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FIRST DMSION.
379
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.
380
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
Judges; That the trial court judge who decided a case 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.-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. 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.
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. In Hibberd v. Rohde
and McMillian, 32 Phil. 476, this
381
382
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. 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.
383
Banks and Banldng; Checks; Manager 's Checks (MCs) are drawn by
the bank's manager upon the bank itself and regarded to be as good as the
money it represents.-It bears to emphasize that the proceeds of the loans
were paid to respondent in MCs, with the respondent specifically named as
payee. MCs checks are drawn by the bank's manager upon the bank itself
and regarded to be as good
384
as the money it represents. Moreover, the MCs were crossed checks, with
the words "Payee's Account Only."
Same; Same; Same; Presumptions; 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, then, the possession by the drawee bank of the said
Manager's Checks (MCs), duly stamped "Paid" gives rise to the
presumption that the said Manager's Checks (MCs) were already paid out
to the intended payee.-The crossed MCs presented by petii t oner 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
385
due to payment, 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.
Same; Same; Same; Same; Where checks crossed for payee's account
only were actually deposited, cleared, and paid, then the presumption would
be that the said checks were properly deposited to the account of the payee,
who was clearly 110,med as such in the checks; The mere fact that the
Manager's Checks (MCs) do not bear the payee's sigMture at the back does
not negate deposit thereof in her account. 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
386
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.
387
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).
Same; Loans; Words and Phrases; Booking the loan means recording
it in the General Ledger. -Ms. Cristina Dondoyano, who worked at
petii
t oner 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 wih t 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 fmally 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. Fernande-z of petii
t oner 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.
388
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.,
76 1.)
Same; Best Evidence Rule; Words and Phrases; In general, the best
evidence rule requires that the highest available degree of proof must be
produced, and, for documentary evidence, the contents of a document are
best proved by the production of the document itself, to the exclusion of any
secondary or substitutionary evidence. -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, to the exclusion of any secondary or
substitutionary evidence. The best evidence rule has been made part of the
revised Rules of Court, Rule 130, Section 3, which reads-SEC. 3. Original
document must be produced; exceptions.-When the subject of inquiry is the
contents of a document, no evidence shall be admissible other than the
original document itself, except in the following cases: (a) When the original
has been lost or destroyed, or cannot be produced in court, without bad faith
on the part of the offeror; (b) When the original is in the custody or under
the control of the party against whom the evidence is offered, and the latter
fails to produce it after reasonable notice; (c) When the original consists of
numerous accounts or other documents which cannot be examined in court
without great loss of time and the fact sought to be established from them is
only the general result of the whole; and (d) When the original is a public
record in the custody of a public officer or is recorded in a public office.
389
Same; A basic rule of evidence 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. "-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 fmdings therein
of wrongdoing or misconduct on the part of herein petitioner Citibank and
Mr. Tan. Any fmding 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 petii
t oner 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." 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 fmd himself at a
given time may likewise change and thus induce him to act in a
390
391
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
392
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.
393
394
ered, 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 interrelation between the omitted assignment
of error and those actually assigned and discussed by the app ellant. 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.
Banks and Banking; Banking is impressed with public interest and its
fiduciary character requires high standards of integrity and performance-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. Although this Court appreciates the right of
-
395
meant to compensate for the actual injury suffered by the respondent, not to
enrich her.
CHICO-NAZARIO, J.:
1
396
397
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-
9
trial hearing, trial proper ensued and the parties proceeded with the
presentation of their respective evidence. Ten years after the filing
10
398
RTC), the case was transferred to Makati RTC, Branch 57, presided by Judge
Francisco X. Velez, for reasons not disclosed in the Records. Judge Velez was able to
try and hear the case until the presentation of the evidence by herein petitioners
(defendants before the RTC). Respondent again took the stand to present rebuttal
evidence, but even before she could finish her testimony, Judge Velez inhibited
himself upon petitioners ' motion (Order, dated 10 April 1992, penned by Judge
Francisco X. Velez, Records, Vol. 11, p. 1085). The case was transferred to Makati
RTC, Branch 141, presided by Judge Marcelino F. Bautista, Jr. For reasons not
disclosed in the Records, Judge Manuel D. Victorio took over Makati RTC, Branch
141. After the parties submitted their respective Memoranda, Judge Victorio declared
the case submitted for decision (Order, dated 9 December 1994, penned by Judge
Manuel D. Victorio, Records, Vol. ill, p. 1602). Judge Victorio rendered his Decision
in Civil Case No. 1 1336 on24 August 1995 (Records, Vol. ill, pp. 1607-1621).
