Citibank vs Sabeniano

Citibank, N.A. and Investors’ Finance Corporation vs Modesta R. Sabeniano G.R. No. 156132

FACTS: • Citibank is a banking corporation duly authorized to do commercial banking activities and perfoem trust functions in the Philippines. Investor’s Finance Corporation, which did business under the name and style of FNCB Finance, was an affiliate company of petitioner Citibank, specifically handling money market placements for its clients. Sabeniano was a client of both Citibank and FNCB Finance. • Respondent filed a complaint against petitioners claiming that she has substantial deposits with them, the proceeds of which were supposedly transferred automatically and directly to her account with Citibank and that allegedly petitioner refused to so despite demands. • Petitioner alleged that respondent has several loans from Citibank and by default, it exercised its right to set-off respondent’s outstanding loans with her deposits and money. Trial court declared the said act of petitioner illegal, and null and void and ordered the petitioner to return the amount plus interest. On the other hand, trial court ordered respondent to pay Citibank her debt. •The Court of Appeals affirmed the trial court’s decision entirely in favor of the respondent. ISSUE: Whether or not compensation was warranted with regard to loan and deposit account. HELD: The court held, YES. Article 1278 states that “Compensation shall take place when two persons, intheir own right, are creditors and debtors of each other.” And in order for that compensation to be proper, it is necessary: (1) that each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other, (2) That both debts consists in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated, (3) That the two debts are due, (4) That they be liquidated and demandable, and (5) That neither of them there be

any retention or controversy, commenced communicated in due time to the debtor.

by

third

persons

and

Thus, the petition is partly granted with modification. Citibank is ordered to return to the respondent the principal amount and was ordered to refund the remittance from respondent’s Citibank-Geneva account since such remittance was declared illegal, and null and void, using the Philippine currency or its equivalent based on the exchange rate at the time of payment. Citibank was also ordered to pay respondent moral damages, exemplary damages and attorney’s fees. Respondent was ordered to pay petitioner the balance of her outstanding loans and interest.