2. Pay to the Estate of Nicolai Drepin, through the Judicial Administrator, Atty.
Tomas Trinidad,
PIO BARRETTO REALTY DEVELOPMENT CORPORATION, petitioner, vs. COURT
OF APPEALS, JUDGE PERFECTO A. S. LAGUIO, JR., RTC-Branch 18,
Manila, and HONOR P. MOSLARES, respondents.
DECISION
BELLOSILLO, J.:
This petition for review on certiorari assails the Decision dated 30 June 1997 of the Court
of Appeals in CA-G.R. SP No. 33982, "Pio Barretto Realty Development Corporation v. Hon.
Perfecto A. Laguio, et al.," which dismissed the special civil action for certiorari filed by
petitioner, as well as its Resolution dated 14 January 1998 denying reconsideration.
On 2 October 1984 respondent Honor P. Moslares instituted an action for annulment of
sale with damages before the Regional Trial Court of Manila against the Testate Estate of Nicolai
Drepin represented by its Judicial Administrator Atty. Tomas Trinidad and petitioner Pio
Barretto Realty Development Corporation. Moslares alleged that the Deed of Sale over four (4)
parcels of land of the Drepin Estate executed in favor of the Barretto Realty was null and void on
the ground that the same parcels of land had already been sold to him by the deceased Nicolai
Drepin. The case was docketed as Civil Case No. 84-27008 and raffled to respondent Judge
Perfecto A. S. Laguio, Jr., RTC-Br. 18, Manila.
On 2 May 1986 the parties, to settle the case, executed a Compromise
Agreement pertinent portions of which are quoted hereunder -
1. The Parties agree to sell the Estate, subject matter of the instant case, which is composed of
the following real estate properties, to wit:
a. Three (3) titled properties covered by TCT Nos. 50539, 50540 and 50541[1] of the Registry of
Deeds for the Province of Rizal, with a total area of 80 hectares, more or less, and
b. Untitled Property, subject matter of (a) Land Registration Case No. 1602 of the Regional Trial
Court, Pasig, Metro Manila, with an area of 81 hectares, more or less,
subject to the following situations and conditions, to wit:
a. If plaintiff Honor P. Moslares x x x buys the property, he is under obligation, as follows:
1. To reimburse and pay Defendant Pio Barretto Realty Development Corporation, represented
by Anthony Que, its capital investment of Three Million Pesos (P3,000,000.00), Philippine
Currency, and
2. To pay the Estate of Nicolai Drepin, represented by the Judicial Administrator, Atty. Tomas
Trinidad, the sum of One Million Three Hundred Fifty Thousand (P1,350,000.00) Pesos,
Philippine Currency
b. If defendant Pio Barretto Realty Development Corporation, represented by Mr. Anthony Que x
x x continue[s] to buy the property, it shall pay for the interests of plaintiff Honor P. Moslares:
1. The sum of One Million (P1,000.000.00) Pesos, Philippine Currency to plaintiff Honor P.
Moslares personally and
the balance of the agreed purchase price subject to negotiation and verification of payments
already made.
2. In the event that plaintiff Honor P. Moslares buys the Estate and pays in full the amount of
Three Million (P3,000,000.00) Philippine Currency to defendant Pio Barretto Realty
Development Corporation, and the full sum of One Million Three Hundred Fifty Thousand
(P1,350,000.00) Pesos, Philippine Currency, to the Estate of Nicolai Drepin, through Atty.
Tomas Trinidad, defendant Pio Barretto shall execute the corresponding Deed of Conveyance in
favor of plaintiff Honor P. Moslares and deliver to him all the titles and pertinent papers to the
Estate.
IN WITNESS WHEREOF, the parties hereto hereby sign this Compromise Agreement at Manila,
Philippines, this 2nd day of May 1986 x x x x x x x x x x x x
On 24 July 1986 the trial court rendered a decision approving the Compromise
Agreement.[2] However, subsequent disagreements arose on the question of who bought the
properties first.
It must be noted that the Compromise Agreement merely gave Moslares and Barretto
Realty options to buy the disputed lots thus implicitly recognizing that the one who paid first had
priority in right. Moslares claimed that he bought the lots first on 15 January 1990 by delivering
to Atty. Tomas Trinidad two (2) PBCom checks, one (1) in favor of Barretto Realty for P3 million,
and the other, in favor of the Drepin Estate for P1.35 million.
But petitioner Barretto Realty denied receiving the check. Instead, it claimed that it bought
the properties
on 7 March 1990 by tendering a Traders Royal Bank Manager's Check for P1million to Moslares,
and a Far East Bank and Trust Company Cashier's Check for P1 million and a Traders Royal
Bank Manager's Check for P350,000.00 to Atty. Tomas Trinidad as Judicial Administrator of the
Estate. However, Moslares and Atty. Trinidad refused to accept the checks.
Defendant Pio Barretto Realty Corporation Inc., is the absolute owner of the real properties in
question and the issue on such ownership is now a closed matter.
Within a reglementary period Moslares moved to reconsider insisting that Barretto
Realty's payment by check was not valid because (a) the check was not delivered personally to
him but to his counsel Atty. Pedro Ravelo, (Judge Laguio ruled that Barretto Realty's payment
through checks was not valid because "a check is not legal tender and it cannot produce the effect
of payment until it is encashed x x x x the check in question has neither been negotiated nor
encashed by the plaintiff."[7]
But Moslares failed to exercise his option and pay the amount within the five (5)-day
period granted him. Instead, he filed a Supplemental Motion to Pay praying that he be given
additional seven (7) days within which to do so.
