether legal compensation is proper.

Held: Yes. Compensation is a mode of extinguishing to the concurrent amount, the debts
of persons who in their own right are creditors and debtors of each other. The object of
compensation is the prevention of unnecessary suits and payments through the mutual
extinction by operation of law of concurring debts. Article 1279 of the Civil Code
provides for the requisites for compensation to take effect and the Court ruled that all the
requisites for compensation are present in the instant case.
First, petitioner and Alagao are debtors and creditors of each other. It is undisputable that
petitioner and Alagao owe each other sums of money. Petitioner owes P85,607 for the
value of the corn grains delivered to her by Alagao in September 1994 while Alagao
owes petitioner P51,730 by virtue of a loan extended by the latter in February 1994.
Second, both debts consist in a sum of money. There is no issue as to the P85,607 debt by
petitioner that it consists a sum of money. As to the P51,730 received by Alagao from
petitioner, though what was extended by petitioner consists of cash advances and
fertilizers, there is no dispute that said amount is payable in money. Third, both debts are
due. Upon delivery of the 398 sacks to petitioner, she was under the obligation to pay for
the value thereof as buyer. As to Alagao’s debt, the contract of loan provided that it is
payable in February 1996. Though it was not yet due in September 1994 when she
delivered the 398 sacks of corn grains to petitioner, it eventually became due at the time
of trial of the instant case. Fourth, both debts are liquidated and demandable. A debt is
liquidated when the amount is known or is determinable by inspection of the terms and
conditions of relevant documents. There is no dispute that the value of the 398 sacks of
corn grains is P85,607. And lastly, neither of the debts are subject of a controversy
commenced by a third person. There are no third-party claims with respect to Alagao’s
P51,730 loan. As to petitioner’s P85,607 debt representing the 398 sacks of corn grains,
the alleged other owners have not commenced any action to protect their claim over it.
Thus, the P85, 607 debt cannot be considered subject of a controversy by a third person.

With respect to the 1/4 share in the harvest due to petitioner as provided in the contract of
loan, the same cannot be considered in the legal compensation of the debts of the parties
since it does not consist in a sum of money, said share being in the form of harvests.
More importantly, it is not yet liquidated. There is still a dispute as to how many harvests
were made from the time of the execution of contract of loan up to the time the action
was commenced against petitioner and even when the principal obligation became due in
February 1996. Thus, the harvests due petitioner is not capable of determination.

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