Citibank v Sebeniano

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378

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

G.R. No. 156132. October 16, 2006.
CITIBANK, N.A. (Formerly First National City Bank) and INVESTORS’ FINANCE
CORPORATION, doing business under the name and style of FNCB Finance,
petitioners, vs.MODESTA R. SABENIANO, respondent.
*

Actions; Pleadings and Practice; Forum Shopping; Motions for Extension of Time; The
Petition for Review would constitute the initiatory pleading before the Supreme Court, upon
the timely filing of which, the case before the Court commences, much in the same way a case
is initiated by the filing of a Complaint before the trial court—and, without such a Petition,
there is technically no case before the Court; A Motion for Extension of Time within which to
file a Petition for Review does not serve the same purpose as the Petition for Review itself. —
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
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*

FIRST DIVISION.

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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Same; Same; Same; Certification Against Forum Shopping;Contents; The Certification
against Forum Shopping is required to be attached to the initiatory pleading.—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 quasi-judicial 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.
Appeals; Findings of fact of the Court of Appeals are conclusive upon the Supreme
Court; Exceptions.—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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Judges; That the trial court judge who decided a case 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.—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. 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.
Evidence; Admissions; Documentary Evidence; Promissory Notes; By the admission of
the genuineness and due execution of an instrument 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 on it, that the document was delivered, and that any formal requisites
required by law, are waived by him; The effect of an 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. —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. In Hibberd v. Rohde and McMillian, 32 Phil. 476, this
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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 aprima 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
Same; Obligations and Contracts; Payments; 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.—Since the genuineness and due execution of
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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. 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.
Same; Witnesses; 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, the Court
is reluctant to give much weight to such bank officials’ testimonies regarding the payment of
promissory notes and the use of the proceeds thereof for opening time deposit accounts—the
Court finds it implausible that they should remember, after all these years, the particular
transaction with respondent involving her promissory notes and her time deposit accounts.—
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. 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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Same; Preponderance of Evidence; Words and Phrases; Preponderant evidence means
that, as a whole, the evidence adduced by one side outweighs that of the adverse party.—
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.
Banks and Banking; Checks; Manager’s Checks (MCs) are drawn by the bank’s
manager upon the bank itself and regarded to be as good as the money it represents.—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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
as the money it represents. Moreover, the MCs were crossed checks, with the words
“Payee’s Account Only.”
Same; Same; Crossed Checks; A crossed check cannot be presented to the drawee bank
for payment in cash—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 can only be deposited and the drawee bank may only pay to another bank
in the payee’s or indorser’s account.—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. The effect of crossing a check was described by this Court in Philippine
Commercial International Bank v. Court of Appeals, 350 SCRA 446 (2001)—[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.”
Same; Same; Same; Presumptions; 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, then, the possession by the
drawee bank of the said Manager’s Checks (MCs), duly stamped “Paid” gives rise to the
presumption that the said Manager’s Checks (MCs) were already paid out to the intended
payee.—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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
due to payment, 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.

Same; Same; Same; Same; It is presumed that private transactions have been fair and
regular, and that the ordinary course of business has been followed.—This Court finds
applicable herein the presumptions that private transactions have been fair and regular,
and that the ordinary course of business has been followed. 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.
Same; Same; Same; Same; Where checks crossed for payee’s account only were actually
deposited, cleared, and paid, then the presumption would be that the said checks were
properly deposited to the account of the payee, who was clearly named as such in the checks;
The mere fact that the Manager’s Checks (MCs) do not bear the payee’s signature at the back
does not negate deposit thereof in her account.—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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Same; Same; Same; 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.—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. 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, 181
SCRA 557 (1990), 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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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).
Same; Loans; Words and Phrases; Booking the loan means recording it in the General
Ledger.—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.
Evidence; Preponderance of Evidence; Words and Phrases; While it is well-settled 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 becomes the determining
factor.—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 well-settled 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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.)
Same; Best Evidence Rule; Words and Phrases; In general, the best evidence rule
requires that the highest available degree of proof must be produced, and, for documentary
evidence, the contents of a document are best proved by the production of the document itself,
to the exclusion of any secondary or substitutionary evidence.—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, to the exclusion of any secondary or substitutionary evidence. 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.
Same; Same; Even with respect to documentary evidence, the best evidence rule applies
only when the content of such document is the subject of the inquiry.—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
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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
Same; A basic rule of evidence 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.”—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.” 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
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90
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Banks and Banking; Compensation; Compensation takes place by operation of law.—
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 ormutuum by the depositor to the banking institution. 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, 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.
Evidence; Notarial Law; On the evidentiary value of notarized 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.—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, 217 SCRA 307 (1993), 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
391