On 14 January 1998 petitioner's motion for reconsideration was denied; hence, this
petition.
ISSUE: W/N the Court of Appeals erred in disregarding jurisprudence declaring that
cashier's or manager's checks are deemed cash or as good as the money they represent? YES.
It is not disputed, and in fact borne by the records, that petitioner bought the disputed lots
of the Drepin Estate subject matter of the Compromise Agreement ahead of Moslares and that
the checks issued in payment thereof were even personally delivered by the Deputy Sheriff of the
RTC-Br. 18, Manila, upon Order of respondent Judge dated 14 June 1990 after tender was
refused by Moslares and the Drepin Estate.Respondent Moslares never raised the invalidity of
the payment through checks either through a motion for reconsideration or a timely appeal. . In
fact the disputed lots were already registered in petitioner's name under TCT Nos. 50539, 50540
and 50541 as a consequence thereof.
The fact that the check paid to him by Barretto Realty was never encashed should not be
invoked against the latter. As already stated, Moslares never questioned the tender done three
(3) years earlier. Besides, while delivery of a check produces the effect of payment only when it is
encashed, the rule is otherwise if the debtor was prejudiced by the creditor's unreasonable delay
in presentment. Acceptance of a check implies an undertaking of due diligence in presenting it
for payment. If no such presentment was made, the drawer cannot be held liable irrespective of
loss or injury sustained by the payee. Payment will be deemed effected and the obligation for
which the check was given as conditional payment will be discharged.[18]
Petitioner Pio Barretto Realty Development Corporation as the absolute owner of the real
properties in question, and all subsequent proceedings culminating in the Order of 12 October
1994 authorizing the Clerk of Court, RTC-Manila, to execute a deed of conveyance over subject
properties in favor of respondent Honor P. Moslares, are declared NULL and VOID for want of
jurisdiction.
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ROBERTO
TONGKO, accused-appellant.
DECISION
PUNO, J.:
This is an appeal by accused Roberto Tongko from the Decision of the RTC of Pasig City,
Branch 156 finding him guilty of estafa under Article 315(2)(d) of the Revised Penal Code. He
was sentenced to suffer twenty seven (27) years of reclusion perpetua and to indemnify
Carmelita V. Santos by way of actual damages in the sum of P100,000.00 and to pay the cost of
suit.
Accused was charged under the following Information:
"That on or about the 20th day of August, 1993, in the Municipality of Pasig, Metro Manila,
Philippines and within the jurisdiction of this Honorable Court, the above-named accused, by
means of deceit and false pretenses committed prior to or simultaneously with the commission
of the fraudulent acts, did then and there willfully, unlawfully and feloniously make or draw and
issue to one, Carmelita Santos to apply on account or for value, the check described below:
BANK CHECK NO. DATE AMOUNT
10 CHECKS Phil. Amanah Bank 203729 12-20-93 P10,000.00
said accused well knowing at the time of issue he did not have sufficient funds in or credit
with the drawee bank for the payment in full of the face amount of such check upon
presentment which check when presented for payment within ninety (90) days from the
date thereof was subsequently dishonored by the drawee bank for the reason "Account
Closed" and despite the lapse of three (3) banking days from receipt of notice that said
check has been dishonored, the accused failed to pay said payee the face amount of such
check or to make arrangement for full payment thereof, to the damage and prejudice of
said Carmelita Santos in the total amount of P100,000.00.
CONTRARY TO LAW."
Accused pled not guilty and underwent trial.
The evidence for the prosecution shows that on September 21, 1990, accused opened
savings and current accounts with Amanah Bank.[1] In the morning of August 20, 1993, Marites
Bo-ot brought the accused to the office of Carmelita V. Santos at Room 504 Pacific Place, Pearl
Drive, Ortigas Center, Pasig City to borrow money.[2] The accused asked for P50,000.00 to be
paid not later than December 1993.[3] He assured Santos that his receivables would come in by
November 1993. He persuaded Santos to give the loan by issuing five (5) checks, each in the sum
of P10,000.00, postdated December 20, 1993 and by signing a promissory note.[4] The
promissory note was co-signed by Bo-ot. In the afternoon of the same date, the accused returned
to Santos and borrowed an additional P50,000.00. Again, he issued five (5) checks, each
worth P10,000.00 postdated December 20, 1993. He also signed a promissory note together
with Bo-ot.[5]
On September 14, 1993, Amanah Bank closed accused's current account for lack of
funds. On October 19, 1993, accused himself requested for the closing of his savings account.[6]
Santos did not present accused's checks to the drawee bank on their due date upon the
request of accused himself.[7] Instead, the checks were presented on March 1, 1994 but were
dishonored as accused's accounts had been closed.[8] Accused was informed that his checks had
bounced. He promised to make good the checks. He failed to redeem his promise, hence, the
case at bar.[9]
The accused testified for himself. Nobody corroborated his testimony. He admitted the
evidence of the prosecution but alleged that the postdated checks were issued a day or two after
he signed the promissory notes.[10] Obviously, he was relying on the defense that the checks were
in payment of a pre-existing obligation.
