Silahis Mktg. Corp. vs.

IAC 180 SCRA 217

FACTS:
Gregorio De Leon sold and delivered to Silahis Marketing Corporation various items of
merchandise payable within 30 days from date of the covering invoices. Silahis failed to pay
despite repeated demands so De Leon filed a complaint for the collection, plus accrued interest,
attorney's fees plus litigation cost. Silahis admitted the complaint insofar as the invoices are
concerned but t countered by: (1) presenting a debit memo representing the unrealized profit for
their commission with the transaction that De Leon made with Dole Phil. without coursing
through Silahis; and (2) Asking for the cancellation of the defective stainless steel wire which
was returned by Silahis’ client.
The lower court confirmed the liability of Silahis for the claim of de Leon but at the same time
ordered that it be partially offset by Silahis' counterclaim as contained in the debit memo for
unrealized profit and commission.
CA set aside the lower court’s decision as it found that there was no agreement, verbal or
otherwise, nor was there any contractual obligation between De Leon and Silahis prohibiting any
direct sales to Dole by de Leon; nor was there anything in the debit memo obligating de Leon to
pay a commission to Silahis for the sale of sprockets to Dole.
ISSUE: Whether De Leon is obliged to compensate Silahis for the latter’s contention.
Rule of Law: Compensation takes place when two persons, in their own right, are creditors and
debtors to each other. Article 1279 of the Civil Code provides that: "In order that compensation
may be proper, it is necessary:
1) that each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;
2) that both debts consist in a sum of money, or if the things due are consumable, they be
of the same kind, and also of the same quality if the latter has been stated;
3) that the two debts be due;
4) that they be liquidated and demandable;
5) that over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.
APPLICATION:
No, the Court found no proof to show that De Leon obligated himself to set-off or compensate
Silahis’ outstanding accounts with the alleged unrealized commission from the assailed sale of
sprockets to Dole. When all the requisites mentioned in Art. 1279 of the Civil Code are present,
compensation takes effect by operation of law, even without the consent or knowledge of the
creditors and debtors.
CONCLUSION:
The Court agrees with respondent appellate court that there is no evidence on record from which
it can be inferred that there was any agreement between the petitioner and private respondent
prohibiting the latter from selling directly to Dole Philippines, Incorporated. Hence, the decision
of the appellate court was affirmed, the SC ruled in favor of De Leon.