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Legal Compensation in Debt Disputes

This case involves a dispute over debts and promissory notes between several parties: Congeneric, Ramon Mojica, Mever Films, and Perez. Congeneric owed money to both Mojica and Mever Films, while also owing money to Perez. Mever Films attempted to use promissory notes assigned to it by Mojica to offset the debt Congeneric owed, but the Supreme Court ruled that legal compensation was not possible because the notes Mojica assigned were not yet due based on previous rollover agreements. Therefore, the petition was granted and no compensation could take place between the debts.

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202 views2 pages

Legal Compensation in Debt Disputes

This case involves a dispute over debts and promissory notes between several parties: Congeneric, Ramon Mojica, Mever Films, and Perez. Congeneric owed money to both Mojica and Mever Films, while also owing money to Perez. Mever Films attempted to use promissory notes assigned to it by Mojica to offset the debt Congeneric owed, but the Supreme Court ruled that legal compensation was not possible because the notes Mojica assigned were not yet due based on previous rollover agreements. Therefore, the petition was granted and no compensation could take place between the debts.

Uploaded by

VEDIA GENON
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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329

Perez v. CA
127 SCRA 636
Melencio-Herrera, J.

DOCTRINE OF THE LAW: No legal compensation can take place where the loan
instruments to be set-off are not yet due and demandable.

FACTS: This is a petition for review on certiorari of a decision of the Court of Appeals.
Congeneric is a debtor of Ramon Mojica or an entity owned by him evidenced by two
promissory notes 1) in the amount of P111,973.58 as bill 1298 to mature on August 6,
1974. (2) for the sum of P208,666.67 as bill 1419 to mature on August 13, 1974. On the
other hand, Mever Films, Inc. the private respondent herein is a debtor of Congeneric
with the amount of P500K evidenced by a negotiable promissory note to mature on
August 5, 1974. Then, Congeneric received P200K from petitioner Perez and issued to
her confirmation of sale and petitioner was to be paid P203,483.33 on August 5, 1974,
which Congeneric would make collection on behalf of petitioner Perez. While private
respondent paid P100K to Congeneric leaving a balance of P400K. Then, Congeneric
paid petitioner the sum of P103,483.33, the P3,483.33 coming from its own funds.
Congeneric also paid Mojica the interest due however the principal in 2 bills being
rolled-over to mature on Oct. 4 and 11, 1974 respectively. On Sept. 9, 1974, Mojica
assigned the two bills to private respondent Mever through a notarized deed.
Consequently, respondent surrendered the two bills to Congeneric and asked the latter
to compute the balance of the account of it with Congeneric, taking account of the
amounts of the two bills, which balance respondent would then pay. However,
Congeneric advised respondent that of the original amount of P500K, the sum of P200K
was sold to a third party, but not naming Corazon Perez (petitioner) as the third party
and confirmed in writing to respondent that the previous “sale” of P200K out of the
P500K and advised that it could not take account of the assignment to private
respondent of Bill 1298 and Bill 1419. Respondent turned over to the Provincial Sheriff
of Rizal, the sum of P79,359.75, which had computed as the amount it was still owing
Congeneric and which was subject to garnishment. Petitioner Perez filed suit before the
CFI of Rizal against private respondent for the recovery of P100K, interest, damages,
and attorney’s fees. The Trial Court rendered judgment in favor of petitioner but
reversed by the CA. Hence, this petition.

ISSUE: Whether there is a legal compensation.

RULING: NO. Petition granted. Since on the respective dates of maturity, August 6 and
13, 1974, respectively, Ramon C. Mojica was still the holder of those bills, it can be
safely assumed that it was he who had asked for the roll-overs on the said dates. Mever
was bound by the roll-overs since the assignment to it was made only on Sept. 9, 1974.
The inevitable result of the roll-overs of the principals was that Bill No. 1298 and Bill No.
1419 were not yet due and demandable as of the date of their assignment by Mojica to
Mever on Sept. 9, 1974, nor as of Oct. 3, 1974 when Mever surrendered said bills to
Congeneric. As a consequence, no legal compensation could have taken place
because, for it to exist, the two debts, among other requisites, must be due and
demandable.

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