Cathay Pacific Vs Vasquez (399 SCRA 207)

3/16/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 504
378 SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
*
G.R. No. 156132. October 16, 2006.
CITIBANK, N.A. (Formerly First National City Bank) and

INVESTORS’ FINANCE CORPORATION, doing business under
the name and style of FNCB Finance, petitioners, vs. MODESTA R.
SABENIANO, respondent.
Actions; Pleadings and Practice; Forum Shopping; Motions for

Extension of Time; The Petition for Review would constitute the initiatory
pleading before the Supreme Court, upon the timely filing of which, the case
before the Court commences, much in the same way a case is initiated by the
filing of a Complaint before the trial court—and, without such a Petition,
there is technically no case before the Court; A Motion for Extension of
Time within which to file a Petition for Review does not serve the same
purpose as the Petition for Review itself.—Although it may seem at first
glance that respondent was simultaneously seeking recourse from the Court
of Appeals and this Court, a careful and closer scrutiny of the details of the
case at bar would reveal otherwise. It should be recalled that respondent did
nothing more in G.R. No. 152985 than to file with this Court a Motion for
Extension of Time within which to file her Petition for Review. For
unexplained reasons, respondent failed to submit to this Court her intended
Petition within the reglementary period. Consequently, this Court was
prompted to issue a Resolution, dated 13 November 2002, declaring G.R.
No. 152985 terminated, and the therein assailed Court of Appeals Decision
final and executory. G.R. No. 152985, therefore, did not progress and
respondent’s appeal was unperfected. The Petition for Review would
constitute the initiatory pleading before this Court, upon the timely filing of
which, the case before this Court commences; much in the same way a case
is initiated by the filing of a Complaint before the trial court. The Petition
for Review establishes the identity of parties, rights or causes of action, and
relief sought from this Court, and without such a Petition, there is
technically no case before this Court. The Motion filed by respondent
seeking extension of time within which to file her Petition for Review does
not serve the same purpose as the Petition for Review itself. Such a Motion
merely presents the important dates and the justification for the additional
time requested for, but it does
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* FIRST DIVISION.
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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 CAG.R. CV No. 51930.
Same; Same; Same; Certification Against Forum Shopping; Contents;

The Certification against Forum Shopping is required to be attached to the
initiatory pleading.—It should also be noted that the Certification against
Forum Shopping is required to be attached to the initiatory pleading, which,
in G.R. No. 152985, should have been respondent’s Petition for Review. It
is in that Certification wherein respondent certifies, under oath, that: (a) she
has not commenced any action or filed any claim involving the same issues
in any court, tribunal or quasijudicial agency and, to the best of her
knowledge, no such other action or claim is pending therein; (b) if there is
such other pending action or claim, that she is presenting a complete
statement of the present status thereof; and (c) if she should thereafter learn
that the same or similar action or claim has been filed or is pending, she
shall report that fact within five days therefrom to this Court. Without her
Petition for Review, respondent had no obligation to execute and submit the
foregoing Certification against Forum Shopping. Thus, respondent did not
violate Rule 7, Section 5 of the Revised Rules of Court; neither did she
mislead this Court as to the pendency of another similar case.
Appeals; Findings of fact of the Court of Appeals are conclusive upon
the Supreme Court; Exceptions.—It is already a wellsettled rule that the
jurisdiction of this Court in cases brought before it from the Court of
Appeals by virtue of Rule 45 of the Revised Rules of Court is limited to
reviewing errors of law. Findings of fact of the Court of Appeals are
conclusive upon this Court. There are, however, recognized exceptions to the
foregoing rule, namely: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the interference made is
manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts;
(5) when the findings of fact are conflicting; (6) when in making its
findings, the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the
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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.
Evidence; Admissions; Documentary Evidence; Promissory Notes; By

