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epublic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 156132 October 12, 2006

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

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari,1 under Rule 45 of the Revised Rules of Court,
of the Decision2 of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, and the
Resolution,3 dated 20 November 2002, of the same court which, although modifying its earlier
Decision, still denied for the most part the Motion for Reconsideration of herein petitioners.

Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a banking corporation
duly authorized and existing under the laws of the United States of America and licensed to do
commercial banking activities and perform trust functions in the Philippines.

Petitioner Investor's Finance Corporation, which did business under the name and style of FNCB
Finance, was an affiliate company of petitioner Citibank, specifically handling money market
placements for its clients. It is now, by virtue of a merger, doing business as part of its successor-in-
interest, BPI Card Finance Corporation. However, so as to consistently establish its identity in the
Petition at bar, the said petitioner shall still be referred to herein as FNCB Finance. 4

Respondent Modesta R. Sabeniano was a client of both petitioners Citibank and FNCB Finance.
Regrettably, the business relations among the parties subsequently went awry.

On 8 August 1985, respondent filed a Complaint5 against petitioners, docketed as Civil Case No.
11336, before the Regional Trial Court (RTC) of Makati City. Respondent claimed to have substantial
deposits and money market placements with the petitioners, as well as money market placements
with the Ayala Investment and Development Corporation (AIDC), the proceeds of which were
supposedly deposited automatically and directly to respondent's accounts with petitioner Citibank.
Respondent alleged that petitioners refused to return her deposits and the proceeds of her money
market placements despite her repeated demands, thus, compelling respondent to file Civil Case No.
11336 against petitioners for "Accounting, Sum of Money and Damages." Respondent eventually filed
an Amended Complaint6 on 9 October 1985 to include additional claims to deposits and money
market placements inadvertently left out from her original Complaint.

In their joint Answer7 and Answer to Amended Complaint,8 filed on 12 September 1985 and 6
November 1985, respectively, petitioners admitted that respondent had deposits and money market
placements with them, including dollar accounts in the Citibank branch in Geneva, Switzerland
(Citibank-Geneva). Petitioners further alleged that the respondent later obtained several loans from
petitioner Citibank, for which she executed Promissory Notes (PNs), and secured by (a) a Declaration
of Pledge of her dollar accounts in Citibank-Geneva, and (b) Deeds of Assignment of her money
market placements with petitioner FNCB Finance. When respondent failed to pay her loans despite
repeated demands by petitioner Citibank, the latter exercised its right to off-set or compensate
respondent's outstanding loans with her deposits and money market placements, pursuant to the
Declaration of Pledge and the Deeds of Assignment executed by respondent in its favor. Petitioner
Citibank supposedly informed respondent Sabeniano of the foregoing compensation through letters,
dated 28 September 1979 and 31 October 1979. Petitioners were therefore surprised when six years
later, in 1985, respondent and her counsel made repeated requests for the withdrawal of
respondent's deposits and money market placements with petitioner Citibank, including her dollar
accounts with Citibank-Geneva and her money market placements with petitioner FNCB Finance.
Thus, petitioners prayed for the dismissal of the Complaint and for the award of actual, moral, and
exemplary damages, and attorney's fees.

When the parties failed to reach a compromise during the pre-trial hearing,9 trial proper ensued and
the parties proceeded with the presentation of their respective evidence. Ten years after the filing of
the Complaint on 8 August 1985, a Decision10 was finally rendered in Civil Case No. 11336 on 24
August 1995 by the fourth Judge11 who handled the said case, Judge Manuel D. Victorio, the
dispositive portion of which reads

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

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

(2) Declaring the plaintiff [respondent Sabeniano] indebted to the defendant Bank [petitioner
Citibank] in the amount of 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
respondent's deposits and money market placements with them. On the other hand, petitioners
argued that petitioner Citibank validly compensated respondent's outstanding loans with her dollar
accounts with Citibank-Geneva, in accordance with the Declaration of Pledge she executed in its
favor. Petitioners also alleged that the RTC erred in not declaring respondent liable for damages and
interest.

On 26 March 2002, the Court of Appeals rendered its Decision12 affirming with modification the RTC
Decision in Civil Case No. 11336, dated 24 August 1995, and ruling entirely in favor of respondent in
this wise
Wherefore, premises considered, the assailed 24 August 1995 Decision of the court a quo is
herebyAFFIRMED with MODIFICATION, as follows:

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

2. As defendant-appellant Citibank failed to establish by competent evidence the alleged


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

3. As defendants-appellants failed to account the following plaintiff-appellant's money


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

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

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

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

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

(v) The Two Million (P2,000,000.00) money market placements of Ms.


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

4. Ordering defendants-appellants to jointly and severally pay the plaintiff-appellant the sum
of FIVE HUNDRED THOUSAND PESOS (P500,000.00) by way of moral damages, FIVE
HUNDRED THOUSAND PESOS (P500,000.00) as exemplary damages, and ONE
HUNDRED THOUSAND PESOS (P100,000.00) as attorney's fees.

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

G.R. No. 152985

Respondent no longer sought a reconsideration of the Decision of the Court of Appeals in CA-G.R.
CV No. 51930, dated 26 March 2002, and instead, filed immediately with this Court on 3 May 2002 a
Motion for Extension of Time to File a Petition for Review,13 which, after payment of the docket and
other lawful fees, was assigned the docket number G.R. No. 152985. In the said Motion, respondent
alleged that she received a copy of the assailed Court of Appeals Decision on 18 April 2002 and,
thus, had 15 days therefrom or until 3 May 2002 within which to file her Petition for Review. Since she
informed her counsel of her desire to pursue an appeal of the Court of Appeals Decision only on 29
April 2002, her counsel neither had enough time to file a motion for reconsideration of the said
Decision with the Court of Appeals, nor a Petition for Certiorari with this Court. Yet, the Motion failed
to state the exact extension period respondent was requesting for.

Since this Court did not act upon respondent's Motion for Extension of Time to file her Petition for
Review, then the period for appeal continued to run and still expired on 3 May 2002. 14 Respondent
failed to file any Petition for Review within the prescribed period for appeal and, hence, this Court
issued a Resolution,15 dated 13 November 2002, in which it pronounced that

G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals, et al.). It appearing that
petitioner failed to file the intended petition for review on certiorari within the period which expired
on May 3, 2002, the Court Resolves to DECLARE THIS CASE TERMINATED and DIRECT the
Division Clerk of Court toINFORM the parties that the judgment sought to be reviewed has become
final and executory.

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

G.R. No. 156132

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

WHEREFORE, premises considered, the instant Motion for Reconsideration is PARTIALLY


GRANTED as Sub-paragraph (V) paragraph 3 of the assailed Decision's dispositive portion is
hereby ordered DELETED.

The challenged 26 March 2002 Decision of the Court is AFFIRMED with MODIFICATION.

Assailing the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 51930, dated 26
March 2002 and 20 November 2002, respectively, petitioners filed the present Petition, docketed as
G.R. No. 156132. The Petition was initially denied17 by this Court for failure of the petitioners to attach
thereto a Certification against Forum Shopping. However, upon petitioners' Motion and compliance
with the requirements, this Court resolved18to reinstate the Petition.

The Petition presented fourteen (14) assignments of errors allegedly committed by the Court of
Appeals in its Decision, dated 26 March 2002, involving both questions of fact and questions of law
which this Court, for the sake of expediency, discusses jointly, whenever possible, in the succeeding
paragraphs.

The Resolution of this Court, dated 13 November 2002, in G.R. No. 152985, declaring the
Decision of the Court of Appeals, dated 26 March 2002, final and executory, pertains to
respondent Sabeniano alone.

Before proceeding to a discussion of the merits of the instant Petition, this Court wishes to address
first the argument, persistently advanced by respondent in her pleadings on record, as well as her
numerous personal and unofficial letters to this Court which were no longer made part of the record,
that the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, had
already become final and executory by virtue of the Resolution of this Court in G.R. No. 152985,
dated 13 November 2002.

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

This Court already explained the matter to respondent when it issued a 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 Citibank's and FNCB Finance's Motion for Reconsideration, we resolved to grant the
motion, reinstate the petition and require Sabeniano to file a comment thereto in our Resolution of
June 23, 2003. Sabeniano filed a Comment dated July 17, 2003 to which Citibank and FNCB
Finance filed a Reply dated August 20, 2003.

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

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

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

Respondent Sabeniano did not commit forum shopping.

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

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

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

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

Forum shopping has been defined as the filing of two or more suits involving the same parties for the
same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable
judgment.22 The test for determining forum shopping is whether in the two (or more) cases pending,
there is an identity of parties, rights or causes of action, and relief sought.23 To guard against this
deplorable practice, Rule 7, Section 5 of the revised Rules of Court imposes the following
requirement

SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under
oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-
judicial agency and, to the best of his knowledge, no such other action or claim is pending therein;
(b) if there is such other pending action or claim, a complete statement of the present status
thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed
or is pending, he shall report that fact within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.

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

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

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

The Petition for Review would constitute the initiatory pleading before this Court, upon the timely filing
of which, the case before this Court commences; much in the same way a case is initiated by the
filing of a Complaint before the trial court. The Petition for Review establishes the identity of parties,
rights or causes of action, and relief sought from this Court, and without such a Petition, there is
technically no case before this Court. The Motion filed by respondent seeking extension of time within
which to file her Petition for Review does not serve the same purpose as the Petition for Review itself.
Such a Motion merely presents the important dates and the justification for the additional time
requested for, but it does not go into the details of the appealed case.
Without any particular idea as to the assignments of error or the relief respondent intended to seek
from this Court, in light of her failure to file her Petition for Review, there is actually no second case
involving the same parties, rights or causes of action, and relief sought, as that in CA-G.R. CV No.
51930.

