G.R. No.
156132 October 12, 2006 Promissory Notes (PNs), and secured by (a) a Declaration of
CITIBANK, N.A. (Formerly First National City Bank) and
INVESTORS' FINANCE CORPORATION, doing business
under the name and style of FNCB Finance, petitioners,
vs.
MODESTA R. SABENIANO, respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari,1 under
Rule 45 of the Revised Rules of Court, of the Decision 2 of the
Court of Appeals in CA-G.R. CV No. 51930, dated 26 March
2002, and the Resolution,3 dated 20 November 2002, of the
same court which, although modifying its earlier Decision, still
denied for the most part the Motion for Reconsideration of herein
petitioners.
Petitioner Citibank, N.A. (formerly known as the First National
City Bank) is a banking corporation duly authorized and existing
under the laws of the United States of America and licensed to
do commercial banking activities and perform trust functions in
the Philippines.
Petitioner Investor's Finance Corporation, which did business
under the name and style of FNCB Finance, was an affiliate
company of petitioner Citibank, specifically handling money
market placements for its clients. It is now, by virtue of a merger,
doing business as part of its successor-in-interest, BPI Card
Finance Corporation. However, so as to consistently establish
its identity in the Petition at bar, the said petitioner shall still be
referred to herein as FNCB Finance.4
Respondent Modesta R. Sabeniano was a client of both
petitioners Citibank and FNCB Finance. Regrettably, the
business relations among the parties subsequently went awry.
On 8 August 1985, respondent filed a Complaint 5 against
petitioners, docketed as Civil Case No. 11336, before the
Regional Trial Court (RTC) of Makati City. Respondent claimed
to have substantial deposits and money market placements with
the petitioners, as well as money market placements with the
Ayala Investment and Development Corporation (AIDC), the
proceeds of which were supposedly deposited automatically
and directly to respondent's accounts with petitioner Citibank.
Respondent alleged that petitioners refused to return her
deposits and the proceeds of her money market placements
despite her repeated demands, thus, compelling respondent to
file Civil Case No. 11336 against petitioners for "Accounting,
Sum of Money and Damages." Respondent eventually filed an
Amended Complaint6 on 9 October 1985 to include additional
claims to deposits and money market placements inadvertently
left out from her original Complaint.
In their joint Answer7 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
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 respondent's
outstanding loans with her deposits and money market
placements, pursuant to the Declaration of Pledge and the
Deeds of Assignment executed by respondent in its favor.
Petitioner Citibank supposedly informed respondent Sabeniano
of the foregoing compensation through letters, dated 28
September 1979 and 31 October 1979. Petitioners were
therefore surprised when six years later, in 1985, respondent
and her counsel made repeated requests for the withdrawal of
respondent's deposits and money market placements with
petitioner Citibank, including her dollar accounts with Citibank-
Geneva and her money market placements with petitioner
FNCB Finance. Thus, petitioners prayed for the dismissal of the
Complaint and for the award of actual, moral, and exemplary
damages, and attorney's fees.
When the parties failed to reach a compromise during the pre-
trial hearing,9 trial proper ensued and the parties proceeded with
the presentation of their respective evidence. Ten years after the
filing of the Complaint on 8 August 1985, a Decision10 was finally
rendered in Civil Case No. 11336 on 24 August 1995 by the
fourth Judge11 who handled the said case, Judge Manuel D.
Victorio, the dispositive portion of which reads –
WHEREFORE, in view of all the foregoing, decision is
hereby rendered as follows:
(1) Declaring as illegal, null and void the setoff
effected by the defendant Bank [petitioner
Citibank] of plaintiff's [respondent Sabeniano]
dollar deposit with Citibank, Switzerland, in
the amount of US$149,632.99, and ordering
the said defendant [petitioner Citibank] to
refund the said amount to the plaintiff with
legal interest at the rate of twelve percent
(12%) per annum, compounded yearly, from
31 October 1979 until fully paid, or its peso
equivalent at the time of payment;
(2) Declaring the plaintiff [respondent
Sabeniano] indebted to the defendant Bank
[petitioner Citibank] in the amount of
₱1,069,847.40 as of 5 September 1979 and
ordering the plaintiff [respondent Sabeniano]
to pay said amount, however, there shall be
no interest and penalty charges from the time
the illegal setoff was effected on 31 October
1979;
(3) Dismissing all other claims and
counterclaims interposed by the parties
against each other.
Costs against the defendant Bank.
All the parties appealed the foregoing Decision of the RTC to the
Court of Appeals, docketed as CA-G.R. CV No. 51930.
Respondent questioned the findings of the RTC that she was
still indebted to petitioner Citibank, as well as the failure of the
RTC to order petitioners to render an accounting of respondent's
deposits and money market placements with them. On the other
hand, petitioners argued that petitioner Citibank validly
compensated respondent's outstanding loans with her dollar
accounts with Citibank-Geneva, in accordance with the
Declaration of Pledge she executed in its favor. Petitioners also
alleged that the RTC erred in not declaring respondent liable for
damages and interest.
On 26 March 2002, the Court of Appeals rendered its
Decision12 affirming with modification the RTC Decision in Civil
Case No. 11336, dated 24 August 1995, and ruling entirely in
favor of respondent in this wise –
Wherefore, premises considered, the assailed 24
August 1995 Decision of the court a quo is
hereby AFFIRMED with MODIFICATION, as follows:
1. Declaring as illegal, null and void the set-
off effected by the defendant-appellant Bank
of the plaintiff-appellant's dollar deposit with
Citibank, Switzerland, in the amount of
US$149,632.99, and ordering defendant-
appellant Citibank to refund the said amount
to the 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 ₱1,069,847.40 in the account of Ms.
Sabeniano is hereby declared as without legal
and factual basis;
3. As defendants-appellants failed to account
the following plaintiff-appellant's money
market placements, savings account and
current accounts, the former is hereby
ordered to return the same, in accordance
with the terms and conditions agreed upon by
the contending parties as evidenced by the
certificates of investments, to wit:
(i) Citibank NNPN Serial
No. 023356 (Cancels and
Supersedes NNPN No.
22526) issued on 17 March
1977, ₱318,897.34 with
14.50% interest p.a.;
(ii) Citibank NNPN Serial
No. 23357 (Cancels and
Supersedes NNPN No.
22528) issued on 17 March
1977, ₱203,150.00 with
14.50 interest p.a.;
(iii) FNCB NNPN Serial No.
05757 (Cancels and
Supersedes NNPN No.
04952), issued on 02 June
1977, ₱500,000.00 with
17% interest p.a.;
(iv) FNCB NNPN Serial No.
05758 (Cancels and
Supersedes NNPN No.
04962), issued on 02 June
1977, ₱500,000.00 with
17% interest per annum;
(v) The Two Million
(₱2,000,000.00) 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 (₱500,000.00) by way of moral
damages, FIVE HUNDRED THOUSAND
PESOS (₱500,000.00) as exemplary
damages, and ONE HUNDRED THOUSAND
PESOS (₱100,000.00) as attorney's fees.
Apparently, the parties to the case, namely, the respondent, on
one hand, and the petitioners, on the other, made separate
attempts to bring the aforementioned Decision of the Court of
Appeals, dated 26 March 2002, before this Court for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the Decision
of the Court of Appeals in CA-G.R. CV No. 51930, dated 26
March 2002, and instead, filed immediately with this Court on 3
May 2002 a Motion for Extension of Time to File a Petition for
Review,13 which, after payment of the docket and other lawful
fees, was assigned the docket number G.R. No. 152985. In the
said Motion, respondent alleged that she received a copy of the
assailed Court of Appeals Decision on 18 April 2002 and, thus,
had 15 days therefrom or until 3 May 2002 within which to file
her Petition for Review. Since she informed her counsel of her
desire to pursue an appeal of the Court of Appeals Decision only
on 29 April 2002, her counsel neither had enough time to file a
motion for reconsideration of the said Decision with the Court of
Appeals, nor a Petition for Certiorari with this Court. Yet, the
Motion failed to state the exact extension period respondent was
requesting for.
Since this Court did not act upon respondent's Motion for
Extension of Time to file her Petition for Review, then the period
for appeal continued to run and still expired on 3 May
2002.14 Respondent failed to file any Petition for Review within
the prescribed period for appeal and, hence, this Court issued a
Resolution,15 dated 13 November 2002, in which it pronounced
that –
G.R. No. 152985 (Modesta R. Sabeniano vs. Court
of Appeals, et al.). – It appearing that petitioner failed
to file the intended petition for review on certiorari
within the period which expired on May 3, 2002, the
Court Resolves to DECLARE THIS CASE
TERMINATED and DIRECT the Division Clerk of
Court to INFORM the parties that the judgment sought
to be reviewed has become final and executory.
The said Resolution was duly recorded in the Book of Entries of
Judgments on 3 January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a Motion
for Reconsideration of its Decision in CA-G.R. CV No. 51930,
dated 26 March 2002. Acting upon the said Motion, the Court of
Appeals issued the Resolution,16 dated 20 November 2002,
modifying its Decision of 26 March 2002, as follows –
WHEREFORE, premises considered, the
instant Motion for Reconsideration is PARTIALLY
GRANTED as Sub-paragraph (V) paragraph 3 of the
assailed Decision's dispositive 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
denied17 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 resolved18 to reinstate the Petition.
The Petition presented fourteen (14) assignments of errors
allegedly committed by the Court of Appeals in its Decision,
dated 26 March 2002, involving both questions of fact and
questions of law which this Court, for the sake of expediency,
discusses jointly, whenever possible, in the succeeding
paragraphs.
I To sustain the argument of respondent would result in an unjust
The Resolution of this Court, dated 13 November 2002, in
G.R. No. 152985, declaring the Decision of the Court of
Appeals, dated 26 March 2002, final and executory, pertains
to respondent Sabeniano alone.
Before proceeding to a discussion of the merits of the instant
Petition, this Court wishes to address first the argument,
persistently advanced by respondent in her pleadings on record,
as well as her numerous personal and unofficial letters to this
Court which were no longer made part of the record, that the
Decision of the Court of Appeals in CA-G.R. CV No. 51930,
dated 26 March 2002, had already become final and executory
by virtue of the Resolution of this Court in G.R. No. 152985,
dated 13 November 2002.
G.R. No. 152985 was the docket number assigned by this Court
to respondent's Motion for Extension of Time to File a Petition
for Review. Respondent, though, did not file her supposed
Petition. Thus, after the lapse of the prescribed period for the
filing of the Petition, this Court issued the Resolution, dated 13
November 2002, declaring the Decision of the Court of Appeals,
dated 26 March 2002, final and executory. It should be pointed
out, however, that the Resolution, dated 13 November 2002,
referred only to G.R. No. 152985, respondent's appeal, which
she failed to perfect through the filing of a Petition for Review
within the prescribed period. The declaration of this Court in the
same Resolution would bind respondent solely, and not
petitioners which filed their own separate appeal before this
Court, docketed as G.R. No. 156132, the Petition at bar. This
would mean that respondent, on her part, should be bound by
the findings of fact and law of the Court of Appeals, including the
monetary amounts consequently awarded to her by the
appellate court in its Decision, dated 26 March 2002; and she
can no longer refute or assail any part thereof. 19
This Court already explained the matter to respondent when it
issued a Resolution20 in G.R. No. 156132, dated 2 February
2004, which addressed her Urgent Motion for the Release of the
Decision with the Implementation of the Entry of Judgment in the
following manner –
[A]cting on Citibank's and FNCB Finance's Motion for
Reconsideration, we resolved to grant the motion,
reinstate the petition and require Sabeniano to file a
comment thereto in our Resolution of June 23, 2003.
Sabeniano filed a Comment dated July 17, 2003 to
which Citibank and FNCB Finance filed a Reply dated
August 20, 2003.
From the foregoing, it is clear that Sabeniano had
knowledge of, and in fact participated in, the
proceedings in G.R. No. 156132. She cannot feign
ignorance of the proceedings therein and claim that
the Decision of the Court of Appeals has become final
and executory. More precisely, the Decision became
final and executory only with regard to Sabeniano in
view of her failure to file a petition for review within the
extended period granted by the Court, and not to
Citibank and FNCB Finance whose Petition for
Review was duly reinstated and is now submitted for
decision.
Accordingly, the instant Urgent Motion is hereby
DENIED. (Emphasis supplied.)
and incongruous situation wherein one party may frustrate the
efforts of the opposing party to appeal the case by merely filing
with this Court a Motion for Extension of Time to File a Petition
for Review, ahead of the opposing party, then not actually filing
the intended Petition.21 The party who fails to file its intended
Petition within the reglementary or extended period should
solely bear the consequences of such failure.
Respondent Sabeniano did not commit forum shopping.
Another issue that does not directly involve the merits of the
present Petition, but raised by petitioners, is whether respondent
should be held liable for forum shopping.
Petitioners contend that respondent committed forum shopping
on the basis of the following facts:
While petitioners' Motion for Reconsideration of the Decision in
CA-G.R. CV No. 51930, dated 26 March 2002, was still pending
before the Court of Appeals, respondent already filed with this
Court on 3 May 2002 her Motion for Extension of Time to File a
Petition for Review of the same Court of Appeals Decision,
docketed as G.R. No. 152985. Thereafter, respondent
continued to participate in the proceedings before the Court of
Appeals in CA-G.R. CV No. 51930 by filing her Comment, dated
17 July 2002, to petitioners' Motion for Reconsideration; and a
Rejoinder, dated 23 September 2002, to petitioners' Reply.
Thus, petitioners argue that by seeking relief concurrently from
this Court and the Court of Appeals, respondent is undeniably
guilty of forum shopping, if not indirect contempt.
This Court, however, finds no sufficient basis to hold respondent
liable for forum shopping.
Forum shopping has been defined as the filing of two or more
suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of
obtaining a favorable judgment.22 The test for determining forum
shopping is whether in the two (or more) cases pending, there
is an identity of parties, rights or causes of action, and relief
sought.23 To guard against this deplorable practice, Rule 7,
Section 5 of the revised Rules of Court imposes the following
requirement –
SEC. 5. Certification against forum shopping. – The
plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim
for relief, or in a sworn certification annexed thereto
and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge,
no such other action or claim is pending therein; (b) if
there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action
or claim has been filed or is pending, he shall report
that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading
has been filed.
