GAN TION v

CA, JUDGE AGUSTIN MONTESA (CFI, Manila), ONG WAN SIENG,

SHERIFF OF MANILA
21 May 1969
Ponente: Makalintal, J.

DOCTRINE: Compensation possible only when two parties are each

other’s creditor and debtor

FACTS

1. 1961 – P filed an ejectment case against Ong Wan Sieng (OWS)

2. P contends that OWS was in default for 2 months of rent at
180/month
3. OWS contends that rent was only 160/month, and that he tried to
pay P but was refused
4. CFI ruled in favor of OWS, awarding latter P500 in attorney’s fees
5. 1963 – P notified OWS that rent would increase 180/month, and
demanded payment of unpaid rent amounting to 4k from 1961-
1963
6. OWS able to obtain writ of execution for P500 attorney’s fees
7. P complained that P500 should be considered partial legal
compensation to him for the 4k debt owed by OWS
8. CA ruled against P, stating that P500 can only be considered
legal compensation if P and OWS were creditors and debtors of
one another, but the P500 attorney’s fees did not belong to P but
to his attorney, and therefore the attorney was the creditor, not P

ISSUES

1. WON attorney’s fees can be subject of legal compensation

RULING

1. Yes
a. P500 does not belong to attorney but to P
b. P is the proper creditor of the P500
c. P500 may properly be the subject of legal compensation
against OWS’ debts
d. Unjust to ask P to pay P500 when OWS owes him 4k

CA decision reversed