FIRST DIVISION

CITIBANK, N.A. (Formerly G.R. No. 156132

First National City Bank) and
INVESTORS FINANCE Present:
CORPORATION, doing business
under the name and style of FNCB PANGANIBAN, C.J.
Finance, Chairperson,
Petitioners, YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
- versus- CHICO-NAZARIO, JJ.

Promulgated:
MODESTA R. SABENIANO,
Respondent. October 16, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari,[1] under Rule 45 of the
Revised Rules of Court, of the Decision[2] of the Court of Appeals in CA-G.R. CV No.
51930, dated 26 March 2002, and the Resolution,[3] dated 20 November 2002, of the
same court which, although modifying its earlier Decision, still denied for the most part
the Motion for Reconsideration of herein petitioners.

Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a banking
corporation duly authorized and existing under the laws of the United States of America
and licensed to do commercial banking activities and perform trust functions in the
Philippines.
 Petitioner Investors Finance Corporation, which did business under the name and
style of FNCB Finance, was an affiliate company of petitioner Citibank, specifically
handling money market placements for its clients. It is now, by virtue of a merger, doing
business as part of its successor-in-interest, BPI Card Finance Corporation. However, so
as to consistently establish its identity in the Petition at bar, the said petitioner shall still
be referred to herein as FNCB Finance.[4]

Respondent Modesta R. Sabeniano was a client of both petitioners Citibank and

FNCB Finance. Regrettably, the business relations among the parties subsequently went
awry.

On 8 August 1985, respondent filed a Complaint[5] against petitioners, docketed

as Civil Case No. 11336, before the Regional Trial Court (RTC) of Makati
City.Respondent claimed to have substantial deposits and money market placements
with the petitioners, as well as money market placements with the Ayala Investment and
Development Corporation (AIDC), the proceeds of which were supposedly deposited
automatically and directly to respondents accounts with petitioner Citibank. Respondent
alleged that petitioners refused to return her deposits and the proceeds of her money
market placements despite her repeated demands, thus, compelling respondent to file
Civil Case No. 11336 against petitioners for Accounting, Sum of Money and
Damages. Respondent eventually filed an Amended Complaint[6] on 9 October 1985 to
include additional claims to deposits and money market placements inadvertently left
out from her original Complaint.

In their joint Answer[7] and Answer to Amended Complaint,[8] filed on 12

September 1985 and 6 November 1985, respectively, petitioners admitted that
respondent had deposits and money market placements with them, including dollar
accounts in the Citibank branch in Geneva, Switzerland (Citibank-Geneva). Petitioners
further alleged that the respondent later obtained several loans from petitioner Citibank,
for which she executed Promissory Notes (PNs), and secured by (a) a Declaration of
Pledge of her dollar accounts in 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 off-set or compensate respondents 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 respondents 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 attorneys
fees.

When the parties failed to reach a compromise during the pre-trial hearing, [9] trial
proper ensued and the parties proceeded with the presentation of their respective
evidence. Ten years after the filing of the Complaint on 8 August 1985, a
Decision[10] was finally rendered in Civil Case No. 11336 on 24 August 1995 by the
fourth Judge[11]who handled the said case, Judge Manuel D. Victorio, the dispositive
portion of which reads

WHEREFORE, in view of all the foregoing, decision is hereby rendered

as follows:

(1) Declaring as illegal, null and void the setoff effected by the defendant
Bank [petitioner Citibank] of plaintiffs [respondent Sabeniano] dollar deposit
with Citibank, Switzerland, in the amount of US$149,632.99, and ordering the
said defendant [petitioner Citibank] to refund the said amount to the plaintiff with
legal interest at the rate of twelve percent (12%) per annum, compounded yearly,
from 31 October 1979 until fully paid, or its peso equivalent at the time of
payment;

(2) Declaring the plaintiff [respondent Sabeniano] indebted to the

defendant Bank [petitioner Citibank] in the amount of P1,069,847.40 as of 5
September 1979 and ordering the plaintiff [respondent Sabeniano] to pay said
amount, however, there shall be no interest and penalty charges from the time the
illegal setoff was effected on 31 October 1979;
 (3) Dismissing all other claims and counterclaims interposed by the parties
against each other.

Costs against the defendant Bank.

All the parties appealed the foregoing Decision of the RTC to the Court of Appeals,
docketed as CA-G.R. CV No. 51930. Respondent questioned the findings of the RTC
that she was still indebted to petitioner Citibank, as well as the failure of the RTC to
order petitioners to render an accounting of respondents deposits and money market
placements with them. On the other hand, petitioners argued that petitioner Citibank
validly compensated respondents outstanding loans with her dollar accounts with
Citibank-Geneva, in accordance with the Declaration of Pledge she executed in its
favor. Petitioners also alleged that the RTC erred in not declaring respondent liable for
damages and interest.

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

Wherefore, premises considered, the assailed 24 August 1995 Decision of

the court a quo is hereby AFFIRMED with MODIFICATION, as follows:

1. Declaring as illegal, null and void the set-off effected by the defendant-
appellant Bank of the plaintiff-appellants 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-

appellants money market placements, savings account and current accounts, the
former is hereby ordered to return the same, in accordance with the terms and
conditions agreed upon by the contending parties as evidenced by the certificates
of investments, to wit:
 (i) Citibank NNPN Serial No. 023356 (Cancels and
Supersedes NNPN No. 22526) issued on 17 March
1977, P318,897.34 with 14.50% interest p.a.;

(ii) Citibank NNPN Serial No. 23357 (Cancels and

Supersedes NNPN No. 22528) issued on 17 March
1977, P203,150.00 with 14.50 interest p.a.;

(iii) FNCB NNPN Serial No. 05757 (Cancels and

Supersedes NNPN No. 04952), issued on 02 June
1977, P500,000.00 with 17% interest p.a.;

(iv) FNCB NNPN Serial No. 05758 (Cancels and

Supersedes NNPN No. 04962), issued on 02 June
1977, P500,000.00 with 17% interest per annum;

(v) The Two Million (P2,000,000.00) money market

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

4. Ordering defendants-appellants to jointly and severally pay the plaintiff-

appellant the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00) by
way of moral damages, FIVE HUNDRED THOUSAND PESOS (P500,000.00)
as exemplary damages, and ONE HUNDRED THOUSAND PESOS
(P100,000.00) as attorneys fees.

Apparently, the parties to the case, namely, the respondent, on one hand, and the
petitioners, on the other, made separate attempts to bring the aforementioned Decision of
the Court of Appeals, dated 26 March 2002, before this Court for review.

G.R. No. 152985

Respondent no longer sought a reconsideration of the Decision of the Court of Appeals

in CA-G.R. CV No. 51930, dated 26 March 2002, and instead, filed immediately with
this Court on 3 May 2002 a Motion for Extension of Time to File a Petition for Review,
[13] which, after payment of the docket and other lawful fees, was assigned the docket
number G.R. No. 152985. In the said Motion, respondent alleged that she received a
copy of the assailed Court of Appeals Decision on 18 April 2002 and, thus, had 15 days
therefrom or until 3 May 2002 within which to file her Petition for Review. Since she
informed her counsel of her desire to pursue an appeal of the Court of Appeals Decision
only on 29 April 2002, her counsel neither had enough time to file a motion for
reconsideration of the said Decision with the Court of Appeals, nor a Petition
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 respondents Motion for Extension of Time to
file her Petition for Review, then the period for appeal continued to run and still expired
on 3 May 2002.[14] Respondent failed to file any Petition for Review within the
prescribed period for appeal and, hence, this Court issued a Resolution, [15] dated 13
November 2002, in which it pronounced that

G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals, et al.). It

appearing that petitioner failed to file the intended petition for review on
certiorari within the period which expired on May 3, 2002, the Court Resolves
to DECLARE THIS CASE TERMINATED and DIRECT the Division Clerk of
Court to INFORM the parties that the judgment sought to be reviewed has
become final and executory.

The said Resolution was duly recorded in the Book of Entries of Judgments on 3
January 2003.

G.R. No. 156132

Meanwhile, petitioners filed with the Court of Appeals a Motion for

Reconsideration of its Decision in CA-G.R. CV No. 51930, dated 26 March
2002. Acting upon the said Motion, the Court of Appeals issued the Resolution,
[16] dated 20 November 2002, modifying its Decision of 26 March 2002, as follows

WHEREFORE, premises considered, the instant Motion for

Reconsideration is PARTIALLY GRANTED as Sub-paragraph (V) paragraph 3
of the assailed Decisionsdispositive portion is hereby ordered DELETED.
 The challenged 26 March 2002 Decision of the Court
is AFFIRMED with MODIFICATION.

Assailing the Decision and Resolution of the Court of Appeals in CA-G.R. CV

No. 51930, dated 26 March 2002 and 20 November 2002, respectively, petitioners filed
the present Petition, docketed as G.R. No. 156132. The Petition was initially
denied[17] by this Court for failure of the petitioners to attach thereto a Certification
against Forum Shopping. However, upon petitioners Motion and compliance with the
requirements, this Court resolved[18] to reinstate the Petition.

The Petition presented fourteen (14) assignments of errors allegedly committed by

the Court of Appeals in its Decision, dated 26 March 2002, involving both questions of
fact and questions of law which this Court, for the sake of expediency, discusses jointly,
whenever possible, in the succeeding paragraphs.

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 respondents
Motion for Extension of Time to File a Petition for Review. Respondent, though, did not
file her supposed Petition. Thus, after the lapse of the prescribed period for the filing of
the Petition, this Court issued the Resolution, dated 13 November 2002, declaring the
Decision of the Court of Appeals, dated 26 March 2002, final and executory. It should be
pointed out, however, that the Resolution, dated 13 November 2002, referred only to
G.R. No. 152985, respondents appeal, which she failed to perfect through the filing of a
Petition for Review within the prescribed period. The declaration of this Court in the
same Resolution would bind respondent solely, and not petitioners which filed their own
separate appeal before this Court, docketed as G.R. No. 156132, the Petition at bar. This
would mean that respondent, on her part, should be bound by the findings of fact and
law of the Court of Appeals, including the monetary amounts consequently awarded to
her by the appellate court in its Decision, dated 26 March 2002; and she can no longer
refute or assail any part thereof. [19]

This Court already explained the matter to respondent when it issued a

Resolution[20] in G.R. No. 156132, dated 2 February 2004, which addressed her Urgent
Motion for the Release of the Decision with the Implementation of the Entry of
Judgment in the following manner
[A]cting on Citibanks and FNCB Finances Motion for Reconsideration, we
resolved to grant the motion, reinstate the petition and require Sabeniano to file a
comment thereto in our Resolution of June 23, 2003. Sabeniano filed
a Comment dated July 17, 2003 to which Citibank and FNCB Finance filed
a Reply dated August 20, 2003.

From the foregoing, it is clear that Sabeniano had knowledge of, and in fact
participated in, the proceedings in G.R. No. 156132. She cannot feign ignorance
of the proceedings therein and claim that the Decision of the Court of Appeals
has become final and executory. More precisely, the Decision became final and
executory only with regard to Sabeniano in view of her failure to file a petition
for review within the extended period granted by the Court, and not to Citibank
and FNCB Finance whose Petition for Reviewwas duly reinstated and is now
submitted for decision.

Accordingly, the instant Urgent Motion is hereby DENIED. (Emphasis supplied.)

To sustain the argument of respondent would result in an unjust and incongruous

situation wherein one party may frustrate the efforts of the opposing party to appeal the
case by merely filing with this Court a Motion for Extension of Time to File a Petition
for Review, ahead of the opposing party, then not actually filing the intended Petition.
[21] The party who fails to file its intended Petition within the reglementary or extended
period should solely bear the consequences of such failure.

Respondent Sabeniano did not commit forum

shopping.

Another issue that does not directly involve the merits of the present Petition, but raised
by petitioners, is whether respondent should be held liable for forum shopping.

Petitioners contend that respondent committed forum shopping on the basis of the
following facts:

While petitioners Motion for Reconsideration of the Decision in CA-G.R. CV No.

51930, dated 26 March 2002, was still pending before the Court of Appeals, respondent
already filed with this Court on 3 May 2002 her Motion for Extension of Time to File a
Petition for Review of the same Court of Appeals Decision, docketed as G.R. No.
152985.Thereafter, respondent continued to participate in the proceedings before the
Court of Appeals in CA-G.R. CV No. 51930 by filing her Comment, dated 17 July 2002,
to petitioners Motion for Reconsideration; and a Rejoinder, dated 23 September 2002, to
petitioners Reply. Thus, petitioners argue that by seeking relief concurrently from this
Court and the Court of Appeals, respondent is undeniably guilty of forum shopping, if
not indirect contempt.

