Pnb Madecor v. Gerardo C. Uy · G.R. 129598

Petitioner: Pnb Madecor
Respondent: Gerardo C. Uy
Citation: G.R. No. 129598
Court: Supreme Court
Division: Second Division
Ponente: Quisumbing, J.
Decided: August 15, 2001

Summary

This case involves the intersection of legal compensation and garnishment procedures. Gerardo Uy, as assignee of receivables from PNEI, sought collection through garnishment of PNEI's assets held by PNB MADECOR. PNB MADECOR claimed its P7.8M debt to PNEI was offset by PNEI's P8.7M rental arrears, resulting in legal compensation that would prevent garnishment. The Supreme Court ruled that legal compensation could not occur because PNB MADECOR's obligation, though admitted, was payable on demand and no proper demand was made by PNEI. The September 1984 letter was merely notice of a dacion en pago arrangement, not a demand for payment. Since the debt was not yet 'due and demandable' as required under Civil Code Article 1279, legal compensation could not take place. The garnishment was therefore proper, and PNB MADECOR remained liable to PNEI for the full amount under the promissory note.

Statutes applied

Civil Code, Art. 1279

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By the Intellegal Editorial Board · August 15, 2001

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