People v. Soriano
REITERATIONFacts
The Antecedents: Adelaida Soriano (petitioner) was charged with estafa for allegedly defrauding Consolacion R. Alagao (private complainant) of ₱85,607.00 by misrepresenting her business dealings and failing to pay for 398 sacks of corn grits delivered by Alagao. Alagao claimed Soriano made her sign a cash voucher for the full amount while only giving her ₱3,000, and that Soriano subsequently disappeared. Prior to this, Alagao's daughter, Evelyn, had obtained a ₱40,000 loan from Soriano, secured by a real estate mortgage, with an agreement that Alagao would give Soriano ¼ of every harvest until the loan was paid. Alagao admitted receiving ₱51,730 in fertilizers and cash advances from Soriano, not just the ₱40,000 stated in the loan contract. Procedural History: The Regional Trial Court (RTC) found petitioner guilty of estafa and ordered her to pay ₱85,607.00. The Court of Appeals (CA) acquitted petitioner of estafa due to insufficient proof of deceit but ordered her to pay ₱74,807.00 as civil liability for the remaining balance of the corn grits' value, plus legal interest. The CA arrived at this amount by deducting ₱3,000 (cash payment) and ₱7,800 (value of 64 sacks intended as partial payment) from the total value of ₱85,607. The Petition: Petitioner assailed her civil liability, arguing the CA erred in computing it by failing to correctly apply the principle of set-off or compensation. She contended that Alagao's indebtedness should have been ₱51,730 (as admitted during pre-trial) instead of ₱40,000, and that the CA failed to offset the value of ¼ share of the harvest (₱57,200) against her indebtedness.
Issue(s)
Whether the Court of Appeals erred in the computation of petitioner's civil liability by failing to correctly apply the principle of set-off or compensation. Whether the Court of Appeals erred in placing private complainant's indebtedness to petitioner at ₱40,000.00 instead of ₱51,730.00. Whether the Court of Appeals erred in omitting to off-set the amount equivalent to ¼ share of the harvest against petitioner's indebtedness.
Ruling
The Supreme Court modified the ruling of the Court of Appeals. While acquitting the petitioner of estafa, the Court ordered her to pay ₱30,877 as payment for the remaining balance of the cash value of the 398 sacks of corn grains, plus legal interest at the rate of 6% per annum computed from the finality of the Decision until its full satisfaction.
Ratio Decidendi
On the computation of civil liability and the application of set-off or compensation: The Court found that all requisites for legal compensation under Article 1279 of the Civil Code were present. Firstly, both parties were principal debtors and creditors to each other; petitioner owed ₱85,607 for the corn grits, and Alagao owed petitioner ₱51,730 for the loan and advances. Secondly, both debts consisted of sums of money. Thirdly, both debts were considered due, as Alagao's debt, though not yet due at the time of delivery, eventually became due by the time of trial. Fourthly, both debts were liquidated and demandable, with no dispute as to the amounts involved, especially since Alagao admitted receiving ₱51,730 during pre-trial. Lastly, neither debt was subject to retention or controversy by a third person. Therefore, compensation took effect by operation of law, extinguishing both debts to their concurrent amount. On Alagao's indebtedness: The Court disagreed with the respondent People's contention that Alagao's loan was only ₱40,000. It upheld Alagao's admission during pre-trial that she received ₱51,730 in the form of cash advances and fertilizers. This admission, being a judicial admission, requires no further proof and binds the parties. Thus, the amount of Alagao's indebtedness to petitioner was correctly established as ₱51,730 for the purpose of compensation. On the ¼ share of the harvest: The Court ruled that the ¼ share in the harvest due to petitioner could not be considered in the legal compensation. This is because the share was not a sum of money but in the form of harvests, and more importantly, it was not yet liquidated. There was a dispute regarding the number of harvests that occurred from the loan's execution until the case commenced, making the value of this share indeterminable and thus not capable of compensation under Article 1279.
Main Doctrine
Legal compensation under Article 1279 of the Civil Code requires that both debts must be due, liquidated, and demandable. If these requisites are met, compensation takes effect by operation of law, extinguishing both debts to the concurrent amount.