399
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. 12
400
(i) Citibank NNPN Serial No. 023356 (Cancels and Supersedes NNPN
No. 22526) issued on 17 March 1977, P318,897.34 with 14.50%
interest p.a.;
(ii) Citibank NNPN Serial No. 23357 (Cancels and Supersedes NNPN
No. 22528) issued on 17 March 1977, P203,150.00 with 14.50
interest p.a.;
(iii) FNCB NNPN Serial No. 05757 (Cancels and Supersedes NNPN
No. 04952), issued on 02 June 1977, PS00,000.00 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;
401
13
Petition for Review, 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 14
402
G.R. No. 156132. The Petition was initially denied by this Court
for failure of the petitioners to attach thereto a Certification against
Forum Shopping. However, upon petitioners' Motion 18
and
compliance with the requirements, this Court resolved to reinstate
the Petition.
The Petition presented fourteen (14) assignments of errors
allegedly committed by the Court of Appeals in its Decision, dated
26 March 2002, involving both questions of fact and questions of
law which this Court, for the sake of expediency, discusses jointly,
whenever possible, in the succeeding paragraphs.
t6 Rollo, p. 374.
11 Resolution, dated 29 January 2003; Rollo, pp. 980-A-B.
403
VOL. 504, OCTOBER 16, 2006 403
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
404
19 Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137 Phil.
239, 244; 27 SCRA 418, 422 (1969); Singh v. Liberty Insurance Corp., 1 18 Phil. 532,
535; 8 SCRA 517, 519-520 (1963).
20 Rollo, pp. 1443-1445.
405
21
party, then not actually filing the intended Petition. The party who
fails to file its intended Petition within the reglementary or extended
period should solely bear the consequences of such failure.
21 See the case ofBorromeo v. Court ofAppeals (162 Phil. 430, 438; 70 SCRA 329
[1976]) wherein this Court pronounced that a party's right to appeal shall not be
affected by the perfection of another appeal from the same decision; otherwise, it
would lead to the absurd proposition that one party may be deprived of the right to
appeal from the portion of a decision against him just because the other party who had
been notified of the decision ahead had already perfected his appeal in so far as the
said decision adveISely affects him. If the perfection of an appeal by one party would
not bar the right of the other party to appeal from the same decision, then an
unperfected appeal, as in the case at bar, would have far less effect.
406
22 The Executive Secretary v. Gordon, 359 Phil. 266, 271; 298 SCRA 736, 740
(1998).
23 Young v. John Keng Seng, 446 Phil. 823, 833; 398 SCRA 629, 638 (2003).
407
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."
408
409
II
24 Sps. Sta. Maria v. Court ofAppeals, 349 Phil. 275, 282-283; 285 SCRA 351, 357-
358 (1998).
2S The Court of Appeals modified the trial court's findings and conclusions, as
follows: (1) By declaring the Pl,069,847.40 alleged indebtedness of Ms. Sabeniano as
non-existing for failure ofCitibank
410
The fact that the trialjudge who rendered the RTC Decision in Civil
Case No. 11336, dated 24 August 1995, was not the samejudge who
heard and tried the case, does not, by itself, render the said Decision
erroneous.
The Decision in Civil Case No. 1 1336 was rendered more than 10
years from the institution of the said case. In the course of 26its trial,
the case was presided over by four (4) different RTC judges. It was
Judge Victoria, the fourth judge assigned to the case, who wrote the 27
"After carefully evaluating the mass of evidence adduced by the parties, this
Court is not inclined to believe the plaintiffs assertion that the promissory
notes as well as the deeds of assignments of
to substantiate its allegations; (2) By declaring that there are uapaid money maiket
placements, current accounts and savings account of Ms. Sabeniano; and (3) The
awarding of damages in favor of Ms. Sabeniano and against Citibank.
26 Supra note 11.
21 Records, Vol. III, pp. 1612-1613.
411
her FNCB Finance money market placements were simulated. The evidence
is overwhelming that the plaintiff received the proceeds of the loans
evidenced by the various promissory notes she had signed. What is more,
there was not an iota of proof save the plaintiff's bare testimony that she had
indeed applied for loan with the Development Bank of the Philippines.