the admission of the genuineness and due execution of an instrument is
meant that the party whose signature it bears admits that he signed it or that
it was signed by another for him with his authority, that at the time it was
signed it was in words and figures exactly as set out in the pleading of the
party relying on it, that the document was delivered, and that any formal
requisites required by law, are waived by him; The effect of an admission is
such that in the case of a promissory note a prima facie case is made for the
plaintiff which dispenses with the necessity of evidence on his part and
entitles him to a judgment on the pleadings unless a special defense of new
matter, such as payment, is interposed by the defendant.—Petitioner
Citibank did not deny the existence nor questioned the authenticity of PNs
No. 23356 and 23357 it issued in favor of respondent for her money market
placements. In fact, it admitted the genuineness and due execution of the said
PNs, but qualified that they were no longer outstanding. In Hibberd v. Rohde
and McMillian, 32 Phil. 476, this
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Court delineated the consequences of such an admission—By the admission
of the genuineness and due execution of an instrument, as provided in this
section, is meant that the party whose signature it bears admits that he signed
it or that it was signed by another for him with his authority; that at the time
it was signed it was in words and figures exactly as set out in the pleading of
the party relying upon it; that the document was delivered; and that any
formal requisites required by law, such as a seal, an acknowledgment, or
revenue stamp, which it lacks, are waived by him. Hence, such defenses as
that the signature is a forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M.,
425; Cox vs. Northwestern Stage Co., 1 Idaho, 376; Woollen vs. Whitacre,
73 Ind., 198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escaño, 11 Phil.
Rep., 92); or that it was unauthorized, as in the case of an agent signing for
his principal, or one signing in behalf of a partnership (Country Bank vs.
Greenberg, 127 Cal., 26; Henshaw vs. Root, 60 Inc., 220; Naftzker vs.
Lantz, 137 Mich., 441) or of a corporation (Merchant vs. International
Banking Corporation, 6 Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253;
Barnes vs. Spencer & Barnes Co., 162 Mich., 509); or that, in the case of
the latter, that the corporation was authorized under its charter to sign the
instrument (Merchant vs. International Banking Corporation, supra); or that
the party charged signed the instrument in some other capacity than that
alleged in the pleading setting it out (Payne vs. National Bank, 16 Kan.,
147); or that it was never delivered (Hunt vs. Weir, 29 Ill., 83; Elbring vs.
Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co., 48 N.Y., 253; Fire
Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut off by the
admission of its genuineness and due execution. The effect of the admission
is such that in the case of a promissory note a prima facie case is made for
the plaintiff which dispenses with the necessity of evidence on his part and
entitles him to a judgment on the pleadings unless a special defense of new
matter, such as payment, is interposed by the defendant (Papa vs. Martinez,
12 Phil. Rep., 613; Chinese Chamber of Commerce vs. Pua To Ching, 14
Phil. Rep., 222; Banco EspañolFilipino vs. McKay & Zoeller, 27 Phil.
Rep., 183). x x x
Same; Obligations and Contracts; Payments; As a general rule, one

who pleads payment has the burden of proving it—even where the plaintiff
must allege nonpayment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove non
payment.—Since the genuineness and due execution of
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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 nonpayment, the general rule is that the
burden rests on the defendant to prove payment, rather than on the plaintiff
to prove nonpayment. The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment. When the
existence of a debt is fully established by the evidence contained in the
record, the burden of proving that it has been extinguished by payment
devolves upon the debtor who offers such defense to the claim of the
creditor. Where the debtor introduces some evidence of payment, the burden
of going forward with the evidence—as distinct from the general burden of
proof—shifts to the creditor, who is then under the duty of producing some
evidence of nonpayment.
Same; Witnesses; Taking into consideration the substantial length of

