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BPI and Romero v Reyes (1996)

Reyes fraudulently claimed and deposited a US Treasury Warrant on behalf of his
(already deceased) grandmother.
The check was dishonored when the US Department of Treasury got word that his
grandmother had passed away 3 days prior to its issuance.
Reyes then verbally authorized BPI to debit from his joint account the amount
stated in the dishonored US Treasury Warrant.
Thereafter, he filed a suit for damages against BPI before the RTC of Quezon City,
demanding for restitution for the debited amount. The RTC dismissed his suit, but
the CA reversed the RTC ruling.

WON the CA erred when it failed to rule that legal compensation is proper in
this case YES
DOCTRINE: Compensation
Art. 1279. In order that compensation may be proper, it is necessary:
(1)That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;
(2)That both debts consist in a sum of money, or if the things due are consumable,
they be of the same kind, and also of the same quality if the latter has been
(3)That the two debts be due;
(4)That they be liquidated and demandable;
(5)That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.
The SC ruled in favor of BPI, finding not only that Reyes had indeed verbally
authorized BPI to debit the amount, but that the requisites of legal compensation
under Art. 1279 were present in this case. BPI was a debtor to Reyes as the latter
was a depositor, but at the same time BPI was a creditor to Reyes for the amount
of the dishonored Treasury check.
Their mutual obligations to each other must be considered extinguished, and
Reyess suit for restitution has no cause of action.

Broadway Centrum v. Tropical Hut

Facts: Petitioner Broadway and respondent Tropical executed a Lease Contract on Nov.
28, 1980. However, due to financial difficulties of respondent Tropical, Broadway
agreed to a "provisional and temporary agreement" on Apr. 20, 1982 reducing
Tropicals monthly rental, but stipulating that such provisional arrangement is not an
amendment to the Lease Contract they entered into. When Broadway increased
Tropicals monthly rental once again, the RTC ruled in favor of Tropical because the
Lease Contract was partially novated.

Issue: WON the letter-agreement dated Apr. 20, 1982 novated the Lease Contract of
Nov. 28, 1980

Held: No. The will to novate, whether totally or partially, must appear by express
agreement of the parties, by their acts too clear and unequivocal to be mistaken. The
Apr. 20, 1992 letter-agreement was a provisional and temporary agreement to a
reduction of Tropical's monthly rental. Likewise, the formal notarized Nov. 28, 1990
Lease Contract made it clear that a temporary and provisional concessional reduction
of rentals which Broadway might grant to Tropical was not to be construed as alteration
or waiver of any of the terms of the Lease Contract itself. Thus, the SC held that the
Apr. 20, 1982 letter-agreement did not constitute a novation, whether partial or total, of
the Nov. 28, 1980 Lease Contract.



Facts: Astro was granted several loans by Philtrust in the amount of P3M with interest,
secured by 3 promissory notes. Petitioner Roxas signed the instruments twice: both as
President of Astro and in his personal capacity. Phil Guarantee (respondent) with
consent of Astro, guaranteed in favor of Philtrust the payment of 70% of Astros loan,
subject to the condition that upon payment it shall be proportionally subrogated to the
rights of Philtrust against Astro. Since Astro failed to pay, Philguarantee paid 70% of
the loan and proceeded file a complaint against Astro and Roxas for sum of money.
Roxas disclaims any liability on the instrument because he signed them in blank, and
the words in his personal capacity were fraudulently added after. The issue here is
WON Roxas may be held solidarily liable with Astro,

Held: Yes. The promissory notes signed by Roxas twice were valid and binding.
Signatures covered portions of the typewritten words show that the typewritten words
were already existing when Roxas signed it. Given this, Philguarantee has all the rights
to proceed against Roxas and Astro and to be subrogated to the rights of Philtrust.
Roxas consent isnt necessary for subrogation to take place because the case is one of
legal subrogation which occurs by operation of law and without the need of debtors