FIRST DIVISION

CITIBANK, N.A. (Formerly

FirstNational City Bank)
and INVESTORS FINANCE
CORPORATION,
doing
business under the name
and style of FNCB
Finance,
Petitioners,

G.R. No. 156132

Present:
PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

- versus-

Promulgated:
MODESTA
SABENIANO,

R.
October 16, 2006

Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Page 1 of 100

Before this Court is a Petition for Review

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

Petitioner Citibank, N.A. (formerly known as the First National

City Bank) is a banking corporation duly authorized and
existing under the laws of the United States of America and
licensed to do commercial banking activities and perform
trust functions in the Philippines.
Petitioner Investors Finance Corporation, which did
business under the name and style of FNCB Finance, was an
affiliate company of petitioner Citibank, specifically handling
money market placements for its clients. It is now, by virtue
of a merger, doing business as part of its successor-ininterest, 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.
Page 2 of 100

On 8 August 1985, respondent filed a

Complaint[5] against petitioners, docketed as Civil Case No.
11336, before the Regional Trial Court (RTC) of Makati
City. Respondent claimed to have substantial deposits and
money market placements with the petitioners, as well as
money market placements with the Ayala Investment and
Development Corporation (AIDC), the proceeds of which
were supposedly deposited automatically and directly to
respondents accounts with petitioner Citibank. Respondent
alleged that petitioners refused to return her deposits and
the proceeds of her money market placements despite her
repeated demands, thus, compelling respondent to file Civil
Case No. 11336 against petitioners for Accounting, Sum of
Money and Damages. Respondent eventually filed an
Amended Complaint[6]on 9 October 1985 to include
additional claims to deposits and money market placements
inadvertently left out from her original Complaint.
In their joint Answer[7] and Answer to Amended
Complaint,[8] filed on 12 September 1985 and 6 November
1985, respectively, petitioners admitted that respondent had
deposits and money market placements with them, including
dollar accounts in the Citibank branch in Geneva, Switzerland
(Citibank-Geneva). Petitioners further alleged that the
respondent later obtained several loans from petitioner
Citibank, for which she executed Promissory Notes (PNs), and
secured by (a) a Declaration of Pledge of her dollar accounts
in Citibank-Geneva, and (b) Deeds of Assignment of her
money market placements with petitioner FNCB
Page 3 of 100

Finance. When respondent failed to pay her loans despite

repeated demands by petitioner Citibank, the latter exercised
its right to off-set or compensate respondents outstanding
loans with her deposits and money market placements,
pursuant to the Declaration of Pledge and the Deeds of
Assignment executed by respondent in its favor. Petitioner
Citibank supposedly informed respondent Sabeniano of the
foregoing compensation through letters, dated 28 September
1979 and 31 October 1979. Petitioners were therefore
surprised when six years later, in 1985, respondent and her
counsel made repeated requests for the withdrawal of
respondents deposits and money market placements with
petitioner Citibank, including her dollar accounts with
Citibank-Geneva and her money market placements with
petitioner FNCB Finance. Thus, petitioners prayed for the
dismissal of the Complaint and for the award of actual, moral,
and exemplary damages, and attorneys fees.
When the parties failed to reach a compromise during
the pre-trial hearing,[9] trial proper ensued and the parties
proceeded with the presentation of their respective
evidence. Ten years after the filing of the Complaint on 8
August 1985, a Decision[10] was finally rendered in Civil Case
No. 11336 on 24 August 1995 by the fourth Judge[11] who
handled the said case, Judge Manuel D. Victorio, the
dispositive portion of which reads
WHEREFORE, in view of all the foregoing,
decision is hereby rendered as follows:

Page 4 of 100

(1) Declaring as illegal, null and void the setoff

effected by the defendant Bank [petitioner Citibank]
of plaintiffs [respondent Sabeniano] dollar deposit
with Citibank, Switzerland, in the amount of
US$149,632.99, and ordering the said defendant
[petitioner Citibank] to refund the said amount to
the plaintiff with legal interest at the rate of twelve
percent (12%) per annum, compounded yearly, from
31 October 1979 until fully paid, or its peso
equivalent at the time of payment;
(2) Declaring the plaintiff [respondent
Sabeniano] indebted to the defendant Bank
[petitioner Citibank] in the amount of P1,069,847.40
as of 5 September 1979 and ordering the plaintiff
[respondent Sabeniano] to pay said amount,
however, there shall be no interest and penalty
charges from the time the illegal setoff was effected
on 31 October 1979;
(3) Dismissing all other claims and
counterclaims interposed by the parties against
each other.
Costs against the defendant Bank.

All the parties appealed the foregoing Decision of the RTC to

the Court of Appeals, docketed as CA-G.R. CV No.
51930. Respondent questioned the findings of the RTC that
she was still indebted to petitioner Citibank, as well as the
failure of the RTC to order petitioners to render an accounting
of respondents deposits and money market placements with
them. On the other hand, petitioners argued that petitioner
Citibank validly compensated respondents outstanding loans
with her dollar accounts with Citibank-Geneva, in accordance
with the Declaration of Pledge she executed in its
Page 5 of 100

favor. Petitioners also alleged that the RTC erred in not

declaring respondent liable for damages and interest.

On 26 March 2002, the Court of Appeals rendered its

Decision[12] affirming with modification the RTC Decision in
Civil Case No. 11336, dated 24 August 1995, and ruling
entirely in favor of respondent in this wise

Wherefore, premises considered, the

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

1. Declaring as illegal, null and void the set-off

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

2. As defendant-appellant Citibank failed to

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

3. As defendants-appellants failed to account

the following plaintiff-appellants money market
Page 6 of 100

placements, savings account and current accounts,

the former is hereby ordered to return the same, in
accordance with the terms and conditions agreed
upon by the contending parties as evidenced by the
certificates of investments, to wit:

(i) Citibank NNPN Serial No.

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

(ii) Citibank NNPN Serial No.

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

(iii) FNCB NNPN Serial No.

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

(iv) FNCB NNPN Serial No.

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

(v)
The
Two
Million
(P2,000,000.00)
money
market
placements of Ms. Sabeniano with the
Page 7 of 100

Ayala Investment & Development

Corporation (AIDC) with legal interest
at the rate of twelve percent (12%) per
annum compounded yearly, from 30
September 1976 until fully paid;

4. Ordering defendants-appellants to jointly

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

Apparently, the parties to the case, namely, the respondent,

on one hand, and the petitioners, on the other, made
separate attempts to bring the aforementioned Decision of
the Court of Appeals, dated 26 March 2002, before this Court
for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the
Decision of the Court of Appeals in CA-G.R. CV No. 51930,
dated 26 March 2002, and instead, filed immediately with this
Court on 3 May 2002 a Motion for Extension of Time to File a
Petition for Review,[13] which, after payment of the docket
and other lawful fees, was assigned the docket number G.R.
No. 152985. In the said Motion, respondent alleged that she
received a copy of the assailed Court of Appeals Decision on
18 April 2002 and, thus, had 15 days therefrom or until 3 May
Page 8 of 100

2002 within which to file her Petition for Review. Since she
informed her counsel of her desire to pursue an appeal of the
Court of Appeals Decision only on 29 April 2002, her counsel
neither had enough time to file a motion for reconsideration
of the said Decision with the Court of Appeals, nor a Petition
for Certiorari with this Court. Yet, the Motion failed to state
the exact extension period respondent was requesting for.
Since this Court did not act upon respondents Motion
for Extension of Time to file her Petition for Review, then the
period for appeal continued to run and still expired on 3 May
2002.[14] Respondent failed to file any Petition for Review
within the prescribed period for appeal and, hence, this Court
issued a Resolution,[15] dated 13 November 2002, in which it
pronounced that
G.R. No. 152985 (Modesta R. Sabeniano vs.
Court of Appeals, et al.). It appearing that petitioner
failed to file the intended petition for review on
certiorari within the period which expired on May 3,
2002, the Court Resolves to DECLARE THIS CASE
TERMINATED and DIRECT the Division Clerk of Court
to INFORM the parties that the judgment sought to
be reviewed has become final and executory.

The said Resolution was duly recorded in the Book of Entries

of Judgments on 3 January 2003.
G.R. No. 156132

Page 9 of 100

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 Decisions 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 denied[17] by this Court for failure of the petitioners to
attach
thereto
a
Certification
against
Forum
Shopping. However, upon petitioners Motion and compliance
with the requirements, this Court resolved[18] to reinstate the
Petition.
The Petition presented fourteen (14) assignments of
errors allegedly committed by the Court of Appeals in its
Decision, dated 26 March 2002, involving both questions of
Page 10 of 100

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

Before proceeding to a discussion of the merits of the

instant Petition, this Court wishes to address first the
argument, persistently advanced by respondent in her
pleadings on record, as well as her numerous personal and
unofficial letters to this Court which were no longer made
part of the record, that the Decision of the Court of Appeals
in CA-G.R. CV No. 51930, dated 26 March 2002, had already
become final and executory by virtue of the Resolution of this
Court in G.R. No. 152985, dated 13 November 2002.
G.R. No. 152985 was the docket number assigned by
this Court to respondents Motion for Extension of Time to File
a Petition for Review. Respondent, though, did not file her
supposed Petition. Thus, after the lapse of the prescribed
Page 11 of 100

period for the filing of the Petition, this Court issued the
Resolution, dated 13 November 2002, declaring the Decision
of the Court of Appeals, dated 26 March 2002, final and
executory. It should be pointed out, however, that the
Resolution, dated 13 November 2002, referred only to G.R.
No. 152985, respondents appeal, which she failed to perfect
through the filing of a Petition for Review within the
prescribed period. The declaration of this Court in the same
Resolution would bind respondent solely, and not petitioners
which filed their own separate appeal before this Court,
docketed as G.R. No. 156132, the Petition at bar. This would
mean that respondent, on her part, should be bound by the
findings of fact and law of the Court of Appeals, including the
monetary amounts consequently awarded to her by the
appellate court in its Decision, dated 26 March 2002; and she
can no longer refute or assail any part thereof. [19]
This Court already explained the matter to respondent
when it issued a Resolution[20] in G.R. No. 156132, dated 2
February 2004, which addressed her Urgent Motion for the
Release of the Decision with the Implementation of the Entry
of Judgment in the following manner
[A]cting on Citibanks and FNCB Finances Motion for
Reconsideration, we resolved to grant the motion,
reinstate the petition and require Sabeniano to file
a comment thereto in our Resolution of June 23,
2003.Sabeniano filed a Comment dated July 17,
2003 to which Citibank and FNCB Finance filed
a Reply dated August 20, 2003.
From the foregoing, it is clear that Sabeniano had
knowledge of, and in fact participated in, the
Page 12 of 100

proceedings in G.R. No. 156132. She cannot feign

ignorance of the proceedings therein and claim that
the Decisionof 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.
Page 13 of 100

Petitioners contend that respondent committed forum

shopping on the basis of the following facts:
While petitioners Motion for Reconsideration of the
Decision in CA-G.R. CV No. 51930, dated 26 March 2002, was
still pending before the Court of Appeals, respondent already
filed with this Court on 3 May 2002 her Motion for Extension
of Time to File a Petition for Review of the same Court of
Appeals Decision, docketed as G.R. No. 152985. Thereafter,
respondent continued to participate in the proceedings
before the Court of Appeals in CA-G.R. CV No. 51930 by filing
her Comment, dated 17 July 2002, to petitioners Motion for
Reconsideration; and a Rejoinder, dated 23 September 2002,
to petitioners Reply. Thus, petitioners argue that by seeking
relief concurrently from this Court and the Court of Appeals,
respondent is undeniably guilty of forum shopping, if not
indirect contempt.
This Court, however, finds no sufficient basis to hold
respondent liable for forum shopping.
Forum shopping has been defined as the filing of two or more
suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of
obtaining a favorable judgment.[22] The test for determining
forum shopping is whether in the two (or more) cases
pending, there is an identity of parties, rights or causes of
action, and relief sought.[23] To guard against this deplorable
practice, Rule 7, Section 5 of the revised Rules of Court
imposes the following requirement
Page 14 of 100

SEC. 5. Certification against forum shopping. The plaintiff or principal

party shall certify under oath in the complaint or other initiatory pleading asserting a
claim for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial agency and, to the
best of his knowledge, no such other action or claim is pending therein; (b) if there is
such other pending action or claim, a complete statement of the present status
thereof; and (c) if he should thereafter learn that the same or similar action or claim
has been filed or is pending, he shall report that fact within five (5) days therefrom to
the court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory pleading but shall be cause for
the dismissal of the case without prejudice, unless otherwise provided, upon motion
and after hearing. The submission of a false certification or non-compliance with any
of the undertakings therein shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and deliberate forum shopping, the same
shall be ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as cause for administrative sanctions.

