1. Citibank vs. Sabeniano

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FIRST DIVISION
CITIBANK,
N.A.
(Formerly
FirstNational
City Bank)
and
INVESTORS’
FINANCE
CORPORATION, doing business
under the name and style of FNCB
Finance,
Petitioners,

G.R. No. 156132

Present:
PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,

- versus-

CALLEJO, SR., and
CHICO-NAZARIO, JJ.

MODESTA R. SABENIANO,
Respondent.

Promulgated:
October 16, 2006

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DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari,[1] under Rule 45 of
the Revised Rules of Court, of the Decision[2] of the Court of Appeals in CA-G.R. CV

No. 51930, dated 26 March 2002, and the Resolution,[3] dated 20 November 2002,
of the same court which, although modifying its earlier Decision, still denied for
the most part the Motion for Reconsideration of herein petitioners.

Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a
banking corporation duly authorized and existing under the laws of the United
States of America and licensed to do commercial banking activities and perform
trust functions in the Philippines.
Petitioner Investor’s 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. It is now, by virtue
of a merger, doing business as part of its successor-in-interest, BPI Card Finance
Corporation. However, so as to consistently establish its identity in the Petition at
bar, the said petitioner shall still be referred to herein as FNCB Finance.[4]
Respondent Modesta R. Sabeniano was a client of both petitioners Citibank
and FNCB Finance. Regrettably, the business relations among the parties
subsequently went awry.
On 8 August 1985, respondent filed a Complaint[5] against petitioners,
docketed as Civil Case No. 11336, before the Regional Trial Court (RTC) of Makati
City. Respondent claimed to have substantial deposits and money market
placements with the petitioners, as well as money market placements with the
Ayala Investment and Development Corporation (AIDC), the proceeds of which
were supposedly deposited automatically and directly to respondent’s accounts
with petitioner Citibank. Respondent alleged that petitioners refused to return
her deposits and the proceeds of her money market placements despite her

repeated demands, thus, compelling respondent to file Civil Case No. 11336
against petitioners for “Accounting, Sum of Money and Damages.” Respondent
eventually filed an Amended Complaint[6] on 9 October 1985 to include additional
claims to deposits and money market placements inadvertently left out from her
original Complaint.
In their joint Answer[7] and Answer to Amended Complaint,[8] filed on 12
September 1985 and 6 November 1985, respectively, petitioners admitted that
respondent had deposits and money market placements with them, including
dollar accounts in the Citibank branch in Geneva, Switzerland (CitibankGeneva). Petitioners further alleged that the respondent later obtained several
loans from petitioner Citibank, for which she executed Promissory Notes (PNs),
and secured by (a) a Declaration of Pledge of her dollar accounts in CitibankGeneva, and (b) Deeds of Assignment of her money market placements with
petitioner FNCB Finance. When respondent failed to pay her loans despite
repeated demands by petitioner Citibank, the latter exercised its right to off-set
or compensate respondent’s outstanding loans with her deposits and money
market placements, pursuant to the Declaration of Pledge and the Deeds of
Assignment executed by respondent in its favor. Petitioner Citibank supposedly
informed respondent Sabeniano of the foregoing compensation through letters,
dated 28 September 1979 and 31 October 1979. Petitioners were therefore
surprised when six years later, in 1985, respondent and her counsel made
repeated requests for the withdrawal of respondent’s deposits and money
market placements with petitioner Citibank, including her dollar accounts with
Citibank-Geneva and her money market placements with petitioner FNCB
Finance. Thus, petitioners prayed for the dismissal of the Complaint and for the
award of actual, moral, and exemplary damages, and attorney’s fees.
When the parties failed to reach a compromise during the pre-trial
hearing,[9] trial proper ensued and the parties proceeded with the presentation of

their respective evidence. Ten years after the filing of the Complaint on 8 August
1985, a Decision[10] was finally rendered in Civil Case No. 11336 on 24 August 1995
by the fourth Judge[11]who handled the said case, Judge Manuel D. Victorio, the
dispositive portion of which reads –
WHEREFORE, in view of all the foregoing, decision is hereby
rendered as follows:
(1) Declaring as illegal, null and void the setoff effected by the
defendant Bank *petitioner Citibank+ of plaintiff’s *respondent Sabeniano+
dollar deposit with Citibank, Switzerland, in the amount of US$149,632.99,
and ordering the said defendant [petitioner Citibank] to refund the said
amount to the plaintiff with legal interest at the rate of twelve percent
(12%) per annum, compounded yearly, from 31 October 1979 until fully
paid, or its peso equivalent at the time of payment;
(2) Declaring the plaintiff [respondent Sabeniano] indebted to the
defendant Bank [petitioner Citibank] in the amount of P1,069,847.40 as of
5 September 1979 and ordering the plaintiff [respondent Sabeniano] to
pay said amount, however, there shall be no interest and penalty charges
from the time the illegal setoff was effected on 31 October 1979;
(3) Dismissing all other claims and counterclaims interposed by the
parties against each other.
Costs against the defendant Bank.

All the parties appealed the foregoing Decision of the RTC to the Court of
Appeals, docketed as CA-G.R. CV No. 51930. Respondent questioned the findings
of the RTC that she was still indebted to petitioner Citibank, as well as the failure
of the RTC to order petitioners to render an accounting of respondent’s deposits
and money market placements with them. On the other hand, petitioners argued
that petitioner Citibank validly compensated respondent’s outstanding loans with
her dollar accounts with Citibank-Geneva, in accordance with the Declaration of

Pledge she executed in its favor. Petitioners also alleged that the RTC erred in not
declaring respondent liable for damages and interest.

On 26 March 2002, the Court of Appeals rendered its Decision[12] affirming
with modification the RTC Decision in Civil Case No. 11336, dated 24 August 1995,
and ruling entirely in favor of respondent in this wise –

Wherefore, premises considered, the assailed 24 August
1995 Decision of
the
court a
quo is
hereby AFFIRMED
with
MODIFICATION, as follows:

1.
Declaring as illegal, null and void the set-off effected by the
defendant-appellant Bank of the plaintiff-appellant’s dollar deposit with
Citibank, Switzerland, in the amount of US$149,632.99, and ordering
defendant-appellant Citibank to refund the said amount to the plaintiffappellant with legal interest at the rate of twelve percent (12%) per
annum, compounded yearly, from 31 October 1979 until fully paid, or its
peso equivalent at the time of payment;

2.
As defendant-appellant Citibank failed to establish by
competent evidence the alleged indebtedness of plaintiff-appellant, the
set-off of P1,069,847.40 in the account of Ms. Sabeniano is hereby
declared as without legal and factual basis;

3.
As defendants-appellants failed to account the following
plaintiff-appellant’s money market placements, savings account and
current accounts, the former is hereby ordered to return the same, in
accordance with the terms and conditions agreed upon by the contending
parties as evidenced by the certificates of investments, to wit:

(i)
Citibank NNPN Serial No. 023356 (Cancels and
Supersedes NNPN No. 22526) issued on 17 March
1977, P318,897.34 with 14.50% interest p.a.;

(ii)
Citibank NNPN Serial No. 23357 (Cancels and
Supersedes NNPN No. 22528) issued on 17 March
1977, P203,150.00 with 14.50 interest p.a.;

(iii) FNCB NNPN Serial No. 05757 (Cancels and
Supersedes NNPN No. 04952), issued on 02 June
1977, P500,000.00 with 17% interest p.a.;

(iv) FNCB NNPN Serial No. 05758 (Cancels and
Supersedes NNPN No. 04962), issued on 02 June
1977, P500,000.00 with 17% interest per annum;

(v)
The Two Million (P2,000,000.00) money market
placements of Ms. Sabeniano with the Ayala Investment &
Development Corporation (AIDC) with legal interest at the
rate of twelve percent (12%) per annum compounded yearly,
from 30 September 1976 until fully paid;

4.
Ordering defendants-appellants to jointly and severally pay
the plaintiff-appellant the sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) by way of moral damages, FIVE HUNDRED THOUSAND
PESOS (P500,000.00) as exemplary damages, and ONE HUNDRED
THOUSAND PESOS (P100,000.00) as attorney’s fees.

Apparently, the parties to the case, namely, the respondent, on one hand,
and the petitioners, on the other, made separate attempts to bring the

aforementioned Decision of the Court of Appeals, dated 26 March 2002, before
this Court for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the Decision of the Court
of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, and instead, filed
immediately with this Court on 3 May 2002 a Motion for Extension of Time to File
a Petition for Review,[13] which, after payment of the docket and other lawful fees,
was assigned the docket number G.R. No. 152985. In the said Motion,
respondent alleged that she received a copy of the assailed Court of Appeals
Decision on 18 April 2002 and, thus, had 15 days therefrom or until 3 May 2002
within which to file her Petition for Review. Since she informed her counsel of
her desire to pursue an appeal of the Court of Appeals Decision only on 29 April
2002, her counsel neither had enough time to file a motion for reconsideration of
the said Decision with the Court of Appeals, nor a Petition forCertiorari with this
Court. Yet, the Motion failed to state the exact extension period respondent was
requesting for.
Since this Court did not act upon respondent’s Motion for Extension of
Time to file her Petition for Review, then the period for appeal continued to run
and still expired on 3 May 2002.[14] Respondent failed to file any Petition for
Review within the prescribed period for appeal and, hence, this Court issued a
Resolution,[15] dated 13 November 2002, in which it pronounced that –
G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals, et
al.). – It appearing that petitioner failed to file the intended petition for
review on certiorari within the period which expired on May 3, 2002, the
Court Resolves to DECLARE THIS CASE TERMINATED and DIRECT the
Division Clerk of Court to INFORM the parties that the judgment sought to
be reviewed has become final and executory.

The said Resolution was duly recorded in the Book of Entries of Judgments on 3
January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a Motion for
Reconsideration of its Decision in CA-G.R. CV No. 51930, dated 26 March
2002. Acting upon the said Motion, the Court of Appeals issued the
Resolution,[16] dated 20 November 2002, modifying its Decision of 26 March 2002,
as follows –
WHEREFORE, premises considered, the instant Motion for
Reconsideration is PARTIALLY GRANTED as Sub-paragraph (V) paragraph 3
of the assailed Decision’sdispositive portion is hereby ordered DELETED.

The challenged 26 March
is AFFIRMED with MODIFICATION.

2002 Decision of

the

Court

Assailing the Decision and Resolution of the Court of Appeals in CA-G.R. CV
No. 51930, dated 26 March 2002 and 20 November 2002, respectively, petitioners
filed the present Petition, docketed as G.R. No. 156132. The Petition was initially
denied[17] by this Court for failure of the petitioners to attach thereto a
Certification against Forum Shopping. However, upon petitioners’ Motion and
compliance with the requirements, this Court resolved[18] to reinstate the Petition.
The Petition presented fourteen (14) assignments of errors allegedly
committed by the Court of Appeals in its Decision, dated 26 March 2002, involving

both questions of fact and questions of law which this Court, for the sake of
expediency, discusses jointly, whenever possible, in the succeeding paragraphs.
I
The Resolution of this Court, dated 13
November 2002, in G.R. No. 152985,
declaring the Decision of the Court of
Appeals, dated 26 March 2002, final and
executory,
pertains
to
respondent
Sabeniano alone.

Before proceeding to a discussion of the merits of the instant Petition, this
Court wishes to address first the argument, persistently advanced by respondent
in her pleadings on record, as well as her numerous personal and unofficial letters
to this Court which were no longer made part of the record, that the Decision of
the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, had already
become final and executory by virtue of the Resolution of this Court in G.R. No.
152985, dated 13 November 2002.
G.R. No. 152985 was the docket number assigned by this Court to
respondent’s Motion for Extension of Time to File a Petition for
Review. Respondent, though, did not file her supposed Petition. Thus, after the
lapse of the prescribed period for the filing of the Petition, this Court issued the
Resolution, dated 13 November 2002, declaring the Decision of the Court of
Appeals, dated 26 March 2002, final and executory. It should be pointed out,
however, that the Resolution, dated 13 November 2002, referred only to G.R. No.
152985, respondent’s appeal, which she failed to perfect through the filing of a
Petition for Review within the prescribed period. The declaration of this Court in
the same Resolution would bind respondent solely, and not petitioners which

filed their own separate appeal before this Court, docketed as G.R. No. 156132,
the Petition at bar. This would mean that respondent, on her part, should be
bound by the findings of fact and law of the Court of Appeals, including the
monetary amounts consequently awarded to her by the appellate court in its
Decision, dated 26 March 2002; and she can no longer refute or assail any part
thereof. [19]
This Court already explained the matter to respondent when it issued a
Resolution[20] in G.R. No. 156132, dated 2 February 2004, which addressed her
Urgent Motion for the Release of the Decision with the Implementation of the
Entry of Judgment in the following manner –
*A+cting on Citibank’s and FNCB Finance’s Motion for Reconsideration, we
resolved to grant the motion, reinstate the petition and require Sabeniano
to file a comment thereto in our Resolution of June 23, 2003. Sabeniano
filed a Comment dated July 17, 2003 to which Citibank and FNCB Finance
filed a Reply dated August 20, 2003.
From the foregoing, it is clear that Sabeniano had knowledge of,
and in fact participated in, the proceedings in G.R. No. 156132. She
cannot feign ignorance of the proceedings therein and claim that
the Decision of the Court of Appeals has become final and
executory. More precisely, the Decision became final and executory only
with regard to Sabeniano in view of her failure to file a petition for review
within the extended period granted by the Court, and not to Citibank and
FNCB Finance whose Petition for Review was duly reinstated and is now
submitted for decision.
Accordingly, the instant Urgent Motion is hereby DENIED. (Emphasis
supplied.)

To sustain the argument of respondent would result in an unjust and incongruous
situation wherein one party may frustrate the efforts of the opposing party to

appeal the case by merely filing with this Court a Motion for Extension of Time to
File a Petition for Review, ahead of the opposing party, then not actually filing the
intended Petition.[21] The party who fails to file its intended Petition within the
reglementary or extended period should solely bear the consequences of such
failure.
Respondent Sabeniano did not commit
forum shopping.

Another issue that does not directly involve the merits of the present
Petition, but raised by petitioners, is whether respondent should be held liable for
forum shopping.
Petitioners contend that respondent committed forum shopping on the
basis of the following facts:
While petitioners’ Motion for Reconsideration of the Decision in CA-G.R. CV
No. 51930, dated 26 March 2002, was still pending before the Court of Appeals,
respondent already filed with this Court on 3 May 2002 her Motion for Extension
of Time to File a Petition for Review of the same Court of Appeals Decision,
docketed as G.R. No. 152985. Thereafter, respondent continued to participate in
the proceedings before the Court of Appeals in CA-G.R. CV No. 51930 by filing her
Comment, dated 17 July 2002, to petitioners’ Motion for Reconsideration; and a
Rejoinder, dated 23 September 2002, to petitioners’ Reply. Thus, petitioners
argue that by seeking relief concurrently from this Court and the Court of
Appeals, respondent is undeniably guilty of forum shopping, if not indirect
contempt.
This Court, however, finds no sufficient basis to hold respondent liable for
forum shopping.

Forum shopping has been defined as the filing of two or more suits involving
the same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable judgment.[22] The test for
determining forum shopping is whether in the two (or more) cases pending, there
is an identity of parties, rights or causes of action, and relief sought.[23] To guard
against this deplorable practice, Rule 7, Section 5 of the revised Rules of Court
imposes the following requirement –
SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim
is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof;
and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report
that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint
or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided,
upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings
therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as well as cause for administrative
sanctions.

Although it may seem at first glance that respondent was simultaneously
seeking recourse from the Court of Appeals and this Court, a careful and closer
scrutiny of the details of the case at bar would reveal otherwise.
It should be recalled that respondent did nothing more in G.R. No. 152985
than to file with this Court a Motion for Extension of Time within which to file her
Petition for Review. For unexplained reasons, respondent failed to submit to this
Court her intended Petition within the reglementary period. Consequently, this
Court was prompted to issue a Resolution, dated 13 November 2002, declaring
G.R. No. 152985 terminated, and the therein assailed Court of Appeals Decision
final and executory. G.R. No. 152985, therefore, did not progress and
respondent’s appeal was unperfected.

The Petition for Review would constitute the initiatory pleading before this
Court, upon the timely filing of which, the case before this Court commences;
much in the same way a case is initiated by the filing of a Complaint before the
trial court. The Petition for Review establishes the identity of parties, rights or
causes of action, and relief sought from this Court, and without such a Petition,
there is technically no case before this Court. The Motion filed by respondent
seeking extension of time within which to file her Petition for Review does not
serve the same purpose as the Petition for Review itself. Such a Motion merely
presents the important dates and the justification for the additional time
requested for, but it does not go into the details of the appealed case.
Without any particular idea as to the assignments of error or the relief
respondent intended to seek from this Court, in light of her failure to file her
Petition for Review, there is actually no second case involving the same parties,
rights or causes of action, and relief sought, as that in CA-G.R. CV No. 51930.
It should also be noted that the Certification against Forum Shopping is
required to be attached to the initiatory pleading, which, in G.R. No. 152985,
should have been respondent’s Petition for Review. It is in that Certification
wherein respondent certifies, under oath, that: (a) she has not commenced any
action or filed any claim involving the same issues in any court, tribunal or quasijudicial agency and, to the best of her knowledge, no such other action or claim is
pending therein; (b) if there is such other pending action or claim, that she is
presenting a complete statement of the present status thereof; and (c) if she
should thereafter learn that the same or similar action or claim has been filed or is
pending, she shall report that fact within five days therefrom to this
Court. Without her Petition for Review, respondent had no obligation to execute
and submit the foregoing Certification against Forum Shopping. Thus, respondent
did not violate Rule 7, Section 5 of the Revised Rules of Court; neither did she
mislead this Court as to the pendency of another similar case.