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

evidence means that, as a whole, the evidence adduced by one side outweighs
that of the adverse party.—After going through the testimonial and
documentary evidence presented by both sides to this case, it is this Court’s
assessment that respondent did indeed have outstanding loans with petitioner
Citibank at the time it effected the offset or compensation on 25 July 1979
(using respondent’s savings deposit with petitioner Citibank), 5 September
1979 (using the proceeds of respondent’s money market placements with
petitioner FNCB Finance) and 26 October 1979 (using respondent’s dollar
accounts remitted from CitibankGeneva). The totality of petitioners’
evidence as to the existence of the said loans preponderates over
respondent’s. Preponderant evidence means that, as a whole, the evidence
adduced by one side outweighs that of the adverse party.
Banks and Banking; 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; Crossed Checks; A crossed check cannot be presented to
the drawee bank for payment in cash—the check can only be deposited with
the payee’s bank which, in turn, must present it for payment against the
drawee bank in the course of normal banking hours; The crossed check can
only be deposited and the drawee bank may only pay to another bank in the
payee’s or indorser’s account.—In general, a crossed check cannot be
presented to the drawee bank for payment in cash. Instead, the check can
only be deposited with the payee’s bank which, in turn, must present it for
payment against the drawee bank in the course of normal banking hours. The
crossed check cannot be presented for payment, but it can only be deposited
and the drawee bank may only pay to another bank in the payee’s or
indorser’s account. The effect of crossing a check was described by this
Court in Philippine Commercial International Bank v. Court of Appeals, 350
SCRA 446 (2001)—[T]he crossing of a check with the phrase “Payee’s
Account Only” is a warning that the check should be deposited in the account
of the payee. Thus, it is the duty of the collecting bank PCI Bank to
ascertain that the check be deposited in payee’s account only. It is bound to
scrutinize the check and to know its depositors before it can make the
clearing indorsement “all prior indorsements and/or lack of indorsement
guaranteed.”
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 petitioner Bank were
indeed deposited in several different bank accounts and cleared by the
Clearing Office of the Central Bank of the Philippines, as evidenced by the
stamp marks and notations on the said checks. The crossed MCs are already
in the possession of petitioner Citibank, the drawee bank, which was
ultimately responsible for the payment of the amount stated in the checks.
Given that a check is more than just an instrument of credit used in
commercial transactions for it also serves as a receipt or evidence for the
drawee bank of the cancellation of the said check
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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; It is presumed that private transactions have
been fair and regular, and that the ordinary course of business has been
followed.—This Court finds applicable herein the presumptions that private
transactions have been fair and regular, and that the ordinary course of
business has been followed. There is no question that the loan transaction
between petitioner Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCs—from their issuance by
petitioner Citibank to respondent as payment of the proceeds of her loans; to
its deposit in respondent’s accounts with several different banks; to the
clearing of the MCs by an independent clearing house; and finally, to the
payment of the MCs by petitioner Citibank as the drawee bank of the said
checks—are all private transactions which shall be presumed to have been
fair and regular to all the parties concerned. In addition, the banks involved
in the foregoing transactions are also presumed to have followed the ordinary
course of business in the acceptance of the crossed MCs for deposit in
respondent’s accounts, submitting them for clearing, and their eventual
payment and cancellation.
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 named as such in the checks; The mere fact that the
Manager’s Checks (MCs) do not bear the payee’s signature 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.
Same; Same; Same; 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.—Mr. Tan, in his deposition, further explained that provisional
receipts were issued when payment to the bank was made using checks, since
the checks would still be subject to clearing. The purpose for the provisional
receipts was merely to acknowledge the delivery of the checks to the
possession of the bank, but not yet of payment. This bank practice finds
legitimacy in the pronouncement of this Court that a check, whether an MC
or an ordinary check, is not legal tender and, therefore, cannot constitute
valid tender of payment. In Philippine Airlines, Inc. v. Court of Appeals,
181 SCRA 557 (1990), this Court elucidated that: Since a negotiable
instrument is only a substitute for money and not money, the delivery of
such an instrument does not, by itself, operate as payment (Sec. 189, Act
2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v. American
Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A
check, whether a manager’s check or ordinary check, is not legal tender, and
an offer of a check in payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor. Mere delivery of checks
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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 petitioner
Citibank as a loan processor, was responsible for booking respondent’s
loans. Booking the loans means recording it in the General Ledger. She
explained the procedure for booking loans, as follows: The account officer,
in the Marketing Department, deals directly with the clients who wish to
borrow money from petitioner Citibank. The Marketing Department will
forward a loan booking checklist, together with the borrowing client’s PNs
and other supporting documents, to the loan preprocessor, 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
preprocessor, to be forwarded finally to the loan processor. The loan
processor shall book the loan in the General Ledger, indicating therein the
client name, loan amount, interest rate, maturity date, and the corresponding
PN number. Since she booked respondent’s loans personally, Ms.
Dondoyano testified that she saw the original PNs. In 1986, Atty. Fernandez
of petitioner Citibank requested her to prepare an accounting of respondent’s
loans, which she did, and which was presented as Exhibit “120” for the
petitioners. The figures from the said exhibit were culled from the bookings
in the General Ledger, a fact which respondent’s counsel was even willing to
stipulate.
Evidence; Preponderance of Evidence; Words and Phrases; While it is
wellsettled that the term “preponderance of evidence” should not be wholly
dependent on the number of witnesses, there are certain instances when the
number of witnesses becomes the determining factor.—This Court finds that
the preponderance of evidence supports the existence of the respondent’s
loans, in the principal sum of P1,920,000.00, as of 5 September 1979. While
it is wellsettled that the term “preponderance of evidence” should not be
wholly dependent on the number of witnesses, there are certain instances
when the number of witnesses become the determining factor—The
preponderance of evidence may be determined, under certain conditions, by
the number of witnesses testifying to a particular fact or
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.,
761.)
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.
Same; Same; Even with respect to documentary evidence, the best
evidence rule applies only when the content of such document is the subject
of the inquiry.—As the aforequoted provision states, the best evidence rule
applies only when the subject of the inquiry is the contents of the document.
The scope of the rule is more extensively explained thus—But even with
respect to documentary evidence, the best evidence rule applies only when
the content of such document is the subject of the inquiry. Where the issue is
only as to whether such
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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. 7666; 4 Martin,
op. cit., p. 78). Any other substitutionary evidence is likewise admissible
without need for accounting for the original. Thus, when a document is
presented to prove its existence or condition it is offered not as documentary,
but as real, evidence. Parol evidence of the fact of execution of the
documents is allowed (Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565).
x x x
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 findings therein
of wrongdoing or misconduct on the part of herein petitioner Citibank and
Mr. Tan. Any finding of wrongdoing or misconduct as against herein
petitioners should be made based on the factual background and pieces of
evidence submitted in this case, not those in another case. It is apparent that
the Court of Appeals took judicial notice of the Dy case not as a legal
precedent for the present case, but rather as evidence of similar acts
committed by petitioner Citibank and Mr. Tan. A basic rule of evidence,
however, states that, “Evidence that one did or did not do a certain thing at
one time is not admissible to prove that he did or did not do the same or
similar thing at another time; but it may be received to prove a specific intent
or knowledge, identity, plan, system, scheme, habit, custom or usage, and
the like.” The rationale for the rule is explained thus—The rule is founded
upon reason, public policy, justice and judicial convenience. The fact that a
person has committed the same or similar acts at some prior time affords, as
a general rule, no logical guaranty that he committed the act in question. This
is so because, subjectively, a man’s mind and even his modes of life may
change; and, objectively, the conditions under which he may find himself at a
given time may likewise change and thus induce him to act in a
390
different way. Besides, if evidence of similar acts are to be invariably
admitted, they will give rise to a multiplicity of collateral issues and will
subject the defendant to surprise as well as confuse the court and prolong the
trial.
Banks and Banking; Compensation; Compensation takes place by

