BANK OF THE PHILIPPINES ISLAND and GRACE ROMERO vs. COURT OF APPEALS and EDVIN F.

REYES FACTS: Edvin Reyes opened a joint and/or account with his wife in the petitioner Bank of the Philippine Islands (BPI). Reyes also held another joint and/or account with his grandmother, Emerlita M. Frenandez, in which he regularly deposited the U.S. Treasury Warrants payable to the order of Mrs. Fernandez as her monthly pension. Mrs.Fernandez died without the knowledge of the U.S. Treasury Department so she was still sent pension which was then deposited by Reyes in their joint account. However, the treasury warrant was dishonored by the said Department upon knowledge of the death of Mrs. Fernandez. Prior to the dishonor, Reyes had closed the joint account with his grandmother and transferred the funds thereof to his joint account with his wife. Since the U.S. Treasury Department requested for refund, the BPI called the attention of Reyes who assured that he would drop by and look into the matter. Reyes also verbally authorized BPI to debit from his other joint account (that his of his wifes) the amount stated in the dishonored U.S. Treasury Warrant. However, Reyes filed a suit for the restitution of the debited amount against the BPI. The latter then averred that Reyes gave his express verbal authorization to debit the questioned amount and further claim that Reyes refused to execute a written authorization. ISSUE: Whether or not the debiting of the amount to the account of Reyes and his wife proper. RULING: Yes. It was properly made by the BPI. The presence of his wife does not negate the mutuality of the parties; they are creditors and debtors to each other in their own rights. Petitioner bank stands as a debtor of the private respondent, a depositor. At the same time, said bank is the creditor of the private respondent with respect to the dishonored U.S. Treasury Warrant which the latter illegally transferred to his joint account. The debts involved consist of a sum of money. They are due, liquidated, and demandable. They are not claimed by a third person. To frustrate the application of legal compensation on the ground that the parties are not all mutually obligated would result in unjust enrichment on the part of the private respondent and his wife who herself out of honesty has not objected 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.