G.R. No.

L-22490

GAN TION​ Petitioners,

VS.
HON. COURT OF APPEALS, HON. JUDGE AGUSTIN P. MONTESA, as Judge of the
Court of First Instance of Manila, ONG WAN SIENG and the SHERIFF OF
MANILA,​ Respondents.

Article 1278 and 1279 - ​Compensation

May 21, 1969

FACTS OF THE CASE:

Gan Tion filed an ejectment case against Ong Wan Sieng, contending that OWS
was in default for 2 months of rent at P180/month. OWS denied the allegation saying
that the agreed monthly rental was only P160/month, which he offered to pay but was
refused by Gan Tion. Gan Tion obtained a favorable judgment but upon appeal, the CFI
reversed the judgment and ordered the plaintiff to pay P500 as attorney’s fees. Later,
Gan Tion served notice that he was increasing rent to P180/month plus the arrears at
the old rate amounting to P4,320. OWS was able to obtain a writ of execution of
judgment for attorney’s fees in his favor, and Gan Tion pleaded partial legal
compensation since OWS was still indebted to him. CA ruled against Gan Tion, stating
that P500 can only be considered as compensation if Gan Tion and OWS were
creditors and debtors of one another, but the P500 attorney’s fees did not belong to Gan
Tion but to his attorney therefore the attorney was the creditor.

ISSUE/S:

Whether or not there has been legal compensation between petitioner Gan Tion
and respondent Ong Wan Sieng.

CONCLUSION:

Yes. The P500 does not belong to attorney but to Gan Tion. OWS is the proper
creditor of the P500 and may properly be the subject of legal compensation against his
debts. Such credit, therefore, may properly be the subject of legal compensation. It
would be unjust to ask Gan Tion to pay when OWS owes him P4, 320.