It should also be noted that the Certification against Forum Shopping is required to be attached to the
initiatory pleading, which, in G.R. No. 152985, should have been respondent's Petition for Review. It
is in that Certification wherein respondent certifies, under oath, that: (a) she has not commenced any
action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and,
to the best of her knowledge, no such other action or claim is pending therein; (b) if there is such
other pending action or claim, that she is presenting a complete statement of the present status
thereof; and (c) if she should thereafter learn that the same or similar action or claim has been filed or
is pending, she shall report that fact within five days therefrom to this Court. Without her Petition for
Review, respondent had no obligation to execute and submit the foregoing Certification against
Forum Shopping. Thus, respondent did not violate Rule 7, Section 5 of the Revised Rules of Court;
neither did she mislead this Court as to the pendency of another similar case.

Lastly, the fact alone that the Decision of the Court of Appeals, dated 26 March 2002, essentially
ruled in favor of respondent, does not necessarily preclude her from appealing the same. Granted
that such a move is ostensibly irrational, nonetheless, it does not amount to malice, bad faith or
abuse of the court processes in the absence of further proof. Again, it should be noted that the
respondent did not file her intended Petition for Review. The Petition for Review would have
presented before this Court the grounds for respondent's appeal and her arguments in support
thereof. Without said Petition, any reason attributed to the respondent for appealing the 26 March
2002 Decision would be grounded on mere speculations, to which this Court cannot give credence.

II

As an exception to the general rule, this Court takes cognizance of questions of fact raised in
the Petition at bar.

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

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

It is indubitable that the Court of Appeals made factual findings that are contrary to those of the
RTC,25 thus, resulting in its substantial modification of the trial court's Decision, and a ruling entirely in
favor of the respondent. In addition, petitioners invoked in the instant Petition for Review several
exceptions that would justify this Court's review of the factual findings of the Court of Appeals, i.e., the
Court of Appeals made conflicting findings of fact; findings of fact which went beyond the issues
raised on appeal before it; as well as findings of fact premised on the supposed absence of evidence
and contradicted by the evidence on record.

On the basis of the foregoing, this Court shall proceed to reviewing and re-evaluating the evidence on
record in order to settle questions of fact raised in the Petition at bar.

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

The Decision in Civil Case No. 11336 was rendered more than 10 years from the institution of the
said case. In the course of its trial, the case was presided over by four (4) different RTC judges. 26 It
was Judge Victorio, the fourth judge assigned to the case, who wrote the RTC Decision, dated 24
August 1995. In his Decision,27 Judge Victorio made the following findings

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

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

Finally, there were sufficient evidence wherein the plaintiff had admitted the existence of her loans
with the defendant Bank in the total amount of P1,920,000.00 exclusive of interests and penalty
charges (Exhibits "28", "31", "32", and "33").

In fine, this Court hereby finds that the defendants had established the genuineness and due
execution of the various promissory notes heretofore identified as well as the two deeds of
assignments of the plaintiff's money market placements with defendant FNCB Finance, on the
strength of which the said money market placements were applied to partially pay the plaintiff's
past due obligation with the defendant Bank. Thus, the total sum of P1,053,995.80 of the plaintiff's
past due obligation was partially offset by the said money market placement leaving a balance
of P1,069,847.40 as of 5 September 1979 (Exhibit "34").

Disagreeing in the foregoing findings, the Court of Appeals stressed, in its Decision in CA-G.R. CV
No. 51930, dated 26 March 2002, "that the ponente of the herein assailed Decision is not the
Presiding Judge who heard and tried the case."28 This brings us to the question of whether the fact
alone that the RTC Decision was rendered by a judge other than the judge who actually heard and
tried the case is sufficient justification for the appellate court to disregard or set aside the findings in
the Decision of the court a quo?

This Court rules in the negative.

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

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

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

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

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

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

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

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

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

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

This Court proceeds to making its own findings of fact.

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

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

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

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

Money market placements with petitioner Citibank

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

Date Maturity Date Amount Interest


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

Petitioner Citibank alleged that it had already paid to respondent the principal amounts and
proceeds of PNs No. 23356 and 23357, upon their maturity. Petitioner Citibank further averred that
respondent used the 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 InHibberd v. Rohde and McMillian,32 this Court delineated the consequences of such
an admission

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


this section, is meant that the party whose signature it bears admits that he signed it or that
it was signed by another for him with his authority; that at the time it was signed it was in
words and figures exactly as set out in the pleading of the party relying upon it; that the
document was delivered; and that any formal requisites required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by him. Hence, such
defenses as that the signature is a forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425;
Cox vs. Northwestern Stage Co., 1 Idaho, 376; Woollen vs. Whitacre, 73 Ind., 198;
Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escao, 11 Phil. Rep., 92); or that it was
unauthorized, as in the case of an agent signing for his principal, or one signing in behalf of
a partnership (Country Bank vs. Greenberg, 127 Cal., 26; Henshaw vs.Root, 60 Inc., 220;
Naftzker vs. Lantz, 137 Mich., 441) or of a corporation (Merchant vs.International Banking
Corporation, 6 Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs.Spencer &
Barnes Co., 162 Mich., 509); or that, in the case of the latter, that the corporation was
authorized under its charter to sign the instrument (Merchant vs. International Banking
Corporation,supra); or that the party charged signed the instrument in some other capacity
than that alleged in the pleading setting it out (Payne vs. National Bank, 16 Kan., 147); or
that it was never delivered (Hunt vs. Weir, 29 Ill., 83; Elbring vs. Mullen, 4 Idaho, 199;
Thorp vs. Keokuk Coal Co., 48 N.Y., 253; Fire Association of Philadelphia vs. Ruby, 60
Neb., 216) are cut off by the admission of its genuineness and due execution.

The effect of the admission is such that in the case of a promissory note a prima facie case
is made for the plaintiff which dispenses with the necessity of evidence on his part and
entitles him to a judgment on the pleadings unless a special defense of new matter, such as
payment, is interposed by the defendant (Papa vs. Martinez, 12 Phil. Rep., 613; Chinese
Chamber of Commerce vs. Pua To Ching, 14 Phil. Rep., 222; Banco Espaol-
Filipino vs. McKay & Zoeller, 27 Phil. Rep., 183). x x x

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

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

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

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

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

The relevant portion37 of Mr. Pujeda's testimony as to PNs No. 23356 and 23357 (referred to
therein as Exhibits No. "47" and "48," respectively) is reproduced below

Atty. Mabasa:

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

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

Court:

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

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

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

A Based on documents, your Honor.

Court:

Are these documents still available now?

A Yes, your honor.

Court:

Better present the documents.

Atty. Mabasa:

Yes, your Honor, that is why your Honor.

Atty. Mabasa:

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

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

Q And you are saying time deposits with what bank?

A With First National Citibank.

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

A Yes, sir.

Q And how much was the amount booked as time deposit with defendant Citibank?

A In the amount of P500,000.00.

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

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

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

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

A She funded it directly.

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

A That is right.

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

Atty. Mabasa : Now from the Exhibits that you have identified Mr. Tan from Exhibits "A" to
"F", which are Exhibits of the plaintiff. Now, do I understand from you that the original
amount is Five Hundred Thousand and thereafter renewed in the succeeding exhibits?

Mr. Tan : Yes, Sir.

Atty. Mabasa : Alright, after these Exhibits "E" and "F" matured, what happened thereafter?

Mr. Tan : Split into two time deposits.

Atty. Mabasa : Exhibits "E" and "F"?

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

Moreover, while there are documentary evidences to support and trace respondent's money
market placements with petitioner Citibank, from the original PN No. 20773, rolled-over several
times to, finally, PNs No. 23356 and 23357, there is an evident absence of any documentary
evidence on the payment of these last two PNs and the use of the proceeds thereof by respondent
for opening TD accounts. The paper trail seems to have ended with the copies of PNs No. 23356
and 23357. Although both Mr. Pujeda and Mr. Tan said that they based their testimonies, not just
on their memories but also on the documents on file, the supposed documents on which they
based those portions of their testimony on the payment of PNs No. 23356 and 23357 and the
opening of the TD accounts from the proceeds thereof, were never presented before the courts
nor made part of the records of the case. Respondent's money market placements were of
substantial amounts consisting of the principal amount of P500,000.00, plus the interest it should
have earned during the years of placement and it is difficult for this Court to believe that
petitioner Citibank would not have had documented the payment thereof.

When Mr. Pujeda testified before the RTC on 6 February 1990, 39 petitioners' counsel attempted to
present in evidence a document that would supposedly support the claim of petitioner Citibank that
the proceeds of PNs No. 23356 and 23357 were used by respondent to open one of her two TD
accounts in the amount of P500,000.00. Respondent's counsel objected to the presentation of the
document since it was a mere "xerox" copy, and was blurred and hardly readable. Petitioners'
counsel then asked for a continuance of the hearing so that they can have time to produce a better
document, which was granted by the court. However, during the next hearing and continuance of
Mr. Pujeda's testimony on 12 March 1990, petitioners' counsel no longer referred to the said
document.

As respondent had established a prima facie case that petitioner Citibank is obligated to her for the
amounts stated in PNs No. 23356 and 23357, and as petitioner Citibank failed to present sufficient
proof of payment of the said PNs and the use by the respondent of the proceeds thereof to open
her TD accounts, this Court finds that PNs No. 23356 and 23357 are still outstanding and
petitioner Citibank is still liable to respondent for the amounts stated therein.

The significance of this Court's declaration that PNs No. 23356 and 23357 are still outstanding
becomes apparent in the light of petitioners' next contentions that respondent used the proceeds
of PNs No. 23356 and 23357, together with additional money, to open TD Accounts No. 17783 and
17784 with petitioner Citibank; and, subsequently, respondent pre-terminated these TD accounts
and transferred the proceeds thereof, amounting to P1,100,000.00, to petitioner FNCB Finance for
money market placements. While respondent's money market placements with petitioner FNCB
Finance may be traced back with definiteness to TD Accounts No. 17783 and 17784, there is only
flimsy and unsubstantiated connection between the said TD accounts and the supposed proceeds
paid from PNs No. 23356 and 23357. With PNs No. 23356 and 23357 still unpaid, then they
represent an obligation of petitioner Citibank separate and distinct from the obligation of petitioner
FNCB Finance arising from respondent's money market placements with the latter.

