Digest: Solinap vs. Hon. Del Rosario, et al. [GRN 50638 July 25, 1983] ESCOLIN, J.:)

FACTS: The spouses Tiburcio Lutero and Asuncion Magalona, owners of the Hacienda Tambal, leased the said hacienda to petitioner Loreto Solinap for 10 years for the stipulated rental of P50,000.00 a year. It was further agreed in the lease contract that P25,000.00 from the rental should be paid by Solinap to the PNB to amortize the indebtedness of the spouses Lutero. When Tiburcio Lutero died, his heirs instituted the testate estate proceedings. On the basis of an order, respondents Juanito Lutero [grandson and heir of the late Tiburcio] and his wife Hardivi R. Lutero paid the PNB the sum of P25,000.00 as partial settlement of the deceased's obligations. Spouses Lutero filed a motion seeking reimbursement from the petitioner. They argued that the said amount should have been paid by petitioner to the PNB, as stipulated in the lease contract. Before the motion could be resolved, petitioner a separate action against the spouses for collection of P71,000.00 they borrowed from the petitioner. The spouses answered and pleaded a counterclaim against petitioner for P125,000.00 representing unpaid rentals on Hacienda Tambal and that petitioners purchased one-half of Hacienda Tambal. The respondent judge issued an order granting the spouses’ motion for reimbursement from petitioner of the sum of P25,000.00, plus interest. Petitioner filed a petition for certiorari before this Court, assailing the above order. Acting on the petition, the P25,000.00 to be paid by the petitioner to the private respondent Luteros may well be taken up in the final liquidation of the account between petitioner as lessee and the subject estate as lessor. Thereafter the respondent Luteros filed with the respondent court a motion raising that the amount payable to private respondents should be compensated against the latter's indebtedness to him amounting to P7 1,000.00. This motion was denied by respondent judge on the ground that "the claim of Loreto Solinap against spouses was yet to be liquidated and determined, such that the requirement in Article 1279 of the New Civil Code that both debts are liquidated for compensation to take place has not been established by the oppositor Loreto Solinap. Petitioner filed a motion for reconsideration of this order, but the same was denied. Hence, this petition.

ISSUE: whether or not the obligation of petitioner to private respondents may be compensated or set-off against the amount sought to be recovered in an action for a sum of money filed by the former against the latter

HELD: The petition is devoid of merit. In the case at bar, the petitioner's claim against the spouses was still pending determination by the court. Petitioner’s claim in the case could not be categorized as liquidated credit which may properly be set-off against his obligation. As this Court ruled in Mialhe vs. Halili "compensation cannot take place where one's claim against the other is still the subject of court litigation. It is a requirement, for compensation to take place, that the amount involved be certain and liquidated." The petition was dismissed.