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

documents, it should be recalled that the notarization of a private document
converts it into a public one and renders it admissible in court without
further proof of its authenticity.—The Deeds of Assignment of the money
market placements with petitioner FNCB Finance were notarized documents,
thus, admissible in evidence. Rule 132, Section 30 of the Rules of Court
provides that—SEC. 30. Proof of notarial documents.—Every instrument
duly acknowledged or proved and certified as provided by law, may be
presented in evidence without further proof, the certificate of
acknowledgement being prima facie evidence of the execution of the
instrument or document involved. Significant herein is this Court’s
elucidation in De Jesus v. Court of Appeals, 217 SCRA 307 (1993), which
reads—On the evidentiary value of these documents, it should be recalled
that the notarization of a private document converts it into a public
391
VOL. 504, OCTOBER 16, 2006 391
one and renders it admissible in court without further proof of its
authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This is so because
a public document duly executed and entered in the proper registry is
presumed to be valid and genuine until the contrary is shown by clear and
convincing proof (Asido vs. Guzman, 57 Phil. 652 [1918]; U.S. vs.
Enriquez, 1 Phil. 241 [1902]; Favor vs. Court of Appeals, 194 SCRA 308
[1991]). As such, the party challenging the recital of the document must
prove his claim with clear and convincing evidence (Diaz vs. Court of
Appeals, 145 SCRA 346 [1986]).
Same; Same; The certificate of acknowledgment in notarized Deeds of