Lastly, the fact alone that the Decision of the Court of Appeals, dated 26
March 2002, essentially ruled in favor of respondent, does not necessarily
preclude her from appealing the same. Granted that such a move is ostensibly
irrational, nonetheless, it does not amount to malice, bad faith or abuse of the
court processes in the absence of further proof. Again, it should be noted that
the respondent did not file her intended Petition for Review. The Petition for
Review would have presented before this Court the grounds for respondent’s
appeal and her arguments in support thereof. Without said Petition, any reason
attributed to the respondent for appealing the 26 March 2002 Decision would be
grounded on mere speculations, to which this Court cannot give credence.
II
As an exception to the general rule, this
Court takes cognizance of questions of fact
raised in the Petition at bar.
It is already a well-settled rule that the jurisdiction of this Court in cases
brought before it from the Court of Appeals by virtue of Rule 45 of the Revised
Rules of Court is limited to reviewing errors of law. Findings of fact of the Court of
Appeals are conclusive upon this Court. There are, however, recognized
exceptions to the foregoing rule, namely: (1) when the findings are grounded
entirely on speculation, surmises, or conjectures; (2) when the interference made
is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5)
when the findings of fact are conflicting; (6) when in making its findings, the Court
of Appeals went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth

in the petition as well as in the petitioner’s main and reply briefs are not disputed
by the respondent; and (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record.[24]
Several of the enumerated exceptions pertain to the Petition at bar.
It is indubitable that the Court of Appeals made factual findings that are
contrary to those of the RTC,[25] thus, resulting in its substantial modification of
the trial court’s Decision, and a ruling entirely in favor of the respondent. In
addition, petitioners invoked in the instant Petition for Review several exceptions
that would justify this Court’s review of the factual findings of the Court of
Appeals, i.e., the Court of Appeals made conflicting findings of fact; findings of
fact which went beyond the issues raised on appeal before it; as well as findings
of fact premised on the supposed absence of evidence and contradicted by the
evidence on record.
On the basis of the foregoing, this Court shall proceed to reviewing and reevaluating the evidence on record in order to settle questions of fact raised in the
Petition at bar.
The fact that the trial judge who rendered
the RTC Decision in Civil Case No. 11336,
dated 24 August 1995, was not the same
judge who heard and tried the case, does
not, by itself, render the said Decision
erroneous.
The Decision in Civil Case No. 11336 was rendered more than 10 years from
the institution of the said case. In the course of its trial, the case was presided
over by four (4) different RTC judges.[26] It was Judge Victorio, the fourth judge

assigned to the case, who wrote the RTC Decision, dated 24 August 1995. In his
Decision,[27] Judge Victorio made the following findings –
After carefully evaluating the mass of evidence adduced by the parties, this Court is not inclined to believe the
plaintiff’s assertion that the promissory notes as well as the deeds of assignments of her FNCB Finance money market
placements were simulated. The evidence is overwhelming that the plaintiff received the proceeds of the loans
evidenced by the various promissory notes she had signed. What is more, there was not an iota of proof save the
plaintiff’s bare testimony that she had indeed applied for loan with the Development Bank of the Philippines.

More importantly, the two deeds of assignment were notarized, hence they partake the nature of a public
document. It makes more than preponderant proof to overturn the effect of a notarial attestation. Copies of the deeds
of assignments were actually filed with the Records Management and Archives Office.

Finally, there were sufficient evidence wherein the plaintiff had admitted the existence of her loans with the
defendant Bank in the total amount of P1,920,000.00 exclusive of interests and penalty charges (Exhibits “28”, “31”, “32”,
and “33”).
In fine, this Court hereby finds that the defendants had established the genuineness and due execution of the
various promissory notes heretofore identified as well as the two deeds of assignments of the plaintiff’s money market
placements with defendant FNCB Finance, on the strength of which the said money market placements were applied to
partially pay the plaintiff’s past due obligation with the defendant Bank. Thus, the total sum of P1,053,995.80 of the
plaintiff’s past due obligation was partially offset by the said money market placement leaving a balance of P1,069,847.40
as of 5 September 1979 (Exhibit “34”).

Disagreeing in the foregoing findings, the Court of Appeals stressed, in its
Decision in CA-G.R. CV No. 51930, dated 26 March 2002, “that the ponente of the
herein assailed Decision is not the Presiding Judge who heard and tried the
case.”[28] This brings us to the question of whether the fact alone that the RTC
Decision was rendered by a judge other than the judge who actually heard and
tried the case is sufficient justification for the appellate court to disregard or set
aside the findings in the Decision of the court a quo?
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there exists a disputable
presumption that the RTC Decision was rendered by the judge in the regular
performance of his official duties. While the said presumption is only disputable,
it is satisfactory unless contradicted or overcame by other
evidence.[29] Encompassed in this presumption of regularity is the presumption
that the RTC judge, in resolving the case and drafting his Decision, reviewed,

evaluated, and weighed all the evidence on record. That the said RTC judge is not
the same judge who heard the case and received the evidence is of little
consequence when the records and transcripts of stenographic notes (TSNs) are
complete and available for consideration by the former.
In People v. Gazmen,[30] this Court already elucidated its position on such an
issue –
Accused-appellant makes an issue of the fact that the judge who penned the decision was not the judge who
heard and tried the case and concludes therefrom that the findings of the former are erroneous. Accused-appellant’s
argument does not merit a lengthy discussion. It is well-settled that the decision of a judge who did not try the case is
not by that reason alone erroneous.
It is true that the judge who ultimately decided the case had not heard the controversy at all, the trial having
been conducted by then Judge Emilio L. Polig, who was indefinitely suspended by this Court. Nonetheless, the transcripts
of stenographic notes taken during the trial were complete and were presumably examined and studied by Judge
Baguilat before he rendered his decision. It is not unusual for a judge who did not try a case to decide it on the basis of
the record. The fact that he did not have the opportunity to observe the demeanor of the witnesses during the trial but
merely relied on the transcript of their testimonies does not for that reason alone render the judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
Although it is true that the judge who heard the witnesses testify is in a better position to observe the
witnesses on the stand and determine by their demeanor whether they are telling the truth or mouthing falsehood, it
does not necessarily follow that a judge who was not present during the trial cannot render a valid decision since he can
rely on the transcript of stenographic notes taken during the trial as basis of his decision.
Accused-appellant’s contention that the trial judge did not have the opportunity to observe the conduct and
demeanor of the witnesses since he was not the same judge who conducted the hearing is also untenable. While it is
true that the trial judge who conducted the hearing would be in a better position to ascertain the truth and falsity of the
testimonies of the witnesses, it does not necessarily follow that a judge who was not present during the trial cannot
render a valid and just decision since the latter can also rely on the transcribed stenographic notes taken during the trial
as the basis of his decision.
(People vs. De Paz, 212 SCRA 56, 63 [1992])
At any rate, the test to determine the value of the testimony of the witness is whether or not such is in
conformity with knowledge and consistent with the experience of mankind (People vs. Morre, 217 SCRA 219
[1993]). Further, the credibility of witnesses can also be assessed on the basis of the substance of their testimony and
the surrounding circumstances (People v. Gonzales, 210 SCRA 44 [1992]). A critical evaluation of the testimony of the
prosecution witnesses reveals that their testimony accords with the aforementioned tests, and carries with it the ring of
truth end perforce, must be given full weight and credit.

Irrefragably, by reason alone that the judge who penned the RTC Decision
was not the same judge who heard the case and received the evidence therein
would not render the findings in the said Decision erroneous and
unreliable. While the conduct and demeanor of witnesses may sway a trial court

judge in deciding a case, it is not, and should not be, his only consideration. Even
more vital for the trial court judge’s decision are the contents and substance of
the witnesses’ testimonies, as borne out by the TSNs, as well as the object and
documentary evidence submitted and made part of the records of the
case.

This Court proceeds to making its own
findings of fact.
Since the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated
26 March 2002, has become final and executory as to the respondent, due to her
failure to interpose an appeal therefrom within the reglementary period, she is
already bound by the factual findings in the said Decision. Likewise, respondent’s
failure to file, within the reglementary period, a Motion for Reconsideration or an
appeal of the Resolution of the Court of Appeals in the same case, dated 20
November 2002, which modified its earlier Decision by deleting paragraph 3(v) of
its dispositive portion, ordering petitioners to return to respondent the proceeds
of her money market placement with AIDC, shall already bar her from questioning
such modification before this Court. Thus, what is for review before this Court is
the Decision of the Court of Appeals, dated 26 March 2002, as modified by the
Resolution of the same court, dated 20 November 2002.
Respondent alleged that she had several deposits and money market
placements with petitioners. These deposits and money market placements, as

determined by the Court of Appeals in its Decision, dated 26 March 2002, and as
modified by its Resolution, dated 20 November 2002, are as follows –
Deposit/Placement
Dollar deposit with Citibank-Geneva
Money market placement with Citibank, evidenced by Promissory Note (PN) No. 23356
(which cancels and supersedes PN No. 22526), earning 14.5% interest per annum (p.a.)

Amount
$

149,632.99

P

318,897.34

P

203,150.00

P

500,000.00

P

500,000.00

Money market placement with Citibank, evidenced by PN No. 23357 (which cancels and
supersedes PN No. 22528), earning 14.5% interest p.a.
Money market placement with FNCB Finance, evidenced by PN No. 5757 (which cancels
and supersedes PN No. 4952), earning 17% interest p.a.
Money market placement with FNCB Finance, evidenced by PN No. 5758 (which cancels
and supersedes PN No. 2962), earning 17% interest p.a.

This Court is tasked to determine whether petitioners are indeed liable to return
the foregoing amounts, together with the appropriate interests and penalties, to
respondent. It shall trace respondent’s transactions with petitioners, from her
money market placements with petitioner Citibank and petitioner FNCB Finance,
to her savings and current accounts with petitioner Citibank, and to her dollar
accounts with Citibank-Geneva.
Money market placements with petitioner Citibank
The history of respondent’s money market placements with petitioner
Citibank began on 6 December 1976, when she made a placement of P500,000.00
as principal amount, which was supposed to earn an interest of 16% p.a. and for
which PN No. 20773 was issued. Respondent did not yet claim the proceeds of
her placement and, instead, rolled-over or re-invested the principal and proceeds
several times in the succeeding years for which new PNs were issued by petitioner
Citibank to replace the ones which matured. Petitioner Citibank accounted for
respondent’s original placement and the subsequent roll-overs thereof, as follows


Maturity Date

Date
(mm/dd/yyyy)

PN No.

Cancels PN
No.

(mm/dd/yyyy)

Amount

Interest

(P)

(p.a.)

12/06/1976

20773

None

01/13/1977

500,000.00

16%

01/14/1977

21686

20773

02/08/1977

508,444.44

15%

02/09/1977

22526

21686

03/16/1977

313,952.59

15-3/4%

22528

21686

03/16/1977

200,000.00

15-3/4%

23356

22526

04/20/1977

318,897.34

14-1/2%

23357

22528

04/20/1977

203,150.00

14-1/2%

03/17/1977

Petitioner Citibank alleged that it had already paid to respondent the
principal amounts and proceeds of PNs No. 23356 and 23357, upon their
maturity. Petitioner Citibank further averred that respondent used
the P500,000.00 from the payment of PNs No. 23356 and 23357,
plus P600,000.00 sourced from her other funds, to open two time deposit (TD)
accounts with petitioner Citibank, namely, TD Accounts No. 17783 and 17784.
Petitioner Citibank did not deny the existence nor questioned the
authenticity of PNs No. 23356 and 23357 it issued in favor of respondent for her
money market placements. In fact, it admitted the genuineness and due
execution of the said PNs, but qualified that they were no longer
outstanding.[31] In Hibberd v. Rohde and McMillian,[32] this Court delineated the
consequences of such an admission –
By the admission of the genuineness and due execution of an instrument, as provided in this section, is meant
that the party whose signature it bears admits that he signed it or that it was signed by another for him with his
authority; that at the time it was signed it was in words and figures exactly as set out in the pleading of the party relying
upon it; that the document was delivered; and that any formal requisites required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by him. Hence, such defenses as that the signature is a
forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425; Cox vs. Northwestern Stage Co., 1 Idaho, 376;
Woollen vs. Whitacre, 73 Ind., 198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs.Escaño, 11 Phil. Rep., 92); or that it was
unauthorized, as in the case of an agent signing for his principal, or one signing in behalf of a partnership (Country
Bank vs. Greenberg, 127 Cal., 26; Henshaw vs. Root, 60 Inc., 220; Naftzker vs. Lantz, 137 Mich., 441) or of a corporation
(Merchant vs. International Banking Corporation, 6 Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs. Spencer &

Barnes Co., 162 Mich., 509); or that, in the case of the latter, that the corporation was authorized under its charter to sign
the instrument (Merchant vs. International Banking Corporation, supra); or that the party charged signed the instrument
in some other capacity than that alleged in the pleading setting it out (Payne vs. National Bank, 16 Kan., 147); or that it
was never delivered (Hunt vs. Weir, 29 Ill., 83; Elbring vs. Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co., 48 N.Y., 253;
Fire Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut off by the admission of its genuineness and due execution.
The effect of the admission is such that in the case of a promissory note a prima facie case is made for the
plaintiff which dispenses with the necessity of evidence on his part and entitles him to a judgment on the pleadings
unless a special defense of new matter, such as payment, is interposed by the defendant (Papa vs. Martinez, 12 Phil.
Rep., 613; Chinese Chamber of Commerce vs. Pua To Ching, 14 Phil. Rep., 222; Banco Español-Filipino vs. McKay &
Zoeller, 27 Phil. Rep., 183). x x x

Since the genuineness and due execution of PNs No. 23356 and 23357 are
uncontested, respondent was able to establish prima facie that petitioner
Citibank is liable to her for the amounts stated therein. The assertion of
petitioner Citibank of payment of the said PNs is an affirmative allegation of a
new matter, the burden of proof as to such resting on petitioner
Citibank. Respondent having proved the existence of the obligation, the burden
of proof was upon petitioner Citibank to show that it had been discharged.[33] It
has already been established by this Court that –
As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege
non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to
prove non-payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged
by payment.
When the existence of a debt is fully established by the evidence contained in the record, the burden of
proving that it has been extinguished by payment devolves upon the debtor who offers such defense to the claim of the
creditor. Where the debtor introduces some evidence of payment, the burden of going forward with the evidence – as
distinct from the general burden of proof – shifts to the creditor, who is then under the duty of producing some evidence
of non-payment.[34]

Reviewing the evidence on record, this Court finds that petitioner Citibank
failed to satisfactorily prove that PNs No. 23356 and 23357 had already been paid,
and that the amount so paid was actually used to open one of respondent’s TD
accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two witnesses to support
its contention of payment: (1) That of Mr. Herminio Pujeda,[35] the officer-in-

charge of loans and placements at the time when the questioned transactions
took place; and (2) that of Mr. Francisco Tan,[36] the former Assistant VicePresident of Citibank, who directly dealt with respondent with regard to her
deposits and loans.
The relevant portion[37] of Mr. Pujeda’s testimony as to PNs No. 23356 and
23357 (referred to therein as Exhibits No. “47” and “48,” respectively) is
reproduced below –
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to testify in this case and this case is [sic] consist [sic] of several
documents involving transactions between the plaintiff and the defendant. Now, were you able to make your
own memorandum regarding all these transactions?
A

Yes, based on my recollection of these facts, I did come up of [sic] the outline of the chronological sequence of
events.

Court:
Are you trying to say that you have personal knowledge or participation to these transactions?
A

Yes, your Honor, I was the officer-in charge of the unit that was processing these transactions. Some of the
documents bear my signature.

Court:
And this resume or summary that you have prepared is based on purely your recollection or documents?
A

Based on documents, your Honor.

Court:
Are these documents still available now?
A

Yes, your honor.

Court:
Better present the documents.
Atty. Mabasa:
Yes, your Honor, that is why your Honor.
Atty. Mabasa:
Q

Now, basing on the notes that you prepared, Mr. Witness, and according to you basing also on your personal
recollection about all the transactions involved between Modesta Sabeniano and defendant City Bank [sic] in
this case. Now, would you tell us what happened to the money market placements of Modesta Sabeniano
that you have earlier identified in Exhs. “47” and “48”?

A

The transactions which I said earlier were terminated and booked to time deposits.

Q

And you are saying time deposits with what bank?

A

With First National Citibank.

Q

Is it the same bank as Citibank, N.A.?

A

Yes, sir.

Q

And how much was the amount booked as time deposit with defendant Citibank?

A

In the amount of P500,000.00.

