Case Digest: Steve Tan & Marciano Tan vs. Fabian Mendez, Jr., G.R. No. 138669

Steve Tan & Marciano Tan vs. Fabian Mendez, Jr., G.R. No. 138669, June 6, 2002

Subject: Obligations and Contracts

FACTS

Petitioners Steve Tan and Marciano Tan are the owners of a travel agency and a bus company, while Fabian Mendez, Jr. is the owner of three gasoline stations. The Tan brothers opened a credit line for their buses’ lubricants and fuel consumption with Mendez. At the same time, the latter was also designated by petitioners as the booking and ticketing agent in Iriga City. Tans’ drivers purchased oil products for its buses through withdrawal slips, with periodic payments to respondent through checks. Mendez remitted the proceeds of ticket sales to petitioners also through the issuance of checks. Sent together with Mendez’ remittances are the remittances of the ticket sales in the Baao Booking system, which is managed separately and independently by another agent. The Tans issued several checks to respondent as payment for oil and fuel products, which were dishonored by the bank for being drawn against insufficient funds. Mendez sent a demand letter to petitioners demanding that they make good the check or pay the amount, to no avail. RTC convicted petitioners of violating BP 22. Marciano averred that he cannot be held liable for violation of B.P. 22 because the amount subject of the check had already been extinguished by offset or compensation against the collection from ticket sales from the booking offices. Mendez remitted the proceeds, but the Tans did not encash the check. But After the alleged offset, there remains a balance of P226,785.83.

ISSUE

Whether or not payment through compensation or offset can preclude prosecution for violation of B.P. 22.

RULING

No, respondent is not a debtor of petitioners insofar as the two checks representing collections from the Baao ticket sales are concerned.

Under the law (Art 1278, NCC), as a prerequisite for compensation, that the parties be mutually and principally bound as creditors and debtors.

In this case, no compensation can take place between petitioners and respondent as they were not mutually creditors and debtors of each other. The memorandum shows that some uncashed checks returned to respondent to allegedly offset the dishonored check were from the Baao ticket sales which are separate from the ticket sales of respondent. Respondent only acted as an intermediary in remitting the Baao ticket sales and is not a debtor of petitioners. Thus, the payment through compensation or offset cannot preclude prosecution for violation of B.P. 22.