3/10/25, 7:12 PM G.R. No.

156132

Today is Monday, March 10, 2025

FIRST DIVISION

G.R. No. 156132 October 12, 2006

CITIBANK, N.A. (Formerly First National City Bank) and INVESTORS' FINANCE CORPORATION, doing
business under the name and style of FNCB Finance, petitioners,
vs.
MODESTA R. SABENIANO, respondent.

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
Decision2 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 Complaint5 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 Promissory Notes (PNs),
and secured by (a) a Declaration of Pledge of her dollar accounts in Citibank-Geneva, and (b) Deeds of Assignment
of her money market placements with petitioner FNCB Finance. When respondent failed to pay her loans despite
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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.;

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(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.

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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.)

To sustain the argument of respondent would result in an unjust and incongruous situation wherein one party may
frustrate the efforts of the opposing party to appeal the case by merely filing with this Court a Motion for Extension of
Time to File a Petition for Review, ahead of the opposing party, then not actually filing the intended Petition.21 The
party who fails to file its intended Petition within the reglementary or extended period should solely bear the
consequences of such failure.

Respondent Sabeniano did not commit forum shopping.

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

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

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

This Court, however, finds no sufficient basis to hold respondent liable for forum shopping.

Forum shopping has been defined as the filing of two or more suits involving the same parties for the same cause of
action, either simultaneously or successively, for the purpose of obtaining a favorable judgment.22 The test for
determining forum shopping is whether in the two (or more) cases pending, there is an identity of parties, rights or

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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.

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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
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regularity is the presumption that the RTC judge, in resolving the case and drafting his Decision, reviewed,
evaluated, and weighed all the evidence on record. That the said RTC judge is not the same judge who heard the
case and received the evidence is of little consequence when the records and transcripts of stenographic notes
(TSNs) are complete and available for consideration by the former.

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

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

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

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

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

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

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

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

Irrefragably, by reason alone that the judge who penned the RTC Decision was not the same judge who heard the
case and received the evidence therein would not render the findings in the said Decision erroneous and unreliable.
While the conduct and demeanor of witnesses may sway a trial court judge in deciding a case, it is not, and should
not be, his only consideration. Even more vital for the trial court judge's decision are the contents and substance of
the witnesses' testimonies, as borne out by the TSNs, as well as the object and documentary evidence submitted
and made part of the records of the case.

This Court proceeds to making its own findings of fact.

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

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

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Deposit/Placement Amount
Dollar deposit with Citibank-Geneva $ 149,632.99
Money market placement with Citibank, evidenced by Promissory Note (PN) ₱ 318,897.34
No. 23356 (which cancels and supersedes PN No. 22526), earning 14.5%
interest per annum (p.a.)
Money market placement with Citibank, evidenced by PN No. 23357 (which ₱ 203,150.00
cancels and supersedes PN No. 22528), earning 14.5% interest p.a.
Money market placement with FNCB Finance, evidenced by PN No. 5757 ₱ 500,000.00
(which cancels and supersedes PN No. 4952), earning 17% interest p.a.
Money market placement with FNCB Finance, evidenced by PN No. 5758 ₱ 500,000.00
(which cancels and supersedes PN No. 2962), earning 17% interest p.a.

This Court is tasked to determine whether petitioners are indeed liable to return the foregoing amounts, together
with the appropriate interests and penalties, to respondent. It shall trace respondent's transactions with petitioners,
from her money market placements with petitioner Citibank and petitioner FNCB Finance, to her savings and current
accounts with petitioner Citibank, and to her dollar accounts with Citibank-Geneva.

Money market placements with petitioner Citibank

The history of respondent's money market placements with petitioner Citibank began on 6 December 1976, when
she made a placement of ₱500,000.00 as principal amount, which was supposed to earn an interest of 16% p.a.
and for which PN No. 20773 was issued. Respondent did not yet claim the proceeds of her placement and, instead,
rolled-over or re-invested the principal and proceeds several times in the succeeding years for which new PNs were
issued by petitioner Citibank to replace the ones which matured. Petitioner Citibank accounted for respondent's
original placement and the subsequent roll-overs thereof, as follows –

Date Maturity Date Amount Interest

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

Petitioner Citibank alleged that it had already paid to respondent the principal amounts and proceeds of PNs
No. 23356 and 23357, upon their maturity. Petitioner Citibank further averred that respondent used the
₱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)

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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.

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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.