This Court, however, finds no sufficient basis to hold respondent liable for forum
shopping.
Forum shopping has been defined as the filing of two or more suits involving the same
parties for the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment.[22] The test for determining forum shopping
is whether in the two (or more) cases pending, there is an identity of parties, rights or
causes of action, and relief sought.[23] To guard against this deplorable practice, Rule 7,
Section 5 of the revised Rules of Court imposes the following requirement
 SEC. 5. Certification against forum shopping. The plaintiff or principal party
shall certify under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a)
that he has not theretofore commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge,
no such other action or claim is pending therein; (b) if there is such other pending action
or claim, a complete statement of the present status thereof; and (c) if he should
thereafter learn that the same or similar action or claim has been filed or is pending, he
shall report that fact within five (5) days therefrom to the court wherein his aforesaid
complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to the
corresponding administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as cause
for administrative sanctions.

Although it may seem at first glance that respondent was simultaneously seeking
recourse from the Court of Appeals and this Court, a careful and closer scrutiny of the
details of the case at bar would reveal otherwise.

It should be recalled that respondent did nothing more in G.R. No. 152985 than to
file with this Court a Motion for Extension of Time within which to file her Petition for
Review. For unexplained reasons, respondent failed to submit to this Court her intended
Petition within the reglementary period. Consequently, this Court was prompted to issue
a Resolution, dated 13 November 2002, declaring G.R. No. 152985 terminated, and the
therein assailed Court of Appeals Decision final and executory. G.R. No. 152985,
therefore, did not progress and respondents appeal was unperfected.

The Petition for Review would constitute the initiatory pleading before this Court,
upon the timely filing of which, the case before this Court commences; much in the
same way a case is initiated by the filing of a Complaint before the trial court. The
Petition for Review establishes the identity of parties, rights or causes of action, and
relief sought from this Court, and without such a Petition, there is technically no case
before this Court. The Motion filed by respondent seeking extension of time within
which to file her Petition for Review does not serve the same purpose as the Petition for
Review itself. Such a Motion merely presents the important dates and the justification
for the additional time requested for, but it does not go into the details of the appealed
case.

Without any particular idea as to the assignments of error or the relief respondent
intended to seek from this Court, in light of her failure to file her Petition for Review,
there is actually no second case involving the same parties, rights or causes of action,
and relief sought, as that in CA-G.R. CV No. 51930.
It should also be noted that the Certification against Forum Shopping is required
to be attached to the initiatory pleading, which, in G.R. No. 152985, should have been
respondents 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 respondents appeal and her arguments in support thereof. Without said
Petition, any reason attributed to the respondent for appealing the 26 March 2002
Decision would be grounded on mere speculations, to which this Court cannot give
credence.

II

As an exception to the general rule, this Court

takes cognizance of questions of fact raised in
the Petition at bar.
It is already a well-settled rule that the jurisdiction of this Court in cases brought
before it from the Court of Appeals by virtue of Rule 45 of the Revised Rules of Court is
limited to reviewing errors of law. Findings of fact of the Court of Appeals are
conclusive upon this Court. There are, however, recognized exceptions to the foregoing
rule, namely: (1) when the findings are grounded entirely on speculation, surmises, or
conjectures; (2) when the interference made is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based
on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in
making its findings, the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7) when
the findings are contrary to those of the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioners main and reply briefs are not disputed by
the respondent; and (10) when the findings of fact are premised on the supposed absence
of evidence and contradicted by the evidence on record.[24]

Several of the enumerated exceptions pertain to the Petition at bar.

It is indubitable that the Court of Appeals made factual findings that are contrary
to those of the RTC,[25] thus, resulting in its substantial modification of the trial courts
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
Courts 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 re-
evaluating the evidence on record in order to settle questions of fact raised in the
Petition at bar.

The fact that the trial judge who rendered the

RTC Decision in Civil Case No. 11336, dated 24
August 1995, was not the same judge who heard
and tried the case, does not, by itself, render the
said Decision erroneous.

The Decision in Civil Case No. 11336 was rendered more than 10 years from the
institution of the said case. In the course of its trial, the case was presided over by four
(4) different RTC judges.[26] It was Judge Victorio, the fourth judge assigned to the case,
who wrote the RTC Decision, dated 24 August 1995. In his Decision,[27] Judge Victorio
made the following findings
After carefully evaluating the mass of evidence adduced by the parties, this
Court is not inclined to believe the plaintiffs assertion that the promissory notes as well
as the deeds of assignments of her FNCB Finance money market placements were
simulated. The evidence is overwhelming that the plaintiff received the proceeds of the
loans evidenced by the various promissory notes she had signed. What is more, there
was not an iota of proof save the plaintiffs 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 plaintiffs money market placements with
defendant FNCB Finance, on the strength of which the said money market placements
were applied to partially pay the plaintiffs past due obligation with the defendant
Bank. Thus, the total sum of P1,053,995.80 of the plaintiffs past due obligation was
partially offset by the said money market placement leaving a balance of P1,069,847.40
as of 5 September 1979 (Exhibit 34).
Disagreeing in the foregoing findings, the Court of Appeals stressed, in its Decision in
CA-G.R. CV No. 51930, dated 26 March 2002, that the ponente of the herein
assailed Decision is not the Presiding Judge who heard and tried the case. [28] This
brings us to the question of whether the fact alone that the RTC Decision was rendered
by a judge other than the judge who actually heard and tried the case is sufficient
justification for the appellate court to disregard or set aside the findings in the Decision
of the court a quo?

This Court rules in the negative.

What deserves stressing is that, in this jurisdiction, there exists a disputable presumption
that the RTC Decision was rendered by the judge in the regular performance of his
official duties. While the said presumption is only disputable, it is satisfactory unless
contradicted or overcame by other evidence.[29] Encompassed in this presumption of
regularity is the presumption that the RTC judge, in resolving the case and drafting his
Decision, reviewed, evaluated, and weighed all the evidence on record. That the said
RTC judge is not the same judge who heard the case and received the evidence is of
little consequence when the records and transcripts of stenographic notes (TSNs) are
complete and available for consideration by the former.

In People v. Gazmen,[30] this Court already elucidated its position on such an issue

Accused-appellant makes an issue of the fact that the judge who penned the
decision was not the judge who heard and tried the case and concludes therefrom that
the findings of the former are erroneous. Accused-appellants argument does not merit a
lengthy discussion. It is well-settled that the decision of a judge who did not try the case
is not by that reason alone erroneous.

It is true that the judge who ultimately decided the case had not heard the
controversy at all, the trial having been conducted by then Judge Emilio L. Polig, who
was indefinitely suspended by this Court. Nonetheless, the transcripts of stenographic
notes taken during the trial were complete and were presumably examined and studied
by Judge Baguilat before he rendered his decision. It is not unusual for a judge who did
not try a case to decide it on the basis of the record. The fact that he did not have the
opportunity to observe the demeanor of the witnesses during the trial but merely relied
 on the transcript of their testimonies does not for that reason alone render the judgment
erroneous.

(People vs. Jaymalin, 214 SCRA 685, 692 [1992])

Although it is true that the judge who heard the witnesses testify is in a better
position to observe the witnesses on the stand and determine by their demeanor whether
they are telling the truth or mouthing falsehood, it does not necessarily follow that a
judge who was not present during the trial cannot render a valid decision since he can
rely on the transcript of stenographic notes taken during the trial as basis of his decision.

Accused-appellants contention that the trial judge did not have the opportunity to
observe the conduct and demeanor of the witnesses since he was not the same judge
who conducted the hearing is also untenable. While it is true that the trial judge who
conducted the hearing would be in a better position to ascertain the truth and falsity of
the testimonies of the witnesses, it does not necessarily follow that a judge who was not
present during the trial cannot render a valid and just decision since the latter can also
rely on the transcribed stenographic notes taken during the trial as the basis of his
decision.

(People vs. De Paz, 212 SCRA 56, 63 [1992])

At any rate, the test to determine the value of the testimony of the witness is
whether or not such is in conformity with knowledge and consistent with the experience
of mankind (People vs. Morre, 217 SCRA 219 [1993]). Further, the credibility of
witnesses can also be assessed on the basis of the substance of their testimony and the
surrounding circumstances (People v. Gonzales, 210 SCRA 44 [1992]). A critical
evaluation of the testimony of the prosecution witnesses reveals that their testimony
accords with the aforementioned tests, and carries with it the ring of truth end perforce,
must be given full weight and credit.

Irrefragably, by reason alone that the judge who penned the RTC Decision was not the
same judge who heard the case and received the evidence therein would not render the
findings in the said Decision erroneous and unreliable. While the conduct and demeanor
of witnesses may sway a trial court judge in deciding a case, it is not, and should not be,
his only consideration. Even more vital for the trial court judges 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, respondents failure to file, within the
reglementary period, a Motion for Reconsideration or an appeal of the Resolution of the
Court of Appeals in the same case, dated 20 November 2002, which modified its earlier
Decision by deleting paragraph 3(v) of its dispositive portion, ordering petitioners to
return to respondent the proceeds of her money market placement with AIDC, shall
already bar her from questioning such modification before this Court. Thus, what is for
review before this Court is the Decision of the Court of Appeals, dated 26 March 2002,
as modified by the Resolution of the same court, dated 20 November 2002.

Respondent alleged that she had several deposits and money market placements
with petitioners. These deposits and money market placements, as determined by the
Court of Appeals in its Decision, dated 26 March 2002, and as modified by its
Resolution, dated 20 November 2002, are as follows

Deposit/Placement Amount
Dollar deposit with Citibank-Geneva $ 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% interest per
annum (p.a.) P 318,897.34
Money market placement with Citibank, evidenced by PN
No. 23357 (which cancels and supersedes PN No. 22528),
earning 14.5% interest p.a. P 203,150.00
Money market placement with FNCB Finance, evidenced
by PN No. 5757 (which cancels and supersedes PN No.
4952), earning 17% interest p.a. P 500,000.00
Money market placement with FNCB Finance, evidenced
by PN No. 5758 (which cancels and supersedes PN No.
2962), earning 17% interest p.a. P 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 respondents 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 respondents money market placements with petitioner Citibank

began on 6 December 1976, when she made a placement of P500,000.00 as principal
amount, which was supposed to earn an interest of 16% p.a. and for which PN No.
20773 was issued. Respondent did not yet claim the proceeds of her placement and,
instead, rolled-over or re-invested the principal and proceeds several times in the
succeeding years for which new PNs were issued by petitioner Citibank to replace the
ones which matured. Petitioner Citibank accounted for respondents original placement
and the subsequent roll-overs thereof, as follows

Maturity
Date PN No. Cancels PN Date Amount Interest
(mm/dd/yy No. (mm/dd/yyy (P) (p.a.)
yy) y)
12/06/1976 20773 None 01/13/1977 500,000.00 16%
01/14/1977 21686 20773 02/08/1977 508,444.44 15%
02/09/1977 22526 21686 03/16/1977 313,952.59 15-3/4%
22528 21686 03/16/1977 200,000.00 15-3/4%
03/17/1977 23356 22526 04/20/1977 318,897.34 14-1/2%
23357 22528 04/20/1977 203,150.00 14-1/2%

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 outstanding.[31] In Hibberd v. Rohde and McMillian,
[32] this Court delineated the consequences of such an admission

By the admission of the genuineness and due execution of an instrument, as

provided in this section, is meant that the party whose signature it bears admits that he
signed it or that it was signed by another for him with his authority; that at the time it
was signed it was in words and figures exactly as set out in the pleading of the party
relying upon it; that the document was delivered; and that any formal requisites required
by law, such as a seal, an acknowledgment, or revenue stamp, which it lacks, are waived
by him. Hence, such defenses as that the signature is a forgery (Puritan Mfg. Co. vs. Toti
& Gradi, 14 N. M., 425; Cox vs. Northwestern Stage Co., 1 Idaho, 376;
Woollen vs. Whitacre, 73 Ind., 198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escao,
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
Espaol-Filipino vs. McKay & Zoeller, 27 Phil. Rep., 183). x x x

Since the genuineness and due execution of PNs No. 23356 and 23357 are uncontested,
respondent was able to establish prima facie that petitioner Citibank is liable to her for
the amounts stated therein. The assertion of petitioner Citibank of payment of the said
PNs is an affirmative allegation of a new matter, the burden of proof as to such resting
on petitioner Citibank. Respondent having proved the existence of the obligation, the
burden of proof was upon petitioner Citibank to show that it had been discharged. [33] It
has already been established by this Court that

As a general rule, one who pleads payment has the burden of proving it. Even
where the plaintiff must allege non-payment, the general rule is that the burden rests on
the defendant to prove payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the obligation has been
discharged by payment.