As aforestated, the trial court convicted the accused. He appealed to this Court and
changed his counsel.[11] He now contends:
ISSUE: THE TRIAL COURT ERRED IN NOT HOLDING THAT THE POST-DATED CHECKS
WERE IN PAYMENT OF PRE-EXISTING OBLIGATIONS. NO.
Estafa, under Article 315, paragraph 2(d) of the Revised Penal Code, as amended by
Republic Act No. 4885, has the following elements: (1) postdating or issuance of a check in
payment of an obligation contracted at the time the check was issued; (2) lack of sufficiency of
funds to cover the check; and (3) damage to the payee thereof.
Santos categorically declared that it was the issuance of postdated checks which
persuaded her to part with her money. We quote her testimony, viz.:[12]
"Q What happened to those checks you mentioned in the promissory note?
A When presented to the bank they were all returned by the bank for reason, account
closed.
Q Before this was deposited to the bank when the accused came to your office and loaned
money from you, what was his representation if any to you?
A That his collection will come in by Nov. 1993 and also the checks issued to me will be
definitely funded on the date that it will become due.
Q Were you persuaded as a result of the statement of the accused that these checks will be
good that you parted away the amount?
A Yes, sir."
"It takes more than merely being harsh, excessive, out of proportion, or severe for a penalty to be
obnoxious to the Constitution. The fact that the punishment authorized by the statute is severe
does not make it cruel and unusual. Expressed in other terms, it has been held that to come
under the ban, the punishment must be "flagrantly and plainly oppressive," "wholly In May 1988, petitioner Concepcion Chua Gaw and her husband, Antonio Gaw, asked
disproportionate to the nature of the offense as to shock the moral sense of the community." respondent, Suy Ben Chua, to lend them P200,000.00 which they will use for the construction of
their house in Marilao, Bulacan. The parties agreed that the loan will be payable within six (6)
months without interest.[7] On June 7, 1988, respondent issued in their favor China Banking
SO ORDERED.
Corporation Check No. 240810[8] for P200,000.00 which he delivered to the couples house in
Marilao, Bulacan. Antonio later encashed the check.
CONCEPCION CHUA GAW, G.R. No. 160855
Petitioner, On August 1, 1990, their sister, Chua Sioc Huan, executed a Deed of Sale over all her
Present: rights and interests in Hagonoy Lumber for a consideration of P255,000.00 in favor of
YNARES-SANTIAGO, J., respondent.[9]
Chairperson,
- versus - AUSTRIA-MARTINEZ, Meantime, the spouses Gaw failed to pay the amount they borrowed from respondent
CHICO-NAZARIO, within the designated period. Respondent sent the couple a demand letter, [10] dated March 25,
NACHURA, and 1991, requesting them to settle their obligation with the warning that he will be constrained to
REYES, JJ. take the appropriate legal action if they fail to do so.
SUY BEN CHUA and Promulgated: Failing to heed his demand, respondent filed a Complaint for Sum of Money against
FELISA CHUA, April 16, 2008 the spouses Gaw with the RTC.
Respondents. In their Answer (with Compulsory Counterclaim), the spouses Gaw contended that
theP200,000.00 was not a loan but petitioners share in the profits of Hagonoy Lumber, one of
her familys businesses.
In his Reply, respondent averred that the spouses Gaw did not demand from him an
accounting of Capitol Sawmills Corporation, Columbia Wood Industries, and Hagonoy Lumber.

With leave of court, the spouses Gaw filed an Answer (with Amended Compulsory
Counterclaim) wherein they insisted that petitioner, as one of the compulsory heirs, is entitled to
one-sixth (1/6) of Hagonoy Lumber

In his Answer to Amended Counterclaim, respondent explained that his sister, Chua
Sioc Huan, became the sole owner of Hagonoy Lumber when the heirs executed the Deed of
Partition on December 8, 1986. In turn, he became the sole owner of Hagonoy Lumber when he
bought it from Chua Sioc Huan, as evidenced by the Deed of Sale dated August 1, 1990.[15]
DECISION
On December 10, 1998, Antonio Gaw died due to cardio vascular and respiratory
NACHURA, J.: failure.[21]

This is a Petition for Review on Certiorari from the Decision[1] of the Court of Appeals On February 11, 2000, the RTC rendered a Decision in favor of the respondent, thus:
(CA) in CA-G.R. CV No. 66790 and Resolution[2] denying the motion for reconsideration. The
assailed decision affirmed the ruling of the Regional Trial Court (RTC) in a Complaint for Sum of The RTC held that respondent is entitled to the payment of the amount of P200,000.00 with
Money in favor of the plaintiff. interest.

The antecedents are as follows:
Spouses Chua Chin and Chan Chi were the founders of three business
enterprises[3]namely: Hagonoy Lumber, Capitol Sawmill Corporation, and Columbia Wood
Industries.The couple had seven children, namely, Santos Chua; Concepcion Chua; Suy Ben
Chua; Chua Suy Phen; Chua Sioc Huan; Chua Suy Lu; and Julita Chua. On June 19, 1986, Chua
Chin died, leaving his wife Chan Chi and his seven children as his only surviving heirs. At the
time of Chua Chins death, the net worth of Hagonoy Lumber was P415,487.20.[4]
On December 8, 1986, his surviving heirs executed a Deed of Extra-Judicial Partition
and Renunciation of Hereditary Rights in Favor of a Co-Heir[5] (Deed of Partition, for brevity),
wherein the heirs settled their interest in Hagonoy Lumber as follows: one-half (1/2) thereof will
pertain to the surviving spouse, Chan Chi, as her share in the conjugal partnership; and the other
half, equivalent to P207,743.60, will be divided among Chan Chi and the seven children in
equal pro indiviso shares equivalent to P25,967.00 each.[6] In said document, Chan Chi and the
six children likewise agreed to voluntarily renounce and waive their shares over Hagonoy
Lumber in favor of their co-heir, Chua Sioc Huan.
