G.R. No. 146918 - Citibank, N.A. vs. Spouses Cabamongan

Spouses Luis and Carmelita Cabamongan, residing and working in California, opened a joint “and/or” foreign currency time deposit in trust for their sons (Luis, Jr. and Lito) at Citibank, N.A., Makati branch.
The deposit, referenced as No. 60-22214372, amounted to US$55,216.69 for a term of 182 days (August 16, 1993 to February 14, 1994) with an interest rate of 2.5625% per annum.

On November 10, 1993, a person identifying herself as Carmelita presented herself at the Makati branch and preterminated the time deposit.

She produced a valid passport, Bank of America Versatele Card, an ATM card, and a Mabuhay Credit Card.
With the assistance of Account Officer Yeye San Pedro, she completed the necessary forms for the pretermination.

Although the procedure required surrendering the original Certificate of Deposit and obtaining a notarized release and waiver document, the following irregularities occurred:

The certificate was not surrendered.
The notarization of the release and waiver document was delayed or omitted on the day of the transaction, yet the money was already dispensed.

The transaction lasted about 40 minutes; afterward, an identification card was inadvertently left behind by the transacting person.
Subsequent telephone follow-up from San Pedro revealed that the account holder, Carmelita, was actually in the United States, raising serious suspicions about the legitimacy of the transaction.

Prior to the pretermination incident, between June 10 and 16, 1993, an unidentified person broke into the Cabamongan residence in California and stole valuables, including passports, bank deposit certificates (the subject deposit among them), and other identification cards.
The Cabamongan spouses, upon realizing their loss and learning of the pretermination, communicated via various overseas calls and informed Citibank that Carmelita could not have performed the withdrawal since she was in the United States.
Despite their protestations and provision of supporting documentary evidence, Citibank maintained that proper identification and verification had been observed during the transaction.

On January 27, 1995, the spouses filed a complaint for Specific Performance with Damages before the Regional Trial Court (RTC) of Makati.
During the trial:

The Cabamongan spouses testified that Carmelita could not have preterminated the deposit given her documented presence in the United States.
Florenda G. Negre, a documents examiner from the Philippine National Police (PNP) Crime Laboratory, testified that the signatures on the pretermination forms significantly diverged from Carmelita’s standard signatures, establishing that the signatures were forgeries.

Citibank’s defense was based on the testimonies of Account Officer San Pedro and Cris Cabalatungan (VP and In-charge of Security and Management Division), who asserted that the transaction had been carried out in compliance with the bank’s identification procedures.

Principal amount (or its Philippine currency equivalent) plus interests.
Moral damages initially at P50,000.00, later increased upon a motion for partial reconsideration.
Attorney’s fees, exemplary damages, and litigation expenses.

Dissatisfied with the RTC decision, Citibank appealed to the Court of Appeals (CA), which:

Affirmed the finding of negligence on the part of Citibank, emphasizing the failure in proper verification despite visible discrepancies.
Modified the awards by reducing moral damages to P100,000.00, and deleting some damage awards (exemplary damages and litigation expenses), while also ruling on the appropriate period and rate for computing legal interest.

The Cabamongan spouses’ petition was denied.
Citibank’s petition was given due course, raising issues on negligence, the award of moral damages, the computation of interest, and contributory negligence.

The Bank should not be held negligent, citing the extra diligence supposedly exercised by its employee, San Pedro.
The award of moral damages was baseless because mere negligence without willful or fraudulent conduct does not warrant such an award.
The interest should be computed at the stipulated rate of 2.5625% rather than 12% per annum after the extra-judicial demand.

The spouses countered by emphasizing the clear evidence of forgery and procedural lapses by Citibank.
Citibank, in a supplemental memorandum, additionally argued that the spouses were contributorily negligent for not promptly reporting the burglary and missing documents, an argument raised belatedly and not previously included in the record.

Whether Citibank was negligent in releasing the preterminated deposit despite noticeable discrepancies in the identification documents and signatures.
Whether the procedures for surrendering the original certificate of deposit and notarizing the release and waiver document were properly observed and enforced by Citibank.
Whether the forged signatures on the pretermination documents establish that an impostor, not the actual depositor, carried out the transaction.
What the proper computation of interest should be on the principal amount of US$55,216.69, including the periods and applicable rates (stated contract rate versus legal rate).
Whether the award of moral damages (and other corresponding damages such as attorney’s fees, exemplary damages, and litigation expenses) is justified under the law given the circumstances of negligence and alleged fraud.
Whether the allegation of contributory negligence on the part of the Cabamongan spouses has any merit, especially considering it was raised belatedly in the proceedings.