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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
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(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 amounts of
₱500,000.00 and ₱600,000.00, respectively, payable to respondent's savings account with petitioner Citibank,
S/A No. 25-13703-4, upon their maturity on 1 June 1977. Once again, respondent rolled-over several times
the principal amounts of her money market placements with petitioner FNCB Finance, as follows –

Date Maturity Date Amount Interest

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

As presented by the petitioner FNCB Finance, respondent rolled-over only the principal amounts of her money
market placements as she chose to receive the interest income therefrom. Petitioner FNCB Finance also pointed
out that when PN No. 4962, with principal amount of ₱600,000.00, matured on 1 June 1977, respondent received a
partial payment of the principal which, together with the interest, amounted to ₱102,633.33;44 thus, only the amount
of ₱500,000.00 from PN No. 4962 was rolled-over to PN No. 5758.

Based on the foregoing records, the principal amounts of PNs No. 5757 and 5758, upon their maturity, were rolled
over to PNs No. 8167 and 8169, respectively. PN No. 816745 expressly 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 award to respondent the principal amounts and interests covered by PNs No. 5757 and
5758 when these were already canceled and superseded. It is now incumbent upon this Court to determine what
subsequently happened to PNs No. 8167 and 8169.

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

Date of Issuance Check No. Amount Notation

(mm/dd/yyyy) (₱)
09/01/1978 76962 12,833.34 Interest payment on PN#08167
09/01/1978 76961 12,833.34 Interest payment on PN#08169
09/05/1978 77035 500,000.00 Full payment of principal on PN#08167
which is hereby cancelled
09/05/ 1978 77034 500,000.00 Full payment of principal on PN#08169
which is hereby cancelled

Then again, Checks No. 77035 and 77034 were later returned to petitioner FNCB Finance together with a memo,47
dated 6 September 1978, from Mr. Tan of petitioner Citibank, to a Mr. Bobby Mendoza of petitioner FNCB Finance.
According to the memo, the two checks, in the total amount of ₱1,000,000.00, were to be returned to respondent's
account with instructions to book the said amount in money market placements for one more year. Pursuant to the
said memo, Checks No. 77035 and 77034 were invested by petitioner FNCB Finance, on behalf of respondent, in
money market placements for which it issued PNs No. 20138 and 20139. The PNs each covered ₱500,000.00, to
earn 11% interest per annum, and to mature on 3 September 1979.

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On 3 September 1979, petitioner FNCB Finance issued Check No. 100168, pay to the order of "Citibank N.A. A/C
Modesta Sabeniano," in the amount of ₱1,022,916.66, as full payment of the principal amounts and interests of both
PNs No. 20138 and 20139 and, resultantly, canceling the said PNs.48 Respondent actually admitted the issuance
and existence of Check No. 100168, but with the qualification that the proceeds thereof were turned over to
petitioner Citibank.49 Respondent did not clarify the circumstances attending the supposed turn over, but on the
basis of the allegations of petitioner Citibank itself, the proceeds of PNs No. 20138 and 20139, amounting to
₱1,022,916.66, was used by it to liquidate respondent's outstanding loans. Therefore, the determination of whether
or not respondent is still entitled to the return of the proceeds of PNs No. 20138 and 20139 shall be dependent on
the resolution of the issues raised as to the existence of the loans and the authority of petitioner Citibank to use the
proceeds of the said PNs, together with respondent's other deposits and money market placements, to pay for the
same.

Savings and current accounts with petitioner Citibank

Respondent presented and submitted before the RTC deposit slips and bank statements to prove deposits made to
several of her accounts with petitioner Citibank, particularly, Accounts No. 00484202, 59091, and 472-751, which
would have amounted to a total of ₱3,812,712.32, had there been no withdrawals or debits from the said accounts
from the time the said deposits were made.

Although the RTC and the Court of Appeals did not make any definitive findings as to the status of respondent's
savings and current accounts with petitioner Citibank, the Decisions of both the trial and appellate courts effectively
recognized only the ₱31,079.14 coming from respondent's savings account which was used to off-set her alleged
outstanding loans with petitioner Citibank.50

Since both the RTC and the Court of Appeals had consistently recognized only the ₱31,079.14 of respondent's
savings account with petitioner Citibank, and that respondent failed to move for reconsideration or to appeal this
particular finding of fact by the trial and appellate courts, it is already binding upon this Court. Respondent is already
precluded from claiming any greater amount in her savings and current accounts with petitioner Citibank. Thus, this
Court shall limit itself to determining whether or not respondent is entitled to the return of the amount of ₱31,079.14
should the off-set thereof by petitioner Citibank against her supposed loans be found invalid.