More importantly, the two deeds of assignment were notariz.ed, 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
P l ,920,000.00 exclusive of interests and penalty charges (Exhibits ''28,"
"31," "32," and "33'1.
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
plaintiffs past due obligation with the defendant Bank. Thus, the total sum
of P l ,053,995.80 of the plaintiffs past due obligation was partially offset by
the said money market placement leaving a balance of P l,069,847.40 as of 5
September 1979 (Exhibit "34'')."
Judge who heard and tried the case." 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?
28 Pemed by Associate Justice Andres B. Reyes with Associate Justices Conrado
M. Vasquez, Jr. and Amelita G. Tolentino, concurring; Rollo, p. 344.
412
"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
argwnent 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
'29 Section 3(m) of Rule 131 ofthe REVISED RULES OF COURT reads-
413
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."
lrrefragably, 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
414
415
Deposit/Placement Amount
Dollar deposit with Ciubank-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% p
interestper annum (p.a.) 3 1 8,897.34
Money market placement with Citibank, evidenced by
PN No. 23357 (which cancels and supersedes PN No.
22528), p
earning 14.5% interest p.a. 203,150.00
Money market placement with FNCB Finance,
evidenced
by PN No. 5757 (which cancels and supersedes PN No.
4952), p
earning 17% interest p.a. 500,000.00
Money market placement with FNCB Finance,
evidenced
by PN No. 5758 (which cancels and supersedes PN No.
2962), p
earning 17% interest p.a. 500,000.00
416
417
418
419
36
place; and (2) that of Mr. Francisco Tan, the former Assistant Vice-
President of Citibank, who directly dealt with respondent with
regard to her deposits and loans.37
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 ofthe 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?
36 Mr. Francisco Tan, at the time of his deposition in 1990, was already working as
Assistant General Manager for Dai-Chi Kangyo Bank in Hong Kong.
37 TSN, 12 March 1990, pp. 6-10.
420
Atty. Mabasa:
Q Now, basing on the notes that you prepared, Mr. Witness, and according
to you basing also on your personal recollection about all the
transactions involved between Modesta Sabeniano and defendant City
Bank [sic] in this case. Now, would you tell us what happened to the
money market placements of Modesta Sabeniano that you have earlier
identified in Exhs. "47" and "48"?
A The transactions which I said earlier were terminated and booked to time
deposits.
Q And you are saying time deposits with what bank?
A With First National Citibank.
Q Is it the same bank as Citibank, N.A.?
A Yes, sir.
Q And how much was the amount booked as time deposit with defendant
Citibank?
A In the amount of P500,000.00.
Q And outside this P500,000.00 which you said was booked out of the
proceeds of Exhs. "47" and "48," were there other time deposits opened
by Mrs. Modesta Sabeniano at that time.
A Yes, she also opened another time deposit for P600,000.00.
Q So all in all Mr. Witness, sometime in April of 1978 Mrs. Modesta
Sabeneano [sic] had time deposit placements with Citibank in the
amount of P500,000.00 which is the proceeds of Exhs. "47" and "48"
and another P600,000.00, is it not?
A Yes, sir.
Q And would you know where did the other P600,000 placed by Mrs.
Sabeneano [sic] in a time deposit with Citibank, N.A. came [sic] from?
A She funded it directly.
Q What are you saying Mr. Witness is that the P600,000 is a [sic] fresh
money coming from Mrs. Modesta Sabeneano [sic]?
A That is right.
421
Atty. Mabasa: Now from the Exhibits that you have identified Mr. Tan from
Exhibits "A'' to "F," which are Exhibits of the plaintiff. Now, do I
understand from you that the original amount is Five Hundred Thousand
and thereafter renewed in the succeeding exhibits?
Mr. Tan: Yes, Sir.
Atty. Mabasa: Alright, after these Exhibits ''E'' and ''F" matured, what
happened thereafter?
Mr. Tan: Split into two time deposits.
Atty. Mabasa: Exhibits "E" and "F"?
38 Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
422
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, fmally, 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----o -<: nsisting 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. 39
423
tioner 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 fmds 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 1 7784 with petitioner Citibank; and,
subsequently, respondent pre-terminated these TD accounts and
transferred the proceeds thereof, amounting to Pl,1 00,000.00, 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 1 7784, 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.
424
425
426
427
48 Exhibits "1 12" and "1 19," Id., at pp. 121-A, 124.
49 Records, Vol. ill, p. 1367.
428
Citibank.