Although it may seem at first glance that respondent was

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

Page 15 of 100

The Petition for Review would constitute the initiatory

pleading before this Court, upon the timely filing of which,
the case before this Court commences; much in the same way
a case is initiated by the filing of a Complaint before the trial
court. The Petition for Review establishes the identity of
parties, rights or causes of action, and relief sought from this
Court, and without such a Petition, there is technically no
case before this Court. The Motion filed by respondent
seeking extension of time within which to file her Petition for
Review does not serve the same purpose as the Petition for
Review itself. Such a Motion merely presents the important
dates and the justification for the additional time requested
for, but it does not go into the details of the appealed case.
Without any particular idea as to the assignments of
error or the relief respondent intended to seek from this
Court, in light of her failure to file her Petition for Review,
there is actually no second case involving the same parties,
rights or causes of action, and relief sought, as that in CA-G.R.
CV No. 51930.
It should also be noted that the Certification against
Forum Shopping is required to be attached to the initiatory
pleading, which, in G.R. No. 152985, should have been
respondents Petition for Review. It is in that Certification
wherein respondent certifies, under oath, that: (a) she has
not commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency
and, to the best of her knowledge, no such other action or
claim is pending therein; (b) if there is such other pending
action or claim, that she is presenting a complete statement
Page 16 of 100

of the present status thereof; and (c) if she should thereafter

learn that the same or similar action or claim has been filed
or is pending, she shall report that fact within five days
therefrom to this Court. Without her Petition for Review,
respondent had no obligation to execute and submit the
foregoing Certification against Forum Shopping. Thus,
respondent did not violate Rule 7, Section 5 of the Revised
Rules of Court; neither did she mislead this Court as to the
pendency of another similar case.
Lastly, the fact alone that the Decision of the Court of
Appeals, dated 26 March 2002, essentially ruled in favor of
respondent, does not necessarily preclude her from
appealing the same. Granted that such a move is ostensibly
irrational, nonetheless, it does not amount to malice, bad
faith or abuse of the court processes in the absence of further
proof. Again, it should be noted that the respondent did not
file her intended Petition for Review. The Petition for Review
would have presented before this Court the grounds for
respondents appeal and her arguments in support
thereof. Without said Petition, any reason attributed to the
respondent for appealing the 26 March 2002 Decision would
be grounded on mere speculations, to which this Court
cannot give credence.
II
As an exception to the
general rule, this
Court
takes
cognizance
of
Page 17 of 100

questions of fact
raised in the Petition
at bar.
It is already a well-settled rule that the jurisdiction of
this Court in cases brought before it from the Court of
Appeals by virtue of Rule 45 of the Revised Rules of Court is
limited to reviewing errors of law. Findings of fact of the Court
of Appeals are conclusive upon this Court. There are,
however, recognized exceptions to the foregoing rule,
namely: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the
interference made is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on a misapprehension of facts;
(5) when the findings of fact are conflicting; (6) when in
making its findings, the Court of Appeals went beyond the
issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when
the findings are contrary to those of the trial court; (8) when
the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioners main and
reply briefs are not disputed by the respondent; and (10)
when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on
record.[24]
Several of the enumerated exceptions pertain to the
Petition at bar.
It is indubitable that the Court of Appeals made factual
findings that are contrary to those of the RTC,[25] thus,
Page 18 of 100

resulting in its substantial modification of the trial courts

Decision, and a ruling entirely in favor of the respondent. In
addition, petitioners invoked in the instant Petition for
Review several exceptions that would justify this Courts
review of the factual findings of the Court of Appeals, i.e., the
Court of Appeals made conflicting findings of fact; findings of
fact which went beyond the issues raised on appeal before it;
as well as findings of fact premised on the supposed absence
of evidence and contradicted by the evidence on record.
On the basis of the foregoing, this Court shall proceed
to reviewing and re-evaluating the evidence on record in
order to settle questions of fact raised in the Petition at bar.
The fact that the trial
judge who rendered
the RTC Decision in
Civil Case No. 11336,
dated 24 August 1995,
was not the same
judge who heard and
tried the case, does
not, by itself, render
the said Decision
erroneous.
The Decision in Civil Case No. 11336 was rendered more than
10 years from the institution of the said case. In the course of
its trial, the case was presided over by four (4) different RTC
judges.[26] It was Judge Victorio, the fourth judge assigned to
the case, who wrote the RTC Decision, dated 24 August
1995. In his Decision,[27] Judge Victorio made the following
findings
Page 19 of 100

After carefully evaluating the mass of evidence adduced by the parties,

this Court is not inclined to believe the plaintiffs assertion that the promissory notes
as well as the deeds of assignments of her FNCB Finance money market placements
were simulated. The evidence is overwhelming that the plaintiff received the
proceeds of the loans evidenced by the various promissory notes she had
signed. What is more, there was not an iota of proof save the plaintiffs bare testimony
that she had indeed applied for loan with the Development Bank of the Philippines.

More importantly, the two deeds of assignment were notarized, hence

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

Finally, there were sufficient evidence wherein the plaintiff had admitted
the existence of her loans with the defendant Bank in the total amount
of P1,920,000.00 exclusive of interests and penalty charges (Exhibits 28, 31, 32, and
33).
In fine, this Court hereby finds that the defendants had established the
genuineness and due execution of the various promissory notes heretofore identified
as well as the two deeds of assignments of the plaintiffs money market placements
with defendant FNCB Finance, on the strength of which the said money market
placements were applied to partially pay the plaintiffs past due obligation with the
defendant Bank. Thus, the total sum ofP1,053,995.80 of the plaintiffs past due
obligation was partially offset by the said money market placement leaving a balance
of P1,069,847.40 as of 5 September 1979 (Exhibit 34).

Disagreeing in the foregoing findings, the Court of Appeals

stressed, in its Decision in CA-G.R. CV No. 51930, dated 26
March 2002, that the ponente of the herein
assailed Decision is not the Presiding Judge who heard and
tried the case.[28] This brings us to the question of whether
the fact alone that the RTC Decision was rendered by a judge
other than the judge who actually heard and tried the case is
sufficient justification for the appellate court to disregard or
set aside the findings in the Decision of the court a quo?
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there
exists a disputable presumption that the RTC Decision was
rendered by the judge in the regular performance of his
official duties. While the said presumption is only disputable,
Page 20 of 100

it is satisfactory unless contradicted or overcame by other

evidence.[29] Encompassed in this presumption of regularity is
the presumption that the RTC judge, in resolving the case and
drafting his Decision, reviewed, evaluated, and weighed all
the evidence on record. That the said RTC judge is not the
same judge who heard the case and received the evidence is
of little consequence when the records and transcripts of
stenographic notes (TSNs) are complete and available for
consideration by the former.
In People v. Gazmen,[30] this Court already elucidated its
position on such an issue
Accused-appellant makes an issue of the fact that the judge who penned
the decision was not the judge who heard and tried the case and concludes therefrom
that the findings of the former are erroneous. Accused-appellants argument does not
merit a lengthy discussion. It is well-settled that the decision of a judge who did not
try the case is not by that reason alone erroneous.
It is true that the judge who ultimately decided the case had not heard the
controversy at all, the trial having been conducted by then Judge Emilio L. Polig, who
was indefinitely suspended by this Court. Nonetheless, the transcripts of
stenographic notes taken during the trial were complete and were presumably
examined and studied by Judge Baguilat before he rendered his decision. It is not
unusual for a judge who did not try a case to decide it on the basis of the record. The
fact that he did not have the opportunity to observe the demeanor of the witnesses
during the trial but merely relied on the transcript of their testimonies does not for
that reason alone render the judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
Although it is true that the judge who heard the witnesses testify is in a
better position to observe the witnesses on the stand and determine by their
demeanor whether they are telling the truth or mouthing falsehood, it does not
necessarily follow that a judge who was not present during the trial cannot render a
valid decision since he can rely on the transcript of stenographic notes taken during
the trial as basis of his decision.
Accused-appellants contention that the trial judge did not have the
opportunity to observe the conduct and demeanor of the witnesses since he was not
the same judge who conducted the hearing is also untenable. While it is true that the
trial judge who conducted the hearing would be in a better position to ascertain the
truth and falsity of the testimonies of the witnesses, it does not necessarily follow
that a judge who was not present during the trial cannot render a valid and just
decision since the latter can also rely on the transcribed stenographic notes taken
during the trial as the basis of his decision.
(People vs. De Paz, 212 SCRA 56, 63 [1992])

Page 21 of 100

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

Irrefragably, by reason alone that the judge who penned the

RTC Decision was not the same judge who heard the case and
received the evidence therein would not render the findings
in the said Decision erroneous and unreliable. While the
conduct and demeanor of witnesses may sway a trial court
judge in deciding a case, it is not, and should not be, his only
consideration. Even more vital for the trial court judges
decision are the contents and substance of the witnesses
testimonies, as borne out by the TSNs, as well as the object
and documentary evidence submitted and made part of the
records of the case.
This Court proceeds to
making
its
own
findings of fact.
Since the Decision of the Court of Appeals in CA-G.R.
CV No. 51930, dated 26 March 2002, has become final and
executory as to the respondent, due to her failure to
interpose an appeal therefrom within the reglementary
period, she is already bound by the factual findings in the said
Decision. Likewise, respondents failure to file, within the
reglementary period, a Motion for Reconsideration or an
appeal of the Resolution of the Court of Appeals in the same
case, dated 20 November 2002, which modified its earlier
Page 22 of 100

Decision by deleting paragraph 3(v) of its dispositive portion,

ordering petitioners to return to respondent the proceeds of
her money market placement with AIDC, shall already bar her
from questioning such modification before this Court. Thus,
what is for review before this Court is the Decision of the
Court of Appeals, dated 26 March 2002, as modified by the
Resolution of the same court, dated 20 November 2002.
Respondent alleged that she had several deposits and
money market placements with petitioners. These deposits
and money market placements, as determined by the Court
of Appeals in its Decision, dated 26 March 2002, and as
modified by its Resolution, dated 20 November 2002, are as
follows
Deposit/Placement
Dollar deposit with Citibank-Geneva
Money market placement with Citibank, evidenced by Promissory
Note (PN) No. 23356 (which cancels and supersedes PN No. 22526),
earning 14.5% interest per annum (p.a.)

Amount
$ 149,632.99

P 318,897.34
Money market placement with Citibank, evidenced by PN No.
23357 (which cancels and supersedes PN No. 22528), earning 14.5%
interest p.a.
Money market placement with FNCB Finance, evidenced by PN No.
5757 (which cancels and supersedes PN No. 4952), earning 17%
interest p.a.
Money market placement with FNCB Finance, evidenced by PN No.
5758 (which cancels and supersedes PN No. 2962), earning 17%
interest p.a.

P 203,150.00

P 500,000.00

P 500,000.00

This Court is tasked to determine whether petitioners are

indeed liable to return the foregoing amounts, together with
the appropriate interests and penalties, to respondent. It
shall trace respondents transactions with petitioners, from
her money market placements with petitioner Citibank and
petitioner FNCB Finance, to her savings and current accounts

Page 23 of 100

with petitioner Citibank, and to her dollar accounts with

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

Date
(mm/dd/yyyy
)

PN
No.

Cancel
s PN
No.

(mm/dd/yyyy
)

Amount
(P)

Interes
t
(p.a.)

12/06/1976

2077
3

None

01/13/1977

500,000.0
0

16%

01/14/1977

2168
6

20773

02/08/1977

508,444.4
4

15%

02/09/1977

2252
6

21686

03/16/1977

313,952.5
9

153/4%

2252
8

21686

03/16/1977

200,000.0
0

153/4%

Page 24 of 100

03/17/1977

2335
6

22526

04/20/1977

318,897.3
4

141/2%

2335
7

22528

04/20/1977

203,150.0
0

141/2%

Petitioner Citibank alleged that it had already paid to

respondent the principal amounts and proceeds of PNs No.
23356 and 23357, upon their maturity. Petitioner Citibank
further averred that respondent used the P500,000.00 from
the payment of PNs No. 23356 and 23357, plus P600,000.00
sourced from her other funds, to open two time deposit (TD)
accounts with petitioner Citibank, namely, TD Accounts No.
17783 and 17784.
Petitioner Citibank did not deny the existence nor
questioned the authenticity of PNs No. 23356 and 23357 it
issued in favor of respondent for her money market
placements. In fact, it admitted the genuineness and due
execution of the said PNs, but qualified that they were no
longer outstanding.[31] In Hibberd v. Rohde and
McMillian,[32] this Court delineated the consequences of such
an admission
By the admission of the genuineness and due execution of an instrument,
as provided in this section, is meant that the party whose signature it bears admits
that he signed it or that it was signed by another for him with his authority; that at
the time it was signed it was in words and figures exactly as set out in the pleading of
the party relying upon it; that the document was delivered; and that any formal
requisites required by law, such as a seal, an acknowledgment, or revenue stamp,
which it lacks, are waived by him. Hence, such defenses as that the signature is a
forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425; Cox vs. Northwestern Stage
Co., 1 Idaho, 376; Woollen vs. Whitacre, 73 Ind., 198; Smith vs. Ehnert, 47 Wis., 479;
Faelnar vs. Escao, 11 Phil. Rep., 92); or that it was unauthorized, as in the case of an
agent signing for his principal, or one signing in behalf of a partnership (Country
Bank vs. Greenberg, 127 Cal., 26; Henshaw vs. Root, 60 Inc., 220; Naftzker vs. Lantz,
137 Mich., 441) or of a corporation (Merchant vs. International Banking Corporation,
6 Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs. Spencer & Barnes Co.,
162 Mich., 509); or that, in the case of the latter, that the corporation was authorized
under its charter to sign the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed the instrument in some other

Page 25 of 100

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

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 nonpayment.[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
Page 26 of 100

so paid was actually used to open one of respondents TD

accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two
witnesses to support its contention of payment: (1) That of
Mr. Herminio Pujeda,[35] the officer-in-charge of loans and
placements at the time when the questioned transactions
took place; and (2) that of Mr. Francisco Tan,[36] the former
Assistant Vice-President of Citibank, who directly dealt with
respondent with regard to her deposits and loans.
The relevant portion[37] of Mr. Pujedas testimony as to
PNs No. 23356 and 23357 (referred to therein as Exhibits No.
47 and 48, respectively) is reproduced below
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to testify in this case and this case is
[sic] consist [sic] of several documents involving transactions between the
plaintiff and the defendant. Now, were you able to make your own
memorandum regarding all these transactions?
A Yes, based on my recollection of these facts, I did come up of [sic] the outline of the
chronological sequence of events.
Court:
Are you trying to say that you have personal knowledge or participation to these
transactions?
A Yes, your Honor, I was the officer-in charge of the unit that was processing these
transactions. Some of the documents bear my signature.
Court:
And this resume or summary that you have prepared is based on purely your
recollection or documents?
A Based on documents, your Honor.
Court:
Are these documents still available now?
A Yes, your honor.

Page 27 of 100

Court:
Better present the documents.
Atty. Mabasa:
Yes, your Honor, that is why your Honor.
Atty. Mabasa:
Q Now, basing on the notes that you prepared, Mr. Witness, and according to you
basing also on your personal recollection about all the transactions
involved between Modesta Sabeniano and defendant City Bank [sic] in this
case. Now, would you tell us what happened to the money market
placements of Modesta Sabeniano that you have earlier identified in Exhs.
47 and 48?
A The transactions which I said earlier were terminated and booked to time deposits.
Q And you are saying time deposits with what bank?
A With First National Citibank.
Q Is it the same bank as Citibank, N.A.?
A Yes, sir.
Q And how much was the amount booked as time deposit with defendant Citibank?
A In the amount of P500,000.00.
Q And outside this P500,000.00 which you said was booked out of the proceeds of
Exhs. 47 and 48, were there other time deposits opened by Mrs. Modesta
Sabeniano at that time.
A Yes, she also opened another time deposit for P600,000.00.
Q So all in all Mr. Witness, sometime in April of 1978 Mrs. Modesta Sabeneano [sic]
had time deposit placements with Citibank in the amount of P500,000.00
which is the proceeds of Exh. 47 and 48 and another P600,000.00, is it
not?
A Yes, sir.
Q And would you know where did the other P600,000 placed by Mrs. Sabeneano [sic]
in a time deposit with Citibank, N.A. came [sic] from?
A She funded it directly.
Q What are you saying Mr. Witness is that the P600,000 is a [sic] fresh money coming
from Mrs. Modesta Sabeneano [sic]?
A That is right.