VOL. 504, OCTOBER 16, 2006

39
1

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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]).
Same; Same; The certificate of acknowledgment in notarized Deeds of Assignment
constitutes prima facie evidence of the execution thereof.—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 or raised questions as to the verity of the notary public’s acknowledgment and
certificate in the Deeds. 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.
Same; Pledge; Although the pertinent documents were entitled Deeds of Assignment,
they were, in reality, more of a pledge.—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 off-set 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
392

3

SUPREME COURT REPORTS ANNOTATED

92
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Same; Same; Conflict of Laws; Processual Presumptions;Words and Phrases; In the
absence of any allegation and evidence presented 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.—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.
Same; Best Evidence Rule; Forgery; When a document is assailed on the basis of forgery,
the best evidence rule applies;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.—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
393

VOL. 504, OCTOBER 16, 2006

39
3

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Same; Presumptions; It is presumed that evidence willfully suppressed by a party would
be adverse to said party if the evidence is produced.—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, petitioner Citibank failed to comply with
the production of the original Declaration of Pledge. It is admitted that Citibank-Geneva
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 Citibank-Geneva 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. 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.

Appeals; Review of matters, even those not assigned as errors in the appeal, may be
authorized if the consideration thereof is necessary in arriving at a just decision of the case,
and there is a close interrelation between the omitted assignment of error and those actually
assigned and discussed by the appellant.—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 consid394

3

SUPREME COURT REPORTS ANNOTATED

94
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
ered, 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 interrelation between the omitted assignment of error and those actually assigned and
discussed by the appellant. 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.
Banks and Banking; Banking is impressed with public interest and its fiduciary
character requires high standards of integrity and performance—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.—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. 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. The bank must record every single transaction accurately, down to the last centavo,
and as promptly as possible. 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.
Damages; The award of moral damages is meant to compensate for the actual injury
suffered by a party, not to enrich her.—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
395

VOL. 504, OCTOBER 16, 2006

39
5

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
meant to compensate for the actual injury suffered by the respondent, not to enrich her.

PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Agcaoili & Associates for petitioners.

Angara, Abello, Concepcion, Regala & Cruz co-counsel for petitioners.
Moises R. Tolentino, Jr. for respondent.
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the Revised
Rules of Court, of the Decision of the Court of Appeals in CA-G.R. CV No. 51930,
dated 26 March 2002, and the Resolution, 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
1

2

3

_______________
1

Rollo, pp. 165-325.

2

Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Conrado M. Vasquez, Jr. and

Amelita G. Tolentino, concurring;Id., at pp. 327-366.
3

Id., at pp. 368-374.

396

396

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.
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 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 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 and Answer to Amended Complaint, filed on 12 September
1985 and 6 November 1985, respectively, petitioners admitted that respondent had
4

5

6

7

8

deposits and money market placements with them, including dollar accounts in the
Citibank branch in Geneva, Switzerland (Citibank-Geneva). Petitioners further
alleged that the respondent
_______________
4

TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.

5

Records, Vol. I, pp. 1-8.

6

Id., at pp. 148-157.

7

Id., at pp. 40-51.

8

Id., at pp. 208-227.

397

VOL. 504, OCTOBER 16, 2006
397
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 Citibank-Geneva, 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 offset 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, 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 was finally rendered in Civil Case No. 11336 on 24 August 1995 by the
fourth Judge who handled the said case,
9

10

11

_______________
9

Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes, Records, Vol. I, p. 346.

10

Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 1607-1621.

11

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
398

398

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 set-off 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 set-off 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.”
_______________
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).
399

VOL. 504, OCTOBER 16, 2006
399
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 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—
12

“Wherefore, premises considered, the assailed 24 August 1995Decision 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 plaintiff-appellant 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 con_______________
12

Rollo, pp. 365-366.

400

400

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
tending parties as evidenced by the certificates of investments, to wit:
1. (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.;
2. (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.;
3. (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.;
4. (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;
5. (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
401

VOL. 504, OCTOBER 16, 2006
401
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

Petition for Review, which, after payment of the docket and other lawful fees, was
assigned the docket numberG.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
13

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 for Certiorari 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. Respondent failed to file any Petition for Review within the
prescribed period for appeal and, hence, this Court issued a Resolution, dated 13
November 2002, in which it pronounced that—
14

15

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 THISCASE
TERMINATED and DIRECT the Division Clerk of Court to INFORM the parties that the
judgment sought to be reviewed has become final and executory.
_______________
13

Rollo of G.R. No. 152985, pp. 3-4.

14

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; 4 SCRA 135, 138 [1962]).
15

Rollo of G.R. No. 156132, p. 1227.