Dollar accounts with Citibank-Geneva

Respondent made an effort of preparing and presenting before the RTC her own computations of her money market
placements and dollar accounts with Citibank-Geneva, purportedly amounting to a total of United States (US)
$343,220.98, as of 23 June 1985.51 In her Memorandum filed with the RTC, she claimed a much bigger amount of
deposits and money market placements with Citibank-Geneva, totaling US$1,336,638.65.52 However, respondent
herself also submitted as part of her formal offer of evidence the computation of her money market placements and
dollar accounts with Citibank-Geneva as determined by the latter.53 Citibank-Geneva accounted for respondent's
money market placements and dollar accounts as follows –

MODESTA SABENIANO &/OR

==================
US$ 30'000.-- Principal Fid. Placement
+ US$ 339.06 Interest at 3,875% p.a. from 12.07. –
25.10.79
- US$ 95.-- Commission (minimum)
US$ 30'244.06 Total proceeds on 25.10.1979
US$ 114'000.-- Principal Fid. Placement
+ US$ 1'358.50 Interest at 4,125% p.a. from 12.07. –
25.10.79
- US$ 41.17 Commission
US$ 115'317.33 Total proceeds on 25.10.1979
US$ 145'561.39 Total proceeds of both placements on
25.10.1979
+ US$ 11'381.31 total of both current accounts

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US$ 156'942.70 Total funds available

- US$ 149'632.99 Transfer to Citibank Manila on
26.10.1979
(counter value of Pesos 1'102'944.78)
US$ 7'309.71 Balance in current accounts
- US$ 6'998.84 Transfer to Citibank Zuerich – ac no.
121359 on March 13, 1980
US$ 310.87 various charges including closing
charges

According to the foregoing computation, by 25 October 1979, respondent had a total of US$156,942.70, from which,
US$149,632.99 was transferred by Citibank-Geneva to petitioner Citibank in Manila, and was used by the latter to
off-set respondent's outstanding loans. The balance of respondent's accounts with Citibank-Geneva, after the
remittance to petitioner Citibank in Manila, amounted to US$7,309.71, which was subsequently expended by a
transfer to another account with Citibank-Zuerich, in the amount of US$6,998.84, and by payment of various bank
charges, including closing charges, in the amount of US$310.87. Rightly so, both the RTC and the Court of Appeals
gave more credence to the computation of Citibank-Geneva as to the status of respondent's accounts with the said
bank, rather than the one prepared by respondent herself, which was evidently self-serving. Once again, this Court
shall limit itself to determining whether or not respondent is entitled to the return of the amount of US$149,632.99
should the off-set thereof by petitioner Citibank against her alleged outstanding loans be found invalid. Respondent
cannot claim any greater amount since she did not perfect an appeal of the Decision of the Court of Appeals, dated
26 March 2002, which found that she is entitled only to the return of the said amount, as far as her accounts with
Citibank-Geneva is concerned.

III

Petitioner Citibank was able to establish by preponderance of evidence the existence of respondent's loans.

Petitioners' version of events

In sum, the following amounts were used by petitioner Citibank to liquidate respondent's purported outstanding
loans –

Description Amount
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB
Finance)
₱ 1,022,916.66
Savings account with petitioner Citibank
31,079.14
Dollar remittance from Citibank-Geneva (peso
equivalent of US$149,632.99)
1,102,944.78

Total
₱ 2,156,940.58

According to petitioner Citibank, respondent incurred her loans under the circumstances narrated below.

As early as 9 February 1978, respondent obtained her first loan from petitioner Citibank in the principal amount of
₱200,000.00, for which she executed PN No. 31504.54 Petitioner Citibank extended to her several other loans in the
succeeding months. Some of these loans were paid, while others were rolled-over or renewed. Significant to the
Petition at bar are the loans which respondent obtained from July 1978 to January 1979, appropriately covered by
PNs (first set).55 The aggregate principal amount of these loans was ₱1,920,000.00, which could be broken down
as follows –

Date of Date of
Principal Date of Release
PN No. Issuance Maturity MC No.
Amount (mm/dd/yyyy)
(mm/dd/yyyy) (mm/dd/yyyy)

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32935 07/20/1978 09/18/1978 ₱ 400,000.00 07/20/1978 220701

33751 10/13/1978 12/12/1978 100,000.00 Unrecovered
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978 226285
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978 226439
34079 11/21/1978 01/19/1979 250,000.00 11/21/1978 226467
34192 12/04/1978 01/18/1979 100,000.00 12/05/1978 228057
34402 12/26/1978 02/23/1979 300,000.00 12/26/1978 228203
34534 01/09/1979 03/09/1979 150,000.00 01/09/1979 228270
34609 01/17/1979 03/19/1979 150,000.00 01/17/1979 228357
34740 01/30/1979 03/30/1979 220,000.00 01/30/1979 228400

Total ₱ 1,920,000.00

When respondent was unable to pay the first set of PNs upon their maturity, these were rolled-over or renewed
several times, necessitating the execution by respondent of new PNs in favor of petitioner Citibank. As of 5 April
1979, respondent had the following outstanding PNs (second set),56 the principal amount of which remained at
₱1,920,000.00 –