When the existence of a debt is fully established by the evidence contained in the
record, the burden of proving that it has been extinguished by payment devolves upon
the debtor who offers such defense to the claim of the creditor. Where the debtor
introduces some evidence of payment, the burden of going forward with the evidence as
distinct from the general burden of proof shifts to the creditor, who is then under the
duty of producing some evidence of non-payment.[34]

Reviewing the evidence on record, this Court finds that petitioner Citibank failed
to satisfactorily prove that PNs No. 23356 and 23357 had already been paid, and that the
amount so paid was actually used to open one of respondents TD accounts with
petitioner Citibank.

Petitioner Citibank presented the testimonies of two witnesses to support its

contention of payment: (1) That of Mr. Herminio Pujeda,[35] the officer-in-charge of
loans and placements at the time when the questioned transactions took place; and (2)
that of Mr. Francisco Tan,[36] the former Assistant Vice-President of Citibank, who
directly dealt with respondent with regard to her deposits and loans.

The relevant portion[37] of Mr. Pujedas testimony as to PNs No. 23356 and 23357
(referred to therein as Exhibits No. 47 and 48, respectively) is reproduced below

Atty. Mabasa:

Okey [sic]. Now Mr. Witness, you were asked to testify in this case and this case is [sic]
consist [sic] of several documents involving transactions between the plaintiff
and the defendant. Now, were you able to make your own memorandum
regarding all these transactions?

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

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

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

Court:

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

A Based on documents, your Honor.

Court:

Are these documents still available now?

A Yes, your honor.

Court:

Better present the documents.

Atty. Mabasa:

Yes, your Honor, that is why your Honor.

Atty. Mabasa:

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

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

Q And you are saying time deposits with what bank?

A With First National Citibank.

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

A Yes, sir.

Q And how much was the amount booked as time deposit with defendant Citibank?
 A In the amount of P500,000.00.

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

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

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

A Yes, sir.

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

A She funded it directly.

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

A That is right.

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

Atty. Mabasa : 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. Pujedas testimony before
the RTC was made on 12 March 1990 and Mr. Tans deposition in Hong Kong was
conducted on 3 September 1990, more than a decade had passed from the time the
transactions they were testifying on took place. This Court had previously recognized
the frailty and unreliability of human memory with regards to figures after the lapse of
five years.[38] Taking into consideration the substantial length of time between the
transactions and the witnesses testimonies, as well as the undeniable fact that bank
officers deal with multiple clients and process numerous transactions during their tenure,
this Court is reluctant to give much weight to the testimonies of Mr. Pujeda and Mr. Tan
regarding the payment of PNs No. 23356 and 23357 and the use by respondent of the
proceeds thereof for opening TD accounts. This Court finds it implausible that they
should remember, after all these years, this particular transaction with respondent
involving her PNs No. 23356 and 23357 and TD accounts. Both witnesses did not give
any reason as to why, from among all the clients they had dealt with and all the
transactions they had processed as officers of petitioner Citibank, they specially
remembered respondent and her PNs No. 23356 and 23357. Their testimonies likewise
lacked details on the circumstances surrounding the payment of the two PNs and the
opening of the time deposit accounts by respondent, such as the date of payment of the
two PNs, mode of payment, and the manner and context by which respondent relayed
her instructions to the officers of petitioner Citibank to use the proceeds of her two PNs
in opening the TD accounts.

Moreover, while there are documentary evidences to support and trace

respondents 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. Respondents money market placements were
of substantial amounts consisting of the principal amount of P500,000.00, plus the
interest it should have earned during the years of placement and it is difficult for this
Court to believe that petitioner Citibank would not have had documented the payment
thereof.
When Mr. Pujeda testified before the RTC on 6 February 1990, [39] petitioners
counsel attempted to present in evidence a document that would supposedly support the
claim of petitioner Citibank that the proceeds of PNs No. 23356 and 23357 were used by
respondent to open one of her two TD accounts in the amount
of P500,000.00.Respondents 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. Pujedas 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 Courts 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 respondents 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 respondents money
market placements with the latter.
Money market placements with petitioner FNCB Finance

According to petitioners, respondents TD Accounts No. 17783 and 17784, in the total
amount of P1,100,000.00, were supposed to mature on 15 March 1978. However,
respondent, through a letter dated 28 April 1977,[40] 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
Managers Checks (MC) No. 199253[41] and 199251[42] for the amounts of P500,000.00
and P600,00.00, respectively. Both MCs were payable to Citifinance (which, according
to Mr. Pujeda,[43] was one with and the same as petitioner FNCB Finance), with the
additional notation that A/C MODESTA R. SABENIANO. Typewritten on MC No.
199253 is the phrase Ref. Proceeds of TD 17783, and on MC No. 199251 is a similar
phrase, Ref. Proceeds of TD 17784. These phrases purportedly established that the MCs
were paid from the proceeds of respondents 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
respondents savings account with petitioner Citibank, S/A No. 25-13703-4, upon their
maturity on 1 June 1977. Once again, respondent rolled-over several times the principal
amounts of her money market placements with petitioner FNCB Finance, as follows

Maturity
Date PN No. Cancels PN Date Amount Interest
(mm/dd/yyy No. (mm/dd/yyyy) (P) (p.a.)
y)
04/29/1977 4952 None 06/01/1977 500,000.00 17%
4962 None 06/01/1977 600,000.00 17%
06/02/1977 5757 4952 08/31/1977 500,000.00 17%
5758 4962 08/31/1977 500,000.00 17%
 08/31/1977 8167 5757 08/25/1978 500,000.00 14%
8169 5752 08/25/1978 500,000.00 14%

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

Based on the foregoing records, the principal amounts of PNs No. 5757 and 5758, upon
their maturity, were rolled over to PNs No. 8167 and 8169, respectively. PN No.
8167[45] expressly canceled and superseded PN No. 5757, while PN No. 8169 [46] also
explicitly canceled and superseded PN No. 5758. Thus, it is patently erroneous for the
Court of Appeals to still award to respondent the principal amounts and interests covered
by PNs No. 5757 and 5758 when these were already canceled and superseded. It is now
incumbent upon this Court to determine what subsequently happened to PNs No. 8167
and 8169.

Petitioner FNCB Finance presented four checks as proof of payment of the principal
amounts and interests of PNs No. 8167 and 8169 upon their maturity. All the checks
were payable to respondents savings account with petitioner Citibank, with the
following details

Date of Amount
Issuance Check No. (P) Notation
(mm/dd/yyyy)
09/01/1978 76962 12,833.34 Interest payment on PN#08167

09/01/1978 76961 12,833.34 Interest payment on PN#08169

09/05/1978 77035 500,000.00 Full payment of principal on PN#08167

which is hereby cancelled
 09/05/ 1978 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,[47] dated 6 September 1978, from Mr. Tan of petitioner
Citibank, to a Mr. Bobby Mendoza of petitioner FNCB Finance. According to the
memo, the two checks, in the total amount of P1,000,000.00, were to be returned to
respondents account with instructions to book the said amount in money market
placements for one more year. Pursuant to the said memo, Checks No. 77035 and 77034
were invested by petitioner FNCB Finance, on behalf of respondent, in money market
placements for which it issued PNs No. 20138 and 20139. The PNs each
covered P500,000.00, to earn 11% interest per annum, and to mature on 3 September
1979.

On 3 September 1979, petitioner FNCB Finance issued Check No. 100168, pay to the
order of Citibank N.A. A/C Modesta Sabeniano, in the amount of P1,022,916.66, as full
payment of the principal amounts and interests of both PNs No. 20138 and 20139 and,
resultantly, canceling the said PNs.[48] Respondent actually admitted the issuance and
existence of Check No. 100168, but with the qualification that the proceeds thereof were
turned over to petitioner Citibank.[49] Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the allegations of petitioner
Citibank itself, the proceeds of PNs No. 20138 and 20139, amounting to P1,022,916.66,
was used by it to liquidate respondents 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 respondents 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 respondents savings and current accounts with petitioner Citibank, the
Decisions of both the trial and appellate courts effectively recognized only
the P31,079.14 coming from respondents savings account which was used to off-set her
alleged outstanding loans with petitioner Citibank.[50]

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

Dollar accounts with Citibank-Geneva

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

MODESTA SABENIANO &/OR

==================

US$ 30000.-- Principal Fid. Placement

+ US$ 339.06 Interest at 3,875% p.a. from 12.07. 25.10.79
- US$ 95.-- Commission (minimum)

US$ 30244.06 Total proceeds on 25.10.1979

US$ 114000.-- Principal Fid. Placement

+ US$ 1358.50 Interest at 4,125% p.a. from 12.07. 25.10.79
- US$ 41.17 Commission

US$ 115317.33 Total proceeds on 25.10.1979

US$ 145561.39 Total proceeds of both placements on 25.10.1979

+ US$ 11381.31 total of both current accounts

US$ 156942.70 Total funds available

- US$ 149632.99 Transfer to Citibank Manila on 26.10.1979

(counter value of Pesos 1102944.78)

US$ 7309.71 Balance in current accounts

- US$ 6998.84 Transfer to Citibank Zuerich ac no. 121359 on March

13, 1980

US$ 310.87 various charges including closing charges

According to the foregoing computation, by 25 October 1979, respondent had a total of
US$156,942.70, from which, US$149,632.99 was transferred by Citibank-Geneva to
petitioner Citibank in Manila, and was used by the latter to off-set respondents
outstanding loans. The balance of respondents accounts with Citibank-Geneva, after the
remittance to petitioner Citibank in Manila, amounted to US$7,309.71, which was
subsequently expended by a transfer to another account with Citibank-Zuerich, in the
amount of US$6,998.84, and by payment of various bank charges, including closing
charges, in the amount of US$310.87. Rightly so, both the RTC and the Court of
Appeals gave more credence to the computation of Citibank-Geneva as to the status of
respondents 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
respondents loans.

Petitioners version of events

In sum, the following amounts were used by petitioner Citibank to liquidate respondents
purported outstanding loans

Description Amount
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB Finance) P 1,022,916.66
Savings account with petitioner Citibank 31,079.14
Dollar remittance from Citibank-Geneva (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.
[54]Petitioner Citibank extended to her several other loans in the succeeding
months. Some of these loans were paid, while others were rolled-over or renewed.
Significant to the Petition at bar are the loans which respondent obtained from July 1978
to January 1979, appropriately covered by PNs (first set).[55] The aggregate principal
amount of these loans was P1,920,000.00, which could be broken down as follows

Date of Date of Date of

PN Issuance Maturity Principal Release MC No.
No. (mm/dd/yyyy) (mm/dd/yyyy) Amount (mm/dd/yyyy)
32935 07/20/1978 09/18/1978 P 400,000.00 07/20/1978 220701
33751 10/13/1978 12/12/1978 100,000.00 Unrecovered
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978 226285
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978 226439
34079 11/21/1978 01/19/1979 250,000.00 11/21/1978 226467
34192 12/04/1978 01/18/1979 100,000.00 12/05/1978 228057
34402 12/26/1978 02/23/1979 300,000.00 12/26/1978 228203
34534 01/09/1979 03/09/1979 150,000.00 01/09/1979 228270
34609 01/17/1979 03/19/1979 150,000.00 01/17/1979 228357
34740 01/30/1979 03/30/1979 220,000.00 01/30/1979 228400

Total P1,920,000.00

When respondent was unable to pay the first set of PNs upon their maturity, these were
rolled-over or renewed several times, necessitating the execution by respondent of new
PNs in favor of petitioner Citibank. As of 5 April 1979, respondent had the following
outstanding PNs (second set),[56] the principal amount of which remained
at P1,920,000.00

Date of Issuance Date of Maturity

PN No. (mm/dd/yyyy) (mm/dd/yyyy) Principal Amount
34510 01/01/1979 03/02/1979 P 400,000.00
 34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
34612 01/19/1979 03/16/1979 150,000.00
34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
35694 03/19/1979 05/29/1979 150,000.00
35695 03/19/1979 05/29/1979 100,000.00
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 220,000.00

Total P 1,920,000.00

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

Respondent secured her foregoing loans with petitioner Citibank by executing

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

When respondent failed to pay the second set of PNs upon their maturity, an exchange of
letters ensued between respondent and/or her representatives, on one hand, and the
representatives of petitioners, on the other.

The first letter[62] was dated 5 April 1979, addressed to respondent and signed by Mr.
Tan, as the manager of petitioner Citibank, which stated, in part, that

Despite our repeated requests and follow-up, we regret you have not granted us with any
response or payment.

We, therefore, have no alternative but to call your loan of P1,920,000.00 plus interests
and other charges due and demandable. If you still fail to settle this obligation by
4/27/79, we shall have no other alternative but to refer your account to our lawyers for
legal action to protect the interest of the bank.

Respondent sent a reply letter[63] dated 26 April 1979, printed on paper bearing the
letterhead of respondents company, MC Adore International Palace, the body of which
reads

This is in reply to your letter dated April 5, 1979 inviting my attention to my loan which
has become due. Pursuant to our representation with you over the telephone through Mr.
F. A. Tan, you allow us to pay the interests due for the meantime.