402

402

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

The said Resolution was duly recorded in the Book of Entriesof 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, dated 20 November 2002,
modifying its Decision of 26 March 2002, as follows—
16

“WHEREFORE, premises

considered,

the

instant Motion

for

Reconsideration is PARTIALLY GRANTED as Sub-paragraph (V) paragraph 3 of the
assailed Decision’s dispositive portion is hereby ordered DELETED.
The
challenged
26
March
isAFFIRMED 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 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 to reinstate the Petition.
17

18

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.
_______________
16

Rollo, p. 374.

17

Resolution, dated 29 January 2003; Rollo, pp. 980-A-B.

18

Resolution, dated 23 June 2003; Id., at pp. 1311-1312.

403

VOL. 504, OCTOBER 16, 2006
403
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 toG.R. No. 152985, respon-dent’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
404

404

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

Decision, dated 26 March 2002; and she can no longer refute or assail any part
thereof.
This Court already explained the matter to respondent when it issued a
Resolution 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—
19

20

[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
ourResolution of June 23, 2003. Sabeniano filed a Comment dated July 17, 2003 to which
Citibank and FNCB Finance filed a Replydated 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
_______________
19

Firestone Tire and Rubber Company of the Philippines v. Tempongko,137 Phil. 239, 244; 27 SCRA

418, 422 (1969); Singh v. Liberty Insurance Corp., 118 Phil. 532, 535; 8 SCRA 517, 519-520 (1963).
20

Rollo, pp. 1443-1445.

405

VOL. 504, OCTOBER 16, 2006
405
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

party, then not actually filing the intended Petition. 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,
21

_______________
21

See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438; 70 SCRA 329 [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.
406

406

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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. To guard against this
deplorable practice, Rule 7, Section 5 of the revised Rules of Court imposes the
following requirement—
22

23

“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
_______________
22

The Executive Secretary v. Gordon, 359 Phil. 266, 271; 298 SCRA 736, 740 (1998).

23

Young v. John Keng Seng, 446 Phil. 823, 833; 398 SCRA 629, 638 (2003).

407

VOL. 504, OCTOBER 16, 2006
407
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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
408

408

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 re-spondent’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 quasi-judicial 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.
409

VOL. 504, OCTOBER 16, 2006
409
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.
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, thus, result24

25

_______________
24

Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283; 285 SCRA 351, 357-358 (1998).

25

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
410

410

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

ing 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. It was Judge Victorio, the fourth judge assigned to
the case, who wrote the RTC Decision, dated 24 August 1995. In his
Decision, Judge Victorio made the following findings—
26

27

“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
_______________
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.
26

Supra note 11.

27

Records, Vol. III, pp. 1612-1613.

411

VOL. 504, OCTOBER 16, 2006
411
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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
assailedDecision is not the Presiding Judge who heard and tried the case.” 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?
28

_______________
28

Penned by Associate Justice Andres B. Reyes with Associate Justices Conrado M. Vasquez, Jr. and

Amelita G. Tolentino, concurring; Rollo, p. 344.
412

412

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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, this Court already elucidated its position on such an issue

29

30

“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
_______________
29

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.
30

317 Phil. 495, 501-503; 247 SCRA 414, 419-420 (1995).

413

VOL. 504, OCTOBER 16, 2006
413
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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
414

414

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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—

415

VOL. 504, OCTOBER 16, 2006
415
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
Deposit/Placement
Amount     
Dollar deposit with Citibank­Geneva
$ 149,632.99
Money market placement with Citibank, evidenced 
by Promissory Note (PN) No. 23356 (which cancels 
and supersedes PN No. 22526), earning 14.5%
P
interest per annum (p.a.)
318,897.34
Money market placement with Citibank, evidenced by 
PN No. 23357 (which cancels and supersedes PN No. 
22528), 
P
earning 14.5% interest p.a.
203,150.00
Money market placement with FNCB Finance, evidenced 
by PN No. 5757 (which cancels and supersedes PN No. 
4952), 
P
earning 17% interest p.a.
500,000.00
Money market placement with FNCB Finance, evidenced 
by PN No. 5758 (which cancels and supersedes PN No. 
2962), 
P
earning 17% interest p.a.
500,000.00

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 re416

416

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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—
Date 
(mm/dd/
yyyy)

PN No.

Cancels
PN No.

12/06/1976
01/14/1977
02/09/1977

20773
21686
22526
22528
23356
23357

None
20773
21686
21686
22526
22528

03/17/1977

Maturity 
Date 
(mm/dd/
yyyy)
01/13/1977
02/08/1977
03/16/1977
03/16/1977
04/20/1977
04/20/1977

Amount 
(P)

Interest
(p.a.)