Date of Issuance Date of Maturity

PN No. Principal Amount
(mm/dd/yyyy) (mm/dd/yyyy)
34510 01/01/1979 03/02/1979 P 400,000.00
34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
34612 01/19/1979 03/16/1979 150,000.00
34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
35694 03/19/1979 05/29/1979 150,000.00
35695 03/19/1979 05/29/1979 100,000.00
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 220,000.00
Total ₱ 1,920,000.00

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

Respondent secured her foregoing loans with petitioner Citibank by executing Deeds of Assignment of her money
market placements with petitioner FNCB Finance. On 2 March 1978, respondent executed in favor of petitioner
Citibank a Deed of Assignment57 of PN No. 8169, which was issued by petitioner FNCB Finance, to secure payment
of the credit and banking facilities extended to her by petitioner Citibank, in the aggregate principal amount of
₱500,000.00. On 9 March 1978, respondent executed in favor of petitioner Citibank another Deed of Assignment,58
this time, of PN No. 8167, also issued by petitioner FNCB Finance, to secure payment of the credit and banking
facilities extended to her by petitioner Citibank, in the aggregate amount of ₱500,000.00. When PNs No. 8167 and
8169, representing respondent's money market placements with petitioner FNCB Finance, matured and were rolled-
over to PNs No. 20138 and 20139, respondent executed new Deeds of Assignment,59 in favor of petitioner Citibank,
on 25 August 1978. According to the more recent Deeds, respondent assigned PNs No. 20138 and 20139,
representing her rolled-over money market placements with petitioner FNCB Finance, to petitioner Citibank as
security for the banking and credit facilities it extended to her, in the aggregate principal amount of ₱500,000.00 per
Deed.
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In addition to the Deeds of Assignment of her money market placements with petitioner FNCB Finance, respondent
also executed a Declaration of Pledge,60 in which she supposedly pledged "[a]ll present and future fiduciary
placements held in my personal and/or joint name with Citibank, Switzerland," to secure all claims the petitioner
Citibank may have or, in the future, acquire against respondent. The petitioners' copy of the Declaration of Pledge is
undated, while that of the respondent, a copy certified by a Citibank-Geneva officer, bore the date 24 September
1979.61

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

The first letter62 was dated 5 April 1979, addressed to respondent and signed by Mr. Tan, as the manager of
petitioner Citibank, which stated, in part, that –

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

We, therefore, have no alternative but to call your loan of ₱1,920,000.00 plus interests and other charges due
and demandable. If you still fail to settle this obligation by 4/27/79, we shall have no other alternative but to
refer your account to our lawyers for legal action to protect the interest of the bank.

Respondent sent a reply letter63 dated 26 April 1979, printed on paper bearing the letterhead of respondent's
company, MC Adore International Palace, the body of which reads –

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

Please accept our Comtrust Check in the amount of ₱62,683.33.

Please bear with us for a little while, at most ninety days. As you know, we have a pending loan with the
Development Bank of the Philippines in the amount of ₱11-M. This loan has already been recommended for
approval and would be submitted to the Board of Governors. In fact, to further facilitate the early release of
this loan, we have presented and furnished Gov. J. Tengco a xerox copy of your letter.

You will be doing our corporation a very viable service, should you grant us our request for a little more time.

A week later or on 3 May 1979, a certain C. N. Pugeda, designated as "Executive Secretary," sent a letter64 to
petitioner Citibank, on behalf of respondent. The letter was again printed on paper bearing the letterhead of MC
Adore International Palace. The pertinent paragraphs of the said letter are reproduced below –

Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for a re-computation of the interest
and penalty charges on her loan in the aggregate amount of ₱1,920,000.00 with maturity date of all
promissory notes at June 30, 1979. As she has personally discussed with you yesterday, this date will more or
less assure you of early settlement.

In this regard, please entrust to bearer, our Comtrust check for ₱62,683.33 to be replaced by another check
with amount resulting from the new computation. Also, to facilitate the processing of the same, may we
request for another set of promissory notes for the signature of Mrs. Sabeniano and to cancel the previous
ones she has signed and forwarded to you.

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

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

Re: PN No. 20138 for ₱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.

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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,68
as follows –

Respondent's outstanding obligation (principal and interest) ₱

2,123,843.20
Proceeds from respondent's money market
Less:
placements
with petitioner FNCB Finance (principal and interest) (1,022,916.66)
Deposits in respondent's bank accounts with
petitioner
Citibank (31,079.14)
Balance of respondent's obligation ₱
1,069,847.40

Mr. Tan of petitioner Citibank subsequently sent a letter,69 dated 28 September 1979, notifying respondent of the
status of her loans and the foregoing compensation which petitioner Citibank effected. In the letter, Mr. Tan informed
respondent that she still had a remaining past-due obligation in the amount of ₱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.