Money market placements with petitioner FNCB Finance

According to petitioners, respondent's TD Accounts No. 17783 and 17784, in the total amount
ofP1,100,000.00, were supposed to mature on 15 March 1978. However, respondent, through a
letter dated 28 April 1977,40 pre-terminated the said TD accounts and transferred all the proceeds
thereof to petitioner FNCB Finance for money market placement. Pursuant to her instructions, TD
Accounts No. 17783 and 17784 were pre-terminated and petitioner Citibank (then still named First
National City Bank) issued Manager's Checks (MC) No. 19925341 and 19925142 for the amounts
of P500,000.00 and P600,00.00, respectively. Both MCs were payable to Citifinance (which,
according to Mr. Pujeda,43 was one with and the same as petitioner FNCB Finance), with the
additional notation that "A/C MODESTA R. SABENIANO." Typewritten on MC No. 199253 is the
phrase "Ref. Proceeds of TD 17783," and on MC No. 199251 is a similar phrase, "Ref. Proceeds of
TD 17784." These phrases purportedly established that the MCs were paid from the proceeds of
respondent's pre-terminated TD accounts with petitioner Citibank. Upon receipt of the MCs,
petitioner FNCB Finance deposited the same to its account with Feati Bank and Trust Co., as
evidenced by the rubber stamp mark of the latter found at the back of both MCs. In exchange,
petitioner FNCB Finance booked the amounts received as money market placements, and
accordingly issued PNs No. 4952 and 4962, for the amounts of P500,000.00 and P600,000.00,
respectively, payable to respondent's savings account with petitioner Citibank, S/A No. 25-13703-
4, upon their maturity on 1 June 1977. Once again, respondent rolled-over several times the
principal amounts of her money market placements with petitioner FNCB Finance, as follows

Date Maturity Date Amount Interest


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

As presented by the petitioner FNCB Finance, respondent rolled-over only the principal amounts of
her money market placements as she chose to receive the interest income therefrom. Petitioner
FNCB Finance also pointed out that when PN No. 4962, with principal amount of 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. 816745 expressly canceled
and superseded PN No. 5757, while PN No. 816946 also explicitly canceled and superseded PN No.
5758. Thus, it is patently erroneous for the Court of Appeals to still award to respondent the principal
amounts and interests covered by PNs No. 5757 and 5758 when these were already canceled and
superseded. It is now incumbent upon this Court to determine what subsequently happened to PNs
No. 8167 and 8169.

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

Date of Check Amount Notation


Issuance No. (P)
(mm/dd/yyyy)
09/01/1978 76962 12,833.34 Interest payment on PN#08167
09/01/1978 76961 12,833.34 Interest payment on PN#08169
09/05/1978 77035 500,000.00 Full payment of principal on PN#08167 which is hereby
cancelled
09/05/ 1978 77034 500,000.00 Full payment of principal on PN#08169 which is hereby
cancelled

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

On 3 September 1979, petitioner FNCB Finance issued Check No. 100168, pay to the order of
"Citibank N.A. A/C Modesta Sabeniano," in the amount of P1,022,916.66, as full payment of the
principal amounts and interests of both PNs No. 20138 and 20139 and, resultantly, canceling the said
PNs.48 Respondent actually admitted the issuance and existence of Check No. 100168, but with the
qualification that the proceeds thereof were turned over to petitioner Citibank. 49 Respondent did not
clarify the circumstances attending the supposed turn over, but on the basis of the allegations of
petitioner Citibank itself, the proceeds of PNs No. 20138 and 20139, amounting to P1,022,916.66,
was used by it to liquidate respondent's outstanding loans. Therefore, the determination of whether or
not respondent is still entitled to the return of the proceeds of PNs No. 20138 and 20139 shall be
dependent on the resolution of the issues raised as to the existence of the loans and the authority of
petitioner Citibank to use the proceeds of the said PNs, together with respondent's other deposits and
money market placements, to pay for the same.

Savings and current accounts with petitioner Citibank

Respondent presented and submitted before the RTC deposit slips and bank statements to prove
deposits made to several of her accounts with petitioner Citibank, particularly, Accounts No.
00484202, 59091, and 472-751, which would have amounted to a total of P3,812,712.32, had there
been no withdrawals or debits from the said accounts from the time the said deposits were made.

Although the RTC and the Court of Appeals did not make any definitive findings as to the status of
respondent's savings and current accounts with petitioner Citibank, the Decisions of both the trial and
appellate courts effectively recognized only the P31,079.14 coming from respondent's savings
account which was used to off-set her alleged outstanding loans with petitioner Citibank.50

Since both the RTC and the Court of Appeals had consistently recognized only the P31,079.14 of
respondent's savings account with petitioner Citibank, and that respondent failed to move for
reconsideration or to appeal this particular finding of 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 respondent's money
market placements and dollar accounts as follows

MODESTA SABENIANO &/OR


==================
US$ 30'000.-- Principal Fid. Placement
+ US$ 339.06 Interest at 3,875% p.a. from 12.07.
25.10.79
- US$ 95.-- Commission (minimum)
US$ 30'244.06 Total proceeds on 25.10.1979
US$ 114'000.-- Principal Fid. Placement
+ US$ 1'358.50 Interest at 4,125% p.a. from 12.07.
25.10.79
- US$ 41.17 Commission
US$ 115'317.33 Total proceeds on 25.10.1979
US$ 145'561.39 Total proceeds of both placements on
25.10.1979
+ US$ 11'381.31 total of both current accounts
US$ 156'942.70 Total funds available
- US$ 149'632.99 Transfer to Citibank Manila on
26.10.1979
(counter value of Pesos 1'102'944.78)
US$ 7'309.71 Balance in current accounts
- US$ 6'998.84 Transfer to Citibank Zuerich ac no.
121359 on March 13, 1980
US$ 310.87 various charges including closing
charges

According to the foregoing computation, by 25 October 1979, respondent had a total of


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

III

Petitioner Citibank was able to establish by preponderance of evidence the existence of


respondent's loans.

Petitioners' version of events


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

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

Total P 2,156,940.58

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

As early as 9 February 1978, respondent obtained her first loan from petitioner Citibank in the
principal amount of P200,000.00, for which she executed PN No. 31504.54 Petitioner Citibank
extended to her several other loans in the succeeding months. Some of these loans were paid, while
others were rolled-over or renewed. Significant to the Petition at bar are the loans which respondent
obtained from July 1978 to January 1979, appropriately covered by PNs (first set).55 The aggregate
principal amount of these loans was P1,920,000.00, which could be broken down as follows

Date of Date of Date of


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

Total P 1,920,000.00

When respondent was unable to pay the first set of PNs upon their maturity, these were rolled-over or
renewed several times, necessitating the execution by respondent of new PNs in favor of petitioner
Citibank. As of 5 April 1979, respondent had the following outstanding PNs (second set),56 the
principal amount of which remained atP1,920,000.00

Date of Issuance Date of Maturity


PN No. Principal Amount
(mm/dd/yyyy) (mm/dd/yyyy)
34510 01/01/1979 03/02/1979 P 400,000.00
34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
34612 01/19/1979 03/16/1979 150,000.00
34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
35694 03/19/1979 05/29/1979 150,000.00
35695 03/19/1979 05/29/1979 100,000.00
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 220,000.00
Total 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 Assignment57 of PN No. 8169, which was issued by
petitioner FNCB Finance, to secure payment of the credit and banking facilities extended to her by
petitioner Citibank, in the aggregate principal amount of 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 ofP500,000.00. When PNs No. 8167 and 8169,
representing respondent's money market placements with petitioner FNCB Finance, matured and
were rolled-over to PNs No. 20138 and 20139, respondent executed new Deeds of Assignment, 59 in
favor of petitioner Citibank, on 25 August 1978. According to the more recent Deeds, respondent
assigned PNs No. 20138 and 20139, representing her rolled-over money market placements with
petitioner FNCB Finance, to petitioner Citibank as security for the banking and credit facilities it
extended to her, in the aggregate principal amount of 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 letter62 was dated 5 April 1979, addressed to respondent and signed by Mr. Tan, as the
manager of petitioner Citibank, which stated, in part, that

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

We, therefore, have no alternative but to call your loan of 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 letter63 dated 26 April 1979, printed on paper bearing the letterhead of
respondent's company, MC Adore International Palace, the body of which reads

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

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

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

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

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

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

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

This was followed by a telegram,65 dated 5 June 1979, and received by petitioner Citibank the
following day. The telegram was sent by a Dewey G. Soriano, Legal Counsel. The telegram
acknowledged receipt of the telegram sent by petitioner Citibank regarding the "re-past due
obligation" of McAdore International Palace. However, it reported that respondent, the President and
Chairman of MC Adore International Palace, was presently abroad negotiating for a big loan. Thus,
he was requesting for an extension of the due date of the obligation until respondent's arrival on or
before 31 July 1979.
The next letter,66 dated 21 June 1979, was signed by respondent herself and addressed to Mr. Bobby
Mendoza, a Manager of petitioner FNCB Finance. Respondent wrote therein

Re: PN No. 20138 for 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 letter67 to Mr. Tan of petitioner Citibank, stating that

Re: S/A No. 25-225928


and C/A No. 484-946

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

Unlike respondent's earlier letters, both letters, dated 21 June 1979, are printed on plain paper,
without the letterhead of her company, MC Adore International Palace.