Failure to comply with the foregoing requirements shall
not be curable by mere amendment of the complaint or
other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless
otherwise provided, upon motion and after hearing.
The submission of a false certification or non-
compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice
to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly
constitute willful and deliberate forum shopping, the
same shall be ground for summary dismissal with
prejudice and shall constitute direct contempt, as well
as cause for administrative sanctions.
Although it may seem at first glance that respondent was
simultaneously seeking recourse from the Court of Appeals and
this Court, a careful and closer scrutiny of the details of the case
at bar would reveal otherwise.
It should be recalled that respondent did nothing more in G.R.
No. 152985 than to file with this Court a Motion for Extension of
Time within which to file her Petition for Review. For unexplained
reasons, respondent failed to submit to this Court her intended
Petition within the reglementary period. Consequently, this
Court was prompted to issue a Resolution, dated 13 November
2002, declaring G.R. No. 152985 terminated, and the therein
assailed Court of Appeals Decision final and executory. G.R.
No. 152985, therefore, did not progress and respondent's
appeal was unperfected.
The Petition for Review would constitute the initiatory pleading
before this Court, upon the timely filing of which, the case before
this Court commences; much in the same way a case is initiated
by the filing of a Complaint before the trial court. The Petition for
Review establishes the identity of parties, rights or causes of
action, and relief sought from this Court, and without such a
Petition, there is technically no case before this Court. The
Motion filed by respondent seeking extension of time within
which to file her Petition for Review does not serve the same
purpose as the Petition for Review itself. Such a Motion merely
presents the important dates and the justification for the
additional time requested for, but it does not go into the details
of the appealed case.
Without any particular idea as to the assignments of error or the
relief respondent intended to seek from this Court, in light of her
failure to file her Petition for Review, there is actually no second
case involving the same parties, rights or causes of action, and
relief sought, as that in CA-G.R. CV No. 51930.
It should also be noted that the Certification against Forum
Shopping is required to be attached to the initiatory pleading,
which, in G.R. No. 152985, should have been respondent's
Petition for Review. It is in that Certification wherein respondent
certifies, under oath, that: (a) she has not commenced any
action or filed any claim involving the same issues in any court,
tribunal or quasi-judicial agency and, to the best of her
knowledge, no such other action or claim is pending therein; (b)
if there is such other pending action or claim, that she is
presenting a complete statement of the present status thereof;
and (c) if she should thereafter learn that the same or similar
action or claim has been filed or is pending, she shall report that
fact within five days therefrom to this Court. Without her Petition
for Review, respondent had no obligation to execute and submit
the foregoing Certification against Forum Shopping. Thus,
respondent did not violate Rule 7, Section 5 of the Revised
Rules of Court; neither did she mislead this Court as to the
pendency of another similar case.
Lastly, the fact alone that the Decision of the Court of Appeals,
dated 26 March 2002, essentially ruled in favor of respondent,
does not necessarily preclude her from appealing the same.
Granted that such a move is ostensibly irrational, nonetheless,
it does not amount to malice, bad faith or abuse of the court
processes in the absence of further proof. Again, it should be
noted that the respondent did not file her intended Petition for
Review. The Petition for Review would have presented before
this Court the grounds for respondent's appeal and her
arguments in support thereof. Without said Petition, any reason
attributed to the respondent for appealing the 26 March 2002
Decision would be grounded on mere speculations, to which this
Court cannot give credence.
II
As an exception to the general rule, this Court takes
cognizance of questions of fact raised in the Petition at bar.
It is already a well-settled rule that the jurisdiction of this Court
in cases brought before it from the Court of Appeals by virtue of
Rule 45 of the Revised Rules of Court is limited to reviewing
errors of law. Findings of fact of the Court of Appeals are
conclusive upon this Court. There are, however, recognized
exceptions to the foregoing rule, namely: (1) when the findings
are grounded entirely on speculation, surmises, or conjectures;
(2) when the interference made is manifestly mistaken, absurd,
or impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on a misapprehension of facts; (5)
when the findings of fact are conflicting; (6) when in making its
findings, the Court of Appeals went beyond the issues of the
case, or its findings are contrary to the admissions of both the
appellant and the appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9)
when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on
the supposed absence of evidence and contradicted by the
evidence on record.24
Several of the enumerated exceptions pertain to the Petition at
bar.
It is indubitable that the Court of Appeals made factual findings
that are contrary to those of the RTC,25 thus, resulting in its
substantial modification of the trial court's Decision, and a ruling
entirely in favor of the respondent. In addition, petitioners
invoked in the instant Petition for Review several exceptions that
would justify this Court's review of the factual findings of the
Court of Appeals, i.e., the Court of Appeals made conflicting
findings of fact; findings of fact which went beyond the issues
raised on appeal before it; as well as findings of fact premised
on the supposed absence of evidence and contradicted by the
evidence on record.
On the basis of the foregoing, this Court shall proceed to
reviewing and 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 plaintiff's assertion that the promissory
notes as well as the deeds of assignments of her FNCB
Finance money market placements were simulated.
The evidence is overwhelming that the plaintiff
received the proceeds of the loans evidenced by the
various promissory notes she had signed. What is
more, there was not an iota of proof save the plaintiff's
bare testimony that she had indeed applied for loan
with the Development Bank of the Philippines.
More importantly, the two deeds of assignment were
notarized, hence they partake the nature of a public
document. It makes more than preponderant proof to
overturn the effect of a notarial attestation. Copies of
the deeds of assignments were actually filed with the
Records Management and Archives Office.
Finally, there were sufficient evidence wherein the
plaintiff had admitted the existence of her loans with
the defendant Bank in the total amount of
₱1,920,000.00 exclusive of interests and penalty
charges (Exhibits "28", "31", "32", and "33").
In fine, this Court hereby finds that the defendants had
established the genuineness and due execution of the
various promissory notes heretofore identified as well
as the two deeds of assignments of the plaintiff's
money market placements with defendant FNCB
Finance, on the strength of which the said money
market placements were applied to partially pay the
plaintiff's past due obligation with the defendant Bank.
Thus, the total sum of ₱1,053,995.80 of the plaintiff's
past due obligation was partially offset by the said
money market placement leaving a balance of
₱1,069,847.40 as of 5 September 1979 (Exhibit "34").
Disagreeing in the foregoing findings, the Court of Appeals
stressed, in its Decision in CA-G.R. CV No. 51930, dated 26
March 2002, "that the ponente of the herein assailed Decision is
not the Presiding Judge who heard and tried the case." 28 This
brings us to the question of whether the fact alone that the RTC
Decision was rendered by a judge other than the judge who
actually heard and tried the case is sufficient justification for the
appellate court to disregard or set aside the findings in the
Decision of the court a quo?
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there exists
a disputable presumption that the RTC Decision was rendered
by the judge in the regular performance of his official duties.
While the said presumption is only disputable, it is satisfactory
unless contradicted or overcame by other
evidence.29 Encompassed in this presumption of regularity is the
presumption that the RTC judge, in resolving the case and
drafting his Decision, reviewed, evaluated, and weighed all the
evidence on record. That the said RTC judge is not the same
judge who heard the case and received the evidence is of little
consequence when the records and transcripts of stenographic
notes (TSNs) are complete and available for consideration by
the former.
In People v. Gazmen,30 this Court already elucidated its position
on such an issue –
Accused-appellant makes an issue of the fact that the
judge who penned the decision was not the judge who
heard and tried the case and concludes therefrom that
the findings of the former are erroneous. Accused-
appellant's argument does not merit a lengthy
discussion. It is well-settled that the decision of a judge
who did not try the case is not by that reason alone
erroneous.
It is true that the judge who ultimately decided the case
had not heard the controversy at all, the trial having
been conducted by then Judge Emilio L. Polig, who
was indefinitely suspended by this Court. Nonetheless,
the transcripts of stenographic notes taken during the
trial were complete and were presumably examined
and studied by Judge Baguilat before he rendered his
decision. It is not unusual for a judge who did not try a
case to decide it on the basis of the record. The fact
that he did not have the opportunity to observe the
demeanor of the witnesses during the trial but merely
relied on the transcript of their testimonies does not for
that reason alone render the judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
 Although it is true that the judge who heard the
witnesses testify is in a better position to observe the
witnesses on the stand and determine by their
demeanor whether they are telling the truth or
mouthing falsehood, it does not necessarily follow that
a judge who was not present during the trial cannot
render a valid decision since he can rely on the
transcript of stenographic notes taken during the trial
as basis of his decision.
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 –

Accused-appellant's contention that theDeposit/Placement

trial judge did
not have the opportunity to observe the conduct and
Dollar deposit with Citibank-Geneva
demeanor of the witnesses since he was not the same
judge who conducted the hearing is also Money untenable.
market placement with Citibank, evidenced by Promissory Note (PN) No. 23356 (which
While it is true that the trial judge who cancels
conducted andthe
supersedes PN No. 22526), earning 14.5% interest per annum (p.a.)
hearing would be in a better position to ascertain the
truth and falsity of the testimonies of theMoney market
witnesses, it placement with Citibank, evidenced by PN No. 23357 (which cancels and
does not necessarily follow that a judgesupersedes
who was not PN No. 22528), earning 14.5% interest p.a.
present during the trial cannot render a valid and just
decision since the latter can also rely on Money market placement with FNCB Finance, evidenced by PN No. 5757 (which cancels and
the transcribed
stenographic notes taken during the trial supersedes PN No. 4952), earning 17% interest p.a.
as the basis
of his decision. Money market placement with FNCB Finance, evidenced by PN No. 5758 (which cancels and
supersedes PN No. 2962), earning 17% interest p.a.
(People vs. De Paz, 212 SCRA 56, 63 [1992])
This Court is tasked to determine whether petitioners are indeed
At any rate, the test to determine the value of the liable to return the foregoing amounts, together with the
testimony of the witness is whether or not such is in appropriate interests and penalties, to respondent. It shall trace
conformity with knowledge and consistent with the respondent's transactions with petitioners, from her money
experience of mankind (People vs. Morre, 217 SCRA market placements with petitioner Citibank and petitioner FNCB
219 [1993]). Further, the credibility of witnesses can Finance, to her savings and current accounts with petitioner
also be assessed on the basis of the substance of their Citibank, and to her dollar accounts with Citibank-Geneva.
testimony and the surrounding circumstances (People
v. Gonzales, 210 SCRA 44 [1992]). A critical evaluation
of the testimony of the prosecution witnesses reveals Money market placements with petitioner Citibank
that their testimony accords with the aforementioned
tests, and carries with it the ring of truth end perforce, The history of respondent's money market placements with
must be given full weight and credit. petitioner Citibank began on 6 December 1976, when she made
a placement of ₱500,000.00 as principal amount, which was
Irrefragably, by reason alone that the judge who penned the supposed to earn an interest of 16% p.a. and for which PN No.
RTC Decision was not the same judge who heard the case and 20773 was issued. Respondent did not yet claim the proceeds
received the evidence therein would not render the findings in of her placement and, instead, rolled-over or re-invested the
the said Decision erroneous and unreliable. While the conduct principal and proceeds several times in the succeeding years for
and demeanor of witnesses may sway a trial court judge in which new PNs were issued by petitioner Citibank to replace the
deciding a case, it is not, and should not be, his only ones which matured. Petitioner Citibank accounted for
consideration. Even more vital for the trial court judge's decision respondent's original placement and the subsequent roll-overs
are the contents and substance of the witnesses' testimonies, thereof, as follows –
as borne out by the TSNs, as well as the object and
documentary evidence submitted and made part of the records Date
of the case. PN No. Cancels PN No.
(mm/dd/yyyy)

This Court proceeds to making its own findings of fact. 12/06/1976 20773 None
01/14/1977 21686 20773
Since the Decision of the Court of Appeals in CA-G.R. CV No.
51930, dated 26 March 2002, has become final and executory 22526 21686
as to the respondent, due to her failure to interpose an appeal 02/09/1977
therefrom within the reglementary period, she is already bound 22528 21686
by the factual findings in the said Decision. Likewise, 23356 22526
respondent's failure to file, within the reglementary period, a 03/17/1977
Motion for Reconsideration or an appeal of the Resolution of the 23357 22528
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 Petitioner Citibank alleged that it had already paid to
respondent the proceeds of her money market placement with respondent the principal amounts and proceeds of PNs
AIDC, shall already bar her from questioning such modification No. 23356 and 23357, upon their maturity. Petitioner
before this Court. Thus, what is for review before this Court is Citibank further averred that respondent used the
the Decision of the Court of Appeals, dated 26 March 2002, as ₱500,000.00 from the payment of PNs No. 23356 and
23357, plus ₱600,000.00 sourced from her other
funds, to open two time deposit (TD) accounts with
petitioner Citibank, namely, TD Accounts No. 17783
and 17784.
Petitioner Citibank did not deny the existence nor
questioned the authenticity of PNs No. 23356 and
23357 it issued in favor of respondent for her money
market placements. In fact, it admitted the
genuineness and due execution of the said PNs, but
qualified that they were no longer
outstanding.31 In Hibberd v. Rohde and
McMillian,32 this Court delineated the consequences of
such an admission –
By the admission of the genuineness and due
execution of an instrument, as provided in this
section, is meant that the party whose
signature it bears admits that he signed it or
that it was signed by another for him with his
authority; that at the time it was signed it was
in words and figures exactly as set out in the
pleading of the party relying upon it; that the
document was delivered; and that any formal
requisites required by law, such as a seal, an
acknowledgment, or revenue stamp, which it
lacks, are waived by him. Hence, such
defenses as that the signature is a forgery
(Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M.,
425; Cox vs. Northwestern Stage Co., 1
Idaho, 376; Woollen vs. Whitacre, 73 Ind.,
198; Smith vs. Ehnert, 47 Wis., 479;
Faelnar vs. Escaño, 11 Phil. Rep., 92); or that
it was unauthorized, as in the case of an agent
signing for his principal, or one signing in
behalf of a partnership (Country
Bank vs. Greenberg, 127 Cal., 26;
Henshaw vs. Root, 60 Inc., 220;
Naftzker vs. Lantz, 137 Mich., 441) or of a
corporation (Merchant vs. International
Banking Corporation, 6 Phil Rep., 314;
Wanita vs. Rollins, 75 Miss., 253;
Barnes vs. Spencer & Barnes Co., 162 Mich.,
509); or that, in the case of the latter, that the
corporation was authorized under its charter
to sign the instrument
(Merchant vs. International Banking
Corporation, supra); or that the party charged
signed the instrument in some other capacity
than that alleged in the pleading setting it out
(Payne vs. National Bank, 16 Kan., 147); or
that it was never delivered (Hunt vs. Weir, 29
Ill., 83; Elbring vs. Mullen, 4 Idaho, 199;
Thorp vs. Keokuk Coal Co., 48 N.Y., 253; Fire
Association of Philadelphia vs. Ruby, 60
Neb., 216) are cut off by the admission of its
genuineness and due execution.
