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GR No L-50638 July 25, 1983

Solinap Tiburcio Lutero
Heirs of Lutero e.g. Juanito Lutero
 Spouses Tiburcio Lutero and Asuncion Magalona, owners of Hacienda Tambal, leased said property to Solinap for 10 years at P50K a year.
o Lease Contract also provided that sum of P25K should be paid by Solinap to PNB to amortize the indebtedness of the Sps Lutero.
 TIburcio Lutero died in 1971.

 Tiburcio’s heirs instituted testate estate proceedings of deceased, presided by respondent Judge Del Rosario.
 Judge Del Rosario, CFI Iloilo: ruled that the administrator was authorized to scout among the testamentary heirs who is financially in a
position to pay all the unpaid obligations of the estate, with right to subrogation. (this is to protect estate since interest was accruing)
 Juanito Lutero (Tiburcio’s grandson and heir) paid PNB P25K as partial settlement of Tiburcio’s obligations.
 Thereafter, Juanito filed motion before the testate court for reimbursement from Solinap of the amount he paid.
o He argued that the said amount should have been paid by Solinap as stipulated in the lease contract.

 Before the above motion by Juanito Lutero could be resolved, Solinap filed a separate action against the Spouses Juanito Lutero for
collection of P71,000.00; averred that --
1 – Sps Lutero borrowed from him P45,000 for which Sps Lutero executed a real estate mortgage;
2 – Sps Lutero made additional loan of P3,000.00, evidenced by a receipt;
3 – Sps Lutero are iable to him for sum of P23,000, wc is value of certain dishonored checks issued by them to him
 CFI: granted Sps Lutero's motion for reimbursement from Solinap of sum of P25,000plus interest.
 Solinap filed petition for certiorari assailing above order.

WoN the obligation of Solinap to Lutero may be compensated or set-off against the amount sought to be recovered in an action for sum of money
filed by Solinap against the Lutero. --NO

Solinap averred: amount payable to Sps Lutero should be compensated against Sps Lutero's indebtedness to him of P71,000, relying on Art 1278 of
Civil Code to the effect that compensation shall take place when two persons, on their own right, are creditors and debtors of each other.
Therefore, mutual obligations of the parties be extinguished to the extent of their respective amounts.
Court ruled (with Sps Lutero):
 Petition by Solinap is devoid of merit.
 Art 1279 of Civil Code provides that compensation can take place only if both obligations are liquidated.

In this case ---

 Solinap's claim against Sps Lutero is still pending determination by the court.
 While it is not for this Court to pass upon the merits of Solinap's cause of action in that case, it appears that the claim asserted by Solinap is
disputed by Sps Lutero on both factual and legal grounds. If counterclaim by Sps Lutero is found to be meritorious, their claim can defeat
Solinap's claim of compensation.
 Upon this premise, Solinap’s claim in the case cannot be categorized as liquidated credit which may properly be compensated against his
 Further, as this Court ruled in Mialhe vs. Halili, "compensation cannot take place where one's claim against the other is still the subject of
court litigation.
(ELAM: In short - It is a requirement for compensation to take place, that the amount involved be certain and liquidated)

WHEREFORE, the petition is dismissed, with costs against petitioner. SO ORDERED.