Please accept our Comtrust Check in the amount of P62,683.33.

Please bear with us for a little while, at most ninety days. As you know, we have a
pending loan with the Development Bank of the Philippines in the amount of P11-
M. This loan has already been recommended for approval and would be submitted to the
Board of Governors. In fact, to further facilitate the early release of this loan, we have
presented and furnished Gov. J. Tengco a xerox copy of your letter.
 You will be doing our corporation a very viable service, should you grant us our request
for a little more time.

A week later or on 3 May 1979, a certain C. N. Pugeda, designated as Executive

Secretary, sent a letter[64] to petitioner Citibank, on behalf of respondent. The letter was
again printed on paper bearing the letterhead of MC Adore International Palace. The
pertinent paragraphs of the said letter are reproduced below

Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for a re-
computation of the interest and penalty charges on her loan in the aggregate amount
of P1,920,000.00 with maturity date of all promissory notes at June 30, 1979. As she has
personally discussed with you yesterday, this date will more or less assure you of early
settlement.

In this regard, please entrust to bearer, our Comtrust check for P62,683.33 to be replaced
by another check with amount resulting from the new computation. Also, to facilitate
the processing of the same, may we request for another set of promissory notes for the
signature of Mrs. Sabeniano and to cancel the previous ones she has signed and
forwarded to you.

This was followed by a telegram,[65] dated 5 June 1979, and received by petitioner
Citibank the following day. The telegram was sent by a Dewey G. Soriano, Legal
Counsel.The telegram acknowledged receipt of the telegram sent by petitioner Citibank
regarding the re-past due obligation of McAdore International Palace. However, it
reported that respondent, the President and Chairman of MC Adore International Palace,
was presently abroad negotiating for a big loan. Thus, he was requesting for an
extension of the due date of the obligation until respondents arrival on or before 31 July
1979.

The next letter,[66] dated 21 June 1979, was signed by respondent herself and
addressed to Mr. Bobby Mendoza, a Manager of petitioner FNCB Finance. Respondent
wrote therein

Re: PN No. 20138 for P500,000.00 & PN No. 20139

for P500,000.00 totalling P1 Million, both PNs will
mature on 9/3/1979.
 This is to authorize you to release the accrued quarterly interests payment from
my captioned placements and forward directly to Citibank, Manila Attention: Mr. F. A.
Tan, Manager, to apply to my interest payable on my outstanding loan with Citibank.

Please note that the captioned two placements are continuously

pledged/hypothecated to Citibank, Manila to support my personal outstanding
loan. Therefore, please do not release the captioned placements upon maturity until you
have received the instruction from Citibank, Manila.
On even date, respondent sent another letter[67] to Mr. Tan of petitioner Citibank,
stating that

Re: S/A No. 25-225928

and C/A No. 484-946

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

Unlike respondents 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, respondents outstanding and past due obligations to petitioner

Citibank totaled P2,123,843.20, representing the principal amounts plus
interests. Relying on respondents Deeds of Assignment, petitioner Citibank applied the
proceeds of respondents money market placements with petitioner FNCB Finance, as
well as her deposit account with petitioner Citibank, to partly liquidate respondents
outstanding loan balance,[68] as follows

Respondents outstanding obligation (principal and interest) P 2,123,843.20

Less: Proceeds from respondents money market placements
with petitioner FNCB Finance (principal and interest) (1,022,916.66)
Deposits in respondents bank accounts with petitioner
Citibank (31,079.14)

Balance of respondents obligation P 1,069,847.40

Mr. Tan of petitioner Citibank subsequently sent a letter, [69] dated 28 September 1979,
notifying respondent of the status of her loans and the foregoing compensation which
petitioner Citibank effected. In the letter, Mr. Tan informed respondent that she still had
a remaining past-due obligation in the amount of P1,069,847.40, as of 5 September
1979, and should respondent fail to pay the amount by 15 October 1979, then petitioner
Citibank shall proceed to off-set the unpaid amount with respondents other collateral,
particularly, a money market placement in Citibank-Hongkong.

On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on paper bearing
the letterhead of MC Adore International Palace, as regards the P1,920,000.00 loan
account supposedly of MC Adore Finance & Investment, Inc., and requested for a
statement of account covering the principal and interest of the loan as of 31 October
1979. She stated therein that the loan obligation shall be paid within 60 days from
receipt of the statement of account.

Almost three weeks later, or on 25 October 1979, a certain Atty. Moises Tolentino
dropped by the office of petitioner Citibank, with a letter, dated 9 October 1979, and
printed on paper with the letterhead of MC Adore International Palace, which authorized
the bearer thereof to represent the respondent in settling the overdue account, this time,
purportedly, of MC Adore International Palace Hotel. The letter was signed by
respondent as the President and Chairman of the Board.

Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as counsel of petitioner

Citibank, sent a letter to respondent, dated 31 October 1979, informing her that
petitioner Citibank had effected an off-set using her account with Citibank-Geneva, in
the amount of US$149,632.99, against her outstanding, overdue, demandable and unpaid
obligation to petitioner Citibank. Atty. Agcaoili claimed therein that the compensation or
off-set was made pursuant to and in accordance with the provisions of Articles 1278
through 1290 of the Civil Code. He further declared that respondents obligation to
petitioner Citibank was now fully paid and liquidated.

Unfortunately, on 7 October 1987, a fire gutted the 7th floor of petitioner Citibanks
building at Paseo de Roxas St., Makati, Metro Manila. Petitioners submitted a
Certification[70] to this effect, dated 17 January 1991, issued by the Chief of the Arson
Investigation Section, Fire District III, Makati Fire Station, Metropolitan Police
Force.The 7th floor of petitioner Citibanks building housed its Control Division, which
was in charge of keeping the necessary documents for cases in which it was
involved. After compiling the documentary evidence for the present case, Atty. Renato J.
Fernandez, internal legal counsel of petitioner Citibank, forwarded them to the Control
Division. The original copies of the MCs, which supposedly represent the proceeds of
the first set of PNs, as well as that of other documentary evidence related to the case,
were among those burned in the said fire.[71]

Respondents version of events

Respondent disputed petitioners narration of the circumstances surrounding her loans

with petitioner Citibank and the alleged authority she gave for the off-set or
compensation of her money market placements and deposit accounts with petitioners
against her loan obligation.

Respondent denied outright executing the first set of PNs, except for one (PN No. 34534
in particular). Although she admitted that she obtained several loans from petitioner
Citibank, these only amounted to P1,150,000.00, and she had already paid them. She
secured from petitioner Citibank two loans of P500,000.00 each. She executed in favor
of petitioner Citibank the corresponding PNs for the loans and the Deeds of Assignment
of her money market placements with petitioner FNCB Finance as security. [72] To prove
payment of these loans, respondent presented two provisional receipts of petitioner
Citibank No. 19471,[73] dated 11 August 1978, and No. 12723,[74] dated 10 November
1978 both signed by Mr. Tan, and acknowledging receipt from respondent of several
checks in the total amount of P500,744.00 and P500,000.00, respectively, for liquidation
of loan.

She borrowed another P150,000.00 from petitioner Citibank for personal

investment, and for which she executed PN No. 34534, on 9 January 1979. Thus, she
admitted to receiving the proceeds of this loan via MC No. 228270. She invested the
loan amount in another money market placement with petitioner FNCB Finance. In turn,
she used the very same money market placement with petitioner FNCB Finance as
security for her P150,000.00 loan from petitioner Citibank. When she failed to pay the
loan when it became due, petitioner Citibank allegedly forfeited her money market
placement with petitioner FNCB Finance and, thus, the loan was already paid.[75]

Respondent likewise questioned the MCs presented by petitioners, except for one (MC
No. 228270 in particular), as proof that she received the proceeds of the loans covered
by the first set of PNs. As recounted in the preceding paragraph, respondent admitted to
obtaining a loan of P150,000.00, covered by PN No. 34534, and receiving MC No.
228270 representing the proceeds thereof, but claimed that she already paid the same.
She denied ever receiving MCs No. 220701 (for the loan of P400,000.00, covered by PN
No. 33935) and No. 226467 (for the loan of P250,000.00, covered by PN No. 34079),
and pointed out that the checks did not bear her indorsements. She did not deny
receiving all other checks but she interposed that she received these checks, not as
proceeds of loans, but as payment of the principal amounts and/or interests from her
money market placements with petitioner Citibank. She also raised doubts as to the
notation on each of the checks that reads RE: Proceeds of PN#[corresponding PN No.],
saying that such notation did not appear on the MCs when she originally received them
and that the notation appears to have been written by a typewriter different from that
used in writing all other information on the checks (i.e., date, payee, and amount).
[76] She even testified that MCs were not supposed to bear notations indicating the
purpose for which they were issued.
As to the second set of PNs, respondent acknowledged having signed them
all. However, she asserted that she only executed these PNs as part of the simulated
loans she and Mr. Tan of petitioner Citibank concocted. Respondent explained that she
had a pending loan application for a big amount with the Development Bank of the
Philippines (DBP), and when Mr. Tan found out about this, he suggested that they could
make it appear that the respondent had outstanding loans with petitioner Citibank and
the latter was already demanding payment thereof; this might persuade DBP to approve
respondents loan application. Mr. Tan made the respondent sign the second set of PNs,
so that he may have something to show the DBP investigator who might inquire with
petitioner Citibank as to respondents loans with the latter. On her own copies of the said
PNs, respondent wrote by hand the notation, This isa (sic) simulated non-negotiable
note, signed copy given to Mr. Tan., (sic) per agreement to be shown to DBP
representative. itwill (sic) be returned to me if the P11=M (sic) loan for MC Adore
Palace Hotel is approved by DBP.[77]

Findings of this Court as to the existence of the loans

After going through the testimonial and documentary evidence presented by both sides
to this case, it is this Courts 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 respondents savings deposit with petitioner Citibank), 5 September
1979 (using the proceeds of respondents money market placements with petitioner
FNCB Finance) and 26 October 1979 (using respondents dollar accounts remitted from
Citibank-Geneva).The totality of petitioners evidence as to the existence of the said
loans preponderates over respondents. Preponderant evidence means that, as a whole,
the evidence adduced by one side outweighs that of the adverse party.[78]

Respondents outstanding obligation for P1,920,000.00 had been sufficiently documented

by petitioner Citibank.

The second set of PNs is a mere renewal of the prior loans originally covered by the first
set of PNs, except for PN No. 34534. The first set of PNs is supported, in turn, by the
existence of the MCs that represent the proceeds thereof received by the respondent.

It bears to emphasize that the proceeds of the loans were paid to respondent in MCs,
with the respondent specifically named as payee. MCs checks are drawn by the banks
manager upon the bank itself and regarded to be as good as the money it represents.
[79] Moreover, the MCs were crossed checks, with the words Payees 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 payees 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 payees or indorsers account.
[80] The effect of crossing a check was described by this Court in Philippine
Commercial International Bank v. Court of Appeals[81]

[T]he crossing of a check with the phrase Payees 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 payees account
only. It is bound to scrutinize the check and to know its depositors before it can make
the clearing indorsement all prior indorsements and/or lack of indorsement guaranteed.

The crossed MCs presented by petitioner Bank were indeed deposited in several
different bank accounts and cleared by the Clearing Office of the Central Bank of the
Philippines, as evidenced by the stamp marks and notations on the said checks. The
crossed MCs are already in the possession of petitioner Citibank, the drawee bank,
which was ultimately responsible for the payment of the amount stated in the
checks. Given that a check is more than just an instrument of credit used in commercial
transactions for it also serves as a receipt or evidence for the drawee bank of the
cancellation of the said check due to payment,[82] then, the possession by petitioner
Citibank of the said MCs, duly stamped Paid gives rise to the presumption that the said
MCs were already paid out to the intended payee, who was in this case, the respondent.

This Court finds applicable herein the presumptions that private transactions have been
fair and regular,[83] and that the ordinary course of business has been followed.
[84] There is no question that the loan transaction between petitioner Citibank and the
respondent is a private transaction. The transactions revolving around the crossed MCs
from their issuance by petitioner Citibank to respondent as payment of the proceeds of
her loans; to its deposit in respondents 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 respondents accounts, submitting them for clearing, and their
eventual payment and cancellation.
The afore-stated presumptions are disputable, meaning, they are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence.
[85] Respondent, however, was unable to present sufficient and credible evidence to
dispute these presumptions.

It should be recalled that out of the nine MCs presented by petitioner Citibank,
respondent admitted to receiving one as proceeds of a loan (MC No. 228270), denied
receiving two (MCs No. 220701 and 226467), and admitted to receiving all the rest, but
not as proceeds of her loans, but as return on the principal amounts and interests from
her money market placements.