On 5 October 1979, respondent wrote Mr. Tan of petitioner 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 7th 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

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documents for cases in which it was involved. After compiling the documentary evidence for the present case, Atty.
Renato J. Fernandez, internal legal counsel of petitioner Citibank, forwarded them to the Control Division. The
original copies of the MCs, which supposedly represent the proceeds of the first set of PNs, as well as that of other
documentary evidence related to the case, were among those burned in the said fire.71

Respondent's version of events

Respondent disputed petitioners' narration of the circumstances surrounding her loans with petitioner Citibank and
the alleged authority she gave for the off-set or compensation of her money market placements and deposit
accounts with petitioners against her loan obligation.

Respondent denied outright executing the first set of PNs, except for one (PN No. 34534 in particular). Although she
admitted that she obtained several loans from petitioner Citibank, these only amounted to ₱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.

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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
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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.94
Because of her Exhibit "HHH," respondent effectively admitted receipt of MC No. 226467, although for reasons
other than as proceeds of a loan.

Neither can this Court give credence to respondent's contention that the notations on the MCs, stating that they
were the proceeds of particular PNs, were not there when she received the checks and that the notations appeared
to be written by a typewriter different from that used to write the other information on the checks. Once more,
respondent's allegations were uncorroborated by any other evidence. Her and her counsel's observation that the
notations on the MCs appear to be written by a typewriter different from that used to write the other information on
the checks hardly convinces this Court considering that it constitutes a mere opinion on the appearance of the
notation by a witness who does not possess the necessary expertise on the matter. In addition, the notations on the
MCs were written using both capital and small letters, while the other information on the checks were written using
capital letters only, such difference could easily confuse an untrained eye and lead to a hasty conclusion that they
were written by different typewriters.

Respondent's testimony, that based on her experience transacting with banks, the MCs were not supposed to
include notations on the purpose for which the checks were issued, also deserves scant consideration. While
respondent may have extensive experience dealing with banks, it still does not qualify her as a competent witness
on banking procedures and practices. Her testimony on this matter is even belied by the fact that the other MCs
issued by petitioner Citibank (when it was still named First National City Bank) and by petitioner FNCB Finance, the
existence and validity of which were not disputed by respondent, also bear similar notations that state the reason for
which they were issued.

Respondent presented several more pieces of evidence to substantiate her claim that she received MCs No.
226285, 226439, 226467, 226057, 228357, and 228400, not as proceeds of her loans from petitioner Citibank, but
as the return of the principal amounts and payment of interests from her money market placements with petitioners.
Part of respondent's exhibits were personal 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

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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

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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. It is 1âwphi1

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-

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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,113
to the exclusion of any secondary or substitutionary evidence.114
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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

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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 disturbing
taking into consideration the similarities of the fraud, machinations, and deceits employed by the defendant-
appellant Citibank and its Account Manager Francisco Tan.

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

As the factual milieu of the present appeal created reasonable doubts as to whether the nine (9) Promissory
Notes were indeed executed with considerations, the doubts, coupled by the findings and conclusions of this
Court in CA-G.R. CV No. 15934 and the Supreme Court in G.R. No. 93350. should be construed against
herein defendants-appellants Citibank and FNCB Finance.

What this Court truly finds disturbing is the significance given by the Court of Appeals in its assailed Decision to the
Decision119 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.
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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,
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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.

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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.

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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,
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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.

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 public interest and its fiduciary character
requires high standards of integrity and performance.141 A bank is under the obligation to treat the accounts of its
depositors with meticulous care whether such accounts consist only of a few hundred pesos or of millions of
pesos.142 The bank must record every single transaction accurately, down to the last centavo, and as promptly as
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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?

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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 2229146
and 2234147 of the Civil Code.

With the award of exemplary damages, then respondent shall also be entitled to an award of attorney's fees.148
Additionally, attorney's fees may be awarded when a party is compelled to litigate or to incur expenses to protect his
interest by reason of an unjustified act of the other party.149 In this case, an award of ₱200,000.00 attorney's fees
shall be satisfactory.

In contrast, this Court finds no sufficient basis to award damages to petitioners. Respondent was compelled to
1âwphi1

institute the present case in the exercise of her rights and in the protection of her interests. In fact, although her
Complaint before the RTC was not sustained in its entirety, it did raise meritorious points and on which this Court
rules in her favor. Any injury resulting from the exercise of one's rights is damnum absque injuria.150

IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED. The assailed Decision of the Court of
Appeals in CA-G.R. No. 51930, dated 26 March 2002, as already modified by its Resolution, dated 20 November
2002, is hereby AFFIRMED WITH MODIFICATION, as follows –

1. PNs No. 23356 and 23357 are DECLARED subsisting and outstanding. Petitioner Citibank is ORDERED
to return to respondent the principal amounts of the said PNs, amounting to Three Hundred Eighteen
Thousand Eight Hundred Ninety-Seven Pesos and Thirty-Four Centavos (₱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.