By 5 September 1979, respondent's outstanding and past due obligations to petitioner Citibank
totaledP2,123,843.20, representing the principal amounts plus interests. Relying on respondent's
Deeds of Assignment, petitioner Citibank applied the proceeds of respondent's money market
placements with petitioner FNCB Finance, as well as her deposit account with petitioner Citibank, to
partly liquidate respondent's outstanding loan balance,68 as follows

Respondent's outstanding obligation (principal and


P2,123,843.20
interest)
Proceeds from respondent's money market
Less:
placements
with petitioner FNCB Finance (principal and
(1,022,916.66)
interest)
Deposits in respondent's bank accounts with
petitioner
Citibank (31,079.14)
Balance of respondent's obligation P1,069,847.40

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

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

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

Unfortunately, on 7 October 1987, a fire gutted the 7 th floor of petitioner Citibank's building at Paseo
de Roxas St., Makati, Metro Manila. Petitioners submitted a 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 Citibank's building housed its Control
Division, which was in charge of keeping the necessary documents for cases in which it was involved.
After compiling the documentary evidence for the present case, Atty. Renato J. Fernandez, internal
legal counsel of petitioner Citibank, forwarded them to the Control Division. The original copies of the
MCs, which supposedly represent the proceeds of the first set of PNs, as well as that of other
documentary evidence related to the case, were among those burned in the said fire.71

Respondent's version of events

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

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

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

Respondent likewise questioned the MCs presented by petitioners, except for one (MC No. 228270 in
particular), as proof that she received the proceeds of the loans covered by the first set of PNs. As
recounted in the preceding paragraph, respondent admitted to obtaining a loan of P150,000.00,
covered by PN No. 34534, and receiving MC No. 228270 representing the proceeds thereof, but
claimed that she already paid the same. She denied ever receiving MCs No. 220701 (for the loan
of P400,000.00, covered by PN No. 33935) and No. 226467 (for the loan of P250,000.00, covered by
PN No. 34079), and pointed out that the checks did not bear her indorsements. She did not deny
receiving all other checks but she interposed that she received these checks, not as proceeds of
loans, but as payment of the principal amounts and/or interests from her money market placements
with petitioner Citibank. She also raised doubts as to the notation on each of the checks that reads
"RE: Proceeds of PN#[corresponding PN No.]," saying that such notation did not appear on the MCs
when she originally received them and that the notation appears to have been written by a typewriter
different from that used in writing all other information on the checks (i.e., date, payee, and
amount).76 She even testified that MCs were not supposed to bear notations indicating the purpose
for which they were issued.

As to the second set of PNs, respondent acknowledged having signed them all. However, she
asserted that she only executed these PNs as part of the simulated loans she and Mr. Tan of
petitioner Citibank concocted. Respondent explained that she had a pending loan application for a big
amount with the Development Bank of the Philippines (DBP), and when Mr. Tan found out about this,
he suggested that they could make it appear that the respondent had outstanding loans with
petitioner Citibank and the latter was already demanding payment thereof; this might persuade DBP
to approve respondent's loan application. Mr. Tan made the respondent sign the second set of PNs,
so that he may have something to show the DBP investigator who might inquire with petitioner
Citibank as to respondent's loans with the latter. On her own copies of the said PNs, respondent
wrote by hand the notation, "This isa (sic) simulated non-negotiable note, signed copy given to Mr.
Tan., (sic) per agreement to be shown to DBP representative. itwill (sic) be returned to me if
the P11=M (sic) loan for MC Adore Palace Hotel is approved by DBP."77

Findings of this Court as to the existence of the loans

After going through the testimonial and documentary evidence presented by both sides to this case, it
is this Court's assessment that respondent did indeed have outstanding loans with petitioner Citibank
at the time it effected the off-set or compensation on 25 July 1979 (using respondent's savings
deposit with petitioner Citibank), 5 September 1979 (using the proceeds of respondent's money
market placements with petitioner FNCB Finance) and 26 October 1979 (using respondent's dollar
accounts remitted from Citibank-Geneva). The totality of petitioners' evidence as to the existence of
the said loans preponderates over respondent's. Preponderant evidence means that, as a whole, the
evidence adduced by one side outweighs that of the adverse party. 78

Respondent's outstanding obligation for 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 bank's manager upon the
bank itself and regarded to be as good as the money it represents. 79 Moreover, the MCs were
crossed checks, with the words "Payee's Account Only."

In general, a crossed check cannot be presented to the drawee bank for payment in cash. Instead,
the check can only be deposited with the payee's bank which, in turn, must present it for payment
against the drawee bank in the course of normal banking hours. The crossed check cannot be
presented for payment, but it can only be deposited and the drawee bank may only pay to another
bank in the payee's or indorser's account.80The effect of crossing a check was described by this Court
in Philippine Commercial International Bank v. Court of Appeals81

[T]he crossing of a check with the phrase "Payee's Account Only" is a warning that the check
should be deposited in the account of the payee. Thus, it is the duty of the collecting bank PCI
Bank to ascertain that the check be deposited in payee's account only. It is bound to scrutinize the
check and to know its depositors before it can make the clearing indorsement "all prior
indorsements and/or lack of indorsement guaranteed."

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

This Court finds applicable herein the presumptions that private transactions have been fair and
regular,83 and that the ordinary course of business has been followed.84 There is no question that the
loan transaction between petitioner Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCs from their issuance by petitioner Citibank to
respondent as payment of the proceeds of her loans; to its deposit in respondent's accounts with
several different banks; to the clearing of the MCs by an independent clearing house; and finally, to
the payment of the MCs by petitioner Citibank as the drawee bank of the said checks are all private
transactions which shall be presumed to have been fair and regular to all the parties concerned. In
addition, the banks involved in the foregoing transactions are also presumed to have followed the
ordinary course of business in the acceptance of the crossed MCs for deposit in respondent's
accounts, submitting them for clearing, and their eventual payment and cancellation.

The afore-stated presumptions are disputable, meaning, they are satisfactory if uncontradicted, but
may be contradicted and overcome by other evidence.85 Respondent, however, was unable to
present sufficient and credible evidence to dispute these presumptions.

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

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

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

The mere fact that MCs No. 220701 and 226467 do not bear respondent's signature at the back does
not negate deposit thereof in her account. The liability for the lack of indorsement on the MCs no
longer fall on petitioner Citibank, but on the bank who received the same for deposit, in this case, BPI
Cubao Branch. Once again, it must be noted that the MCs were crossed, for payee's account only,
and the payee named in both checks was none other than respondent. The crossing of the MCs was
already a warning to BPI to receive said checks for deposit only in respondent's account. It was up to
BPI to verify whether it was receiving the crossed MCs in accordance with the instructions on the face
thereof. If, indeed, the MCs were deposited in accounts other than respondent's, then the respondent
would have a cause of action against BPI.90

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

Furthermore, respondent's bare and unsubstantiated denial of receipt of the MCs in question and
their deposit in her account is rendered suspect when MC No. 220701 was actually deposited in
Account No. 0123-0572-28 of BPI Cubao Branch, the very same account in which MC No. 228270
(which respondent admitted to receiving as proceeds of her loan from petitioner Citibank), and MCs
No. 228203, 228357, and 228400 (which respondent admitted to receiving as proceeds from her
money market placements) were deposited. Likewise, MC No. 226467 was deposited in Account No.
0121-002-43 of BPI Cubao Branch, to which MCs No. 226285 and 226439 (which respondent
admitted to receiving as proceeds from her money market placements) were deposited. It is an
apparent contradiction for respondent to claim having received the proceeds of checks deposited in
an account, and then deny receiving the proceeds of another check deposited in the very same
account.

Another inconsistency in respondent's denial of receipt of MC No. 226467 and her deposit of the
same in her account, is her presentation of Exhibit "HHH," a provisional receipt which was supposed
to prove that respondent turned over 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 respondent's contention that the notations on the MCs, stating
that they were the proceeds of particular PNs, were not there when she received the checks and that
the notations appeared to be written by a typewriter different from that used to write the other
information on the checks. Once more, respondent's allegations were uncorroborated by any other
evidence. Her and her counsel's observation that the notations on the MCs appear to be written by a
typewriter different from that used to write the other information on the checks hardly convinces this
Court considering that it constitutes a mere opinion on the appearance of the notation by a witness
who does not possess the necessary expertise on the matter. In addition, the notations on the MCs
were written using both capital and small letters, while the other information on the checks were
written using capital letters only, such difference could easily confuse an untrained eye and lead to a
hasty conclusion that they were written by different typewriters.

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

Respondent presented several more pieces of evidence to substantiate her claim that she received
MCs No. 226285, 226439, 226467, 226057, 228357, and 228400, not as proceeds of her loans from
petitioner Citibank, but as the return of the principal amounts and payment of interests from her
money market placements with petitioners. Part of respondent's exhibits were personal
checks95 drawn by respondent on her account with Feati Bank & Trust Co., which she allegedly
invested in separate money market placements with both petitioners, the returns from which were
paid to her via MCs No. 226285 and 228400. Yet, to this Court, the personal checks only managed to
establish respondent's issuance thereof, but there was nothing on the face of the checks that would
reveal the purpose for which they were issued and that they were actually invested in money market
placements as respondent claimed.

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

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

Also, going by the information on the front page of the note, this Court observes that payment of
respondent's alleged money market placements with petitioner FNCB Finance were made using
Citytrust Checks; the MCs in question, including MC No. 228057, were issued by petitioner Citibank.
Although Citytrust (formerly Feati Bank & Trust Co.), petitioner FNCB Finance, and petitioner Citibank
may be affiliates of one another, they each remained separate and distinct corporations, each having
its own financial system and records. Thus, this Court cannot simply assume that one corporation,
such as petitioner Citibank or Citytrust, can issue a check to discharge an obligation of petitioner
FNCB Finance. It should be recalled that when petitioner FNCB Finance paid for respondent's money
market placements, covered by its PNs No. 8167 and 8169, as well as PNs No. 20138 and 20139,
petitioner FNCB Finance issued its own checks.

As a last point on this matter, if respondent truly had money market placements with petitioners, then
these would have been evidenced by PNs issued by either petitioner Citibank or petitioner FNCB
Finance, acknowledging the principal amounts of the investments, and stating the applicable interest
rates, as well as the dates of their of issuance and maturity. After respondent had so meticulously
reconstructed her other money market placements with petitioners and consolidated the documentary
evidence thereon, she came surprisingly short of offering similar details and substantiation for these
particular money market placements.

