Cabana, Adrian C.
Doctrine : It is well-settled that Article 1250 of the Civil Code becomes applicable
only when there is extraordinary inflation or deflation of the currency.
Case Title : Citibank vs. Sabeniano
GR. No. 156132
February 6, 2007
Chico-Nazario, J
Facts
Respondent - Modesta Sabeniano is a client of Citibank and FNCB Finance. She had several
deposits and market placements with petitioners, among which were her savings account with the local
branch of petitioner Citibank (Citibank-Manila3 ); money market placements with petitioner FNCB
Finance; and dollar accounts with the Geneva branch of Citibank.
Respondent incurred at Citibank-Manila outstanding loans amounting to ₱1,920,000.00 all of
which had become due and demandable by May 1979. Despite repeated demands by petitioner
Citibank, respondent failed to pay her outstanding loans. Thus, petitioner Citibank used respondent’s
deposits and money market placements to off-set and liquidate her outstanding obligations.
Respondent, however, denied having any outstanding loans with petitioner Citibank.
Sabeniano then filed a complaint against Citibank for damages and specific performance (for proper
accounting and return of the remitted proceeds from her personal accounts). She also contended that
the proceeds of 2 promissory notes (PN) from her money market placements with Citibank were rolled
over or reinvested into the petitioner bank, and these should also be returned to her.
RTC rendered a decision declaring as illegal and void the setoff effected by the defendant Bank but held
nonetheless that Sabeniano indebted to Citibank.
CA affirmed the RTC’s decision with modification and ruled entirely in favor of declaring as illegal, null
and void the set-off effected by Citibank and ordered the latter to refund the subject amount at the
prevailing rate at the time of payment.
Issue
Whether or not petitioner Citibank should refund to respondent the U.S. $149,632.99 taken
from her Citibank-Geneva accounts, or its equivalent in Philippine currency using the exchange rate at
the time of payment.
Ruling
Yes. Citibank should refund to respondent the U.S $149, 632, 99 take from her Citibank-Geneva
accounts, or its equivalent in Philippine currency using the exchange rate at the time of payment.
The Supreme Court held that it is well-settled that Article 1250 of the Civil Code becomes
applicable only when there is extraordinary inflation or deflation of the currency. Furthermore, it is
incontrovertible that Article 1250 of the Civil Code is based on equitable considerations. Among the
maxims of equity are (1) he who seeks equity must do equity, and (2) he who comes into equity must
come with clean hands.
The damage caused to respondent of the deprivation of her dollar accounts for more than two
decades is unquestionably relatively more extensive and devastating, as compared to whatever damage
petitioner Citibank, an international banking corporation with undoubtedly substantial capital, may have
suffered for respondent’s non-payment of her loans. It must also be remembered that petitioner
Citibank had already considered respondent’s loans paid or liquidated by 26 October 1979 after it had
fully effected compensation thereof using respondent’s deposits and money market placements.
Taking these into consideration, respondent’s dollar accounts with Citibank-Geneva must be
deemed to be subsisting and continuously deposited with petitioner Citibank all this while, and will only
be presently withdrawn by respondent.
Therefore, petitioner Citibank should refund to respondent the U.S. $149,632.99 taken from her
Citibank-Geneva accounts, or its equivalent in Philippine currency using the exchange rate at the time of
payment, plus the stipulated interest for each of the fiduciary placements and current accounts
involved, beginning 26 October 1979.
IN VIEW OF THE FOREGOING, petitioners’ Motion for Partial Reconsideration of this Court’s
Decision, dated 16 October 2006, and respondent’s Motion for this Court to declare the same Decision
already final and executory, are both DENIED for lack of merit.
