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 Complaint 6 on 9
October 1985 to include additional claims to deposits and money market placements
inadvertently left out from her original Complaint.
In their joint 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 Decision 10 was finally
rendered in Civil Case No. 11336 on 24 August 1995 by the fourth Judge11who 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.

Citibank, Switzerland, in the amount of US$149,632.99, and ordering

defendant-appellant Citibank to refund the said amount to the plaintiffappellant 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 plaintiffappellant'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.;

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 Decision 12 affirming with
modification the RTC Decision in Civil Case No. 11336, dated 24 August 1995, and
ruling entirely in favor of respondent in this wise
Wherefore, premises considered, the assailed 24 August 1995 Decision of the
court a quo is hereby AFFIRMED with MODIFICATION, as follows:
1. Declaring as illegal, null and void the set-off effected by the
defendant-appellant Bank of the plaintiff-appellant's dollar deposit with

(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 to INFORM the parties that the judgment sought to be reviewed has
become final and executory.
The said Resolution was duly recorded in the Book of Entries of Judgments on 3
January 2003.
G.R. No. 156132

Meanwhile, petitioners filed with the Court of Appeals a Motion for Reconsideration of
its Decision in CA-G.R. CV No. 51930, dated 26 March 2002. Acting upon the said
Motion, the Court of Appeals issued the Resolution, 16dated 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 denied 17 by
this Court for failure of the petitioners to attach thereto a Certification against Forum
Shopping. However, upon petitioners' Motion and compliance with the requirements,
this Court 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.
I
The Resolution of this Court, dated 13 November 2002, in G.R. No. 152985,
declaring the Decision of the Court of Appeals, dated 26 March 2002, final and
executory, pertains to respondent Sabeniano alone.
Before proceeding to a discussion of the merits of the instant Petition, this Court
wishes to address first the argument, persistently advanced by respondent in her
pleadings on record, as well as her numerous personal and unofficial letters to this
Court which were no longer made part of the record, that the Decision of the Court of
Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, had already become final
and executory by virtue of the Resolution of this Court in G.R. No. 152985, dated 13
November 2002.
G.R. No. 152985 was the docket number assigned by this Court to 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 the Decision of the Court
of Appeals has become final and executory. More precisely,
the Decision became final and executory only with regard to Sabeniano in
view of her failure to file a petition for review within the extended period
granted by the Court, and not to Citibank and FNCB Finance whose Petition
for Reviewwas duly reinstated and is now submitted for decision.
Accordingly, the instant Urgent Motion is hereby DENIED. (Emphasis
supplied.)
To sustain the argument of respondent would result in an unjust and incongruous
situation wherein one party may frustrate the efforts of the opposing party to appeal
the case by merely filing with this Court a Motion for Extension of Time to File a
Petition for Review, ahead of the opposing party, then not actually filing the intended
Petition.21The 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 noncompliance 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.

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

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").

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 (PN) No.
23356 (which cancels and supersedes PN
No. 22526), earning 14.5% interest per
annum (p.a.)

P 318,897.34

Money market placement with Citibank,

evidenced by PN No. 23357 (which cancels
and supersedes PN No. 22528), earning
14.5% interest p.a.

P 203,150.00

Money market placement with FNCB

Finance, evidenced by PN No. 5757 (which
cancels and supersedes PN No. 4952),

P 500,000.00

deposit (TD) accounts with petitioner Citibank, namely, TD Accounts No. 17783
and 17784.

earning 17% interest p.a.

Money market placement with FNCB
Finance, evidenced by PN No. 5758 (which
cancels and supersedes PN No. 2962),
earning 17% interest p.a.

P 500,000.00

Petitioner Citibank did not deny the existence nor questioned the authenticity
of PNs No. 23356 and 23357 it issued in favor of respondent for her money
market placements. In fact, it admitted the genuineness and due execution of
the said PNs, but qualified that they were no longer outstanding. 31 In Hibberd v.
Rohde and McMillian,32 this Court delineated the consequences of such an
admission

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,
Date
(mm/dd/yyyy)

PN No.

Cancels PN No.

Maturity Date
(mm/dd/yyyy)

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%

22528

21686

03/16/1977

200,000.00

15-3/4%

23356

22526

04/20/1977

318,897.34

14-1/2%

23357

22528

04/20/1977

203,150.00

14-1/2%

02/09/1977

03/17/1977

Amount
(P)

Interest
(p.a.)

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
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

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:

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?

Yes, your Honor, that is why your Honor.

A She funded it directly.
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?

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?

A With First National Citibank.

Mr. Tan : Yes, Sir.
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?

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"?

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.

