FIRST DIVISION

[G.R. No. 181692. August 14, 2013.]

ADELAIDA SORIANO , petitioner, vs . PEOPLE OF THE PHILIPPINES,

PHILIPPINES
respondent.

DECISION

JR. J :
VILLARAMA, JR., p

Before this Court is a petition for review on certiorari assailing the May 19, 2005
Decision 1 and January 11, 2008 Resolution 2 of the Court of Appeals (CA) in CA-G.R. CR
No. 23108 insofar as it ordered petitioner to pay P74,807 plus interest to private
complainant Consolacion R. Alagao.
Petitioner Adelaida Soriano was charged with the crime of estafa on January 30,
1995 under an Information which reads as follows:
That on September 9, 1994, at more or less 2:00 o'clock [sic] in the
afternoon, and days thereafter, at Piaping Puti, Macabalan, Cagayan de Oro City,
Philippines, and within the jurisdiction of this Honorable Court, the above-named
accused, with intent to defraud and cause damage and prejudice by means of
deceit, and false pretenses or fraudulent acts executed prior to or simultaneously
with the commission of the fraud, did then and there wil[l]fully, unlawfully and
feloniously represent and pretend to the offended party, Consolacion Alagao y
Regala, who was then canvassing for buyers of her one (1) truck load of corn grits
containing 398 sacks, that she (accused Adelaida Soriano) was engaged in the
business of buying corn grits, among others from the public under the business
style of A & R Soriano Trading, paying it in cash, with place of business located at
Piaping Puti, Macab[a]lan, this City; that due to accused['s] representation, said
offended party was persuaded and convinced to sell her own corn grits to the
former, which cereals came all the way from Old Nungnungan, Don Carlos,
Bukidnon; that after unloading said 398 sacks of corn grains in the establishment
of said Adelaida Soriano, said accused did not pay offended party for the said
goods delivered, but instead she let offended party to sign a Cash Voucher,
making it appear thereat that offended party has received the sum of P85,607.00,
when in truth and in fact accused has not paid the same; that inspite of that
misrepresented entries in the Cash Voucher above-cited, the accused further
directed to collect the same amount from a neighbor of the offended party in Old
Nungnungan, above-mentioned; that perplexed about the actions of Mrs. Adelaida
Soriano, offended party proceeded to demand payment from her but the accused
failed to pay her monetary obligation [to] the offended party as the accused and
her business establishment disappeared from Piaping Puti, Macabalan, this City
after the incident, and transferred to an unknown location; that she could not also
get back the said 398 sacks of corn grits anymore because the accused had
disposed of it already; thus misapplying, misappropriating and converting the
said sum of P85,607.00 the value of 398 sacks of corn grits, to her own gain and
bene t, to the damage and prejudice of the said offended party, in the aforestated
sum of P85,607.00, Philippine currency.
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 Contrary to and in violation to Article 315, par. 2(a), of the Revised Penal Code, as
amended. 3 TSAHIa

When arraigned, petitioner pleaded not guilty. 4

During pre-trial, the following transpired:
1. Parties admitted that on September 9, 1993, private complainant
Consolacion Alagao borrowed cash from the accused in the amount of P10,000,
guaranteed by a titled land, owned by her daughter Evelyn Alagao;

2. Parties also agreed that the aforesaid debt was fully paid with corn
grains by the private complainant in February, 1994;

3. Parties also agreed that subsequent to this transaction,

private complainant's daughter Evelyn Alagao executed a Contract of
Loan secured by Real Estate Mortgage now marked Exh. "1" for the
d e f e n s e , to secure the payment of P40,000.00 which private
complainant admitted to have received P51,730.00 in the form of
fertilizers and cash advances[:]
advances

Fertilizers & Pioneer corn seeds P17,910.00

(Exh. "A")

110 bags chicken dung 6,600.00

(Chicken manure)

Hauling expense of th[e]se materials 1,570.00

Additional fertilizers 9,550.00

(As shown in Exh. "B")

and several cash advances as follows: TCaEIc

2-7-94 P4,000.00

2-14-94 2,000.00

3-3-94 2,000.00

No date 100.00

5-1-94 2,000.00

5-6-94 2,000.00

7-19-94 500.00

7-20-94 500.00
(but which accused claimed
[to be] P1,500.00)

9-10-94 3,000.00 16,100.00

——————————
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 Total P51,730.00
=========

4. That private complainant claimed that . . . on August 17, 1994, she

delivered a 10-wheeler corn grains (sic) to the accused which parties agreed [was]
worth more than P80,000.00. And the private complainant claimed having paid
the accused partially in the amount of P8,060.00 which accused denied. The
latter claimed that no payment was ever made because the corn grains were
owned by private complainant and another person and that private complainant
and companion were paid of the worth of the delivery;