The effect of the admission is such that in the
case of a promissory note a prima facie case
is made for the plaintiff which dispenses with
the necessity of evidence on his part and
entitles him to a judgment on the pleadings
unless a special defense of new matter, such
as payment, is interposed by the defendant
(Papa vs. Martinez, 12 Phil. Rep., 613;
Chinese Chamber of Commerce vs. Pua To
Ching, 14 Phil. Rep., 222; Banco Español-
Filipino vs. McKay & Zoeller, 27 Phil. Rep.,
183). x x x
Since the genuineness and due execution of PNs No.
23356 and 23357 are uncontested, respondent was
able to establish prima facie that petitioner Citibank is
liable to her for the amounts stated therein. The
assertion of petitioner Citibank of payment of the said
PNs is an affirmative allegation of a new matter, the
burden of proof as to such resting on petitioner
Citibank. Respondent having proved the existence of
the obligation, the burden of proof was upon petitioner
Citibank to show that it had been discharged. 33 It has
already been established by this Court that –
As a general rule, one who pleads payment
has the burden of proving it. Even where the
plaintiff must allege non-payment, the general
rule is that the burden rests on the defendant
to prove payment, rather than on the plaintiff
to prove non-payment. The debtor has the
burden of showing with legal certainty that the
obligation has been discharged by payment.
When the existence of a debt is fully
established by the evidence contained in the
record, the burden of proving that it has been
extinguished by payment devolves upon the
debtor who offers such defense to the claim
of the creditor. Where the debtor introduces
some evidence of payment, the burden of
going forward with the evidence – as distinct
from the general burden of proof – shifts to the
creditor, who is then under the duty of
producing some evidence of non-payment.34
Reviewing the evidence on record, this Court finds that
petitioner Citibank failed to satisfactorily prove that PNs
No. 23356 and 23357 had already been paid, and that
the amount so paid was actually used to open one of
respondent's TD accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two
witnesses to support its contention of payment: (1)
That of Mr. Herminio Pujeda,35 the officer-in-charge of
loans and placements at the time when the questioned
transactions took place; and (2) that of Mr. Francisco
Tan,36 the former Assistant Vice-President of Citibank,
who directly dealt with respondent with regard to her
deposits and loans.
The relevant portion37 of Mr. Pujeda's testimony as to
PNs No. 23356 and 23357 (referred to therein as
Exhibits No. "47" and "48," respectively) is reproduced
below –
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you
were asked to testify in this case and
this case is [sic] consist [sic] of
several documents involving
transactions between the plaintiff
and the defendant. Now, were you
able to make your own
 memorandum regarding all these
transactions?
A Yes, based on my recollection of these
facts, I did come up of [sic] the outline of the
chronological sequence of events.
Court:
Are you trying to say that you have
personal knowledge or participation
to these transactions?
A Yes, your Honor, I was the officer-in charge
of the unit that was processing these
transactions. Some of the documents bear my
signature.
Court:
And this resume or summary that
you have prepared is based on
purely your recollection or
documents?
A Based on documents, your Honor.
Court:
Are these documents still available
now?
A Yes, your honor.
Court:
Better present the documents.
Atty. Mabasa:
Yes, your Honor, that is why your
Honor.
Atty. Mabasa:
Q Now, basing on the notes that you
prepared, Mr. Witness, and according to you
basing also on your personal recollection
about all the transactions involved between
Modesta Sabeniano and defendant City Bank
[sic] in this case. Now, would you tell us what
happened to the money market placements of
Modesta Sabeniano that you have earlier
identified in Exhs. "47" and "48"?
A The transactions which I said earlier were
terminated and booked to time deposits.
Q And you are saying time deposits with what
bank?
A With First National Citibank.
Q Is it the same bank as Citibank, N.A.?
A Yes, sir.
Q And how much was the amount booked as
time deposit with defendant Citibank?
A In the amount of ₱500,000.00.
Q And outside this ₱500,000.00 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 ₱600,000.00.
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 ₱500,000.00 which is the proceeds
of Exh. "47" and "48" and another
₱600,000.00, is it not?
A Yes, sir.
Q And would you know where did the other
₱600,000 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
₱600,000 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.
Pujeda's testimony before the RTC was made on 12
March 1990 and Mr. Tan's deposition in Hong Kong
was conducted on 3 September 1990, more than a
decade had passed from the time the transactions they
were testifying on took place. This Court had previously
recognized the frailty and unreliability of human
memory with regards to figures after the lapse of five
years.38 Taking into consideration the substantial
length of time between the transactions and the
witnesses' testimonies, as well as the undeniable fact
that bank officers deal with multiple clients and process
numerous transactions during their tenure, this Court is
reluctant to give much weight to the testimonies of Mr.
Pujeda and Mr. Tan regarding the payment of PNs No.
23356 and 23357 and the use by respondent of the
proceeds thereof for opening TD accounts. This Court
finds it implausible that they should remember, after all
these years, this particular transaction with respondent
involving her PNs No. 23356 and 23357 and TD
accounts. Both witnesses did not give any reason as to
why, from among all the clients they had dealt with and
all the transactions they had processed as officers of
petitioner Citibank, they specially remembered
respondent and her PNs No. 23356 and 23357. Their
testimonies likewise lacked details on the
circumstances surrounding the payment of the two
PNs and the opening of the time deposit accounts by
respondent, such as the date of payment of the two
PNs, mode of payment, and the manner and context
by which respondent relayed her instructions to the
officers of petitioner Citibank to use the proceeds of her
two PNs in opening the TD accounts.
Moreover, while there are documentary evidences to
support and trace respondent's money market
placements with petitioner Citibank, from the original
PN No. 20773, rolled-over several times to, finally, PNs
No. 23356 and 23357, there is an evident absence of
any documentary evidence on the payment of these
last two PNs and the use of the proceeds thereof by
respondent for opening TD accounts. The paper trail
seems to have ended with the copies of PNs No. 23356
and 23357. Although both Mr. Pujeda and Mr. Tan said
that they based their testimonies, not just on their
memories but also on the documents on file, the
supposed documents on which they based those
portions of their testimony on the payment of PNs No.
23356 and 23357 and the opening of the TD accounts
from the proceeds thereof, were never presented
before the courts nor made part of the records of
the case. Respondent's money market placements
were of substantial amounts – consisting of the
principal amount of ₱500,000.00, 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 ₱500,000.00. Respondent's counsel
objected to the presentation of the document since it
was a mere "xerox" copy, and was blurred and hardly
readable. Petitioners' counsel then asked for a
continuance of the hearing so that they can have time
to produce a better document, which was granted by
the court. However, during the next hearing and
continuance of Mr. Pujeda's testimony on 12 March
1990, petitioners' counsel no longer referred to the said
document.
As respondent had established a prima facie case that
petitioner Citibank is obligated to her for the amounts
stated in PNs No. 23356 and 23357, and as petitioner
Citibank failed to present sufficient proof of payment of
the said PNs and the use by the respondent of the
proceeds thereof to open her TD accounts, this Court
finds that PNs No. 23356 and 23357 are still
outstanding and petitioner Citibank is still liable to
respondent for the amounts stated therein.
The significance of this Court's declaration that PNs
No. 23356 and 23357 are still outstanding becomes
apparent in the light of petitioners' next contentions –
that respondent used the proceeds of PNs No. 23356
and 23357, together with additional money, to open TD
Accounts No. 17783 and 17784 with petitioner
Citibank; and, subsequently, respondent pre-
terminated these TD accounts and transferred the
proceeds thereof, amounting to ₱1,100,000.00, to
petitioner FNCB Finance for money market
placements. While respondent's money market
placements with petitioner FNCB Finance may be
traced back with definiteness to TD Accounts No.
17783 and 17784, there is only flimsy and
unsubstantiated connection between the said TD
accounts and the supposed proceeds paid from PNs
No. 23356 and 23357. With PNs No. 23356 and 23357
still unpaid, then they represent an obligation of
petitioner Citibank separate and distinct from the
obligation of petitioner FNCB Finance arising from
respondent's money market placements with the latter.
Money market placements with petitioner FNCB
Finance
According to petitioners, respondent's TD Accounts
No. 17783 and 17784, in the total amount of
₱1,100,000.00, 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 Manager's Checks
(MC) No. 19925341 and 19925142 for the amounts of
₱500,000.00 and ₱600,00.00, respectively. Both MCs
were payable to Citifinance (which, according to Mr.
Pujeda,43 was one with and the same as petitioner
FNCB Finance), with the additional notation that "A/C
MODESTA R. SABENIANO." Typewritten on MC No.
199253 is the phrase "Ref. Proceeds of TD 17783,"
and on MC No. 199251 is a similar phrase, "Ref.
Proceeds of TD 17784." These phrases purportedly
established that the MCs were paid from the proceeds
of respondent's pre-terminated TD accounts with
petitioner Citibank. Upon receipt of the MCs, petitioner
FNCB Finance deposited the same to its account with
Feati Bank and Trust Co., as evidenced by the rubber
stamp mark of the latter found at the back of both MCs.
In exchange, petitioner FNCB Finance booked the
amounts received as money market placements, and
 accordingly issued PNs No. 4952 and 4962, for the which is hereby
amounts of ₱500,000.00 and ₱600,000.00, cancelled
respectively, payable to respondent's savings account
with petitioner Citibank, S/A No. 25-13703-4, upon their
maturity on 1 June 1977. Once again, respondent Then again, Checks No. 77035 and 77034 were later returned
rolled-over several times the principal amounts of her to petitioner FNCB Finance together with a memo, 47dated 6
money market placements with petitioner FNCB September 1978, from Mr. Tan of petitioner Citibank, to a Mr.
Finance, as follows – Bobby Mendoza of petitioner FNCB Finance. According to the
memo, the two checks, in the total amount of ₱1,000,000.00,
were to be returned to respondent's account with instructions to
Maturity Date Amount Interest
book the said amount in money market placements for one more
PN No. Cancels PN No.
(mm/dd/yyyy) (₱) (p.a.)
year. Pursuant to the said memo, Checks No. 77035 and 77034
4952 None 06/01/1977 500,000.00 were
17% invested by petitioner FNCB Finance, on behalf of
respondent, in money market placements for which it issued
4962 None 06/01/1977 600,000.00 PNs17% No. 20138 and 20139. The PNs each covered
₱500,000.00, to earn 11% interest per annum, and to mature on
5757 4952 08/31/1977 500,000.00 17%
3 September 1979.
5758 4962 08/31/1977 500,000.00 17%
On 3 September 1979, petitioner FNCB Finance issued Check
8167 5757 08/25/1978 500,000.00 No. 14%
100168, pay to the order of "Citibank N.A. A/C Modesta
Sabeniano," in the amount of ₱1,022,916.66, as full payment of
8169 5752 08/25/1978 500,000.00 the 14%
principal amounts and interests of both PNs No. 20138 and
20139 and, resultantly, canceling the said PNs. 48 Respondent
As presented by the petitioner FNCB Finance, respondent actually admitted the issuance and existence of Check No.
rolled-over only the principal amounts of her money market 100168, but with the qualification that the proceeds thereof were
placements as she chose to receive the interest income turned over to petitioner Citibank.49 Respondent did not clarify
therefrom. Petitioner FNCB Finance also pointed out that when the circumstances attending the supposed turn over, but on the
PN No. 4962, with principal amount of ₱600,000.00, matured on basis of the allegations of petitioner Citibank itself, the proceeds
1 June 1977, respondent received a partial payment of the of PNs No. 20138 and 20139, amounting to ₱1,022,916.66, was
principal which, together with the interest, amounted to used by it to liquidate respondent's outstanding loans.
₱102,633.33;44 thus, only the amount of ₱500,000.00 from PN Therefore, the determination of whether or not respondent is still
No. 4962 was rolled-over to PN No. 5758. 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
Based on the foregoing records, the principal amounts of PNs Citibank to use the proceeds of the said PNs, together with
No. 5757 and 5758, upon their maturity, were rolled over to PNs respondent's other deposits and money market placements, to
No. 8167 and 8169, respectively. PN No. 816745 expressly pay for the same.
canceled and superseded PN No. 5757, while PN No.
816946 also explicitly canceled and superseded PN No. 5758.
Thus, it is patently erroneous for the Court of Appeals to still Savings and current accounts with petitioner Citibank
award to respondent the principal amounts and interests
covered by PNs No. 5757 and 5758 when these were already Respondent presented and submitted before the RTC deposit
canceled and superseded. It is now incumbent upon this Court slips and bank statements to prove deposits made to several of
to determine what subsequently happened to PNs No. 8167 and her accounts with petitioner Citibank, particularly, Accounts No.
8169. 00484202, 59091, and 472-751, which would have amounted to
a total of ₱3,812,712.32, had there been no withdrawals or
Petitioner FNCB Finance presented four checks as proof of debits from the said accounts from the time the said deposits
payment of the principal amounts and interests of PNs No. 8167 were made.
and 8169 upon their maturity. All the checks were payable to
respondent's savings account with petitioner Citibank, with the Although the RTC and the Court of Appeals did not make any
following details – definitive findings as to the status of respondent's savings and
current accounts with petitioner Citibank, the Decisions of both
the trial and appellate courts effectively recognized only the
Date of Check Amount Notation ₱31,079.14 coming from respondent's savings account which
Issuance No. (₱) was used to off-set her alleged outstanding loans with petitioner
(mm/dd/yyyy) Citibank.50
09/01/1978 76962 12,833.34 Interest payment on
PN#08167 Since both the RTC and the Court of Appeals had consistently
recognized only the ₱31,079.14 of respondent's savings
09/01/1978 76961 12,833.34 Interest payment on account with petitioner Citibank, and that respondent failed to
PN#08169 move for reconsideration or to appeal this particular finding of
fact by the trial and appellate courts, it is already binding upon
09/05/1978 77035 500,000.00 Full payment of
this Court. Respondent is already precluded from claiming any
principal on PN#08167
greater amount in her savings and current accounts with
which is hereby
petitioner Citibank. Thus, this Court shall limit itself to
cancelled
determining whether or not respondent is entitled to the return
09/05/ 1978 77034 500,000.00 Full payment of of the amount of ₱31,079.14 should the off-set thereof by
principal on PN#08169 petitioner Citibank against her supposed loans be found invalid.