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 of P1,100,000.00, were supposed to mature on 15 March
1978. However, respondent, through a letter dated 28 April 1977,40 preterminated the said TD accounts and transferred all the proceeds thereof to
petitioner FNCB Finance for money market placement. Pursuant to her
instructions, TD Accounts No. 17783 and 17784 were pre-terminated and
petitioner Citibank (then still named First National City Bank) issued 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
(mm/dd/yyyy)
04/29/1977

06/02/1977

08/31/1977

PN No.

Cancels PN No.

Maturity Date
(mm/dd/yyyy)

Amount
(P)

Interest
(p.a.)

4952

None

06/01/1977

500,000.00

17%

4962

None

06/01/1977

600,000.00

17%

5757

4952

08/31/1977

500,000.00

17%

5758

4962

08/31/1977

500,000.00

17%

8167

5757

08/25/1978

500,000.00

14%

8169

5752

08/25/1978

500,000.00

14%

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 rolledover 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. 8169 46 also
explicitly canceled and superseded PN No. 5758. Thus, it is patently erroneous for the
Court of Appeals to still award to respondent the principal amounts and interests
covered by PNs No. 5757 and 5758 when these were already canceled and
superseded. It is now incumbent upon this Court to determine what subsequently
happened to PNs No. 8167 and 8169.
Petitioner FNCB Finance presented four checks as proof of payment of the principal
amounts and interests of PNs No. 8167 and 8169 upon their maturity. All the checks
were payable to respondent's savings account with petitioner Citibank, with the
following details

Date of
Issuance
(mm/dd/yyyy)

Check
No.

Amount
(P)

Notation

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.

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

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

- US$

41.17

US$

115'317.33

Total proceeds on 25.10.1979

US$

145'561.39

Total proceeds of both placements on

25.10.1979

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.

+ US$

11'381.31

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

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 CitibankGeneva, 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.--

+ US$

339.06

- US$

95.--

Principal Fid. Placement

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

Commission

total of both current accounts

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

33798

10/19/1978

11/03/1978

100,000.00

10/19/1978

226285

Petitioner Citibank was able to establish by preponderance of evidence the

existence of respondent's loans.

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

Petitioners' version of events

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

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)
Total

1,102,944.78
P 2,156,940.58

Date of
Maturity
(mm/dd/yyyy)

Principal
Amount

32935

07/20/1978

09/18/1978

P 400,000.00

33751

10/13/1978

12/12/1978

100,000.00

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

Date of Maturity
(mm/dd/yyyy)

Principal Am

34510

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
Issuance
(mm/dd/yyyy)

P 1,920,000.00

PN No.

According to petitioner Citibank, respondent incurred her loans under the

circumstances narrated below.

PN No.

Total

Date of Release
(mm/dd/yyyy)

MC No.

07/20/1978

220701

Unrecovered

01/01/1979

03/02/1979

P 400

34509

01/02/1979

03/02/1979

100

34534

01/09/1979

03/09/1979

150

34612

01/19/1979

03/16/1979

150

34741

01/26/1979

03/12/1979

35689

02/23/1979

05/29/1979

35694

03/19/1979

05/29/1979

35695

03/19/1979

05/29/1979

356946

03/20/1979

05/29/1979

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

35697

03/30/1979

05/29/1979

Total
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 of P500,000.00. When PNs No. 8167 and 8169, representing respondent's
money market placements with petitioner FNCB Finance, matured and were rolledover to PNs No. 20138 and 20139, respondent executed new Deeds of

Despite our repeated requests and follow-up, we regret you have not granted
us with any response or payment.
P 1,920,000.00
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.

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.

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

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.

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.

On even date, respondent sent another letter 67 to Mr. Tan of petitioner Citibank, stating
that
Re: S/A No. 25-225928
and C/A No. 484-946
This letter serves as an authority to debit whatever the outstanding balance
from my captioned accounts and credit the amount to my loan outstanding
account with you.
Unlike respondent's earlier letters, both letters, dated 21 June 1979, are printed on
plain paper, without the letterhead of her company, MC Adore International Palace.
By 5 September 1979, respondent's outstanding and past due obligations to petitioner
Citibank totaled P2,123,843.20, representing the principal amounts plus interests.
Relying on respondent's Deeds of Assignment, petitioner Citibank applied the
proceeds of respondent's money market placements with petitioner FNCB Finance, as
well as her deposit account with petitioner Citibank, to partly liquidate respondent's
outstanding loan balance,68 as follows
Respondent's outstanding obligation (principal and interest)

P2,123,843.20

Less: Proceeds from respondent's money market placements

with petitioner FNCB Finance (principal and interest)

(1,022,916.66)

Deposits in respondent's bank accounts with petitioner

Citibank
Balance of respondent's obligation

(31,079.14)
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 7th floor of petitioner Citibank's
building at Paseo de Roxas St., Makati, Metro Manila. Petitioners submitted a
Certification70 to this effect, dated 17 January 1991, issued by the Chief of the Arson
Investigation Section, Fire District III, Makati Fire Station, Metropolitan Police Force.
The 7thfloor 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.

