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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 164791 June 29, 2010

SELWYN F. LAO n! E"GAR MANANSALA, Petitioners,vs.SPEC#AL PLANS, #NC., Respondent.

D ! I S I O N

"EL CAST#LLO, J.:

In Ro"an #a$, co"pensation $as the reciprocal e%tinction of clai"s bet$een "utualdebtors. In the earlier sta&es of that s'ste" the practice did not e%ist as a "atter of ri&htbut its application $as discretionar' $ith the judex . #ater the praetor applied it b'incorporatin& into the for"ula, $hich he prepared for the judex , an e%ceptiondoli , that is,an authori(ation to ta)e into account an' circu"stances $hich $ould render ine*uitablethe enforce"ent of the clai". The effect $as to cause a dis"issal of the clai", ho$everlar&e, if a counterclai", ho$ever s"all, $as proven and the indirect result $as toco"pel the actor +plaintiff to deduct the counterclai" in advance.-

Factual Antecedents

Petitioners Sel$'n F. #ao +#ao and d&ar Manansala +Manansala, to&ether $ithen/a"in 0i" +0i", entered into a !ontract of #ease1 $ith respondent Special Plans,Inc. +SPI for the period 0anuar' -2, -334 to 0anuar' -5, -335 over SPI6s buildin& at No.457 8ue(on 9venue, 8ue(on !it'. Petitioners intended to use the pre"ises for their)arao)e and restaurant business )no$n as :Saporro Restaurant:.

;pon e%piration of the lease contract, it $as rene$ed for a period of ei&ht "onths at arental rate of P14,

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 9fter service of su""ons, petitioners filed their Verified 9ns$er 5 faultin& SPI for "a)in&the" believe that it o$ns the leased propert'. The' li)e$ise asserted that SPI did notdeliver the leased pre"ises in a condition fit for petitioners6 intended use. Thus,petitioners clai"ed that the' $ere constrained to incur e%penses for necessar' repairsas $ell as e%penses for the repair of structural defects, $hich SPI failed and refused to

rei"burse. Petitioners pra'ed that the co"plaint be dis"issed and /ud&"ent on theircounterclai"s be rendered orderin& SPI to pa' the" the su" of P711,31

Delfin !ru(, president of Special Plans, Inc. testified that on 0anuar' ?, -334, plaintiff@corporation and herein defendants entered into a t$o@'ear !ontract of #ease +%hibit:9: inclusive, $ith sub@"ar)in&s startin& 0anuar' -2, -334 until 0anuar' -5, -335,involvin& a portion of said plaintiff@corporation6s office buildin& $hich used to be the

aha' Na"in Food and Drin)s at 457 8ue(on 9venue, 8ue(on !it'. Defendants usedthe leased pre"ises for their )arao)e and restaurant business )no$n as SaporroRestaurant. ;pon Ae%piration of the leaseB, defendants, throu&h defendant #aore*uested in $ritin& +%hibit :: for a rene$al of the contract of lease, but plaintiff@corporation a&reed onl' for an ei&ht@"onth e%tension of AtheB contract $ith all its ter"sand conditions on a "onth@to@"onth basis at a "onthl' rental of P14,

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hi" to sta' $ith the &roup for another % % % 'ear. ut the business lost even "ore so hefinall' called it *uits $ith the consent of the &roup. e pulled out his audio@videoe*uip"ent, refri&erator, and air@conditionin& unit on 0anuar' 1, -335, thirteen +-4 da'sbefore the e%piration of the contract of lease. e further denied havin& si&ned there*uest for the e%tension of the contract.1avvphi1

On cross, he stated that he did not si&n docu"ents for and in behalf of SaporroC and,that he allo$ed defendant #ao and Victor San #uis to si&n for the &roup.

Testif'in& for defendant 0i", 9tt'. Maria Rosario !ar"ela Nova declared that defendant0i" sou&ht her services on 9u&ust 4

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FROM T OIN MI##I;, pre"ises considered, the lo$er court6s +ranch 4=decision dated Dece"ber -5, -333 is "odified to the effect that Defendants Sel$'n #aoand d&ar Manansala are ordered to pa' to the plaintiff@corporation the a"ount ofNinet' Five Thousand +P35,

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5. Over neither of the" be an' retention or controvers', co""enced b' thirdparties and co""unicated in due ti"e to the debtor. 17

Petitioners failed to properl' dischar&e their burden to sho$ that the debts are li*uidatedand de"andable. !onse*uentl', le&al co"pensation is inapplicable.

 9 clai" is li*uidated $hen the a"ount and ti"e of pa'"ent is fi%ed.15 If 

ac)no$led&ed b' the debtor, althou&h not in $ritin&, the clai" "ust be treated asli*uidated.12 Ehen the defendant, $ho has an unli*uidated clai", sets it up b' $a' ofcounterclai", and a /ud&"ent is rendered li*uidatin& such clai", it can be co"pensateda&ainst the plaintiff6s clai" fro" the "o"ent it is li*uidated b' /ud&"ent.1? Ee haverestated this in Solinap v. on. Del Rosario1= $here $e held that co"pensation ta)esplace onl' if both obli&ations are li*uidated.