5. Parties agreed that on September 9, 1994 at 2:00 o'clock (sic) in the

afternoon[,] there was a delivery by the private complainant with her companions,
corn grains worth P85,607.00. Private complainant claimed that she was only
paid P3,000.00 and which accused claimed that she did not pay her because that
delivery was in payment of her account and the P3,000.00 which she received
was advanced payment of whatever remaining after paying her previous
accounts to the accused;

6. Parties agreed that there was a Cash Voucher of the amount of corn
grains delivered to the accused on September 9, 1994, now marked [as] Exh. "C." 5
(Emphasis and underscoring supplied.)
Trial on the merits ensued. aCcHEI

Based on the evidence presented and what transpired during the pre-trial, the facts
are:
On February 18, 1994, Evelyn Alagao (Evelyn), daughter of private complainant
Consolation Alagao (Alagao), as borrower-mortgagor, executed a " Contract of Loan
Secured by Real Estate Mortgage with Special Power to Sell Mortgage Property without
Judicial Proceedings" 6 in favor of petitioner as lender-mortgagee. The instrument
provides for a P40,000 loan secured by a parcel of land covered by Original Certi cate of
Title No. P-6254, 7 located in Old Nongnongan, Don Carlos, Bukidnon, registered in Evelyn's
name. It likewise provides that the loan was to be paid two years from the date of
execution of the contract, or on February 18, 1996 , and that Evelyn agrees to give
petitioner 1/4 of every harvest from her cornland until the full amount of the loan has been
paid, starting from the rst harvest. Based on Alagao's testimony, the rst harvest was
made only in September 1994. 8 Petitioner on the other hand claims that from the time the
loan was obtained until September 1994, there were already four harvests. During pre-trial,
it was admitted by Alagao that she did not only receive P40,000 as provided in the
contract of loan but P51,730 in the form of fertilizers and cash advances. 9
On September 9, 1994, Alagao and some companions delivered 398 sacks of corn
grains to petitioner. Petitioner prepared a voucher indicating that Alagao had received the
amount of P85,607 as full payment for the 398 sacks of corn grains. Alagao signed said
voucher even if she only received P3,000. 1 0 According to Alagao, 64 of the 398 sacks will
serve as partial payment of her P40,000 loan with petitioner while the remaining balance
will come from the P85,607 cash she was supposed to receive as payment for the corn
grains delivered so she can redeem her daughter's land title. 1 1 ATHCac

On March 16, 1999, the Regional Trial Court (RTC) of Misamis Oriental, Branch 40,
rendered a decision 1 2 nding petitioner guilty beyond reasonable doubt of the crime of
estafa. The fallo of the RTC decision reads:
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 WHEREFORE, IN VIEW OF THE FOREGOING PREMISES, accused Adelaida
Soriano is hereby found guilty beyond reasonable doubt of the crime of Estafa as
de ned and penalized under Article 315, par. 2(a) of the Revised Penal Code, and
is hereby sentenced to suffer imprisonment of Four (4) Years, Two (2) Months
and One (1) day of Prision Correccional, as minimum, to Thirteen (13) Years, Four
(4) Months of Reclusion Temporal, as maximum and, is hereby further ordered to
pay the offended party in this case the amount of P85,607.00 representing the
value of the 398 sacks of corn grains. Costs against the accused.

SO ORDERED. 1 3

Petitioner's conviction, however, was set aside by the CA in the assailed decision.
The CA disposed as follows: CTSHDI

WHEREFORE, premises considered, the assailed Decision of the Regional

Trial Court of Misamis Oriental, Branch 40, dated 16 March 1999 in Criminal Case
No. 95-41 is REVERSED and SET ASIDE. Appellant ADELAIDA SORIANO is
ACQUITTED of the crime charged on the ground of reasonable doubt. However,
Appellant ADELAIDA SORIANO is hereby ordered to pay private complainant
CONSOLACION R. ALAGAO the sum of seventy-four thousand, eight hundred
seven pesos (P74,807.00) as payment for the remaining balance of the cash
value of the 398 sacks of corn grains, plus legal interest at the rate of 12% per
annum computed from 9 September 1994 until fully paid.

