7/25/2019 207391980 Citibank vs Sabeniano

1/3

CITIBANK vs SABERIANO

Facts:

This is a case involving Citibank, N.A., a banking corporation duly registered under US Laws and is

licensed to do commercial banking and trust unctions in the !hilippines and "nvestor#s $inance

Corporation %aka $NC& $inance', and ailiate company o Citibank, mainly handling money market

placements%((!s are short term debt instruments that give the owner an unconditional right to receive a

stated, i)ed sum o money on a speciied date'.

(odesta *. Sabeniano was a client o both petitioners Citibank and $NC& $inance.Unortunately, the

business relations among the parties subse+uently went awry. Subse+uently, Sabeniano iled a complaint

with the *TC against petitioners as she claims to have substantial deposits and money market placements

with the petitioners and other investment companies, the proceeds o which were supposedly deposited

automatically and directly to her account with Citibank. Sabeniano alleged that Citibank et al reused to

return her deposits and the proceeds o her money market placements despite her repeated demands, thus,

the civil case or Accounting, Sum o (oney and -amages.

"n their reply, Citibank et al admitted that Sabeniano had deposits and money market placements with

them, including dollar accounts in other Citibank branches. /owever, they also alleged that respondent

later obtained several loans rom Citibank, e)ecuted through !romissory Notes and secured by a pledge

on her dollar accounts, and a deed o assignment against her ((!S with $NC& $inance. 0hen

Sabeniano deaulted, Citibank e)ercised its right to o1set or compensate respondent#s outstanding loans

with her deposits and money market placements, pursuant to securities she e)ecuted. Citibank supposedlyinormed Sabeniano o the oregoing compensation through letters, thus, Citibank et al were surprised

when si) years later, Sabeniano and her counsel made repeated re+uests or the withdrawal o

respondent#s deposits and ((!s with Citibank, including her dollar accounts with Citibank12eneva and

her money market placements with petitioner $NC& $inance. Thus, petitioners prayed or the dismissal o

the Complaint and or the award o actual, moral, and e)emplary damages, and attorney#s ees.

The case was eventually decided ater 34 years with the 5udge declaring the osetting done as illegal and

the return o the amount with legal interest, while Sabeniano was ordered to pay her loans to Citibank.

The ruling was then appealed. The CA modiied the decision but only to the e)tent o Sabeniano6s loans

which it ruled that Citibank ailed to establish the indebtedness and is also without legal and actual basis.

The case was thus appealed to the SC.

"ssue7 0hether or not there was a valid o setting8compensation o loan vis a vis thea.'-eposits and

b.' ((!s.

/eld7

2eneral *e+uirement o Compensation7

7/25/2019 207391980 Citibank vs Sabeniano

2/3

Art. 39:;. Compensation shall take place when two persons, in their own right, are creditors and

debtors o each other.

Art. 39:

7/25/2019 207391980 Citibank vs Sabeniano

3/3

valid compensation, that each one o the obligors be bound principally, and that he be at the same time a

principal creditor o the other, was not met.

0hat petitioner Citibank actually did was to e)ercise its rights to the proceeds o respondent#s moneymarket placements with petitioner $NC& $inance by virtue o the -eeds o Assignment e)ecuted by

respondent in its avor. !etitioner Citibank was only acting upon the authority granted to it under the

oregoing -eeds when it inally used the proceeds o !Ns No. 943>; and 943>