In addition, para&raph 2 of the contract of lease bet$een the petitioners and the

respondent reads>

The lessee shall "aintain the leased pre"ises includin& the par)in& lot in &ood, cleanand sanitar' condition andshall "a)e all the necessar' repairs thereon at their o$ne%pense e%cept repairs of the structural defects $hich shall be the responsibilit' of thelessor. % % % +"phasis supplied

 9s the contract contrastin&l' treats necessar' repairs, $hich are on the account of thelessee, and repairs of structural defects, $hich are the responsibilit' of the lessor,the onus of the petitioners is t$o@fold> +- to establish the e%istence, a"ount andde"andabilit' of their clai"C and +1 to sho$ that these e%penses $ere incurred in the

repair of structural defects.

Respectin& these issues, petitioner #ao testified as follo$s>13

8> Ehen 'ou too) possession of the pre"ises on 0anuar' -2, -334, $ere 'ouable to notice or discover an'thin& about the structure of the pre"ises, if an'G

 9> ein& an en&ineer, $hen I too) possession of the pre"ises I have noticed thestructure of the pre"ises speciall' the trusses and the roof and the ceilin& $erealread' dilapidated.

8> Ehat else if an' $ere 'ou able to discoverG

 9> Ee discovered that $hen it is rainin&, $ater AseepedB throu&h the floor and itcaused a lot of "ess especiall' the carpet &ettin& $et.

8> Ehat did 'ou do ne%t after havin& discovered the defects in the pre"isesG

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 9> I tried to tal) to Mr. !ru( re&ardin& our position because based on oura&ree"ent the rental is hi&h because accordin& to hi" $e can "ove ini""ediatel' $ithout so "uch cost to our co"pan' that6s $h' the 4 of us ca"e uponl' $ith P-1 The si&nature of an en&ineerJcontractor, sir.

8> 9"on& the list of scope of $or) can 'ou please specif' the repairs done % % %.

 9> It $as indicated here that the roofin& repair $or)s costs around P75,

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 9> More than P5 Eere 'ou able to tal) to hi" so"e other da' $ith respect to these repairsG

 9> es, sir.

8> Ehat happened $hen 'ou $ere able to tal) to Mr. !ru(G

 9> e is sh' on us so"eti"e but don6t tal) to us, sir.

On the basis of #ao6s testi"on', the MeT! found that :the &roup conducted structural

and necessar' repairs thereon, incurrin& the su" of P575,

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Further, the testi"on' of Ta"a'o, the alle&ed subcontractor $ho "ade the repairs onthe leased pre"ises did not convince ;s that there $ere repairs "ade thereat since hefailed to present an' receipts of ac)no$led&"ents of pa'"ents $hich $as alle&edl'"ade to hi".4<

Further "anifestin& the present appeal6s lac) of "erit, petitioner #ao, as sho$n abovein his testi"on', did not define the lessor6s and the lessees6 understandin& of thede"arcation bet$een :repairs of structural defects: and :necessar' repairs.: venpetitioners6 second $itness, re&orio Ta"a'o, the contractor $ho supposedl'perfor"ed the repair $or) on the leased pre"ises, did not credibl' and cate&oricall'testif' on classification of structural repairs>

8> Insofar as 'ou are concerned, $hat do 'ou "ean b' structuralG

 9> ecause $hen I inspect the buildin&K

8> In this roo", $hat is the structural defectG

 9> Roc)s on the $all.

8> It has so"ethin& to do $ith the foundationG

 9> Ma'be, sir.4- +"phasis supplied

The petitioners atte"pted to prove that the' spent for the repair of the roofin&, ceilin&and floorin&, as $ell as for $aterproofin&. o$ever, the' failed to appreciate that, as per their lease contract, onl' structural repairs are for the account of the lessor, herein

respondent SPI. In $hich case, the' overloo)ed the need to establish that aforesaidrepairs are structural in nature, in the conte%t of their earlier a&ree"ent. It $ould havebeen an alto&ether different "atter if the lessor $as infor"ed of the said structuralrepairs and he i"plicitl' or e%pressl' consented and a&reed to ta)e responsibilit' for thesaid e%penses. Such $ant of evidence on this respect is fatal to this appeal.!onse*uentl', their clai" re"ains unli*uidated and, le&al co"pensation is inapplicable.

For failure to ti"el' appeal the RT! Decision before the !9 and subse*uentl' thelatter6s Decision before this !ourt, SPI can no lon&er as) for affir"ative reliefs.

In its Me"orandu", SPI pra's that petitioners be ordered to pa' 4L interest "onthl' as

stipulated in the !ontract for #ease, plus attorne'6s fees. o$ever, as SPI did notappeal the RT! Decision before the appellate court, $e cannot act on the sa"e.

It is $ell@settled that a part' $ho has not appealed fro" a Decision cannot see) an'relief other than $hat is provided in the /ud&"ent appealed fro".41 SPI did not appeal,thus it cannot obtain fro" the appellate court an' affir"ative relief other than those&ranted in the Decision of the court belo$.44 It can onl' advance an' ar&u"ent that it"a' dee" necessar' to defeat petitioners6 clai" or to uphold the Decision that is bein&

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