Q

And outside this P500,000.00 which you said was booked out of the proceeds of Exhs. “47” and “48”, were there
other time deposits opened by Mrs. Modesta Sabeniano at that time.

A

Yes, she also opened another time deposit for P600,000.00.

Q

So all in all Mr. Witness, sometime in April of 1978 Mrs. Modesta Sabeneano [sic] had time deposit placements
with Citibank in the amount of P500,000.00 which is the proceeds of Exh. “47” and “48” and
another P600,000.00, is it not?

A

Yes, sir.

Q

And would you know where did the other P600,000 placed by Mrs. Sabeneano [sic] in a time deposit with Citibank,
N.A. came [sic] from?

A

She funded it directly.

Q

What are you saying Mr. Witness is that the P600,000 is a [sic] fresh money coming from Mrs. Modesta Sabeneano
[sic]?

A

That is right.

In his deposition in Hong Kong, Mr. Tan recounted what happened to PNs
No. 23356 and 23357 (referred to therein as Exhibits “E” and “F,” respectively), as
follows –
Atty. Mabasa :

Mr. Tan :
Atty. Mabasa :
Mr. Tan :
Atty. Mabasa :

Now from the Exhibits that you have identified Mr. Tan from Exhibits “A” to “F”, which are Exhibits of
the plaintiff. Now, do I understand from you that the original amount is Five Hundred
Thousand and thereafter renewed in the succeeding exhibits?
Yes, Sir.
Alright, after these Exhibits “E” and “F” matured, what happened thereafter?
Split into two time deposits.
Exhibits “E” and “F”?

Before anything else, it should be noted that when Mr. Pujeda’s testimony
before the RTC was made on 12 March 1990 and Mr. Tan’s deposition in Hong

Kong was conducted on 3 September 1990, more than a decade had passed from
the time the transactions they were testifying on took place. This Court had
previously recognized the frailty and unreliability of human memory with regards
to figures after the lapse of five years.[38] Taking into consideration the
substantial length of time between the transactions and the witnesses’
testimonies, as well as the undeniable fact that bank officers deal with multiple
clients and process numerous transactions during their tenure, this Court is
reluctant to give much weight to the testimonies of Mr. Pujeda and Mr. Tan
regarding the payment of PNs No. 23356 and 23357 and the use by respondent of
the proceeds thereof for opening TD accounts. This Court finds it implausible that
they should remember, after all these years, this particular transaction with
respondent involving her PNs No. 23356 and 23357 and TD accounts. Both
witnesses did not give any reason as to why, from among all the clients they had
dealt with and all the transactions they had processed as officers of petitioner
Citibank, they specially remembered respondent and her PNs No. 23356 and
23357. Their testimonies likewise lacked details on the circumstances
surrounding the payment of the two PNs and the opening of the time deposit
accounts by respondent, such as the date of payment of the two PNs, mode of
payment, and the manner and context by which respondent relayed her
instructions to the officers of petitioner Citibank to use the proceeds of her two
PNs in opening the TD accounts.
Moreover, while there are documentary evidences to support and trace
respondent’s money market placements with petitioner Citibank, from the
original PN No. 20773, rolled-over several times to, finally, PNs No. 23356 and
23357, there is an evident absence of any documentary evidence on the payment
of these last two PNs and the use of the proceeds thereof by respondent for
opening TD accounts. The paper trail seems to have ended with the copies of PNs
No. 23356 and 23357. Although both Mr. Pujeda and Mr. Tan said that they
based their testimonies, not just on their memories but also on the documents on

file, the supposed documents on which they based those portions of their
testimony on the payment of PNs No. 23356 and 23357 and the opening of the TD
accounts from the proceeds thereof, were never presented before the courts nor
made part of the records of the case. Respondent’s money market placements
were of substantial amounts – consisting of the principal amount of P500,000.00,
plus the interest it should have earned during the years of placement – and it is
difficult for this Court to believe that petitioner Citibank would not have had
documented the payment thereof.
When Mr. Pujeda testified before the RTC on 6 February
1990,[39] petitioners’ counsel attempted to present in evidence a document that
would supposedly support the claim of petitioner Citibank that the proceeds of
PNs No. 23356 and 23357 were used by respondent to open one of her two TD
accounts in the amount of P500,000.00. Respondent’s counsel objected to the
presentation of the document since it was a mere “xerox" copy, and was blurred
and hardly readable. Petitioners’ counsel then asked for a continuance of the
hearing so that they can have time to produce a better document, which was
granted by the court. However, during the next hearing and continuance of Mr.
Pujeda’s testimony on 12 March 1990, petitioners’ counsel no longer referred to
the said document.
As respondent had established a prima facie case that petitioner Citibank is
obligated to her for the amounts stated in PNs No. 23356 and 23357, and as
petitioner Citibank failed to present sufficient proof of payment of the said PNs
and the use by the respondent of the proceeds thereof to open her TD accounts,
this Court finds that PNs No. 23356 and 23357 are still outstanding and
petitioner Citibank is still liable to respondent for the amounts stated therein.
The significance of this Court’s declaration that PNs No. 23356 and 23357
are still outstanding becomes apparent in the light of petitioners’ next

contentions – that respondent used the proceeds of PNs No. 23356 and 23357,
together with additional money, to open TD Accounts No. 17783 and 17784 with
petitioner Citibank; and, subsequently, respondent pre-terminated these TD
accounts and transferred the proceeds thereof, amounting to P1,100,000.00, to
petitioner FNCB Finance for money market placements. While respondent’s
money market placements with petitioner FNCB Finance may be traced back with
definiteness to TD Accounts No. 17783 and 17784, there is only flimsy and
unsubstantiated connection between the said TD accounts and the supposed
proceeds paid from PNs No. 23356 and 23357. With PNs No. 23356 and 23357
still unpaid, then they represent an obligation of petitioner Citibank separate and
distinct from the obligation of petitioner FNCB Finance arising from respondent’s
money market placements with the latter.
Money market placements with petitioner FNCB Finance
According to petitioners, respondent’s TD Accounts No. 17783 and 17784, in
the total amount of P1,100,000.00, were supposed to mature on 15 March
1978. However, respondent, through a letter dated 28 April 1977,[40] preterminated the said TD accounts and transferred all the proceeds thereof to
petitioner FNCB Finance for money market placement. Pursuant to her
instructions, TD Accounts No. 17783 and 17784 were pre-terminated and
petitioner Citibank (then still named First National City Bank) issued Manager’s
Checks (MC) No. 199253[41] and 199251[42] for the amounts of P500,000.00
and P600,00.00, respectively. Both MCs were payable to Citifinance (which,
according to Mr. Pujeda,[43] was one with and the same as petitioner FNCB
Finance), with the additional notation that “A/C MODESTA R.
SABENIANO.” Typewritten on MC No. 199253 is the phrase “Ref. Proceeds of TD
17783,” and on MC No. 199251 is a similar phrase, “Ref. Proceeds of TD
17784.” These phrases purportedly established that the MCs were paid from the
proceeds of respondent’s pre-terminated TD accounts with petitioner

Citibank. Upon receipt of the MCs, petitioner FNCB Finance deposited the same
to its account with Feati Bank and Trust Co., as evidenced by the rubber stamp
mark of the latter found at the back of both MCs. In exchange, petitioner FNCB
Finance booked the amounts received as money market placements, and
accordingly issued PNs No. 4952 and 4962, for the amounts of P500,000.00
and P600,000.00, respectively, payable to respondent’s savings account with
petitioner Citibank, S/A No. 25-13703-4, upon their maturity on 1 June
1977. Once again, respondent rolled-over several times the principal amounts of
her money market placements with petitioner FNCB Finance, as follows –
Maturity Date

Date
(mm/dd/yyyy)

04/29/1977

06/02/1977

08/31/1977

PN No.

Cancels PN
No.

(mm/dd/yyyy)

Amount

Interest

(P)

(p.a.)

4952

None

06/01/1977

500,000.00

17%

4962

None

06/01/1977

600,000.00

17%

5757

4952

08/31/1977

500,000.00

17%

5758

4962

08/31/1977

500,000.00

17%

8167

5757

08/25/1978

500,000.00

14%

8169

5752

08/25/1978

500,000.00

14%

As presented by the petitioner FNCB Finance, respondent rolled-over only the
principal amounts of her money market placements as she chose to receive the
interest income therefrom. Petitioner FNCB Finance also pointed out that when
PN No. 4962, with principal amount of P600,000.00, matured on 1 June 1977,
respondent received a partial payment of the principal which, together with the
interest, amounted to P102,633.33;[44] thus, only the amount of P500,000.00 from
PN No. 4962 was rolled-over to PN No. 5758.

Based on the foregoing records, the principal amounts of PNs No. 5757 and
5758, upon their maturity, were rolled over to PNs No. 8167 and 8169,
respectively. PN No. 8167[45] expressly canceled and superseded PN No. 5757,
while PN No. 8169[46] also explicitly canceled and superseded PN No. 5758. Thus,
it is patently erroneous for the Court of Appeals to still award to respondent the
principal amounts and interests covered by PNs No. 5757 and 5758 when these
were already canceled and superseded. It is now incumbent upon this Court to
determine what subsequently happened to PNs No. 8167 and 8169.
Petitioner FNCB Finance presented four checks as proof of payment of the
principal amounts and interests of PNs No. 8167 and 8169 upon their
maturity. All the checks were payable to respondent’s savings account with
petitioner Citibank, with the following details –
Date of Issuance
(mm/dd/yyyy)
09/01/1978

Check No.
76962

Amount
(P)
12,833.34

09/01/1978

76961

12,833.34

09/05/1978

77035

500,000.00

09/05/ 1978

77034

500,000.00

Notation
Interest payment on PN#08167
Interest payment on PN#08169
Full payment of principal on PN#08167 which is hereby
cancelled
Full payment of principal on PN#08169 which is hereby
cancelled

Then again, Checks No. 77035 and 77034 were later returned to petitioner FNCB
Finance together with a memo,[47] dated 6 September 1978, from Mr. Tan of
petitioner Citibank, to a Mr. Bobby Mendoza of petitioner FNCB
Finance. According to the memo, the two checks, in the total amount
of P1,000,000.00, were to be returned to respondent’s account with instructions
to book the said amount in money market placements for one more
year. Pursuant to the said memo, Checks No. 77035 and 77034 were invested by
petitioner FNCB Finance, on behalf of respondent, in money market placements
for which it issued PNs No. 20138 and 20139. The PNs each covered P500,000.00,
to earn 11% interest per annum, and to mature on 3 September 1979.

On 3 September 1979, petitioner FNCB Finance issued Check No. 100168,
pay to the order of “Citibank N.A. A/C Modesta Sabeniano,” in the amount
of P1,022,916.66, as full payment of the principal amounts and interests of both
PNs No. 20138 and 20139 and, resultantly, canceling the said PNs.[48] Respondent
actually admitted the issuance and existence of Check No. 100168, but with the
qualification that the proceeds thereof were turned over to petitioner
Citibank.[49] Respondent did not clarify the circumstances attending the
supposed turn over, but on the basis of the allegations of petitioner Citibank
itself, the proceeds of PNs No. 20138 and 20139, amounting to P1,022,916.66,
was used by it to liquidate respondent’s outstanding loans. Therefore, the
determination of whether or not respondent is still entitled to the return of the
proceeds of PNs No. 20138 and 20139 shall be dependent on the resolution of the
issues raised as to the existence of the loans and the authority of petitioner
Citibank to use the proceeds of the said PNs, together with respondent’s other
deposits and money market placements, to pay for the same.
Savings and current accounts with petitioner Citibank
Respondent presented and submitted before the RTC deposit slips and
bank statements to prove deposits made to several of her accounts with
petitioner Citibank, particularly, Accounts No. 00484202, 59091, and 472-751,
which would have amounted to a total of P3,812,712.32, had there been no
withdrawals or debits from the said accounts from the time the said deposits
were made.
Although the RTC and the Court of Appeals did not make any definitive
findings as to the status of respondent’s savings and current accounts with
petitioner Citibank, the Decisions of both the trial and appellate courts effectively

recognized only the P31,079.14 coming from respondent’s savings account which
was used to off-set her alleged outstanding loans with petitioner Citibank.[50]
Since both the RTC and the Court of Appeals had consistently recognized
only the P31,079.14 of respondent’s savings account with petitioner Citibank, and
that respondent failed to move for reconsideration or to appeal this particular
finding of fact by the trial and appellate courts, it is already binding upon this
Court. Respondent is already precluded from claiming any greater amount in her
savings and current accounts with petitioner Citibank. Thus, this Court shall limit
itself to determining whether or not respondent is entitled to the return of the
amount of P31,079.14 should the off-set thereof by petitioner Citibank against
her supposed loans be found invalid.

Dollar accounts with Citibank-Geneva
Respondent made an effort of preparing and presenting before the RTC her
own computations of her money market placements and dollar accounts with
Citibank-Geneva, purportedly amounting to a total of United States (US)
$343,220.98, as of 23 June 1985.[51] In her Memorandum filed with the RTC, she
claimed a much bigger amount of deposits and money market placements with
Citibank-Geneva, totaling US$1,336,638.65.[52] However, respondent herself also
submitted as part of her formal offer of evidence the computation of her money
market placements and dollar accounts with Citibank-Geneva as determined by
the latter.[53] Citibank-Geneva accounted for respondent’s money market
placements and dollar accounts as follows –
MODESTA SABENIANO &/OR
==================
US$
+ US$
- US$

30’000.-339.06
95.--

Principal Fid. Placement
Interest at 3,875% p.a. from 12.07. – 25.10.79
Commission (minimum)

US$

30’244.06

Total proceeds on 25.10.1979

US$
+ US$
- US$

114’000.-1’358.50
41.17

Principal Fid. Placement
Interest at 4,125% p.a. from 12.07. – 25.10.79
Commission

US$

115’317.33

Total proceeds on 25.10.1979

US$
+ US$

145’561.39
11’381.31

Total proceeds of both placements on 25.10.1979
total of both current accounts

US$

156’942.70

Total funds available

- US$

149’632.99

Transfer to Citibank Manila on 26.10.1979
(counter value of Pesos 1’102’944.78)

US$

7’309.71

Balance in current accounts

- US$

6’998.84

Transfer to Citibank Zuerich – ac no. 121359 on March
13, 1980

US$

310.87

various charges including closing charges

According to the foregoing computation, by 25 October 1979, respondent
had a total of US$156,942.70, from which, US$149,632.99 was transferred by
Citibank-Geneva to petitioner Citibank in Manila, and was used by the latter to
off-set respondent’s outstanding loans. The balance of respondent’s accounts
with Citibank-Geneva, after the remittance to petitioner Citibank in Manila,
amounted to US$7,309.71, which was subsequently expended by a transfer to
another account with Citibank-Zuerich, in the amount of US$6,998.84, and by
payment of various bank charges, including closing charges, in the amount of
US$310.87. Rightly so, both the RTC and the Court of Appeals gave more
credence to the computation of Citibank-Geneva as to the status of respondent’s
accounts with the said bank, rather than the one prepared by respondent herself,
which was evidently self-serving. Once again, this Court shall limit itself to
determining whether or not respondent is entitled to the return of the amount of
US$149,632.99 should the off-set thereof by petitioner Citibank against her
alleged outstanding loans be found invalid. Respondent cannot claim any greater
amount since she did not perfect an appeal of the Decision of the Court of

Appeals, dated 26 March 2002, which found that she is entitled only to the return
of the said amount, as far as her accounts with Citibank-Geneva is concerned.
III
Petitioner Citibank was able to establish by
preponderance of evidence the existence of
respondent’s loans.

Petitioners’ version of events
In sum, the following amounts were used by petitioner Citibank to liquidate
respondent’s purported outstanding loans –
Description
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB Finance)
Savings account with petitioner Citibank
Dollar remittance from Citibank-Geneva (peso equivalent
Of US$149,632.99)
Total

Amount
P

1,022,916.66
31,079.14
1,102,944.78

P

2,156,940.58

According to petitioner Citibank, respondent incurred her loans under the
circumstances narrated below.
As early as 9 February 1978, respondent obtained her first loan from
petitioner Citibank in the principal amount of P200,000.00, for which she
executed PN No. 31504.[54] Petitioner Citibank extended to her several other
loans in the succeeding months. Some of these loans were paid, while others
were rolled-over or renewed. Significant to the Petition at bar are the loans which
respondent obtained from July 1978 to January 1979, appropriately covered by

PNs (first set).[55] The aggregate principal amount
was P1,920,000.00, which could be broken down as follows –
PN No.

Date of Issuance
(mm/dd/yyyy)

Date of Maturity
(mm/dd/yyyy)

32935
33751
33798
34025
34079
34192
34402
34534
34609
34740

07/20/1978
10/13/1978
10/19/1978
11/15/1978
11/21/1978
12/04/1978
12/26/1978
01/09/1979
01/17/1979
01/30/1979

09/18/1978
12/12/1978
11/03/1978
01/15/1979
01/19/1979
01/18/1979
02/23/1979
03/09/1979
03/19/1979
03/30/1979

Total

Principal
Amount
P 400,000.00
100,000.00
100,000.00
150,000.00
250,000.00
100,000.00
300,000.00
150,000.00
150,000.00
220,000.00

of

these

Date of Release
(mm/dd/yyyy)

loans

MC No.