500,000.00
508,444.44
313,952.59
200,000.00
318,897.34
203,150.00

16%
15%
15­3/4%
15­3/4%
14­1/2%
14­1/2%

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 out-standing. In Hibberd v. Rohde and
McMillian, this Court delineated the consequences of such an admission—
31

32

_______________
31

Records, Vol. I, p. 515.

32

32 Phil. 476, 478-479.

417

VOL. 504, OCTOBER 16, 2006
417
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
“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

418

418

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. It has already been established by this Court that—
33

“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, the officer-in-charge of
loans and placements at the time when the questioned transactions took
35

_______________
33

Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).

34

Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95;256 SCRA 84, 89-90 (1996).

35

Mr. Herminio Pujeda, at the time he testified before the RTC in 1990, was already the Vice President

of petitioner Citibank.
419

VOL. 504, OCTOBER 16, 2006
419
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

place; and (2) that of Mr. Francisco Tan, the former Assistant Vice-President of
Citibank, who directly dealt with respondent with regard to her deposits and loans.
The relevant portion 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

36

37

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 officer­in 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.
_______________
36

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.
37

TSN, 12 March 1990, pp. 6-10.

420

420

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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 Exhs. “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.

421

VOL. 504, OCTOBER 16, 2006
421
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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: 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?
Mr. Tan: Yes, Sir.
Atty. Mabasa: Alright, after these Exhibits “E” and “F” matured, what happened
thereafter?
Mr. Tan: Split into two time deposits.
Atty. Mabasa: 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. 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,
38

_______________
38

Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).

422

422

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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, petitioners’
counsel attempted to present in evidence a document that would supposedly support
the claim of peti39

_______________
39

TSN, 6 February 1990, Vol. V, pp. 16-24.

423

VOL. 504, OCTOBER 16, 2006
423
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

tioner 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.
424

424

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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, pre-terminated 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 and 199251 for the
amounts of P500,000.00 and P600,00.00, respectively. Both MCs were payable to
Citifinance (which, according to Mr. Pujeda, 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
40

41

42

43

_______________
40

Exhibit “37,” defendants’ folder of exhibits, p. 106.

41

Exhibit “37-C,” Id., at p. 107.

42

Exhibit “37-F,” Id., at p. 108.

43

TSN, 12 March 1990, p. 13.

425

VOL. 504, OCTOBER 16, 2006
425
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

amounts of her money market placements with petitioner FNCB Finance, as follows

Date 
(mm/dd/
yyyy)
04/29/1977
06/02/1977

PN No.

Cancels
PN No.

Maturity Date 
(mm/dd/yyyy)

Amount 
(P)

Interest
(p.a.)

4952
4962
5757
5758

None
None
4952
4962

06/01/1977
06/01/1977
08/31/1977
08/31/1977

500,000.00
600,000.00
500,000.00
500,000.00

17%
17%
17%
17%

Date 
(mm/dd/
yyyy)
08/31/1977

PN No.

Cancels
PN No.

Maturity Date 
(mm/dd/yyyy)

Amount 
(P)

Interest
(p.a.)

8167
8169

5757
5752

08/25/1978
08/25/1978

500,000.00
500,000.00

14%
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; 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 expressly canceled and superseded PN No. 5757, while PN No. 8169 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.
44

45

46

_______________
44

Exhibit “104-C,” defendants’ folder of exhibits, p. 111.

45

Exhibit “105,” Id., at p. 112.

46

Exhibit “106,” Id., at p. 114.

426

426

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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
09/01/1978
09/05/1978

09/05/ 1978

Check Amount 
No.
(P)

Notation

76962 12,833.34 Interest payment on PN#08167
76961 12,833.34 Interest payment on PN#08169
77035 500,000.00 Full payment of principal on 
PN#08167 which is hereby 
cancelled
77034 500,000.00 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, 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
47

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,
_______________
47

Exhibit “108,” Id., at p. 118.

427

VOL. 504, OCTOBER 16, 2006
427
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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. 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
48

49

_______________
48

Exhibits “112” and “119,” Id., at pp. 121-A, 124.

49

Records, Vol. III, p. 1367.

428

428

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.
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
50

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 CitibankGeneva, purportedly amounting to a total of United States (US) $343,220.98, as of
23 June 1985. 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. 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. Citibank51

52

53

_______________
50

Exhibit “34-B,” petitioners’ folder of exhibits, p. 102.

51

Exhibit “G,” plaintiff’s folder of exhibits, pp. 4-15.

52

Records, Vol. III, p. 1, 562.

53

Exhibit “J,” plaintiff’s folder of exhibits, p. 49.