Dollar accounts with Citibank-Geneva
Respondent made an effort of preparing and presenting before
the RTC her own computations of her money market placements
and dollar accounts with Citibank-Geneva, purportedly
amounting to a total of United States (US) $343,220.98, as of 23
June 1985.51 In her Memorandum filed with the RTC, she
claimed a much bigger amount of deposits and money market
placements with Citibank-Geneva, totaling
US$1,336,638.65.52 However, respondent herself also
submitted as part of her formal offer of evidence the computation
of her money market placements and dollar accounts with
Citibank-Geneva as determined by the latter.53 Citibank-Geneva
accounted for respondent's money market placements and
dollar accounts as follows –
perfect an appeal of the Decision of the Court of Appeals, dated
26 March 2002, which found that she is entitled only to the return
of the said amount, as far as her accounts with Citibank-Geneva
is concerned.
III
Petitioner Citibank was able to establish by preponderance
of evidence the existence of respondent's loans.
Petitioners' version of events
In sum, the following amounts were used by petitioner Citibank
to liquidate respondent's purported outstanding loans –

MODESTA SABENIANO Description &/OR

==================
Principal and interests of PNs No. 20138 an
US$ 30'000.-- Principal Fid. Placement (money market placements with petitioner FNCB Fina
+ US$ 339.06 Interest at 3,875% p.a. from 12.07. – 25.10.79
Savings account with petitioner Citibank
- US$ 95.-- Commission (minimum) Dollar remittance from Citibank-Geneva (peso eq
US$149,632.99)
US$ 30'244.06 Total proceeds on 25.10.1979
US$ 114'000.-- Principal Fid. Placement Total
+ US$ 1'358.50 Interest at 4,125% p.a. from 12.07. – 25.10.79
- US$ 41.17 Commission According to petitioner Citibank, respondent incurred her loans
under the circumstances narrated below.
US$ 115'317.33 Total proceeds on 25.10.1979
As early as 9 February 1978, respondent obtained her first loan
US$ 145'561.39 Total proceeds of both placements on 25.10.1979
from petitioner Citibank in the principal amount of ₱200,000.00,
+ US$ 11'381.31 for which she executed PN No. 31504.54 Petitioner Citibank
total of both current accounts
extended to her several other loans in the succeeding months.
US$ 156'942.70 Total funds available Some of these loans were paid, while others were rolled-over or
renewed. Significant to the Petition at bar are the loans which
- US$ 149'632.99 Transfer to Citibank Manila obtained
respondent on 26.10.1979
from July 1978 to January 1979,
(counter value of Pesos 1'102'944.78)
appropriately covered by PNs (first set). 55 The aggregate
US$ 7'309.71 principal amount of these loans was ₱1,920,000.00, which could
Balance in current accounts
be broken down as follows –
- US$ 6'998.84 Transfer to Citibank Zuerich – ac no. 121359 on
March 13, 1980
Date of Issuance Date of Maturity Principal Date of Release
PN No.
US$ 310.87 (mm/dd/yyyy)
various charges (mm/dd/yyyy)
including closing charges Amount (mm/dd/yyyy)

32935 07/20/1978 09/18/1978 ₱ 400,000.00 07/20/1978

According to the foregoing computation, by 25 October 1979,
respondent had a total of US$156,942.70,33751 from which,10/13/1978 12/12/1978 100,000.00 Unrecovered
US$149,632.99 was transferred by Citibank-Geneva 33798 to
10/19/1978 11/03/1978 100,000.00 10/19/1978
petitioner Citibank in Manila, and was used by the latter to off-
set respondent's outstanding loans. The 34025 balance 11/15/1978
of 01/15/1979 150,000.00 11/16/1978
respondent's accounts with Citibank-Geneva, after the
remittance to petitioner Citibank in Manila, 34079 amounted 11/21/1978
to 01/19/1979 250,000.00 11/21/1978
US$7,309.71, which was subsequently expended by a transfer
34192 12/04/1978 01/18/1979 100,000.00 12/05/1978
to another account with Citibank-Zuerich, in the amount of
US$6,998.84, and by payment of various bank 34402charges,12/26/1978 02/23/1979 300,000.00 12/26/1978
including closing charges, in the amount of US$310.87. Rightly
so, both the RTC and the Court of Appeals gave more34534credence01/09/1979 03/09/1979 150,000.00 01/09/1979
to the computation of Citibank-Geneva as to the status of
respondent's accounts with the said bank, rather34609 01/17/1979
than the one 03/19/1979 150,000.00 01/17/1979
prepared by respondent herself, which was 34740 evidently self-
01/30/1979 03/30/1979 220,000.00 01/30/1979
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 thereofTotal by petitioner ₱ 1,920,000.00
Citibank against her alleged outstanding loans be found invalid.
Respondent cannot claim any greater amount since she did not
When respondent was unable to pay the first set of PNs upon When respondent failed to pay the second set of PNs upon their
their maturity, these were rolled-over or renewed several times, maturity, an exchange of letters ensued between respondent
necessitating the execution by respondent of new PNs in favor and/or her representatives, on one hand, and the
of petitioner Citibank. As of 5 April 1979, respondent had the representatives of petitioners, on the other.
following outstanding PNs (second set),56 the principal amount
of which remained at ₱1,920,000.00 – The first letter62 was dated 5 April 1979, addressed to
respondent and signed by Mr. Tan, as the manager of petitioner
Date of Issuance Date Citibank,
of which stated, in part, that –
Maturity
PN No. Principal Amount
(mm/dd/yyyy) (mm/dd/yyyy)
Despite our repeated requests and follow-up, we regret
34510 01/01/1979 03/02/1979 you have notP 400,000.00
granted us with any response or
payment.
34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
We, therefore, have no alternative but to call your loan
of ₱1,920,000.00 plus interests and other charges due
34612 01/19/1979 03/16/1979 150,000.00
and demandable. If you still fail to settle this obligation
34741 01/26/1979 03/12/1979 by 4/27/79, 100,000.00
we shall have no other alternative but to
refer your account to our lawyers for legal action to
35689 02/23/1979 05/29/1979 protect the interest of the bank.
300,000.00
35694 03/19/1979 05/29/1979 150,000.00
Respondent sent a reply letter63 dated 26 April 1979, printed on
35695 03/19/1979 05/29/1979 paper bearing the letterhead
100,000.00 of respondent's company, MC
Adore International Palace, the body of which reads –
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 This is in reply to your letter dated April 5, 1979 inviting
220,000.00
my attention to my loan which has become due.
Total Pursuant to₱ our 1,920,000.00
representation with you over the
telephone through Mr. F. A. Tan, you allow us to pay
the interests due for the meantime.
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." Please accept our Comtrust Check in the amount of
₱62,683.33.
Respondent secured her foregoing loans with petitioner Citibank
by executing Deeds of Assignment of her money market Please bear with us for a little while, at most ninety
placements with petitioner FNCB Finance. On 2 March 1978, days. As you know, we have a pending loan with the
respondent executed in favor of petitioner Citibank a Deed of Development Bank of the Philippines in the amount of
Assignment57 of PN No. 8169, which was issued by petitioner ₱11-M. This loan has already been recommended for
FNCB Finance, to secure payment of the credit and banking approval and would be submitted to the Board of
facilities extended to her by petitioner Citibank, in the aggregate Governors. In fact, to further facilitate the early release
principal amount of ₱500,000.00. On 9 March 1978, respondent of this loan, we have presented and furnished Gov. J.
executed in favor of petitioner Citibank another Deed of Tengco a xerox copy of your letter.
Assignment,58 this time, of PN No. 8167, also issued by
petitioner FNCB Finance, to secure payment of the credit and You will be doing our corporation a very viable service,
banking facilities extended to her by petitioner Citibank, in the should you grant us our request for a little more time.
aggregate amount of ₱500,000.00. When PNs No. 8167 and
8169, representing respondent's money market placements with A week later or on 3 May 1979, a certain C. N. Pugeda,
petitioner FNCB Finance, matured and were rolled-over to PNs designated as "Executive Secretary," sent a letter64 to petitioner
No. 20138 and 20139, respondent executed new Deeds of Citibank, on behalf of respondent. The letter was again printed
Assignment,59 in favor of petitioner Citibank, on 25 August 1978. on paper bearing the letterhead of MC Adore International
According to the more recent Deeds, respondent assigned PNs Palace. The pertinent paragraphs of the said letter are
No. 20138 and 20139, representing her rolled-over money reproduced below –
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 Per instructions of Mrs. Modesta R. Sabeniano, we
₱500,000.00 per Deed. would like to request for a re-computation of the
interest and penalty charges on her loan in the
aggregate amount of ₱1,920,000.00 with maturity date
In addition to the Deeds of Assignment of her money market of all promissory notes at June 30, 1979. As she has
placements with petitioner FNCB Finance, respondent also personally discussed with you yesterday, this date will
executed a Declaration of Pledge,60 in which she supposedly more or less assure you of early settlement.
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, In this regard, please entrust to bearer, our Comtrust
acquire against respondent. The petitioners' copy of the check for ₱62,683.33 to be replaced by another check
Declaration of Pledge is undated, while that of the respondent, with amount resulting from the new computation. Also,
a copy certified by a Citibank-Geneva officer, bore the date 24 to facilitate the processing of the same, may we
September 1979.61 request for another set of promissory notes for the
 signature of Mrs. Sabeniano and to cancel the previous
ones she has signed and forwarded to you.
This was followed by a telegram,65 dated 5 June 1979, and
received by petitioner Citibank the following day. The telegram
was sent by a Dewey G. Soriano, Legal Counsel. The telegram
acknowledged receipt of the telegram sent by petitioner Citibank
regarding the "re-past due obligation" of McAdore International
Palace. However, it reported that respondent, the President and
Chairman of MC Adore International Palace, was presently
abroad negotiating for a big loan. Thus, he was requesting for
an extension of the due date of the obligation until respondent's
arrival on or before 31 July 1979.
The next letter,66 dated 21 June 1979, was signed by
respondent herself and addressed to Mr. Bobby Mendoza, a
Manager of petitioner FNCB Finance. Respondent wrote therein
– On 5 October 1979, respondent wrote Mr. Tan of petitioner
Re: PN No. 20138 for ₱500,000.00 & PN No.
20139 for ₱500,000.00 totalling ₱1 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 letter67 to Mr. Tan of
petitioner Citibank, stating that –
Re: S/A No. 25-225928
and C/A No. 484-946
This letter serves as an authority to debit whatever the
outstanding balance from my captioned accounts and
credit the amount to my loan outstanding account with
you.
Unlike respondent's earlier letters, both letters, dated 21 June
1979, are printed on plain paper, without the letterhead of her
company, MC Adore International Palace.
By 5 September 1979, respondent's outstanding and past due
obligations to petitioner Citibank totaled ₱2,123,843.20,
representing the principal amounts plus interests. Relying on
respondent's Deeds of Assignment, petitioner Citibank applied
the proceeds of respondent's money market placements with
petitioner FNCB Finance, as well as her deposit account with
petitioner Citibank, to partly liquidate respondent's outstanding
loan balance,68as follows –
Respondent's outstanding obligation (principal and interest)
Respondent's version of events
Less: Proceeds from respondent's money market placements
with petitioner FNCB Finance (principal and interest)
Deposits in respondent's bank accounts with petitioner
Citibank
Balance of respondent's obligation
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
₱1,069,847.40, as of 5 September 1979, and should respondent
fail to pay the amount by 15 October 1979, then petitioner
Citibank shall proceed to off-set the unpaid amount with
respondent's other collateral, particularly, a money market
placement in Citibank-Hongkong.
Citibank, on paper bearing the letterhead of MC Adore
International Palace, as regards the ₱1,920,000.00 loan
account supposedly of MC Adore Finance & Investment, Inc.,
and requested for a statement of account covering the principal
and interest of the loan as of 31 October 1979. She stated
therein that the loan obligation shall be paid within 60 days from
receipt of the statement of account.
Almost three weeks later, or on 25 October 1979, a certain Atty.
Moises Tolentino dropped by the office of petitioner Citibank,
with a letter, dated 9 October 1979, and printed on paper with
the letterhead of MC Adore International Palace, which
authorized the bearer thereof to represent the respondent in
settling the overdue account, this time, purportedly, of MC Adore
International Palace Hotel. The letter was signed by respondent
as the President and Chairman of the Board.
Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as
counsel of petitioner Citibank, sent a letter to respondent, dated
31 October 1979, informing her that petitioner Citibank had
effected an off-set using her account with Citibank-Geneva, in
the amount of US$149,632.99, against her "outstanding,
overdue, demandable and unpaid obligation" to petitioner
Citibank. Atty. Agcaoili claimed therein that the compensation or
off-set was made pursuant to and in accordance with the
provisions of Articles 1278 through 1290 of the Civil Code. He
further declared that respondent's obligation to petitioner
Citibank was now fully paid and liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7 th floor of
petitioner Citibank's building at Paseo de Roxas St., Makati,
Metro Manila. Petitioners submitted a Certification70 to this
effect, dated 17 January 1991, issued by the Chief of the Arson
Investigation Section, Fire District III, Makati Fire Station,
Metropolitan Police Force. The 7th floor of petitioner Citibank's
building housed its Control Division, which was in charge of
keeping the necessary documents for cases in which it was
involved. After compiling the documentary evidence for the
present case, Atty. Renato J. Fernandez, internal legal counsel
of petitioner Citibank, forwarded them to the Control Division.