Since this Court is satisfied that respondent indeed received the proceeds of the first set of PNs, then
it proceeds to analyze her evidence of payment thereof.

In support of respondent's assertion that she had already paid whatever loans she may have had with
petitioner Citibank, she presented as evidence Provisional Receipts No. 19471, dated 11 August
1978, and No. 12723, dated 10 November 1978, both of petitioner Citibank and signed by Mr. Tan,
for the amounts of P500,744.00 andP500,000.00, respectively. While these provisional receipts did
state that Mr. Tan, on behalf of petitioner Citibank, received respondent's checks as payment for her
loans, they failed to specifically identify which loans were actually paid. Petitioner Citibank was able to
present evidence that respondent had executed several PNs in the years 1978 and 1979 to cover the
loans she secured from the said bank. Petitioner Citibank did admit that respondent was able to pay
for some of these PNs, and what it identified as the first and second sets of PNs were only those
which remained unpaid. It thus became incumbent upon respondent to prove that the checks
received by Mr. Tan were actually applied to the PNs in either the first or second set; a fact that,
unfortunately, cannot be determined from the provisional receipts submitted by respondent since they
only generally stated that the checks received by Mr. Tan were payment for respondent's loans.

Mr. Tan, in his deposition, further explained that provisional receipts were issued when payment to
the bank was made using checks, since the checks would still be subject to clearing. The purpose for
the provisional receipts was merely to acknowledge the delivery of the checks to the possession of
the bank, but not yet of payment.99This bank practice finds legitimacy in the pronouncement of this
Court that a check, whether an MC or an ordinary check, is not legal tender and, therefore, cannot
constitute valid tender of payment. In Philippine Airlines, Inc. v. Court of Appeals, 100 this Court
elucidated that:

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

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

As for PN No. 34534, respondent asserted payment thereof at two separate instances by two
different means. In her formal offer of exhibits, respondent submitted a deposit slip of petitioner
Citibank, dated 11 August 1978, evidencing the deposit of BPI Check No. 5785 for P150,000.00.101 In
her Formal Offer of Documentary Exhibits, dated 7 July 1989, respondent stated that the purpose for
the presentation of the said deposit slip was to prove that she already paid her loan covered by PN
No. 34534.102 In her testimony before the RTC three years later, on 28 November 1991, she changed
her story. This time she narrated that the loan covered by PN No. 34534 was secured by her money
market placement with petitioner FNCB Finance, and when she failed to pay the said PN when it
became due, the security was applied to the loan, therefore, the loan was considered paid. 103Given
the foregoing, respondent's assertion of payment of PN No. 34534 is extremely dubious.

According to petitioner Citibank, the PNs in the second set, except for PN No. 34534, were mere
renewals of the unpaid PNs in the first set, which was why the PNs stated that they were for the
purpose of liquidating existing obligations. PN No. 34534, however, which was part of the first set,
was still valid and subsisting and so it was included in the second set without need for its renewal,
and it still being the original PN for that particular loan, its stated purpose was for personal
investment.104 Respondent essentially admitted executing the second set of PNs, but they were only
meant to cover simulated loans. Mr. Tan supposedly convinced her that her pending loan application
with DBP would have a greater chance of being approved if they made it appear that respondent
urgently needed the money because petitioner Citibank was already demanding payment for her
simulated loans.

Respondent's defense of simulated loans to escape liability for the second set of PNs is truly a novel
one. It is regrettable, however, that she was unable to substantiate the same. Yet again,
1wphi 1

respondent's version of events is totally based on her own uncorroborated testimony. The notations
on the second set of PNs, that they were non-negotiable simulated notes, were admittedly made by
respondent herself and were, thus, self-serving. Equally self-serving was respondent's letter, written
on 7 October 1985, or more than six years after the execution of the second set of PNs, in which she
demanded return of the simulated or fictitious PNs, together with the letters relating thereto, which Mr.
Tan purportedly asked her to execute. Respondent further failed to present any proof of her alleged
loan application with the DBP, and of any circumstance or correspondence wherein the simulated or
fictitious PNs were indeed used for their supposed purpose.

In contrast, petitioner Citibank, as supported by the testimonies of its officers and available
documentation, consistently treated the said PNs as regular loans accepted, approved, and paid in
the ordinary course of its business.
The PNs executed by the respondent in favor of petitioner Citibank to cover her loans were duly-filled
out and signed, including the disclosure statement found at the back of the said PNs, in adherence to
the Central Bank requirement to disclose the full finance charges to a loan granted to borrowers.

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

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

Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan processor, was responsible for
booking respondent's loans. Booking the loans means recording it in the General Ledger. She
explained the procedure for booking loans, as follows: The account officer, in the Marketing
Department, deals directly with the clients who wish to borrow money from petitioner Citibank. The
Marketing Department will forward a loan booking checklist, together with the borrowing client's PNs
and other supporting documents, to the loan pre-processor, who will check whether the details in the
loan booking checklist are the same as those in the PNs. The documents are then sent to Signature
Control for verification of the client's signature in the PNs, after which, they are returned to the loan
pre-processor, to be forwarded finally to the loan processor. The loan processor shall book the loan in
the General Ledger, indicating therein the client name, loan amount, interest rate, maturity date, and
the corresponding PN number. Since she booked respondent's loans personally, Ms. Dondoyano
testified that she saw the original PNs. In 1986, Atty. Fernandez of petitioner Citibank requested her
to prepare an accounting of respondent's loans, which she did, and which was presented as Exhibit
"120" for the petitioners. The figures from the said exhibit were culled from the bookings in the
General Ledger, a fact which respondent's counsel was even willing to stipulate.107

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

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

Lastly, the exchange of letters between petitioner Citibank and respondent, as well as the letters sent
by other people working for respondent, had consistently recognized that respondent owed petitioner
Citibank money.

In consideration of the foregoing discussion, this Court finds that the preponderance of evidence
supports the existence of the respondent's loans, in the principal sum of P1,920,000.00, as of 5
September 1979. While it is well-settled that the term "preponderance of evidence" should not be
wholly dependent on the number of witnesses, there are certain instances when the number of
witnesses become the determining factor

The preponderance of evidence may be determined, under certain conditions, by the number of
witnesses testifying to a particular fact or state of facts. For instance, one or two witnesses may
testify to a given state of facts, and six or seven witnesses of equal candor, fairness, intelligence,
and truthfulness, and equally well corroborated by all the remaining evidence, who have no greater
interest in the result of the suit, testify against such state of facts. Then the preponderance of
evidence is determined by the number of witnesses. (Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St.
Rep., 761.)112

Best evidence rule

This Court disagrees in the pronouncement made by the Court of Appeals summarily dismissing the
documentary evidence submitted by petitioners based on its broad and indiscriminate application of
the best evidence rule.

In general, the best evidence rule requires that the highest available degree of proof must be
produced. Accordingly, for documentary evidence, the contents of a document are best proved by the
production of the document itself,113 to the exclusion of any secondary or substitutionary evidence.114

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

SEC. 3. Original document must be produced; exceptions. When the subject of inquiry is the
contents of a document, no evidence shall be admissible other than the original document itself,
except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without
bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party against whom the
evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be
examined in court without great loss of time and the fact sought to be established from them
is only the general result of the whole; and

(d) When the original is a public record in the custody of a public officer or is recorded in a
public office.

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

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

Thus, when a document is presented to prove its existence or condition it is offered not as
documentary, but as real, evidence. Parol evidence of the fact of execution of the documents is
allowed (Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565). x x x 115

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

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

"Production of the original may be dispensed with, in the trial court's discretion, whenever in the
case in hand the opponent does not bona fide dispute the contents of the document and no other
useful purpose will be served by requiring production.24

"x x x x

"In several Canadian provinces, the principle of unavailability has been abandoned, for certain
documents in which ordinarily no real dispute arised. This measure is a sensible and progressive
one and deserves universal adoption (post, sec. 1233). Its essential feature is that a copy may be
used unconditionally, if the opponent has been given an opportunity to inspect it." (Emphasis
supplied.)

This Court did not violate the best evidence rule when it considered and weighed in evidence the
photocopies and microfilm copies of the PNs, MCs, and letters submitted by the petitioners to
establish the existence of respondent's loans. The terms or contents of these documents were never
the point of contention in the Petition at bar. It was respondent's position that the PNs in the first set
(with the exception of PN No. 34534) never existed, while the PNs in the second set (again, excluding
PN No. 34534) were merely executed to cover simulated loan transactions. As for the MCs
representing the proceeds of the loans, the respondent either denied receipt of certain MCs or
admitted receipt of the other MCs but for another purpose. Respondent further admitted the letters
she wrote personally or through her representatives to Mr. Tan of petitioner Citibank acknowledging
the loans, except that she claimed that these letters were just meant to keep up the ruse of the
simulated loans. Thus, respondent questioned the documents as to their existence or execution, or
when the former is admitted, as to the purpose for which the documents were executed, matters
which are, undoubtedly, external to the documents, and which had nothing to do with the contents
thereof.

Alternatively, even if it is granted that the best evidence rule should apply to the evidence presented
by petitioners regarding the existence of respondent's loans, it should be borne in mind that the rule
admits of the following exceptions under Rule 130, Section 5 of the revised Rules of Court

SEC. 5. When the original document is unavailable. When the original document has been lost or
destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and
the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by
a recital of its contents in some authentic document, or by the testimony of witnesses in the order
stated.

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

It was only petitioner FNCB Finance who claimed that they lost the original copies of the PNs when it
moved to a new office. Citibank did not make a similar contention; instead, it explained that the
original copies of the PNs were returned to the borrower upon liquidation of the loan, either through
payment or roll-over. Petitioner Citibank proffered the excuse that they were still looking for the
documents in their storage or warehouse to explain the delay and difficulty in the retrieval thereof, but
not their absence or loss. The original documents in this case, such as the MCs and letters, were
destroyed and, thus, unavailable for presentation before the RTC only on 7 October 1987, when a fire
broke out on the 7th floor of the office building of petitioner Citibank. There is no showing that the fire
was intentionally set. The fire destroyed relevant documents, not just of the present case, but also of
other cases, since the 7th floor housed the Control and Investigation Division, in charge of keeping the
necessary documents for cases in which petitioner Citibank was involved.