In his deposition in Hong Kong, Mr. Tan recounted

what happened to PNs No. 23356 and 23357 (referred to
therein as Exhibits E and F, respectively), as follows
Page 28 of 100

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

Before anything else, it should be noted that when Mr.

Pujedas testimony before the RTC was made on 12 March
1990 and Mr. Tans deposition in Hong Kong was conducted
on 3 September 1990, more than a decade had passed from
the time the transactions they were testifying on took
place. This Court had previously recognized the frailty and
unreliability of human memory with regards to figures after
the lapse of five years.[38] Taking into consideration the
substantial length of time between the transactions and the
witnesses testimonies, as well as the undeniable fact that
bank officers deal with multiple clients and process numerous
transactions during their tenure, this Court is reluctant to give
much weight to the testimonies of Mr. Pujeda and Mr. Tan
regarding the payment of PNs No. 23356 and 23357 and the
use by respondent of the proceeds thereof for opening TD
accounts. This Court finds it implausible that they should
remember, after all these years, this particular transaction
with respondent involving her PNs No. 23356 and 23357 and
TD accounts. Both witnesses did not give any reason as to
why, from among all the clients they had dealt with and all
the transactions they had processed as officers of petitioner
Page 29 of 100

Citibank, they specially remembered respondent and her PNs

No. 23356 and 23357. Their testimonies likewise lacked
details on the circumstances surrounding the payment of the
two PNs and the opening of the time deposit accounts by
respondent, such as the date of payment of the two PNs,
mode of payment, and the manner and context by which
respondent relayed her instructions to the officers of
petitioner Citibank to use the proceeds of her two PNs in
opening the TD accounts.
Moreover, while there are documentary evidences to
support and trace respondents money market placements
with petitioner Citibank, from the original PN No. 20773,
rolled-over several times to, finally, PNs No. 23356 and
23357, there is an evident absence of any documentary
evidence on the payment of these last two PNs and the use
of the proceeds thereof by respondent for opening TD
accounts.The paper trail seems to have ended with the copies
of PNs No. 23356 and 23357. Although both Mr. Pujeda and
Mr. Tan said that they based their testimonies, not just on
their memories but also on the documents on file, the
supposed documents on which they based those portions of
their testimony on the payment of PNs No. 23356 and 23357
and the opening of the TD accounts from the proceeds
thereof,were never presented before the courts nor made
part of the records of the case. Respondents money market
placements were of substantial amounts consisting of the
principal amount of P500,000.00, plus the interest it should
have earned during the years of placement and it is difficult

Page 30 of 100

for this Court to believe that petitioner Citibank would not

have had documented the payment thereof.
When Mr. Pujeda testified before the RTC on 6
February 1990,[39] petitioners counsel attempted to present
in evidence a document that would supposedly support the
claim of petitioner Citibank that the proceeds of PNs No.
23356 and 23357 were used by respondent to open one of
her
two
TD
accounts
in
the
amount
of P500,000.00. Respondents counsel objected to the
presentation of the document since it was a mere xerox"
copy, and was blurred and hardly readable. Petitioners
counsel then asked for a continuance of the hearing so that
they can have time to produce a better document, which was
granted by the court. However, during the next hearing and
continuance of Mr. Pujedas testimony on 12 March 1990,
petitioners counsel no longer referred to the said document.
As respondent had established a prima facie case that
petitioner Citibank is obligated to her for the amounts stated
in PNs No. 23356 and 23357, and as petitioner Citibank failed
to present sufficient proof of payment of the said PNs and the
use by the respondent of the proceeds thereof to open her
TD accounts, this Court finds that PNs No. 23356 and 23357
are still outstanding and petitioner Citibank is still liable to
respondent for the amounts stated therein.
The significance of this Courts declaration that PNs No. 23356
and 23357 are still outstanding becomes apparent in the light
of petitioners next contentions that respondent used the
proceeds of PNs No. 23356 and 23357, together with
additional money, to open TD Accounts No. 17783 and 17784
Page 31 of 100

with petitioner Citibank; and, subsequently, respondent preterminated these TD accounts and transferred the proceeds
thereof, amounting to P1,100,000.00, to petitioner FNCB
Finance for money market placements. While respondents
money market placements with petitioner FNCB Finance may
be traced back with definiteness to TD Accounts No. 17783
and 17784, there is only flimsy and unsubstantiated
connection between the said TD accounts and the supposed
proceeds paid from PNs No. 23356 and 23357. With PNs No.
23356 and 23357 still unpaid, then they represent an
obligation of petitioner Citibank separate and distinct from
the obligation of petitioner FNCB Finance arising from
respondents money market placements with the latter.
Money market placements with petitioner FNCB Finance
According to petitioners, respondents TD Accounts No. 17783
and 17784, in the total amount of P1,100,000.00, were
supposed to mature on 15 March 1978. However,
respondent, through a letter dated 28 April 1977,[40] preterminated the said TD accounts and transferred all the
proceeds thereof to petitioner FNCB Finance for money
market placement. Pursuant to her instructions, TD Accounts
No. 17783 and 17784 were pre-terminated and petitioner
Citibank (then still named First National City Bank) issued
Managers Checks (MC) No. 199253[41] and 199251[42] for the
amounts of P500,000.00 and P600,00.00, respectively. Both
MCs were payable to Citifinance (which, according to Mr.
Pujeda,[43] was one with and the same as petitioner FNCB
Finance), with the additional notation that A/C MODESTA R.
Page 32 of 100

SABENIANO. Typewritten on MC No. 199253 is the phrase

Ref. Proceeds of TD 17783, and on MC No. 199251 is a similar
phrase, Ref. Proceeds of TD 17784. These phrases
purportedly established that the MCs were paid from the
proceeds of respondents pre-terminated TD accounts with
petitioner Citibank. Upon receipt of the MCs, petitioner FNCB
Finance deposited the same to its account with Feati Bank
and Trust Co., as evidenced by the rubber stamp mark of the
latter found at the back of both MCs. In exchange, petitioner
FNCB Finance booked the amounts received as money
market placements, and accordingly issued PNs No. 4952 and
4962, for the amounts of P500,000.00 and P600,000.00,
respectively, payable to respondents savings account with
petitioner Citibank, S/A No. 25-13703-4, upon their maturity
on 1 June 1977. Once again, respondent rolled-over several
times the principal amounts of her money market placements
with petitioner FNCB Finance, as follows
Maturity Date

Date
(mm/dd/yyyy)

04/29/1977

06/02/1977

08/31/1977

PN
No.

Cancels
PN No.

(mm/dd/yyyy)

Amount

Interest

(P)

(p.a.)

4952

None

06/01/1977

500,000.00

17%

4962

None

06/01/1977

600,000.00

17%

5757

4952

08/31/1977

500,000.00

17%

5758

4962

08/31/1977

500,000.00

17%

8167

5757

08/25/1978

500,000.00

14%

8169

5752

08/25/1978

500,000.00

14%

Page 33 of 100

As presented by the petitioner FNCB Finance, respondent

rolled-over only the principal amounts of her money market
placements as she chose to receive the interest income
therefrom. Petitioner FNCB Finance also pointed out that
when PN No. 4962, with principal amount of P600,000.00,
matured on 1 June 1977, respondent received a partial
payment of the principal which, together with the interest,
amounted to P102,633.33;[44] thus, only the amount
of P500,000.00 from PN No. 4962 was rolled-over to PN No.
5758.
Based on the foregoing records, the principal amounts of PNs
No. 5757 and 5758, upon their maturity, were rolled over to
PNs No. 8167 and 8169, respectively. PN No.
8167[45] expressly canceled and superseded PN No. 5757,
while PN No. 8169[46] also explicitly canceled and superseded
PN No. 5758. Thus, it is patently erroneous for the Court of
Appeals to still award to respondent the principal amounts
and interests covered by PNs No. 5757 and 5758 when these
were already canceled and superseded. It is now incumbent
upon this Court to determine what subsequently happened
to PNs No. 8167 and 8169.
Petitioner FNCB Finance presented four checks as proof of
payment of the principal amounts and interests of PNs No.
8167 and 8169 upon their maturity. All the checks were
payable to respondents savings account with petitioner
Citibank, with the following details
Date of Issuance
(mm/dd/yyyy)
09/01/1978

Check No.
76962

Amount
(P)
12,833.34

Notation
Interest payment on PN#08167

Page 34 of 100

09/01/1978

76961

12,833.34

09/05/1978

77035

500,000.00

09/05/ 1978

77034

500,000.00

Interest payment on PN#08169

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

Then again, Checks No. 77035 and 77034 were later returned
to petitioner FNCB Finance together with a memo,[47] dated 6
September 1978, from Mr. Tan of petitioner Citibank, to a Mr.
Bobby Mendoza of petitioner FNCB Finance. According to the
memo, the two checks, in the total amount of P1,000,000.00,
were to be returned to respondents account with instructions
to book the said amount in money market placements for one
more year. Pursuant to the said memo, Checks No. 77035 and
77034 were invested by petitioner FNCB Finance, on behalf
of respondent, in money market placements for which it
issued PNs No. 20138 and 20139. The PNs each
covered P500,000.00, to earn 11% interest per annum, and to
mature on 3 September 1979.
On 3 September 1979, petitioner FNCB Finance issued Check
No. 100168, pay to the order of Citibank N.A. A/C Modesta
Sabeniano, in the amount of P1,022,916.66, as full payment
of the principal amounts and interests of both PNs No. 20138
and 20139 and, resultantly, canceling the said
PNs.[48] Respondent actually admitted the issuance and
existence of Check No. 100168, but with the qualification that
the proceeds thereof were turned over to petitioner
Citibank.[49] Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the
allegations of petitioner Citibank itself, the proceeds of PNs
No. 20138 and 20139, amounting to P1,022,916.66, was used
Page 35 of 100

by it to liquidate respondents outstanding loans. Therefore,

the determination of whether or not respondent is still
entitled to the return of the proceeds of PNs No. 20138 and
20139 shall be dependent on the resolution of the issues
raised as to the existence of the loans and the authority of
petitioner Citibank to use the proceeds of the said PNs,
together with respondents other deposits and money market
placements, to pay for the same.
Savings and current accounts with petitioner Citibank
Respondent presented and submitted before the RTC
deposit slips and bank statements to prove deposits made to
several of her accounts with petitioner Citibank, particularly,
Accounts No. 00484202, 59091, and 472-751, which would
have amounted to a total of P3,812,712.32, had there been
no withdrawals or debits from the said accounts from the
time the said deposits were made.
Although the RTC and the Court of Appeals did not make any
definitive findings as to the status of respondents savings and
current accounts with petitioner Citibank, the Decisions of
both the trial and appellate courts effectively recognized only
the P31,079.14 coming from respondents savings account
which was used to off-set her alleged outstanding loans with
petitioner Citibank.[50]
Since both the RTC and the Court of Appeals had consistently
recognized only the P31,079.14 of respondents savings
account with petitioner Citibank, and that respondent failed
Page 36 of 100

to move for reconsideration or to appeal this particular

finding of fact by the trial and appellate courts, it is already
binding upon this Court. Respondent is already precluded
from claiming any greater amount in her savings and current
accounts with petitioner Citibank. Thus, this Court shall limit
itself to determining whether or not respondent is entitled to
the return of the amount of P31,079.14 should the off-set
thereof by petitioner Citibank against her supposed loans be
found invalid.

Dollar accounts with Citibank-Geneva

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

30000.-339.06
95.--

Principal Fid. Placement

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

Page 37 of 100

US$

30244.06

Total proceeds on 25.10.1979

US$
+ US$
- US$

114000.-1358.50
41.17

Principal Fid. Placement

Interest at 4,125% p.a. from 12.07. 25.10.79
Commission

US$

115317.33

Total proceeds on 25.10.1979

US$
+ US$

145561.39
11381.31

Total proceeds of both placements on 25.10.1979

total of both current accounts

US$

156942.70

Total funds available

- US$

149632.99

Transfer to Citibank Manila on 26.10.1979

(counter value of Pesos 1102944.78)

US$

7309.71

Balance in current accounts

- US$

6998.84

Transfer to Citibank Zuerich ac no. 121359 on March

13, 1980

US$

310.87

various charges including closing charges

According to the foregoing computation, by 25 October 1979,

respondent had a total of US$156,942.70, from which,
US$149,632.99 was transferred by Citibank-Geneva to
petitioner Citibank in Manila, and was used by the latter to
off-set respondents outstanding loans. The balance of
respondents accounts with Citibank-Geneva, after the
remittance to petitioner Citibank in Manila, amounted to
US$7,309.71, which was subsequently expended by a transfer
to another account with Citibank-Zuerich, in the amount of
US$6,998.84, and by payment of various bank charges,
including closing charges, in the amount of
US$310.87. Rightly so, both the RTC and the Court of Appeals
gave more credence to the computation of Citibank-Geneva
as to the status of respondents accounts with the said bank,
rather than the one prepared by respondent herself, which
was evidently self-serving. Once again, this Court shall limit
itself to determining whether or not respondent is entitled to
the return of the amount of US$149,632.99 should the off-set
Page 38 of 100

thereof by petitioner Citibank against her alleged outstanding

loans be found invalid. Respondent cannot claim any greater
amount since she did not perfect an appeal of the Decision of
the Court of Appeals, dated 26 March 2002, which found that
she is entitled only to the return of the said amount, as far as
her accounts with Citibank-Geneva is concerned.
III
Petitioner
Citibank
was able to establish
by preponderance of
evidence the existence
of respondents loans.

Petitioners version of events

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

Amount
P 1,022,916.66
31,079.14
1,102,944.78
P 2,156,940.58

According to petitioner Citibank, respondent incurred her

loans under the circumstances narrated below.
As early as 9 February 1978, respondent obtained her
first loan from petitioner Citibank in the principal amount
Page 39 of 100

of P200,000.00, for which she executed PN No.

31504.[54] Petitioner Citibank extended to her several other
loans in the succeeding months. Some of these loans were
paid, while others were rolled-over or renewed. Significant to
the Petition at bar are the loans which respondent obtained
from July 1978 to January 1979, appropriately covered by PNs
(first set).[55] The aggregate principal amount of these loans
was P1,920,000.00, which could be broken down as follows
PN No.