Aggrieved, petitioner appealed to the CA, alleging that the trial court erred (1) when it considered
the amount of P200,000.00 as a loan obligation and not Concepcions share in the profits of
Hagonoy Lumber;
On May 23, 2003, the CA affirmed the Decision of the RTC. [25]
In the first place, the delineation of a piece of evidence as part of the evidence of one
party or the other is only significant in determining whether the party on whose shoulders lies
the burden of proof was able to meet the quantum of evidence needed to discharge the burden.
In civil cases, that burden devolves upon the plaintiff who must establish her case by
preponderance of evidence. The rule is that the plaintiff must rely on the strength of his own
evidence and not upon the weakness of the defendants evidence. Thus, it barely matters who
with a piece of evidence is credited. In the end, the court will have to consider the entirety of the
evidence presented by both parties. Preponderance of evidence is then determined by
considering all the facts and circumstances of the case, culled from the evidence, regardless of
who actually presented it.[31]
 In the present case, the petitioner, by her own testimony, failed to discredit the
respondents testimony on how Hagonoy Lumber became his sole property. The petitioner
admitted having signed the Deed of Partition but she insisted that the transfer of the property to
Chua Siok Huan was only temporary. On cross-examination, she confessed that no other
document was executed to indicate that the transfer of the business to Chua Siok Huan was a
temporary arrangement.
Before this Court is a Petition for Review on Certiorari,[1] under Rule 45 of the Revised
Rules of Court, of the Decision[2] of the Court of Appeals in CA-G.R. CV No. 51930, dated 26
March 2002, and the Resolution,[3] dated 20 November 2002, of the same court which, although
modifying its earlier Decision, still denied for the most part the Motion for Reconsideration of
herein petitioners.

ISSUE: On the issue of whether the P200,000.00 was really a loan,

Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a banking
it is well to remember that a check may be evidence of indebtedness.[41] A check, the corporation duly authorized and existing under the laws of the United States of America and
entries of which are in writing, could prove a loan transaction.[42] It is pure naivet to insist that licensed to do commercial banking activities and perform trust functions in the Philippines.
an entrepreneur who has several sources of income and has access to considerable bank credit,
no longer has any reason to borrow any amount. Petitioner Investors Finance Corporation, which did business under the name and
style of FNCB Finance, was an affiliate company of petitioner Citibank, specifically handling
The petitioners allegation that the P200,000.00 was advance on her share in the money market placements for its clients. It is now, by virtue of a merger, doing business as part
profits of Hagonoy Lumber is implausible. It is true that Hagonoy Lumber was originally owned of its successor-in-interest, BPI Card Finance Corporation. However, so as to consistently
by the parents of petitioner and respondent. However, on December 8, 1986, the heirs freely establish its identity in the Petition at bar, the said petitioner shall still be referred to herein as
renounced and waived in favor of their sister Chua Sioc Huan all their hereditary shares and FNCB Finance.[4]
interest therein, as shown by the Deed of Partition which the petitioner herself signed. By virtue
of this deed, Chua Sioc Huan became the sole owner and proprietor of Hagonoy Lumber. Thus, Respondent Modesta R. Sabeniano was a client of both petitioners Citibank and FNCB
when the respondent delivered the check for P200,000.00 to the petitioner on June 7, 1988, Finance. Regrettably, the business relations among the parties subsequently went awry.
Chua Sioc Huan was already the sole owner of Hagonoy Lumber. At that time, both petitioner
and respondent no longer had any interest in the business enterprise; neither had a right to On 8 August 1985, respondent filed a Complaint[5] against petitioners, docketed as
demand a share in the profits of the business. Respondent became the sole owner of Hagonoy Civil Case No. 11336, before the Regional Trial Court (RTC) of Makati City. Respondent claimed
Lumber only after Chua Sioc Huan sold it to him on August 1, 1990. So, when the respondent to have substantial deposits and money market placements with the petitioners, as well as
delivered to the petitioner the P200,000.00 check on June 7, 1988, it could not have been given money market placements with the Ayala Investment and Development Corporation (AIDC), the
as an advance on petitioners share in the business, because at that moment in time both of them proceeds of which were supposedly deposited automatically and directly to respondents accounts
had no participation, interest or share in Hagonoy Lumber. Even assuming, arguendo, that the with petitioner Citibank. Respondent alleged that petitioners refused to return her deposits and
check was an advance on the petitioners share in the profits of the business, it was highly the proceeds of her money market placements despite her repeated demands, thus, compelling
unlikely that the respondent would deliver a check drawn against his personal, and not against respondent to file Civil Case No. 11336 against petitioners for Accounting, Sum of Money and
the business enterprises account. 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
It is also worthy to note that both the Deed of Partition and the Deed of Sale were original Complaint.