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."

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

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

Findings of this Court as to the existence of the loans

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.

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

[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."

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

Neither can this Court give credence to respondent's contention that the notations on
the MCs, stating that they were the proceeds of particular PNs, were not there when
she received the checks and that the notations appeared to be written by a typewriter
different from that used to write the other information on the checks. Once more,
respondent's allegations were uncorroborated by any other evidence. Her and her
counsel's observation that the notations on the MCs appear to be written by a
typewriter different from that used to write the other information on the checks hardly
convinces this Court considering that it constitutes a mere opinion on the appearance
of the notation by a witness who does not possess the necessary expertise on the
matter. In addition, the notations on the MCs were written using both capital and small
letters, while the other information on the checks were written using capital letters only,
such difference could easily confuse an untrained eye and lead to a hasty conclusion
that they were written by different typewriters.
Respondent's testimony, that based on her experience transacting with banks, the
MCs were not supposed to include notations on the purpose for which the checks
were issued, also deserves scant consideration. While respondent may have
extensive experience dealing with banks, it still does not qualify her as a competent
witness on banking procedures and practices. Her testimony on this matter is even
belied by the fact that the other MCs issued by petitioner Citibank (when it was still
named First National City Bank) and by petitioner FNCB Finance, the existence and
validity of which were not disputed by respondent, also bear similar notations that state
the reason for which they were issued.
Respondent presented several more pieces of evidence to substantiate her claim that
she received MCs No. 226285, 226439, 226467, 226057, 228357, and 228400, not as
proceeds of her loans from petitioner Citibank, but as the return of the principal
amounts and payment of interests from her money market placements with petitioners.
Part of respondent's exhibits were personal checks95 drawn by respondent on her
account with Feati Bank & Trust Co., which she allegedly invested in separate money
market placements with both petitioners, the returns from which were paid to her via
MCs No. 226285 and 228400. Yet, to this Court, the personal checks only managed to
establish respondent's issuance thereof, but there was nothing on the face of the
checks that would reveal the purpose for which they were issued and that they were
actually invested in money market placements as respondent claimed.
Respondent further submitted handwritten notes that purportedly computed and
presented the returns on her money market placements, corresponding to the amount
stated in the MCs she received from petitioner Citibank. Exhibit "HHH-1"96 was a
handwritten note, which respondent attributed to Mr. Tan of petitioner Citibank,
showing the breakdown of her BPI Check for 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.97 Second, according to Provisional Receipt No. 12724, BPI
Check No. 120989 for P500,000.00 was supposed to be invested in three money
market placements with petitioner Citibank for the period of 60 days. Since all these
money market placements were made through one check deposited on the same day,
10 November 1978, it made no sense that the handwritten note at the back of
Provisional Receipt No. 12724 provided for different dates of maturity for each of the
money market placements (i.e., 16 November 1978, 17 January 1979, and 21
November 1978), and such dates did not correspond to the 60 day placement period
stated on the face of the provisional receipt. And third, the principal amounts of the
money market placements as stated in the handwritten note
P145,000.00, P145,000.00 and P242,000.00 totaled P532,000.00, and was
obviously in excess of the P500,000.00 acknowledged on the face of Provisional
Receipt No. 12724.
Exhibits "III" and "III-1," the front and bank pages of a handwritten note of Mr. Bobby
Mendoza of petitioner FNCB Finance,98 also did not deserve much evidentiary weight,
and this Court cannot rely on the truth and accuracy of the computations presented
therein. Mr. Mendoza was not presented as a witness during the trial before the RTC,
so that the document was not properly authenticated nor its contents sufficiently
explained. No one was able to competently identify whether the initials as appearing
on the note were actually Mr. 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
and P500,000.00, 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:

does not discharge the obligation under a judgment. The obligation is not
extinguished and remains suspended until the payment by commercial
document is actually realized (Art. 1249, Civil Code, par. 3).
In the case at bar, the issuance of an official receipt by petitioner Citibank would have
been dependent on whether the checks delivered by respondent were actually cleared
and paid for by the drawee banks.
As for PN No. 34534, respondent asserted payment thereof at two separate instances
by two different means. In her formal offer of exhibits, respondent submitted a deposit
slip of petitioner Citibank, dated 11 August 1978, evidencing the deposit of BPI Check
No. 5785 for P150,000.00.101 In her Formal Offer of Documentary Exhibits, dated 7 July
1989, respondent stated that the purpose for the presentation of the said deposit slip
was to prove that she already paid her loan covered by PN No. 34534. 102 In her
testimony before the RTC three years later, on 28 November 1991, she changed her
story. This time she narrated that the loan covered by PN No. 34534 was secured by
her money market placement with petitioner FNCB Finance, and when she failed to
pay the said PN when it became due, the security was applied to the loan, therefore,
the loan was considered paid.103 Given the foregoing, 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, 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
1wphi1

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

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.