Date of Issuance
(mm/dd/yyyy)

Date of Maturity
(mm/dd/yyyy)

32935
33751
33798
34025
34079
34192
34402
34534
34609
34740

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

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

Total

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

Date of Release
(mm/dd/yyyy)
07/20/1978
Unrecovered
10/19/1978
11/16/1978
11/21/1978
12/05/1978
12/26/1978
01/09/1979
01/17/1979
01/30/1979

P1,920,000.00

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

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

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

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

Page 40 of 100

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

356946
35697
Total

03/20/1979
03/30/1979

05/29/1979
05/29/1979

250,000.00
220,000.00
P 1,920,000.00

All the PNs stated that the purpose of the loans covered
thereby is To liquidate existing obligation, except for PN No.
34534, which stated for its purpose personal investment.
Respondent secured her foregoing loans with
petitioner Citibank by executing Deeds of Assignment of her
money market placements with petitioner FNCB Finance. On
2 March 1978, respondent executed in favor of petitioner
Citibank a Deed of Assignment[57] of PN No. 8169, which was
issued by petitioner FNCB Finance, to secure payment of the
credit and banking facilities extended to her by petitioner
Citibank,
in
the
aggregate
principal
amount
of P500,000.00. On 9 March 1978, respondent executed in
favor of petitioner Citibank another Deed of
Assignment,[58] this time, of PN No. 8167, also issued by
petitioner FNCB Finance, to secure payment of the credit and
banking facilities extended to her by petitioner Citibank, in
the aggregate amount of P500,000.00. When PNs No. 8167
and 8169, representing respondents money market
placements with petitioner FNCB Finance, matured and were
rolled-over to PNs No. 20138 and 20139, respondent
executed new Deeds of Assignment,[59] in favor of petitioner
Citibank, on 25 August 1978. According to the more recent
Deeds, respondent assigned PNs No. 20138 and 20139,
representing her rolled-over money market placements with
petitioner FNCB Finance, to petitioner Citibank as security for

Page 41 of 100

the banking and credit facilities it extended to her, in the

aggregate principal amount of P500,000.00 per Deed.
In addition to the Deeds of Assignment of her money market
placements with petitioner FNCB Finance, respondent also
executed a Declaration of Pledge,[60] in which she supposedly
pledged [a]ll present and future fiduciary placements held in
my personal and/or joint name with Citibank, Switzerland, to
secure all claims the petitioner Citibank may have or, in the
future, acquire against respondent. The petitioners copy of
the Declaration of Pledge is undated, while that of the
respondent, a copy certified by a Citibank-Geneva officer,
bore the date 24 September 1979.[61]
When respondent failed to pay the second set of PNs upon
their maturity, an exchange of letters ensued between
respondent and/or her representatives, on one hand, and the
representatives of petitioners, on the other.
The first letter[62] was dated 5 April 1979, addressed to
respondent and signed by Mr. Tan, as the manager of
petitioner Citibank, which stated, in part, that
Despite our repeated requests and follow-up, we regret you have not granted us with
any response or payment.
We, therefore, have no alternative but to call your loan of P1,920,000.00 plus
interests and other charges due and demandable. If you still fail to settle this
obligation by 4/27/79, we shall have no other alternative but to refer your account
to our lawyers for legal action to protect the interest of the bank.

Respondent sent a reply letter[63] dated 26 April 1979, printed

on paper bearing the letterhead of respondents company,
MC Adore International Palace, the body of which reads

Page 42 of 100

This is in reply to your letter dated April 5, 1979 inviting my attention to my loan
which has become due. Pursuant to our representation with you over the telephone
through Mr. F. A. Tan, you allow us to pay the interests due for the meantime.
Please accept our Comtrust Check in the amount of P62,683.33.
Please bear with us for a little while, at most ninety days. As you know, we have a
pending loan with the Development Bank of the Philippines in the amount of P11M. This loan has already been recommended for approval and would be submitted
to the Board of Governors. In fact, to further facilitate the early release of this loan,
we have presented and furnished Gov. J. Tengco a xerox copy of your letter.
You will be doing our corporation a very viable service, should you grant us our
request for a little more time.

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

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

This was followed by a telegram,[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
Page 43 of 100

date of the obligation until respondents arrival on or before

31 July 1979.
The next letter,[66] dated 21 June 1979, was signed by
respondent herself and addressed to Mr. Bobby Mendoza, a
Manager of petitioner FNCB Finance. Respondent wrote
therein
Re: PN No. 20138 for P500,000.00 & PN No. 20139
for P500,000.00 totalling P1 Million,
both PNs will mature on 9/3/1979.
This is to authorize you to release the accrued quarterly interests payment
from my captioned placements and forward directly to Citibank, Manila Attention:
Mr. F. A. Tan, Manager, to apply to my interest payable on my outstanding loan with
Citibank.
Please note that the captioned two placements are continuously
pledged/hypothecated to Citibank, Manila to support my personal outstanding
loan. Therefore, please do not release the captioned placements upon maturity until
you have received the instruction from Citibank, Manila.

On even date, respondent sent another letter[67] to Mr.

Tan of petitioner Citibank, stating that
Re: S/A No. 25-225928
and C/A No. 484-946
This letter serves as an authority to debit whatever the outstanding
balance from my captioned accounts and credit the amount to my loan
outstanding account with you.

Unlike respondents earlier letters, both letters, dated 21 June

1979, are printed on plain paper, without the letterhead of
her company, MC Adore International Palace.
By 5 September 1979, respondents outstanding and past due
obligations to petitioner Citibank totaled P2,123,843.20,
representing the principal amounts plus interests. Relying on
respondents Deeds of Assignment, petitioner Citibank
applied the proceeds of respondents money market
placements with petitioner FNCB Finance, as well as her
Page 44 of 100

deposit account with petitioner Citibank, to partly liquidate

respondents outstanding loan balance,[68] as follows
Respondents outstanding obligation (principal and interest)
Less:
Proceeds from respondents money market placements
with petitioner FNCB Finance (principal and interest)
Deposits in respondents bank accounts with petitioner
Citibank

P 2,123,843.20

Balance of respondents obligation

P 1,069,847.40

(1,022,916.66)
(31,079.14)

Mr. Tan of petitioner Citibank subsequently sent a

letter,[69] dated 28 September 1979, notifying respondent of
the status of her loans and the foregoing compensation which
petitioner Citibank effected. In the letter, Mr. Tan informed
respondent that she still had a remaining past-due obligation
in the amount of P1,069,847.40, as of 5 September 1979, and
should respondent fail to pay the amount by 15 October
1979, then petitioner Citibank shall proceed to off-set the
unpaid amount with respondents other collateral,
particularly, a money market placement in CitibankHongkong.
On 5 October 1979, respondent wrote Mr. Tan of petitioner
Citibank, on paper bearing the letterhead of MC Adore
International Palace, as regards the P1,920,000.00 loan
account supposedly of MC Adore Finance & Investment, Inc.,
and requested for a statement of account covering the
principal and interest of the loan as of 31 October 1979. She
stated therein that the loan obligation shall be paid within 60
days from receipt of the statement of account.
Almost three weeks later, or on 25 October 1979, a certain
Atty. Moises Tolentino dropped by the office of petitioner
Page 45 of 100

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 CitibankGeneva, in the amount of US$149,632.99, against her
outstanding, overdue, demandable and unpaid obligation to
petitioner Citibank. Atty. Agcaoili claimed therein that the
compensation or off-set was made pursuant to and in
accordance with the provisions of Articles 1278 through 1290
of the Civil Code. He further declared that respondents
obligation to petitioner Citibank was now fully paid and
liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7th floor
of petitioner Citibanks building at Paseo de Roxas St., Makati,
Metro Manila. Petitioners submitted a Certification[70] to this
effect, dated 17 January 1991, issued by the Chief of the
Arson Investigation Section, Fire District III, Makati Fire
Station, Metropolitan Police Force. The 7th floor of petitioner
Citibanks building housed its Control Division, which was in
charge of keeping the necessary documents for cases in
which it was involved. After compiling the documentary
Page 46 of 100

evidence for the present case, Atty. Renato J. Fernandez,

internal legal counsel of petitioner Citibank, forwarded them
to the Control Division. The original copies of the MCs, which
supposedly represent the proceeds of the first set of PNs, as
well as that of other documentary evidence related to the
case, were among those burned in the said fire.[71]
Respondents version of events
Respondent disputed petitioners narration of the
circumstances surrounding her loans with petitioner Citibank
and the alleged authority she gave for the off-set or
compensation of her money market placements and deposit
accounts with petitioners against her loan obligation.
Respondent denied outright executing the first set of PNs,
except for one (PN No. 34534 in particular). Although she
admitted that she obtained several loans from petitioner
Citibank, these only amounted toP1,150,000.00, and she had
already paid them. She secured from petitioner Citibank two
loans of P500,000.00 each. She executed in favor of petitioner
Citibank the corresponding PNs for the loans and the Deeds
of Assignment of her money market placements with
petitioner FNCB Finance as security.[72] To prove payment of
these loans, respondent presented two provisional receipts
of petitioner Citibank No. 19471,[73] dated 11 August 1978,
and No. 12723,[74] dated 10 November 1978 both signed by
Mr. Tan, and acknowledging receipt from respondent of
several checks in the total amount of P500,744.00
andP500,000.00, respectively, for liquidation of loan.
Page 47 of 100

She borrowed another P150,000.00 from petitioner

Citibank for personal investment, and for which she executed
PN No. 34534, on 9 January 1979. Thus, she admitted to
receiving the proceeds of this loan via MC No. 228270. She
invested the loan amount in another money market
placement with petitioner FNCB Finance. In turn, she used
the very same money market placement with petitioner FNCB
Finance as security for her P150,000.00 loan from petitioner
Citibank. When she failed to pay the loan when it became
due, petitioner Citibank allegedly forfeited her money market
placement with petitioner FNCB Finance and, thus, the loan
was already paid.[75]
Respondent likewise questioned the MCs presented by
petitioners, except for one (MC No. 228270 in particular), as
proof that she received the proceeds of the loans covered by
the first set of PNs. As recounted in the preceding paragraph,
respondent admitted to obtaining a loan of P150,000.00,
covered by PN No. 34534, and receiving MC No. 228270
representing the proceeds thereof, but claimed that she
already paid the same. She denied ever receiving MCs No.
220701 (for the loan of P400,000.00, covered by PN No.
33935) and No. 226467 (for the loan of P250,000.00, covered
by PN No. 34079), and pointed out that the checks did not
bear her indorsements. She did not deny receiving all other
checks but she interposed that she received these checks, not
as proceeds of loans, but as payment of the principal amounts
and/or interests from her money market placements with
petitioner Citibank. She also raised doubts as to the notation
Page 48 of 100

on each of the checks that reads RE: Proceeds of

PN#[corresponding PN No.], saying that such notation did not
appear on the MCs when she originally received them and
that the notation appears to have been written by a
typewriter different from that used in writing all other
information on the checks (i.e., date, payee, and
amount).[76] She even testified that MCs were not supposed
to bear notations indicating the purpose for which they were
issued.
As to the second set of PNs, respondent acknowledged having
signed them all. However, she asserted that she only
executed these PNs as part of the simulated loans she and
Mr. Tan of petitioner Citibank concocted. Respondent
explained that she had a pending loan application for a big
amount with the Development Bank of the Philippines (DBP),
and when Mr. Tan found out about this, he suggested that
they could make it appear that the respondent had
outstanding loans with petitioner Citibank and the latter was
already demanding payment thereof; this might persuade
DBP to approve respondents loan application.Mr. Tan made
the respondent sign the second set of PNs, so that he may
have something to show the DBP investigator who might
inquire with petitioner Citibank as to respondents loans with
the latter. On her own copies of the said PNs, respondent
wrote by hand the notation, This isa (sic) simulated nonnegotiable note, signed copy given to Mr. Tan., (sic) per
agreement to be shown to DBP representative. itwill (sic) be
returned to me if the P11=M (sic) loan for MC Adore Palace
Hotel is approved by DBP.[77]
Findings of this Court as to the existence of the loans
Page 49 of 100

After going through the testimonial and documentary

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

Page 50 of 100

the money it represents.[79] Moreover, the MCs were crossed

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

The crossed MCs presented by petitioner Bank were indeed

deposited in several different bank accounts and cleared by
the Clearing Office of the Central Bank of the Philippines, as
evidenced by the stamp marks and notations on the said
checks. The crossed MCs are already in the possession of
petitioner Citibank, the drawee bank, which was ultimately
responsible for the payment of the amount stated in the
checks. Given that a check is more than just an instrument of
credit used in commercial transactions for it also serves as a
receipt or evidence for the drawee bank of the cancellation
of the said check due to payment,[82] then, the possession by
petitioner Citibank of the said MCs, duly stamped Paid gives
rise to the presumption that the said MCs were already paid
Page 51 of 100

out to the intended payee, who was in this case, the

respondent.
This Court finds applicable herein the presumptions that
private transactions have been fair and regular,[83] and that
the ordinary course of business has been followed.[84] There
is no question that the loan transaction between petitioner
Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCs from their
issuance by petitioner Citibank to respondent as payment of
the proceeds of her loans; to its deposit in respondents
accounts with several different banks; to the clearing of the
MCs by an independent clearing house; and finally, to the
payment of the MCs by petitioner Citibank as the drawee
bank of the said checks are all private transactions which shall
be presumed to have been fair and regular to all the parties
concerned. In addition, the banks involved in the foregoing
transactions are also presumed to have followed the ordinary
course of business in the acceptance of the crossed MCs for
deposit in respondents accounts, submitting them for
clearing, and their eventual payment and cancellation.
The afore-stated presumptions are disputable, meaning, they
are satisfactory if uncontradicted, but may be contradicted
and overcome by other evidence.[85] Respondent, however,
was unable to present sufficient and credible evidence to
dispute these presumptions.
It should be recalled that out of the nine MCs presented by
petitioner Citibank, respondent admitted to receiving one as
proceeds of a loan (MC No. 228270), denied receiving two
Page 52 of 100