The original copies of the MCs, which supposedly represent the
proceeds of the first set of PNs, as well as that of other
documentary evidence related to the case, were among those
burned in the said fire.71
₱ 2,123,843.20
(1,022,916.66)
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 ₱1,150,000.00, and she had
already paid them. She secured from petitioner Citibank two
loans of ₱500,000.00 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 ₱500,744.00 and ₱500,000.00,
respectively, for "liquidation of loan."
She borrowed another ₱150,000.00 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
₱150,000.00 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 ₱150,000.00,
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 ₱400,000.00, covered by PN No. 33935) and No.
226467 (for the loan of ₱250,000.00, covered by PN No. 34079),
and pointed out that the checks did not bear her indorsements.
She did not deny receiving all other checks but she interposed
that she received these checks, not as proceeds of loans, but as
payment of the principal amounts and/or interests from her
money market placements with petitioner Citibank. She also
raised doubts as to the notation on each of the checks that reads
"RE: Proceeds of PN#[corresponding PN No.]," saying that such
notation did not appear on the MCs when she originally received
them and that the notation appears to have been written by a
typewriter different from that used in writing all other information
on the checks (i.e., date, payee, and amount).76 She even
testified that MCs were not supposed to bear notations
indicating the purpose for which they were issued.
As to the second set of PNs, respondent acknowledged having
signed them all. However, she asserted that she only executed
these PNs as part of the simulated loans she and Mr. Tan of
petitioner Citibank concocted. Respondent explained that she
had a pending loan application for a big amount with the
Development Bank of the Philippines (DBP), and when Mr. Tan
found out about this, he suggested that they could make it
appear that the respondent had outstanding loans with petitioner
Citibank and the latter was already demanding payment thereof;
this might persuade DBP to approve respondent's loan
application. Mr. Tan made the respondent sign the second set
of PNs, so that he may have something to show the DBP
investigator who might inquire with petitioner Citibank as to
respondent's loans with the latter. On her own copies of the said
PNs, respondent wrote by hand the notation, "This isa (sic)
simulated non-negotiable note, signed copy given to Mr. Tan.,
(sic) per agreement to be shown to DBP representative. itwill
(sic) be returned to me if the ₱11=M (sic) loan for MC Adore
Palace Hotel is approved by DBP."77
Findings of this Court as to the existence of the loans
After going through the testimonial and documentary evidence
presented by both sides to this case, it is this Court's
assessment that respondent did indeed have outstanding loans
with petitioner Citibank at the time it effected the off-set or
compensation on 25 July 1979 (using respondent's savings
deposit with petitioner Citibank), 5 September 1979 (using the
proceeds of respondent's money market placements with
petitioner FNCB Finance) and 26 October 1979 (using
respondent's dollar accounts remitted from Citibank-Geneva).
The totality of petitioners' evidence as to the existence of the
said loans preponderates over respondent's. Preponderant
evidence means that, as a whole, the evidence adduced by one
side outweighs that of the adverse party.78
Respondent's outstanding obligation for ₱1,920,000.00 had
been sufficiently documented by petitioner Citibank.
The second set of PNs is a mere renewal of the prior loans
originally covered by the first set of PNs, except for PN No.
34534. The first set of PNs is supported, in turn, by the existence
of the MCs that represent the proceeds thereof received by the
respondent.
It bears to emphasize that the proceeds of the loans were paid
to respondent in MCs, with the respondent specifically named
as payee. MCs checks are drawn by the bank's manager upon
the bank itself and regarded to be as good as the money it
represents.79 Moreover, the MCs were crossed checks, with the
words "Payee's Account Only."
In general, a crossed check cannot be presented to the drawee
bank for payment in cash. Instead, the check can only be
deposited with the payee's bank which, in turn, must present it
for payment against the drawee bank in the course of normal
banking hours. The crossed check cannot be presented for
payment, but it can only be deposited and the drawee bank may
only pay to another bank in the payee's or indorser's
account.80 The effect of crossing a check was described by this
Court in Philippine Commercial International Bank v. Court of
Appeals81 –
[T]he crossing of a check with the phrase "Payee's
Account Only" is a warning that the check should be
deposited in the account of the payee. Thus, it is the
duty of the collecting bank PCI Bank to ascertain that
the check be deposited in payee's account only. It is
bound to scrutinize the check and to know its
depositors before it can make the clearing indorsement
"all prior indorsements and/or lack of indorsement
guaranteed."
The crossed MCs presented by petitioner Bank were indeed
deposited in several different bank accounts and cleared by the
Clearing Office of the Central Bank of the Philippines, as
evidenced by the stamp marks and notations on the said checks.
The crossed MCs are already in the possession of petitioner
Citibank, the drawee bank, which was ultimately responsible for
the payment of the amount stated in the checks. Given that a
check is more than just an instrument of credit used in
commercial transactions for it also serves as a receipt or
evidence for the drawee bank of the cancellation of the said
check due to payment,82 then, the possession by petitioner
Citibank of the said MCs, duly stamped "Paid" gives rise to the
presumption that the said MCs were already paid out to the
intended payee, who was in this case, the respondent.
This Court finds applicable herein the presumptions that private
transactions have been fair and regular,83 and that the ordinary
course of business has been followed.84 There is no question
that the loan transaction between petitioner Citibank and the
respondent is a private transaction. The transactions revolving
around the crossed MCs – from their issuance by petitioner
Citibank to respondent as payment of the proceeds of her loans;
to its deposit in respondent's accounts with several different
banks; to the clearing of the MCs by an independent clearing
house; and finally, to the payment of the MCs by petitioner
Citibank as the drawee bank of the said checks – are all private
transactions which shall be presumed to have been fair and
regular to all the parties concerned. In addition, the banks
involved in the foregoing transactions are also presumed to
have followed the ordinary course of business in the acceptance
of the crossed MCs for deposit in respondent's accounts,
submitting them for clearing, and their eventual payment and
cancellation.
The afore-stated presumptions are disputable, meaning, they
are satisfactory if uncontradicted, but may be contradicted and
overcome by other evidence.85 Respondent, however, was
unable to present sufficient and credible evidence to dispute
these presumptions.
It should be recalled that out of the nine MCs presented by
petitioner Citibank, respondent admitted to receiving one as
proceeds of a loan (MC No. 228270), denied receiving two (MCs
No. 220701 and 226467), and admitted to receiving all the rest,
but not as proceeds of her loans, but as return on the principal
amounts and interests from her money market placements.
Respondent admitted receiving MC No. 228270 representing
the proceeds of her loan covered by PN No. 34534. Although
the principal amount of the loan is ₱150,000.00, respondent only
received ₱146,312.50, because the interest and handling fee on
the loan transaction were already deducted therefrom. 86 Stamps
and notations at the back of MC No. 228270 reveal that it was
deposited at the Bank of the Philippine Islands (BPI), Cubao
Branch, in Account No. 0123-0572-28.87 The check also bore
the signature of respondent at the back. 88 And, although
respondent would later admit that she did sign PN No. 34534
and received MC No. 228270 as proceeds of the loan extended
to her by petitioner Citibank, she contradicted herself when, in
an earlier testimony, she claimed that PN No. 34534 was among
the PNs she executed as simulated loans with petitioner
Citibank.89
Respondent denied ever receiving MCs No. 220701 and
226467. However, considering that the said checks were
crossed for payee's account only, and that they were actually
deposited, cleared, and paid, then the presumption would be
that the said checks were properly deposited to the account of
respondent, who was clearly named the payee in the checks.
Respondent's bare allegations that she did not receive the two
checks fail to convince this Court, for to sustain her, would be
for this Court to conclude that an irregularity had occurred
somewhere from the time of the issuance of the said checks, to
their deposit, clearance, and payment, and which would have
involved not only petitioner Citibank, but also BPI, which
accepted the checks for deposit, and the Central Bank of the
Philippines, which cleared the checks. It falls upon the
respondent to overcome or dispute the presumption that the
crossed checks were issued, accepted for deposit, cleared, and
paid for by the banks involved following the ordinary course of
their business.
The mere fact that MCs No. 220701 and 226467 do not bear
respondent's signature at the back does not negate deposit
thereof in her account. The liability for the lack of indorsement
on the MCs no longer fall on petitioner Citibank, but on the bank
who received the same for deposit, in this case, BPI Cubao
Branch. Once again, it must be noted that the MCs were
crossed, for payee's account only, and the payee named in both
checks was none other than respondent. The crossing of the
MCs was already a warning to BPI to receive said checks for
deposit only in respondent's account. It was up to BPI to verify
whether it was receiving the crossed MCs in accordance with
the instructions on the face thereof. If, indeed, the MCs were
deposited in accounts other than respondent's, then the
respondent would have a cause of action against BPI.90
BPI further stamped its guarantee on the back of the checks to
the effect that, "All prior endorsement and/or Lack of
endorsement guaranteed." Thus, BPI became the indorser of
the MCs, and assumed all the warranties of an
indorser,91 specifically, that the checks were genuine and in all
respects what they purported to be; that it had a good title to the
checks; that all prior parties had capacity to contract; and that
the checks were, at the time of their indorsement, valid and
subsisting.92 So even if the MCs deposited by BPI's client,
whether it be by respondent herself or some other person,
lacked the necessary indorsement, BPI, as the collecting bank,
is bound by its warranties as an indorser and cannot set up the
defense of lack of indorsement as against petitioner Citibank,
the drawee bank.93
Furthermore, respondent's bare and unsubstantiated denial of
receipt of the MCs in question and their deposit in her account
is rendered suspect when MC No. 220701 was actually
deposited in Account No. 0123-0572-28 of BPI Cubao Branch,
the very same account in which MC No. 228270 (which
respondent admitted to receiving as proceeds of her loan from
petitioner Citibank), and MCs No. 228203, 228357, and 228400
(which respondent admitted to receiving as proceeds from her
money market placements) were deposited. Likewise, MC No.
226467 was deposited in Account No. 0121-002-43 of BPI
Cubao Branch, to which MCs No. 226285 and 226439 (which
respondent admitted to receiving as proceeds from her money
market placements) were deposited. It is an apparent
contradiction for respondent to claim having received the
proceeds of checks deposited in an account, and then deny
receiving the proceeds of another check deposited in the very
same account.
Another inconsistency in respondent's denial of receipt of MC
No. 226467 and her deposit of the same in her account, is her
presentation of Exhibit "HHH," a provisional receipt which was
supposed to prove that respondent turned over ₱500,000.00 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.94Because of her Exhibit "HHH," respondent
effectively admitted receipt of MC No. 226467, although for
reasons other than as proceeds of a loan.
Neither can this Court give credence to respondent's contention
that the notations on the MCs, stating that they were the
proceeds of particular PNs, were not there when she received
the checks and that the notations appeared to be written by a
typewriter different from that used to write the other information
on the checks. Once more, respondent's allegations were
uncorroborated by any other evidence. Her and her counsel's
observation that the notations on the MCs appear to be written
by a typewriter different from that used to write the other
information on the checks hardly convinces this Court
considering that it constitutes a mere opinion on the appearance
of the notation by a witness who does not possess the
necessary expertise on the matter. In addition, the notations on
the MCs were written using both capital and small letters, while
the other information on the checks were written using capital
letters only, such difference could easily confuse an untrained
eye and lead to a hasty conclusion that they were written by
different typewriters.
Respondent's testimony, that based on her experience
transacting with banks, the MCs were not supposed to include
notations on the purpose for which the checks were issued, also
deserves scant consideration. While respondent may have
extensive experience dealing with banks, it still does not qualify
her as a competent witness on banking procedures and
practices. Her testimony on this matter is even belied by the fact
that the other MCs issued by petitioner Citibank (when it was still
named First National City Bank) and by petitioner FNCB
Finance, the existence and validity of which were not disputed
by respondent, also bear similar notations that state the reason
for which they were issued.
Respondent presented several more pieces of evidence to
substantiate her claim that she received MCs No. 226285,
226439, 226467, 226057, 228357, and 228400, not as proceeds
of her loans from petitioner Citibank, but as the return of the
principal amounts and payment of interests from her money
market placements with petitioners. Part of respondent's
exhibits were personal checks95 drawn by respondent on her
account with Feati Bank & Trust Co., which she allegedly
invested in separate money market placements with both
petitioners, the returns from which were paid to her via MCs No.
226285 and 228400. Yet, to this Court, the personal checks only
managed to establish respondent's issuance thereof, but there
was nothing on the face of the checks that would reveal the
purpose for which they were issued and that they were actually
invested in money market placements as respondent claimed.
Respondent further submitted handwritten notes that
purportedly computed and presented the returns on her money
market placements, corresponding to the amount stated in the
MCs she received from petitioner Citibank. Exhibit "HHH-
1"96 was a handwritten note, which respondent attributed to Mr.
Tan of petitioner Citibank, showing the breakdown of her BPI
Check for ₱500,000.00 into three different money market
placements with petitioner Citibank. This Court, however,
noticed several factors which render the note highly suspect.
One, it was written on the reversed side of Provisional Receipt
No. 12724 of petitioner Citibank which bore the initials of Mr. Tan
acknowledging receipt of respondent's BPI Check No. 120989
for ₱500,000.00; 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 ₱500,000.00 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 – ₱145,000.00,
₱145,000.00 and ₱242,000.00 – totaled ₱532,000.00, and was
obviously in excess of the ₱500,000.00 acknowledged on the
face of Provisional Receipt No. 12724.
Exhibits "III" and "III-1," the front and bank pages of a
handwritten note of Mr. Bobby Mendoza of petitioner FNCB
Finance,98 also did not deserve much evidentiary weight, and
this Court cannot rely on the truth and accuracy of the
computations presented therein. Mr. Mendoza was not
presented as a witness during the trial before the RTC, so that
the document was not properly authenticated nor its contents
sufficiently explained. No one was able to competently identify
whether the initials as appearing on the note were actually Mr.
Mendoza's.
Also, going by the information on the front page of the note, this
Court observes that payment of respondent's alleged money
market placements with petitioner FNCB Finance were made
using Citytrust Checks; the MCs in question, including MC No.