(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;

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

(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

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;

(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

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

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.

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

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

whether the nine (9) Promissory Notes were indeed executed with
considerations, the doubts, coupled by the findings and conclusions of this
Court in CA-G.R. CV No. 15934 and the Supreme Court in G.R. No. 93350.
should be construed against herein defendants-appellants Citibank and FNCB
Finance.
What this Court truly finds disturbing is the significance given by the Court of Appeals
in its assailed Decision to the Decision119 of its Third Division in CA-G.R. CV No. 15934
(or the Dy case), when there is an absolute lack of legal basis for doing such.
Although petitioner Citibank and its officer, Mr. Tan, were also involved in the Dy case,
that is about the only connection between the Dy case and the one at bar. Not only did
the Dy case tackle transactions between parties other than the parties presently before
this Court, but the transactions are absolutely independent and unrelated to those in
the instant Petition.
In the Dy case, Severino Chua Caedo managed to obtain loans from herein petitioner
Citibank amounting to P7,000,000.00, 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."120 The rationale for the rule is explained thus
The rule is founded upon reason, public policy, justice and judicial
convenience. The fact that a person has committed the same or similar acts at
some prior time affords, as a general rule, no logical guaranty that he
committed the act in question. This is so because, subjectively, a man's mind
and even his modes of life may change; and, objectively, the conditions under
which he may find himself at a given time may likewise change and thus
induce him to act in a different way. Besides, if evidence of similar acts are to
be invariably admitted, they will give rise to a multiplicity of collateral issues
and will subject the defendant to surprise as well as confuse the court and
prolong the trial.121
The factual backgrounds of the two cases are so different and unrelated that the Dy
case cannot be used to prove specific intent, knowledge, identity, plan, system,
scheme, habit, custom or usage on the part of petitioner Citibank or its officer, Mr. Tan,
to defraud respondent in the present case.
IV
The liquidation of respondent's outstanding loans were valid in so far as
petitioner Citibank used respondent's savings account with the bank and her
money market placements with petitioner FNCB Finance; but illegal and void in
so far as petitioner Citibank used respondent's dollar accounts with CitibankGeneva.

Savings Account with petitioner Citibank

Money market placements with FNCB Finance

Compensation is a recognized mode of extinguishing obligations. Relevant provisions

of the Civil Code provides

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.

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.

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 documents 125 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.
V
The parties shall be liable for interests on their monetary obligations to each
other, as determined herein.

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

proceeds of her money market placements, represented by PNs No. 23356 and
23357, amounting to P318,897.34 and P203,150.00, respectively, earning an interest
of 14.5% per annum as stipulated in the PNs,139 beginning 17 March 1977, the date of
the placements.
Petitioner Citibank is also ordered to refund to respondent the amount of
US$149,632.99, or its equivalent in Philippine currency, which had been remitted from
her Citibank-Geneva accounts. These dollar accounts, consisting of two fiduciary
placements and current accounts with Citibank-Geneva shall continue earning their
respective stipulated interests from 26 October 1979, the date of their remittance by
Citibank-Geneva to petitioner Citibank in Manila and applied against 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 Yes sir, definitely.

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?

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

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.

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?

For the mental anguish, serious anxiety, besmirched reputation, moral shock and
social humiliation suffered by the respondent, the award of moral damages is but
proper. However, this Court reduces the amount thereof to P300,000.00, for the award
of moral damages is meant to compensate for the actual injury suffered by the
respondent, not to enrich her.145
Having failed to exercise more care and prudence than a private individual in its
dealings with respondent, petitioner Citibank should be liable for exemplary damages,
in the amount of P250,000.00, in accordance with Article 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 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
1wphi1

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?

IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED. The

assailed Decision of the Court of Appeals in CA-G.R. No. 51930, dated 26 March
2002, as already modified by its Resolution, dated 20 November 2002, is
hereby AFFIRMED WITH MODIFICATION, as follows
1. PNs No. 23356 and 23357 are DECLARED subsisting and outstanding.
Petitioner Citibank is ORDEREDto return to respondent the principal amounts
of the said PNs, amounting to Three Hundred Eighteen Thousand Eight

Hundred Ninety-Seven Pesos and Thirty-Four Centavos (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.