Respondent admitted receiving MC No. 228270 representing the proceeds of her loan
covered by PN No. 34534. Although the principal amount of the loan is P150,000.00,
respondent only received P146,312.50, because the interest and handling fee on the loan
transaction were already deducted therefrom.[86] Stamps and notations at the back of
MC No. 228270 reveal that it was deposited at the Bank of the Philippine Islands (BPI),
Cubao Branch, in Account No. 0123-0572-28.[87] The check also bore the signature of
respondent at the back.[88] And, although respondent would later admit that she did sign
PN No. 34534 and received MC No. 228270 as proceeds of the loan extended to her by
petitioner Citibank, she contradicted herself when, in an earlier testimony, she claimed
that PN No. 34534 was among the PNs she executed as simulated loans with petitioner
Citibank.[89]

Respondent denied ever receiving MCs No. 220701 and 226467. However, considering
that the said checks were crossed for payees 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. Respondents bare allegations that she did not receive the two checks fail to
convince this Court, for to sustain her, would be for this Court to conclude that an
irregularity had occurred somewhere from the time of the issuance of the said checks, to
their deposit, clearance, and payment, and which would have involved not only
petitioner Citibank, but also BPI, which accepted the checks for deposit, and the Central
Bank of the Philippines, which cleared the checks. It falls upon the respondent to
overcome or dispute the presumption that the crossed checks were issued, accepted for
deposit, cleared, and paid for by the banks involved following the ordinary course of
their business.

The mere fact that MCs No. 220701 and 226467 do not bear respondents 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 payees 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 respondents 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 respondents,
then the respondent would have a cause of action against BPI.[90]

BPI further stamped its guarantee on the back of the checks to the effect that, All prior
endorsement and/or Lack of endorsement guaranteed. Thus, BPI became the indorser of
the MCs, and assumed all the warranties of an indorser, [91] specifically, that the checks
were genuine and in all respects what they purported to be; that it had a good title to the
checks; that all prior parties had capacity to contract; and that the checks were, at the
time of their indorsement, valid and subsisting. [92] So even if the MCs deposited by
BPI's client, whether it be by respondent herself or some other person, lacked the
necessary indorsement, BPI, as the collecting bank, is bound by its warranties as an
indorser and cannot set up the defense of lack of indorsement as against petitioner
Citibank, the drawee bank.[93]

Furthermore, respondents 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 respondents denial of receipt of MC No. 226467 and her

deposit of the same in her account, is her presentation of Exhibit HHH, a provisional
receipt which was supposed to prove that respondent turned over P500,000.00 to Mr.
Tan of petitioner Citibank, that the said amount was split into three money market
placements, and that MC No. 226467 represented the return on her investment from one
of these placements.[94] Because of her Exhibit HHH, respondent effectively admitted
receipt of MC No. 226467, although for reasons other than as proceeds of a loan.

Neither can this Court give credence to respondents 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,
respondents allegations were uncorroborated by any other evidence. Her and her
counsels observation that the notations on the MCs appear to be written by a typewriter
different from that used to write the other information on the checks hardly convinces
this Court considering that it constitutes a mere opinion on the appearance of the
notation by a witness who does not possess the necessary expertise on the matter. In
addition, the notations on the MCs were written using both capital and small letters,
while the other information on the checks were written using capital letters only, such
difference could easily confuse an untrained eye and lead to a hasty conclusion that they
were written by different typewriters.
Respondents testimony, that based on her experience transacting with banks, the MCs
were not supposed to include notations on the purpose for which the checks were issued,
also deserves scant consideration. While respondent may have extensive experience
dealing with banks, it still does not qualify her as a competent witness on banking
procedures and practices. Her testimony on this matter is even belied by the fact that the
other MCs issued by petitioner Citibank (when it was still named First National City
Bank) and by petitioner FNCB Finance, the existence and validity of which were not
disputed by respondent, also bear similar notations that state the reason for which they
were issued.

Respondent presented several more pieces of evidence to substantiate her claim that she
received MCs No. 226285, 226439, 226467, 226057, 228357, and 228400, not as
proceeds of her loans from petitioner Citibank, but as the return of the principal amounts
and payment of interests from her money market placements with petitioners. Part of
respondents exhibits were personal checks[95] drawn by respondent on her account with
Feati Bank & Trust Co., which she allegedly invested in separate money market
placements with both petitioners, the returns from which were paid to her via MCs No.
226285 and 228400. Yet, to this Court, the personal checks only managed to establish
respondents issuance thereof, but there was nothing on the face of the checks that would
reveal the purpose for which they were issued and that they were actually invested in
money market placements as respondent claimed.

Respondent further submitted handwritten notes that purportedly computed and

presented the returns on her money market placements, corresponding to the amount
stated in the MCs she received from petitioner Citibank. Exhibit HHH-1[96] was a
handwritten note, which respondent attributed to Mr. Tan of petitioner Citibank, showing
the breakdown of her BPI Check for P500,000.00 into three different money market
placements with petitioner Citibank. This Court, however, noticed several factors which
render the note highly suspect. One, it was written on the reversed side of Provisional
Receipt No. 12724 of petitioner Citibank which bore the initials of Mr. Tan
acknowledging receipt of respondents BPI Check No. 120989 for P500,000.00; but the
initials on the handwritten note appeared to be that of Mr. Bobby Mendoza of petitioner
FNCB Finance.[97]Second, according to Provisional Receipt No. 12724, BPI Check No.
120989 for P500,000.00 was supposed to be invested in three money market placements
with petitioner Citibank for the period of 60 days. Since all these money market
placements were made through one check deposited on the same day, 10 November
1978, it made no sense that the handwritten note at the back of Provisional Receipt No.
12724 provided for different dates of maturity for each of the money market placements
(i.e., 16 November 1978, 17 January 1979, and 21 November 1978), and such dates did
not correspond to the 60 day placement period stated on the face of the provisional
receipt. And third, the principal amounts of the money market placements as stated in
the handwritten note P145,000.00, P145,000.00 and P242,000.00 totaled P532,000.00,
and was obviously in excess of the P500,000.00 acknowledged on the face of
Provisional Receipt No. 12724.

Exhibits III and III-1, the front and bank pages of a handwritten note of Mr.
Bobby Mendoza of petitioner FNCB Finance, [98] also did not deserve much evidentiary
weight, and this Court cannot rely on the truth and accuracy of the computations
presented therein. Mr. Mendoza was not presented as a witness during the trial before
the RTC, so that the document was not properly authenticated nor its contents
sufficiently explained. No one was able to competently identify whether the initials as
appearing on the note were actually Mr. Mendozas.

Also, going by the information on the front page of the note, this Court observes
that payment of respondents alleged money market placements with petitioner FNCB
Finance were made using Citytrust Checks; the MCs in question, including MC No.
228057, were issued by petitioner Citibank. Although Citytrust (formerly Feati Bank &
Trust Co.), petitioner FNCB Finance, and petitioner Citibank may be affiliates of one
another, they each remained separate and distinct corporations, each having its own
financial system and records. Thus, this Court cannot simply assume that one
corporation, such as petitioner Citibank or Citytrust, can issue a check to discharge an
obligation of petitioner FNCB Finance. It should be recalled that when petitioner FNCB
Finance paid for respondents 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 respondents 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 respondents checks as payment for her loans,
they failed to specifically identify which loans were actually paid. Petitioner Citibank
was able to present evidence that respondent had executed several PNs in the years 1978
and 1979 to cover the loans she secured from the said bank. Petitioner Citibank did
admit that respondent was able to pay for some of these PNs, and what it identified as
the first and second sets of PNs were only those which remained unpaid. It thus became
incumbent upon respondent to prove that the checks received by Mr. Tan were actually
applied to the PNs in either the first or second set; a fact that, unfortunately, cannot be
determined from the provisional receipts submitted by respondent since they only
generally stated that the checks received by Mr. Tan were payment for respondents
loans.
 Mr. Tan, in his deposition, further explained that provisional receipts were issued
when payment to the bank was made using checks, since the checks would still be
subject to clearing. The purpose for the provisional receipts was merely to acknowledge
the delivery of the checks to the possession of the bank, but not yet of payment. [99] This
bank practice finds legitimacy in the pronouncement of this Court that a check, whether
an MC or an ordinary check, is not legal tender and, therefore, cannot constitute valid
tender of payment. In Philippine Airlines, Inc. v. Court of Appeals, [100] this Court
elucidated that:

Since a negotiable instrument is only a substitute for money and not money, the
delivery of such an instrument does not, by itself, operate as payment (Sec. 189, Act
2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v. American Bank, 7
Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check, whether a
manager's check or ordinary check, is not legal tender, and an offer of a check in
payment of a debt is not a valid tender of payment and may be refused receipt by the
obligee or creditor. Mere delivery of checks does not discharge the obligation under a
judgment. The obligation is not extinguished and remains suspended until the payment
by commercial document is actually realized (Art. 1249, Civil Code, par. 3).

In the case at bar, the issuance of an official receipt by petitioner Citibank would have
been dependent on whether the checks delivered by respondent were actually cleared
and paid for by the drawee banks.

As for PN No. 34534, respondent asserted payment thereof at two separate instances by
two different means. In her formal offer of exhibits, respondent submitted a deposit slip
of petitioner Citibank, dated 11 August 1978, evidencing the deposit of BPI Check No.
5785 for P150,000.00.[101] In her Formal Offer of Documentary Exhibits, dated 7 July
1989, respondent stated that the purpose for the presentation of the said deposit slip was
to prove that she already paid her loan covered by PN No. 34534. [102] In her testimony
before the RTC three years later, on 28 November 1991, she changed her story. This
time she narrated that the loan covered by PN No. 34534 was secured by her money
market placement with petitioner FNCB Finance, and when she failed to pay the said PN
when it became due, the security was applied to the loan, therefore, the loan was
considered paid.[103] Given the foregoing, respondents assertion of payment of PN No.
34534 is extremely dubious.
 According to petitioner Citibank, the PNs in the second set, except for PN No.
34534, were mere renewals of the unpaid PNs in the first set, which was why the PNs
stated that they were for the purpose of liquidating existing obligations. PN No. 34534,
however, which was part of the first set, was still valid and subsisting and so it was
included in the second set without need for its renewal, and it still being the original PN
for that particular loan, its stated purpose was for personal investment. [104] Respondent
essentially admitted executing the second set of PNs, but they were only meant to cover
simulated loans. Mr. Tan supposedly convinced her that her pending loan application
with DBP would have a greater chance of being approved if they made it appear that
respondent urgently needed the money because petitioner Citibank was already
demanding payment for her simulated loans.

Respondents 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, respondents 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 respondents letter, written on 7 October 1985, or
more than six years after the execution of the second set of PNs, in which she demanded
return of the simulated or fictitious PNs, together with the letters relating thereto, which
Mr. Tan purportedly asked her to execute. Respondent further failed to present any proof
of her alleged loan application with the DBP, and of any circumstance or correspondence
wherein the simulated or fictitious PNs were indeed used for their supposed purpose.

In contrast, petitioner Citibank, as supported by the testimonies of its officers and

available documentation, consistently treated the said PNs as regular loans accepted,
approved, and paid in the ordinary course of its business.

The PNs executed by the respondent in favor of petitioner Citibank to cover her loans
were duly-filled out and signed, including the disclosure statement found at the back of
the said PNs, in adherence to the Central Bank requirement to disclose the full finance
charges to a loan granted to borrowers.