The foregoing would have been sufficient to allow the presentation of photocopies or microfilm copies
of the PNs, MCs, and letters by the petitioners as secondary evidence to establish the existence of
respondent's loans, as an exception to the best evidence rule.

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

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

Besides, We find the declaration and conclusions of this Court in CA-G.R. CV No.
15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et al, promulgated
on 15 January 1990, asdisturbing taking into consideration the similarities of the fraud,
machinations, and deceits employed by the defendant-appellant Citibank and its Account Manager
Francisco Tan.
Worthy of note is the fact that Our declarations and conclusions against Citibank and the person of
Francisco Tan in CA-G.R. CV No. 15934 were affirmed in toto by the Highest Magistrate in
a Minute Resolution dated 22 August 1990 entitled Citibank, N.A., vs. Court of Appeals, G.R.
93350.

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

What this Court truly finds disturbing is the significance given by the Court of Appeals in its assailed
Decision to the Decision119 of its Third Division in CA-G.R. CV No. 15934 (or the Dy case), when there
is an absolute lack of legal basis for doing such.

Although petitioner Citibank and its officer, Mr. Tan, were also involved in the Dy case, that is about
the only connection between the Dy case and the one at bar. Not only did the Dy case tackle
transactions between parties other than the parties presently before this Court, but the transactions
are absolutely independent and unrelated to those in the instant Petition.

In the Dy case, Severino Chua Caedo managed to obtain loans from herein petitioner Citibank
amounting toP7,000,000.00, secured to the extent of P5,000,000.00 by a Third Party Real Estate
Mortgage of the properties of Caedo's aunt, Rosalind Dy. It turned out that Rosalind Dy and her
husband were unaware of the said loans and the mortgage of their properties. The transactions were
carried out exclusively between Caedo and Mr. Tan of petitioner Citibank. The RTC found Mr. Tan
guilty of fraud for his participation in the questionable transactions, essentially because he allowed
Caedo to take out the signature cards, when these should have been signed by the Dy spouses
personally before him. Although the Dy spouses' signatures in the PNs and Third Party Real Estate
Mortgage were forged, they were approved by the signature verifier since the signature cards against
which they were compared to were also forged. Neither the RTC nor the Court of Appeals, however,
categorically declared Mr. Tan personally responsible for the forgeries, which, in the narration of the
facts, were more likely committed by Caedo.

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

While the Court of Appeals can take judicial notice of the Decision of its Third Division in the Dy case,
it should not have given the said case much weight when it rendered the assailed Decision, since the
former does not constitute a precedent. The Court of Appeals, in the challenged Decision, did not
apply any legal argument or principle established in the Dy case but, rather, adopted the findings
therein of wrongdoing or misconduct on the part of herein petitioner Citibank and Mr. Tan. Any finding
of wrongdoing or misconduct as against herein petitioners should be made based on the factual
background and pieces of evidence submitted in this case, not those in another case.

It is apparent that the Court of Appeals took judicial notice of the Dy case not as a legal precedent for
the present case, but rather as evidence of similar acts committed by petitioner Citibank and Mr. Tan.
A basic rule of evidence, however, states that, "Evidence that one did or did not do a certain thing at
one time is not admissible to prove that he did or did not do the same or similar thing at another time;
but it may be received to prove a specific intent or knowledge, identity, plan, system, scheme, habit,
custom or usage, and the like."120The rationale for the rule is explained thus

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

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

IV

The liquidation of respondent's outstanding loans were valid in so far as petitioner Citibank
used respondent's savings account with the bank and her money market placements with
petitioner FNCB Finance; but illegal and void in so far as petitioner Citibank used
respondent's dollar accounts with Citibank-Geneva.

Savings Account with petitioner Citibank

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


Code provides

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

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

(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;

(2) That both debts consist in a sum of money, or if the things due are consumable, they be
of the same kind, and also of the same quality if the latter has been stated;

(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.

There is little controversy when it comes to the right of petitioner Citibank to compensate respondent's
outstanding loans with her deposit account. As already found by this Court, petitioner Citibank was
the creditor of respondent for her outstanding loans. At the same time, respondent was the creditor of
petitioner Citibank, as far as her deposit account was concerned, since bank deposits, whether fixed,
savings, or current, should be considered as simple loan or mutuum by the depositor to the banking
institution.122 Both debts consist in sums of money. By June 1979, all of respondent's PNs in the
second set had matured and became demandable, while respondent's savings account was
demandable anytime. Neither was there any retention or controversy over the PNs and the deposit
account commenced by a third person and communicated in due time to the debtor concerned.
Compensation takes place by operation of law,123 therefore, even in the absence of an expressed
authority from respondent, petitioner Citibank had the right to effect, on 25 June 1979, the partial
compensation or off-set of respondent's outstanding loans with her deposit account, amounting
to P31,079.14.

Money market placements with FNCB Finance

Things though are not as simple and as straightforward as regards to the money market placements
and bank account used by petitioner Citibank to complete the compensation or off-set of respondent's
outstanding loans, which came from persons other than petitioner Citibank.

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

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

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

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

Moreover, the Deeds of Assignment of the money market placements with petitioner FNCB Finance
were notarized documents, thus, admissible in evidence. Rule 132, Section 30 of the Rules of Court
provides that

SEC. 30. Proof of notarial documents. Every instrument duly acknowledged or proved and
certified as provided by law, may be presented in evidence without further proof, the certificate of
acknowledgement being prima facie evidence of the execution of the instrument or document
involved.

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

The rule on the evidentiary weight that must be accorded a notarized document is clear and
unambiguous. The certificate of acknowledgement in the notarized Deeds of Assignment
constituted prima facie evidence of the execution thereof. Thus, the burden of refuting this
presumption fell on respondent. She could have presented evidence of any defect or irregularity in
the execution of the said documents125 or raised questions as to the verity of the notary public's
acknowledgment and certificate in the Deeds.126 But again, respondent admitted executing the Deeds
of Assignment, dated 2 March 1978 and 9 March 1978, although claiming that the loans for which
they were executed as security were already paid. And, she assailed the Deeds of Assignment, dated
25 August 1978, with nothing more than her bare denial of execution thereof, hardly the clear and
convincing evidence required to trounce the presumption of due execution of a notarized document.

Petitioners not only presented the notarized Deeds of Assignment, but even secured certified literal
copies thereof from the National Archives.127 Mr. Renato Medua, an archivist, working at the Records
Management and Archives Office of the National Library, testified that the copies of the Deeds
presented before the RTC were certified literal copies of those contained in the Notarial Registries of
the notary publics concerned, which were already in the possession of the National Archives. He also
explained that he could not bring to the RTC the Notarial Registries containing the original copies of
the Deeds of Assignment, because the Department of Justice (DOJ) Circular No. 97, dated 8
November 1968, prohibits the bringing of original documents to the courts to prevent the loss of
irreplaceable and priceless documents.128

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

The ASSIGNOR and the ASSIGNEE hereby further agree as follows:

xxxx

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

xxxx
5. This Assignment shall be considered as sufficient authority to FNCB Finance to pay and
deliver the PLACEMENT or so much thereof as may be necessary to liquidate the
OBLIGATIONS, to the ASSIGNEE in accordance with terms and provisions hereof. 130

Petitioner Citibank was only acting upon the authority granted to it under the foregoing Deeds when it
finally used the proceeds of PNs No. 20138 and 20139, paid by petitioner FNCB Finance, to partly
pay for respondent's outstanding loans. Strictly speaking, it did not effect a legal compensation or off-
set under Article 1278 of the Civil Code, but rather, it partly extinguished respondent's obligations
through the application of the security given by the respondent for her loans. Although the pertinent
documents were entitled Deeds of Assignment, they were, in reality, more of a pledge by respondent
to petitioner Citibank of her credit due from petitioner FNCB Finance by virtue of her money market
placements with the latter. According to Article 2118 of the Civil Code

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

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

Dollar accounts with Citibank-Geneva

Despite the legal compensation of respondent's savings account and the total application of the
proceeds of PNs No. 20138 and 20139 to respondent's outstanding loans, there still remained a
balance of P1,069,847.40. Petitioner Citibank then proceeded to applying respondent's dollar
accounts with Citibank-Geneva against her remaining loan balance, pursuant to a Declaration of
Pledge supposedly executed by respondent in its favor.

Certain principles of private international law should be considered herein because the property
pledged was in the possession of an entity in a foreign country, namely, Citibank-Geneva. In the
absence of any allegation and evidence presented by petitioners of the specific rules and laws
governing the constitution of a pledge in Geneva, Switzerland, they will be presumed to be the same
as Philippine local or domestic laws; this is known as processual presumption.131

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

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

Second, petitioner Citibank was unable to establish the date when the Declaration of Pledge was
actually executed. The photocopy of the Declaration of Pledge submitted by petitioner Citibank before
the RTC was undated.132 It presented only a photocopy of the pledge because it already forwarded
the original copy thereof to Citibank-Geneva when it requested for the remittance of respondent's
dollar accounts pursuant thereto. Respondent, on the other hand, was able to secure a copy of the
Declaration of Pledge, certified by an officer of Citibank-Geneva, which bore the date 24 September
1979.133 Respondent, however, presented her passport and plane tickets to prove that she was out of
the country on the said date and could not have signed the pledge. Petitioner Citibank insisted that
the pledge was signed before 24 September 1979, but could not provide an explanation as to how
and why the said date was written on the pledge. Although Mr. Tan testified that the Declaration of
Pledge was signed by respondent personally before him, he could not give the exact date when the
said signing took place. It is important to note that the copy of the Declaration of Pledge submitted by
the respondent to the RTC was certified by an officer of Citibank-Geneva, which had possession of
the original copy of the pledge. It is dated 24 September 1979, and this Court shall abide by the
presumption that the written document is truly dated.134 Since it is undeniable that respondent was out
of the country on 24 September 1979, then she could not have executed the pledge on the said date.