228057, were issued by petitioner Citibank. Although Citytrust
(formerly Feati Bank & Trust Co.), petitioner FNCB Finance, and
petitioner Citibank may be affiliates of one another, they each
remained separate and distinct corporations, each having its
own financial system and records. Thus, this Court cannot
simply assume that one corporation, such as petitioner Citibank
or Citytrust, can issue a check to discharge an obligation of
petitioner FNCB Finance. It should be recalled that when
petitioner FNCB Finance paid for respondent's money market
placements, covered by its PNs No. 8167 and 8169, as well as
PNs No. 20138 and 20139, petitioner FNCB Finance issued its
own checks.
As a last point on this matter, if respondent truly had money
market placements with petitioners, then these would have been
evidenced by PNs issued by either petitioner Citibank or
petitioner FNCB Finance, acknowledging the principal amounts
of the investments, and stating the applicable interest rates, as
well as the dates of their of issuance and maturity. After
respondent had so meticulously reconstructed her other money
market placements with petitioners and consolidated the
documentary evidence thereon, she came surprisingly short of
offering similar details and substantiation for these particular
money market placements.
Since this Court is satisfied that respondent indeed received the
proceeds of the first set of PNs, then it proceeds to analyze her
evidence of payment thereof.
In support of respondent's assertion that she had already paid
whatever loans she may have had with petitioner Citibank, she
presented as evidence Provisional Receipts No. 19471, dated
11 August 1978, and No. 12723, dated 10 November 1978, both
of petitioner Citibank and signed by Mr. Tan, for the amounts of
₱500,744.00 and ₱500,000.00, respectively. While these
provisional receipts did state that Mr. Tan, on behalf of petitioner
Citibank, received respondent's checks as payment for her
loans, they failed to specifically identify which loans were
actually paid. Petitioner Citibank was able to present evidence
that respondent had executed several PNs in the years 1978
and 1979 to cover the loans she secured from the said bank.
Petitioner Citibank did admit that respondent was able to pay for
some of these PNs, and what it identified as the first and second
sets of PNs were only those which remained unpaid. It thus
became incumbent upon respondent to prove that the checks
received by Mr. Tan were actually applied to the PNs in either
the first or second set; a fact that, unfortunately, cannot be
determined from the provisional receipts submitted by
respondent since they only generally stated that the checks
received by Mr. Tan were payment for respondent's loans.
Mr. Tan, in his deposition, further explained that provisional
receipts were issued when payment to the bank was made using
checks, since the checks would still be subject to clearing. The
purpose for the provisional receipts was merely to acknowledge
the delivery of the checks to the possession of the bank, but not
yet of payment.99 This bank practice finds legitimacy in the
pronouncement of this Court that a check, whether an MC or an
ordinary check, is not legal tender and, therefore, cannot
constitute valid tender of payment. In Philippine Airlines, Inc. v.
Court of Appeals, 100 this Court elucidated that:
Since a negotiable instrument is only a substitute for
money and not money, the delivery of such an
instrument does not, by itself, operate as payment
(Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil
Code; Bryan Landon Co. v. American Bank, 7 Phil.
255; Tan Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60,
61). A check, whether a manager's check or ordinary
check, is not legal tender, and an offer of a check in
payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor. Mere
delivery of checks does not discharge the obligation
under a judgment. The obligation is not extinguished
and remains suspended until the payment by
commercial document is actually realized (Art. 1249,
Civil Code, par. 3).
In the case at bar, the issuance of an official receipt by petitioner
Citibank would have been dependent on whether the checks
delivered by respondent were actually cleared and paid for by
the drawee banks.
As for PN No. 34534, respondent asserted payment thereof at
two separate instances by two different means. In her formal
offer of exhibits, respondent submitted a deposit slip of petitioner
Citibank, dated 11 August 1978, evidencing the deposit of BPI
Check No. 5785 for ₱150,000.00.101 In her Formal Offer of
Documentary Exhibits, dated 7 July 1989, respondent stated
that the purpose for the presentation of the said deposit slip was
to prove that she already paid her loan covered by PN No.
34534.102 In her testimony before the RTC three years later, on
28 November 1991, she changed her story. This time she
narrated that the loan covered by PN No. 34534 was secured by
her money market placement with petitioner FNCB Finance, and
when she failed to pay the said PN when it became due, the
security was applied to the loan, therefore, the loan was
considered paid.103 Given the foregoing, respondent's assertion
of payment of PN No. 34534 is extremely dubious.
According to petitioner Citibank, the PNs in the second set,
except for PN No. 34534, were mere renewals of the unpaid PNs
in the first set, which was why the PNs stated that they were for
the purpose of liquidating existing obligations. PN No. 34534,
however, which was part of the first set, was still valid and
subsisting and so it was included in the second set without need
for its renewal, and it still being the original PN for that particular
loan, its stated purpose was for personal
investment.104 Respondent essentially admitted executing the
second set of PNs, but they were only meant to cover simulated
loans. Mr. Tan supposedly convinced her that her pending loan
application with DBP would have a greater chance of being
approved if they made it appear that respondent urgently
needed the money because petitioner Citibank was already
demanding payment for her simulated loans.
Respondent's defense of simulated loans to escape liability for
the second set of PNs is truly a novel one.1âwphi1 It is
regrettable, however, that she was unable to substantiate the
same. Yet again, respondent's version of events is totally based
on her own uncorroborated testimony. The notations on the
second set of PNs, that they were non-negotiable simulated
notes, were admittedly made by respondent herself and were,
thus, self-serving. Equally self-serving was respondent's letter,
written on 7 October 1985, or more than six years after the
execution of the second set of PNs, in which she demanded
return of the simulated or fictitious PNs, together with the letters
relating thereto, which Mr. Tan purportedly asked her to
execute. Respondent further failed to present any proof of her
alleged loan application with the DBP, and of any circumstance
or correspondence wherein the simulated or fictitious PNs were
indeed used for their supposed purpose.
In contrast, petitioner Citibank, as supported by the testimonies
of its officers and available documentation, consistently treated
the said PNs as regular loans – accepted, approved, and paid
in the ordinary course of its business.
The PNs executed by the respondent in favor of petitioner
Citibank to cover her loans were duly-filled out and signed,
including the disclosure statement found at the back of the said
PNs, in adherence to the Central Bank requirement to disclose
the full finance charges to a loan granted to borrowers.
Mr. Tan, then an account officer with the Marketing Department
of petitioner Citibank, testified that he dealt directly with
respondent; he facilitated the loans; and the PNs, at least in the
second set, were signed by respondent in his presence. 105
Mr. Pujeda, the officer who was previously in charge of loans
and placements, confirmed that the signatures on the PNs were
verified against respondent's specimen signature with the
bank.106
Ms. Cristina Dondoyano, who worked at petitioner Citibank as a
loan processor, was responsible for booking respondent's loans.
Booking the loans means recording it in the General Ledger.
She explained the procedure for booking loans, as follows: The
account officer, in the Marketing Department, deals directly with
the clients who wish to borrow money from petitioner Citibank.
The Marketing Department will forward a loan booking checklist,
together with the borrowing client's PNs and other supporting
documents, to the loan pre-processor, who will check whether
the details in the loan booking checklist are the same as those
in the PNs. The documents are then sent to Signature Control
for verification of the client's signature in the PNs, after which,
they are returned to the loan pre-processor, to be forwarded
finally to the loan processor. The loan processor shall book the
loan in the General Ledger, indicating therein the client name,
loan amount, interest rate, maturity date, and the corresponding
PN number. Since she booked respondent's loans personally,
Ms. Dondoyano testified that she saw the original PNs. In 1986,
Atty. Fernandez of petitioner Citibank requested her to prepare
an accounting of respondent's loans, which she did, and which
was presented as Exhibit "120" for the petitioners. The figures
from the said exhibit were culled from the bookings in the
General Ledger, a fact which respondent's counsel was even
willing to stipulate.107
Ms. Teresita Glorioso was an Investigation and Reconcilement
Clerk at the Control Department of petitioner Citibank. She was
presented by petitioner Citibank to expound on the microfilming
procedure at the bank, since most of the copies of the PNs were
retrieved from microfilm. Microfilming of the documents are
actually done by people at the Operations Department. At the
end of the day or during the day, the original copies of all bank
documents, not just those pertaining to loans, are microfilmed.
She refuted the possibility that insertions could be made in the
microfilm because the microfilm is inserted in a cassette; the
cassette is placed in the microfilm machine for use; at the end
of the day, the cassette is taken out of the microfilm machine
and put in a safe vault; and the cassette is returned to the
machine only the following day for use, until the spool is full. This
is the microfilming procedure followed everyday. When the
microfilm spool is already full, the microfilm is developed, then
sent to the Control Department, which double checks the
contents of the microfilms against the entries in the General
Ledger. The Control Department also conducts a random
comparison of the contents of the microfilms with the original
documents; a random review of the contents is done on every
role of microfilm.108
Ms. Renee Rubio worked for petitioner Citibank for 20 years.
She rose from the ranks, initially working as a secretary in the
Personnel Group; then as a secretary to the Personnel Group
Head; a Service Assistant with the Marketing Group, in 1972 to
1974, dealing directly with corporate and individual clients who,
among other things, secured loans from petitioner Citibank; the
Head of the Collection Group of the Foreign Department in 1974
to 1976; the Head of the Money Transfer Unit in 1976 to 1978;
the Head of the Loans and Placements Unit up to the early
1980s; and, thereafter, she established operations training for
petitioner Citibank in the Asia-Pacific Region responsible for the
training of the officers of the bank. She testified on the standard
loan application process at petitioner Citibank. According to Ms.
Rubio, the account officer or marketing person submits a
proposal to grant a loan to an individual or corporation. Petitioner
Citibank has a worldwide policy that requires a credit committee,
composed of a minimum of three people, which would approve
the loan and amount thereof. There can be no instance when
only one officer has the power to approve the loan application.
When the loan is approved, the account officer in charge will
obtain the corresponding PNs from the client. The PNs are sent
to the signature verifier who would validate the signatures
therein against those appearing in the signature cards
previously submitted by the client to the bank. The Operations
Unit will check and review the documents, including the PNs, if
it is a clean loan, and securities and deposits, if it is
collateralized. The loan is then recorded in the General Ledger.
The Loans and Placements Department will not book the loans
without the PNs. When the PNs are liquidated, whether they are
paid or rolled-over, they are returned to the client.109 Ms. Rubio
further explained that she was familiar with respondent's
accounts since, while she was still the Head of the Loan and
Placements Unit, she was asked by Mr. Tan to prepare a list of
respondent's outstanding obligations.110 She thus calculated
respondent's outstanding loans, which was sent as an
attachment to Mr. Tan's letter to respondent, dated 28
September 1979, and presented before the RTC as Exhibits
"34-B" and "34-C."111
Lastly, the exchange of letters between petitioner Citibank and
respondent, as well as the letters sent by other people working
for respondent, had consistently recognized that respondent
owed petitioner Citibank money.
In consideration of the foregoing discussion, this Court finds that
the preponderance of evidence supports the existence of the
respondent's loans, in the principal sum of ₱1,920,000.00, 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, 113to the
exclusion of any secondary or substitutionary evidence.114
The best evidence rule has been made part of the revised Rules
of Court, Rule 130, Section 3, which reads –
SEC. 3. Original document must be produced;
exceptions. – When the subject of inquiry is the
contents of a document, no evidence shall be
admissible other than the original document itself,
except in the following cases:
(a) When the original has been lost or
destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;
(b) When the original is in the custody or
under the control of the party against whom
the evidence is offered, and the latter fails to
produce it after reasonable notice;
(c) When the original consists of numerous
accounts or other documents which cannot be
examined in court without great loss of time
and the fact sought to be established from
them is only the general result of the whole;
and
 (d) When the original is a public record in the
custody of a public officer or is recorded in a
public office.
As the afore-quoted provision states, the best evidence rule
applies only when the subject of the inquiry is the contents of the
document. The scope of the rule is more extensively explained
thus –
But even with respect to documentary evidence, the
best evidence rule applies only when the content of
such document is the subject of the inquiry. Where the
issue is only as to whether such document was actually
executed, or exists, or on the circumstances relevant
to or surrounding its execution, the best evidence rule
does not apply and testimonial evidence is admissible
(5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78).
Any other substitutionary evidence is likewise
admissible without need for accounting for the original.
Thus, when a document is presented to prove its
existence or condition it is offered not as documentary,
but as real, evidence. Parol evidence of the fact of
execution of the documents is allowed (Hernaez, et al.
vs. McGrath, etc., et al., 91 Phil 565). x x x 115
In Estrada v. Desierto,116 this Court had occasion to rule that –
It is true that the Court relied not upon the original but
only copy of the Angara Diary as published in the
Philippine Daily Inquirer on February 4-6, 2001. In
doing so, the Court, did not, however, violate the best
evidence rule. Wigmore, in his book on evidence,
states that:
"Production of the original may be dispensed with, in
the trial court's discretion, whenever in the case in
hand the opponent does not bona fide dispute the
contents of the document and no other useful purpose
will be served by requiring production.24
"x x x x
"In several Canadian provinces, the principle of
unavailability has been abandoned, for certain
documents in which ordinarily no real dispute arised.
This measure is a sensible and progressive one and
deserves universal adoption (post, sec. 1233). Its
essential feature is that a copy may be used
unconditionally, if the opponent has been given an
opportunity to inspect it." (Emphasis supplied.)
This Court did not violate the best evidence rule when it
considered and weighed in evidence the photocopies and
microfilm copies of the PNs, MCs, and letters submitted by the
petitioners to establish the existence of respondent's loans. The
terms or contents of these documents were never the point of
contention in the Petition at bar. It was respondent's position that
the PNs in the first set (with the exception of PN No. 34534)
never existed, while the PNs in the second set (again, excluding
PN No. 34534) were merely executed to cover simulated loan
transactions. As for the MCs representing the proceeds of the
loans, the respondent either denied receipt of certain MCs or
admitted receipt of the other MCs but for another purpose.
Respondent further admitted the letters she wrote personally or
through her representatives to Mr. Tan of petitioner Citibank
acknowledging the loans, except that she claimed that these
letters were just meant to keep up the ruse of the simulated
loans. Thus, respondent questioned the documents as to their
existence or execution, or when the former is admitted, as to the
purpose for which the documents were executed, matters which
are, undoubtedly, external to the documents, and which had
nothing to do with the contents thereof.
