Facts:

The case involves Insular Investment and Trust Corporation (IITC) as the petitioner and Capital One Equities Corporation (COEC) and Planters Development Bank (PDB) as respondents. The events leading to the case began in 1994 when IITC engaged in the trading of Philippine treasury bills. IITC purchased treasury bills from COEC with a total face value of P260,683,392.51, for which it fully paid but only received P121,050,000.00 worth of treasury bills. On May 2, 1994, COEC purchased treasury bills from IITC, issuing checks to PDB and IITC as payment. IITC later demanded the delivery of treasury bills from PDB, which had been paid for by COEC. Disputes arose regarding the delivery of treasury bills, leading IITC to file an Amended Complaint on March 20, 1995, in the Regional Trial Court (RTC) of Makati City. The RTC ruled that COEC owed IITC P119,633,392.00 worth of treasury bills but also found IITC liable to COEC for P136,790,000.00. The RTC orde...

Facts:

Parties Involved:

• Petitioner: Insular Investment and Trust Corporation (IITC)
• Respondents: Capital One Equities Corp. (COEC) and Planters Development Bank (PDB)

Background:
The parties are engaged in trading, sale, and purchase of Philippine Treasury Bills (T-Bills).

Transactions:

1. IITC Purchases from COEC:

   • In 1994, IITC purchased T-Bills from COEC totaling P260,683,392.51.
   • IITC fully paid for the T-Bills, but COEC only delivered P121,050,000.00 worth of T-Bills.

2. COEC Purchases from IITC:

   • On May 2, 1994, COEC purchased T-Bills worth P186,774,739.49 from IITC.
   • COEC paid via checks, most of which were payable to PDB.
   • PDB issued confirmations of sale to IITC for T-Bills worth P186,790,000.00, which IITC purchased from PDB.

Dispute:

• COEC demanded delivery of T-Bills it purchased from IITC.
• IITC demanded delivery of the remaining T-Bills from COEC or a refund of the purchase price.
• COEC proposed a legal set-off of obligations, but IITC rejected it, claiming it acted only as a conduit between COEC and PDB.

Tripartite Agreement:

• On July 1, 1994, the parties entered into a Tripartite Agreement, wherein PDB assigned Central Bank Bills to IITC, which IITC reassigned to COEC.
• Despite this, PDB and COEC failed to deliver the remaining T-Bills or return the purchase price.

Litigation:

• IITC filed a complaint against COEC and PDB for the delivery of T-Bills or payment of their equivalent value.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. IITC’s Principal Role:

   • Confirmations of sale and purchase issued by IITC clearly state it acted as a principal in both transactions.
   • The language of the documents was unambiguous, and IITC’s actions (e.g., demanding delivery from PDB) confirmed its principal role.

2. Set-Off Under Article 1279 of the Civil Code:

   • The debts between IITC and COEC are liquidated, demandable, and of the same kind (government securities with monetary value).
   • All prerequisites for legal compensation are met, allowing COEC to set off its obligations against IITC’s.

3. PDB’s Obligation:

   • PDB received payment for the T-Bills from COEC, acting on IITC’s behalf, and must deliver the T-Bills or pay their equivalent value.
   • The Tripartite Agreement and PDB’s May 4, 1994 letter confirm its obligation to IITC.

Unjust Enrichment:

• PDB cannot retain the payment without delivering the T-Bills, as this would result in unjust enrichment.