G.R. No.

108052 July 24, 1996

PHILIPPINE NATIONAL BANK, petitioner,

vs.
THE COURT OF APPEALS and RAMON LAPEZ,  doing business under the name and
1

style SAPPHIRE SHIPPING, respondents.

PANGANIBAN, J.:

Facts: - PNB appropriated the amounts 2, 627 USD and 34, 340 PHP from
remittances of Sapphire Shipping’s principals abroad, the first amount by the
National Commercial Bank of Jeddah to be credited to Sapphire Shipping’s
account at Citibank Greenhills, the second from Libya intended to be
deposited at Sapphire’s account with PNB - In two instances in the past,
Sapphire Shipping’s account with PNB as doubly-credited with 5, 679 USD
and 5, 8885 USD, amounting to an aggregate of 87, 380 Php. PNB made a
demand upon Sapphire Shipping for the erroneous double-credit, which
Sapphire Shipping did not contest, since the erroneous double payments
made to Sapphire Shipping’s accounts created an extra-contractual obligation
on the part of Sapphire Shipping to PNB under the principle of Solutio
Indebiti. 1 - PNB’s argument is that in order to recover the erroneous double
payment it is entitled to by virtue of solutio indebiti, PNB can appropriate the
remittances from Sapphire Shipping’s foreign principals (Jedda and Libya) as
compensation.

Issue/s: W/N PNB was legally justified in making compensation or set-off

against the two remittances coursed through it in favor of Sapphire Shipping
(one from the bank in Jeddah, for Sapphire’s account in Citibank, and one
from the bank in Libya, for Sapphire’s account with PNB), to recover on the
erroneous double payments it was entitled to recover from Sapphire
Shipping?

Ruling:

NO. For compensation to take place, one essential requisite is that the parties
must be bound principally to one another as obligor and obligee. Sapphire
Shipping, as depositor, and PNB as depository, are creditor and debtor
respectively. Sapphire Shipping incurred a debt with PNB due to an amount
erroneously double-credited to Sapphire’s PNB account. When Sapphire’s
principal in Jedda telexed money to Sapphire’s Citibank, Greenhills account
and coursed said amount through PNB’s head office, PNB intercepted the
money to compensate for Sapphire’s debt with PNB. However, the Court
ruled that with regard to said amount telexed from the foreign bank in Jedda
to Sapphire’s account with Citibank, PNB is MERELY A TRUST, with
Sapphire Shipping as creditor and the bank in Jedda as debtor. The
relationship between PNB and Sapphire Shipping with regard to the telexed
amount from Jedda not being one of principality, PNB cannot use the said
amount as compensation for Sapphire Shipping’s debt, because being
principals with respect to the obligation is one of the essential requisites for
compensation be valid.