429

VOL. 504, OCTOBER 16, 2006
429
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

Geneva accounted for respondent’s money market placements and dollar accounts as
follows—
US$
+
US$
­ US$
US$
US$
+
US$
­ US$
US$
US$
+
US$
US$
­ US$
 
US$
­ US$

MODESTA SABENIANO &/OR
30’000.­ Principal Fid. Placement
339.06 Interest at 3,875% p.a. from 12.07.—25.10.79
95.­
30’244.06
114’000.­
1’358.50

Commission (minimum)
Total proceeds on 25.10.1979
Principal Fid. Placement
Interest at 4,125% p.a. from 12.07.—25.10.79

41.17
115’317.3
3
145’561.3
9
11’381.31

Commission
Total proceeds on 25.10.1979

156’942.7
0
149’632.9
9
 
7’309.71
6’998.84

Total funds available

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

Transfer to Citibank Manila on 26.10.1979
(counter value of Pesos 1’102’944.78)
Balance in current accounts
Transfer to Citibank Zuerich—ac no. 121359 on 
March 13, 1980

MODESTA SABENIANO &/OR
310.87 various charges including closing charges

US$

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 offset 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,
430

430

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

which was subsequently expended by a transfer to another account with CitibankZuerich, 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 Citibank­Geneva

Amount

 
P
1,022,916.66
31,079.14
 

431

VOL. 504, OCTOBER 16, 2006
431
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
(peso equivalent
 
Of US$149,632.99)
1,102,944.78
Total
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. 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.
54

Significant to the Petition at bar are the loans which respondent obtained from July
1978 to January 1979, appropriately covered by PNs (first set). The aggregate
principal amount of these loans was P1,920,000.00, which could be broken down as
follows—
55

PN
No.
32935
33751
33798
34025
34079
34192
34402
34534
34609
34740
Total

Date of Issuance
(mm/dd/yyyy)
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
 

Date of Maturity
(mm/dd/yyyy)
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
 

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
P1,920,000.00

Date of Release
(mm/dd/yyyy)
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
 

MC
No.
220701
226285
226439
226467
228057
228203
228270
228357
228400
 

_______________
54

Exhibit “120-H,” defendants’ folder of exhibits, p. 131.

55

Exhibits “1” to “9,” Id., at pp. 44-52.

432

432

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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), the principal amount of which remained at
P1,920,000.00—
56

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
P1,920,000.00

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 of PN No. 8169, which was issued by petitioner
FNCB Finance, to secure payment of the credit and banking facilities extended to
57

her by petitioner Citibank, in the aggregate principal amount of P500,000.00. On 9
March 1978, respondent executed in favor of petitioner
_______________
56

Exhibits “18” to “26,” Id., at pp. 83-92.

57

Exhibit “13-E,” Id., at pp. 65-67.

433

VOL. 504, OCTOBER 16, 2006
433
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

Citibank another Deed of Assignment, 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, 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, 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.
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.
58

59

60

61

_______________
58

Exhibit “14-G,” Id., at pp. 72-74.

59

Exhibit “15” and “Exhibit 17-D,” Id., at pp. 77-78, 81-82.

60

Exhibit “38,” Id., at pp. 109-110.

61

Exhibit “K-1,” plaintiff’s folder of exhibits, pp. 54-55.

434

434

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

The first letter 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.
62

Respondent sent a reply letter dated 26 April 1979, printed on paper bearing the
letterhead of respondent’s company, MC Adore International Palace, the body of
which reads—
63

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 to petitioner
64

_______________
62

Exhibit “27,” defendants’ folder of exhibits, p. 93.

63

Exhibit “28,” Id., at p. 94.

64

Exhibit “29,” Id., at p. 95.

435

VOL. 504, OCTOBER 16, 2006
435
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 recomputation 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, 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, dated 21 June 1979, was signed by respondent herself and
addressed to Mr. Bobby Mendoza, a Manager of petitioner FNCB Finance.
Respondent wrote therein—
65

66

_______________

65

Exhibit “30,” Id., at p. 96.

66

Exhibit “31,” Id., at p. .97.

436

436

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
Re:
PN
No.
20138
for
P500,000.00
&
PN
No.
20139
for
P500,000.00
totalling
P1
Mil
lion, 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 to Mr. Tan of petitioner Citibank,
stating that—
67

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, as follows—
68

_______________
67

Exibit “32,” Id., at p. 98.

68

Exhibits “34-B” and “34-C,” Id., at pp. 102-103.

