On even terms

This case of Doming illustrates a different mode of paying your debt to someone who also owes you.

Doming was a practicing lawyer. One of his clients was Don Pedro who had several cases being handled by Doming. Needing some funds for the operation of his law office, Doming borrowed the sum of P400,000 from Don Pedro with a monthly interest of 2% later on increased to 3.5% with Doming’s consent. Doming was able to pay the sum of P100,000 and interest corresponding to ten months only. Thereafter he was not able to pay any other amount despite demands from Don Pedro.

So Don Pedro had to summarily dismiss Doming as his lawyer, and filed a complaint against him   before the Regional Trial Court (RTC) for Recovery of Sum of Money. In his answer Doming interposed a counterclaim of no less than P500,000 representing his attorney’s fees for several cases he handled as lawyer of Don Pedro.

After trial and presentation of evidence by both parties on the claim and counterclaim, the RTC found merit in the claim of Don Pedro regarding the loan extended to Doming. On the other hand the RTC also found merit in the counterclaim of Doming for the legal services he rendered to Don Pedro. So it rendered judgment ordering Doming to pay Don Pedro the sum of P300,000 with 12%  interest per annum from the filing of the complaint. On the other hand, the RTC also ordered that whatever amount recoverable from Doming shall be set off by an equivalent amount representing Doming’s attorney’s fees for legal services previously rendered to Don Pedro computed on the basis of quantum meruit.

When the RTC decision was being implemented by the offsetting of the claim and counterclaim, Don Pedro questioned it contending that the RTC failed to specify the amount of attorney’s fees. He maintained that for offsetting to apply, the two debts must be liquidated or ascertainable. But in this case, Don Pedro contended that Doming’s attorney’s fees were based only on quantum meruit without specifying the exact amount thereof. Was Don Pedro correct?

No. A debt is considered liquidated not only when it is already expressed in definite figures but also when the determination of the exact amount depends on a simple arithmetical operation.

In this case, both obligations are already liquidated. Doming has the obligation to pay his debt due to Don Pedro in the amount of P300,000 with 12% interest per annum from the filing of the complaint until paid. Don Pedro on the other hand, has the obligation to pay Doming’s attorney’s fees based on quantum meruit, which the RTC had already determined as equivalent to whatever amount recoverable from Doming.

Therefore, whatever amount due to Don Pedro as payment of Doming’s debt is equivalent to the amount awarded to the latter as his attorney’s fees. Legal compensation or set off then takes place between Don Pedro and Doming, and both parties are on even terms such that there is actually nothing left to execute or satisfy in favor of either party. Any amount due in favor of Don Pedro against Doming is set off by an equivalent amount in the form of Doming’s attorney’s fees for past legal services he rendered to Don Pedro (Montemayor vs. Millora, G.R. 168251, July 27, 2011).

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