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    Citibank N.A. & Investors Finance Corporation v. Sabeniano

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    Shiela Pilar
    Citibank exercised its right to set-off deposits from a client, Sabeniano, against her outstanding loans. The trial court found this illegal and ordered Citibank to return the deposits. The Court of Appeals affirmed. The Supreme Court partly granted Citibank's petition, finding compensation was allowed under Article 1278 since Citibank and Sabeniano were creditors and debtors to each other. It ordered Citibank to return principal deposits but also ordered Sabeniano to pay outstanding loan balances and interest.

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    Citibank N.A. & Investors Finance Corporation v. Sabeniano

    Uploaded by

    Shiela Pilar
    1K views1 page
    Citibank exercised its right to set-off deposits from a client, Sabeniano, against her outstanding loans. The trial court found this illegal and ordered Citibank to return the deposits. The Court of Appeals affirmed. The Supreme Court partly granted Citibank's petition, finding compensation was allowed under Article 1278 since Citibank and Sabeniano were creditors and debtors to each other. It ordered Citibank to return principal deposits but also ordered Sabeniano to pay outstanding loan balances and interest.

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    Citibank N.a. & Investors Finance Corporation v. Sabeniano Credit

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    Citibank N.a. & Investors Finance Corporation v. Sabeniano

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    Citibank exercised its right to set-off deposits from a client, Sabeniano, against her outstanding loans. The trial court found this illegal and ordered Citibank to return the deposits. The Court of Appeals affirmed. The Supreme Court partly granted Citibank's petition, finding compensation was allowed under Article 1278 since Citibank and Sabeniano were creditors and debtors to each other. It ordered Citibank to return principal deposits but also ordered Sabeniano to pay outstanding loan balances and interest.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views1 page

    Citibank N.A. & Investors Finance Corporation v. Sabeniano

    Uploaded by

    Shiela Pilar
    Citibank exercised its right to set-off deposits from a client, Sabeniano, against her outstanding loans. The trial court found this illegal and ordered Citibank to return the deposits. The Court of Appeals affirmed. The Supreme Court partly granted Citibank's petition, finding compensation was allowed under Article 1278 since Citibank and Sabeniano were creditors and debtors to each other. It ordered Citibank to return principal deposits but also ordered Sabeniano to pay outstanding loan balances and interest.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Citibank N.A. & Investors Finance Corporation v.

    Sabeniano,
    GR No. 156132, October 12, 2006, 504 SCRA 378

    FACTS:
    Citibank is a banking corporation duly authorized to do commercial banking
    activities and perform trust functions in the Philippines. Investors 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 respondents 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 courts decision entirely in favor of the
    respondent.

    ISSUE: Whether or not compensation was warranted with regard to loan and
    deposit account.

    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 by third persons and communicated in due time to the
    debtor.

    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 respondents 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 attorneys fees.
    Respondent was ordered to pay petitioner the balance of her outstanding loans
    and interest.

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