Since both the RTC and the Court of Appeals had consistently
recognized only the P3 1 ,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 P3 l ,079 . 1 4 should the off
set thereof by petitioner Citibank against her supposed loans be
found invalid.
429
4 1 . 1 7 Commission
US$
- 149'632.99
US$ Transfer to Citibank Manila on 26. 10.1979
430
III
Description Amount
Principal and interests of PNs No. 20 138 and 20139
431
(peso equivalent
OfUS$149,632.99) 1,102,944.78
Total p 2,1 56,940.58
PNs (first set). The aggregate principal amount of these loans was
Pl ,920,000.00, which could be broken down as follows--
432
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
56
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
51
433
58
Citibank another Deed of Assignment, this time, of PN No. 8 1 67,
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 PS00,000.00. When PNs No. 8 1 67 and
8 1 69, representing respondent's money market placements with
petitioner FNCB Finance, matured and were rolled-over to PNs No.59
20138 and 20139, respondent executed new Deeds of Assignment,
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 PS00,000.00 per Deed.
In addition to the Deeds of Assignment of her money market
placements with petitioner FNCB Finance, respondent also executed
60
62
The first letter was dated 5 April 1979, addressed to respondent and
signed by Mr. Tan, as the manager of petitioner Citibank, which
stated, in part, that-
Despite our repeated requests and follow-up, we regret you have
not granted us with any response or payment. We, therefore, have no
alternative but to call your loan of P l ,920,000.00 plus interests and
other charges due and demandable. If you still fail to settle this
obligation by 4/27179, we shall have no other alternative but to refer
your account to our lawyers for legal action to protect the interest of
the bank. 63
You will be doing our corporation a very viable service, should you
grant us our request for a little more time. A week later or on 3 May
1979, a certain C. N. Pugeda, designated as "Executive Secretary,"
64
435
436
437
69
Mr. Tan of petitioner Citibank subsequently sent a letter, 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 P l,069,847.40, as of
5 September 1979, and should respondent fail to pay the amount by
1 5 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 P l,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 3 1 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
438
439
440
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 P 150,000.00, covered by PN No.
34534, and receiving MC No. 228270 representing the proceeds
thereof, but claimed that she already paid the same. She denied ever
receiving MCs No. 220701 (for the loan of 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
76
on the checks (i.e., date, payee, and amount). She even testified
that MCs were not supposed to bear notations indicating the purpose
for which they were issued.
As to the second set of PNs, respondent acknowledged having
signed them all. However, she asserted that she only executed these
PNs as part of the simulated loans she and Mr. Tan of petitioner
Citibank concocted. Respondent explained that she had a pending
loan application for a big amount with the Development Bank of the
Philippines (DBP), and when Mr. Tan found out about this, he
suggested that they could make it appear that the respondent had
outstanding loans with petitioner Citibank and the latter was already
demanding payment thereof; this might persuade DBP to approve
respondent's loan application. Mr. Tan made the respondent sign the
second set of PNs, so that he may have something to show the DBP
investigator who might
441
77 TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-28.
78 Sarmiento v. Court ofAppeals, 364 Phil. 613, 621; 305 SCRA 138, 146 (1999).
442
named as payee. MCs checks are drawn by the bank's manager upon
the bank itself and regarded to be as good as the money it
79
represents. Moreover, the MCs were crossed
checks, with the words "Payee's Account Only." In general, a
crossed check cannot be presented to the drawee bank for payment
in cash. Instead, the check can only be deposited with the payee's
bank which, in tum, 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
80
indorser' s account. The effect of crossing a check was described by
this Court in Philippine Commercial International Bank v. Court of
81
Appeals -
79 Bank ofthe Philippine Islands v. Court ofAppeals, 383 Phil. 538, 553; 326 SCRA
641, 656 (2000), with reference to Tan v. Court ofAppeals, 239 SCRA 310, 322 (1994).
so Gempesaw v. Court ofAppeals, G.R. No. 92244, 9 February 1993, 218 SCRA 682,
695.
81 403 Phil. 361, 383; 350 SCRA 446, 467 (2001).
443
'ir1. Moran v. Court ofAppeal.s, G.R. No. 105836, 7 March 1994, 230 SCRA 799, 311-
312.