Alternatively, even if it is granted that the best evidence rule
should apply to the evidence presented by petitioners regarding
the existence of respondent's loans, it should be borne in mind
that the rule admits of the following exceptions under Rule 130,
Section 5 of the revised Rules of Court –
SEC. 5. When the original document is unavailable. –
When the original document has been lost or
destroyed, or cannot be produced in court, the offeror,
upon proof of its execution or existence and the cause
of its unavailability without bad faith on his part, may
prove its contents by a copy, or by a recital of its
contents in some authentic document, or by the
testimony of witnesses in the order stated.
The execution or existence of the original copies of the
documents was established through the testimonies of
witnesses, such as Mr. Tan, before whom most of the
documents were personally executed by respondent. The
original PNs also went through the whole loan booking system
of petitioner Citibank – from the account officer in its Marketing
Department, to the pre-processor, to the signature verifier, back
to the pre-processor, then to the processor for booking.117 The
original PNs were seen by Ms. Dondoyano, the processor, who
recorded them in the General Ledger. Mr. Pujeda personally
saw the original MCs, proving respondent's receipt of the
proceeds of her loans from petitioner Citibank, when he helped
Attys. Cleofe and Fernandez, the bank's legal counsels, to
reconstruct the records of respondent's loans. The original MCs
were presented to Atty. Cleofe who used the same during the
preliminary investigation of the case, sometime in years 1986-
1987. The original MCs were subsequently turned over to the
Control and Investigation Division of petitioner Citibank.118
It was only petitioner FNCB Finance who claimed that they lost
the original copies of the PNs when it moved to a new office.
Citibank did not make a similar contention; instead, it explained
that the original copies of the PNs were returned to the borrower
upon liquidation of the loan, either through payment or roll-over.
Petitioner Citibank proffered the excuse that they were still
looking for the documents in their storage or warehouse to
explain the delay and difficulty in the retrieval thereof, but not
their absence or loss. The original documents in this case, such
as the MCs and letters, were destroyed and, thus, unavailable
for presentation before the RTC only on 7 October 1987, when
a fire broke out on the 7th floor of the office building of petitioner
Citibank. There is no showing that the fire was intentionally set.
The fire destroyed relevant documents, not just of the present
case, but also of other cases, since the 7th floor housed the
Control and Investigation Division, in charge of keeping the
necessary documents for cases in which petitioner Citibank was
involved.
The foregoing would have been sufficient to allow the
presentation of photocopies or microfilm copies of the PNs,
MCs, and letters by the petitioners as secondary evidence to
establish the existence of respondent's loans, as an exception
to the best evidence rule.
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 disturbingtaking 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 ₱7,000,000.00,
secured to the extent of ₱5,000,000.00 by a Third Party Real
Estate Mortgage of the properties of Caedo's aunt, Rosalind Dy.
It turned out that Rosalind Dy and her husband were unaware
of the said loans and the mortgage of their properties. The
transactions were carried out exclusively between Caedo and
Mr. Tan of petitioner Citibank. The RTC found Mr. Tan guilty of
fraud for his participation in the questionable transactions,
essentially because he allowed Caedo to take out the signature
cards, when these should have been signed by the Dy spouses
personally before him. Although the Dy spouses' signatures in
the PNs and Third Party Real Estate Mortgage were forged, they
were approved by the signature verifier since the signature
cards against which they were compared to were also forged.
Neither the RTC nor the Court of Appeals, however,
categorically declared Mr. Tan personally responsible for the
forgeries, which, in the narration of the facts, were more likely
committed by Caedo.
In the Petition at bar, respondent dealt with Mr. Tan directly,
there was no third party involved who could have perpetrated
any fraud or forgery in her loan transactions. Although
respondent attempted to raise suspicion as to the authenticity of
her signatures on certain documents, these were nothing more
than naked allegations with no corroborating evidence; worse,
even her own allegations were replete with inconsistencies. She
could not even establish in what manner or under what
circumstances the fraud or forgery was committed, or how Mr.
Tan could have been directly responsible for the same.
While the Court of Appeals can take judicial notice of the
Decision of its Third Division in the Dy case, it should not have
given the said case much weight when it rendered the assailed
Decision, since the former does not constitute a precedent. The
Court of Appeals, in the challenged Decision, did not apply any
legal argument or principle established in the Dy case but,
rather, adopted the findings therein of wrongdoing or
misconduct on the part of herein petitioner Citibank and Mr. Tan.
Any finding of wrongdoing or misconduct as against herein
petitioners should be made based on the factual background
and pieces of evidence submitted in this case, not those in
another case.
It is apparent that the Court of Appeals took judicial notice of the
Dy case not as a legal precedent for the present case, but rather
as evidence of similar acts committed by petitioner Citibank and
Mr. Tan. A basic rule of evidence,however, states that,
"Evidence that one did or did not do a certain thing at one time
is not admissible to prove that he did or did not do the same or
similar thing at another time; but it may be received to prove a
specific intent or knowledge, identity, plan, system, scheme,
habit, custom or usage, and the like."120 The rationale for the
rule is explained thus –
The rule is founded upon reason, public policy, justice
and judicial convenience. The fact that a person has
committed the same or similar acts at some prior time
affords, as a general rule, no logical guaranty that he
committed the act in question. This is so because,
subjectively, a man's mind and even his modes of life
may change; and, objectively, the conditions under
which he may find himself at a given time may likewise
change and thus induce him to act in a different way.
Besides, if evidence of similar acts are to be invariably
admitted, they will give rise to a multiplicity of collateral
issues and will subject the defendant to surprise as well
as confuse the court and prolong the trial.121
The factual backgrounds of the two cases are so different and
unrelated that the Dy case cannot be used to prove specific
intent, knowledge, identity, plan, system, scheme, habit, custom
or usage on the part of petitioner Citibank or its officer, Mr. Tan,
to defraud respondent in the present case.
IV
The liquidation of respondent's outstanding loans were
valid in so far as petitioner Citibank used respondent's
savings account with the bank and her money market
placements with petitioner FNCB Finance; but illegal and
void in so far as petitioner Citibank used respondent's
dollar accounts with Citibank-Geneva.
Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing
obligations. Relevant provisions of the Civil Code provides –
 Art. 1278. Compensation shall take place when two
persons, in their own right, are creditors and debtors of
each other.
Art. 1279. In order that compensation may be proper,
it is necessary;
(1) That each one of the obligors be bound
principally, and that he be at the same time a
principal creditor of the other;
(2) That both debts consist in a sum of money,
or if the things due are consumable, they be
of the same kind, and also of the same quality
if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any
retention or controversy, commenced by third
persons and communicated in due time to the
debtor.
There is little controversy when it comes to the right of petitioner
Citibank to compensate respondent's outstanding loans with her
deposit account. As already found by this Court, petitioner
Citibank was the creditor of respondent for her outstanding
loans. At the same time, respondent was the creditor of
petitioner Citibank, as far as her deposit account was
concerned, since bank deposits, whether fixed, savings, or
current, should be considered as simple loan or mutuum by the
depositor to the banking institution.122 Both debts consist in
sums of money. By June 1979, all of respondent's PNs in the
second set had matured and became demandable, while
respondent's savings account was demandable anytime.
Neither was there any retention or controversy over the PNs and
the deposit account commenced by a third person and
communicated in due time to the debtor concerned.
Compensation takes place by operation of law,123 therefore,
even in the absence of an expressed authority from respondent,
petitioner Citibank had the right to effect, on 25 June 1979, the
partial compensation or off-set of respondent's outstanding
loans with her deposit account, amounting to ₱31,079.14.
Money market placements with FNCB Finance
Things though are not as simple and as straightforward as
regards to the money market placements and bank account
used by petitioner Citibank to complete the compensation or off-
set of respondent's outstanding loans, which came from persons
other than petitioner Citibank.
Respondent's money market placements were with petitioner
FNCB Finance, and after several roll-overs, they were ultimately
covered by PNs No. 20138 and 20139, which, by 3 September
1979, the date the check for the proceeds of the said PNs were
issued, amounted to ₱1,022,916.66, inclusive of the principal
amounts and interests. As to these money market placements,
respondent was the creditor and petitioner FNCB Finance the
debtor; while, as to the outstanding loans, petitioner Citibank
was the creditor and respondent the debtor. Consequently, legal
compensation, under Article 1278 of the Civil Code, would not
apply since the first requirement for a valid compensation, that
each one of the obligors be bound principally, and that he be at
the same time a principal creditor of the other, was not met.
What petitioner Citibank actually did was to exercise its rights to
the proceeds of respondent's money market placements with
petitioner FNCB Finance by virtue of the Deeds of Assignment
executed by respondent in its favor.
The Court of Appeals did not consider these Deeds of
Assignment because of petitioners' failure to produce the
original copies thereof in violation of the best evidence rule. This
Court again finds itself in disagreement in the application of the
best evidence rule by the appellate court.
To recall, the best evidence rule, in so far as documentary
evidence is concerned, requires the presentation of the original
copy of the document only when the context thereof is the
subject of inquiry in the case. Respondent does not question the
contents of the Deeds of Assignment. While she admitted the
existence and execution of the Deeds of Assignment, dated 2
March 1978 and 9 March 1978, covering PNs No. 8169 and
8167 issued by petitioner FNCB Finance, she claimed, as
defense, that the loans for which the said Deeds were executed
as security, were already paid. She denied ever executing both
Deeds of Assignment, dated 25 August 1978, covering PNs No.
20138 and 20139. These are again issues collateral to the
contents of the documents involved, which could be proven by
evidence other than the original copies of the said documents.
Moreover, the Deeds of Assignment of the money market
placements with petitioner FNCB Finance were notarized
documents, thus, admissible in evidence. Rule 132, Section 30
of the Rules of Court provides that –
SEC. 30. Proof of notarial documents. – Every
instrument duly acknowledged or proved and certified
as provided by law, may be presented in evidence
without further proof, the certificate of
acknowledgement being prima facie evidence of the
execution of the instrument or document involved.
Significant herein is this Court's elucidation in De Jesus v. Court
of Appeals,124 which reads –
On the evidentiary value of these documents, it should
be recalled that the notarization of a private document
converts it into a public one and renders it admissible
in court without further proof of its authenticity (Joson
vs. Baltazar, 194 SCRA 114 [1991]). This is so
because a public document duly executed and entered
in the proper registry is presumed to be valid and
genuine until the contrary is shown by clear and
convincing proof (Asido vs. Guzman, 57 Phil. 652
[1918]; U.S. vs. Enriquez, 1 Phil 241 [1902]; Favor vs.
Court of Appeals, 194 SCRA 308 [1991]). As such, the
party challenging the recital of the document must
prove his claim with clear and convincing evidence
(Diaz vs. Court of Appeals, 145 SCRA 346 [1986]).
The rule on the evidentiary weight that must be accorded a
notarized document is clear and unambiguous. The certificate
of acknowledgement in the notarized Deeds of Assignment
constituted prima facie evidence of the execution thereof. Thus,
the burden of refuting this presumption fell on respondent. She
could have presented evidence of any defect or irregularity in
the execution of the said documents125 or raised questions as to
the verity of the notary public's acknowledgment and certificate
in the Deeds.126 But again, respondent admitted executing the
Deeds of Assignment, dated 2 March 1978 and 9 March 1978,
although claiming that the loans for which they were executed
as security were already paid. And, she assailed the Deeds of
Assignment, dated 25 August 1978, with nothing more than her
bare denial of execution thereof, hardly the clear and convincing
evidence required to trounce the presumption of due execution
of a notarized document.
Petitioners not only presented the notarized Deeds of
Assignment, but even secured certified literal copies thereof
from the National Archives.127 Mr. Renato Medua, an archivist,
working at the Records Management and Archives Office of the
National Library, testified that the copies of the Deeds presented
before the RTC were certified literal copies of those contained
in the Notarial Registries of the notary publics concerned, which
were already in the possession of the National Archives. He also
explained that he could not bring to the RTC the Notarial
Registries containing the original copies of the Deeds of
Assignment, because the Department of Justice (DOJ) Circular
No. 97, dated 8 November 1968, prohibits the bringing of original
documents to the courts to prevent the loss of irreplaceable and
priceless documents.128
Accordingly, this Court gives the Deeds of Assignment grave
importance in establishing the authority given by the respondent
to petitioner Citibank to use as security for her loans her money
her market placements with petitioner FNCB Finance,
represented by PNs No. 8167 and 8169, later to be rolled-over
as PNs No. 20138 and 20139. These Deeds of Assignment
constitute the law between the parties, and the obligations
arising therefrom shall have the force of law between the parties
and should be complied with in good faith. 129 Standard clauses
in all of the Deeds provide that –
The ASSIGNOR and the ASSIGNEE hereby further
agree as follows:
xxxx
2. In the event the OBLIGATIONS are not
paid at maturity or upon demand, as the case
may be, the ASSIGNEE is fully authorized
and empowered to collect and receive the
PLACEMENT (or so much thereof as may be
necessary) and apply the same in payment of
the OBLIGATIONS. Furthermore, the
ASSIGNOR agrees that at any time, and from
time to time, upon request by the ASSIGNEE,
the ASSIGNOR will promptly execute and
deliver any and all such further instruments
and documents as may be necessary to
effectuate this Assignment.
xxxx
5. This Assignment shall be considered as
sufficient authority to FNCB Finance to pay
and deliver the PLACEMENT or so much
thereof as may be necessary to liquidate the
OBLIGATIONS, to the ASSIGNEE in
accordance with terms and provisions
hereof.130
Petitioner Citibank was only acting upon the authority granted to
it under the foregoing Deeds when it finally used the proceeds
of PNs No. 20138 and 20139, paid by petitioner FNCB Finance,
to partly pay for respondent's outstanding loans. Strictly
speaking, it did not effect a legal compensation or off-set under
Article 1278 of the Civil Code, but rather, it partly extinguished
respondent's obligations through the application of the security
given by the respondent for her loans. Although the pertinent
documents were entitled Deeds of Assignment, they were, in
reality, more of a pledge by respondent to petitioner Citibank of
her credit due from petitioner FNCB Finance by virtue of her
money market placements with the latter. According to Article
2118 of the Civil Code –
ART. 2118. If a credit has been pledged becomes due
before it is redeemed, the pledgee may collect and
receive the amount due. He shall apply the same to the
payment of his claim, and deliver the surplus, should
there be any, to the pledgor.