Panganiban, C.J. (Chairperson), Ynares-Santiago, Austria-Martinez, and Callejo, Sr., JJ., concur.

Footnotes

1 Rollo, pp. 165-325.

2
Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Conrado M. Vasquez, Jr. and
Amelita G. Tolentino, concurring; id. at 327-366.

3 Id. at 368-374.

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

5
Records, Vol. I, pp. 1-8.
6 Id. at 148-157.

7 Id. at 40-51.

8
Id. at 208-227.
9 Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes, Records, Vol. I, p. 346.

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

11
Civil Case No. 11336 was raffled and re-reffled to four different Judges of the Makati RTC before it was
finally resolved. It was originally raffled to Makati RTC, Branch 140, presided by Judge Ansberto P. Paredes.
On 4 February 1987, before the termination of the re-direct examination of herein respondent (plaintiff before
the RTC), the case was transferred to Makati RTC, Branch 57, presided by Judge Francisco X. Velez, for
reasons not disclosed in the Records. Judge Velez was able to try and hear the case until the presentation of
the evidence by herein petitioners (defendants before the RTC). Respondent again took the stand to present
rebuttal evidence, but even before she could finish her testimony, Judge Velez inhibited himself upon
petitioners' motion (Order, dated 10 April 1992, penned by Judge Francisco X. Velez, Records, Vol. 11, p.
1085). The case was transferred to Makati RTC, Branch 141, presided by Judge Marcelino F. Bautista, Jr. For
reasons not disclosed in the Records, Judge Manuel D. Victorio took over Makati RTC, Branch 141. After the
parties submitted their respective Memoranda, Judge Victorio declared the case submitted for decision
(Order, dated 9 December 1994, penned by Judge Manuel D. Victorio, Records, Vol. III, p. 1602). Judge
Victorio rendered his Decision in Civil Case No. 11336 on 24 August 1995 (Records, Vol. III, pp. 1607-1621).

12 Rollo, pp. 365-366.

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

14
The filing of a motion for extension does not automatically suspend the running of the period for appeal,
since the purpose of such motion is to merely ask the court to grant an enlargement of the time fixed by law.
The movant, therefore, has no right to assume that his motion would be granted, and should check with the
court as to the outcome of his motion, so that if the same is denied, he can still perfect his appeal. (Hon. Bello
and Ferrer v. Fernando, 114 Phil. 101, 104 [1962].)

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

16 Rollo, p. 374.

17
Resolution, dated 29 January 2003; rollo, pp. 980-A-B.
18 Resolution, dated 23 June 2003; id. at 1311-1312.

19 Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137 Phil. 239, 244 (1969); Singh v.
Liberty Insurance Corp., 118 Phil. 532, 535 (1963).
20
Rollo, pp. 1443-1445.
21 See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438 [1976]) wherein this Court pronounced
that a party's right to appeal shall not be affected by the perfection of another appeal from the same
decision; otherwise, it would lead to the absurd proposition that one party may be deprived of the right to
appeal from the portion of a decision against him just because the other party who had been notified of the
decision ahead had already perfected his appeal in so far as the said decision adversely affects him. If the
perfection of an appeal by one party would not bar the right of the other party to appeal from the same
decision, then an unperfected appeal, as in the case at bar, would have far less effect.
22
The Executive Secretary v. Gordon, 359 Phil. 266, 271 (1998).
23 Young v. John Keng Seng, 446 Phil. 823, 833 (2003).

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24 Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283 (1998).

25
The Court of Appeals modified the trial court's findings and conclusions, as follows: (1) By declaring the
₱1,069,847.40 alleged indebtedness of Ms. Sabeniano as non-existing for failure of Citibank to substantiate
its allegations; (2) By declaring that there are unpaid money market placements, current accounts and
savings account of Ms. Sabeniano; and (3) The awarding of damages in favor of Ms. Sabeniano and against
Citibank.

26 Supra note 11.

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

28
Penned by Associate Justice Andres B. Reyes with Associate Justices Conrado M. Vasquez, Jr. and
Amelita G. Tolentino, concurring; rollo, p. 344.

29 Section 3(m) of Rule 131 of the Revised Rules of Court reads –

SEC. 3. Disputable presumptions. – The following presumptions are satisfactory if uncontradicted, but
may be contradicted and overcome by other evidence:

xxxx

(m) That official duty has been regularly performed.

