5.

COMPENSATION

I. Complete Case Title: BANK OF THE PHILIPPINES ISLAND and GRACE

ROMERO, petitioners,
vs.
COURT OF APPEALS and EDVIN F. REYES, respondents.
Docket Number: G.R. No. 116792
Date: March 29, 1996

II. FACTS:

On September 25, 1985, private respondent Edvin F. Reyes opened a joint account
with his wife Sonia S. Reyes, a savings account No. 3185-0172-56 at Bank of the
Philippine Island Cubao, Shopping Center Branch. On February 11, 1986 opened
another joint Savings Account No. 3185-0128-82 with his grandmother, Emetaria M.
Fernandez at the same BPI branch which he deposited this account the U.S. Treasury
Warrants payable to as his grandmother monthly pension. After his grandmother
death, he continued to deposit to the said U.S. treasury check to the Savings account
of his grandmother which the U.S. Treasury Department issued without their
knowledge that Emetaria M. Fernandez was already dead. On January 16, 1991, U.S.
Treasury Warrant No. 21667307 was dishonored after finding out that Fernandez was
dead and asked for reimbursement from the BPI which at that time came to know the
death of Fernandez. Prior to the dishonor, Reyes closed his joint account with his
grandmother and transferred it to his other joint account with his wife. Upon knowing
that BPI will call his attention, Reyes verbally authorized to debit from his other joint
account with his wife the amount stated in the dishonored U.S. Treasury Warrant.
However, Reyes filed a suit to BPI for damages for the reason that the latter hold his
account which fails him to withdraw money when he needs it. The BPI counter
claimed for moral and exemplary damages and averred that Reyes gave them express
verbal authorization to debit the questioned and for the refusal of Reyes to provide
written authorization.

III. ISSUE:
Whether or not the legal compensation is proper?

IV. RULING:
Yes, the legal compensation is proper because compensation shall take place when
two persons, in their own rights are creditor and debtor of each other. In this case all
the elements of the compensation are present. BPI, the petitioner is the debtor of the
private respondent, a depositor. At the same time the former is the creditor of private
respondent with regards to his joint account to the dishonored U.S. Treasury Warrant
which the private respondent illegally transferred to his joint account with his wife.
 Provided also that the debt consists of a sum of money which are due, liquidated, and
demandable. Likewise, they are not claimed by a third person.
It is also clear that the wife of Reyes, the private respondent is not a party in this case
because she never guaranteed any right to the amount debited U.S. Treasury Warrant.
In fact, the right of the petitioner bank to make the debit is clear and cannot be
doubted. Therefore, the ground of legal compensation is that not all mutually
obligated would result in unjust enrichment on the part of Reyes and his wife who
herself does not asserted to the debit. “The rule as to mutuality is strictly applied at
law. But not in equity, where to allow the same would defeat a clear right or permit
irremediable injustice”.

“In VIEW HEREOF, the Decision of the respondent Court of Appeals in CA-G.R.
CV No.41543 dated August 16, 1994 is ANNULED and SET ASSIDE and the
Decision of the trial court in Civil Case No. Q-91-8451 dated January 20, 1993 is
REINSTATED. Costs against private respondent”.
SO ORDERED.

ADOPTED BY: ESPINA, GLORY MAE E.

WITH MY CONFIRMITY: DOLOSO, RONNAMIE A.