SO ORDERED. 1 4

The CA ruled that the prosecution failed to establish that petitioner made false
pretenses, fraudulent acts or fraudulent means to induce Alagao to deliver to her the 398
sacks of corn grains. In fact, in Alagao's testimony, she admitted that she delivered the
corn grains to petitioner because the latter was demanding payment from her and she
wanted to pay her obligation of P40,000 to petitioner so that she could get back the title
of her daughter's mortgaged property and the balance of the total cash value of the 398
sacks of corn. Thus, the CA held, in the absence of deceit, petitioner's liability is only civil.
TSDHCc

In determining petitioner's civil liability, the CA deducted from P85,607 — the total
value of the 398 sacks of corn grains delivered to petitioner — the P3,000 petitioner had
paid Alagao and the P7,800 which the CA considered as the value of the 64 sacks of corn
grains which Alagao intended as partial payment for the P40,000 loan, thus leaving the
balance of P74,807.
Unsatis ed, petitioner is now before this Court questioning her civil liability. She
assigns to the CA the following errors:
1) The Court of Appeals committed error in the computation of petitioner's
civil liability as it failed to apply correctly the principle of set-off or
compensation.

2) The Court of Appeals, in applying set-off or compensation, erroneously

placed private complainant's indebtedness to petitioner at P40,000.00
instead of P51,730.00 as found by it and as stipulated during pre-trial.

3) The Court of [A]ppeals omitted to off-set the amount equivalent to 1/4

share of the harvest (or P57,200.00) against petitioner's indebtedness to
private complainant in the amount of P85,607.00 despite admission by
private complainant. 1 5
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 Petitioner argues that while the CA found her indebted to Alagao in the sum of
P85,607, it only offset P40,000 instead of P51,730 which was the amount stipulated
during pre-trial. Petitioner contends that the compensation should be as follows: SaAcHE

Petitioner's indebtedness: [Alagao's] Indebtedness:

P85,607.00(value of 398 sacks) P51,730.00(instead of P40,000.00)

- 3,000.00(cash payment) - 7,800.00(value of 64 sacks)
——————————— ———————————
P82,607.00 P43,930.00
- 7,800.00 (value of 64 sacks)
———————————
P74,807.00 (as correctly found
by the Court of
Appeals) 1 6

Thus, deducting Alagao's indebtedness of P43,930 from petitioner's indebtedness

amounting to P74,807, petitioner's remaining indebtedness should only be P30,877.
Petitioner likewise argues that the CA also failed to consider Alagao's obligation to
deliver to her 1/4 of every harvest. Petitioner claims that her 1/4 share in the harvest
amounted to P57,200 for four harvests. Therefore, applying the principle of set off, it is
Alagao who is indebted to petitioner in the amount of P26,323 (P57,200 minus P30,877).
Respondent on the other hand contends that the amount of loan extended to Alagao
was P40,000 and not P51,730 as claimed by petitioner. Moreover, the entire value of the
398 sacks of corn grains should not be set off with Alagao's loan since (1) the loan was
not yet due and demandable at the time of delivery of the 398 sacks of corn grains in
September 1994; and (2) only 154 of the 398 sacks of corn grains belong to Alagao.
Respondent also claims that P13,765.95 1 7 should be considered as the correct value of
the 64 sacks intended by Alagao as partial payment for the loan and not P7,800 as found
by the CA. SEcADa

The petition is partly meritorious.

Compensation is a mode of extinguishing to the concurrent amount, the debts of
persons who in their own right are creditors and debtors of each other. The object of
compensation is the prevention of unnecessary suits and payments through the mutual
extinction by operation of law of concurring debts. 1 8 Article 1279 of the Civil Code
provides for the requisites for compensation to take effect:
ART. 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be
at the same time a principal creditor of the other;

(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the latter
has been stated;

(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy,

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 commenced by third persons and communicated in due time to the debtor.

This Court rules that all the above requisites for compensation are present in the
instant case. ECTSDa

First, petitioner and Alagao are debtors and creditors of each other. It is
undisputable that petitioner and Alagao owe each other sums of money. Petitioner owes
P85,607 for the value of the corn grains delivered to her by Alagao in September 1994
while Alagao owes petitioner P51,730 by virtue of a loan extended by the latter in February
1994.
Second, both debts consist in a sum of money. There is no issue as to the P85,607
debt by petitioner that it consists a sum of money. As to the P51,730 received by Alagao
from petitioner, though what was extended by petitioner consists of cash advances and
fertilizers, there is no dispute that said amount is payable in money.
Third, both debts are due. Upon delivery of the 398 sacks to petitioner, she was
under the obligation to pay for the value thereof as buyer. As to Alagao's debt, the contract
of loan provided that it is payable in February 1996. Though it was not yet due in
September 1994 when she delivered the 398 sacks of corn grains to petitioner, it
eventually became due at the time of trial of the instant case.
Fourth, both debts are liquidated and demandable. A debt is liquidated when the
amount is known or is determinable by inspection of the terms and conditions of relevant
documents. 1 9 There is no dispute that the value of the 398 sacks of corn grains is
P85,607. As to Alagao's debt, we disagree with respondent People that the loan amount is
only P40,000 since during pre-trial, Alagao herself admitted that she did not only receive
P40,000 but P51,730 in the form of cash advances and fertilizers from petitioner. It is well
settled that an admission made in a stipulation of facts at pre-trial by the parties is
considered a judicial admission and, under the Rules of Court, requires no proof. Such
admission may be controverted only by a showing that it was made through a palpable
mistake or that no such admission was made. 2 0 DHITcS