Mr. Tan, then an account officer with the Marketing Department of petitioner
Citibank, testified that he dealt directly with respondent; he facilitated the loans; and the
PNs, at least in the second set, were signed by respondent in his presence.[105]

Mr. Pujeda, the officer who was previously in charge of loans and placements,
confirmed that the signatures on the PNs were verified against respondents specimen
signature with the bank.[106]

Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan processor,

was responsible for booking respondents 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 clients 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 clients 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 respondents 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 respondents 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 respondents counsel was even willing to stipulate.[107]

Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at the Control
Department of petitioner Citibank. She was presented by petitioner Citibank to expound
on the microfilming procedure at the bank, since most of the copies of the PNs were
retrieved from microfilm. Microfilming of the documents are actually done by people at
the Operations Department. At the end of the day or during the day, the original copies
of all bank documents, not just those pertaining to loans, are microfilmed. She refuted
the possibility that insertions could be made in the microfilm because the microfilm is
inserted in a cassette; the cassette is placed in the microfilm machine for use; at the end
of the day, the cassette is taken out of the microfilm machine and put in a safe vault; and
the cassette is returned to the machine only the following day for use, until the spool is
full.This is the microfilming procedure followed everyday. When the microfilm spool is
already full, the microfilm is developed, then sent to the Control Department, which
double checks the contents of the microfilms against the entries in the General
Ledger. The Control Department also conducts a random comparison of the contents of
the microfilms with the original documents; a random review of the contents is done on
every role of microfilm.[108]

Ms. Renee Rubio worked for petitioner Citibank for 20 years. She rose from the ranks,
initially working as a secretary in the Personnel Group; then as a secretary to the
Personnel Group Head; a Service Assistant with the Marketing Group, in 1972 to 1974,
dealing directly with corporate and individual clients who, among other things, secured
loans from petitioner Citibank; the Head of the Collection Group of the Foreign
Department in 1974 to 1976; the Head of the Money Transfer Unit in 1976 to 1978; the
Head of the Loans and Placements Unit up to the early 1980s; and, thereafter,
she established operations training for petitioner Citibank in the Asia-Pacific Region
responsible for the training of the officers of the bank. She testified on the standard loan
application process at petitioner Citibank. According to Ms. Rubio, the account officer
or marketing person submits a proposal to grant a loan to an individual or
corporation. Petitioner Citibank has a worldwide policy that requires a credit committee,
composed of a minimum of three people, which would approve the loan and amount
thereof. There can be no instance when only one officer has the power to approve the
loan application. When the loan is approved, the account officer in charge will obtain the
corresponding PNs from the client. The PNs are sent to the signature verifier who would
validate the signatures therein against those appearing in the signature cards previously
submitted by the client to the bank. The Operations Unit will check and review the
documents, including the PNs, if it is a clean loan, and securities and deposits, if it is
collateralized. The loan is then recorded in the General Ledger. The Loans and
Placements Department will not book the loans without the PNs.When the PNs are
liquidated, whether they are paid or rolled-over, they are returned to the client. [109] Ms.
Rubio further explained that she was familiar with respondents 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 respondents outstanding obligations.[110] She thus calculated respondents
outstanding loans, which was sent as an attachment to Mr. Tans letter to respondent,
dated 28 September 1979, and presented before the RTC as Exhibits 34-B and 34-C.[111]
Lastly, the exchange of letters between petitioner Citibank and respondent, as well as the
letters sent by other people working for respondent, had consistently recognized that
respondent owed petitioner Citibank money.

In consideration of the foregoing discussion, this Court finds that the

preponderance of evidence supports the existence of the respondents loans, in the
principal sum ofP1,920,000.00, 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, [113] to the exclusion
of any secondary or substitutionary evidence.[114]

The best evidence rule has been made part of the revised Rules of Court, Rule
130, Section 3, which reads

SEC. 3. Original document must be produced; exceptions. When the subject of

inquiry is the contents of a document, no evidence shall be admissible other than the
original document itself, except in the following cases:
(a) When the original has been lost or destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party against
whom the evidence is offered, and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other documents which
cannot be examined in court without great loss of time and the fact sought to be
established from them is only the general result of the whole; and
(d) When the original is a public record in the custody of a public officer or is
recorded in a public office.

As the afore-quoted provision states, the best evidence rule applies only when the
subject of the inquiry is the contents of the document. The scope of the rule is more
extensively explained thus

But even with respect to documentary evidence, the best evidence rule applies
only when the content of such document is the subject of the inquiry. Where the issue is
only as to whether such document was actually executed, or exists, or on the
circumstances relevant to or surrounding its execution, the best evidence rule does not
apply and testimonial evidence is admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op.
cit., p. 78). Any other substitutionary evidence is likewise admissible without need for
accounting for the original.

Thus, when a document is presented to prove its existence or condition it is

offered not as documentary, but as real, evidence. Parol evidence of the fact of execution
of the documents is allowed (Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565). x x
x [115]

In Estrada v. Desierto,[116] this Court had occasion to rule that

 It is true that the Court relied not upon the original but only copy of the Angara
Diary as published in the Philippine Daily Inquirer on February 4-6, 2001. In doing
so, the Court, did not, however, violate the best evidence rule. Wigmore, in his book on
evidence, states that:

Production of the original may be dispensed with, in the trial courts 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

xxxx

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 respondents loans. The terms or
contents of these documents were never the point of contention in the Petition at bar. It
was respondents position that the PNs in the first set (with the exception of PN No.
34534) never existed, while the PNs in the second set (again, excluding PN No. 34534)
were merely executed to cover simulated loan transactions. As for the MCs representing
the proceeds of the loans, the respondent either denied receipt of certain MCs or
admitted receipt of the other MCs but for another purpose. Respondent further admitted
the letters she wrote personally or through her representatives to Mr. Tan of petitioner
Citibank acknowledging the loans, except that she claimed that these letters were just
meant to keep up the ruse of the simulated loans. Thus, respondent questioned the
documents as to their existence or execution, or when the former is admitted, as to the
purpose for which the documents were executed, matters which are, undoubtedly,
external to the documents, and which had nothing to do with the contents thereof.
Alternatively, even if it is granted that the best evidence rule should apply to the
evidence presented by petitioners regarding the existence of respondents loans, it should
be borne in mind that the rule admits of the following exceptions under Rule 130,
Section 5 of the revised Rules of Court
 SEC. 5. When the original document is unavailable. When the original document
has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its
execution or existence and the cause of its unavailability without bad faith on his part,
may prove its contents by a copy, or by a recital of its contents in some authentic
document, or by the testimony of witnesses in the order stated.

The execution or existence of the original copies of the documents was

established through the testimonies of witnesses, such as Mr. Tan, before whom most of
the documents were personally executed by respondent. The original PNs also went
through the whole loan booking system of petitioner Citibank from the account officer
in its Marketing Department, to the pre-processor, to the signature verifier, back to the
pre-processor, then to the processor for booking.[117] The original PNs were seen by Ms.
Dondoyano, the processor, who recorded them in the General Ledger. Mr. Pujeda
personally saw the original MCs, proving respondents receipt of the proceeds of her
loans from petitioner Citibank, when he helped Attys. Cleofe and Fernandez, the banks
legal counsels, to reconstruct the records of respondents loans. The original MCs were
presented to Atty. Cleofe who used the same during the preliminary investigation of the
case, sometime in years 1986-1987. The original MCs were subsequently turned over to
the Control and Investigation Division of petitioner Citibank.[118]

It was only petitioner FNCB Finance who claimed that they lost the original
copies of the PNs when it moved to a new office. Citibank did not make a similar
contention; instead, it explained that the original copies of the PNs were returned to the
borrower upon liquidation of the loan, either through payment or 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 respondents loans, as an exception to the best
evidence rule.

The impact of the Decision of the Court of Appeals in the Dy case

In its assailed Decision, the Court of Appeals made the following pronouncement

Besides, We find the declaration and conclusions of this Court in CA-G.R. CV

No. 15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et al,
promulgated on 15 January 1990, as disturbing taking into consideration the similarities
of the fraud, machinations, and deceits employed by the defendant-appellant Citibank
and its Account Manager Francisco Tan.

Worthy of note is the fact that Our declarations and conclusions against Citibank
and the person of Francisco Tan in CA-G.R. CV No. 15934 were affirmed in toto by the
Highest Magistrate in a Minute Resolution dated 22 August 1990 entitled Citibank, N.A.,
vs. Court of Appeals, G.R. 93350.

As the factual milieu of the present appeal created reasonable doubts as to

whether the nine (9) Promissory Notes were indeed executed with considerations, the
doubts, coupled by the findings and conclusions of this Court in 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[119] 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 parties presently before
this Court, but the transactions are absolutely independent and unrelated to those in the
instant Petition.
In the Dy case, Severino Chua Caedo managed to obtain loans from herein petitioner
Citibank amounting to P7,000,000.00, secured to the extent of P5,000,000.00 by a Third
Party Real Estate Mortgage of the properties of Caedos aunt, Rosalind Dy. It turned out
that Rosalind Dy and her husband were unaware of the said loans and the mortgage of
their properties. The transactions were carried out exclusively between Caedo and Mr.
Tan of petitioner Citibank. The RTC found Mr. Tan guilty of fraud for his participation
in the questionable transactions, essentially because he allowed Caedo to take out the
signature cards, when these should have been signed by the Dy spouses personally
before him.Although the Dy spouses signatures in the PNs and Third Party Real Estate
Mortgage were forged, they were approved by the signature verifier since the signature
cards against which they were compared to were also forged. Neither the RTC nor the
Court of Appeals, however, categorically declared Mr. Tan personally responsible for the
forgeries, which, in the narration of the facts, were more likely committed by Caedo.

In the Petition at bar, respondent dealt with Mr. Tan directly, there was no third party
involved who could have perpetrated any fraud or forgery in her loan
transactions. Although respondent attempted to raise suspicion as to the authenticity of
her signatures on certain documents, these were nothing more than naked allegations
with no corroborating evidence; worse, even her own allegations were replete with
inconsistencies. She could not even establish in what manner or under what
circumstances the fraud or forgery was committed, or how Mr. Tan could have been
directly responsible for the same.

While the Court of Appeals can take judicial notice of the Decision of its Third Division
in the Dy case, it should not have given the said case much weight when it rendered the
assailed Decision, since the former does not constitute a precedent. The Court of
Appeals, in the challenged Decision, did not apply any legal argument or principle
established in the Dy case but, rather, adopted the findings therein of wrongdoing or
misconduct on the part of herein petitioner Citibank and Mr. Tan. Any finding of
wrongdoing or misconduct as against herein petitioners should be made based on the
factual background and pieces of evidence submitted in this case, not those in another
case.
It is apparent that the Court of Appeals took judicial notice of the Dy case not as a legal
precedent for the present case, but rather as evidence of similar acts committed by
petitioner Citibank and Mr. Tan. A basic rule of evidence, however, states that, Evidence
that one did or did not do a certain thing at one time is not admissible to prove that he
did or did not do the same or similar thing at another time; but it may be received to
prove a specific intent or knowledge, identity, plan, system, scheme, habit, custom or
usage, and the like.[120] The rationale for the rule is explained thus

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

The factual backgrounds of the two cases are so different and unrelated that the Dy case
cannot be used to prove specific intent, knowledge, identity, plan, system, scheme, habit,
custom or usage on the part of petitioner Citibank or its officer, Mr. Tan, to defraud
respondent in the present case.

IV

The liquidation of respondents outstanding

loans were valid in so far as petitioner Citibank
used respondents 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 respondents
dollar accounts with Citibank-Geneva.

Savings Account with petitioner Citibank

Compensation is a recognized mode of extinguishing obligations. Relevant provisions of
the Civil Code provides

Art. 1278. Compensation shall take place when two persons, in their own right,
are creditors and debtors of each other.

Art. 1279. In order that compensation may be proper, it is necessary;

(1) That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the latter has been
stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced
by third persons and communicated in due time to the debtor.

There is little controversy when it comes to the right of petitioner Citibank to

compensate respondents outstanding loans with her deposit account. As already found
by this Court, petitioner Citibank was the creditor of respondent for her outstanding
loans. At the same time, respondent was the creditor of petitioner Citibank, as far as her
deposit account was concerned, since bank deposits, whether fixed, savings, or current,
should be considered as simple loan or mutuum by the depositor to the banking
institution.[122]Both debts consist in sums of money. By June 1979, all of respondents
PNs in the second set had matured and became demandable, while respondents savings
account was demandable anytime. Neither was there any retention or controversy over
the PNs and the deposit account commenced by a third person and communicated in due
time to the debtor concerned. Compensation takes place by operation of law,
[123] therefore, even in the absence of an expressed authority from respondent, petitioner
Citibank had the right to effect, on 25 June 1979, the partial compensation or off-set of
respondents 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 respondents outstanding loans, which came from persons
other than petitioner Citibank.

Respondents money market placements were with petitioner FNCB Finance, and
after several roll-overs, they were ultimately covered by PNs No. 20138 and 20139,
which, by 3 September 1979, the date the check for the proceeds of the said PNs were
issued, amounted to P1,022,916.66, inclusive of the principal amounts and interests. As
to these money market placements, respondent was the creditor and petitioner FNCB
Finance the debtor; while, as to the outstanding loans, petitioner Citibank was the
creditor and respondent the debtor. Consequently, legal compensation, under Article
1278 of the Civil Code, would not apply since the first requirement for a valid
compensation, that each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other, was not met.

What petitioner Citibank actually did was to exercise its rights to the proceeds of
respondents money market placements with petitioner FNCB Finance by virtue of the
Deeds of Assignment executed by respondent in its favor.

The Court of Appeals did not consider these Deeds of Assignment because of
petitioners failure to produce the original copies thereof in violation of the best evidence
rule.This Court again finds itself in disagreement in the application of the best evidence
rule by the appellate court.

To recall, the best evidence rule, in so far as documentary evidence is concerned,

requires the presentation of the original copy of the document only when the context
thereof is the subject of inquiry in the case. Respondent does not question the contents of
the Deeds of Assignment. While she admitted the existence and execution of the Deeds
of Assignment, dated 2 March 1978 and 9 March 1978, covering PNs No. 8169 and
8167 issued by petitioner FNCB Finance, she claimed, as defense, that the loans for
which the said Deeds were executed as security, were already paid. She denied ever
executing both Deeds of Assignment, dated 25 August 1978, covering PNs No. 20138
and 20139. These are again issues collateral to the contents of the documents involved,
which could be proven by evidence other than the original copies of the said documents.

