Doctrine: Compensation, be it legal or conventional, requires confluence in the parties of the characters of mutualdebtors and creditors, although their rights as such creditors or their obligations as such debtors need not spring fromone and the same contract or transaction.

Nisce vs Equitable PCI BankG.R. No. 167434February 19, 2007

Facts: Spouses Ramon and Natividad Nisce contracted loans evidenced by promissory notes with herein respondentEquitable PCI Bank, Inc secured by a real mortgage on the former’s parcel of land. Having defaulted, respondent ascreditor-mortgagee filed a petition for extrajudicial foreclosure. Petitioners alleged, among others, that the bank shouldhave compensated their debt with their dollar account which they maintain with PCI Capital Asia Ltd. (Hong Kong), asubsidiary of Equitable. The Bank, for its part, contends that although the spouses’ debt was restructured, theynevertheless failed to pay. Moreover, it alleged that there cannot be legal compensation because PCI Capital had aseparate and distinct personality from the PCIB, and a claim against the former cannot be made against the latter.

Issue: Whether or not legal compensation may operate to extinguish the petitioner’s obligation? 

Ruling: Admittedly, PCI Capital is a subsidiary of respondent Bank. Even then, PCI Capital [PCI Express Padala (HK)Ltd.] has an independent and separate juridical personality from that of the respondent Bank, its parent company; hence,any claim against the subsidiary is not a claim against the parent company and vice versa. On hindsight, petitionerscould have spared themselves the expenses and tribulation of a litigation had they just withdrawn their deposit from thePCI Capital and remitted the same to respondent. However, petitioner insisted on their contention of setoff.