83 REVISED RULES OF COURT, Rule 131, Section 3(p).
84 Jd., Rule 131, Section3(q).
85 Id., Section 3.
444
445
446
92
and subsisting. 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
93
447
94
448
448 SUPREME COURT REPORTS ANNOTATED
95 Exhibits "GGG" and "JJJ," plaintiff's folder ofexhibits, pp. 109, 113.
96 Plaintiff's folder of exhibits, p. 110.
97 See the initials on Exhibit "III-1," plaintiff's folder of exhibits, p. 112.
449
450
451
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
pwpose for the provisional receipts was merely to acknowledge the
delivery of the checks to the possession of the bank, but not yet of
99
payment. This bank practice finds legitimacy in the pronouncement
of this Court that a check, whether an MC or an ordinary check, is
not legal tender and, therefore, cannot constitute valid tender of
100
452
453
lated 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 pwportedly asked her to
execute. Respondent further failed to present any proof of her
alleged loan application with the DBP, and of any circumstance or
correspondence wherein the simulated or fictitious PNs were indeed
used for their supposed purpose.
In contrast, petitioner Citibank, as supported by the testimonies
of its officers and available documentation, consistently treated the
said PNs as regular loans-accepted, approved, and paid in the
ordinary course of its business.
The PNs executed by the respondent in favor of petitioner
Citibank to cover her loans were duly-filled out and signed,
including the disclosure statement found at the back of the said PNs,
in adherence to the Central Bank requirement to disclose the full
:finance charges to a loan granted to borrowers.
Mr. Tan, then an account officer with the Marketing Department
of petitioner Citibank, testified that he dealt directly with
respondent; he facilitated the loans; and the PNs,
454
presence.
Mr. Pujeda, the officer who was previously in charge of loans
and placements, confirmed that the signatures on the PNs were
106
1os TSN, deposition of Mr. Francisco A Tan, 3 September 1990, pp. 13-16.
106 TSN, 22May 1990, Vol. V, pp. 31-61.
101 TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol. X, pp. 7-9.
455
tos TSN, 1 9 March 1991, Vol. X,pp. 17-21; TSN, 8 April 1991, Vol. X,pp. 31-34.
456
they are returned to the client. 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 bv
n'o
Mr. Tan to prepare a list of respondent's outstanding obligations.
She thus calculated respondent's outstanding loans, which was sent
as an attachment to Mr. Tan's letter to respondent, dated 28
September 1 979, and presented before the RTC as Exhibits "34-B"
Ill
and "34-C."
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.
100 TSN, 18 April 1991, Vol. :X, pp. 3-13.
110 Id., at pp. 15-23.
111 Folder ofdefendants' exhibits, pp. 102-103.
457
458
The best evidence rule has been made part of the revised Rules of
Court, Rule 130, Section 3, which reads-
(a) When the original has been lost or destroyed, or cannot be produced
in court, without bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party
against whom the evidence is offered, and the latter fails to produce
it after reasonable notice;
(c) When the original consists of numerous accounts or other
documents which cannot be examined in court without great loss of
time and the fact sought to be established from them is only the
general result of the whole; and
(d) When the original is a public record in the custody of a public
officer or is recorded in a public office."
"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.
459
''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
460
461
462
119 Dr. Ricardo L. Dy and Rosalind 0. Dy vs. Citibank, N.A., CA-G.R. CV No.
15934, 15 January 1990, penned by Associate Justice Nicolas P. Lapefia, Jr. with
Associate Justices Santiago M. Ka-pwmn and Emeterio C. Cui, concurring.
463
ties 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
464
465
IV
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;
466
122 CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal ofManila, 213 Phil.
516, 523-524; 128 SCRA 577, 584 (1984).
123 CIVIL CODE, Article 1286.
467
468
Significant
124
herein is this Court's elucidation in De Jesus v. Court of
Appeals, which reads-
"On the evidentiary value of these documents, it should be recalled that the
notarization of a private docwnent converts it into a public one and renders it
admissible in court without further proof of its authenticity (Joson vs.
Baltazar, 194 SCRA 1 14 [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 ofAppeals, 145 SCRA 346 [1986])."
469
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
127
the National Archives. 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
128
127 See Exhibits "13-E, "14-G," "15-D,"and "17-D," defendants' folder of exhibits,
pp. 65-67, 72-74, 77-78, 81-82.