Moreover, the Deeds of Assignment of the money market placements with

petitioner FNCB Finance were notarized documents, thus, admissible in evidence. Rule
132, Section 30 of the Rules of Court provides that

SEC. 30. Proof of notarial documents. Every instrument duly acknowledged or

proved and certified as provided by law, may be presented in evidence without further
proof, the certificate of acknowledgement being prima facie evidence of the execution
of the instrument or document involved.
Significant herein is this Courts elucidation in De Jesus v. Court of Appeals,
[124] which reads

On the evidentiary value of these documents, it should be recalled that the

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

The rule on the evidentiary weight that must be accorded a notarized document is
clear and unambiguous. The certificate of acknowledgement in the notarized Deeds of
Assignment constituted prima facie evidence of the execution thereof. Thus, the burden
of refuting this presumption fell on respondent. She could have presented evidence of
any defect or irregularity in the execution of the said documents [125] or raised questions
as to the verity of the notary publics acknowledgment and certificate in the Deeds.
[126] But again, respondent admitted executing the Deeds of Assignment, dated 2 March
1978 and 9 March 1978, although claiming that the loans for which they were executed
as security were already paid. And, she assailed the Deeds of Assignment, dated 25
August 1978, with nothing more than her bare denial of execution thereof, hardly the
clear and convincing evidence required to trounce the presumption of due execution of a
notarized document.
Petitioners not only presented the notarized Deeds of Assignment, but even secured
certified literal copies thereof from the National Archives. [127] Mr. Renato Medua, an
archivist, working at the Records Management and Archives Office of the National
Library, testified that the copies of the Deeds presented before the RTC were certified
literal copies of those contained in the Notarial Registries of the notary publics
concerned, which were already in the possession of the National Archives. He also
explained that he could not bring to the RTC the Notarial Registries containing the
original copies of the Deeds of Assignment, because the Department of Justice (DOJ)
Circular No. 97, dated 8 November 1968, prohibits the bringing of original documents to
the courts to prevent the loss of irreplaceable and priceless documents.[128]

Accordingly, this Court gives the Deeds of Assignment grave importance in establishing
the authority given by the respondent to petitioner Citibank to use as security for her
loans her money her market placements with petitioner FNCB Finance, represented by
PNs No. 8167 and 8169, later to be rolled-over as PNs No. 20138 and 20139. These
Deeds of Assignment constitute the law between the parties, and the obligations arising
therefrom shall have the force of law between the parties and should be complied with in
good faith.[129] Standard clauses in all of the Deeds provide that

The ASSIGNOR and the ASSIGNEE hereby further agree as follows:

xxxx

2. In the event the OBLIGATIONS are not paid at maturity or upon demand, as
the case may be, the ASSIGNEE is fully authorized and empowered to collect and
receive the PLACEMENT (or so much thereof as may be necessary) and apply the same
in payment of the OBLIGATIONS. Furthermore, the ASSIGNOR agrees that at any
time, and from time to time, upon request by the ASSIGNEE, the ASSIGNOR will
promptly execute and deliver any and all such further instruments and documents as
may be necessary to effectuate this Assignment.

xxxx

5. This Assignment shall be considered as sufficient authority to FNCB Finance

to pay and deliver the PLACEMENT or so much thereof as may be necessary to
liquidate the OBLIGATIONS, to the ASSIGNEE in accordance with terms and
provisions hereof.[130]
Petitioner Citibank was only acting upon the authority granted to it under the foregoing
Deeds when it finally used the proceeds of PNs No. 20138 and 20139, paid by petitioner
FNCB Finance, to partly pay for respondents 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 respondents obligations through the application of the
security given by the respondent for her loans. Although the pertinent documents were
entitled Deeds of Assignment, they were, in reality, more of a pledge by respondent to
petitioner Citibank of her credit due from petitioner FNCB Finance by virtue of her
money market placements with the latter. According to Article 2118 of the Civil Code

ART. 2118. If a credit has been pledged becomes due before it is redeemed, the
pledgee may collect and receive the amount due. He shall apply the same to the payment
of his claim, and deliver the surplus, should there be any, to the pledgor.

PNs No. 20138 and 20139 matured on 3 September 1979, without them being redeemed
by respondent, so that petitioner Citibank collected from petitioner FNCB Finance the
proceeds thereof, which included the principal amounts and interests earned by the
money market placements, amounting to P1,022,916.66, and applied the same against
respondents outstanding loans, leaving no surplus to be delivered to respondent.

Dollar accounts with Citibank-Geneva

Despite the legal compensation of respondents savings account and the total application
of the proceeds of PNs No. 20138 and 20139 to respondents outstanding loans, there still
remained a balance of P1,069,847.40. Petitioner Citibank then proceeded to applying
respondents 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.[131]

Upon closer scrutiny of the Declaration of Pledge, this Court finds the same exceedingly
suspicious and irregular.

First of all, it escapes this Court why petitioner Citibank took care to have the Deeds of
Assignment of the PNs notarized, yet left the Declaration of Pledge unnotarized. This
Court would think that petitioner Citibank would take greater cautionary measures with
the preparation and execution of the Declaration of Pledge because it involved
respondents all present and future fiduciary placements with a Citibank branch in
another country, specifically, in Geneva, Switzerland. While there is no express legal
requirement that the Declaration of Pledge had to be notarized to be effective, even so, it
could not enjoy the same prima facie presumption of due execution that is extended to
notarized documents, and petitioner Citibank must discharge the burden of proving due
execution and authenticity of the Declaration of Pledge.

Second, petitioner Citibank was unable to establish the date when the Declaration of
Pledge was actually executed. The photocopy of the Declaration of Pledge submitted by
petitioner Citibank before the RTC was undated. [132] It presented only a photocopy of
the pledge because it already forwarded the original copy thereof to Citibank-Geneva
when it requested for the remittance of respondents dollar accounts pursuant
thereto. Respondent, on the other hand, was able to secure a copy of the Declaration of
Pledge, certified by an officer of Citibank-Geneva, which bore the date 24 September
1979.[133] Respondent, however, presented her passport and plane tickets to prove that
she was out of the country on the said date and could not have signed the
pledge. Petitioner Citibank insisted that the pledge was signed before 24 September
1979, but could not provide an explanation as to how and why the said date was written
on the pledge. Although Mr. Tan testified that the Declaration of Pledge was signed by
respondent personally before him, he could not give the exact date when the said signing
took place. It is important to note that the copy of the Declaration of Pledge submitted
by the respondent to the RTC was certified by an officer of Citibank-Geneva, which had
possession of the original copy of the pledge. It is dated 24 September 1979, and this
Court shall abide by the presumption that the written document is truly dated. [134] Since
it is undeniable that respondent was out of the country on 24 September 1979, then she
could not have executed the pledge on the said date.

Third, the Declaration of Pledge was irregularly filled-out. The pledge was in a standard
printed form. It was constituted in favor of Citibank, N.A., otherwise referred to therein
as the Bank. It should be noted, however, that in the space which should have named the
pledgor, the name of petitioner Citibank was typewritten, to wit

The pledge right herewith constituted shall secure all claims which the Bank now has or
in the future acquires against Citibank, N.A., Manila (full name and address of the
Debtor), regardless of the legal cause or the transaction (for example current account,
securities transactions, collections, credits, payments, documentary credits and
collections) which gives rise thereto, and including principal, all contractual and penalty
interest, commissions, charges, and costs.

The pledge, therefore, made no sense, the pledgor and pledgee being the same
entity. Was a mistake made by whoever filled-out the form? Yes, it could be a
possibility.Nonetheless, considering the value of such a document, the mistake as to a
significant detail in the pledge could only be committed with gross carelessness on the
part of petitioner Citibank, and raised serious doubts as to the authenticity and due
execution of the same. The Declaration of Pledge had passed through the hands of
several bank officers in the country and abroad, yet, surprisingly and implausibly, no one
noticed such a glaring mistake.

Lastly, respondent denied that it was her signature on the Declaration of Pledge. She
claimed that the signature was a forgery. When a document is assailed on the basis of
forgery, the best evidence rule applies

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

Respondent made several attempts to have the original copy of the pledge
produced before the RTC so as to have it examined by experts. Yet, despite several
Orders by the RTC,[136] petitioner Citibank failed to comply with the production of the
original Declaration of Pledge. It is admitted that 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.[137] In addition, even if this Court cannot make a categorical
finding that respondents signature on the original copy of the pledge was forged, it is
persuaded that petitioner Citibank willfully suppressed the presentation of the original
document, and takes into consideration the presumption that the evidence willfully
suppressed would be adverse to petitioner Citibank if produced.[138]

Without the Declaration of Pledge, petitioner Citibank had no authority to demand

the remittance of respondents 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 respondents dollar accounts from
Citibank-Geneva and the application thereof to her outstanding loans with petitioner
Citibank was illegal, and null and void. Resultantly, petitioner Citibank is obligated to
return to respondent the amount of US$149,632,99 from her Citibank-Geneva accounts,
or its present equivalent value in Philippine currency; and, at the same time, respondent
continues to be obligated to petitioner Citibank for the balance of her outstanding loans
which, as of 5 September 1979, amounted to P1,069,847.40.
V

The parties shall be liable for interests on their

monetary obligations to each other, as
determined herein.

In summary, petitioner Citibank is ordered by this Court to pay respondent the

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

Petitioner Citibank is also ordered to refund to respondent the amount of

US$149,632.99, or its equivalent in Philippine currency, which had been remitted from
her Citibank-Geneva accounts. These dollar accounts, consisting of two fiduciary
placements and current accounts with Citibank-Geneva shall continue earning their
respective stipulated interests from 26 October 1979, the date of their remittance by
Citibank-Geneva to petitioner Citibank in Manila and applied against respondents
outstanding loans.
 As for respondent, she is ordered to pay petitioner Citibank the balance of her
outstanding loans, which amounted to P1,069,847.40 as of 5 September 1979. These
loans continue to earn interest, as stipulated in the corresponding PNs, from the time of
their respective maturity dates, since the supposed payment thereof using respondents
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 attorneys fees in favor of respondent. They argued that the RTC did not
award any damages, and respondent, in her appeal before the Court of Appeals, did not
raise in issue the absence of such.

While it is true that the general rule is that only errors which have been stated in the
assignment of errors and properly argued in the brief shall be considered, this Court has
also recognized exceptions to the general rule, wherein it authorized the review of
matters, even those not assigned as errors in the appeal, if the consideration thereof is
necessary in arriving at a just decision of the case, and there is a close inter-relation
between the omitted assignment of error and those actually assigned and discussed by
the appellant.[140]Thus, the Court of Appeals did not err in awarding the damages when
it already made findings that would justify and support the said award.
Although this Court appreciates the right of petitioner Citibank to effect legal
compensation of respondents 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 respondents outstanding loans, it finds that petitioner Citibank did commit
wrong when it failed to pay and properly account for the proceeds of respondents money
market placements, evidenced by PNs No. 23356 and 23357, and when it sought the
remittance of respondents dollar accounts from Citibank-Geneva by virtue of a highly-
suspect Declaration of Pledge to be applied to the remaining balance of respondents
outstanding loans. It bears to emphasize that banking is impressed with public interest
and its fiduciary character requires high standards of integrity and performance. [141] A
bank is under the obligation to treat the accounts of its depositors with meticulous care
whether such accounts consist only of a few hundred pesos or of millions of pesos.
[142] The bank must record every single transaction accurately, down to the last centavo,
and as promptly as possible.[143] Petitioner Citibank evidently failed to exercise the
required degree of care and transparency in its transactions with respondent, thus,
resulting in the wrongful deprivation of her property.

Respondent had been deprived of substantial amounts of her investments and

deposits for more than two decades. During this span of years, respondent had found
herself in desperate need of the amounts wrongfully withheld from her. In her
testimony[144] before the RTC, respondent narrated

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

A I am engaged in real estate. I am the owner of the Modesta Village 1 and 2 in San
Mateo, Rizal. I am also the President and Chairman of the Board of Macador
[sic] Co. and Business Inc. which operates the Macador [sic] International Palace
Hotel. I am also the President of the Macador [sic] International Palace Hotel,
and also the Treasures Home Industries, Inc. which I am the Chairman and
president of the Board and also operating affiliated company in the name of
Treasures Motor Sales engaged in car dealers [sic] like Delta Motors, we are the
dealers of the whole Northern Luzon and I am the president of the Disto
Company, Ltd., based in Hongkong licensed in Honkong [sic] and now operating
in Los Angeles, California.

Q What is the business of that Disto Company Ltd.?

