Citibank N.A. v.

Sabeniano
504 SCRA 378 (Oct. 6, 2006)

Doctrine : In the absence of any allegation and evidence presented by petitioners of the
specific rules and laws governing the constitution of a pledge in Geneva, Switzerland, they
will be presumed to be the same as Philippine local or domestic laws; this is known as
processual presumption.

Facts: Modesta Sabeniano, a Philippine national, had several accounts with Citibank
branches in Switzerland, New York, and the Philippines in the 1970s. In 1985, she sued
Citibank in the Philippine courts, alleging that Citibank refused to pay her amounts it held
in her account. Citibank’s answer asserted that it had made loans to Sabeniano and that it
had offset the balance of the loans she failed to pay. Citibank supposedly informed
Sabeniano of the foregoing compensation through letters, thus, Citibank et al were surprised
when six years later, Sabeniano and her counsel made repeated requests for the withdrawal
of respondent's deposits with Citibank, including her dollar accounts with Citibank-Geneva.
Thus, petitioners prayed for the dismissal of the Complaint and for the award of actual,
moral, and exemplary damages, and attorney's fees. The Judge declared the offsetting as
illegal and the return of the amount with legal interest, while Sabeniano was ordered to pay
her loans to Citibank. 


Issue:
Whether or not Citibank may exercise its right to set-off respondent’s loans with her deposits
and money in Citibank-Geneva?

Held:
No. Certain principles of private international law should be considered herein because the
property pledged was in the possession of an entity in a foreign country, namely, Citibank-
Geneva. In the absence of any allegation and evidence presented by petitioners of the specific
rules and laws governing the constitution of a pledge in Geneva, Switzerland, they will be
presumed to be the same as Philippine local or domestic laws; this is known as processual
presumption. Without the original Declaration of Pledge being produced, petitioner Citibank
had no authority to demand the remittance of respondent's dollar accounts with Citibank-
Geneva and to apply them to her outstanding loans. It cannot effect legal compensation under
Article 1278 of the Civil Code since, petitioner Citibank itself admitted that Citibank-Geneva
is a distinct and separate entity. As for the dollar accounts, respondent was the creditor and
Citibank-Geneva is the debtor; and as for the outstanding loans, petitioner Citibank was the
creditor and respondent was the debtor. The parties in these transactions were evidently not
the principal creditor of each other.
Therefore, this Court declares that the remittance of respondent's dollar accounts from
Citibank-Geneva and the application thereof to her outstanding loans with petitioner
Citibank was illegal, and null and void.