acknowledged before a Notary Public. The notarization of a private document converts
it into a public document, and makes it admissible in court without further proof of its In their joint Answer[7] and Answer to Amended Complaint,[8] filed on 12 September
authenticity.[43] 1985 and 6 November 1985, respectively, petitioners admitted that respondent had deposits and
CITIBANK, N.A. (Formerly G.R. No. 156132 money market placements with them, including dollar accounts in the Citibank branch in
First National City Bank) and Geneva, Switzerland (Citibank-Geneva). Petitioners further alleged that the respondent later
INVESTORS FINANCE Present: obtained several loans from petitioner Citibank, for which she executed Promissory Notes (PNs),
CORPORATION, doing business under and secured by (a) a Declaration of Pledge of her dollar accounts in Citibank-Geneva, and (b)
the name and style of FNCB Finance, PANGANIBAN, C.J. Deeds of Assignment of her money market placements with petitioner FNCB Finance. When
Petitioners, Chairperson, respondent failed to pay her loans despite repeated demands by petitioner Citibank, the latter
YNARES-SANTIAGO, exercised its right to off-set or compensate respondents outstanding loans with her deposits and
AUSTRIA-MARTINEZ, money market placements, pursuant to the Declaration of Pledge and the Deeds of Assignment
- versus- CALLEJO, SR., and executed by respondent in its favor. Petitioner Citibank supposedly informed respondent
CHICO-NAZARIO, JJ. 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
MODESTA R. SABENIANO, Promulgated: her counsel made repeated requests for the withdrawal of respondents deposits and money
Respondent. market placements with petitioner Citibank, including her dollar accounts with Citibank-Geneva
October 16, 2006 and her money market placements with petitioner FNCB Finance. Thus, petitioners prayed for
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x the dismissal of the Complaint and for the award of actual, moral, and exemplary damages, and
attorneys fees.

When the parties failed to reach a compromise during the pre-trial hearing,[9] trial
DECISION proper ensued and the parties proceeded with the presentation of their respective evidence.Ten
years after the filing of the Complaint on 8 August 1985, a Decision[10] was finally rendered in
Civil Case No. 11336 on 24 August 1995 by the fourth Judge[11] who handled the said case, Judge
CHICO-NAZARIO, J.: 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 plaintiffs [respondent Sabeniano]
dollar deposit with Citibank, Switzerland, in the amount of US$149,632.99,
and ordering the said defendant [petitioner Citibank] to refund the said
amount to the plaintiff with legal interest at the rate of twelve percent (12%)
per annum, compounded yearly, from 31 October 1979 until fully paid, or its
peso equivalent at the time of payment;
(2) Declaring the plaintiff [respondent Sabeniano] indebted to the
defendant Bank [petitioner Citibank] in the amount of P1,069,847.40 as of 5
September 1979 and ordering the plaintiff [respondent Sabeniano] to pay
said amount, however, there shall be no interest and penalty charges from
the time the illegal setoff was effected on 31 October 1979;
(3) Dismissing all other claims and counterclaims interposed by
the parties against each other.
Costs against the defendant Bank.
All the parties appealed the foregoing Decision of the RTC to the Court of Appeals, docketed as
CA-G.R. CV No. 51930. Respondent questioned the findings of the RTC that she was still
indebted to petitioner Citibank, as well as the failure of the RTC to order petitioners to render an
accounting of respondents deposits and money market placements with them. On the other
hand, petitioners argued that petitioner Citibank validly compensated respondents outstanding
loans with her dollar accounts with Citibank-Geneva, in accordance with the Declaration of
Pledge she executed in its favor. Petitioners also alleged that the RTC erred in not declaring
respondent liable for damages and interest.
On 26 March 2002, the Court of Appeals rendered its Decision[12] affirming with modification
the RTC Decision in Civil Case No. 11336, dated 24 August 1995, and ruling entirely in favor of
respondent in this wise
Wherefore, premises considered, the assailed 24 August
1995 Decision of the court a quo is hereby AFFIRMED with
MODIFICATION, as follows:
1. Declaring as illegal, null and void the set-off effected by the
defendant-appellant Bank of the plaintiff-appellants dollar deposit with
Citibank, Switzerland, in the amount of US$149,632.99, and ordering
defendant-appellant Citibank to refund the said amount to the plaintiff-
appellant with legal interest at the rate of twelve percent (12%) per annum,
compounded yearly, from 31 October 1979 until fully paid, or its peso
equivalent at the time of payment;
2. As defendant-appellant Citibank failed to establish by
competent evidence the alleged indebtedness of plaintiff-appellant, the set-
off of P1,069,847.40 in the account of Ms. Sabeniano is hereby declared as
without legal and factual basis;
3. As defendants-appellants failed to account the following
plaintiff-appellants money market placements, savings account and current
accounts, the former is hereby ordered to return the same, in accordance
with the terms and conditions agreed upon by the contending parties as
evidenced by the certificates of investments, to wit:
(i) Citibank NNPN Serial No. 023356
(Cancels and Supersedes NNPN No. 22526) issued on
17 March 1977, P318,897.34 with 14.50% interest p.a.;
(ii) Citibank NNPN Serial No. 23357 (Cancels
and Supersedes NNPN No. 22528) issued on 17 March
1977, P203,150.00 with 14.50 interest p.a.;
(iii) FNCB NNPN Serial No. 05757 (Cancels
and Supersedes NNPN No. 04952), issued on 02 June
1977, P500,000.00 with 17% interest p.a.;
(iv) FNCB NNPN Serial No. 05758 (Cancels
and Supersedes NNPN No. 04962), issued on 02 June
1977, P500,000.00 with 17% interest per annum;
(v) The Two Million (P2,000,000.00) money
market placements of Ms. Sabeniano with the Ayala
Investment & Development Corporation (AIDC) with
legal interest at the rate of twelve percent (12%) per
annum compounded yearly, from 30 September 1976
until fully paid;
4. Ordering defendants-appellants to jointly and severally pay the
plaintiff-appellant the sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) by way of moral damages, FIVE HUNDRED THOUSAND
PESOS (P500,000.00) as exemplary damages, and ONE HUNDRED
THOUSAND PESOS (P100,000.00) as attorneys fees.