30 317 Phil. 495, 501-503 (1995).

31
Records, Vol. I, p. 515.
32 32 Phil. 476, 478-479.

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

34
Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95 (1996).
35 Mr. Herminio Pujeda, at the time he testified before the RTC in 1990, was already the Vice President of
petitioner Citibank.

36 Mr. Francisco Tan, at the time of his deposition in 1990, was already working as Assistant General
Manager for Dai-Chi Kangyo Bank in Hong Kong.
37
TSN, 12 March 1990, pp. 6-10.
38 Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).

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

40
Exhibit "37," defendants' folder of exhibits, p. 106.
41 Exhibit "37-C," id. at 107.

42
Exhibit "37-F," id. at 108.
43 TSN, 12 March 1990, p. 13.

44 Exhibit "104-C," defendants' folder of exhibits, p. 111.

45
Exhibit "105," id. at 112.
46 Exhibit "106," id. at 114.

47 Exhibit "108," id. at 118.

48
Exhibits "112" and "119," id. at 121-A, 124.

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49 Records, Vol. III, p. 1367.

50
Exhibit "34-B," petitioners' folder of exhibits, p. 102.
51 Exhibit "G," plaintiff's folder of exhibits, pp. 4-15.

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

53
Exhibit "J," plaintiff's folder of exhibits, p. 49.
54 Exhibit "120-H," defendants' folder of exhibits, pp. 131.

55 Exhibits "1" to "9," id. at 44-52.

56
Exhibits "18" to "26," id. at 83-92.
57 Exhibit "13-E," id. at 65-67.

58 Exhibit "14-G," id. at 72-74.

59
Exhibit "15" and "Exhibit 17-D," id. at 77-78, 81-82.
60 Exhibit "38," id. at 109-110.

61 Exhibit "K-1," plaintiff's folder of exhibits, pp. 54-55

62
Exhibit "27," defendants' folder of exhibits, p. 93.
63 Exhibit "28," id. at 94.

64 Exhibit "29," id. at 95.

65
Exhibit "30," id. at 96.
66 Exhibit "31," id. at 97.

67
Exhibit "32," id. at 98.
68 Exhibits "34-B" and "34-C," id. at 102-103.

69 Exhibit "34," id. at 100.

70
Exhibit "121," id. at 207.
71 TSN, 14 May 1991, Vol. XI , pp. 12-14.

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

73
Exhibit "QQQ," plaintiff's folder of exhibits, p. 117.
74 Exhibit "AAAA," id. at 124.

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

76
Id. at 16-23.
77 TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-28.

78 Sarmiento v. Court of Appeals, 364 Phil. 613, 621 (1999).

79
Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538, 553 (2000), with reference to Tan v. Court
of Appeals, 239 Phil. 310, 322 (1994).

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

81
403 Phil. 361, 383 (2001).
82 Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA 799, 311-312.

83 Revised Rules of Court, Rule 131, Section 3(p).

84
Id., Rule 131, Section 3(q).
85 Id., Section 3.

86 Exhibit "19," defendants' folder of exhibits, p. 84.

87
Exhibits "9-D" and "9-G," id. at 52.
88 Exhibit "9-F," id. at 52.

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

90
Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA 465, 469-471.
91 Banco de Oro Savings and Mortgage Bank v Equitable Banking Corporation, G.R. No. 74917, 20 January
1988, 157 SCRA 188, 199.

92 Negotiable Instruments Law, Section 66, in connection with Section 65.

93
Associated Bank v. Court of Appeals, 322 Phil. 677, 697 (1996); Associated Bank v. Court of Appeals, G.R.
No. 89802, 7 May 1992, 208 SCRA 465, 472.

94 Plaintiff's Formal Offer of Documentary Exhibits, records, Vol. I, pp. 504-505; plaintiff's folder of exhibits, p.
110.

95 Exhibits "GGG" and "JJJ," plaintiff's folder of exhibits, pp. 109, 113.

96
Plaintiff's folder of exhibits, p. 110.
97 See the initials on Exhibit "III-1," plaintiff's folder of exhibits, p. 112.

98
Plaintiff's folder of exhibits, p. 112.
99 TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.

100 G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.

101
Exhibit "MMM," plaintiff's folder of exhibits, p. 115.
102 Records, Vol. I, p. 507.

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

104
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.
105 TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 13-16.

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

107
TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol X, pp. 7-9.
108 TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp. 31-34.

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

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110 Id. at 15-23.

111
Folder of defendants' exhibits, pp. 102-103.
112 Municipality of Moncada v. Cajuigan, 21 Phil 184, 190 (1912).

113 J.A.R. Sibal and J.N. Salazar, Jr., Compendium on Evidence 31 (4th ed., 1995).

114
F.D. Regalado, Remedial Law Compendium, Vol. II, p. 571 (8th ed., 2000).
115 F.D. Regalado, Remedial Law Compendium, Vol. II, 571 (8th ed., 2000).