437

VOL. 504, OCTOBER 16, 2006
437
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
Respondent’s outstanding obligation (principal and 
P
interest)
2,123,843.20
     Less Proceeds from respondent’s money market 
(1,022,916.66)
:
placements 
with petitioner FNCB Finance (principal and 
interest)
 
Deposits in respondent’s bank accounts with 
(31,079.14)
petitioner 
Citibank
Balance of respondent’s obligation
P
1,069,847.40

Mr. Tan of petitioner Citibank subsequently sent a letter, 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
69

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 off-set the unpaid amount with
respondent’s other collateral, particularly, a money market placement in CitibankHongkong.
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
_______________
69

Exhibit “34,” Id., at p. 100.

438

438

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 CitibankGeneva, 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 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.
Respondent’s version of events
70

71

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
_______________
70

Exhibit “121,” Id., at p. 207.

71

TSN, 14 May 1991, Vol. XI, pp. 12-14.

439

VOL. 504, OCTOBER 16, 2006
439
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. To prove payment of these loans, respondent presented two
provisional receipts of petitioner Citibank—No. 19471, dated 11 August 1978, and
No. 12723, 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.
Respondent likewise questioned the MCs presented by petitioners, except for one
(MC No. 228270 in particular), as
72

73

74

75

_______________
72

TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 28-29.

73

Exhibit “QQQ,” plaintiff’s folder of exhibits, p. 117.

74

Exhibit “AAAA,” Id., at p. 124.

75

TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.

440

440

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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). 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
76

_______________
76

Id., at pp. 16-23.

441

VOL. 504, OCTOBER 16, 2006
441
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.”
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 offset 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.
Respondent’s outstanding obligation for P1,920,000.00 had been sufficiently
documented by petitioner Citibank.
77

78

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
_______________
77

TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-28.

78

Sarmiento v. Court of Appeals, 364 Phil. 613, 621; 305 SCRA 138, 146 (1999).

442

442

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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. The effect of crossing
a check was described by this Court in Philippine Commercial International Bank v.
Court of Appeals —
79

80

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
_______________
79

Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538, 553; 326 SCRA 641, 656 (2000),

with reference to Tan v. Court of Appeals,239 SCRA 310, 322 (1994).
80

Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218 SCRA 682, 695.

81

403 Phil. 361, 383; 350 SCRA 446, 467 (2001).

443

VOL. 504, OCTOBER 16, 2006
443
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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, then, the
possession by petitioner Citibank of the said MCs, duly stamped “Paid” gives rise to
82

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, and that the ordinary course of business has been
followed. 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. Respondent, however, was unable to present sufficient and credible
evidence to dispute these presumptions.
83

84

85

_______________
82

Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA 799, 311-312.

83

REVISED RULES OF COURT, Rule 131, Section 3(p).

84

Id., Rule 131, Section 3(q).

85

Id., Section 3.

444

444

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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. The
check also bore the signature of respondent at the back. 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.
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
86

87

88

89

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
_______________
86

Exhibit “19,” defendants’ folder of exhibits, p. 84.

87

Exhibits “9-D” and “9-G,” Id., at p. 52.

88

Exhibit “9-F,” Id., at p. 52.

89

TSN, 19 May 1986, Vol. II, p. 10.

445

VOL. 504, OCTOBER 16, 2006
445
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.
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, 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
90

91

_______________
90

Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992,208 SCRA 465, 469-471.

91

Banco de Oro Savings and Mortgage Bank v Equitable Banking Corporation, G.R. No. 74917, 20

January 1988, 157 SCRA 188, 199.
446

446

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

and subsisting. 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.
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 invest92

93

_______________
92

NEGOTIABLE INSTRUMENTS LAW, Section 66, in connection with Section 65.

93

Associated Bank v. Court of Appeals, 322 Phil. 677, 697; 252 SCRA 620, 630-631 (1996); Associated

Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA 465, 472.
447

VOL. 504, OCTOBER 16, 2006
447
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

ment from one of these placements. 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
94

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.
_______________
94

Plaintiff’s Formal Offer of Documentary Exhibits, Records, Vol. I, pp. 504-505; plaintiff’s folder of

exhibits, p. 110.
448

448

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 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 “HHH1” 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. Second, according to
95

96

97

_______________
95

Exhibits “GGG” and “JJJ,” plaintiff’s folder of exhibits, pp. 109, 113.

96

Plaintiff’s folder of exhibits, p. 110.

97

See the initials on Exhibit “III-1,” plaintiff’s folder of exhibits, p. 112.

449

VOL. 504, OCTOBER 16, 2006
449
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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, 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
98

_______________
98

Plaintiff’s folder of exhibits, p. 112.

450

450

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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
451

VOL. 504, OCTOBER 16, 2006
451
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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, 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).”
99

100

_______________
99
100

TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.

