Facts:

The case involves the Bank of the Philippine Islands (BPI) and Grace Romero as petitioners, and Edvin F. Reyes as the private respondent. The events leading to the case began on September 25, 1985, when Reyes opened a joint "AND/OR" Savings Account No. 3185-0172-56 at BPI's Cubao Shopping Center Branch with his wife, Sonia S. Reyes. Additionally, Reyes held another joint "AND/OR" Savings Account No. 3185-0128-82 with his grandmother, Emeteria M. Fernandez, which was opened on February 11, 1986. This account was regularly funded by U.S. Treasury Warrants, which were monthly pension payments for Fernandez.

Fernandez passed away on December 28, 1989, without the U.S. Treasury Department being informed. Despite her death, a U.S. Treasury Warrant No. 21667302 for $377.00 (approximately P10,556.00) was issued on January 1, 1990. Reyes deposited this check into the account he held with his grandmother on January 4, 1990. The check was conditionally cleared...

Facts:

1. Opening of Joint Accounts:

   • On September 25, 1985, private respondent Edvin F. Reyes opened Savings Account No. 3185-0172-56 at the Bank of the Philippine Islands (BPI) Cubao, Shopping Center Branch. This was a joint "AND/OR" account with his wife, Sonia S. Reyes.
   • On February 11, 1986, Reyes opened another joint "AND/OR" Savings Account No. 3185-0128-82 with his grandmother, Emeteria M. Fernandez, at the same BPI branch.

2. Deposit of U.S. Treasury Warrant:

   • Emeteria M. Fernandez, Reyes' grandmother, was a recipient of U.S. Treasury Warrants as her monthly pension.
   • Fernandez died on December 28, 1989, but the U.S. Treasury Department was unaware of her death.
   • On January 1, 1990, a U.S. Treasury Warrant No. 21667302 in the amount of $377.00 (P10,556.00) was issued in Fernandez's name.
   • On January 4, 1990, Reyes deposited the warrant into Savings Account No. 3185-0128-82. The check was conditionally cleared by the U.S. Veterans Administration Office in Manila and sent to the U.S. for further clearing.

3. Transfer of Funds and Dishonor of Warrant:

   • On March 8, 1990, Reyes closed Savings Account No. 3185-0128-82 and transferred its balance of P13,112.91 to his joint account with his wife (Savings Account No. 3185-0172-56).
   • On January 16, 1991, the U.S. Treasury Warrant was dishonored upon discovery that Fernandez had died three days before its issuance. The U.S. Department of Treasury requested a refund from BPI.

4. Debit of Account and Legal Dispute:

   • On February 19, 1991, BPI debited P10,556.00 from Reyes' joint account with his wife (Savings Account No. 3185-0172-56) after Reyes verbally authorized the debit.
   • Reyes later denied giving authorization and filed a suit for damages against BPI, claiming the debit caused him financial hardship.

5. Trial Court and Court of Appeals Decisions:

   • The Regional Trial Court dismissed Reyes' complaint, finding no cause of action.
   • The Court of Appeals reversed the trial court's decision, ordering BPI to credit Reyes' account with P10,556.00 plus interest.

Issue:

1. Whether private respondent Reyes verbally authorized BPI to debit his joint account with his wife for the amount of the dishonored U.S. Treasury Warrant.
2. Whether BPI had the legal right to apply Reyes' deposit to his outstanding obligation under the principle of "legal compensation."
3. Whether the Court of Appeals erred in not applying the principles enunciated in Gullas v. PNB.
4. Whether the Court of Appeals erred in not considering that the money debited was the same money transferred by Reyes from his joint account with his grandmother to his joint account with his wife.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)