GAN TION v COURT OF APPEALS

GR No. L-22490
MAY 21, 1969

MAKALINTAL, J.

FACTS:
In 1961, Gan Tion filed an ejectment case against Ong Wan Sieng. Tion contends that
the latter was in default for 2 months of rent at 180/ month. Sieng contends, however, that
the rent was only 160/ month and that he tried to pay Gan Tion but the latter refused.
A case was filed against Gan Tion. The CFI ruled in favor of Sieng, and awarding him
P500 as attorney’s fees. In 1963, Gan Tion notified Sieng that rent would increase 180/ month
and demanded payment of unpaid rent amounting to P4000 from 1961-1963.
Sieng was able to obtain a writ of execution for P500 attorney’s fees. Gan Tion
complained, however, that the P500 should be considered as a partial legal compensation to
him for the debt owed by Sieng.
The CA ruled against Gan Tion stating that the P500 can only be considered legal
compensation if Tion and Sieng were creditors and debtors of each other. The CA ruled that
the P500 did not belong to Tion but to his attorney, stating that the attorney is the creditor
and not Tion.

ISSUE:
Can attorney’s fees be subject of legal compensation?

RULING:
The attorney’s fees can be subject of legal compensation.
The P500 does not belong to the attorney but to Gan Tion. This would mean that Gan
Tion is the proper creditor of the P500. Thus, it also means that the the P500 may properly
be the subject of legal compensation against Sieng’s debts.
It would be unjust to ask gan Tion to pay P500 when Sieng owes him P4000.