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
₱1,022,916.66, and applied the same against respondent's
outstanding loans, leaving no surplus to be delivered to
respondent.
Dollar accounts with Citibank-Geneva
Despite the legal compensation of respondent's savings
account and the total application of the proceeds of PNs No.
20138 and 20139 to respondent's outstanding loans, there still
remained a balance of ₱1,069,847.40. Petitioner Citibank then
proceeded to applying respondent's dollar accounts with
Citibank-Geneva against her remaining loan balance, pursuant
to a Declaration of Pledge supposedly executed by respondent
in its favor.
Certain principles of private international law should be
considered herein because the property pledged was in the
possession of an entity in a foreign country, namely, Citibank-
Geneva. In the absence of any allegation and evidence
presented by petitioners of the specific rules and laws governing
the constitution of a pledge in Geneva, Switzerland, they will be
presumed to be the same as Philippine local or domestic laws;
this is known as processual presumption.131
Upon closer scrutiny of the Declaration of Pledge, this Court
finds the same exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank took care
to have the Deeds of Assignment of the PNs notarized, yet left
the Declaration of Pledge unnotarized. This Court would think
that petitioner Citibank would take greater cautionary measures
with the preparation and execution of the Declaration of Pledge
because it involved respondent's "all present and future fiduciary
placements" with a Citibank branch in another country,
specifically, in Geneva, Switzerland. While there is no express
legal requirement that the Declaration of Pledge had to be
notarized to be effective, even so, it could not enjoy the
same prima facie presumption of due execution that is extended
to notarized documents, and petitioner Citibank must discharge
the burden of proving due execution and authenticity of the
Declaration of Pledge.
Second, petitioner Citibank was unable to establish the date
when the Declaration of Pledge was actually executed. The
photocopy of the Declaration of Pledge submitted by petitioner
Citibank before the RTC was undated.132 It presented only a
photocopy of the pledge because it already forwarded the
original copy thereof to Citibank-Geneva when it requested for
the remittance of respondent's dollar accounts pursuant thereto.
Respondent, on the other hand, was able to secure a copy of
the Declaration of Pledge, certified by an officer of Citibank-
Geneva, which bore the date 24 September
1979.133 Respondent, however, presented her passport and
plane tickets to prove that she was out of the country on the said
date and could not have signed the pledge. Petitioner Citibank
insisted that the pledge was signed before 24 September 1979,
but could not provide an explanation as to how and why the said
date was written on the pledge. Although Mr. Tan testified that
the Declaration of Pledge was signed by respondent personally
before him, he could not give the exact date when the said
signing took place. It is important to note that the copy of the
Declaration of Pledge submitted by the respondent to the RTC
was certified by an officer of Citibank-Geneva, which had
possession of the original copy of the pledge. It is dated 24
September 1979, and this Court shall abide by the presumption
that the written document is truly dated.134 Since it is undeniable
that respondent was out of the country on 24 September 1979,
then she could not have executed the pledge on the said date.
Third, the Declaration of Pledge was irregularly filled-out. The
pledge was in a standard printed form. It was constituted in favor
of Citibank, N.A., otherwise referred to therein as the Bank. It
should be noted, however, that in the space which should have
named the pledgor, the name of petitioner Citibank was
typewritten, to wit –
The pledge right herewith constituted shall secure all
claims which the Bank now has or in the future acquires
against Citibank, N.A., Manila (full name and address
of the Debtor), regardless of the legal cause or the
transaction (for example current account, securities
transactions, collections, credits, payments,
documentary credits and collections) which gives rise
thereto, and including principal, all contractual and
penalty interest, commissions, charges, and costs.
The pledge, therefore, made no sense, the pledgor and pledgee
being the same entity. Was a mistake made by whoever filled-
out the form? Yes, it could be a possibility. Nonetheless,
considering the value of such a document, the mistake as to a
significant detail in the pledge could only be committed with
gross carelessness on the part of petitioner Citibank, and raised
serious doubts as to the authenticity and due execution of the
same. The Declaration of Pledge had passed through the hands
of several bank officers in the country and abroad, yet,
surprisingly and implausibly, no one noticed such a glaring
mistake.
Lastly, respondent denied that it was her signature on the
Declaration of Pledge. She claimed that the signature was a
forgery. When a document is assailed on the basis of forgery,
the best evidence rule applies –
Basic is the rule of evidence that when the subject of
inquiry is the contents of a document, no evidence is
admissible other than the original document itself
except in the instances mentioned in Section 3, Rule
130 of the Revised Rules of Court. Mere photocopies
of documents are inadmissible pursuant to the best
evidence rule. This is especially true when the issue
is that of forgery.
As a rule, forgery cannot be presumed and must be
proved by clear, positive and convincing evidence and
the burden of proof lies on the party alleging forgery.
The best evidence of a forged signature in an
instrument is the instrument itself reflecting the alleged
forged signature. The fact of forgery can only be
established by a comparison between the alleged
forged signature and the authentic and genuine
signature of the person whose signature is theorized
upon to have been forged. Without the original
document containing the alleged forged signature, one
cannot make a definitive comparison which would
establish forgery. A comparison based on a mere xerox
copy or reproduction of the document under
controversy cannot produce reliable results.135
Respondent made several attempts to have the original copy of
the pledge produced before the RTC so as to have it examined
by experts. Yet, despite several Orders by the RTC,136 petitioner
Citibank failed to comply with the production of the original
Declaration of Pledge. It is admitted that 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 respondent's signature on the original
copy of the pledge was forged, it is persuaded that petitioner
Citibank willfully suppressed the presentation of the original
document, and takes into consideration the presumption that the
evidence willfully suppressed would be adverse to petitioner
Citibank if produced.138
Without the Declaration of Pledge, petitioner Citibank had no
authority to demand the remittance of respondent's dollar
accounts with Citibank-Geneva and to apply them to her
outstanding loans. It cannot effect legal compensation under
Article 1278 of the Civil Code since, petitioner Citibank itself
admitted that Citibank-Geneva is a distinct and separate entity.
As for the dollar accounts, respondent was the creditor and
Citibank-Geneva is the debtor; and as for the outstanding loans,
petitioner Citibank was the creditor and respondent was the
debtor. The parties in these transactions were evidently not the
principal creditor of each other.
Therefore, this Court declares that the remittance of
respondent's dollar accounts from Citibank-Geneva and the
application thereof to her outstanding loans with petitioner
Citibank was illegal, and null and void. Resultantly, petitioner
Citibank is obligated to return to respondent the amount of
US$149,632,99 from her Citibank-Geneva accounts, or its
present equivalent value in Philippine currency; and, at the
same time, respondent continues to be obligated to petitioner
Citibank for the balance of her outstanding loans which, as of 5
September 1979, amounted to ₱1,069,847.40.
V public interest and its fiduciary character requires high
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
₱318,897.34 and ₱203,150.00, respectively, earning an interest
of 14.5% per annum as stipulated in the PNs,139 beginning 17
March 1977, the date of the placements.
Petitioner Citibank is also ordered to refund to respondent the
amount of US$149,632.99, or its equivalent in Philippine
currency, which had been remitted from her Citibank-Geneva
accounts. These dollar accounts, consisting of two fiduciary
placements and current accounts with Citibank-Geneva shall
continue earning their respective stipulated interests from 26
October 1979, the date of their remittance by Citibank-Geneva
to petitioner Citibank in Manila and applied against respondent's
outstanding loans.
As for respondent, she is ordered to pay petitioner Citibank the
balance of her outstanding loans, which amounted to
₱1,069,847.40 as of 5 September 1979. These loans continue
to earn interest, as stipulated in the corresponding PNs, from the
time of their respective maturity dates, since the supposed
payment thereof using respondent's dollar accounts from
Citibank-Geneva is deemed illegal, null and void, and, thus,
ineffective.
VI
Petitioner Citibank shall be liable for damages to
respondent.
Petitioners protest the award by the Court of Appeals of moral
damages, exemplary damages, and attorney's fees in favor of
respondent. They argued that the RTC did not award any
damages, and respondent, in her appeal before the Court of
Appeals, did not raise in issue the absence of such.
While it is true that the general rule is that only errors which have
been stated in the assignment of errors and properly argued in
the brief shall be considered, this Court has also recognized
exceptions to the general rule, wherein it authorized the review
of matters, even those not assigned as errors in the appeal, if
the consideration thereof is necessary in arriving at a just
decision of the case, and there is a close inter-relation between
the omitted assignment of error and those actually assigned and
discussed by the appellant.140 Thus, the Court of Appeals did
not err in awarding the damages when it already made findings
that would justify and support the said award.
Although this Court appreciates the right of petitioner Citibank to
effect legal compensation of respondent's local deposits, as well
as its right to the proceeds of PNs No. 20138 and 20139 by
virtue of the notarized Deeds of Assignment, to partly extinguish
respondent's outstanding loans, it finds that petitioner Citibank
did commit wrong when it failed to pay and properly account for
the proceeds of respondent's money market placements,
evidenced by PNs No. 23356 and 23357, and when it sought the
remittance of respondent's dollar accounts from Citibank-
Geneva by virtue of a highly-suspect Declaration of Pledge to
be applied to the remaining balance of respondent's outstanding
loans. It bears to emphasize that banking is impressed with
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
testimony144 before the RTC, respondent narrated –
Q By the way Mrs. Witness will you kindly tell us again,
you said before that you are a businesswoman, will you
tell us again what are the businesses you are engaged
into [sic]?
A I am engaged in real estate. I am the owner of the
Modesta Village 1 and 2 in San Mateo, Rizal. I am also
the President and Chairman of the Board of Macador
[sic] Co. and Business Inc. which operates the
Macador [sic] International Palace Hotel. I am also the
President of the Macador [sic] International Palace
Hotel, and also the Treasures Home Industries, Inc.
which I am the Chairman and president of the Board
and also operating affiliated company in the name of
Treasures Motor Sales engaged in car dealers [sic] like
Delta Motors, we are the dealers of the whole Northern
Luzon and I am the president of the Disto Company,
Ltd., based in Hongkong licensed in Honkong [sic] and
now operating in Los Angeles, California.
Q What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and
construction.
Q Aside from those businesses are you a member of
any national or community organization for social and
civil activities?
A Yes sir.
Q What are those?
A I am the Vice-President of thes [sic] Subdivision
Association of the Philippines in 1976, I am also an
officer of the … Chamber of Real Estate Business
Association; I am also an officer of the Chatholic [sic]
Women's League and I am also a member of the CMLI,
I forgot the definition.
Q How about any political affiliation or government
position held if any?
A I was also a candidate for Mayo last January 30,
1980.
Q Where?
 A In Dagupan City, Pangasinan.
Q What else?
A I also ran as an Assemblywoman last May, 1984,
Independent party in Regional I, Pangasinan.
Q What happened to your businesses you mentioned
as a result of your failure to recover you [sic]
investments and bank deposits from the defendants?
A They are not all operating, in short, I was hampered
to push through the businesses that I have.
A [sic] Of all the businesses and enterprises that you
mentioned what are those that are paralyzed and what
remain inactive?
A Of all the company [sic] that I have, only the Disto
Company that is now operating in California.
Q How about your candidacy as Mayor of Dagupan,
[sic] City, and later as Assemblywoman of Region I,
what happened to this?
A I won by voting but when election comes on [sic] the
counting I lost and I protested this, it is still pending and
because I don't have financial resources I was not able
to push through the case. I just have it pending in the
Comelec.
Q Now, do these things also affect your social and civic
activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman
I would like to inform the Honorable Court that I was
awarded as the most outstanding businesswoman of
the year in 1976 but when this money was not given
back to me I was not able to comply with the
commitments that I have promised to these
associations that I am engaged into [sic], sir.
For the mental anguish, serious anxiety, besmirched reputation,
moral shock and social humiliation suffered by the respondent,
the award of moral damages is but proper. However, this Court
reduces the amount thereof to ₱300,000.00, 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
₱250,000.00, in accordance with Article 2229146and 2234147 of
the Civil Code.
With the award of exemplary damages, then respondent shall
also be entitled to an award of attorney's fees.148Additionally,
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
₱200,000.00 attorney's fees shall be satisfactory.
In contrast, this Court finds no sufficient basis to award damages
to petitioners.1âwphi1 Respondent was compelled to institute
the present case in the exercise of her rights and in the
protection of her interests. In fact, although her Complaint before
the RTC was not sustained in its entirety, it did raise meritorious
points and on which this Court rules in her favor. Any injury
resulting from the exercise of one's rights is damnum absque
injuria.150
IN VIEW OF THE FOREGOING, the instant Petition is PARTLY
GRANTED. The assailed Decision of the Court of Appeals in
CA-G.R. No. 51930, dated 26 March 2002, as already modified
by its Resolution, dated 20 November 2002, is
hereby AFFIRMED WITH MODIFICATION, as follows –
1. PNs No. 23356 and 23357
are DECLARED subsisting and outstanding. Petitioner
Citibank is ORDEREDto 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 (₱318,897.34)
and Two Hundred Three Thousand One Hundred Fifty
Pesos (₱203,150.00), respectively, plus the stipulated
interest of Fourteen and a half percent (14.5%) per
annum, beginning 17 March 1977;
2. The remittance of One Hundred Forty-Nine
Thousand Six Hundred Thirty Two US Dollars and
Ninety-Nine Cents (US$149,632.99) from respondent's
Citibank-Geneva accounts to petitioner Citibank in
Manila, and the application of the same against
respondent's outstanding loans with the latter,
is DECLARED illegal, null and void. Petitioner Citibank
is ORDERED to refund to respondent the said amount,
or its equivalent in Philippine currency using the
exchange rate at the time of payment, plus the
stipulated interest for each of the fiduciary placements
and current accounts involved, beginning 26 October
1979;
3. Petitioner Citibank is ORDERED to pay respondent
moral damages in the amount of Three Hundred
Thousand Pesos (₱300,000.00); exemplary damages
in the amount of Two Hundred Fifty Thousand Pesos
(₱250,000.00); and attorney's fees in the amount of
Two Hundred Thousand Pesos (₱200,000.00); 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 (₱1,069,847.40), 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.