(MCs No. 220701 and 226467), and admitted to receiving all

the rest, but not as proceeds of her loans, but as return on
the principal amounts and interests from her money market
placements.
Respondent admitted receiving MC No. 228270 representing
the proceeds of her loan covered by PN No. 34534. Although
the principal amount of the loan is P150,000.00, respondent
only receivedP146,312.50, 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. 01230572-28.[87] The check also bore the signature of respondent
at the back.[88] And, although respondent would later admit
that she did sign PN No. 34534 and received MC No. 228270
as proceeds of the loan extended to her by petitioner
Citibank, she contradicted herself when, in an earlier
testimony, she claimed that PN No. 34534 was among the PNs
she executed as simulated loans with petitioner Citibank.[89]
Respondent denied ever receiving MCs No. 220701 and
226467. However, considering that the said checks were
crossed for payees account only, and that they were actually
deposited, cleared, and paid, then the presumption would be
that the said checks were properly deposited to the account
of respondent, who was clearly named the payee in the
checks. Respondents bare allegations that she did not receive
the two checks fail to convince this Court, for to sustain her,
would be for this Court to conclude that an irregularity had
Page 53 of 100

occurred somewhere from the time of the issuance of the

said checks, to their deposit, clearance, and payment, and
which would have involved not only petitioner Citibank, but
also BPI, which accepted the checks for deposit, and the
Central Bank of the Philippines, which cleared the checks. It
falls upon the respondent to overcome or dispute the
presumption that the crossed checks were issued, accepted
for deposit, cleared, and paid for by the banks involved
following the ordinary course of their business.
The mere fact that MCs No. 220701 and 226467 do not bear
respondents signature at the back does not negate deposit
thereof in her account. The liability for the lack of
indorsement on the MCs no longer fall on petitioner Citibank,
but on the bank who received the same for deposit, in this
case, BPI Cubao Branch. Once again, it must be noted that the
MCs were crossed, for payees account only, and the payee
named in both checks was none other than respondent. The
crossing of the MCs was already a warning to BPI to receive
said checks for deposit only in respondents account. It was up
to BPI to verify whether it was receiving the crossed MCs in
accordance with the instructions on the face thereof. If,
indeed, the MCs were deposited in accounts other than
respondents, then the respondent would have a cause of
action against BPI.[90]
BPI further stamped its guarantee on the back of the checks
to the effect that, All prior endorsement and/or Lack of
endorsement guaranteed. Thus, BPI became the indorser of
the MCs, and assumed all the warranties of an
Page 54 of 100

indorser,[91] specifically, that the checks were genuine and in

all respects what they purported to be; that it had a good title
to the checks; that all prior parties had capacity to contract;
and that the checks were, at the time of their indorsement,
valid and subsisting.[92] So even if the MCs deposited by BPI's
client, whether it be by respondent herself or some other
person, lacked the necessary indorsement, BPI, as the
collecting bank, is bound by its warranties as an indorser and
cannot set up the defense of lack of indorsement as against
petitioner Citibank, the drawee bank.[93]
Furthermore, respondents bare and unsubstantiated denial
of receipt of the MCs in question and their deposit in her
account is rendered suspect when MC No. 220701 was
actually deposited in Account No. 0123-0572-28 of BPI Cubao
Branch, the very same account in which MC No. 228270
(which respondent admitted to receiving as proceeds of her
loan from petitioner Citibank), and MCs No. 228203, 228357,
and 228400 (which respondent admitted to receiving as
proceeds from her money market placements) were
deposited. Likewise, MC No. 226467 was deposited in
Account No. 0121-002-43 of BPI Cubao Branch, to which MCs
No. 226285 and 226439 (which respondent admitted to
receiving as proceeds from her money market placements)
were deposited. It is an apparent contradiction for
respondent to claim having received the proceeds of checks
deposited in an account, and then deny receiving the
proceeds of another check deposited in the very same
account.

Page 55 of 100

Another inconsistency in respondents denial of receipt of MC

No. 226467 and her deposit of the same in her account, is her
presentation of Exhibit HHH, a provisional receipt which was
supposed to prove that respondent turned over P500,000.00
to Mr. Tan of petitioner Citibank, that the said amount was
split into three money market placements, and that MC No.
226467 represented the return on her investment from one
of these placements.[94] Because of her Exhibit HHH,
respondent effectively admitted receipt of MC No. 226467,
although for reasons other than as proceeds of a loan.
Neither can this Court give credence to respondents
contention that the notations on the MCs, stating that they
were the proceeds of particular PNs, were not there when
she received the checks and that the notations appeared to
be written by a typewriter different from that used to write
the other information on the checks. Once more,
respondents allegations were uncorroborated by any other
evidence. Her and her counsels observation that the
notations on the MCs appear to be written by a typewriter
different from that used to write the other information on the
checks hardly convinces this Court considering that it
constitutes a mere opinion on the appearance of the notation
by a witness who does not possess the necessary expertise
on the matter. In addition, the notations on the MCs were
written using both capital and small letters, while the other
information on the checks were written using capital letters
only, such difference could easily confuse an untrained eye
and lead to a hasty conclusion that they were written by
different typewriters.
Page 56 of 100

Respondents testimony, that based on her experience

transacting with banks, the MCs were not supposed to
include notations on the purpose for which the checks were
issued, also deserves scant consideration.While respondent
may have extensive experience dealing with banks, it still
does not qualify her as a competent witness on banking
procedures and practices. Her testimony on this matter is
even belied by the fact that the other MCs issued by
petitioner Citibank (when it was still named First National City
Bank) and by petitioner FNCB Finance, the existence and
validity of which were not disputed by respondent, also bear
similar notations that state the reason for which they were
issued.
Respondent presented several more pieces of evidence to
substantiate her claim that she received MCs No. 226285,
226439, 226467, 226057, 228357, and 228400, not as
proceeds of her loans from petitioner Citibank, but as the
return of the principal amounts and payment of interests
from her money market placements with petitioners. Part of
respondents exhibits were personal checks[95] drawn by
respondent on her account with Feati Bank & Trust Co., which
she allegedly invested in separate money market placements
with both petitioners, the returns from which were paid to
her via MCs No. 226285 and 228400.Yet, to this Court, the
personal checks only managed to establish respondents
issuance thereof, but there was nothing on the face of the
checks that would reveal the purpose for which they were

Page 57 of 100

issued and that they were actually invested in money market

placements as respondent claimed.
Respondent further submitted handwritten notes that
purportedly computed and presented the returns on her
money market placements, corresponding to the amount
stated in the MCs she received from petitioner
Citibank. Exhibit HHH-1[96] was a handwritten note, which
respondent attributed to Mr. Tan of petitioner Citibank,
showing the breakdown of her BPI Check for P500,000.00 into
three different money market placements with petitioner
Citibank. This Court, however, noticed several factors which
render the note highly suspect. One, it was written on the
reversed side of Provisional Receipt No. 12724 of petitioner
Citibank which bore the initials of Mr. Tan acknowledging
receipt of respondents BPI Check No. 120989
for P500,000.00; but the initials on the handwritten note
appeared to be that of Mr. Bobby Mendoza of petitioner
FNCB Finance.[97] Second, according to Provisional Receipt
No. 12724, BPI Check No. 120989 for P500,000.00 was
supposed to be invested in three money market placements
with petitioner Citibank for the period of 60 days. Since all
these money market placements were made through one
check deposited on the same day, 10 November 1978, it
made no sense that the handwritten note at the back of
Provisional Receipt No. 12724 provided for different dates of
maturity for each of the money market placements (i.e., 16
November 1978, 17 January 1979, and 21 November 1978),
and such dates did not correspond to the 60 day placement
period stated on the face of the provisional receipt. And third,
Page 58 of 100

the principal amounts of the money market placements as

stated in the handwritten noteP145,000.00, P145,000.00
and P242,000.00 totaled P532,000.00, and was obviously in
excess of the P500,000.00 acknowledged on the face of
Provisional Receipt No. 12724.
Exhibits III and III-1, the front and bank pages of a
handwritten note of Mr. Bobby Mendoza of petitioner FNCB
Finance,[98] also did not deserve much evidentiary weight, and
this Court cannot rely on the truth and accuracy of the
computations presented therein. Mr. Mendoza was not
presented as a witness during the trial before the RTC, so that
the document was not properly authenticated nor its
contents sufficiently explained. No one was able to
competently identify whether the initials as appearing on the
note were actually Mr. Mendozas.
Also, going by the information on the front page of the
note, this Court observes that payment of respondents
alleged money market placements with petitioner FNCB
Finance were made using Citytrust Checks; the MCs in
question, including MC No. 228057, were issued by petitioner
Citibank. Although Citytrust (formerly Feati Bank & Trust Co.),
petitioner FNCB Finance, and petitioner Citibank may be
affiliates of one another, they each remained separate and
distinct corporations, each having its own financial system
and records. Thus, this Court cannot simply assume that one
corporation, such as petitioner Citibank or Citytrust, can issue
a check to discharge an obligation of petitioner FNCB
Finance. It should be recalled that when petitioner FNCB
Page 59 of 100

Finance paid for respondents money market placements,

covered by its PNs No. 8167 and 8169, as well as PNs No.
20138 and 20139, petitioner FNCB Finance issued its own
checks.
As a last point on this matter, if respondent truly had
money market placements with petitioners, then these
would have been evidenced by PNs issued by either
petitioner Citibank or petitioner FNCB Finance,
acknowledging the principal amounts of the investments, and
stating the applicable interest rates, as well as the dates of
their of issuance and maturity. After respondent had so
meticulously reconstructed her other money market
placements with petitioners and consolidated the
documentary evidence thereon, she came surprisingly short
of offering similar details and substantiation for these
particular money market placements.
Since this Court is satisfied that respondent indeed received
the proceeds of the first set of PNs, then it proceeds to
analyze her evidence of payment thereof.
In support of respondents assertion that she had
already paid whatever loans she may have had with
petitioner Citibank, she presented as evidence Provisional
Receipts No. 19471, dated 11 August 1978, and No. 12723,
dated 10 November 1978, both of petitioner Citibank and
signed by Mr. Tan, for the amounts of P500,744.00
and P500,000.00, respectively. While these provisional
receipts did state that Mr. Tan, on behalf of petitioner
Page 60 of 100

Citibank, received respondents checks as payment for her

loans, they failed to specifically identify which loans were
actually paid. Petitioner Citibank was able to present
evidence that respondent had executed several PNs in the
years 1978 and 1979 to cover the loans she secured from the
said bank. Petitioner Citibank did admit that respondent was
able to pay for some of these PNs, and what it identified as
the first and second sets of PNs were only those which
remained unpaid. It thus became incumbent upon
respondent to prove that the checks received by Mr. Tan
were actually applied to the PNs in either the first or second
set; a fact that, unfortunately, cannot be determined from
the provisional receipts submitted by respondent since they
only generally stated that the checks received by Mr. Tan
were payment for respondents loans.
Mr. Tan, in his deposition, further explained that
provisional receipts were issued when payment to the bank
was made using checks, since the checks would still be subject
to clearing. The purpose for the provisional receipts was
merely to acknowledge the delivery of the checks to the
possession of the bank, but not yet of payment.[99] This bank
practice finds legitimacy in the pronouncement of this Court
that a check, whether an MC or an ordinary check, is not legal
tender and, therefore, cannot constitute valid tender of
payment. In Philippine Airlines, Inc. v. Court of
Appeals, [100] this Court elucidated that:
Since a negotiable instrument is only a substitute for money and not
money, the delivery of such an instrument does not, by itself, operate as payment
(Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v.
American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check,
whether a manager's check or ordinary check, is not legal tender, and an offer of a
check in payment of a debt is not a valid tender of payment and may be refused

Page 61 of 100

receipt by the obligee or creditor. Mere delivery of checks does not discharge the
obligation under a judgment. The obligation is not extinguished and remains
suspended until the payment by commercial document is actually realized (Art. 1249,
Civil Code, par. 3).

In the case at bar, the issuance of an official receipt by

petitioner Citibank would have been dependent on whether
the checks delivered by respondent were actually cleared and
paid for by the drawee banks.
As for PN No. 34534, respondent asserted payment thereof
at two separate instances by two different means. In her
formal offer of exhibits, respondent submitted a deposit slip
of petitioner Citibank, dated 11 August 1978, evidencing the
deposit of BPI Check No. 5785 for P150,000.00.[101] In her
Formal Offer of Documentary Exhibits, dated 7 July 1989,
respondent stated that the purpose for the presentation of
the said deposit slip was to prove that she already paid her
loan covered by PN No. 34534.[102] In her testimony before
the RTC three years later, on 28 November 1991, she changed
her story. This time she narrated that the loan covered by PN
No. 34534 was secured by her money market placement with
petitioner FNCB Finance, and when she failed to pay the said
PN when it became due, the security was applied to the loan,
therefore, the loan was considered paid.[103] Given the
foregoing, respondents assertion of payment of PN No. 34534
is extremely dubious.
According to petitioner Citibank, the PNs in the second
set, except for PN No. 34534, were mere renewals of the
unpaid PNs in the first set, which was why the PNs stated that
they were for the purpose of liquidating existing
Page 62 of 100

obligations. PN No. 34534, however, which was part of the

first set, was still valid and subsisting and so it was included
in the second set without need for its renewal, and it still
being the original PN for that particular loan, its stated
purpose was for personal investment.[104] Respondent
essentially admitted executing the second set of PNs, but
they were only meant to cover simulated loans.Mr. Tan
supposedly convinced her that her pending loan application
with DBP would have a greater chance of being approved if
they made it appear that respondent urgently needed the
money because petitioner Citibank was already demanding
payment for her simulated loans.
Respondents defense of simulated loans to escape liability for
the second set of PNs is truly a novel one. It is regrettable,
however, that she was unable to substantiate the same. Yet
again, respondents version of events is totally based on her
own uncorroborated testimony. The notations on the second
set of PNs, that they were non-negotiable simulated notes,
were admittedly made by respondent herself and were, thus,
self-serving. Equally self-serving was respondents letter,
written on 7 October 1985, or more than six years after the
execution of the second set of PNs, in which she demanded
return of the simulated or fictitious PNs, together with the
letters relating thereto, which Mr. Tan purportedly asked her
to execute. Respondent further failed to present any proof of
her alleged loan application with the DBP, and of any
circumstance or correspondence wherein the simulated or
fictitious PNs were indeed used for their supposed purpose.

