PNB v. CA Facts: PNB applied the amounts of $2,627.11 and Php34,340.

38 from remittances of the defendant, Ramon Lopezs, principals abroad. The first remittance was made by the NCB of Jeddah for the benefit of the plaintiff, to be credited to his account at Citibank, Greenhills Branch; and the second was from Libya, and was intended to be deposited into the plaintiff's account. Afterward, Lopez made a written demand to PNB for the remittance of the equivalent of $2,627.11. It was later found out that Lopezs account had been doubly credited in two instances, with the total amounting to Php87,380.00. Acting upon this information, PNB made a demand from the Lopez to refund the amount of the duplicated credits which, created an extra-contractual obligation under the principle of solutio indebti. To this effect, the amount remittance requested by the defendant had been intercepted and taken by PNB by way of compensation. Upon trial with the lower court, Lopez raised the defense that there had been no compensation under Art. 1279 since, because of their situation, they were both creditors and debtors to each other, with respect to their monetary demands with each other. The trial court, however, said that the relationship between the two of them as creditor and debtor only applies to the fact that Lopez is a depositor in the bank, but by way of solution indebti, he is currently bound to return the amount he had received by mistake as a debtor. However, with respect to the $2627.11, the bank had no right to interfere with the money transfer and retain it as payment for the double credit since it is only a trustee under a stipulation pour atrui, which favors third parties, in that it functions only as a holder in trust of such property before it is claimed by the said third party. On appeal to the Court of Appeals, the bank continued to insist that it validly retained the $2,627.11 in payment of the private respondent's indebtedness by way of compensation or set-off, as provided under Art. 1279 of the Civil Code. The Court of Appeals sided with the trial court and rejected the argument, saying that the money transfer should have been credited in the account of Lopez with Citibank. They should have just transferred the money. Issue: Although the respondent court was correct in saying that the respondent, Ramon Lopez, was bound to return the sum of $2,627.11 to PNB, it erred in not ruling that there had already been a legal compensation that had occurred when the bank was ordered to return to the respondent the same amount. Held: The petitioner liable to the private respondent for the sum of $2,627.11, or its peso equivalent. Ratio: The petitioner contends that since respondent Court found that private respondent is an obligor of PNB and the latter has become an obligor of private respondent, they should be able to hold on to the amount requested by Lopez as a form of first payment. PNB was effectively saying that since the respondent Court of Appeals ruled that petitioner bank could not do a shortcut and simply intercept funds being coursed through it for transfer to another

bank, for transmittal to another bank, and eventually to be deposited to the account of an individual who happens to owe some amount of money to the petitioner, and because respondent Court order petitioner bank to return intercepted amount to said individual, who in turn was found by the appellate Court to be indebted to petitioner bank, there must now be legal compensation of the amounts each owes the other, and hence, there is no need for petitioner bank to actually return the amount, in effect returning to their first position which had already been declared unlawful by the lower courts. This cannot be done. The bank could have just easily disposed of this by exchanging with Lopez checks of equal amounts, but instead wants to make the Court its tool for collection.