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

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

A Yes sir.

Q What are those?

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

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

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

Q Where?

A In Dagupan City, Pangasinan.

Q What else?

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

Pangasinan.

Q What happened to your businesses you mentioned as a result of your failure to

recover you [sic] investments and bank deposits from the defendants?

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

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

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

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

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

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

A Yes sir, definitely.

Q How?

A I was embarrassed because being a businesswoman I would like to inform the

Honorable Court that I was awarded as the most outstanding businesswoman of
the year in 1976 but when this money was not given back to me I was not able to
comply with the commitments that I have promised to these associations that I
am engaged into [sic], sir.
For the mental anguish, serious anxiety, besmirched reputation, moral shock and social
humiliation suffered by the respondent, the award of moral damages is but
proper.However, this Court reduces the amount thereof to P300,000.00, for the award of
moral damages is meant to compensate for the actual injury suffered by the respondent,
not to enrich her.[145]

Having failed to exercise more care and prudence than a private individual in its
dealings with respondent, petitioner Citibank should be liable for exemplary damages, in
the amount of P250,000.00, in accordance with Article 2229[146] and 2234[147] of the
Civil Code.

With the award of exemplary damages, then respondent shall also be entitled to an
award of attorneys fees.[148] Additionally, attorney's fees may be awarded when a party
is compelled to litigate or to incur expenses to protect his interest by reason of an
unjustified act of the other party.[149] In this case, an award of P200,000.00 attorneys
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 ones rights is damnum
absque injuria.[150]

IN VIEW OF THE FOREGOING, the instant Petition is PARTLY

GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. No. 51930,
dated 26 March 2002, as already modified by its Resolution, dated 20 November 2002,
is hereby AFFIRMED WITH MODIFICATION, as follows

1. PNs No. 23356 and 23357 are DECLARED subsisting and

outstanding. Petitioner Citibank is ORDERED to return to respondent the principal
amounts of the said PNs, amounting to Three Hundred Eighteen Thousand Eight
Hundred Ninety-Seven Pesos and Thirty-Four Centavos (P318,897.34) and Two
Hundred Three Thousand One Hundred Fifty Pesos (P203,150.00), respectively, plus the
stipulated interest of Fourteen and a half percent (14.5%) per annum, beginning 17
March 1977;

2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two
US Dollars and Ninety-Nine Cents (US$149,632.99) from respondents Citibank-Geneva
accounts to petitioner Citibank in Manila, and the application of the same against
respondents outstanding loans with the latter, is DECLARED illegal, null and
void. Petitioner Citibank is ORDERED to refund to respondent the said amount, or its
equivalent in Philippine currency using the exchange rate at the time of payment, plus
the stipulated interest for each of the fiduciary placements and current accounts
involved, beginning 26 October 1979;

3. Petitioner Citibank is ORDERED to pay respondent moral damages in the

amount of Three Hundred Thousand Pesos (P300,000.00); exemplary damages in the
amount of Two Hundred Fifty Thousand Pesos (P250,000.00); and attorneys fees in the
amount of Two Hundred Thousand Pesos (P200,000.00); and

4. Respondent is ORDERED to pay petitioner Citibank the balance of her

outstanding loans, which, from the respective dates of their maturity to 5 September
1979, was computed to be in the sum of One Million Sixty-Nine Thousand Eight
Hundred Forty-Seven Pesos and Forty Centavos (P1,069,847.40), inclusive of
interest. These outstanding loans shall continue to earn interest, at the rates stipulated in
the corresponding PNs, from 5 September 1979 until payment thereof.
SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice Associate Justice

ROMEO J. CALLEJO, SR.

Associate Justice

C E R T I FI CAT I O N

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

ARTEMIO V. PANGANIBAN
Chief Justice

[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 327-366.
[3] Id. at 368-374.
[4] TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.
[5] Records, Vol. I, pp. 1-8.
[6] Id. at 148-157.
[7] Id. at 40-51.
[8] Id. at 208-227.
[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 RTC), the case was transferred to Makati RTC, Branch 57, presided by
Judge Francisco X. Velez, for reasons not disclosed in the Records. Judge Velez
was able to try and hear the case until the presentation of the evidence by herein
petitioners (defendants before the RTC). Respondent again took the stand to
present rebuttal evidence, but even before she could finish her testimony, Judge
Velez inhibited himself upon petitioners motion (Order, dated 10 April 1992,
penned by Judge Francisco X. Velez, Records, Vol. 11, p. 1085). The case was
transferred to Makati RTC, Branch 141, presided by Judge Marcelino F. Bautista,
Jr. For reasons not disclosed in the Records, Judge Manuel D. Victorio took over
Makati RTC, Branch 141. After the parties submitted their respective Memoranda,
Judge Victorio declared the case submitted for decision (Order, dated 9 December
1994, penned by Judge Manuel D. Victorio, Records, Vol. III, p. 1602). Judge
Victorio rendered his Decision in Civil Case No. 11336 on 24 August 1995
(Records, Vol. III, pp. 1607-1621).
[12] Rollo, pp. 365-366.
[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 [1962].)
[15] Rollo of G.R. No. 156132, p. 1227.
[16] Rollo, p. 374.
[17] Resolution, dated 29 January 2003; rollo, pp. 980-A-B.
[18] Resolution, dated 23 June 2003; id. at 1311-1312.
[19] Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137 Phil. 239,
244 (1969); Singh v. Liberty Insurance Corp., 118 Phil. 532, 535 (1963).
[20] Rollo, pp. 1443-1445.
[21] See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438 [1976]) wherein
this Court pronounced that a partys 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.
[22] The Executive Secretary v. Gordon, 359 Phil. 266, 271 (1998).
[23] Young v. John Keng Seng, 446 Phil. 823, 833 (2003).
[24] Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283 (1998).
[25] The Court of Appeals modified the trial courts findings and conclusions, as follows:
(1) By declaring the P1,069,847.40 alleged indebtedness of Ms. Sabeniano as
non-existing for failure of Citibank to substantiate its allegations; (2) By declaring
that there are unpaid money market placements, current accounts and savings
account of Ms. Sabeniano; and (3) The awarding of damages in favor of Ms.
Sabeniano and against Citibank.
[26] Supra note 11.
[27] Records, Vol. III, pp. 1612-1613.
[28] Penned by Associate Justice Andres B. Reyes with Associate Justices Conrado M.
Vasquez, Jr. and Amelita G. Tolentino, concurring; rollo, p. 344.

[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 (1995).
[31] Records, Vol. I, p. 515.
[32] 32 Phil. 476, 478-479.
[33] Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).
[34] Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95 (1996).
[35] Mr. Herminio Pujeda, at the time he testified before the RTC in 1990, was already
the Vice President of petitioner Citibank.
[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.
[38] Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
[39] TSN, 6 February 1990, Vol. V, pp. 16-24.
[40] Exhibit 37, defendants folder of exhibits, p. 106.
[41] Exhibit 37-C, id. at 107.
[42] Exhibit 37-F, id. at 108.
[43] TSN, 12 March 1990, p. 13.
[44] Exhibit 104-C, defendants folder of exhibits, p. 111.
[45] Exhibit 105, id. at 112.
[46] Exhibit 106, id. at 114.
[47] Exhibit 108, id. at 118.
[48] Exhibits 112 and 119, id. at 121-A, 124.
[49] Records, Vol. III, p. 1367.
[50] Exhibit 34-B, petitioners folder of exhibits, p. 102.
[51] Exhibit G, plaintiffs folder of exhibits, pp. 4-15.
[52] Records, Vol. III, p. 1,562.
[53] Exhibit J, plaintiffs folder of exhibits, p. 49.
[54] Exhibit 120-H, defendants folder of exhibits, pp. 131.
[55] Exhibits 1 to 9, id. at 44-52.
[56] Exhibits 18 to 26, id. at 83-92.
[57] Exhibit 13-E, id. at 65-67.
[58] Exhibit 14-G, id. at 72-74.
[59] Exhibit 15 and Exhibit 17-D, id. at 77-78, 81-82.
[60] Exhibit 38, id. at 109-110.
[61] Exhibit K-1, plaintiffs folder of exhibits, pp. 54-55
[62] Exhibit 27, defendants folder of exhibits, p. 93.
[63] Exhibit 28, id. at 94.
[64] Exhibit 29, id. at 95.
[65] Exhibit 30, id. at 96.
[66] Exhibit 31, id. at 97.
[67] Exhibit 32, id. at 98.
[68] Exhibits 34-B and 34-C, id. at 102-103.
[69] Exhibit 34, id. at 100.
[70] Exhibit 121, id. at 207.
[71] TSN, 14 May 1991, Vol. XI , pp. 12-14.
[72] TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 28-29.
[73] Exhibit QQQ, plaintiffs folder of exhibits, p. 117.
[74] Exhibit AAAA, id. at 124.
[75] TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.
[76] Id. at 16-23.
[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 (1999).
[79] Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538, 553 (2000), with
reference to Tan v. Court of Appeals, 239 Phil. 310, 322 (1994).
[80] Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218 SCRA 682,
695.
[81] 403 Phil. 361, 383 (2001).
[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.
[86] Exhibit 19, defendants folder of exhibits, p. 84.
[87] Exhibits 9-D and 9-G, id. at 52.
[88] Exhibit 9-F, id. at 52.
[89] TSN, 19 May 1986, Vol. II, p. 10.
[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.
[92] NEGOTIABLE INSTRUMENTS LAW, Section 66, in connection with Section 65.
[93] Associated Bank v. Court of Appeals, 322 Phil. 677, 697 (1996); Associated Bank v.
Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA 465, 472.
[94] Plaintiffs Formal Offer of Documentary Exhibits, records, Vol. I, pp. 504-505;
plaintiffs folder of exhibits, p. 110.
[95] Exhibits GGG and JJJ, plaintiffs folder of exhibits, pp. 109, 113.
[96] Plaintiffs folder of exhibits, p. 110.
[97] See the initials on Exhibit III-1, plaintiffs folder of exhibits, p. 112.
[98] Plaintiffs folder of exhibits, p. 112.
[99] TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
[100] G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.
[101] Exhibit MMM, plaintiffs 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.
[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.
[108] TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp. 31-34.
[109] TSN, 18 April 1991, Vol. X, pp. 3-13.
[110] Id. at 15-23.
[111] Folder of defendants exhibits, pp. 102-103.
[112] Municipality of Moncada v. Cajuigan, 21 Phil 184, 190 (1912).
[113] J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 31 (4th ed.,
1995).
[114] F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, p. 571 (8th ed., 2000).
[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.
[117] TSN, 13 March 1991, Vol X, pp. 7-9.
[118] TSN, 22 May 1990, Vol. V, pp. 14-17.
[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. Lapea, Jr. with Associate
Justices Santiago M. Kapunan and Emeterio C. Cui, concurring.
[120] REVISED RULES OF COURT, Rule 130, Section 34.
[121] J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 199-200
(4th ed., 1995).
[122] CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal of Manila, 213 Phil.
516,523-524 (1984).
[123] CIVIL CODE, Article 1286.
[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).
[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 (1996).
[130] Exhibits 13-E, 14-G, 15-D, and 17-D, defendants folder of exhibits, pp. 65-66, 72-
73, 77-78, 81-82.
[131] Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396 (2000).
[132] Exhibit 38, defendants folder of exhibits, pp. 109-110.
[133] Exhibit K-1, plaintiffs folder of exhibits, 54-55.
[134] REVISED RULES OF COURT, Rule 131, Section 3(u).
[135] Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763 (1998).
[136] Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes, records,
Vol. I, p. 310; Order, dated 2 September 1988, id. at penned by Judge Francisco
X. Velez, records, Vol. I, p. 449; Order, dated 24 November 1988, penned by
Judge Francisco X. Velez, records, Vol. I, p. 458; Order, dated 25 April 1989,
penned by Judge Francisco X. Velez, records, Vol. I, pp. 476-477
[137] Security Bank & Trust Co. v. Triumph Lumber and Construction Corporation, 361
Phil. 463, 477 (1999).
[138] REVISED RULES OF COURT, Rule 131, Section 3(e).
[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.
[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. L-28773, 30 June 1975,
64 SCRA 610, 633-634; Hernandez v. Andal, 78 Phil. 196, 209-210 (1947).
[141] THE GENERAL BANKING LAW OF 2000, Section 2.
[142] Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948 (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.
[145] Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995 (1999); Zenith Insurance
Corporation v. Court of Appeals, G.R. No. 85296, 14 May 1990, 185 SCRA 398,
402-403.
[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 (1999).
[150] ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 498, 531-532
(1999); Tierra International Construction Corp. v. National Labor Relations
Commission, G.R. No. 88912, 3 July 1992, 211 SCRA 73, 81; Saba v. Court of
Appeals, G.R. No. 77950, 24 August 1990, 189 SCRA 50, 55.