Page 63 of 100

In contrast, petitioner Citibank, as supported by the

testimonies of its officers and available documentation,
consistently treated the said PNs as regular loans accepted,
approved, and paid in the ordinary course of its business.
The PNs executed by the respondent in favor of petitioner
Citibank to cover her loans were duly-filled out and signed,
including the disclosure statement found at the back of the
said PNs, in adherence to the Central Bank requirement to
disclose the full finance charges to a loan granted to
borrowers.
Mr. Tan, then an account officer with the Marketing
Department of petitioner Citibank, testified that he dealt
directly with respondent; he facilitated the loans; and the
PNs, at least in the second set, were signed by respondent in
his presence.[105]
Mr. Pujeda, the officer who was previously in charge of
loans and placements, confirmed that the signatures on the
PNs were verified against respondents specimen signature
with the bank.[106]
Ms. Cristina Dondoyano, who worked at petitioner
Citibank as a loan processor, was responsible for booking
respondents loans. Booking the loans means recording it in
the General Ledger. She explained the procedure for booking
loans, as follows: The account officer, in the Marketing
Department, deals directly with the clients who wish to
borrow money from petitioner Citibank. The Marketing
Page 64 of 100

Department will forward a loan booking checklist, together

with the borrowing clients PNs and other supporting
documents, to the loan pre-processor, who will check
whether the details in the loan booking checklist are the same
as those in the PNs. The documents are then sent to Signature
Control for verification of the clients signature in the PNs,
after which, they are returned to the loan pre-processor, to
be forwarded finally to the loan processor. The loan
processor shall book the loan in the General Ledger,
indicating therein the client name, loan amount, interest rate,
maturity date, and the corresponding PN number. Since she
booked respondents loans personally, Ms. Dondoyano
testified that she saw the original PNs. In 1986, Atty.
Fernandez of petitioner Citibank requested her to prepare an
accounting of respondents loans, which she did, and which
was presented as Exhibit 120 for the petitioners. The figures
from the said exhibit were culled from the bookings in the
General Ledger, a fact which respondents counsel was even
willing to stipulate.[107]
Ms. Teresita Glorioso was an Investigation and
Reconcilement Clerk at the Control Department of petitioner
Citibank. She was presented by petitioner Citibank to
expound on the microfilming procedure at the bank, since
most of the copies of the PNs were retrieved from microfilm.
Microfilming of the documents are actually done by people at
the Operations Department. At the end of the day or during
the day, the original copies of all bank documents, not just
those pertaining to loans, are microfilmed. She refuted the
possibility that insertions could be made in the microfilm
Page 65 of 100

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
Page 66 of 100

corporation. Petitioner Citibank has a worldwide policy that

requires a credit committee, composed of a minimum of
three people, which would approve the loan and amount
thereof. There can be no instance when only one officer has
the power to approve the loan application. When the loan is
approved, the account officer in charge will obtain the
corresponding PNs from the client. The PNs are sent to the
signature verifier who would validate the signatures therein
against those appearing in the signature cards previously
submitted by the client to the bank. The Operations Unit will
check and review the documents, including the PNs, if it is a
clean loan, and securities and deposits, if it is
collateralized. The loan is then recorded in the General
Ledger. The Loans and Placements Department will not book
the loans without the PNs. When the PNs are liquidated,
whether they are paid or rolled-over, they are returned to the
client.[109] Ms. Rubio further explained that she was familiar
with respondents accounts since, while she was still the Head
of the Loan and Placements Unit, she was asked by Mr. Tan
to prepare a list of respondents outstanding
obligations.[110] She thus calculated respondents outstanding
loans, which was sent as an attachment to Mr. Tans letter to
respondent, dated 28 September 1979, and presented before
the RTC as Exhibits 34-B and 34-C.[111]
Lastly, the exchange of letters between petitioner Citibank
and respondent, as well as the letters sent by other people
working for respondent, had consistently recognized that
respondent owed petitioner Citibank money.

Page 67 of 100

In consideration of the foregoing discussion, this Court

finds that the preponderance of evidence supports the
existence of the respondents loans, in the principal sum
of P1,920,000.00, as of 5 September 1979. While it is wellsettled that the term preponderance of evidence should not
be wholly dependent on the number of witnesses, there are
certain instances when the number of witnesses become the
determining factor
The preponderance of evidence may be determined, under certain
conditions, by the number of witnesses testifying to a particular fact or state of facts.
For instance, one or two witnesses may testify to a given state of facts, and six or
seven witnesses of equal candor, fairness, intelligence, and truthfulness, and equally
well corroborated by all the remaining evidence, who have no greater interest in the
result of the suit, testify against such state of facts. Then the preponderance of
evidence is determined by the number of witnesses. (Wilcox vs. Hines, 100 Tenn. 524,
66 Am. St. Rep., 761.)[112]

Best evidence rule

This Court disagrees in the pronouncement made by
the Court of Appeals summarily dismissing the documentary
evidence submitted by petitioners based on its broad and
indiscriminate application of the best evidence rule.
In general, the best evidence rule requires that the
highest
available
degree
of
proof
must
be
produced. Accordingly, for documentary evidence, the
contents of a document are best proved by the production of
the document itself,[113] to the exclusion of any secondary or
substitutionary evidence.[114]
The best evidence rule has been made part of the
revised Rules of Court, Rule 130, Section 3, which reads

Page 68 of 100

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

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

As the afore-quoted provision states, the best evidence rule

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

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

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

Page 69 of 100

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

Page 70 of 100

bad faith on his part, may prove its contents by a copy, or by a recital of its contents
in some authentic document, or by the testimony of witnesses in the order stated.

The execution or existence of the original copies of the

documents was established through the testimonies of
witnesses, such as Mr. Tan, before whom most of the
documents were personally executed by respondent. The
original PNs also went through the whole loan booking
system of petitioner Citibank from the account officer in its
Marketing Department, to the pre-processor, to the
signature verifier, back to the pre-processor, then to the
processor for booking.[117] The original PNs were seen by Ms.
Dondoyano, the processor, who recorded them in the
General Ledger. Mr. Pujeda personally saw the original MCs,
proving respondents receipt of the proceeds of her loans
from petitioner Citibank, when he helped Attys. Cleofe and
Fernandez, the banks legal counsels, to reconstruct the
records of respondents loans. The original MCs were
presented to Atty. Cleofe who used the same during the
preliminary investigation of the case, sometime in years
1986-1987. The original MCs were subsequently turned over
to the Control and Investigation Division of petitioner
Citibank.[118]
It was only petitioner FNCB Finance who claimed that
they lost the original copies of the PNs when it moved to a
new office. Citibank did not make a similar contention;
instead, it explained that the original copies of the PNs were
returned to the borrower upon liquidation of the loan, either
through payment or roll-over. Petitioner Citibank proffered
the excuse that they were still looking for the documents in
Page 71 of 100

their storage or warehouse to explain the delay and difficulty

in the retrieval thereof, but not their absence or loss. The
original documents in this case, such as the MCs and letters,
were destroyed and, thus, unavailable for presentation
before the RTC only on 7 October 1987, when a fire broke out
on the 7th floor of the office building of petitioner
Citibank. There is no showing that the fire was intentionally
set.The fire destroyed relevant documents, not just of the
present case, but also of other cases, since the 7th floor
housed the Control and Investigation Division, in charge of
keeping the necessary documents for cases in which
petitioner Citibank was involved.
The foregoing would have been sufficient to allow the
presentation of photocopies or microfilm copies of the PNs,
MCs, and letters by the petitioners as secondary evidence to
establish the existence of respondents loans, as an exception
to the best evidence rule.
The impact of the Decision of the Court of Appeals in the Dy
case
In its assailed Decision, the Court of Appeals made the
following pronouncement
Besides, We find the declaration and conclusions of this Court in CA-G.R.
CV No. 15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et
al, promulgated on 15 January 1990, as disturbingtaking into consideration the
similarities of the fraud, machinations, and deceits employed by the defendantappellant 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

Page 72 of 100

considerations, the doubts, coupled by the findings and conclusions of this Court
in CA-G.R. CV No. 15934 and the Supreme Court in G.R. No. 93350. should be
construed against herein defendants-appellants Citibank and FNCB Finance.

What this Court truly finds disturbing is the significance given

by the Court of Appeals in its assailed Decision to the
Decision[119] of its Third Division in CA-G.R. CV No. 15934 (or
the Dy case), when there is an absolute lack of legal basis for
doing such.
Although petitioner Citibank and its officer, Mr. Tan, were
also involved in the Dy case, that is about the only connection
between the Dy case and the one at bar. Not only did the Dy
case tackle transactions between parties other than the
parties presently before this Court, but the transactions are
absolutely independent and unrelated to those in the instant
Petition.
In the Dy case, Severino Chua Caedo managed to obtain loans
from herein petitioner Citibank amounting to P7,000,000.00,
secured to the extent of P5,000,000.00 by a Third Party Real
Estate Mortgage of the properties of Caedos aunt, Rosalind
Dy. It turned out that Rosalind Dy and her husband were
unaware of the said loans and the mortgage of their
properties. The transactions were carried out exclusively
between Caedo and Mr. Tan of petitioner Citibank. The RTC
found Mr. Tan guilty of fraud for his participation in the
questionable transactions, essentially because he allowed
Caedo to take out the signature cards, when these should
have been signed by the Dy spouses personally before
him. Although the Dy spouses signatures in the PNs and Third
Party Real Estate Mortgage were forged, they were approved
Page 73 of 100

by the signature verifier since the signature cards against

which they were compared to were also forged. Neither the
RTC nor the Court of Appeals, however, categorically declared
Mr. Tan personally responsible for the forgeries, which, in the
narration of the facts, were more likely committed by Caedo.
In the Petition at bar, respondent dealt with Mr. Tan directly,
there was no third party involved who could have
perpetrated any fraud or forgery in her loan
transactions. Although respondent attempted to raise
suspicion as to the authenticity of her signatures on certain
documents, these were nothing more than naked allegations
with no corroborating evidence; worse, even her own
allegations were replete with inconsistencies. She could not
even establish in what manner or under what circumstances
the fraud or forgery was committed, or how Mr. Tan could
have been directly responsible for the same.
While the Court of Appeals can take judicial notice of the
Decision of its Third Division in the Dy case, it should not have
given the said case much weight when it rendered the
assailed Decision, since the former does not constitute a
precedent. The Court of Appeals, in the challenged Decision,
did not apply any legal argument or principle established in
the Dy case but, rather, adopted the findings therein of
wrongdoing or misconduct on the part of herein petitioner
Citibank and Mr. Tan. Any finding of wrongdoing or
misconduct as against herein petitioners should be made
based on the factual background and pieces of evidence
submitted in this case, not those in another case.
Page 74 of 100

It is apparent that the Court of Appeals took judicial notice of

the Dy case not as a legal precedent for the present case, but
rather as evidence of similar acts committed by petitioner
Citibank and Mr. Tan. A basic rule of evidence, however,
states that, Evidence that one did or did not do a certain thing
at one time is not admissible to prove that he did or did not
do the same or similar thing at another time; but it may be
received to prove a specific intent or knowledge, identity,
plan, system, scheme, habit, custom or usage, and the
like.[120] The rationale for the rule is explained thus
The rule is founded upon reason, public policy, justice and judicial
convenience. The fact that a person has committed the same or similar acts at some
prior time affords, as a general rule, no logical guaranty that he committed the act in
question. This is so because, subjectively, a mans mind and even his modes of life
may change; and, objectively, the conditions under which he may find himself at a
given time may likewise change and thus induce him to act in a different way. Besides,
if evidence of similar acts are to be invariably admitted, they will give rise to a
multiplicity of collateral issues and will subject the defendant to surprise as well as
confuse the court and prolong the trial.[121]

The factual backgrounds of the two cases are so different and

unrelated that the Dy case cannot be used to prove specific
intent, knowledge, identity, plan, system, scheme, habit,
custom or usage on the part of petitioner Citibank or its
officer, Mr. Tan, to defraud respondent in the present case.
IV
The liquidation of
respondents
outstanding
loans
were valid in so far as
petitioner
Citibank
used
respondents
Page 75 of 100

savings account with

the bank and her
money
market
placements
with
petitioner
FNCB
Finance; but illegal
and void in so far as
petitioner
Citibank
used
respondents
dollar accounts with
Citibank-Geneva.

Savings Account with petitioner Citibank

Compensation is a recognized mode of extinguishing
obligations. Relevant provisions of the Civil Code provides
Art. 1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is necessary;
(1) That each one of the obligors be bound principally, and that he be at
the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the latter has
been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.

There is little controversy when it comes to the right of

petitioner Citibank to compensate respondents outstanding
loans with her deposit account. As already found by this
Court, petitioner Citibank was the creditor of respondent for
her outstanding loans. At the same time, respondent was the
creditor of petitioner Citibank, as far as her deposit account
was concerned, since bank deposits, whether fixed, savings,
Page 76 of 100

or current, should be considered as simple loan or mutuum by

the depositor to the banking institution.[122] Both debts
consist in sums of money. By June 1979, all of respondents
PNs in the second set had matured and became demandable,
while respondents savings account was demandable
anytime. Neither was there any retention or controversy over
the PNs and the deposit account commenced by a third
person and communicated in due time to the debtor
concerned. Compensation takes place by operation of
law,[123] therefore, even in the absence of an expressed
authority from respondent, petitioner Citibank had the right
to effect, on 25 June 1979, the partial compensation or offset of respondents outstanding loans with her deposit
account, amounting to P31,079.14.
Money market placements with FNCB Finance
Things though are not as simple and as straightforward
as regards to the money market placements and bank
account used by petitioner Citibank to complete the
compensation or off-set of respondents outstanding loans,
which came from persons other than petitioner Citibank.
Respondents money market placements were with
petitioner FNCB Finance, and after several roll-overs, they
were ultimately covered by PNs No. 20138 and 20139, which,
by 3 September 1979, the date the check for the proceeds of
the said PNs were issued, amounted to P1,022,916.66,
inclusive of the principal amounts and interests. As to these
money market placements, respondent was the creditor and
Page 77 of 100

petitioner FNCB Finance the debtor; while, as to the

outstanding loans, petitioner Citibank was the creditor and
respondent the debtor. Consequently, legal compensation,
under Article 1278 of the Civil Code, would not apply since
the first requirement for a valid compensation, that each one
of the obligors be bound principally, and that he be at the
same time a principal creditor of the other, was not met.
What petitioner Citibank actually did was to exercise its
rights to the proceeds of respondents money market
placements with petitioner FNCB Finance by virtue of the
Deeds of Assignment executed by respondent in its favor.
The Court of Appeals did not consider these Deeds of
Assignment because of petitioners failure to produce the
original copies thereof in violation of the best evidence
rule. This Court again finds itself in disagreement in the
application of the best evidence rule by the appellate court.
To recall, the best evidence rule, in so far as
documentary evidence is concerned, requires the
presentation of the original copy of the document only when
the context thereof is the subject of inquiry in the
case. Respondent does not question the contents of the
Deeds of Assignment. While she admitted the existence and
execution of the Deeds of Assignment, dated 2 March 1978
and 9 March 1978, covering PNs No. 8169 and 8167 issued by
petitioner FNCB Finance, she claimed, as defense, that the
loans for which the said Deeds were executed as security,
were already paid. She denied ever executing both Deeds of
Page 78 of 100

Assignment, dated 25 August 1978, covering PNs No. 20138

and 20139. These are again issues collateral to the contents
of the documents involved, which could be proven by
evidence other than the original copies of the said
documents.
Moreover, the Deeds of Assignment of the money
market placements with petitioner FNCB Finance were
notarized documents, thus, admissible in evidence. Rule 132,
Section 30 of the Rules of Court provides that
SEC. 30. Proof of notarial documents. Every instrument duly
acknowledged or proved and certified as provided by law, may be presented in
evidence without further proof, the certificate of acknowledgement being prima
facie evidence of the execution of the instrument or document involved.