07/20/1978
Unrecovered
10/19/1978
11/16/1978
11/21/1978
12/05/1978
12/26/1978
01/09/1979
01/17/1979
01/30/1979

220701
226285
226439
226467
228057
228203
228270
228357
228400

P 1,920,000.00

When respondent was unable to pay the first set of PNs upon their maturity,
these were rolled-over or renewed several times, necessitating the execution by
respondent of new PNs in favor of petitioner Citibank. As of 5 April 1979,
respondent had the following outstanding PNs (second set),[56] the principal
amount of which remained at P1,920,000.00 –
PN No.
34510
34509
34534
34612
34741
35689
35694
35695
356946
35697
Total

Date of Issuance
(mm/dd/yyyy)
01/01/1979
01/02/1979
01/09/1979
01/19/1979
01/26/1979
02/23/1979
03/19/1979
03/19/1979
03/20/1979
03/30/1979

Date of Maturity
(mm/dd/yyyy)
03/02/1979
03/02/1979
03/09/1979
03/16/1979
03/12/1979
05/29/1979
05/29/1979
05/29/1979
05/29/1979
05/29/1979

Principal Amount
P
400,000.00
100,000.00
150,000.00
150,000.00
100,000.00
300,000.00
150,000.00
100,000.00
250,000.00
220,000.00
P

1,920,000.00

All the PNs stated that the purpose of the loans covered thereby is “To liquidate
existing obligation,” except for PN No. 34534, which stated for its purpose
“personal investment.”

Respondent secured her foregoing loans with petitioner Citibank by
executing Deeds of Assignment of her money market placements with petitioner
FNCB Finance. On 2 March 1978, respondent executed in favor of petitioner
Citibank a Deed of Assignment[57] of PN No. 8169, which was issued by petitioner
FNCB Finance, to secure payment of the credit and banking facilities extended to
her by petitioner Citibank, in the aggregate principal amount of P500,000.00. On
9 March 1978, respondent executed in favor of petitioner Citibank another Deed
of Assignment,[58] this time, of PN No. 8167, also issued by petitioner FNCB
Finance, to secure payment of the credit and banking facilities extended to her by
petitioner Citibank, in the aggregate amount of P500,000.00. When PNs No. 8167
and 8169, representing respondent’s money market placements with petitioner
FNCB Finance, matured and were rolled-over to PNs No. 20138 and 20139,
respondent executed new Deeds of Assignment,[59] in favor of petitioner Citibank,
on 25 August 1978. According to the more recent Deeds, respondent assigned
PNs No. 20138 and 20139, representing her rolled-over money market
placements with petitioner FNCB Finance, to petitioner Citibank as security for
the banking and credit facilities it extended to her, in the aggregate principal
amount of P500,000.00 per Deed.
In addition to the Deeds of Assignment of her money market placements
with petitioner FNCB Finance, respondent also executed a Declaration of
Pledge,[60] in which she supposedly pledged “*a+ll present and future fiduciary
placements held in my personal and/or joint name with Citibank, Switzerland,” to
secure all claims the petitioner Citibank may have or, in the future, acquire
against respondent. The petitioners’ copy of the Declaration of Pledge is
undated, while that of the respondent, a copy certified by a Citibank-Geneva
officer, bore the date 24 September 1979.[61]

When respondent failed to pay the second set of PNs upon their maturity,
an exchange of letters ensued between respondent and/or her representatives,
on one hand, and the representatives of petitioners, on the other.
The first letter[62] was dated 5 April 1979, addressed to respondent and
signed by Mr. Tan, as the manager of petitioner Citibank, which stated, in part,
that –
Despite our repeated requests and follow-up, we regret you have not granted us with any response or payment.
We, therefore, have no alternative but to call your loan of P1,920,000.00 plus interests and other charges due and
demandable. If you still fail to settle this obligation by 4/27/79, we shall have no other alternative but to refer your
account to our lawyers for legal action to protect the interest of the bank.

Respondent sent a reply letter[63] dated 26 April 1979, printed on paper
bearing the letterhead of respondent’s company, MC Adore International Palace,
the body of which reads –
This is in reply to your letter dated April 5, 1979 inviting my attention to my loan which has become due. Pursuant to our
representation with you over the telephone through Mr. F. A. Tan, you allow us to pay the interests due for the
meantime.
Please accept our Comtrust Check in the amount of P62,683.33.
Please bear with us for a little while, at most ninety days. As you know, we have a pending loan with the Development
Bank of the Philippines in the amount of P11-M. This loan has already been recommended for approval and would be
submitted to the Board of Governors. In fact, to further facilitate the early release of this loan, we have presented and
furnished Gov. J. Tengco a xerox copy of your letter.
You will be doing our corporation a very viable service, should you grant us our request for a little more time.

A week later or on 3 May 1979, a certain C. N. Pugeda, designated as
“Executive Secretary,” sent a letter[64] to petitioner Citibank, on behalf of
respondent. The letter was again printed on paper bearing the letterhead of MC
Adore International Palace. The pertinent paragraphs of the said letter are
reproduced below –
Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for a re-computation of the interest and penalty
charges on her loan in the aggregate amount of P1,920,000.00 with maturity date of all promissory notes at June 30,
1979. As she has personally discussed with you yesterday, this date will more or less assure you of early settlement.
In this regard, please entrust to bearer, our Comtrust check for P62,683.33 to be replaced by another check with amount
resulting from the new computation. Also, to facilitate the processing of the same, may we request for another set of

promissory notes for the signature of Mrs. Sabeniano and to cancel the previous ones she has signed and forwarded to
you.

This was followed by a telegram,[65] dated 5 June 1979, and received by
petitioner Citibank the following day. The telegram was sent by a Dewey G.
Soriano, Legal Counsel. The telegram acknowledged receipt of the telegram sent
by petitioner Citibank regarding the “re-past due obligation” of McAdore
International Palace. However, it reported that respondent, the President and
Chairman of MC Adore International Palace, was presently abroad negotiating for
a big loan. Thus, he was requesting for an extension of the due date of the
obligation until respondent’s arrival on or before 31 July 1979.
The next letter,[66] dated 21 June 1979, was signed by respondent herself
and addressed to Mr. Bobby Mendoza, a Manager of petitioner FNCB
Finance. Respondent wrote therein –
Re:

PN No. 20138 for P500,000.00 & PN No. 20139 for P500,000.00 totalling P1
Million, both PNs will mature on 9/3/1979.

This is to authorize you to release the accrued quarterly interests payment from my captioned placements and
forward directly to Citibank, Manila Attention: Mr. F. A. Tan, Manager, to apply to my interest payable on my outstanding
loan with Citibank.
Please note that the captioned two placements are continuously pledged/hypothecated to Citibank, Manila to
support my personal outstanding loan. Therefore, please do not release the captioned placements upon maturity until
you have received the instruction from Citibank, Manila.

On even date, respondent sent another letter[67] to Mr. Tan of petitioner
Citibank, stating that –
Re:

S/A No. 25-225928
and C/A No. 484-946

This letter serves as an authority to debit whatever the outstanding balance from my captioned accounts and
credit the amount to my loan outstanding account with you.

Unlike respondent’s earlier letters, both letters, dated 21 June 1979, are printed
on plain paper, without the letterhead of her company, MC Adore International
Palace.

By 5 September 1979, respondent’s outstanding and past due obligations to
petitioner Citibank totaled P2,123,843.20, representing the principal amounts
plus interests. Relying on respondent’s Deeds of Assignment, petitioner Citibank
applied the proceeds of respondent’s money market placements with petitioner
FNCB Finance, as well as her deposit account with petitioner Citibank, to partly
liquidate respondent’s outstanding loan balance,[68] as follows –
Respondent’s outstanding obligation (principal and interest)
Less:
Proceeds from respondent’s money market placements
with petitioner FNCB Finance (principal and interest)
Deposits in respondent’s bank accounts with petitioner
Citibank

P

Balance of respondent’s obligation

P

2,123,843.20
(1,022,916.66)
(31,079.14)
1,069,847.40

Mr. Tan of petitioner Citibank subsequently sent a letter,[69] dated 28
September 1979, notifying respondent of the status of her loans and the
foregoing compensation which petitioner Citibank effected. In the letter, Mr. Tan
informed respondent that she still had a remaining past-due obligation in the
amount of P1,069,847.40, as of 5 September 1979, and should respondent fail to
pay the amount by 15 October 1979, then petitioner Citibank shall proceed to offset the unpaid amount with respondent’s other collateral, particularly, a money
market placement in Citibank-Hongkong.
On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on
paper bearing the letterhead of MC Adore International Palace, as regards
the P1,920,000.00 loan account supposedly of MC Adore Finance & Investment,
Inc., and requested for a statement of account covering the principal and interest
of the loan as of 31 October 1979. She stated therein that the loan obligation
shall be paid within 60 days from receipt of the statement of account.
Almost three weeks later, or on 25 October 1979, a certain Atty. Moises
Tolentino dropped by the office of petitioner Citibank, with a letter, dated 9
October 1979, and printed on paper with the letterhead of MC Adore

International Palace, which authorized the bearer thereof to represent the
respondent in settling the overdue account, this time, purportedly, of MC Adore
International Palace Hotel. The letter was signed by respondent as the President
and Chairman of the Board.
Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as counsel of
petitioner Citibank, sent a letter to respondent, dated 31 October 1979, informing
her that petitioner Citibank had effected an off-set using her account with
Citibank-Geneva, in the amount of US$149,632.99, against her “outstanding,
overdue, demandable and unpaid obligation” to petitioner Citibank. Atty. Agcaoili
claimed therein that the compensation or off-set was made pursuant to and in
accordance with the provisions of Articles 1278 through 1290 of the Civil
Code. He further declared that respondent’s obligation to petitioner Citibank was
now fully paid and liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7th floor of petitioner
Citibank’s building at Paseo de Roxas St., Makati, Metro Manila. Petitioners
submitted a Certification[70] to this effect, dated 17 January 1991, issued by the
Chief of the Arson Investigation Section, Fire District III, Makati Fire Station,
Metropolitan Police Force. The 7th floor of petitioner Citibank’s building housed its
Control Division, which was in charge of keeping the necessary documents for
cases in which it was involved. After compiling the documentary evidence for the
present case, Atty. Renato J. Fernandez, internal legal counsel of petitioner
Citibank, forwarded them to the Control Division. The original copies of the MCs,
which supposedly represent the proceeds of the first set of PNs, as well as that of
other documentary evidence related to the case, were among those burned in the
said fire.[71]
Respondent’s version of events

Respondent disputed petitioners’ narration of the circumstances
surrounding her loans with petitioner Citibank and the alleged authority she gave
for the off-set or compensation of her money market placements and deposit
accounts with petitioners against her loan obligation.
Respondent denied outright executing the first set of PNs, except for one
(PN No. 34534 in particular). Although she admitted that she obtained several
loans from petitioner Citibank, these only amounted to P1,150,000.00, and she
had already paid them. She secured from petitioner Citibank two loans
of P500,000.00 each. She executed in favor of petitioner Citibank the
corresponding PNs for the loans and the Deeds of Assignment of her money
market placements with petitioner FNCB Finance as security.[72] To prove
payment of these loans, respondent presented two provisional receipts of
petitioner Citibank – No. 19471,[73] dated 11 August 1978, and No.
12723,[74] dated 10 November 1978 – both signed by Mr. Tan, and acknowledging
receipt from respondent of several checks in the total amount of P500,744.00
and P500,000.00, respectively, for “liquidation of loan.”
She borrowed another P150,000.00 from petitioner Citibank for personal
investment, and for which she executed PN No. 34534, on 9 January 1979. Thus,
she admitted to receiving the proceeds of this loan via MC No. 228270. She
invested the loan amount in another money market placement with petitioner
FNCB Finance. In turn, she used the very same money market placement with
petitioner FNCB Finance as security for her P150,000.00 loan from petitioner
Citibank. When she failed to pay the loan when it became due, petitioner
Citibank allegedly forfeited her money market placement with petitioner FNCB
Finance and, thus, the loan was already paid.[75]
Respondent likewise questioned the MCs presented by petitioners, except
for one (MC No. 228270 in particular), as proof that she received the proceeds of

the loans covered by the first set of PNs. As recounted in the preceding
paragraph, respondent admitted to obtaining a loan of P150,000.00, covered by
PN No. 34534, and receiving MC No. 228270 representing the proceeds thereof,
but claimed that she already paid the same. She denied ever receiving MCs No.
220701 (for the loan of P400,000.00, covered by PN No. 33935) and No. 226467
(for the loan of P250,000.00, covered by PN No. 34079), and pointed out that the
checks did not bear her indorsements. She did not deny receiving all other
checks but she interposed that she received these checks, not as proceeds of
loans, but as payment of the principal amounts and/or interests from her money
market placements with petitioner Citibank. She also raised doubts as to the
notation on each of the checks that reads “RE: Proceeds of PN#*corresponding PN
No.+,” saying that such notation did not appear on the MCs when she originally
received them and that the notation appears to have been written by a
typewriter different from that used in writing all other information on the checks
(i.e., date, payee, and amount).[76] She even testified that MCs were not supposed
to bear notations indicating the purpose for which they were issued.
As to the second set of PNs, respondent acknowledged having signed them
all. However, she asserted that she only executed these PNs as part of the
simulated loans she and Mr. Tan of petitioner Citibank concocted. Respondent
explained that she had a pending loan application for a big amount with the
Development Bank of the Philippines (DBP), and when Mr. Tan found out about
this, he suggested that they could make it appear that the respondent had
outstanding loans with petitioner Citibank and the latter was already demanding
payment thereof; this might persuade DBP to approve respondent’s loan
application. Mr. Tan made the respondent sign the second set of PNs, so that he
may have something to show the DBP investigator who might inquire with
petitioner Citibank as to respondent’s loans with the latter. On her own copies of
the said PNs, respondent wrote by hand the notation, “This isa (sic) simulated
non-negotiable note, signed copy given to Mr. Tan., (sic) per agreement to be

shown to DBP representative. itwill (sic) be returned to me if the P11=M (sic) loan
for MC Adore Palace Hotel is approved by DBP.”[77]
Findings of this Court as to the existence of the loans

After going through the testimonial and documentary evidence presented
by both sides to this case, it is this Court’s assessment that respondent did indeed
have outstanding loans with petitioner Citibank at the time it effected the off-set
or compensation on 25 July 1979 (using respondent’s savings deposit with
petitioner Citibank), 5 September 1979 (using the proceeds of respondent’s
money market placements with petitioner FNCB Finance) and 26 October 1979
(using respondent’s dollar accounts remitted from Citibank-Geneva). The totality
of petitioners’ evidence as to the existence of the said loans preponderates over
respondent’s. Preponderant evidence means that, as a whole, the evidence
adduced by one side outweighs that of the adverse party.[78]
Respondent’s outstanding obligation for P1,920,000.00 had been sufficiently
documented by petitioner Citibank.
The second set of PNs is a mere renewal of the prior loans originally covered
by the first set of PNs, except for PN No. 34534. The first set of PNs is supported,
in turn, by the existence of the MCs that represent the proceeds thereof received
by the respondent.
It bears to emphasize that the proceeds of the loans were paid to
respondent in MCs, with the respondent specifically named as payee. MCs checks
are drawn by the bank’s manager upon the bank itself and regarded to be as good
as the money it represents.[79] Moreover, the MCs were crossed checks, with the
words “Payee’s Account Only.”

In general, a crossed check cannot be presented to the drawee bank for
payment in cash. Instead, the check can only be deposited with the payee’s bank
which, in turn, must present it for payment against the drawee bank in the course
of normal banking hours. The crossed check cannot be presented for payment,
but it can only be deposited and the drawee bank may only pay to another bank
in the payee’s or indorser’s account.[80] The effect of crossing a check was
described by this Court in Philippine Commercial International Bank v. Court of
Appeals[81] –
*T+he crossing of a check with the phrase “Payee’s Account Only” is a warning that the check should be deposited in the
account of the payee. Thus, it is the duty of the collecting bank PCI Bank to ascertain that the check be deposited in
payee’s account only. It is bound to scrutinize the check and to know its depositors before it can make the clearing
indorsement “all prior indorsements and/or lack of indorsement guaranteed.”

