G.R. No. 120236 . July 20, 1999.
E.G.V. REALTY DEVELOPMENT CORPORATION and CRISTINA CONDOMINIUM CORPORATION, petitioners, vs. COURT OF APPEALS and UNISPHERE INTERNATIONAL, INC., respondents.

FACTS

Petitioner E.G.V. Realty Development Corporation is the owner/developer of Cristina Condominium. Petitioner Cristina Condominium Corporation (CCC) holds title to the common areas and manages the condominium. Respondent Unisphere International, Inc. owns and occupies Unit 301. On November 28, 1981, and July 25, 1982, robberies allegedly occurred at Unit 301, with total losses valued at P12,295.00. Unisphere reported these to CCC and demanded compensation. CCC denied liability. Consequently, Unisphere withheld payment of its monthly condominium dues starting November 1982. On December 5, 1984, E.G.V. Realty executed a Deed of Absolute Sale over Unit 301 to Unisphere, and the issued Condominium Certificate of Title bore an annotation of a lien for unpaid dues amounting to P13,142.67. On January 28, 1987, petitioners filed a collection case with the Securities and Exchange Commission (SEC) for the unpaid dues. Unisphere, in its answer, asserted a counterclaim for P12,295.00 as damages for petitioners’ alleged failure to provide security. The SEC Hearing Officer initially ordered Unisphere to pay P13,142.67 and petitioners to pay Unisphere P12,295.00. Upon reconsideration, the Hearing Officer modified the decision, absolving petitioners from liability for the burglary losses. Unisphere appealed to the SEC en banc. The SEC en banc dismissed the appeal in an Order dated February 23, 1990, for being filed out of time, noting that Unisphere’s memorandum on appeal was filed five days after the extended deadline. Unisphere’s motions for reconsideration were denied. Unisphere then appealed to the Court of Appeals via a petition for review. The Court of Appeals reversed the SEC en banc, ruled that the appeal memorandum was filed on time, and ordered that Unisphere’s losses (P12,295.00) be offset against its unpaid dues (P13,142.67), leaving a balance of P847.67 plus interest for Unisphere to pay. Petitioners moved for reconsideration, which was denied.

ISSUE

1. Whether the Court of Appeals acquired jurisdiction over Unisphere’s appeal given the alleged procedural defects.
2. Whether the SEC en banc Order dismissing the appeal had attained finality.
3. Whether the Court of Appeals correctly ruled on the offsetting of the parties’ claims.

RULING

1. On the procedural aspect, the Supreme Court found that the Court of Appeals correctly acquired jurisdiction. Unisphere’s appeal from the SEC en banc to the Court of Appeals was governed by Rule 43 of the Rules of Court, as amended by Republic Act No. 5434 . The Court noted that Unisphere filed a notice of appeal to the Court of Appeals on September 10, 1990, which was within the reglementary period. The fact that it had earlier filed a notice of appeal to the SEC en banc on September 6, 1990, did not negate the validity of the subsequent appeal to the Court of Appeals, as the rules allowed an appeal from the SEC en banc to the Court of Appeals. The Court also held that the SEC en banc’s order dismissing the appeal for being filed out of time was incorrect. The Court of Appeals properly considered the appeal memorandum as having been filed on time, as the last day for filing fell on a Sunday and the next day was a holiday, making the filing on the following Tuesday, October 10, 1989, timely. The record showed the memorandum was filed on October 9, 1989, which was within the period. Therefore, the SEC en banc’s order had not attained finality.
2. On the substantive aspect, the Supreme Court reversed the Court of Appeals’ ruling on offsetting. The Court held that Unisphere’s claim for damages arising from the robberies and petitioners’ claim for unpaid condominium dues were not proper subjects of compensation or legal offset under Article 1279 of the Civil Code. For compensation to take place, the debts must be liquidated and demandable. Unisphere’s claim for damages was unliquidated, as it arose from an alleged quasi-delict (tort) and required judicial ascertainment. In contrast, the claim for unpaid dues was a liquidated debt arising from contract. The two obligations were not of the same kind and quality. Furthermore, the Court found that petitioners, as the condominium corporation and developer, were not the employers of the building’s security personnel and could not be held liable under the principle of respondeat superior for the alleged negligence of the guards. There was no evidence that petitioners themselves were negligent in providing security. Therefore, Unisphere’s withholding of dues was not justified, and offsetting was not legally permissible. The Supreme Court reinstated the SEC Hearing Officer’s modified decision dated July 17, 1989, which ordered Unisphere to pay the unpaid dues of P13,142.67 and absolved petitioners from liability for the burglary losses.