Significant herein is this Courts elucidation in De Jesus

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

The rule on the evidentiary weight that must be

accorded a notarized document is clear and
unambiguous. The certificate of acknowledgement in the
notarized Deeds of Assignment constituted prima
facie evidence of the execution thereof. Thus, the burden of
refuting this presumption fell on respondent. She could have
presented evidence of any defect or irregularity in the
execution of the said documents[125] or raised questions as to
the verity of the notary publics acknowledgment and
Page 79 of 100

certificate in the Deeds.[126] But again, respondent admitted

executing the Deeds of Assignment, dated 2 March 1978 and
9 March 1978, although claiming that the loans for which they
were executed as security were already paid. And, she
assailed the Deeds of Assignment, dated 25 August 1978,
with nothing more than her bare denial of execution thereof,
hardly the clear and convincing evidence required to trounce
the presumption of due execution of a notarized document.
Petitioners not only presented the notarized Deeds of
Assignment, but even secured certified literal copies thereof
from the National Archives.[127] Mr. Renato Medua, an
archivist, working at the Records Management and Archives
Office of the National Library, testified that the copies of the
Deeds presented before the RTC were certified literal copies
of those contained in the Notarial Registries of the notary
publics concerned, which were already in the possession of
the National Archives. He also explained that he could not
bring to the RTC the Notarial Registries containing the original
copies of the Deeds of Assignment, because the Department
of Justice (DOJ) Circular No. 97, dated 8 November 1968,
prohibits the bringing of original documents to the courts to
prevent the loss of irreplaceable and priceless documents.[128]
Accordingly, this Court gives the Deeds of Assignment grave
importance in establishing the authority given by the
respondent to petitioner Citibank to use as security for her
loans her money her market placements with petitioner FNCB
Finance, represented by PNs No. 8167 and 8169, later to be
rolled-over as PNs No. 20138 and 20139. These Deeds of
Page 80 of 100

Assignment constitute the law between the parties, and the

obligations arising therefrom shall have the force of law
between the parties and should be complied with in good
faith.[129] Standard clauses in all of the Deeds provide that
The ASSIGNOR and the ASSIGNEE hereby further agree as follows:
xxxx
2. In the event the OBLIGATIONS are not paid at maturity or upon demand,
as the case may be, the ASSIGNEE is fully authorized and empowered to collect and
receive the PLACEMENT (or so much thereof as may be necessary) and apply the
same in payment of the OBLIGATIONS. Furthermore, the ASSIGNOR agrees that at
any time, and from time to time, upon request by the ASSIGNEE, the ASSIGNOR will
promptly execute and deliver any and all such further instruments and documents as
may be necessary to effectuate this Assignment.
xxxx
5. This Assignment shall be considered as sufficient authority to FNCB
Finance to pay and deliver the PLACEMENT or so much thereof as may be necessary
to liquidate the OBLIGATIONS, to the ASSIGNEE in accordance with terms and
provisions hereof.[130]

Petitioner Citibank was only acting upon the authority

granted to it under the foregoing Deeds when it finally used
the proceeds of PNs No. 20138 and 20139, paid by petitioner
FNCB Finance, to partly pay for respondents outstanding
loans. Strictly speaking, it did not effect a legal compensation
or off-set under Article 1278 of the Civil Code, but rather, it
partly extinguished respondents obligations through the
application of the security given by the respondent for her
loans. Although the pertinent documents were entitled
Deeds of Assignment, they were, in reality, more of a pledge
by respondent to petitioner Citibank of her credit due from
petitioner FNCB Finance by virtue of her money market
placements with the latter. According to Article 2118 of the
Civil Code
ART. 2118. If a credit has been pledged becomes due before it is
redeemed, the pledgee may collect and receive the amount due. He shall apply the

Page 81 of 100

same to the payment of his claim, and deliver the surplus, should there be any, to the
pledgor.

PNs No. 20138 and 20139 matured on 3 September 1979,

without them being redeemed by respondent, so that
petitioner Citibank collected from petitioner FNCB Finance
the proceeds thereof, which included the principal amounts
and interests earned by the money market placements,
amounting to P1,022,916.66, and applied the same against
respondents outstanding loans, leaving no surplus to be
delivered to respondent.
Dollar accounts with Citibank-Geneva
Despite the legal compensation of respondents savings
account and the total application of the proceeds of PNs No.
20138 and 20139 to respondents outstanding loans, there
still remained a balance ofP1,069,847.40. Petitioner Citibank
then proceeded to applying respondents dollar accounts with
Citibank-Geneva against her remaining loan balance,
pursuant to a Declaration of Pledge supposedly executed by
respondent in its favor.
Certain principles of private international law should be
considered herein because the property pledged was in the
possession of an entity in a foreign country, namely, CitibankGeneva. 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

Page 82 of 100

Philippine local or domestic laws; this is known as processual

presumption.[131]
Upon closer scrutiny of the Declaration of Pledge, this Court
finds the same exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank took
care to have the Deeds of Assignment of the PNs notarized,
yet left the Declaration of Pledge unnotarized. This Court
would think that petitioner Citibank would take greater
cautionary measures with the preparation and execution of
the Declaration of Pledge because it involved respondents all
present and future fiduciary placements with a Citibank
branch in another country, specifically, in Geneva,
Switzerland. While there is no express legal requirement that
the Declaration of Pledge had to be notarized to be effective,
even so, it could not enjoy the sameprima facie presumption
of due execution that is extended to notarized documents,
and petitioner Citibank must discharge the burden of proving
due execution and authenticity of the Declaration of Pledge.
Second, petitioner Citibank was unable to establish the date
when the Declaration of Pledge was actually executed. The
photocopy of the Declaration of Pledge submitted by
petitioner Citibank before the RTC was undated.[132] It
presented only a photocopy of the pledge because it already
forwarded the original copy thereof to Citibank-Geneva when
it requested for the remittance of respondents dollar
accounts pursuant thereto. Respondent, on the other hand,
was able to secure a copy of the Declaration of Pledge,
Page 83 of 100

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.

Page 84 of 100

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
Page 85 of 100

that Citibank-Geneva had possession of the original copy of

the pledge. While petitioner Citibank in Manila and its branch
in Geneva may be separate and distinct entities, they are still
incontestably related, and between petitioner Citibank and
respondent, the former had more influence and resources to
convince Citibank-Geneva to return, albeit temporarily, the
original Declaration of Pledge. Petitioner Citibank did not
present any evidence to convince this Court that it had
exerted diligent efforts to secure the original copy of the
pledge, nor did it proffer the reason why Citibank-Geneva
obstinately refused to give it back, when such document
would have been very vital to the case of petitioner
Citibank. There is thus no justification to allow the
presentation of a mere photocopy of the Declaration of
Pledge in lieu of the original, and the photocopy of the pledge
presented by petitioner Citibank has nil probative value.[137] In
addition, even if this Court cannot make a categorical finding
that respondents signature on the original copy of the pledge
was forged, it is persuaded that petitioner Citibank willfully
suppressed the presentation of the original document, and
takes into consideration the presumption that the evidence
willfully suppressed would be adverse to petitioner Citibank
if produced.[138]
Without the Declaration of Pledge, petitioner Citibank
had no authority to demand the remittance of respondents
dollar accounts with Citibank-Geneva and to apply them to
her outstanding loans. It cannot effect legal compensation
under Article 1278 of the Civil Code since, petitioner Citibank
itself admitted that Citibank-Geneva is a distinct and separate
Page 86 of 100

entity. As for the dollar accounts, respondent was the

creditor and Citibank-Geneva is the debtor; and as for the
outstanding loans, petitioner Citibank was the creditor and
respondent was the debtor. The parties in these transactions
were evidently not the principal creditor of each other.
Therefore, this Court declares that the remittance of
respondents dollar accounts from Citibank-Geneva and the
application thereof to her outstanding loans with petitioner
Citibank was illegal, and null and void. Resultantly, petitioner
Citibank is obligated to return to respondent the amount of
US$149,632,99 from her Citibank-Geneva accounts, or its
present equivalent value in Philippine currency; and, at the
same time, respondent continues to be obligated to
petitioner Citibank for the balance of her outstanding loans
which, as of 5 September 1979, amounted to P1,069,847.40.
V
The parties shall be
liable for interests on
their
monetary
obligations to each
other, as determined
herein.

In summary, petitioner Citibank is ordered by this

Court to pay respondent the proceeds of her money market
placements, represented by PNs No. 23356 and 23357,
amounting to P318,897.34 andP203,150.00, respectively,
earning an interest of 14.5% per annum as stipulated in the
Page 87 of 100

PNs,[139] beginning 17 March 1977, the date of the

placements.
Petitioner Citibank is also ordered to refund to
respondent the amount of US$149,632.99, or its equivalent
in Philippine currency, which had been remitted from her
Citibank-Geneva accounts. These dollar accounts, consisting
of two fiduciary placements and current accounts with
Citibank-Geneva shall continue earning their respective
stipulated interests from 26 October 1979, the date of their
remittance by Citibank-Geneva to petitioner Citibank in
Manila and applied against respondents outstanding loans.
As for respondent, she is ordered to pay petitioner
Citibank the balance of her outstanding loans, which
amounted to P1,069,847.40 as of 5 September 1979. These
loans continue to earn interest, as stipulated in the
corresponding PNs, from the time of their respective maturity
dates, since the supposed payment thereof using
respondents dollar accounts from Citibank-Geneva is deemed
illegal, null and void, and, thus, ineffective.
VI
Petitioner
Citibank
shall be liable for
damages
to
respondent.
Petitioners protest the award by the Court of Appeals of
moral damages, exemplary damages, and attorneys fees in
Page 88 of 100

favor of respondent. They argued that the RTC did not award
any damages, and respondent, in her appeal before the Court
of Appeals, did not raise in issue the absence of such.
While it is true that the general rule is that only errors which
have been stated in the assignment of errors and properly
argued in the brief shall be considered, this Court has also
recognized exceptions to the general rule, wherein it
authorized the review of matters, even those not assigned as
errors in the appeal, if the consideration thereof is necessary
in arriving at a just decision of the case, and there is a close
inter-relation between the omitted assignment of error and
those actually assigned and discussed by the
appellant.[140] Thus, the Court of Appeals did not err in
awarding the damages when it already made findings that
would justify and support the said award.
Although this Court appreciates the right of petitioner
Citibank to effect legal compensation of respondents local
deposits, as well as its right to the proceeds of PNs No. 20138
and 20139 by virtue of the notarized Deeds of Assignment, to
partly extinguish respondents outstanding loans, it finds that
petitioner Citibank did commit wrong when it failed to pay
and properly account for the proceeds of respondents money
market placements, evidenced by PNs No. 23356 and 23357,
and when it sought the remittance of respondents dollar
accounts from Citibank-Geneva by virtue of a highly-suspect
Declaration of Pledge to be applied to the remaining balance
of respondents outstanding loans. It bears to emphasize that
banking is impressed with public interest and its fiduciary
character requires high standards of integrity and
Page 89 of 100

performance.[141] A bank is under the obligation to treat the

accounts of its depositors with meticulous care whether such
accounts consist only of a few hundred pesos or of millions of
pesos.[142] The bank must record every single transaction
accurately, down to the last centavo, and as promptly as
possible.[143] Petitioner Citibank evidently failed to exercise
the required degree of care and transparency in its
transactions with respondent, thus, resulting in the wrongful
deprivation of her property.
Respondent had been deprived of substantial amounts
of her investments and deposits for more than two
decades. During this span of years, respondent had found
herself in desperate need of the amounts wrongfully
withheld from her. In her testimony[144] before the RTC,
respondent narrated
Q By the way Mrs. Witness will you kindly tell us again, you said before that you are
a businesswoman, will you tell us again what are the businesses you are
engaged into [sic]?
A I am engaged in real estate. I am the owner of the Modesta Village 1 and 2 in San
Mateo, Rizal. I am also the President and Chairman of the Board of
Macador [sic] Co. and Business Inc. which operates the Macador [sic]
International Palace Hotel. I am also the President of the Macador [sic]
International Palace Hotel, and also the Treasures Home Industries, Inc.
which I am the Chairman and president of the Board and also operating
affiliated company in the name of Treasures Motor Sales engaged in car
dealers [sic] like Delta Motors, we are the dealers of the whole Northern
Luzon and I am the president of the Disto Company, Ltd., based in
Hongkong licensed in Honkong [sic] and now operating in Los Angeles,
California.
Q What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and construction.
Q Aside from those businesses are you a member of any national or community
organization for social and civil activities?
A Yes sir.
Q What are those?

Page 90 of 100

A I am the Vice-President of thes [sic] Subdivision Association of the Philippines in

1976, I am also an officer of the Chamber of Real Estate Business
Association; I am also an officer of the Chatholic [sic] Womens League and
I am also a member of the CMLI, I forgot the definition.
Q How about any political affiliation or government position held if any?
A I was also a candidate for Mayo last January 30, 1980.
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
A I also ran as an Assemblywoman last May, 1984, Independent party in Regional I,
Pangasinan.
Q What happened to your businesses you mentioned as a result of your failure to
recover you [sic] investments and bank deposits from the defendants?
A They are not all operating, in short, I was hampered to push through the businesses
that I have.
A [sic] Of all the businesses and enterprises that you mentioned what are those that
are paralyzed and what remain inactive?
A Of all the company [sic] that I have, only the Disto Company that is now operating
in California.
Q How about your candidacy as Mayor of Dagupan, [sic] City, and later as
Assemblywoman of Region I, what happened to this?
A I won by voting but when election comes on [sic] the counting I lost and I protested
this, it is still pending and because I dont have financial resources I was
not able to push through the case. I just have it pending in the Comelec.
Q Now, do these things also affect your social and civic activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman I would like to inform the
Honorable Court that I was awarded as the most outstanding
businesswoman of the year in 1976 but when this money was not given
back to me I was not able to comply with the commitments that I have
promised to these associations that I am engaged into [sic], sir.