The crossed MCs presented by petitioner Bank were indeed deposited in
several different bank accounts and cleared by the Clearing Office of the Central
Bank of the Philippines, as evidenced by the stamp marks and notations on the
said checks. The crossed MCs are already in the possession of petitioner Citibank,
the drawee bank, which was ultimately responsible for the payment of the
amount stated in the checks. Given that a check is more than just an instrument
of credit used in commercial transactions for it also serves as a receipt or
evidence for the drawee bank of the cancellation of the said check due to
payment,[82] then, the possession by petitioner Citibank of the said MCs, duly
stamped “Paid” gives rise to the presumption that the said MCs were already paid
out to the intended payee, who was in this case, the respondent.
This Court finds applicable herein the presumptions that private
transactions have been fair and regular,[83] and that the ordinary course of
business has been followed.[84] There is no question that the loan transaction
between petitioner Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCs – from their issuance by petitioner
Citibank to respondent as payment of the proceeds of her loans; to its deposit in
respondent’s accounts with several different banks; to the clearing of the MCs by

an independent clearing house; and finally, to the payment of the MCs by
petitioner Citibank as the drawee bank of the said checks – are all private
transactions which shall be presumed to have been fair and regular to all the
parties concerned. In addition, the banks involved in the foregoing transactions
are also presumed to have followed the ordinary course of business in the
acceptance of the crossed MCs for deposit in respondent’s accounts, submitting
them for clearing, and their eventual payment and cancellation.
The afore-stated presumptions are disputable, meaning, they are
satisfactory if uncontradicted, but may be contradicted and overcome by other
evidence.[85] Respondent, however, was unable to present sufficient and credible
evidence to dispute these presumptions.
It should be recalled that out of the nine MCs presented by petitioner
Citibank, respondent admitted to receiving one as proceeds of a loan (MC No.
228270), denied receiving two (MCs No. 220701 and 226467), and admitted to
receiving all the rest, but not as proceeds of her loans, but as return on the
principal amounts and interests from her money market placements.
Respondent admitted receiving MC No. 228270 representing the proceeds
of her loan covered by PN No. 34534. Although the principal amount of the loan
is P150,000.00, respondent only received P146,312.50, because the interest and
handling fee on the loan transaction were already deducted
therefrom.[86] Stamps and notations at the back of MC No. 228270 reveal that it
was deposited at the Bank of the Philippine Islands (BPI), Cubao Branch, in
Account No. 0123-0572-28.[87] The check also bore the signature of respondent at
the back.[88] And, although respondent would later admit that she did sign PN No.
34534 and received MC No. 228270 as proceeds of the loan extended to her by
petitioner Citibank, she contradicted herself when, in an earlier testimony, she

claimed that PN No. 34534 was among the PNs she executed as simulated loans
with petitioner Citibank.[89]
Respondent denied ever receiving MCs No. 220701 and 226467. However,
considering that the said checks were crossed for payee’s account only, and that
they were actually deposited, cleared, and paid, then the presumption would be
that the said checks were properly deposited to the account of respondent, who
was clearly named the payee in the checks. Respondent’s bare allegations that
she did not receive the two checks fail to convince this Court, for to sustain her,
would be for this Court to conclude that an irregularity had occurred somewhere
from the time of the issuance of the said checks, to their deposit, clearance, and
payment, and which would have involved not only petitioner Citibank, but also
BPI, which accepted the checks for deposit, and the Central Bank of the
Philippines, which cleared the checks. It falls upon the respondent to overcome
or dispute the presumption that the crossed checks were issued, accepted for
deposit, cleared, and paid for by the banks involved following the ordinary course
of their business.
The mere fact that MCs No. 220701 and 226467 do not bear respondent’s
signature at the back does not negate deposit thereof in her account. The liability
for the lack of indorsement on the MCs no longer fall on petitioner Citibank, but
on the bank who received the same for deposit, in this case, BPI Cubao
Branch. Once again, it must be noted that the MCs were crossed, for payee’s
account only, and the payee named in both checks was none other than
respondent. The crossing of the MCs was already a warning to BPI to receive said
checks for deposit only in respondent’s account. It was up to BPI to verify
whether it was receiving the crossed MCs in accordance with the instructions on
the face thereof. If, indeed, the MCs were deposited in accounts other than
respondent’s, then the respondent would have a cause of action against BPI.[90]

BPI further stamped its guarantee on the back of the checks to the effect
that, “All prior endorsement and/or Lack of endorsement guaranteed.” Thus, BPI
became the indorser of the MCs, and assumed all the warranties of an
indorser,[91] specifically, that the checks were genuine and in all respects what
they purported to be; that it had a good title to the checks; that all prior parties
had capacity to contract; and that the checks were, at the time of their
indorsement, valid and subsisting.[92] So even if the MCs deposited by BPI's client,
whether it be by respondent herself or some other person, lacked the necessary
indorsement, BPI, as the collecting bank, is bound by its warranties as an indorser
and cannot set up the defense of lack of indorsement as against petitioner
Citibank, the drawee bank.[93]
Furthermore, respondent’s bare and unsubstantiated denial of receipt of
the MCs in question and their deposit in her account is rendered suspect when
MC No. 220701 was actually deposited in Account No. 0123-0572-28 of BPI Cubao
Branch, the very same account in which MC No. 228270 (which respondent
admitted to receiving as proceeds of her loan from petitioner Citibank), and MCs
No. 228203, 228357, and 228400 (which respondent admitted to receiving as
proceeds from her money market placements) were deposited. Likewise, MC No.
226467 was deposited in Account No. 0121-002-43 of BPI Cubao Branch, to which
MCs No. 226285 and 226439 (which respondent admitted to receiving as
proceeds from her money market placements) were deposited. It is an apparent
contradiction for respondent to claim having received the proceeds of checks
deposited in an account, and then deny receiving the proceeds of another check
deposited in the very same account.
Another inconsistency in respondent’s denial of receipt of MC No. 226467
and her deposit of the same in her account, is her presentation of Exhibit “HHH,”
a provisional receipt which was supposed to prove that respondent turned
over P500,000.00 to Mr. Tan of petitioner Citibank, that the said amount was split

into three money market placements, and that MC No. 226467 represented the
return on her investment from one of these placements.[94] Because of her
Exhibit “HHH,” respondent effectively admitted receipt of MC No. 226467,
although for reasons other than as proceeds of a loan.
Neither can this Court give credence to respondent’s contention that the
notations on the MCs, stating that they were the proceeds of particular PNs, were
not there when she received the checks and that the notations appeared to be
written by a typewriter different from that used to write the other information on
the checks. Once more, respondent’s allegations were uncorroborated by any
other evidence. Her and her counsel’s observation that the notations on the MCs
appear to be written by a typewriter different from that used to write the other
information on the checks hardly convinces this Court considering that it
constitutes a mere opinion on the appearance of the notation by a witness who
does not possess the necessary expertise on the matter. In addition, the
notations on the MCs were written using both capital and small letters, while the
other information on the checks were written using capital letters only, such
difference could easily confuse an untrained eye and lead to a hasty conclusion
that they were written by different typewriters.
Respondent’s testimony, that based on her experience transacting with
banks, the MCs were not supposed to include notations on the purpose for which
the checks were issued, also deserves scant consideration. While respondent may
have extensive experience dealing with banks, it still does not qualify her as a
competent witness on banking procedures and practices. Her testimony on this
matter is even belied by the fact that the other MCs issued by petitioner Citibank
(when it was still named First National City Bank) and by petitioner FNCB Finance,
the existence and validity of which were not disputed by respondent, also bear
similar notations that state the reason for which they were issued.

Respondent presented several more pieces of evidence to substantiate her
claim that she received MCs No. 226285, 226439, 226467, 226057, 228357, and
228400, not as proceeds of her loans from petitioner Citibank, but as the return of
the principal amounts and payment of interests from her money market
placements with petitioners. Part of respondent’s exhibits were personal
checks[95] drawn by respondent on her account with Feati Bank & Trust Co., which
she allegedly invested in separate money market placements with both
petitioners, the returns from which were paid to her via MCs No. 226285 and
228400. Yet, to this Court, the personal checks only managed to establish
respondent’s issuance thereof, but there was nothing on the face of the checks
that would reveal the purpose for which they were issued and that they were
actually invested in money market placements as respondent claimed.
Respondent further submitted handwritten notes that purportedly
computed and presented the returns on her money market placements,
corresponding to the amount stated in the MCs she received from petitioner
Citibank. Exhibit “HHH-1”[96] was a handwritten note, which respondent
attributed to Mr. Tan of petitioner Citibank, showing the breakdown of her BPI
Check for P500,000.00 into three different money market placements with
petitioner Citibank. This Court, however, noticed several factors which render the
note highly suspect. One, it was written on the reversed side of Provisional
Receipt No. 12724 of petitioner Citibank which bore the initials of Mr. Tan
acknowledging receipt of respondent’s BPI Check No. 120989 for P500,000.00;
but the initials on the handwritten note appeared to be that of Mr. Bobby
Mendoza of petitioner FNCB Finance.[97] Second, according to Provisional Receipt
No. 12724, BPI Check No. 120989 for P500,000.00 was supposed to be invested in
three money market placements with petitioner Citibank for the period of 60
days. Since all these money market placements were made through one check
deposited on the same day, 10 November 1978, it made no sense that the
handwritten note at the back of Provisional Receipt No. 12724 provided for

different dates of maturity for each of the money market placements (i.e., 16
November 1978, 17 January 1979, and 21 November 1978), and such dates did
not correspond to the 60 day placement period stated on the face of the
provisional receipt. And third, the principal amounts of the money market
placements as stated in the handwritten note – P145,000.00, P145,000.00
and P242,000.00 – totaled P532,000.00, and was obviously in excess of
the P500,000.00 acknowledged on the face of Provisional Receipt No. 12724.
Exhibits “III” and “III-1,” the front and bank pages of a handwritten note of
Mr. Bobby Mendoza of petitioner FNCB Finance,[98] also did not deserve much
evidentiary weight, and this Court cannot rely on the truth and accuracy of the
computations presented therein. Mr. Mendoza was not presented as a witness
during the trial before the RTC, so that the document was not properly
authenticated nor its contents sufficiently explained. No one was able to
competently identify whether the initials as appearing on the note were actually
Mr. Mendoza’s.
Also, going by the information on the front page of the note, this Court
observes that payment of respondent’s alleged money market placements with
petitioner FNCB Finance were made using Citytrust Checks; the MCs in question,
including MC No. 228057, were issued by petitioner Citibank. Although Citytrust
(formerly Feati Bank & Trust Co.), petitioner FNCB Finance, and petitioner
Citibank may be affiliates of one another, they each remained separate and
distinct corporations, each having its own financial system and records. Thus, this
Court cannot simply assume that one corporation, such as petitioner Citibank or
Citytrust, can issue a check to discharge an obligation of petitioner FNCB
Finance. It should be recalled that when petitioner FNCB Finance paid for
respondent’s money market placements, covered by its PNs No. 8167 and 8169,
as well as PNs No. 20138 and 20139, petitioner FNCB Finance issued its own
checks.

As a last point on this matter, if respondent truly had money market
placements with petitioners, then these would have been evidenced by PNs
issued by either petitioner Citibank or petitioner FNCB Finance, acknowledging
the principal amounts of the investments, and stating the applicable interest
rates, as well as the dates of their of issuance and maturity. After respondent had
so meticulously reconstructed her other money market placements with
petitioners and consolidated the documentary evidence thereon, she came
surprisingly short of offering similar details and substantiation for these particular
money market placements.
Since this Court is satisfied that respondent indeed received the proceeds of
the first set of PNs, then it proceeds to analyze her evidence of payment thereof.
In support of respondent’s assertion that she had already paid whatever
loans she may have had with petitioner Citibank, she presented as evidence
Provisional Receipts No. 19471, dated 11 August 1978, and No. 12723, dated 10
November 1978, both of petitioner Citibank and signed by Mr. Tan, for the
amounts of P500,744.00 and P500,000.00, respectively. While these provisional
receipts did state that Mr. Tan, on behalf of petitioner Citibank, received
respondent’s checks as payment for her loans, they failed to specifically identify
which loans were actually paid. Petitioner Citibank was able to present evidence
that respondent had executed several PNs in the years 1978 and 1979 to cover
the loans she secured from the said bank. Petitioner Citibank did admit that
respondent was able to pay for some of these PNs, and what it identified as the
first and second sets of PNs were only those which remained unpaid. It thus
became incumbent upon respondent to prove that the checks received by Mr.
Tan were actually applied to the PNs in either the first or second set; a fact that,
unfortunately, cannot be determined from the provisional receipts submitted by

respondent since they only generally stated that the checks received by Mr. Tan
were payment for respondent’s loans.
Mr. Tan, in his deposition, further explained that provisional receipts were
issued when payment to the bank was made using checks, since the checks would
still be subject to clearing. The purpose for the provisional receipts was merely to
acknowledge the delivery of the checks to the possession of the bank, but not yet
of payment.[99] This bank practice finds legitimacy in the pronouncement of this
Court that a check, whether an MC or an ordinary check, is not legal tender and,
therefore, cannot constitute valid tender of payment. In Philippine Airlines, Inc. v.
Court of Appeals, [100] this Court elucidated that:
Since a negotiable instrument is only a substitute for money and not money, the delivery of such an
instrument does not, by itself, operate as payment (Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon
Co. v. American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check, whether a manager's check
or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor. Mere delivery of checks does not discharge the obligation under a
judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is
actually realized (Art. 1249, Civil Code, par. 3).

In the case at bar, the issuance of an official receipt by petitioner Citibank
would have been dependent on whether the checks delivered by respondent
were actually cleared and paid for by the drawee banks.
As for PN No. 34534, respondent asserted payment thereof at two separate
instances by two different means. In her formal offer of exhibits, respondent
submitted a deposit slip of petitioner Citibank, dated 11 August 1978, evidencing
the deposit of BPI Check No. 5785 for P150,000.00.[101] In her Formal Offer of
Documentary Exhibits, dated 7 July 1989, respondent stated that the purpose for
the presentation of the said deposit slip was to prove that she already paid her
loan covered by PN No. 34534.[102] In her testimony before the RTC three years
later, on 28 November 1991, she changed her story. This time she narrated that
the loan covered by PN No. 34534 was secured by her money market placement
with petitioner FNCB Finance, and when she failed to pay the said PN when it

became due, the security was applied to the loan, therefore, the loan was
considered paid.[103] Given the foregoing, respondent’s assertion of payment of
PN No. 34534 is extremely dubious.
According to petitioner Citibank, the PNs in the second set, except for PN
No. 34534, were mere renewals of the unpaid PNs in the first set, which was why
the PNs stated that they were for the purpose of liquidating existing
obligations. PN No. 34534, however, which was part of the first set, was still valid
and subsisting and so it was included in the second set without need for its
renewal, and it still being the original PN for that particular loan, its stated
purpose was for personal investment.[104] Respondent essentially admitted
executing the second set of PNs, but they were only meant to cover simulated
loans. Mr. Tan supposedly convinced her that her pending loan application with
DBP would have a greater chance of being approved if they made it appear that
respondent urgently needed the money because petitioner Citibank was already
demanding payment for her simulated loans.
Respondent’s defense of simulated loans to escape liability for the second
set of PNs is truly a novel one. It is regrettable, however, that she was unable to
substantiate the same. Yet again, respondent’s version of events is totally based
on her own uncorroborated testimony. The notations on the second set of PNs,
that they were non-negotiable simulated notes, were admittedly made by
respondent herself and were, thus, self-serving. Equally self-serving was
respondent’s letter, written on 7 October 1985, or more than six years after the
execution of the second set of PNs, in which she demanded return of the
simulated or fictitious PNs, together with the letters relating thereto, which Mr.
Tan purportedly asked her to execute. Respondent further failed to present any
proof of her alleged loan application with the DBP, and of any circumstance or
correspondence wherein the simulated or fictitious PNs were indeed used for
their supposed purpose.