Apparently, the parties to the case, namely, the respondent, on one hand, and the petitioners, on
the other, made separate attempts to bring the aforementioned Decision of the Court of Appeals,
dated 26 March 2002, before this Court for review.
Respondent Sabeniano did
not commit forum shopping.
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.
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]

Moreover, while there are documentary evidences to support and trace respondents
money market placements with petitioner Citibank, from the original PN No. 20773, rolled-over
several times to, finally, PNs No. 23356 and 23357, there is an evident absence of any
documentary evidence on the payment of these last two PNs and the use of the proceeds thereof
by respondent for opening TD accounts. The paper trail seems to have ended with the copies of
PNs No. 23356 and 23357. Although both Mr. Pujeda and Mr. Tan said that they based their
testimonies, not just on their memories but also on the documents on file, the supposed
documents on which they based those portions of their testimony on the payment of PNs No.
23356 and 23357 and the opening of the TD accounts from the proceeds thereof, were never
presented before the courts nor made part of the records of the case.Respondents
money market placements were of substantial amounts consisting of the principal amount
of P500,000.00, plus the interest it should have earned during the years of placement and it is
difficult for this Court to believe that petitioner Citibank would not have had documented the
payment thereof.
Respondents version of events
Respondent disputed petitioners narration of the circumstances surrounding her loans with
petitioner Citibank and the alleged authority she gave for the off-set or compensation of her
money market placements and deposit accounts with petitioners against her loan obligation.
Findings of this Court as to the existence of the loans
After going through the testimonial and documentary evidence presented by both sides to this
case, it is this Courts 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
respondents savings deposit with petitioner Citibank), 5 September 1979 (using the proceeds of
respondents money market placements with petitioner FNCB Finance) and 26 October 1979
(using respondents dollar accounts remitted from Citibank-Geneva). The totality of petitioners
evidence as to the existence of the said loans preponderates over respondents.Preponderant
evidence means that, as a whole, the evidence adduced by one side outweighs that of the adverse
party.[78]
Respondents outstanding obligation for P1,920,000.00 had been sufficiently documented by
petitioner Citibank.
Petitioner Citibank did admit that respondent was able to pay for some of these PNs,
and what it identified as the first and second sets of PNs were only those which remained
unpaid. It thus became incumbent upon respondent to prove that the checks received by Mr. Tan
were actually applied to the PNs in either the first or second set; a fact that, unfortunately,
cannot be determined from the provisional receipts submitted by respondent since they only
generally stated that the checks received by Mr. Tan were payment for respondents loans.
Since a negotiable instrument is only a substitute for money and
not money, the delivery of such an instrument does not, by itself, operate as
payment (Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan
Landon Co. v. American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44;
21 R.C.L. 60, 61). A check, whether a manager's check or ordinary check, is
not legal tender, and an offer of a check in payment of a debt is not a valid
tender of payment and may be refused receipt by the obligee or creditor.
Mere delivery of checks does not discharge the obligation under a judgment.
The obligation is not extinguished and remains suspended until the
payment by commercial document is actually realized (Art. 1249, Civil Code,
par. 3).
In the case at bar, the issuance of an official receipt by petitioner Citibank would have been
dependent on whether the checks delivered by respondent were actually cleared and paid for by
the drawee banks.
In consideration of the foregoing discussion, this Court finds that the preponderance
of evidence supports the existence of the respondents loans, in the principal sum
ofP1,920,000.00, 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
Best evidence rule
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.
Compensation is a recognized mode of extinguishing obligations. Relevant provisions of the Civil
Code provides
Art. 1278. Compensation shall take place when two persons, in
their own right, are creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is
necessary;
(1) That each one of the obligors be bound principally, and that he
be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due
are consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and communicated in due time to
the debtor.
There is little controversy when it comes to the right of petitioner Citibank to
compensate respondents outstanding loans with her deposit account. As already found by this
Court, petitioner Citibank was the creditor of respondent for her outstanding loans. At the same
time, respondent was the creditor of petitioner Citibank, as far as her deposit account was
concerned, since bank deposits, whether fixed, savings, or current, should be considered as
simple loan or mutuum by the depositor to the banking institution.[122] Both debts consist in
sums of money. By June 1979, all of respondents PNs in the second set had matured and became
demandable, while respondents savings account was demandable anytime. Neither was there
any retention or controversy over the PNs and the deposit account commenced by a third person
and communicated in due time to the debtor concerned. Compensation takes place by operation
of law,[123] therefore, even in the absence of an expressed authority from respondent, petitioner
Citibank had the right to effect, on 25 June 1979, the partial compensation or off-set of
respondents outstanding loans with her deposit account, amounting to P31,079.14.
IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED.
The assailed Decision of the Court of Appeals in CA-G.R. No. 51930, dated 26 March 2002, as
already modified by its Resolution, dated 20 November 2002, is hereby AFFIRMED WITH
MODIFICATION, as follows
1. PNs No. 23356 and 23357 are DECLARED subsisting and outstanding. Petitioner
Citibank is ORDERED to return to respondent the principal amounts of the said PNs,
amounting to Three Hundred Eighteen Thousand Eight Hundred Ninety-Seven Pesos and
Thirty-Four Centavos (P318,897.34) and Two Hundred Three Thousand One Hundred Fifty
Pesos (P203,150.00), respectively, plus the stipulated interest of Fourteen and a half percent
(14.5%) per annum, beginning 17 March 1977;
2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US
Dollars and Ninety-Nine Cents (US$149,632.99) from respondents Citibank-Geneva accounts to
petitioner Citibank in Manila, and the application of the same against respondents outstanding
loans with the latter, is DECLARED illegal, null and void. Petitioner Citibank is ORDERED to
refund to respondent the said amount, or its equivalent in Philippine currency using the
exchange rate at the time of payment, plus the stipulated interest for each of the fiduciary
placements and current accounts involved, beginning 26 October 1979;
3. Petitioner Citibank is ORDERED to pay respondent moral damages in the amount
of Three Hundred Thousand Pesos (P300,000.00); exemplary damages in the amount of Two
Hundred Fifty Thousand Pesos (P250,000.00); and attorneys fees in the amount of Two
Hundred Thousand Pesos (P200,000.00); and
4. Respondent is ORDERED to pay petitioner Citibank the balance of her
outstanding loans, which, from the respective dates of their maturity to 5 September 1979, was
computed to be in the sum of One Million Sixty-Nine Thousand Eight Hundred Forty-Seven
Pesos and Forty Centavos (P1,069,847.40), inclusive of interest. These outstanding loans shall
continue to earn interest, at the rates stipulated in the corresponding PNs, from 5 September
1979 until payment thereof.
SO ORDERED.
G.R. No. 85419 March 9, 1993
DEVELOPMENT BANK OF RIZAL, plaintiff-petitioner,
vs.
SIMA WEI and/or LEE KIAN HUAT, MARY CHENG UY, SAMSON TUNG, ASIAN
INDUSTRIAL PLASTIC CORPORATION and PRODUCERS BANK OF THE
PHILIPPINES, defendants-respondents.
On July 6, 1986, the Development Bank of Rizal (petitioner Bank for brevity) filed a complaint
for a sum of money against respondents Sima Wei and/or Lee Kian Huat, Mary Cheng Uy,
Samson Tung, Asian Industrial Plastic Corporation (Plastic Corporation for short) and the
Producers Bank of the Philippines, on two causes of action:
(1) To enforce payment of the balance of P1,032,450.02 on a promissory
note executed by respondent Sima Wei on June 9, 1983; and
(2) To enforce payment of two checks executed by Sima Wei, payable to
petitioner, and drawn against the China Banking Corporation, to pay the
balance due on the promissory note.
Except for Lee Kian Huat, defendants filed their separate Motions to Dismiss alleging a common
ground that the complaint states no cause of action. The trial court granted the defendants'
Motions to Dismiss. The Court of Appeals affirmed this decision, * to which the petitioner Bank,
represented by its Legal Liquidator, filed this Petition for Review by Certiorari, assigning the
following as the alleged errors of the Court of Appeals:1
(1) THE COURT OF APPEALS ERRED IN HOLDING THAT THE
PLAINTIFF-PETITIONER HAS NO CAUSE OF ACTION AGAINST
DEFENDANTS-RESPONDENTS HEREIN.
(2) THE COURT OF APPEALS ERRED IN HOLDING THAT SECTION 13,
RULE 3 OF THE REVISED RULES OF COURT ON ALTERNATIVE
DEFENDANTS IS NOT APPLICABLE TO HEREIN DEFENDANTS-
RESPONDENTS.
The antecedent facts of this case are as follows:
In consideration for a loan extended by petitioner Bank to respondent Sima Wei, the latter
executed and delivered to the former a promissory note, engaging to pay the petitioner Bank or
order the amount of P1,820,000.00 on or before June 24, 1983 with interest at 32% per annum.
Sima Wei made partial payments on the note, leaving a balance of P1,032,450.02. On November
18, 1983, Sima Wei issued two crossed checks payable to petitioner Bank drawn against China
Banking Corporation, bearing respectively the serial numbers 384934, for the amount of
P550,000.00 and 384935, for the amount of P500,000.00. The said checks were allegedly
issued in full settlement of the drawer's account evidenced by the promissory note. These two
checks were not delivered to the petitioner-payee or to any of its authorized representatives. For
reasons not shown, these checks came into the possession of respondent Lee Kian Huat, who
deposited the checks without the petitioner-payee's indorsement (forged or otherwise) to the
account of respondent Plastic Corporation, at the Balintawak branch, Caloocan City, of the
Producers Bank. Cheng Uy, Branch Manager of the Balintawak branch of Producers Bank,
relying on the assurance of respondent Samson Tung, President of Plastic Corporation, that the
transaction was legal and regular, instructed the cashier of Producers Bank to accept the checks
for deposit and to credit them to the account of said Plastic Corporation, inspite of the fact that
the checks were crossed and payable to petitioner Bank and bore no indorsement of the latter.