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

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

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

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

Basic is the rule of evidence that when the subject of inquiry is the contents of a document, no
evidence is admissible other than the original document itself except in the instances mentioned in
Section 3, Rule 130 of the Revised Rules of Court. Mere photocopies of documents are
inadmissible pursuant to the best evidence rule. This is especially true when the issue is that of
forgery.

As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing
evidence and the burden of proof lies on the party alleging forgery. The best evidence of a forged
signature in an instrument is the instrument itself reflecting the alleged forged signature. The fact of
forgery can only be established by a comparison between the alleged forged signature and the
authentic and genuine signature of the person whose signature is theorized upon to have been
forged. Without the original document containing the alleged forged signature, one cannot make a
definitive comparison which would establish forgery. A comparison based on a mere xerox copy or
reproduction of the document under controversy cannot produce reliable results.135
Respondent made several attempts to have the original copy of the pledge produced before the RTC
so as to have it examined by experts. Yet, despite several Orders by the RTC,136 petitioner Citibank
failed to comply with the production of the original Declaration of Pledge. It is admitted that Citibank-
Geneva had possession of the original copy of the pledge. While petitioner Citibank in Manila and its
branch in Geneva may be separate and distinct entities, they are still incontestably related, and
between petitioner Citibank and respondent, the former had more influence and resources to
convince Citibank-Geneva to return, albeit temporarily, the original Declaration of Pledge. Petitioner
Citibank did not present any evidence to convince this Court that it had exerted diligent efforts to
secure the original copy of the pledge, nor did it proffer the reason why Citibank-Geneva obstinately
refused to give it back, when such document would have been very vital to the case of petitioner
Citibank. There is thus no justification to allow the presentation of a mere photocopy of the
Declaration of Pledge in lieu of the original, and the photocopy of the pledge presented by petitioner
Citibank has nil probative value.137In addition, even if this Court cannot make a categorical finding that
respondent's signature on the original copy of the pledge was forged, it is persuaded that petitioner
Citibank willfully suppressed the presentation of the original document, and takes into consideration
the presumption that the evidence willfully suppressed would be adverse to petitioner Citibank if
produced.138

Without the Declaration of Pledge, petitioner Citibank had no authority to demand the remittance of
respondent's dollar accounts with Citibank-Geneva and to apply them to her outstanding loans. It
cannot effect legal compensation under Article 1278 of the Civil Code since, petitioner Citibank itself
admitted that Citibank-Geneva is a distinct and separate entity. As for the dollar accounts, respondent
was the creditor and Citibank-Geneva is the debtor; and as for the outstanding loans, petitioner
Citibank was the creditor and respondent was the debtor. The parties in these transactions were
evidently not the principal creditor of each other.

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

The parties shall be liable for interests on their monetary obligations to each other, as
determined herein.

In summary, petitioner Citibank is ordered by this Court to pay respondent the proceeds of her money
market placements, represented by PNs No. 23356 and 23357, amounting to P318,897.34
and P203,150.00, respectively, earning an interest of 14.5% per annum as stipulated in the
PNs,139 beginning 17 March 1977, the date of the placements.

Petitioner Citibank is also ordered to refund to respondent the amount of US$149,632.99, or its
equivalent in Philippine currency, which had been remitted from her Citibank-Geneva accounts.
These dollar accounts, consisting of two fiduciary placements and current accounts with Citibank-
Geneva shall continue earning their respective stipulated interests from 26 October 1979, the date of
their remittance by Citibank-Geneva to petitioner Citibank in Manila and applied against respondent's
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 respondent's dollar accounts from Citibank-Geneva is deemed
illegal, null and void, and, thus, ineffective.

VI

Petitioner Citibank shall be liable for damages to respondent.

Petitioners protest the award by the Court of Appeals of moral damages, exemplary damages, and
attorney's fees in favor of respondent. They argued that the RTC did not award any damages, and
respondent, in her appeal before the Court of Appeals, did not raise in issue the absence of such.

While it is true that the general rule is that only errors which have been stated in the assignment of
errors and properly argued in the brief shall be considered, this Court has also recognized exceptions
to the general rule, wherein it authorized the review of matters, even those not assigned as errors in
the appeal, if the consideration thereof is necessary in arriving at a just decision of the case, and
there is a close inter-relation between the omitted assignment of error and those actually assigned
and discussed by the appellant.140 Thus, the Court of Appeals did not err in awarding the damages
when it already made findings that would justify and support the said award.

Although this Court appreciates the right of petitioner Citibank to effect legal compensation of
respondent's local deposits, as well as its right to the proceeds of PNs No. 20138 and 20139 by virtue
of the notarized Deeds of Assignment, to partly extinguish respondent's outstanding loans, it finds
that petitioner Citibank did commit wrong when it failed to pay and properly account for the proceeds
of respondent's money market placements, evidenced by PNs No. 23356 and 23357, and when it
sought the remittance of respondent's dollar accounts from Citibank-Geneva by virtue of a highly-
suspect Declaration of Pledge to be applied to the remaining balance of respondent's outstanding
loans. It bears to emphasize that banking is impressed with public interest and its fiduciary character
requires high standards of integrity and performance.141 A bank is under the obligation to treat the
accounts of its depositors with meticulous care whether such accounts consist only of a few hundred
pesos or of millions of pesos.142 The bank must record every single transaction accurately, down to
the last centavo, and as promptly as possible.143 Petitioner Citibank evidently failed to exercise the
required degree of care and transparency in its transactions with respondent, thus, resulting in the
wrongful deprivation of her property.

Respondent had been deprived of substantial amounts of her investments and deposits for more than
two decades. During this span of years, respondent had found herself in desperate need of the
amounts wrongfully withheld from her. In her testimony144 before the RTC, respondent narrated

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

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

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


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

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

A Yes sir.

Q What are those?

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

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

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

Q Where?

A In Dagupan City, Pangasinan.

Q What else?

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

Q What happened to your businesses you mentioned as a result of your failure to recover you [sic]
investments and bank deposits from the defendants?

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

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

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

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

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

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

A Yes sir, definitely.

Q How?

A I was embarrassed because being a businesswoman I would like to inform the Honorable Court
that I was awarded as the most outstanding businesswoman of the year in 1976 but when this
money was not given back to me I was not able to comply with the commitments that I have
promised to these associations that I am engaged into [sic], sir.
For the mental anguish, serious anxiety, besmirched reputation, moral shock and social humiliation
suffered by the respondent, the award of moral damages is but proper. However, this Court reduces
the amount thereof toP300,000.00, for the award of moral damages is meant to compensate for the
actual injury suffered by the respondent, not to enrich her.145

Having failed to exercise more care and prudence than a private individual in its dealings with
respondent, petitioner Citibank should be liable for exemplary damages, in the amount
of P250,000.00, in accordance with Article 2229146 and 2234147 of the Civil Code.

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

In contrast, this Court finds no sufficient basis to award damages to petitioners. Respondent was
1wphi1

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

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

1. PNs No. 23356 and 23357 are DECLARED subsisting and outstanding. Petitioner Citibank
isORDERED to return to respondent the principal amounts of the said PNs, amounting to Three
Hundred Eighteen Thousand Eight Hundred Ninety-Seven Pesos and Thirty-Four Centavos
(P318,897.34) and Two Hundred Three Thousand One Hundred Fifty Pesos (P203,150.00),
respectively, plus the stipulated interest of Fourteen and a half percent (14.5%) per annum,
beginning 17 March 1977;

2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US Dollars and
Ninety-Nine Cents (US$149,632.99) from respondent's Citibank-Geneva accounts to petitioner
Citibank in Manila, and the application of the same against respondent's outstanding loans with the
latter, is DECLAREDillegal, 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 attorney's 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.
Panganiban, C.J. (Chairperson), Ynares-Santiago, Austria-Martinez, and Callejo, Sr., JJ., concur.