128 TSN, 7 March 1991, Vol. IX, pp. 3-6.
129 Cuizon v. Court ofAppeals, 329 Phil. 456, 482; 260 SCRA 645, 662 (1996).
470
2. In the event the OBLIGATIONS are not paid at maturity or upon demand,
as the case may be, the ASSIGNEE is fully authoriz.ed 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 docwnents as may be
necessary to effectuate this Assignment.
xx xx
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
130
"ART. 21 18. 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."
130 Exhibits "13-E,'' "14-G," "15-D," and "17-D," defendants' folder of exhibits, pp.
65-66, 72-73, 77-78, 81-82.
471
VOL. 504, OCTOBER 16, 2006 471
processual presumption.
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 execu-
131 Wildvalley Shipping Co., Ltd v. Court of Appeals, 396 Phil. 383, 396; 342
SCRA 213, 223 (2000).
472
473
134
dated. Since it is undeniable that respondent was out of the country
on 24 September 1 979, 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 secme 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
474
135 Heirs ofSevera P. Gregorio v. Court ofAppeals, 360 Phil. 753, 763; 300 SCRA
565, 574 (1998).
136 Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes, Records,
Vol. I, p. 310; Order, dated 2 September 1988, Id. and penned by Judge Francisco X.
Velez, Records, Vol. I, p. 449; Order, dated 24 November 1988, penned by Judge
Francisco X. Velez, Records, Vol. I, p. 458; Order, dated 25 April 1989, penned by
Judge Francisco X. Velez, Records, Vol. I, pp. 476477.
475
erted 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
137
137 Security Bank & Trust Co. v. Triwnph Lumber and Construction Corporation,
361 Phil. 463, 477; 301 SCRA 537, 550 (1999).
138 REVISED RULES OF COURT, Rule 131, Section 3(e).
476
139 The stipulated interest shall apply as indemnity for the damages incurred in the
delay ofpayment as provided in Article 2209 of the CIVIL CODE which reads-
ART. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs
delay, the indemnity for damages, there being no stipulation to the contrary, shall be the
payment of the interest agreed upon, and in the absence of a stipulation, the legal interest,
Note, however, that the legal interest has been increased from six percent to
twelve percent per annum by virtue of Central Bank Circulars No. 416, dated 29 July
1974, and No. 905, dated 10 December 1982.
477
VI
Petitioner Citibank shall be liablefor 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 140
478
479
Q By the way Mrs. Wi1ness 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 Chainn an 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 Where?
Q What else?
480
A They are not all operating, in short, I was hampered to push through the
businesses that I have.
A [sic] Of all the businesses and enterprises that you mentioned what are
those that are paralyzed and what remain inactive?
A Of all the company [sic] that I have, only the Disto Company that is now
operating in California.
Q How about your candidacy as Mayor of Dagupan, [sic] City, and later as
Assemblywoman of Region I, what happened to this?
A I won by voting but when election comes on [sic] the counting I lost and
I protested this, it is still pending and because I don't have financial
resources I was not able to push through the case. I just have it pending
in the Comelec.
Q Now, do these things also affect your social and civic activities?
Q How?
481
145
the actual injury suffered by the respondent, not to enrich her.
Having failed to exercise more care and prudence than a private
individual in its dealings with respondent, petitioner Citibank should
be liable for exemplary damaQ:es, in the amount of P250,000.00, in
18 147
accordance with Article 2229 and 2234 of the Civil Code.
With the award of exemplary damages, then respondent shall also
148
be entitled to an award of attorney's fees. Additionally, attorney's
fees may be awarded when a party is compelled to litigate or to
incur expenses to nrotect his interest by reason of an unjustified act
1-{9
of the other party. 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
150
of one's rights is damnum absque injuria.
145 Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995; 317 SCRA 527, 541 (1999);
Zenith Insurance Corporation v. Court ofAppeals, G.R. No. 85296, 14 May 1990, 185
SCRA 398, 402-403.
146 Exemplary or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate, liquidated or compensatory
damages.
147 While the amount of exemplary damages need not be proved, the plaintiff must
show that he is entitled to moral, temperate or compensatory damages before the court
may consider the question of whether or not exemplary damages should be awarded x
xx
148 CIVIL CODE, Article 2208(1).
149 Ching Sen Ben vs. Court ofAppeals, 373 Phil. 544, 555; 314 SCRA 762, 772-773
(1999).
150 ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 498, 531-
532; 301 SCRA 572, 604 (1999); Tierra International Construction Corp. v. National
Labor Relations Commission, G.R.
482
483
SO ORDERED.
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484