Hence, petitioner filed the complaint as aforestated.
The main issue before Us is whether petitioner Bank has a cause of action against any or all of
the defendants, in the alternative or otherwise.
A cause of action is defined as an act or omission of one party in violation of the legal right or
rights of another. The essential elements are: (1) legal right of the plaintiff; (2) correlative
obligation of the defendant; and (3) an act or omission of the defendant in violation of said legal
right.2
The normal parties to a check are the drawer, the payee and the drawee bank. Courts have long
recognized the business custom of using printed checks where blanks are provided for the date of
issuance, the name of the payee, the amount payable and the drawer's signature. All the drawer
has to do when he wishes to issue a check is to properly fill up the blanks and sign it. However, decision, in order to determine whether respondent Sima Wei is liable to the Development Bank
the mere fact that he has done these does not give rise to any liability on his part, until and of Rizal for any amount under the promissory note allegedly signed by her.
unless the check is delivered to the payee or his representative. A negotiable instrument, of
which a check is, is not only a written evidence of a contract right but is also a species of
SO ORDERED.
property. Just as a deed to a piece of land must be delivered in order to convey title to the
grantee, so must a negotiable instrument be delivered to the payee in order to evidence its
existence as a binding contract. Section 16 of the Negotiable Instruments Law, which governs Development Bank of Rizal v. Sima Wei [G.R. No. 85419. March 9, 1993]30JUL
checks, provides in part:
FACTSRespondent Sima Wei drew crossed checks for the petitioner, but were not delivered
Every contract on a negotiable instrument is incomplete and revocable until accordingly. It came in the possession of Lee Kian Huat without petitioner-payees indorsement.
delivery of the instrument for the purpose of giving effect thereto. . . . ISSUEWhether or not there is a cause of action against respondent Sima Wei in as far as the
crossed checks are concerned.
RULINGNO. The payee of a negotiable instrument acquires no interest with respect thereto
Thus, the payee of a negotiable instrument acquires no interest with respect thereto until its
until its delivery to him. Without the initial delivery of the instrument from the drawer to the
delivery to him.3Delivery of an instrument means transfer of possession, actual or constructive,
payee, there can be no liability on the instrument. Moreover, such delivery must be intended to
from one person to another.4 Without the initial delivery of the instrument from the drawer to
give effect to the instrument. Here, non-delivery of said checks to petitioner-payee, the former
the payee, there can be no liability on the instrument. Moreover, such delivery must be intended
did not acquire any right or interest therein and cannot therefore assert any cause of
to give effect to the instrument.
action, founded on said checks, whether against the drawer Sima Wei or against any of the other
respondents.
The allegations of the petitioner in the original complaint show that the two (2) China Bank
checks, numbered 384934 and 384935, were not delivered to the payee, the petitioner herein.
Without the delivery of said checks to petitioner-payee, the former did not acquire any right or
interest therein and cannot therefore assert any cause of action, founded on said checks, whether
against the drawer Sima Wei or against the Producers Bank or any of the other respondents.

In the original complaint, petitioner Bank, as plaintiff, sued respondent Sima Wei on the
promissory note, and the alternative defendants, including Sima Wei, on the two checks. On
appeal from the orders of dismissal of the Regional Trial Court, petitioner Bank alleged that its
cause of action was not based on collecting the sum of money evidenced by the negotiable
instruments stated but on quasi-delict — a claim for damages on the ground of fraudulent acts
and evident bad faith of the alternative respondents. This was clearly an attempt by the
petitioner Bank to change not only the theory of its case but the basis of his cause of action. It is
well-settled that a party cannot change his theory on appeal, as this would in effect deprive the
other party of his day in court.5

Notwithstanding the above, it does not necessarily follow that the drawer Sima Wei is freed from
liability to petitioner Bank under the loan evidenced by the promissory note agreed to by her.
Her allegation that she has paid the balance of her loan with the two checks payable to petitioner
Bank has no merit for, as We have earlier explained, these checks were never delivered to
petitioner Bank. And even granting, without admitting, that there was delivery to petitioner
Bank, the delivery of checks in payment of an obligation does not constitute payment unless they
are cashed or their value is impaired through the fault of the creditor.6 None of these exceptions
were alleged by respondent Sima Wei.

Therefore, unless respondent Sima Wei proves that she has been relieved from liability on the
promissory note by some other cause, petitioner Bank has a right of action against her for the
balance due thereon.

. Petitioner Bank has therefore no cause of action against said respondents, in the alternative or
otherwise. If at all, it is Sima Wei, the drawer, who would have a cause of action against her
co-respondents, if the allegations in the complaint are found to be true..

In the light of the foregoing, the judgment of the Court of Appeals dismissing the petitioner's
complaint is AFFIRMED insofar as the second cause of action is concerned. On the first cause of
action, the case is REMANDED to the trial court for a trial on the merits, consistent with this