452

452

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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. 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. 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. Respondent essentially admitted executing the second set of PNs, but
they were only meant to cover simu101

102

103

104

_______________
101

Exhibit “MMM,” plaintiff’s folder of exhibits, p. 115.

102

Records, Vol. I, p. 507.

103

TSN, 28 November 1991, Vol. XIII, pp. 7-8.

104

TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.

453

VOL. 504, OCTOBER 16, 2006
453
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

lated 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,
454

454

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

at least in the second set, were signed by respondent in his presence.
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.
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.
105

106

107

_______________
105

TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 13-16.

106

TSN, 22 May 1990, Vol. V, pp. 31-61.

107

TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol. X, pp. 7-9.

455

VOL. 504, OCTOBER 16, 2006
455
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.
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
108

_______________
108

TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp. 31-34.

456

456

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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. 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.”
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.
109

110

111

_______________
109

TSN, 18 April 1991, Vol. X, pp. 3-13.

110

Id., at pp. 15-23.

111

Folder of defendants’ exhibits, pp. 102-103.

457

VOL. 504, OCTOBER 16, 2006
457
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 well-settled 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, to the exclusion
of any secondary or substitutionary evidence.
113

114

_______________
112

Municipality of Moncada v. Cajuigan, 21 Phil. 184, 190 (1912).

113

J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE31 (4th ed., 1995).

114

F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, p. 571 (8th ed., 2000).

458

458

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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:
1. (a)When the original has been lost or destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;
2. (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;
3. (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
4. (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.
459

VOL. 504, OCTOBER 16, 2006
459
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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, this Court had occasion to rule that—
116

“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
_______________
115

F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, 571 (8th ed., 2000).

116

G.R. Nos. 146710-15, 3 April 2001, 356 SCRA 108, 137-138.

460

460

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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
117

_______________
117

TSN, 13 March 1991, Vol X, pp. 7-9.

461

VOL. 504, OCTOBER 16, 2006
461
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.
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 roll-over.
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.
118

_______________
118

TSN, 22 May 1990, Vol. V, pp. 14-17.

462

462

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 inCA-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 inCA-G.R. CV No. 15934 were affirmed in toto by the Highest
Magistrate in a Minute Resolution dated 22 August 1990 entitledCitibank, 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 CA-G.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 of its Third Division in CA-G.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 par119

_______________
119

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. Ka-punan and
Emeterio C. Cui, concurring.
463

VOL. 504, OCTOBER 16, 2006
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

ties 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
464

464

SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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.” The rationale for the rule is
explained thus—
120

“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
_______________
120

REVISED RULES OF COURT, Rule 130, Section 34.

121

J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE199-200 (4th ed., 1995).

465

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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 respon-dent’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. (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. (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. (3)That the two debts be due;
4. (4)That they be liquidated and demandable;
5. (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
466

466

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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, 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
122

123

_______________
122

CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal of Manila,213 Phil. 516, 523-524; 128 SCRA

577, 584 (1984).
123

CIVIL CODE, Article 1286.

467

VOL. 504, OCTOBER 16, 2006
467
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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—
468

468

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
“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, which
reads—
124

“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 or
raised questions as to the verity of the notary public’s acknowledgment and
certificate in the Deeds. 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,
125

126

_______________
124

G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313-314.

125

Anachuelo v. Intermediate Appellate Court, G.R. No. L-71391, 29 January 1987, 147 SCRA 434, 441-

442.
126

Antillon v. Barcelon, 37 Phil. 148, 150-151 (1917).

469

VOL. 504, OCTOBER 16, 2006
469
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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.
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. Standard clauses in all of
the Deeds provide that—
127

128

129

The ASSIGNOR and the ASSIGNEE hereby further agree as follows:
xxxx
_______________

127

See Exhibits “13-E, “14-G,” “15-D,”and “17-D,” defendants’ folder of exhibits, pp. 65-67, 72-74, 77-78,

81-82.
128

TSN, 7 March 1991, Vol. IX, pp. 3-6.

129

Cuizon v. Court of Appeals, 329 Phil. 456, 482; 260 SCRA 645, 662 (1996).

470

470

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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 off-set 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.”
_______________
130

Exhibits “13-E,” “14-G,” “15-D,” and “17-D,” defendants’ folder of exhibits, pp. 65-66, 72-73, 77-78, 81-

82.
471

VOL. 504, OCTOBER 16, 2006
471
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 Citibank-Geneva 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.
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 execu131

_______________
131

Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396; 342 SCRA 213, 223 (2000).

472

472

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

tion 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. 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. 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
132

133

_______________
132

Exhibit “38,” defendants’ folder of exhibits, pp. 109-110.