In contrast, petitioner Citibank, as supported by the testimonies of its
officers and available documentation, consistently treated the said PNs as regular
loans – accepted, approved, and paid in the ordinary course of its business.
The PNs executed by the respondent in favor of petitioner Citibank to cover
her loans were duly-filled out and signed, including the disclosure statement
found at the back of the said PNs, in adherence to the Central Bank requirement
to disclose the full finance charges to a loan granted to borrowers.
Mr. Tan, then an account officer with the Marketing Department of
petitioner Citibank, testified that he dealt directly with respondent; he facilitated
the loans; and the PNs, at least in the second set, were signed by respondent in
his presence.[105]
Mr. Pujeda, the officer who was previously in charge of loans and
placements, confirmed that the signatures on the PNs were verified against
respondent’s specimen signature with the bank.[106]
Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan
processor, was responsible for booking respondent’s loans. Booking the loans
means recording it in the General Ledger. She explained the procedure for
booking loans, as follows: The account officer, in the Marketing Department,
deals directly with the clients who wish to borrow money from petitioner
Citibank. The Marketing Department will forward a loan booking checklist,
together with the borrowing client’s PNs and other supporting documents, to the
loan pre-processor, who will check whether the details in the loan booking
checklist are the same as those in the PNs. The documents are then sent to
Signature Control for verification of the client’s signature in the PNs, after which,
they are returned to the loan pre-processor, to be forwarded finally to the loan

processor. The loan processor shall book the loan in the General Ledger,
indicating therein the client name, loan amount, interest rate, maturity date, and
the corresponding PN number. Since she booked respondent’s loans personally,
Ms. Dondoyano testified that she saw the original PNs. In 1986, Atty. Fernandez
of petitioner Citibank requested her to prepare an accounting of respondent’s
loans, which she did, and which was presented as Exhibit “120” for the
petitioners. The figures from the said exhibit were culled from the bookings in
the General Ledger, a fact which respondent’s counsel was even willing to
stipulate.[107]
Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at the
Control Department of petitioner Citibank. She was presented by petitioner
Citibank to expound on the microfilming procedure at the bank, since most of the
copies of the PNs were retrieved from microfilm. Microfilming of the documents
are actually done by people at the Operations Department. At the end of the day
or during the day, the original copies of all bank documents, not just those
pertaining to loans, are microfilmed. She refuted the possibility that insertions
could be made in the microfilm because the microfilm is inserted in a cassette;
the cassette is placed in the microfilm machine for use; at the end of the day, the
cassette is taken out of the microfilm machine and put in a safe vault; and the
cassette is returned to the machine only the following day for use, until the spool
is full. This is the microfilming procedure followed everyday. When the microfilm
spool is already full, the microfilm is developed, then sent to the Control
Department, which double checks the contents of the microfilms against the
entries in the General Ledger. The Control Department also conducts a random
comparison of the contents of the microfilms with the original documents; a
random review of the contents is done on every role of microfilm.[108]
Ms. Renee Rubio worked for petitioner Citibank for 20 years. She rose from
the ranks, initially working as a secretary in the Personnel Group; then as a

secretary to the Personnel Group Head; a Service Assistant with the Marketing
Group, in 1972 to 1974, dealing directly with corporate and individual clients who,
among other things, secured loans from petitioner Citibank; the Head of the
Collection Group of the Foreign Department in 1974 to 1976; the Head of the
Money Transfer Unit in 1976 to 1978; the Head of the Loans and Placements Unit
up to the early 1980s; and, thereafter, she established operations training for
petitioner Citibank in the Asia-Pacific Region responsible for the training of the
officers of the bank. She testified on the standard loan application process at
petitioner Citibank. According to Ms. Rubio, the account officer or marketing
person submits a proposal to grant a loan to an individual or
corporation. Petitioner Citibank has a worldwide policy that requires a credit
committee, composed of a minimum of three people, which would approve the
loan and amount thereof. There can be no instance when only one officer has the
power to approve the loan application. When the loan is approved, the account
officer in charge will obtain the corresponding PNs from the client. The PNs are
sent to the signature verifier who would validate the signatures therein against
those appearing in the signature cards previously submitted by the client to the
bank. The Operations Unit will check and review the documents, including the
PNs, if it is a clean loan, and securities and deposits, if it is collateralized. The loan
is then recorded in the General Ledger. The Loans and Placements Department
will not book the loans without the PNs. When the PNs are liquidated, whether
they are paid or rolled-over, they are returned to the client.[109] Ms. Rubio further
explained that she was familiar with respondent’s accounts since, while she was
still the Head of the Loan and Placements Unit, she was asked by Mr. Tan to
prepare a list of respondent’s outstanding obligations.[110] She thus calculated
respondent’s outstanding loans, which was sent as an attachment to Mr. Tan’s
letter to respondent, dated 28 September 1979, and presented before the RTC as
Exhibits “34-B” and “34-C.”[111]

Lastly, the exchange of letters between petitioner Citibank and respondent,
as well as the letters sent by other people working for respondent, had
consistently recognized that respondent owed petitioner Citibank money.
In consideration of the foregoing discussion, this Court finds that the
preponderance of evidence supports the existence of the respondent’s loans, in
the principal sum of P1,920,000.00, as of 5 September 1979. While it is wellsettled that the term “preponderance of evidence” should not be wholly
dependent on the number of witnesses, there are certain instances when the
number of witnesses become the determining factor –
The preponderance of evidence may be determined, under certain conditions, by the number of witnesses
testifying to a particular fact or state of facts. For instance, one or two witnesses may testify to a given state of facts, and
six or seven witnesses of equal candor, fairness, intelligence, and truthfulness, and equally well corroborated by all the
remaining evidence, who have no greater interest in the result of the suit, testify against such state of facts. Then the
preponderance of evidence is determined by the number of witnesses. (Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep.,
761.)[112]

Best evidence rule
This Court disagrees in the pronouncement made by the Court of Appeals
summarily dismissing the documentary evidence submitted by petitioners based
on its broad and indiscriminate application of the best evidence rule.
In general, the best evidence rule requires that the highest available degree
of proof must be produced. Accordingly, for documentary evidence, the contents
of a document are best proved by the production of the document itself,[113] to
the exclusion of any secondary or substitutionary evidence.[114]
The best evidence rule has been made part of the revised Rules of Court,
Rule 130, Section 3, which reads –
SEC. 3. Original document must be produced; exceptions. – When the subject of inquiry is the contents of a
document, no evidence shall be admissible other than the original document itself, except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the
part of the offeror;
(b) When the original is in the custody or under the control of the party against whom the evidence is offered,
and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other documents which cannot be examined in court
without great loss of time and the fact sought to be established from them is only the general result of the whole; and
(d) When the original is a public record in the custody of a public officer or is recorded in a public office.

As the afore-quoted provision states, the best evidence rule applies only when
the subject of the inquiry is the contents of the document. The scope of the rule
is more extensively explained thus –
But even with respect to documentary evidence, the best evidence rule applies only when the content of such
document is the subject of the inquiry. Where the issue is only as to whether such document was actually executed, or
exists, or on the circumstances relevant to or surrounding its execution, the best evidence rule does not apply and
testimonial evidence is admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78). Any other substitutionary
evidence is likewise admissible without need for accounting for the original.
Thus, when a document is presented to prove its existence or condition it is offered not as documentary, but
as real, evidence. Parol evidence of the fact of execution of the documents is allowed (Hernaez, et al. vs. McGrath, etc.,
et al., 91 Phil 565). x x x [115]

In Estrada v. Desierto,[116] this Court had occasion to rule that –
It is true that the Court relied not upon the original but only copy of the Angara Diary as published in the
Philippine Daily Inquirer on February 4-6, 2001. In doing so, the Court, did not, however, violate the best evidence rule.
Wigmore, in his book on evidence, states that:
“Production of the original may be dispensed with, in the trial court’s discretion, whenever in the case in
hand the opponent does not bona fide dispute the contents of the document and no other useful purpose will be served
by requiring production.24
“x x x x
“In several Canadian provinces, the principle of unavailability has been abandoned, for certain documents in
which ordinarily no real dispute arised. This measure is a sensible and progressive one and deserves universal adoption
(post, sec. 1233). Its essential feature is that a copy may be used unconditionally, if the opponent has been given an
opportunity to inspect it.” (Emphasis supplied.)

This Court did not violate the best evidence rule when it considered and
weighed in evidence the photocopies and microfilm copies of the PNs, MCs, and
letters submitted by the petitioners to establish the existence of respondent’s
loans. The terms or contents of these documents were never the point of
contention in the Petition at bar. It was respondent’s position that the PNs in the
first set (with the exception of PN No. 34534) never existed, while the PNs in the
second set (again, excluding PN No. 34534) were merely executed to cover

simulated loan transactions. As for the MCs representing the proceeds of the
loans, the respondent either denied receipt of certain MCs or admitted receipt of
the other MCs but for another purpose. Respondent further admitted the letters
she wrote personally or through her representatives to Mr. Tan of petitioner
Citibank acknowledging the loans, except that she claimed that these letters were
just meant to keep up the ruse of the simulated loans. Thus, respondent
questioned the documents as to their existence or execution, or when the former
is admitted, as to the purpose for which the documents were executed, matters
which are, undoubtedly, external to the documents, and which had nothing to do
with the contents thereof.
Alternatively, even if it is granted that the best evidence rule should apply
to the evidence presented by petitioners regarding the existence of respondent’s
loans, it should be borne in mind that the rule admits of the following exceptions
under Rule 130, Section 5 of the revised Rules of Court –
SEC. 5. When the original document is unavailable. – When the original document has been lost or destroyed,
or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability
without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic
document, or by the testimony of witnesses in the order stated.

The execution or existence of the original copies of the documents was
established through the testimonies of witnesses, such as Mr. Tan, before whom
most of the documents were personally executed by respondent. The original
PNs also went through the whole loan booking system of petitioner Citibank –
from the account officer in its Marketing Department, to the pre-processor, to the
signature verifier, back to the pre-processor, then to the processor for
booking.[117] The original PNs were seen by Ms. Dondoyano, the processor, who
recorded them in the General Ledger. Mr. Pujeda personally saw the original
MCs, proving respondent’s receipt of the proceeds of her loans from petitioner
Citibank, when he helped Attys. Cleofe and Fernandez, the bank’s legal counsels,
to reconstruct the records of respondent’s loans. The original MCs were

presented to Atty. Cleofe who used the same during the preliminary investigation
of the case, sometime in years 1986-1987. The original MCs were subsequently
turned over to the Control and Investigation Division of petitioner Citibank.[118]
It was only petitioner FNCB Finance who claimed that they lost the original
copies of the PNs when it moved to a new office. Citibank did not make a similar
contention; instead, it explained that the original copies of the PNs were returned
to the borrower upon liquidation of the loan, either through payment or rollover. Petitioner Citibank proffered the excuse that they were still looking for the
documents in their storage or warehouse to explain the delay and difficulty in the
retrieval thereof, but not their absence or loss. The original documents in this
case, such as the MCs and letters, were destroyed and, thus, unavailable for
presentation before the RTC only on 7 October 1987, when a fire broke out on the
7th floor of the office building of petitioner Citibank. There is no showing that the
fire was intentionally set. The fire destroyed relevant documents, not just of the
present case, but also of other cases, since the 7th floor housed the Control and
Investigation Division, in charge of keeping the necessary documents for cases in
which petitioner Citibank was involved.
The foregoing would have been sufficient to allow the presentation of
photocopies or microfilm copies of the PNs, MCs, and letters by the petitioners as
secondary evidence to establish the existence of respondent’s loans, as an
exception to the best evidence rule.
The impact of the Decision of the Court of Appeals in the Dy case
In its assailed Decision, the Court of Appeals made the following
pronouncement –
Besides, We find the declaration and conclusions of this Court in CA-G.R. CV No. 15934 entitled Sps. Dr.
Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et al, promulgated on 15 January 1990, as disturbing taking into
consideration the similarities of the fraud, machinations, and deceits employed by the defendant-appellant Citibank and
its Account Manager Francisco Tan.

Worthy of note is the fact that Our declarations and conclusions against Citibank and the person of Francisco
Tan in CA-G.R. CV No. 15934 were affirmed in toto by the Highest Magistrate in a Minute Resolution dated 22 August
1990 entitled Citibank, N.A., vs. Court of Appeals, G.R. 93350.
As the factual milieu of the present appeal created reasonable doubts as to whether the nine (9) Promissory
Notes were indeed executed with considerations, the doubts, coupled by the findings and conclusions of this Court in CAG.R. CV No. 15934 and the Supreme Court in G.R. No. 93350. should be construed against herein defendants-appellants
Citibank and FNCB Finance.

What this Court truly finds disturbing is the significance given by the Court
of Appeals in its assailed Decision to the Decision[119] of its Third Division in CAG.R. CV No. 15934 (or the Dy case), when there is an absolute lack of legal basis
for doing such.
Although petitioner Citibank and its officer, Mr. Tan, were also involved in
the Dy case, that is about the only connection between the Dy case and the one
at bar. Not only did the Dy case tackle transactions between parties other than
the parties presently before this Court, but the transactions are absolutely
independent and unrelated to those in the instant Petition.
In the Dy case, Severino Chua Caedo managed to obtain loans from herein
petitioner Citibank amounting to P7,000,000.00, secured to the extent
of P5,000,000.00 by a Third Party Real Estate Mortgage of the properties of
Caedo’s aunt, Rosalind Dy. It turned out that Rosalind Dy and her husband were
unaware of the said loans and the mortgage of their properties. The transactions
were carried out exclusively between Caedo and Mr. Tan of petitioner
Citibank. The RTC found Mr. Tan guilty of fraud for his participation in the
questionable transactions, essentially because he allowed Caedo to take out the
signature cards, when these should have been signed by the Dy spouses
personally before him. Although the Dy spouses’ signatures in the PNs and Third
Party Real Estate Mortgage were forged, they were approved by the signature
verifier since the signature cards against which they were compared to were also
forged. Neither the RTC nor the Court of Appeals, however, categorically

declared Mr. Tan personally responsible for the forgeries, which, in the narration
of the facts, were more likely committed by Caedo.
In the Petition at bar, respondent dealt with Mr. Tan directly, there was no
third party involved who could have perpetrated any fraud or forgery in her loan
transactions. Although respondent attempted to raise suspicion as to the
authenticity of her signatures on certain documents, these were nothing more
than naked allegations with no corroborating evidence; worse, even her own
allegations were replete with inconsistencies. She could not even establish in
what manner or under what circumstances the fraud or forgery was committed,
or how Mr. Tan could have been directly responsible for the same.
While the Court of Appeals can take judicial notice of the Decision of its
Third Division in the Dy case, it should not have given the said case much weight
when it rendered the assailed Decision, since the former does not constitute a
precedent. The Court of Appeals, in the challenged Decision, did not apply any
legal argument or principle established in the Dy case but, rather, adopted the
findings therein of wrongdoing or misconduct on the part of herein petitioner
Citibank and Mr. Tan. Any finding of wrongdoing or misconduct as against herein
petitioners should be made based on the factual background and pieces of
evidence submitted in this case, not those in another case.
It is apparent that the Court of Appeals took judicial notice of the Dy case
not as a legal precedent for the present case, but rather as evidence of similar
acts committed by petitioner Citibank and Mr. Tan. A basic rule of
evidence, however, states that, “Evidence that one did or did not do a certain
thing at one time is not admissible to prove that he did or did not do the same or
similar thing at another time; but it may be received to prove a specific intent or
knowledge, identity, plan, system, scheme, habit, custom or usage, and the
like.”[120] The rationale for the rule is explained thus –

The rule is founded upon reason, public policy, justice and judicial convenience. The fact that a person has
committed the same or similar acts at some prior time affords, as a general rule, no logical guaranty that he committed
the act in question. This is so because, subjectively, a man’s mind and even his modes of life may change; and,
objectively, the conditions under which he may find himself at a given time may likewise change and thus induce him to
act in a different way. Besides, if evidence of similar acts are to be invariably admitted, they will give rise to a multiplicity
of collateral issues and will subject the defendant to surprise as well as confuse the court and prolong the trial.[121]

The factual backgrounds of the two cases are so different and unrelated that the
Dy case cannot be used to prove specific intent, knowledge, identity, plan,
system, scheme, habit, custom or usage on the part of petitioner Citibank or its
officer, Mr. Tan, to defraud respondent in the present case.
IV
The
liquidation
of
respondent’s
outstanding loans were valid in so far as
petitioner Citibank used respondent’s
savings account with the bank and her
money market placements with petitioner
FNCB Finance; but illegal and void in so far
as petitioner Citibank used respondent’s
dollar accounts with Citibank-Geneva.

Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing obligations. Relevant
provisions of the Civil Code provides –
Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of
each other.
Art. 1279. In order that compensation may 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 consist 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 be due;
(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third persons and
communicated in due time to the debtor.

There is little controversy when it comes to the right of petitioner Citibank
to compensate respondent’s outstanding loans with her deposit account. As
already found by this Court, petitioner Citibank was the creditor of respondent for
her outstanding loans. At the same time, respondent was the creditor of
petitioner Citibank, as far as her deposit account was concerned, since bank
deposits, whether fixed, savings, or current, should be considered as simple loan
or mutuum by the depositor to the banking institution.[122] Both debts consist in
sums of money. By June 1979, all of respondent’s PNs in the second set had
matured and became demandable, while respondent’s savings account was
demandable anytime. Neither was there any retention or controversy over the
PNs and the deposit account commenced by a third person and communicated in
due time to the debtor concerned. Compensation takes place by operation of
law,[123] therefore, even in the absence of an expressed authority from
respondent, petitioner Citibank had the right to effect, on 25 June 1979, the
partial compensation or off-set of respondent’s outstanding loans with her
deposit account, amounting to P31,079.14.
Money market placements with FNCB Finance
Things though are not as simple and as straightforward as regards to the
money market placements and bank account used by petitioner Citibank to
complete the compensation or off-set of respondent’s outstanding loans, which
came from persons other than petitioner Citibank.
Respondent’s money market placements were with petitioner FNCB
Finance, and after several roll-overs, they were ultimately covered by PNs No.
20138 and 20139, which, by 3 September 1979, the date the check for the
proceeds of the said PNs were issued, amounted to P1,022,916.66, inclusive of

the principal amounts and interests. As to these money market placements,
respondent was the creditor and petitioner FNCB Finance the debtor; while, as to
the outstanding loans, petitioner Citibank was the creditor and respondent the
debtor. Consequently, legal compensation, under Article 1278 of the Civil Code,
would not apply since the first requirement for a valid compensation, that each
one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other, was not met.
What petitioner Citibank actually did was to exercise its rights to the
proceeds of respondent’s money market placements with petitioner FNCB
Finance by virtue of the Deeds of Assignment executed by respondent in its
favor.
The Court of Appeals did not consider these Deeds of Assignment because
of petitioners’ failure to produce the original copies thereof in violation of the
best evidence rule. This Court again finds itself in disagreement in the application
of the best evidence rule by the appellate court.
To recall, the best evidence rule, in so far as documentary evidence is
concerned, requires the presentation of the original copy of the document only
when the context thereof is the subject of inquiry in the case. Respondent does
not question the contents of the Deeds of Assignment. While she admitted the
existence and execution of the Deeds of Assignment, dated 2 March 1978 and 9
March 1978, covering PNs No. 8169 and 8167 issued by petitioner FNCB Finance,
she claimed, as defense, that the loans for which the said Deeds were executed as
security, were already paid. She denied ever executing both Deeds of
Assignment, dated 25 August 1978, covering PNs No. 20138 and 20139. These are
again issues collateral to the contents of the documents involved, which could be
proven by evidence other than the original copies of the said documents.

