GR 156335; (November, 2007) (Digest)
G.R. No. 156335 November 28, 2007
SPOUSES RAUL and AMALIA PANLILIO, Petitioners, vs. CITIBANK, N.A., Respondent.
FACTS
Petitioner Amalia Panlilio invested PhP 3 million with respondent Citibank. Through bank employee Jinky Lee, a portion (PhP 2,134,635.87) was placed in a Long-Term Commercial Paper (LTCP) issued by Camella and Palmera Homes. To effect the investment, Amalia signed a Directional Investment Management Agreement (DIMA) and a Directional Letter containing exculpatory clauses, stating Citibank assumed no obligation to guarantee the principal or interest and all investment risks were borne by the client. Petitioners later demanded the withdrawal of the LTCP investment, claiming Amalia had not authorized its purchase and had instructed Lee to place the funds only in a Peso Repriceable Promissory Note (PRPN). Citibank refused, citing the documents signed and the fact that the LTCP, with a 2003 maturity, could only be sold in the secondary market, for which no buyers were found.
ISSUE
Whether Citibank is liable to return the investment amount to the Panlilios for allegedly acting without or in excess of Amalia’s instructions in purchasing the LTCP.
RULING
No. Citibank is not liable. The Supreme Court affirmed the Court of Appeals’ reversal of the RTC, holding that Citibank acted as a mere agent following the specific instructions of its principal, Amalia Panlilio. The legal relationship was governed by the DIMA and Directional Letter, which were contracts of agency where the agent (Citibank) bound itself to render services for the principal (Panlilio) in purchasing securities per her directives. The documents clearly indicated the LTCP investment and contained provisions absolving Citibank from guaranteeing the investment’s success, absent fraud or negligence. Amalia’s claim of unauthorized investment is contradicted by her signatures on these documents and her admission of receiving Confirmations of Investment (COIs) detailing the LTCP purchase without immediate, vigorous protest. The burden of proof to show the bank acted beyond its authority rested with petitioners, which they failed to discharge. The loss stemmed from the inherent risks of the investment and market conditions, not from any fraudulent or negligent act by Citibank. Therefore, as a duly instructed agent, Citibank incurred no liability for the principal’s investment loss.