Selwyn F. Lao v. Special Plans

Summary

Lessees of commercial premises sought to offset P95,000 in unpaid rent against P125,000 claimed expenses for structural repairs. The Supreme Court denied compensation, ruling that lessees failed to prove liquidated and demandable claims for repair expenses through proper documentation. While the lease contract made structural repairs the lessor's responsibility, petitioners could not establish that their claimed expenses were actually incurred or properly classified as structural defects rather than ordinary maintenance. The Court emphasized that legal compensation requires both obligations to be liquidated and demandable, and self-serving testimony without supporting receipts was insufficient to establish the repair claims. The decision reinforces the evidentiary requirements for contractual claims and the strict application of compensation principles in civil obligations.