Moreover, the Deeds of Assignment of the money market placements with
petitioner FNCB Finance were notarized documents, thus, admissible in
evidence. Rule 132, Section 30 of the Rules of Court provides that –
SEC. 30. Proof of notarial documents. – Every instrument duly acknowledged or proved and certified as
provided by law, may be presented in evidence without further proof, the certificate of acknowledgement being prima
facie evidence of the execution of the instrument or document involved.

Significant herein is this Court’s elucidation in De Jesus v. Court of
Appeals,[124] which reads –
On the evidentiary value of these documents, it should be recalled that the notarization of a private document
converts it into a public one and renders it admissible in court without further proof of its authenticity (Joson vs. Baltazar,
194 SCRA 114 [1991]). This is so because a public document duly executed and entered in the proper registry is presumed
to be valid and genuine until the contrary is shown by clear and convincing proof (Asido vs. Guzman, 57 Phil. 652
[1918]; U.S. vs. Enriquez, 1 Phil 241 [1902]; Favor vs. Court of Appeals, 194 SCRA 308 [1991]). As such, the party
challenging the recital of the document must prove his claim with clear and convincing evidence (Diaz vs. Court of
Appeals, 145 SCRA 346 [1986]).

The rule on the evidentiary weight that must be accorded a notarized
document is clear and unambiguous. The certificate of acknowledgement in the
notarized Deeds of Assignment constituted prima facie evidence of the execution
thereof. Thus, the burden of refuting this presumption fell on respondent. She
could have presented evidence of any defect or irregularity in the execution of
the said documents[125] or raised questions as to the verity of the notary public’s
acknowledgment and certificate in the Deeds.[126] But again, respondent admitted
executing the Deeds of Assignment, dated 2 March 1978 and 9 March 1978,
although claiming that the loans for which they were executed as security were
already paid. And, she assailed the Deeds of Assignment, dated 25 August 1978,
with nothing more than her bare denial of execution thereof, hardly the clear and
convincing evidence required to trounce the presumption of due execution of a
notarized document.
Petitioners not only presented the notarized Deeds of Assignment, but even
secured certified literal copies thereof from the National Archives.[127] Mr. Renato

Medua, an archivist, working at the Records Management and Archives Office of
the National Library, testified that the copies of the Deeds presented before the
RTC were certified literal copies of those contained in the Notarial Registries of
the notary publics concerned, which were already in the possession of the
National Archives. He also explained that he could not bring to the RTC the
Notarial Registries containing the original copies of the Deeds of Assignment,
because the Department of Justice (DOJ) Circular No. 97, dated 8 November 1968,
prohibits the bringing of original documents to the courts to prevent the loss of
irreplaceable and priceless documents.[128]
Accordingly, this Court gives the Deeds of Assignment grave importance in
establishing the authority given by the respondent to petitioner Citibank to use as
security for her loans her money her market placements with petitioner FNCB
Finance, represented by PNs No. 8167 and 8169, later to be rolled-over as PNs
No. 20138 and 20139. These Deeds of Assignment constitute the law between
the parties, and the obligations arising therefrom shall have the force of law
between the parties and should be complied with in good faith.[129] Standard
clauses in all of the Deeds provide that –
The ASSIGNOR and the ASSIGNEE hereby further agree as follows:
xxxx
2. In the event the OBLIGATIONS are not paid at maturity or upon demand, as the case may be, the ASSIGNEE
is fully authorized and empowered to collect and receive the PLACEMENT (or so much thereof as may be necessary) and
apply the same in payment of the OBLIGATIONS. Furthermore, the ASSIGNOR agrees that at any time, and from time to
time, upon request by the ASSIGNEE, the ASSIGNOR will promptly execute and deliver any and all such further
instruments and documents as may be necessary to effectuate this Assignment.
xxxx
5. This Assignment shall be considered as sufficient authority to FNCB Finance to pay and deliver the
PLACEMENT or so much thereof as may be necessary to liquidate the OBLIGATIONS, to the ASSIGNEE in accordance with
terms and provisions hereof.[130]

Petitioner Citibank was only acting upon the authority granted to it under
the foregoing Deeds when it finally used the proceeds of PNs No. 20138 and
20139, paid by petitioner FNCB Finance, to partly pay for respondent’s

outstanding loans. Strictly speaking, it did not effect a legal compensation or offset under Article 1278 of the Civil Code, but rather, it partly extinguished
respondent’s obligations through the application of the security given by the
respondent for her loans. Although the pertinent documents were entitled Deeds
of Assignment, they were, in reality, more of a pledge by respondent to petitioner
Citibank of her credit due from petitioner FNCB Finance by virtue of her money
market placements with the latter. According to Article 2118 of the Civil Code –
ART. 2118. If a credit has been pledged becomes due before it is redeemed, the pledgee may collect and
receive the amount due. He shall apply the same to the payment of his claim, and deliver the surplus, should there be
any, to the pledgor.

PNs No. 20138 and 20139 matured on 3 September 1979, without them
being redeemed by respondent, so that petitioner Citibank collected from
petitioner FNCB Finance the proceeds thereof, which included the principal
amounts and interests earned by the money market placements, amounting
to P1,022,916.66, and applied the same against respondent’s outstanding loans,
leaving no surplus to be delivered to respondent.
Dollar accounts with Citibank-Geneva
Despite the legal compensation of respondent’s savings account and the
total application of the proceeds of PNs No. 20138 and 20139 to respondent’s
outstanding loans, there still remained a balance of P1,069,847.40. Petitioner
Citibank then proceeded to applying respondent’s dollar accounts with CitibankGeneva against her remaining loan balance, pursuant to a Declaration of Pledge
supposedly executed by respondent in its favor.
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.[131]
Upon closer scrutiny of the Declaration of Pledge, this Court finds the same
exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank took care to have
the Deeds of Assignment of the PNs notarized, yet left the Declaration of Pledge
unnotarized. This Court would think that petitioner Citibank would take greater
cautionary measures with the preparation and execution of the Declaration of
Pledge because it involved respondent’s “all present and future fiduciary
placements” with a Citibank branch in another country, specifically, in Geneva,
Switzerland. While there is no express legal requirement that the Declaration of
Pledge had to be notarized to be effective, even so, it could not enjoy the
same prima facie presumption of due execution that is extended to notarized
documents, and petitioner Citibank must discharge the burden of proving due
execution and authenticity of the Declaration of Pledge.
Second, petitioner Citibank was unable to establish the date when the
Declaration of Pledge was actually executed. The photocopy of the Declaration of
Pledge submitted by petitioner Citibank before the RTC was undated.[132] It
presented only a photocopy of the pledge because it already forwarded the
original copy thereof to Citibank-Geneva when it requested for the remittance of
respondent’s dollar accounts pursuant thereto. Respondent, on the other hand,
was able to secure a copy of the Declaration of Pledge, certified by an officer of
Citibank-Geneva, which bore the date 24 September 1979.[133] Respondent,
however, presented her passport and plane tickets to prove that she was out of
the country on the said date and could not have signed the pledge. Petitioner
Citibank insisted that the pledge was signed before 24 September 1979, but could
not provide an explanation as to how and why the said date was written on the

pledge. Although Mr. Tan testified that the Declaration of Pledge was signed by
respondent personally before him, he could not give the exact date when the said
signing took place. It is important to note that the copy of the Declaration of
Pledge submitted by the respondent to the RTC was certified by an officer of
Citibank-Geneva, which had possession of the original copy of the pledge. It is
dated 24 September 1979, and this Court shall abide by the presumption that the
written document is truly dated.[134] Since it is undeniable that respondent was
out of the country on 24 September 1979, then she could not have executed the
pledge on the said date.
Third, the Declaration of Pledge was irregularly filled-out. The pledge was in
a standard printed form. It was constituted in favor of Citibank, N.A., otherwise
referred to therein as the Bank. It should be noted, however, that in the space
which should have named the pledgor, the name of petitioner Citibank was
typewritten, to wit –
The pledge right herewith constituted shall secure all claims which the Bank now has or in the future acquires
against Citibank, N.A., Manila (full name and address of the Debtor), regardless of the legal cause or the transaction (for
example current account, securities transactions, collections, credits, payments, documentary credits and collections)
which gives rise thereto, and including principal, all contractual and penalty interest, commissions, charges, and costs.

The pledge, therefore, made no sense, the pledgor and pledgee being the same
entity. Was a mistake made by whoever filled-out the form? Yes, it could be a
possibility. Nonetheless, considering the value of such a document, the mistake as
to a significant detail in the pledge could only be committed with gross
carelessness on the part of petitioner Citibank, and raised serious doubts as to the
authenticity and due execution of the same. The Declaration of Pledge had
passed through the hands of several bank officers in the country and abroad, yet,
surprisingly and implausibly, no one noticed such a glaring mistake.
Lastly, respondent denied that it was her signature on the Declaration of
Pledge. She claimed that the signature was a forgery. When a document is
assailed on the basis of forgery, the best evidence rule applies –

Basic is the rule of evidence that when the subject of inquiry is the contents of a document, no evidence is
admissible other than the original document itself except in the instances mentioned in Section 3, Rule 130 of the Revised
Rules of Court. Mere photocopies of documents are inadmissible pursuant to the best evidence rule. This is especially
true when the issue is that of forgery.
As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the
burden of proof lies on the party alleging forgery. The best evidence of a forged signature in an instrument is the
instrument itself reflecting the alleged forged signature. The fact of forgery can only be established by a comparison
between the alleged forged signature and the authentic and genuine signature of the person whose signature is
theorized upon to have been forged. Without the original document containing the alleged forged signature, one cannot
make a definitive comparison which would establish forgery. A comparison based on a mere xerox copy or reproduction
of the document under controversy cannot produce reliable results.[135]

Respondent made several attempts to have the original copy of the pledge
produced before the RTC so as to have it examined by experts. Yet, despite
several Orders by the RTC,[136] petitioner Citibank failed to comply with the
production of the original Declaration of Pledge. It is admitted that CitibankGeneva had possession of the original copy of the pledge. While petitioner
Citibank in Manila and its branch in Geneva may be separate and distinct entities,
they are still incontestably related, and between petitioner Citibank and
respondent, the former had more influence and resources to convince CitibankGeneva to return, albeit temporarily, the original Declaration of
Pledge. Petitioner Citibank did not present any evidence to convince this Court
that it had exerted diligent efforts to secure the original copy of the pledge, nor
did it proffer the reason why Citibank-Geneva obstinately refused to give it back,
when such document would have been very vital to the case of petitioner
Citibank. There is thus no justification to allow the presentation of a mere
photocopy of the Declaration of Pledge in lieu of the original, and the photocopy
of the pledge presented by petitioner Citibank has nil probative value.[137] In
addition, even if this Court cannot make a categorical finding that respondent’s
signature on the original copy of the pledge was forged, it is persuaded that
petitioner Citibank willfully suppressed the presentation of the original document,
and takes into consideration the presumption that the evidence willfully
suppressed would be adverse to petitioner Citibank if produced.[138]

Without the Declaration of Pledge, 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. Resultantly,
petitioner Citibank is obligated to return to respondent the amount of
US$149,632,99 from her Citibank-Geneva accounts, or its present equivalent
value in Philippine currency; and, at the same time, respondent continues to be
obligated to petitioner Citibank for the balance of her outstanding loans which, as
of 5 September 1979, amounted to P1,069,847.40.
V
The parties shall be liable for interests on
their monetary obligations to each other,
as determined herein.

In summary, petitioner Citibank is ordered by this Court to pay respondent
the proceeds of her money market placements, represented by PNs No. 23356
and 23357, amounting to P318,897.34 and P203,150.00, respectively, earning an
interest of 14.5% per annum as stipulated in the PNs,[139] beginning 17 March
1977, the date of the placements.

Petitioner Citibank is also ordered to refund to respondent the amount of
US$149,632.99, or its equivalent in Philippine currency, which had been remitted
from her Citibank-Geneva accounts. These dollar accounts, consisting of two
fiduciary placements and current accounts with Citibank-Geneva shall continue
earning their respective stipulated interests from 26 October 1979, the date of
their remittance by Citibank-Geneva to petitioner Citibank in Manila and applied
against respondent’s outstanding loans.
As for respondent, she is ordered to pay petitioner Citibank the balance of
her outstanding loans, which amounted to P1,069,847.40 as of 5 September
1979. These loans continue to earn interest, as stipulated in the corresponding
PNs, from the time of their respective maturity dates, since the supposed
payment thereof using respondent’s dollar accounts from Citibank-Geneva is
deemed illegal, null and void, and, thus, ineffective.
VI
Petitioner Citibank shall be liable for
damages to respondent.
Petitioners protest the award by the Court of Appeals of moral damages,
exemplary damages, and attorney’s fees in favor of respondent. They argued that
the RTC did not award any damages, and respondent, in her appeal before the
Court of Appeals, did not raise in issue the absence of such.
While it is true that the general rule is that only errors which have been
stated in the assignment of errors and properly argued in the brief shall be
considered, this Court has also recognized exceptions to the general rule, wherein
it authorized the review of matters, even those not assigned as errors in the
appeal, if the consideration thereof is necessary in arriving at a just decision of
the case, and there is a close inter-relation between the omitted assignment of

error and those actually assigned and discussed by the appellant.[140] Thus, the
Court of Appeals did not err in awarding the damages when it already made
findings that would justify and support the said award.
Although this Court appreciates the right of petitioner Citibank to effect
legal compensation of respondent’s local deposits, as well as its right to the
proceeds of PNs No. 20138 and 20139 by virtue of the notarized Deeds of
Assignment, to partly extinguish respondent’s outstanding loans, it finds that
petitioner Citibank did commit wrong when it failed to pay and properly account
for the proceeds of respondent’s money market placements, evidenced by PNs
No. 23356 and 23357, and when it sought the remittance of respondent’s dollar
accounts from Citibank-Geneva by virtue of a highly-suspect Declaration of Pledge
to be applied to the remaining balance of respondent’s outstanding loans. It bears
to emphasize that banking is impressed with public interest and its fiduciary
character requires high standards of integrity and performance.[141] A bank is
under the obligation to treat the accounts of its depositors with meticulous care
whether such accounts consist only of a few hundred pesos or of millions of
pesos.[142] The bank must record every single transaction accurately, down to the
last centavo, and as promptly as possible.[143] Petitioner Citibank evidently failed
to exercise the required degree of care and transparency in its transactions with
respondent, thus, resulting in the wrongful deprivation of her property.
Respondent had been deprived of substantial amounts of her investments
and deposits for more than two decades. During this span of years, respondent
had found herself in desperate need of the amounts wrongfully withheld from
her. In her testimony[144] before the RTC, respondent narrated –
Q

By the way Mrs. Witness will you kindly tell us again, you said before that you are a businesswoman, will you tell us
again what are the businesses you are engaged into [sic]?

A

I am engaged in real estate. I am the owner of the Modesta Village 1 and 2 in San Mateo, Rizal. I am also the
President and Chairman of the Board of Macador [sic] Co. and Business Inc. which operates the Macador [sic]
International Palace Hotel. I am also the President of the Macador [sic] International Palace Hotel, and also
the Treasures Home Industries, Inc. which I am the Chairman and president of the Board and also operating

affiliated company in the name of Treasures Motor Sales engaged in car dealers [sic] like Delta Motors, we are
the dealers of the whole Northern Luzon and I am the president of the Disto Company, Ltd., based in
Hongkong licensed in Honkong [sic] and now operating in Los Angeles, California.
Q

What is the business of that Disto Company Ltd.?

A

Disto Company, Ltd., is engaged in real estate and construction.

Q

Aside from those businesses are you a member of any national or community organization for social and civil
activities?

A

Yes sir.

Q

What are those?

A

I am the Vice-President of thes [sic+ Subdivision Association of the Philippines in 1976, I am also an officer of the …
Chamber of Real Estate Business Association; I am also an officer of the Chatholic [sic+ Women’s League and I
am also a member of the CMLI, I forgot the definition.

Q

How about any political affiliation or government position held if any?

A

I was also a candidate for Mayo last January 30, 1980.

Q

Where?

A

In Dagupan City, Pangasinan.

Q

What else?

A

I also ran as an Assemblywoman last May, 1984, Independent party in Regional I, Pangasinan.

Q

What happened to your businesses you mentioned as a result of your failure to recover you [sic] investments and
bank deposits from the defendants?

A

They are not all operating, in short, I was hampered to push through the businesses that I have.

A [sic] Of all the businesses and enterprises that you mentioned what are those that are paralyzed and what remain
inactive?
A

Of all the company [sic] that I have, only the Disto Company that is now operating in California.

Q

How about your candidacy as Mayor of Dagupan, [sic] City, and later as Assemblywoman of Region I, what
happened to this?

A

I won by voting but when election comes on [sic] the counting I lost and I protested this, it is still pending and
because I don’t have financial resources I was not able to push through the case. I just have it pending in the
Comelec.

Q

Now, do these things also affect your social and civic activities?