For the mental anguish, serious anxiety, besmirched

reputation, moral shock and social humiliation suffered by
the respondent, the award of moral damages is but
proper. However, this Court reduces the amount thereof
to P300,000.00, for the award of moral damages is meant to
Page 91 of 100

compensate for the actual injury suffered by the respondent,

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

Page 92 of 100

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 NinetySeven Pesos and Thirty-Four Centavos (P318,897.34) and Two
Hundred Three Thousand One Hundred Fifty Pesos
(P203,150.00), respectively, plus the stipulated interest of
Fourteen and a half percent (14.5%) per annum, beginning 17
March 1977;
2. The remittance of One Hundred Forty-Nine
Thousand Six Hundred Thirty Two US Dollars and Ninety-Nine
Cents (US$149,632.99) from respondents Citibank-Geneva
accounts to petitioner Citibank in Manila, and the application
of the same against respondents outstanding loans with the
latter, is DECLARED illegal, null and void. Petitioner Citibank
is ORDERED to refund to respondent the said amount, or its
equivalent in Philippine currency using the exchange rate at
the time of payment, plus the stipulated interest for each of
the fiduciary placements and current accounts involved,
beginning 26 October 1979;
3. Petitioner Citibank is ORDERED to pay respondent
moral damages in the amount of Three Hundred Thousand
Pesos (P300,000.00); exemplary damages in the amount of
Two Hundred Fifty Thousand Pesos (P250,000.00); and

Page 93 of 100

attorneys fees in the amount of Two Hundred Thousand

Pesos (P200,000.00); and
4. Respondent is ORDERED to pay petitioner Citibank
the balance of her outstanding loans, which, from the
respective dates of their maturity to 5 September 1979, was
computed to be in the sum of One Million Sixty-Nine
Thousand Eight Hundred Forty-Seven Pesos and Forty
Centavos (P1,069,847.40), inclusive of interest. These
outstanding loans shall continue to earn interest, at the rates
stipulated in the corresponding PNs, from 5 September 1979
until payment thereof.
SO ORDERED.

MINITA V. CHICONAZARIO
Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson

Page 94 of 100

CONSUELO YNARES-SANTIAGO MA. ALICIA

AUSTRIA-MARTINEZ
Associate Justice Associate Justice

ROMEO J. CALLEJO, SR.

Associate Justice

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

ARTEMIO V. PANGANIBAN
Chief Justice

[1]

Rollo, pp. 165-325.

Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Conrado
M. Vasquez, Jr. and Amelita G. Tolentino, concurring; id. at 327-366.
[3]
Id. at 368-374.
[2]

Page 95 of 100

[4]

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

Records, Vol. I, pp. 1-8.
[6]
Id. at 148-157.
[7]
Id. at 40-51.
[8]
Id. at 208-227.
[9]
Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes, Records,
Vol. I, p. 346.
[10]
Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 1607-1621.
[11]
Civil Case No. 11336 was raffled and re-reffled to four different Judges of the
Makati RTC before it was finally resolved. It was originally raffled to Makati
RTC, Branch 140, presided by Judge Ansberto P. Paredes. On 4 February
1987, before the termination of the re-direct examination of herein respondent
(plaintiff before the RTC), the case was transferred to Makati RTC, Branch
57, presided by Judge Francisco X. Velez, for reasons not disclosed in the
Records. Judge Velez was able to try and hear the case until the presentation
of the evidence by herein petitioners (defendants before the RTC). Respondent
again took the stand to present rebuttal evidence, but even before she could
finish her testimony, Judge Velez inhibited himself upon petitioners motion
(Order, dated 10 April 1992, penned by Judge Francisco X. Velez, Records,
Vol. 11, p. 1085). The case was transferred to Makati RTC, Branch 141,
presided by Judge Marcelino F. Bautista, Jr. For reasons not disclosed in the
Records, Judge Manuel D. Victorio took over Makati RTC, Branch 141. After
the parties submitted their respective Memoranda, Judge Victorio declared the
case submitted for decision (Order, dated 9 December 1994, penned by Judge
Manuel D. Victorio, Records, Vol. III, p. 1602). Judge Victorio rendered his
Decision in Civil Case No. 11336 on 24 August 1995 (Records, Vol. III, pp.
1607-1621).
[12]
Rollo, pp. 365-366.
[13]
Rollo of G.R. No. 152985, pp. 3-4.
[14]
The filing of a motion for extension does not automatically suspend the running of
the period for appeal, since the purpose of such motion is to merely ask the
court to grant an enlargement of the time fixed by law. The movant, therefore,
has no right to assume that his motion would be granted, and should check
with the court as to the outcome of his motion, so that if the same is denied,
he can still perfect his appeal. (Hon. Bello and Ferrer v. Fernando, 114 Phil.
101, 104 [1962].)
[15]
Rollo of G.R. No. 156132, p. 1227.
[16]
Rollo, p. 374.
[17]
Resolution, dated 29 January 2003; rollo, pp. 980-A-B.
[18]
Resolution, dated 23 June 2003; id. at 1311-1312.
[19]
Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137 Phil.
239, 244 (1969); Singh v. Liberty Insurance Corp., 118 Phil. 532, 535 (1963).
[20]
Rollo, pp. 1443-1445.
[21]
See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438 [1976]) wherein
this Court pronounced that a partys right to appeal shall not be affected by
the perfection of another appeal from the same decision; otherwise, it would
lead to the absurd proposition that one party may be deprived of the right to
appeal from the portion of a decision against him just because the other party
who had been notified of the decision ahead had already perfected his appeal
in so far as the said decision adversely affects him. If the perfection of an
appeal by one party would not bar the right of the other party to appeal from
the same decision, then an unperfected appeal, as in the case at bar, would
have far less effect.
[22]
The Executive Secretary v. Gordon, 359 Phil. 266, 271 (1998).
[23]
Young v. John Keng Seng, 446 Phil. 823, 833 (2003).
[24]
Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283 (1998).
[5]

Page 96 of 100

[25]

The Court of Appeals modified the trial courts findings and conclusions, as follows:
(1) By declaring the P1,069,847.40 alleged indebtedness of Ms. Sabeniano as
non-existing for failure of Citibank to substantiate its allegations; (2) By
declaring that there are unpaid money market placements, current accounts
and savings account of Ms. Sabeniano; and (3) The awarding of damages in
favor of Ms. Sabeniano and against Citibank.
[26]
Supra note 11.
[27]
Records, Vol. III, pp. 1612-1613.
[28]
Penned by Associate Justice Andres B. Reyes with Associate Justices Conrado M.
Vasquez, Jr. and Amelita G. Tolentino, concurring; rollo, p. 344.
[29]

Section 3(m) of Rule 131 of the REVISED RULES OF COURT reads

SEC. 3. Disputable presumptions. The following presumptions are
satisfactory if uncontradicted, but may be contradicted and overcome by other
evidence:
xxxx
(m) That official duty has been regularly performed.
[30]
317 Phil. 495, 501-503 (1995).
[31]
Records, Vol. I, p. 515.
[32]
32 Phil. 476, 478-479.
[33]
Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).
[34]
Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95 (1996).
[35]
Mr. Herminio Pujeda, at the time he testified before the RTC in 1990, was already
the Vice President of petitioner Citibank.
[36]
Mr. Francisco Tan, at the time of his deposition in 1990, was already working as
Assistant General Manager for Dai-Chi Kangyo Bank in Hong Kong.
[37]
TSN, 12 March 1990, pp. 6-10.
[38]
Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
[39]
TSN, 6 February 1990, Vol. V, pp. 16-24.
[40]
Exhibit 37, defendants folder of exhibits, p. 106.
[41]
Exhibit 37-C, id. at 107.
[42]
Exhibit 37-F, id. at 108.
[43]
TSN, 12 March 1990, p. 13.
[44]
Exhibit 104-C, defendants folder of exhibits, p. 111.
[45]
Exhibit 105, id. at 112.
[46]
Exhibit 106, id. at 114.
[47]
Exhibit 108, id. at 118.
[48]
Exhibits 112 and 119, id. at 121-A, 124.
[49]
Records, Vol. III, p. 1367.
[50]
Exhibit 34-B, petitioners folder of exhibits, p. 102.
[51]
Exhibit G, plaintiffs folder of exhibits, pp. 4-15.
[52]
Records, Vol. III, p. 1,562.
[53]
Exhibit J, plaintiffs folder of exhibits, p. 49.
[54]
Exhibit 120-H, defendants folder of exhibits, pp. 131.
[55]
Exhibits 1 to 9, id. at 44-52.
[56]
Exhibits 18 to 26, id. at 83-92.
[57]
Exhibit 13-E, id. at 65-67.
[58]
Exhibit 14-G, id. at 72-74.
[59]
Exhibit 15 and Exhibit 17-D, id. at 77-78, 81-82.
[60]
Exhibit 38, id. at 109-110.
[61]
Exhibit K-1, plaintiffs folder of exhibits, pp. 54-55
[62]
Exhibit 27, defendants folder of exhibits, p. 93.
[63]
Exhibit 28, id. at 94.
[64]
Exhibit 29, id. at 95.
[65]
Exhibit 30, id. at 96.
[66]
Exhibit 31, id. at 97.

Page 97 of 100

[67]

Exhibit 32, id. at 98.

Exhibits 34-B and 34-C, id. at 102-103.
[69]
Exhibit 34, id. at 100.
[70]
Exhibit 121, id. at 207.
[71]
TSN, 14 May 1991, Vol. XI , pp. 12-14.
[72]
TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 28-29.
[73]
Exhibit QQQ, plaintiffs folder of exhibits, p. 117.
[74]
Exhibit AAAA, id. at 124.
[75]
TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.
[76]
Id. at 16-23.
[77]
TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-28.
[78]
Sarmiento v. Court of Appeals, 364 Phil. 613, 621 (1999).
[79]
Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538, 553 (2000), with
reference to Tan v. Court of Appeals, 239 Phil. 310, 322 (1994).
[80]
Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218 SCRA 682,
695.
[81]
403 Phil. 361, 383 (2001).
[82]
Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA 799, 311312.
[83]
REVISED RULES OF COURT, Rule 131, Section 3(p).
[84]
Id., Rule 131, Section 3(q).
[85]
Id., Section 3.
[86]
Exhibit 19, defendants folder of exhibits, p. 84.
[87]
Exhibits 9-D and 9-G, id. at 52.
[88]
Exhibit 9-F, id. at 52.
[89]
TSN, 19 May 1986, Vol. II, p. 10.
[90]
Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA
465, 469-471.
[91]
Banco de Oro Savings and Mortgage Bank v Equitable Banking Corporation, G.R.
No. 74917, 20 January 1988, 157 SCRA 188, 199.
[92]
NEGOTIABLE INSTRUMENTS LAW, Section 66, in connection with Section
65.
[93]
Associated Bank v. Court of Appeals, 322 Phil. 677, 697 (1996); Associated Bank v.
Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA 465, 472.
[94]
Plaintiffs Formal Offer of Documentary Exhibits, records, Vol. I, pp. 504-505;
plaintiffs folder of exhibits, p. 110.
[95]
Exhibits GGG and JJJ, plaintiffs folder of exhibits, pp. 109, 113.
[96]
Plaintiffs folder of exhibits, p. 110.
[97]
See the initials on Exhibit III-1, plaintiffs folder of exhibits, p. 112.
[98]
Plaintiffs folder of exhibits, p. 112.
[99]
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
[100]
G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.
[101]
Exhibit MMM, plaintiffs folder of exhibits, p. 115.
[102]
Records, Vol. I, p. 507.
[103]
TSN, 28 November 1991, Vol. XIII, pp. 7-8.
[104]
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.
[105]
TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 13-16.
[106]
TSN, 22 May 1990, Vol. V, pp. 31-61.
[68]

[107]

TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol X, pp. 7-9.
TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp. 31-34.
[109]
TSN, 18 April 1991, Vol. X, pp. 3-13.
[110]
Id. at 15-23.
[111]
Folder of defendants exhibits, pp. 102-103.
[112]
Municipality of Moncada v. Cajuigan, 21 Phil 184, 190 (1912).
[108]

Page 98 of 100

[113]

J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 31 (4th ed.,
1995).
[114]
F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, p. 571 (8th ed.,
2000).
[115]
F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, 571 (8th ed., 2000).
[116]
G.R. Nos. 146710-15, 3 April 2001, 356 SCRA 108, 137-138.
[117]
TSN, 13 March 1991, Vol X, pp. 7-9.
[118]
TSN, 22 May 1990, Vol. V, pp. 14-17.
[119]
Dr. Ricardo L. Dy and Rosalind O. Dy vs. Citibank, N.A.,CA-G.R. CV No. 15934,
15 January 1990, penned by Associate Justice Nicolas P. Lapea, Jr. with
Associate Justices Santiago M. Kapunan and Emeterio C. Cui, concurring.
[120]
REVISED RULES OF COURT, Rule 130, Section 34.
[121]
J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 199-200
(4th ed., 1995).
[122]
CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal of Manila, 213 Phil.
516,523-524 (1984).
[123]
CIVIL CODE, Article 1286.
[124]
G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313-314.
[125]
Anachuelo v. Intermediate Appellate Court, G.R. No. L-71391, 29 January 1987,
147 SCRA 434, 441-442.
[126]
Antillon v. Barcelon, 37 Phil. 148, 150-151 (1917).
[127]
See Exhibits 13-E, 14-G, 15-D,and 17-D, defendants folder of exhibits, pp. 65-67,
72-74, 77-78, 81-82.
[128]
TSN, 7 March 1991, Vol. IX, pp. 3-6.
[129]
Cuizon v. Court of Appeals, 329 Phil. 456, 482 (1996).
[130]
Exhibits 13-E, 14-G, 15-D, and 17-D, defendants folder of exhibits, pp. 65-66, 7273, 77-78, 81-82.
[131]
Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396 (2000).
[132]
Exhibit 38, defendants folder of exhibits, pp. 109-110.
[133]
Exhibit K-1, plaintiffs folder of exhibits, 54-55.
[134]
REVISED RULES OF COURT, Rule 131, Section 3(u).
[135]
Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763 (1998).
[136]
Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes, records,
Vol. I, p. 310; Order, dated 2 September 1988, id. at penned by Judge
Francisco X. Velez, records, Vol. I, p. 449; Order, dated 24 November 1988,
penned by Judge Francisco X. Velez, records, Vol. I, p. 458; Order, dated 25
April 1989, penned by Judge Francisco X. Velez, records, Vol. I, pp. 476-477
[137]
Security Bank & Trust Co. v. Triumph Lumber and Construction Corporation, 361
Phil. 463, 477 (1999).
[138]
REVISED RULES OF COURT, Rule 131, Section 3(e).
[139]
The stipulated interest shall apply as indemnity for the damages incurred in the
delay of payment as provided in Article 2209 of the CIVIL CODE which reads
ART. 2209. If the obligation consists in the payment of a
sum of money, and the debtor incurs delay, the indemnity
for damages, there being no stipulation to the contrary, shall
be the payment of the interest agreed upon, and in the
absence of a stipulation, the legal interest, which is six
percent per annum. [Emphasis supplied.]
Note, however, that the legal interest has been increased from six percent to
twelve percent per annum by virtue of Central Bank Circulars No. 416, dated
29 July 1974, and No. 905, dated 10 December 1982.
[140]
Radio Communications of the Philippines, Inc. v. National Labor Relations
Commission, G.R. Nos. 101181-84, 22 June 1992, 210 SCRA 222, 226227; 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).

Page 99 of 100

[141]

THE GENERAL BANKING LAW OF 2000, Section 2.

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.
[142]

Page 100 of 100