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

117
TSN, 13 March 1991, Vol X, pp. 7-9.
118 TSN, 22 May 1990, Vol. V, pp. 14-17.

119 Dr. Ricardo L. Dy and Rosalind O. Dy vs. Citibank, N.A.,CA-G.R. CV No. 15934, 15 January 1990,
penned by Associate Justice Nicolas P. Lapeña, Jr. with Associate Justices Santiago M. Kapunan and
Emeterio C. Cui, concurring.
120
Revised Rules of Court, Rule 130, Section 34.
121 J.A.R. Sibal and J.N. Salazar, Jr., Compendium on Evidence 199-200 (4th ed., 1995).

122 Civil Code, Article 1980; Guingona, Jr. v. City Fiscal of Manila, 213 Phil. 516,523-524 (1984).

123
Civil Code, Article 1286.
124 G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313-314.

125 Anachuelo v. Intermediate Appellate Court, G.R. No. L-71391, 29 January 1987, 147 SCRA 434, 441-442.

126
Antillon v. Barcelon, 37 Phil. 148, 150-151 (1917).
127 See Exhibits "13-E, "14-G," "15-D,"and "17-D," defendants' folder of exhibits, pp. 65-67, 72-74, 77-78, 81-
82.
128
TSN, 7 March 1991, Vol. IX, pp. 3-6.
129 Cuizon v. Court of Appeals, 329 Phil. 456, 482 (1996).

130 Exhibits "13-E, "14-G," "15-D," and "17-D," defendants' folder of exhibits, pp. 65-66, 72-73, 77-78, 81-82.

131
Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396 (2000).
132 Exhibit "38," defendants' folder of exhibits, pp. 109-110.

133 Exhibit "K-1," plaintiff's folder of exhibits, 54-55.

134
Revised Rules of Court, Rule 131, Section 3(u).
135 Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763 (1998).

136 Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes, records, Vol. I, p. 310; Order,
dated 2 September 1988, id. at penned by Judge Francisco X. Velez, records, Vol. I, p. 449; Order, dated 24
November 1988, penned by Judge Francisco X. Velez, records, Vol. I, p. 458; Order, dated 25 April 1989,
penned by Judge Francisco X. Velez, records, Vol. I, pp. 476-477
137
Security Bank & Trust Co. v. Triumph Lumber and Construction Corporation, 361 Phil. 463, 477 (1999).
138 Revised Rules of Court, Rule 131, Section 3(e).

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139 The stipulated interest shall apply as indemnity for the damages incurred in the delay of payment as
provided in Article 2209 of the Civil Code which reads –

ART. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest
agreed upon, and in the absence of a stipulation, the legal interest, which is six percent per annum.
[Emphasis supplied.]

Note, however, that the legal interest has been increased from six percent to twelve percent per annum
by virtue of Central Bank Circulars No. 416, dated 29 July 1974, and No. 905, dated 10 December
1982.
140
Radio Communications of the Philippines, Inc. v. National Labor Relations Commission, G.R. Nos.
101181-84, 22 June 1992, 210 SCRA 222, 226-227; Ortigas, Jr. v. Lufthansa German Airlines, G.R. No. L-
28773, 30 June 1975, 64 SCRA 610, 633-634; Hernandez v. Andal, 78 Phil. 196, 209-210 (1947).

141 The General Banking Law of 2000, Section 2.

142 Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948 (1999).

143
Simex International (Manila), Inc, vs. Court of Appeals, G.R. No. 88013, 19 March 1990, 183 SCRA 360,
367; Bank of Philippine Islands vs. Intermediate Appellate Court, G.R. No. 69162, 21 February 1992, 206
SCRA 408, 412-413.

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

145 Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995 (1999); Zenith Insurance Corporation v. Court of
Appeals, G.R. No. 85296, 14 May 1990, 185 SCRA 398, 402-403.
146
Exemplary or corrective damages are imposed, by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages.

147 While the amount of exemplary damages need not be proved, the plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court may consider the question of whether or not
exemplary damages should be awarded. x x x

148 Civil Code, Article 2208(1).

149
Ching Sen Ben vs. Court of Appeals, 373 Phil. 544, 555 (1999).
150 ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 498, 531-532 (1999); Tierra
International Construction Corp. v. National Labor Relations Commission, G.R. No. 88912, 3 July 1992, 211
SCRA 73, 81; Saba v. Court of Appeals, G.R. No. 77950, 24 August 1990, 189 SCRA 50, 55.

The Lawphil Project - Arellano Law Foundation

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