A

Yes sir, definitely.

Q

How?

A

I was embarrassed because being a businesswoman I would like to inform the Honorable Court that I was awarded
as the most outstanding businesswoman of the year in 1976 but when this money was not given back to me I
was not able to comply with the commitments that I have promised to these associations that I am engaged
into [sic], sir.

For the mental anguish, serious anxiety, besmirched reputation, moral shock and
social humiliation suffered by the respondent, the award of moral damages is but
proper. However, this Court reduces the amount thereof to P300,000.00, for the
award of moral damages is meant to compensate for the actual injury suffered by
the respondent, not to enrich her.[145]
Having failed to exercise more care and prudence than a private individual
in its dealings with respondent, petitioner Citibank should be liable for exemplary
damages, in the amount of P250,000.00, in accordance with Article 2229[146] and
2234[147] of the Civil Code.
With the award of exemplary damages, then respondent shall also be
entitled to an award of attorney’s fees.[148] Additionally, attorney's fees may be
awarded when a party is compelled to litigate or to incur expenses to protect his
interest by reason of an unjustified act of the other party.[149] In this case, an
award of P200,000.00 attorney’s fees shall be satisfactory.
In contrast, this Court finds no sufficient basis to award damages to
petitioners. Respondent was compelled to institute the present case in the
exercise of her rights and in the protection of her interests. In fact, although her
Complaint before the RTC was not sustained in its entirety, it did raise meritorious
points and on which this Court rules in her favor. Any injury resulting from the
exercise of one’s rights is damnum absque injuria.[150]
IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED. The
assailed Decision of the Court of Appeals in CA-G.R. No. 51930, dated 26 March
2002, as already modified by its Resolution, dated 20 November 2002, is
hereby AFFIRMED WITH MODIFICATION, as follows –

1.
PNs No. 23356 and 23357 are DECLARED subsisting and
outstanding. Petitioner Citibank is ORDERED to return to respondent the
principal amounts of the said PNs, amounting to Three Hundred Eighteen
Thousand Eight Hundred Ninety-Seven Pesos and Thirty-Four Centavos
(P318,897.34) and Two Hundred Three Thousand One Hundred Fifty Pesos
(P203,150.00), respectively, plus the stipulated interest of Fourteen and a half
percent (14.5%) per annum, beginning 17 March 1977;
2.
The remittance of One Hundred Forty-Nine Thousand Six Hundred
Thirty Two US Dollars and Ninety-Nine Cents (US$149,632.99) from respondent’s
Citibank-Geneva accounts to petitioner Citibank in Manila, and the application of
the same against respondent’s outstanding loans with the latter,
is DECLARED illegal, null and void. Petitioner Citibank is ORDERED to refund to
respondent the said amount, 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;
3.
Petitioner Citibank is ORDERED to pay respondent moral damages in
the amount of Three Hundred Thousand Pesos (P300,000.00); exemplary
damages in the amount of Two Hundred Fifty Thousand Pesos (P250,000.00); and
attorney’s fees in the amount of Two Hundred Thousand Pesos (P200,000.00);
and
4.
Respondent is ORDERED to pay petitioner Citibank the balance of her
outstanding loans, which, from the respective dates of their maturity to 5
September 1979, was computed to be in the sum of One Million Sixty-Nine
Thousand Eight Hundred Forty-Seven Pesos and Forty Centavos (P1,069,847.40),
inclusive of interest. These outstanding loans shall continue to earn interest, at
the rates stipulated in the corresponding PNs, from 5 September 1979 until
payment thereof.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson

CONSUELO YNARES-SANTIAGO
Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice

ROMEO J. CALLEJO, SR.
Associate Justice

CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified
that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]
[2]

[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]

Rollo, pp. 165-325.
Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Conrado M. Vasquez, Jr. and
Amelita G. Tolentino, concurring; id. at 327-366.
Id. at 368-374.
TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.
Records, Vol. I, pp. 1-8.
Id. at 148-157.
Id. at 40-51.
Id. at 208-227.
Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes, Records, Vol. I, p. 346.
Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 1607-1621.
Civil Case No. 11336 was raffled and re-reffled to four different Judges of the Makati RTC before it was
finally resolved. It was originally raffled to Makati RTC, Branch 140, presided by Judge Ansberto P.
Paredes. On 4 February 1987, before the termination of the re-direct examination of herein respondent
(plaintiff before the RTC), the case was transferred to Makati RTC, Branch 57, presided by Judge
Francisco X. Velez, for reasons not disclosed in the Records. Judge Velez was able to try and hear the case
until the presentation of the evidence by herein petitioners (defendants before the RTC). Respondent again
took the stand to present rebuttal evidence, but even before she could finish her testimony, Judge Velez
inhibited himself upon petitioners’ motion (Order, dated 10 April 1992, penned by Judge Francisco X.
Velez, Records, Vol. 11, p. 1085). The case was transferred to Makati RTC, Branch 141, presided by
Judge Marcelino F. Bautista, Jr. For reasons not disclosed in the Records, Judge Manuel D. Victorio took
over Makati RTC, Branch 141. After the parties submitted their respective Memoranda, Judge Victorio
declared the case submitted for decision (Order, dated 9 December 1994, penned by Judge Manuel D.
Victorio, Records, Vol. III, p. 1602). Judge Victorio rendered his Decision in Civil Case No. 11336 on 24
August 1995 (Records, Vol. III, pp. 1607-1621).

[12]
[13]
[14]

[15]
[16]
[17]
[18]
[19]

[20]
[21]

[22]
[23]
[24]
[25]

[26]
[27]
[28]

[29]

[30]
[31]
[32]
[33]
[34]
[35]

[36]

[37]
[38]
[39]
[40]
[41]
[42]
[43]
[44]

Rollo, pp. 365-366.
Rollo of G.R. No. 152985, pp. 3-4.
The filing of a motion for extension does not automatically suspend the running of the period for appeal,
since the purpose of such motion is to merely ask the court to grant an enlargement of the time fixed by
law. The movant, therefore, has no right to assume that his motion would be granted, and should check
with the court as to the outcome of his motion, so that if the same is denied, he can still perfect his
appeal. (Hon. Bello and Ferrer v. Fernando, 114 Phil. 101, 104 [1962].)
Rollo of G.R. No. 156132, p. 1227.
Rollo, p. 374.
Resolution, dated 29 January 2003; rollo, pp. 980-A-B.
Resolution, dated 23 June 2003; id. at 1311-1312.
Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137 Phil. 239, 244 (1969);
Singh v. Liberty Insurance Corp., 118 Phil. 532, 535 (1963).
Rollo, pp. 1443-1445.
See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438 [1976]) wherein this Court pronounced
that a party’s right to appeal shall not be affected by the perfection of another appeal from the same
decision; otherwise, it would lead to the absurd proposition that one party may be deprived of the right to
appeal from the portion of a decision against him just because the other party who had been notified of the
decision ahead had already perfected his appeal in so far as the said decision adversely affects him. If the
perfection of an appeal by one party would not bar the right of the other party to appeal from the same
decision, then an unperfected appeal, as in the case at bar, would have far less effect.
The Executive Secretary v. Gordon, 359 Phil. 266, 271 (1998).
Young v. John Keng Seng, 446 Phil. 823, 833 (2003).
Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283 (1998).
The Court of Appeals modified the trial court’s findings and conclusions, as follows: (1) By declaring
the P1,069,847.40 alleged indebtedness of Ms. Sabeniano as non-existing for failure of Citibank to
substantiate its allegations; (2) By declaring that there are unpaid money market placements, current
accounts and savings account of Ms. Sabeniano; and (3) The awarding of damages in favor of Ms.
Sabeniano and against Citibank.
Supra note 11.
Records, Vol. III, pp. 1612-1613.
Penned by Associate Justice Andres B. Reyes with Associate Justices Conrado M. Vasquez, Jr. and
Amelita G. Tolentino, concurring; rollo, p. 344.
Section 3(m) of Rule 131 of the REVISED RULES OF COURT reads –
SEC. 3. Disputable presumptions. – The following presumptions are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence:
xxxx
(m) That official duty has been regularly performed.
317 Phil. 495, 501-503 (1995).
Records, Vol. I, p. 515.
32 Phil. 476, 478-479.
Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).
Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95 (1996).
Mr. Herminio Pujeda, at the time he testified before the RTC in 1990, was already the Vice President of
petitioner Citibank.
Mr. Francisco Tan, at the time of his deposition in 1990, was already working as Assistant General
Manager for Dai-Chi Kangyo Bank in Hong Kong.
TSN, 12 March 1990, pp. 6-10.
Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
TSN, 6 February 1990, Vol. V, pp. 16-24.
Exhibit “37,” defendants’ folder of exhibits, p. 106.
Exhibit “37-C,” id. at 107.
Exhibit “37-F,” id. at 108.
TSN, 12 March 1990, p. 13.
Exhibit “104-C,” defendants’ folder of exhibits, p. 111.

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[79]

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[92]
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[94]

[95]
[96]

Exhibit “105,” id. at 112.
Exhibit “106,” id. at 114.
Exhibit “108,” id. at 118.
Exhibits “112” and “119,” id. at 121-A, 124.
Records, Vol. III, p. 1367.
Exhibit “34-B,” petitioners’ folder of exhibits, p. 102.
Exhibit “G,” plaintiff’s folder of exhibits, pp. 4-15.
Records, Vol. III, p. 1,562.
Exhibit “J,” plaintiff’s folder of exhibits, p. 49.
Exhibit “120-H,” defendants’ folder of exhibits, pp. 131.
Exhibits “1” to “9,” id. at 44-52.
Exhibits “18” to “26,” id. at 83-92.
Exhibit “13-E,” id. at 65-67.
Exhibit “14-G,” id. at 72-74.
Exhibit “15” and “Exhibit 17-D,” id. at 77-78, 81-82.
Exhibit “38,” id. at 109-110.
Exhibit “K-1,” plaintiff’s folder of exhibits, pp. 54-55
Exhibit “27,” defendants’ folder of exhibits, p. 93.
Exhibit “28,” id. at 94.
Exhibit “29,” id. at 95.
Exhibit “30,” id. at 96.
Exhibit “31,” id. at 97.
Exhibit “32,” id. at 98.
Exhibits “34-B” and “34-C,” id. at 102-103.
Exhibit “34,” id. at 100.
Exhibit “121,” id. at 207.
TSN, 14 May 1991, Vol. XI , pp. 12-14.
TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 28-29.
Exhibit “QQQ,” plaintiff’s folder of exhibits, p. 117.
Exhibit “AAAA,” id. at 124.
TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.
Id. at 16-23.
TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-28.
Sarmiento v. Court of Appeals, 364 Phil. 613, 621 (1999).
Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538, 553 (2000), with reference to Tan v.
Court of Appeals, 239 Phil. 310, 322 (1994).
Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218 SCRA 682, 695.
403 Phil. 361, 383 (2001).
Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA 799, 311-312.
REVISED RULES OF COURT, Rule 131, Section 3(p).
Id., Rule 131, Section 3(q).
Id., Section 3.
Exhibit “19,” defendants’ folder of exhibits, p. 84.
Exhibits “9-D” and “9-G,” id. at 52.
Exhibit “9-F,” id. at 52.
TSN, 19 May 1986, Vol. II, p. 10.
Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA 465, 469-471.
Banco de Oro Savings and Mortgage Bank v Equitable Banking Corporation, G.R. No. 74917, 20
January 1988, 157 SCRA 188, 199.
NEGOTIABLE INSTRUMENTS LAW, Section 66, in connection with Section 65.
Associated Bank v. Court of Appeals, 322 Phil. 677, 697 (1996); Associated Bank v. Court of Appeals,
G.R. No. 89802, 7 May 1992, 208 SCRA 465, 472.
Plaintiff’s Formal Offer of Documentary Exhibits, records, Vol. I, pp. 504-505; plaintiff’s folder of
exhibits, p. 110.
Exhibits “GGG” and “JJJ,” plaintiff’s folder of exhibits, pp. 109, 113.
Plaintiff’s folder of exhibits, p. 110.

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See the initials on Exhibit “III-1,” plaintiff’s folder of exhibits, p. 112.
Plaintiff’s folder of exhibits, p. 112.
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.
Exhibit “MMM,” plaintiff’s folder of exhibits, p. 115.
Records, Vol. I, p. 507.
TSN, 28 November 1991, Vol. XIII, pp. 7-8.
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.
TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 13-16.
TSN, 22 May 1990, Vol. V, pp. 31-61.
TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol X, pp. 7-9.
TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp. 31-34.
TSN, 18 April 1991, Vol. X, pp. 3-13.
Id. at 15-23.
Folder of defendants’ exhibits, pp. 102-103.
Municipality of Moncada v. Cajuigan, 21 Phil 184, 190 (1912).
J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 31 (4th ed., 1995).
F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, p. 571 (8th ed., 2000).
F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, 571 (8th ed., 2000).
G.R. Nos. 146710-15, 3 April 2001, 356 SCRA 108, 137-138.
TSN, 13 March 1991, Vol X, pp. 7-9.
TSN, 22 May 1990, Vol. V, pp. 14-17.
Dr. Ricardo L. Dy and Rosalind O. Dy vs. Citibank, N.A.,CA-G.R. CV No. 15934, 15 January 1990,
penned by Associate Justice Nicolas P. Lapeña, Jr. with Associate Justices Santiago M. Kapunan and
Emeterio C. Cui, concurring.
REVISED RULES OF COURT, Rule 130, Section 34.
J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 199-200 (4th ed., 1995).
CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal of Manila, 213 Phil. 516,523-524 (1984).
CIVIL CODE, Article 1286.
G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313-314.
Anachuelo v. Intermediate Appellate Court, G.R. No. L-71391, 29 January 1987, 147 SCRA 434, 441442.
Antillon v. Barcelon, 37 Phil. 148, 150-151 (1917).
See Exhibits “13-E, “14-G,” “15-D,”and “17-D,” defendants’ folder of exhibits, pp. 65-67, 72-74, 77-78,
81-82.
TSN, 7 March 1991, Vol. IX, pp. 3-6.
Cuizon v. Court of Appeals, 329 Phil. 456, 482 (1996).
Exhibits “13-E, “14-G,” “15-D,” and “17-D,” defendants’ folder of exhibits, pp. 65-66, 72-73, 77-78, 8182.
Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396 (2000).
Exhibit “38,” defendants’ folder of exhibits, pp. 109-110.
Exhibit “K-1,” plaintiff’s folder of exhibits, 54-55.
REVISED RULES OF COURT, Rule 131, Section 3(u).
Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763 (1998).
Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes, records, Vol. I, p. 310; Order,
dated 2 September 1988, id. at penned by Judge Francisco X. Velez, records, Vol. I, p. 449; Order, dated 24
November 1988, penned by Judge Francisco X. Velez, records, Vol. I, p. 458; Order, dated 25 April 1989,
penned by Judge Francisco X. Velez, records, Vol. I, pp. 476-477
Security Bank & Trust Co. v. Triumph Lumber and Construction Corporation, 361 Phil. 463, 477 (1999).
REVISED RULES OF COURT, Rule 131, Section 3(e).
The stipulated interest shall apply as indemnity for the damages incurred in the delay of payment as
provided in Article 2209 of the CIVIL CODE which reads –
ART. 2209. If the obligation consists in the payment of a sum of money, and the debtor
incurs delay, the indemnity for damages, there being no stipulation to the contrary, shall

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be the payment of the interest agreed upon, and in the absence of a stipulation, the legal
interest, which is six percent per annum. [Emphasis supplied.]
Note, however, that the legal interest has been increased from six percent to twelve percent per annum by
virtue of Central Bank Circulars No. 416, dated 29 July 1974, and No. 905, dated 10 December 1982.
Radio Communications of the Philippines, Inc. v. National Labor Relations Commission, G.R. Nos.
101181-84, 22 June 1992, 210 SCRA 222, 226-227; Ortigas, Jr. v. Lufthansa German Airlines, G.R. No.
L-28773, 30 June 1975, 64 SCRA 610, 633-634; Hernandez v. Andal, 78 Phil. 196, 209-210 (1947).
THE GENERAL BANKING LAW OF 2000, Section 2.
Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948 (1999).
Simex International (Manila), Inc, vs. Court of Appeals, G.R. No. 88013, 19 March 1990, 183 SCRA
360, 367; Bank of Philippine Islands vs. Intermediate Appellate Court, G.R. No. 69162, 21 February 1992,
206 SCRA 408, 412-413.
TSN, 28 January 1986, Vol. I, pp. 5-7.
Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995 (1999); Zenith Insurance Corporation v. Court of
Appeals, G.R. No. 85296, 14 May 1990, 185 SCRA 398, 402-403.
Exemplary or corrective damages are imposed, by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages.
While the amount of exemplary damages need not be proved, the plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court may consider the question of whether or not
exemplary damages should be awarded. x x x
CIVIL CODE, Article 2208(1).
Ching Sen Ben vs. Court of Appeals, 373 Phil. 544, 555 (1999).
ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 498, 531-532 (1999); Tierra
International Construction Corp. v. National Labor Relations Commission, G.R. No. 88912, 3 July 1992,
211 SCRA 73, 81; Saba v. Court of Appeals, G.R. No. 77950, 24 August 1990, 189 SCRA 50, 55.

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