075. PNB v.

Ong Acero
Feb. 27, 1987
Narvasa, J.
Short Version:
Acero was awarded a judgment credit against Isabela. PNB intervened, claiming that its loan and a
debt that Isabela had with it could be set off. CFI said it could. IAC said it couldnt. SC ruled that as
the IAC had factually found that there was no evidence that ISabela had a debt to PNB, there could
be no compensation.
Facts:
Isabela Wood Construction opened a P2M bank deposit with PNB. The Aceros want to proceed
against the savings on account of the judgment in their favor by the CFI of Rizal. On the other hand,
PNB claims compensation, because at some point in time Isabelas deposit was a loan to it, while
Isabela owed them money. The IAC ruled in favor of PNB.
As stated, the Aceros claim is based on a judgment in their favor against Isabela, while
PNBs is based on an agreement with Isabela where the deposit was meant as security, which, in case
of default by Isabela, it was empowered to apply to the payment of the indebtedness. Isabela didnt
pay, since no one ever pays in an SC case.
PNB intervened in the Isabela v. Acero case, and MRd, but Hon. Judge Apostol said no. it
asked for reconsideration again twice, to which Apostol said no, twice. Then Judge Apostol was
replaced by Judge Solano, who they got to say yes via another MR. Solano ruled that the assignment
of the money was valid and placed the proceeds thereof beyond the reach of the Aceros. Aceros
filed MR. IAC Reversed, ruling in the Aceros favor. Hence this petition for certiorari.
Issue:
WON PNB could legally compensate the loan with the amount owed to it by Isabela. (No)
Ratio:
The insuperable obstacle to PNBs cause is the factual finding that it has not proven itself to be the
creditor of Isabela. All it presented were 2 documents marked in its behalf, but they did not prove
any indebtedness of Isabela to PNB; rather, all they proved was that a letter of credit might have
been opened for Isabela, but thats not the credit were looking for.
The most persuasive evidence of these facts, i.e. Isabelas availment of the credit would have
naturally been in PNBs possession, but it didnt present them. There being no indebtedness to PNB
on Isabelas part, there is no occasion to speak of any mutual set off.

IAC affirmed.
Gabe.