133

Exhibit “K-1,” plaintiff’s folder of exhibits, 54-55.

473

VOL. 504, OCTOBER 16, 2006
473
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

dated. 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—
134

“The pledge right herewith constituted shall secure all claims which the Bank now has or in
the future acquires againstCitibank, 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
_______________
134

REVISED RULES OF COURT, Rule 131, Section 3(u).

474

474

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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, petitioner Citibank failed to comply with the production of the original
Declaration of Pledge. It is admitted that Citibank-Geneva 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 Citibank-Geneva to return, albeit temporarily, the original
Declaration of Pledge. Petitioner Citibank did not present any evidence to convince
this Court that it had ex136

_______________
135

Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763;300 SCRA 565, 574 (1998).

136

Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes, Records, Vol. I, p. 310; Order,

dated 2 September 1988, Id. and 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.
475

VOL. 504, OCTOBER 16, 2006
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Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

erted 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. 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.
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
137

138

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
_______________
137

Security Bank & Trust Co. v. Triumph Lumber and Construction Corporation, 361 Phil. 463,

477; 301 SCRA 537, 550 (1999).
138

REVISED RULES OF COURT, Rule 131, Section 3(e).

476

476

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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, 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.
139

_______________
139

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 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.
477

VOL. 504, OCTOBER 16, 2006
477
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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.
140

_______________
140

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. L28773, 30 June 1975, 64 SCRA 610, 633-634; Hernandez v. Andal, 78 Phil. 196, 209-210 (1947).
478

478

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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 CitibankGeneva 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. 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. The bank must record every single
transaction accurately, down to the last centavo, and as promptly as
possible. 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 before the RTC, respondent narrated—
141

142

143

144

_______________
141

THE GENERAL BANKING LAW OF 2000, Section 2.

142

Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948;315 SCRA 309, 314 (1999).

143

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.
144

TSN, 28 January 1986, Vol. I, pp. 5-7.

479

VOL. 504,
479
OCTOBER 16,
2006
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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 Chairm an 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 Vice­President 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 Mayor last January 30, 1980.
Q
Where?
A
In Dagupan City, Pangasinan.
Q
What else?
480

480

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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?
They are not all operating, in short, I was hampered to push through 
the businesses that I have.
[sic] Of all the businesses and enterprises that you mentioned what 
are those that are paralyzed and what remain inactive?
Of all the company [sic] that I have, only the Disto Company that is 
now operating in California.
How about your candidacy as Mayor of Dagupan, [sic] City, and 
later as Assemblywoman of Region I, what happened to this?
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.
Now, do these things also affect your social and civic activities?
Yes sir, definitely.
How?
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.

A
A
A
Q
A

Q
A
Q
A

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
481

VOL. 504, OCTOBER 16, 2006
481
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

the actual injury suffered by the respondent, not to enrich her.
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 and
2234 of the Civil Code.
With the award of exemplary damages, then respondent shall also be entitled to
an award of attorney’s fees. 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. 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.
145

146

147

148

149

150

_______________
145

Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995; 317 SCRA 527, 541 (1999); Zenith Insurance

Corporation v. Court of Appeals, G.R. No. 85296, 14 May 1990, 185 SCRA 398, 402-403.

146

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.
147

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
148

CIVIL CODE, Article 2208(1).

149

Ching Sen Ben vs. Court of Appeals, 373 Phil. 544, 555; 314 SCRA 762, 772-773 (1999).

150

ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 498, 531-532; 301 SCRA 572, 604

(1999); Tierra International Construction Corp. v. National Labor Relations Commission, G.R.
482

482

SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

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. 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. 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. 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. 4.Respondent is ORDERED to pay petitioner Citibank the balance of her
outstanding loans, which, from the respec
_______________
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.

483

VOL. 504, OCTOBER 16, 2006
483
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

1. tive 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.
Panganiban (C.J.,
Chairperson), Ynares-Santiago,AustriaMartinez and Callejo, Sr., JJ., concur.
Petition partly granted, assailed decision and resolution affirmed with
modification.
Notes.—It is the collecting bank which is bound to scrutinize the check and to
know its depositors before it could make the clearing indorsement “all prior
indorsements and/or lack of indorsement guaranteed.” (Philippine Commercial
International Bank vs. Court of Appeals, 350 SCRA 446 [2001])
A treasurer of a corporation whose negligence in signing a confirmation letter for
rediscounting of crossed checks, knowing fully well that the checks were strictly
endorsed for deposit only to the payee’s account and not to be further negotiated,
resulted in damage to the corporation may be personally liable therefor. (Atrium
Management Corporation vs. Court of Appeals, 353 SCRA 23 [2001])
——o0o——
484

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