Footnotes
1
Rollo, pp. 165-325.
2
Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Conrado M. Vasquez,
Jr. and Amelita G. Tolentino, concurring; id. at 327-366.
3
Id. at 368-374.
4
TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.
5
Records, Vol. I, pp. 1-8.
6
Id. at 148-157.
7
Id. at 40-51.
8
Id. at 208-227.
9
Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes, Records, Vol. I, p. 346.
10
Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 1607-1621.
11
Civil Case No. 11336 was raffled and re-reffled to four different Judges of the Makati RTC before
it was finally resolved. It was originally raffled to Makati RTC, Branch 140, presided by Judge
Ansberto P. Paredes. On 4 February 1987, before the termination of the re-direct examination of
herein respondent (plaintiff before the RTC), the case was transferred to Makati RTC, Branch 57,
presided by Judge Francisco X. Velez, for reasons not disclosed in the Records. Judge Velez was
able to try and hear the case until the presentation of the evidence by herein petitioners
(defendants before the RTC). Respondent again took the stand to present rebuttal evidence, but
even before she could finish her testimony, Judge Velez inhibited himself upon petitioners' motion
(Order, dated 10 April 1992, penned by Judge Francisco X. Velez, Records, Vol. 11, p. 1085). The
case was transferred to Makati RTC, Branch 141, presided by Judge Marcelino F. Bautista, Jr. For
reasons not disclosed in the Records, Judge Manuel D. Victorio took over Makati RTC, Branch
141. After the parties submitted their respective Memoranda, Judge Victorio declared the case
submitted for decision (Order, dated 9 December 1994, penned by Judge Manuel D. Victorio,
Records, Vol. III, p. 1602). Judge Victorio rendered his Decision in Civil Case No. 11336 on 24
August 1995 (Records, Vol. III, pp. 1607-1621).
12
Rollo, pp. 365-366.
13
Rollo of G.R. No. 152985, pp. 3-4.
14
The filing of a motion for extension does not automatically suspend the running of the period for
appeal, since the purpose of such motion is to merely ask the court to grant an enlargement of the
time fixed by law. The movant, therefore, has no right to assume that his motion would be granted,
and should check with the court as to the outcome of his motion, so that if the same is denied, he
can still perfect his appeal. (Hon. Bello and Ferrer v. Fernando, 114 Phil. 101, 104 [1962].)
15
Rollo of G.R. No. 156132, p. 1227.
16
Rollo, p. 374.
17
Resolution, dated 29 January 2003; rollo, pp. 980-A-B.
18
Resolution, dated 23 June 2003; id. at 1311-1312.
19
Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137 Phil. 239, 244 (1969);
Singhv. Liberty Insurance Corp., 118 Phil. 532, 535 (1963).
20
Rollo, pp. 1443-1445.
21
See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438 [1976]) wherein this Court
pronounced that a party's right to appeal shall not be affected by the perfection of another appeal
from the same decision; otherwise, it would lead to the absurd proposition that one party may be
deprived of the right to appeal from the portion of a decision against him just because the other
party who had been notified of the decision ahead had already perfected his appeal in so far as the
said decision adversely affects him. If the perfection of an appeal by one party would not bar the
right of the other party to appeal from the same decision, then an unperfected appeal, as in the
case at bar, would have far less effect.
22
The Executive Secretary v. Gordon, 359 Phil. 266, 271 (1998).
23
Young v. John Keng Seng, 446 Phil. 823, 833 (2003).
24
Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283 (1998).
25
The Court of Appeals modified the trial court's findings and conclusions, as follows: (1) By
declaring theP1,069,847.40 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," plaintiff's folder of exhibits, pp. 4-15.
52
Records, Vol. III, p. 1,562.
53
Exhibit "J," plaintiff's folder of exhibits, p. 49.
54
Exhibit "120-H," defendants' folder of exhibits, pp. 131.
55
Exhibits "1" to "9," id. at 44-52.
56
Exhibits "18" to "26," id. at 83-92.
57
Exhibit "13-E," id. at 65-67.
58
Exhibit "14-G," id. at 72-74.
59
Exhibit "15" and "Exhibit 17-D," id. at 77-78, 81-82.
60
Exhibit "38," id. at 109-110.
61
Exhibit "K-1," plaintiff's folder of exhibits, pp. 54-55
62
Exhibit "27," defendants' folder of exhibits, p. 93.
63
Exhibit "28," id. at 94.
64
Exhibit "29," id. at 95.
65
Exhibit "30," id. at 96.
66
Exhibit "31," id. at 97.
67
Exhibit "32," id. at 98.
68
Exhibits "34-B" and "34-C," id. at 102-103.
69
Exhibit "34," id. at 100.
70
Exhibit "121," id. at 207.
71
TSN, 14 May 1991, Vol. XI , pp. 12-14.
72
TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 28-29.
73
Exhibit "QQQ," plaintiff's folder of exhibits, p. 117.
74
Exhibit "AAAA," id. at 124.
75
TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.
76
Id. at 16-23.
77
TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-28.
78
Sarmiento v. Court of Appeals, 364 Phil. 613, 621 (1999).
79
Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538, 553 (2000), with reference
to Tan v. Court of Appeals, 239 Phil. 310, 322 (1994).
80
Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218 SCRA 682, 695.
81
403 Phil. 361, 383 (2001).
82
Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA 799, 311-312.
83
Revised Rules of Court, Rule 131, Section 3(p).
84
Id., Rule 131, Section 3(q).
85
Id., Section 3.
86
Exhibit "19," defendants' folder of exhibits, p. 84.
87
Exhibits "9-D" and "9-G," id. at 52.
88
Exhibit "9-F," id. at 52.
89
TSN, 19 May 1986, Vol. II, p. 10.
90
Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA 465, 469-471.
91
Banco de Oro Savings and Mortgage Bank v Equitable Banking Corporation, G.R. No. 74917, 20
January 1988, 157 SCRA 188, 199.
92
Negotiable Instruments Law, Section 66, in connection with Section 65.
93
Associated Bank v. Court of Appeals, 322 Phil. 677, 697 (1996); Associated Bank v. Court of
Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA 465, 472.
94
Plaintiff's Formal Offer of Documentary Exhibits, records, Vol. I, pp. 504-505; plaintiff's folder of
exhibits, p. 110.
95
Exhibits "GGG" and "JJJ," plaintiff's folder of exhibits, pp. 109, 113.
96
Plaintiff's folder of exhibits, p. 110.
97
See the initials on Exhibit "III-1," plaintiff's folder of exhibits, p. 112.
98
Plaintiff's folder of exhibits, p. 112.
99
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
100
G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.
101
Exhibit "MMM," plaintiff's folder of exhibits, p. 115.
102
Records, Vol. I, p. 507.
103
TSN, 28 November 1991, Vol. XIII, pp. 7-8.
104
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.
105
TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 13-16.
106
TSN, 22 May 1990, Vol. V, pp. 31-61.
107
TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol X, pp. 7-9.
108
TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp. 31-34.
109
TSN, 18 April 1991, Vol. X, pp. 3-13.
110
Id. at 15-23.
111
Folder of defendants' exhibits, pp. 102-103.
112
Municipality of Moncada v. Cajuigan, 21 Phil 184, 190 (1912).
113
J.A.R. Sibal and J.N. Salazar, Jr., Compendium on Evidence 31 (4th ed., 1995).
114
F.D. Regalado, Remedial Law Compendium, Vol. II, p. 571 (8th ed., 2000).
115
F.D. Regalado, Remedial Law Compendium, Vol. II, 571 (8th ed., 2000).
116
G.R. Nos. 146710-15, 3 April 2001, 356 SCRA 108, 137-138.
117
TSN, 13 March 1991, Vol X, pp. 7-9.
118
TSN, 22 May 1990, Vol. V, pp. 14-17.
119
Dr. Ricardo L. Dy and Rosalind O. Dy vs. Citibank, N.A.,CA-G.R. CV No. 15934, 15 January
1990, penned by Associate Justice Nicolas P. Lapea, Jr. with Associate Justices Santiago M.
Kapunan and Emeterio C. Cui, concurring.
120
Revised Rules of Court, Rule 130, Section 34.
121
J.A.R. Sibal and J.N. Salazar, Jr., Compendium on Evidence 199-200 (4th ed., 1995).
122
Civil Code, Article 1980; Guingona, Jr. v. City Fiscal of Manila, 213 Phil. 516,523-524 (1984).
123
Civil Code, Article 1286.
124
G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313-314.
125
Anachuelo v. Intermediate Appellate Court, G.R. No. L-71391, 29 January 1987, 147 SCRA
434, 441-442.
126
Antillon v. Barcelon, 37 Phil. 148, 150-151 (1917).
127
See Exhibits "13-E, "14-G," "15-D,"and "17-D," defendants' folder of exhibits, pp. 65-67, 72-74,
77-78, 81-82.
128
TSN, 7 March 1991, Vol. IX, pp. 3-6.
129
Cuizon v. Court of Appeals, 329 Phil. 456, 482 (1996).
130
Exhibits "13-E, "14-G," "15-D," and "17-D," defendants' folder of exhibits, pp. 65-66, 72-73, 77-
78, 81-82.
131
Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396 (2000).
132
Exhibit "38," defendants' folder of exhibits, pp. 109-110.
133
Exhibit "K-1," plaintiff's folder of exhibits, 54-55.
134
Revised Rules of Court, Rule 131, Section 3(u).
135
Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763 (1998).
136
Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes, records, Vol. I, p. 310;
Order, dated 2 September 1988, id. at penned by Judge Francisco X. Velez, records, Vol. I, p. 449;
Order, dated 24 November 1988, penned by Judge Francisco X. Velez, records, Vol. I, p. 458;
Order, dated 25 April 1989, penned by Judge Francisco X. Velez, records, Vol. I, pp. 476-477
137
Security Bank & Trust Co. v. Triumph Lumber and Construction Corporation, 361 Phil. 463, 477
(1999).
138
Revised Rules of Court, Rule 131, Section 3(e).
139
The stipulated interest shall apply as indemnity for the damages incurred in the delay of
payment as provided in Article 2209 of the Civil Code which reads

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

Note, however, that the legal interest has been increased from six percent to twelve percent
per annum by virtue of Central Bank Circulars No. 416, dated 29 July 1974, and No. 905,
dated 10 December 1982.
140
Radio Communications of the Philippines, Inc. v. National Labor Relations Commission, G.R.
Nos. 101181-84, 22 June 1992, 210 SCRA 222, 226-227; Ortigas, Jr. v. Lufthansa German
Airlines, G.R. No. L-28773, 30 June 1975, 64 SCRA 610, 633-634; Hernandez v. Andal, 78 Phil.
196, 209-210 (1947).
141
The General Banking Law of 2000, Section 2.
142
Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948 (1999).
143
Simex International (Manila), Inc, vs. Court of Appeals, G.R. No. 88013, 19 March 1990, 183
SCRA 360, 367; Bank of Philippine Islands vs. Intermediate Appellate Court, G.R. No. 69162, 21
February 1992, 206 SCRA 408, 412-413.
144
TSN, 28 January 1986, Vol. I, pp. 5-7.
145
Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995 (1999); Zenith Insurance Corporation v. Court
of Appeals, G.R. No. 85296, 14 May 1990, 185 SCRA 398, 402-403.
146
Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages.
147
While the amount of exemplary damages need not be proved, the plaintiff must show that he is
entitled to moral, temperate or compensatory damages before the court may consider the question
of whether or not exemplary damages should be awarded. x x x
148
Civil Code, Article 2208(1).
149
Ching Sen Ben vs. Court of Appeals, 373 Phil. 544, 555 (1999).
150
ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 498, 531-532 (1999); Tierra
International Construction Corp. v. National Labor Relations Commission, G.R. No. 88912, 3 July
1992, 211 SCRA 73, 81; Saba v. Court of Appeals, G.R. No. 77950, 24 August 1990, 189 SCRA
50, 55.