And lastly, neither of the debts are subject of a controversy commenced by a third
person. There are no third-party claims with respect to Alagao's P51,730 loan. As to
petitioner's P85,607 debt representing the 398 sacks of corn grains, Alagao claims that
she is not the sole owner of all the 398 sacks. This claim of Alagao, however, was never
substantiated and a perusal of the information for estafa shows that the subject corn
grains are allowed by her. Moreover, the alleged other owners have not commenced any
action to protect their claim over it. Thus, the P85,607 debt cannot be considered subject
of a controversy by a third person.
With the presence of all the requisites mentioned in Article 1279, legal
compensation took effect by operation of law as provided in Article 1290 of the Civil Code,
to wit:
ART. 1290. When all the requisites mentioned in Article 1279 are
present, compensation takes effect by operation of law, and extinguishes both
debts to the concurrent amount, even though the creditors and debtors are not
aware of the compensation.

Thus, the computation of petitioner's civil liability should be as follows:

Value of the 398 sacks of corn grains P85,607
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 Cash payment by petitioner upon delivery - 3,000
————————
P82,607
Alagao's debt - 51,730
————————
Petitioner's net civil liability to Alagao P30,877
=======

With respect to the 1/4 share in the harvest due to petitioner as provided in the
contract of loan, the same cannot be considered in the legal compensation of the debts of
the parties since it does not consist in a sum of money, said share being in the form of
harvests. More importantly, it is not yet liquidated. There is still a dispute as to how many
harvests were made from the time of the execution of contract of loan up to the time the
action was commenced against petitioner and even when the principal obligation became
due in February 1996. Thus, the harvests due petitioner is not capable of determination. SIDEaA

WHEREFORE , the May 19, 2005 Decision and January 11, 2008 Resolution of the
Court of Appeals in CA-G.R. CR No. 23108 are hereby AFFIRMED with MODIFICATION .
Petitioner Adelaida Soriano is hereby ordered to pay P30,877 as payment for the
remaining balance of the cash value of the 398 sacks of corn grains, plus legal interest at
the rate of 6% 2 1 per annum computed from nality of this Decision until its full
satisfaction.
No pronouncement as to costs.
SO ORDERED.
ORDERED
Sereno, C.J., Brion, * Bersamin and Reyes, JJ., concur.

Footnotes

*Designated additional member per Special Order No. 1497 dated July 31, 2013.

1.Rollo, pp. 18-36. Penned by Associate Justice Myrna Dimaranan-Vidal with Associate
Justices Teresita Dy-Liacco Flores and Edgardo A. Camello concurring.

2.Id. at 38-39. Penned by Associate Justice Edgardo A. Camello with Associate Justices
Teresita Dy-Liacco Flores and Mario V. Lopez concurring.

3.Records, pp. 1-2.

4.Id. at 57.

5.Id. at 59-60.

6.Exh. "1," Exhibits for Accused, pp. 1-2.

7.Exh. "E," Exhibits for Plaintiff, pp. 5-6.

8.TSN, September 11, 1996, p. 14.

9.Records, p. 59.

10.TSN, September 10, 1996, pp. 8-9; Exh. "C," Exhibits for Plaintiff, p. 3.

11.TSN, November 5, 1996, pp. 16-17.

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 12.Records, pp. 170-177. Penned by Acting Judge Rodrigo F. Lim, Jr.

13.Id. at 177.

14.Rollo, p. 35.

15.Id. at 12.

16.Id.
17.Computed as follows:

P13,765.95 = P85,607.00 x 64 sacks. Rollo, pp. 73-74.

––––––––––
398 sacks
18.Nadela v. Engineering and Construction Corporation of Asia (ECCO-ASIA), 510 Phil. 653, 666
(2005), citing PNB MADECOR v. Uy, 415 Phil. 348, 359 (2001), Art. 1278, CIVIL CODE and
Compañia General de Tabacos v. French and Unson, 39 Phil. 34, 51 (1918).
19.Raquel-Santos v. Court of Appeals, G.R. Nos. 174986, 175071 & 181415, July 7, 2009, 592
SCRA 169, 196.

20.Toshiba Information Equipment (Phils.), Inc. v. Commissioner of Internal Revenue, G.R. No.
157594, March 9, 2010, 614 SCRA 526, 545.

21.Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013 issued on June 21, 2013.

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