Guillermo Uy assigned to respondent his receivables due from Pantranco North Express Inc. (PNEI). Respondent filed a collection suit with an application for issuance of preliminary attachment against PNEI which was granted by the RTC. The sheriff issued a notice of garnishment addressed to PNB and PNB MADECOR. The RTC rendered judgment against PNEI with writ of execution causing the sheriff to garnish the amount therein from the credits and collectibles of PNEI from petitioner and levy upon the assets of petitioner should its personal assets be insufficient to cover its debt with PNEI. Petitioner claimed that as debtor, it is likewise a creditor for PNEI considering unpaid rentals of PNEI for its parcel of land and by operation of law on compensation, it is actually the PNEI that still has outstanding obligations to it.
Whether or not there was legal compensation between the petitioner and PNEI as a defense of the former.
NO. There could not be any compensation between PNEI’s receivables from PNB MADECOR and the latter’s obligation to the former because PNB MADECOR’s supposed debt to PNEI is the subject of attachment proceedings initiated by a third party, herein respondent Gerardo Uy. This is a controversy that would prevent legal compensation from taking place, per the requirements set forth in Article 1279 of the Civil Code. Moreover, it was not clear whether, at the time compensation was supposed to have taken place, the rentals being claimed by petitioner were indeed still unpaid. Petitioner did not present evidence in this regard, apart from a statement of account.