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REPUBLIC v HON.

DE LOS ANGELES
June 25, 1980 | Concepcion Jr, J | Second Division |GR L-30187
Compensation
DLP

DOCTRINE: “Proof of the liquidation of a claim, in order that there be compensation of debts, is proper if such claim is disputed.
But, if the claim is undisputed, as in the case at bar, the statement is sufficient and no other proof may be required.”
CASE SUMMARY: RCA claims compensation of its rental dues with Petra Farin’s outstanding obligation with RCA. Lower court
denied the claim of compensation. Supreme court ruled that lower court erred in denying compensation of debts.

FACTS:
Spouses Petra and Benjamin Farin obtained a loan of 600k from Marcelo Steel Corporation (MSC). As security, spouses constituted a
real estate mortgage upon their parcel of land in QC. MSC asked for extra judicial foreclosure of the mortgage. Respondent Judge
Delos Angeles issued an order commanding MSC to desist from proceeding with the public auction sale.

While the above case was pending, Petra Farin leased portions of the mortgaged premises to Rice and Corn Administration (RCA)
MSC prayed that RCA pay to it the rents for the use of leased portion. MSC’s prayer was granted, and RCA was ordered to pay to
rentals directly to MSC.

MSC and Farin Spouses both filed an MR, both claiming inter alia, that
-Petra Farin has an outstanding obligation with the RCA in the amount of P263,062.40, representing rice shortages incurred
by her as a bonded warehouseman under contract with the RCA, which should be compensated with the rents due and may
be due

MRs denied
-because the records do not show any proof that Farin is indebted to RCA, and assuming arguendo that Farin is indebted to
RCA, the records do not show that a case has been filed against Farin, or a decision has been rendered against her for
payment of such obligation

ISSUE: WoN proof of liquidation of a claim is proper in order that there be compensation of debts- No

RULING: (you can copy the below ruling verbatim for your digest)

“Proof of the liquidation of a claim, in order that there be compensation of debts, is proper if such claim is disputed. But, if the
claim is undisputed, as in the case at bar, the statement is sufficient and no other proof may be required.”

“ In the instant case, the claim of the RCA that Petra R. Farin has an outstanding obligation to the RCA in the amount of P263,062.40
which should be compensated against the rents already due or may be due, was raised by the RCA in its motion for the
reconsideration of the order of December 23, 1967.”

Petra did not dispute this claim.

“The silence of Petra R. Farin, although the declaration is such as naturally one to call for action or comment if not true, could be
taken as an admission of the existence and validity of such a claim. Therefore, since the claim of the RCA is undisputed, proof of its
liquidation is not necessary.”

DISPOSITION:
Petition is granted. Orders of lower court are set aside.