Assignment constitutes prima facie evidence of the execution thereof.—The
rule on the evidentiary weight that must be accorded a notarized document is
clear and unambiguous. The certificate of acknowledgement in the notarized
Deeds of Assignment constituted prima facie evidence of the execution
thereof. Thus, the burden of refuting this presumption fell on respondent.
She could have presented evidence of any defect or irregularity in the
execution of the said documents or raised questions as to the verity of the
notary public’s acknowledgment and certificate in the Deeds. But again,
respondent admitted executing the Deeds of Assignment, dated 2 March
1978 and 9 March 1978, although claiming that the loans for which they
were executed as security were already paid. And, she assailed the Deeds of
Assignment, dated 25 August 1978, with nothing more than her bare denial
of execution thereof, hardly the clear and convincing evidence required to
trounce the presumption of due execution of a notarized document.
Same; Pledge; Although the pertinent documents were entitled Deeds of
Assignment, they were, in reality, more of a pledge.—Petitioner Citibank
was only acting upon the authority granted to it under the foregoing Deeds
when it finally used the proceeds of PNs No. 20138 and 20139, paid by
petitioner FNCB Finance, to partly pay for respondent’s outstanding loans.
Strictly speaking, it did not effect a legal compensation or offset 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.
Same; Same; Conflict of Laws; Processual Presumptions; Words and

Phrases; In the absence of any allegation and evidence presented of the
specific rules and laws governing the constitution of a pledge in Geneva,
Switzerland, they will be presumed to be the same as Philippine local or
domestic laws—this is known as processual presumption.—Certain
principles of private international law should be considered herein because
the property pledged was in the possession of an entity in a foreign country,
namely, CitibankGeneva. In the absence of any allegation and evidence
presented by petitioners of the specific rules and laws governing the
constitution of a pledge in Geneva, Switzerland, they will be presumed to be
the same as Philippine local or domestic laws; this is known as processual
presumption.
Same; Best Evidence Rule; Forgery; When a document is assailed on

the basis of forgery, the best evidence rule applies; Without the original
document containing the alleged forged signature, one cannot make a
definitive comparison which would establish forgery—a comparison based
on a mere xerox copy or reproduction of the document under controversy
cannot produce reliable results.—Respondent denied that it was her
signature on the Declaration of Pledge. She claimed that the signature was a
forgery. When a document is assailed on the basis of forgery, the best
evidence rule applies—Basic is the rule of evidence that when the subject of
inquiry is the contents of a document, no evidence is admissible other than
the original document itself except in the instances mentioned in Section 3,
Rule 130 of the Revised Rules of Court. Mere photocopies of documents are
inadmissible pursuant to the best evidence rule. This is especially true when
the issue is that of forgery. As a rule, forgery cannot be presumed and must
be proved by clear, positive and convincing evidence and the burden of proof
lies on the party alleging forgery. The best evidence of a forged signature in
an instrument is the instrument itself reflecting the alleged forged signature.
The fact of forgery can only be established by a comparison between the
alleged forged signature and the authentic and
393
VOL. 504, OCTOBER 16, 2006 393
genuine signature of the person whose signature is theorized upon to have
been forged. Without the original document containing the alleged forged
signature, one cannot make a definitive comparison which would establish
forgery. A comparison based on a mere xerox copy or reproduction of the
document under controversy cannot produce reliable results.
Same; Presumptions; It is presumed that evidence willfully suppressed
by a party would be adverse to said party if the evidence is produced.—
Respondent made several attempts to have the original copy of the pledge
produced before the RTC so as to have it examined by experts. Yet, despite
several Orders by the RTC, petitioner Citibank failed to comply with the
production of the original Declaration of Pledge. It is admitted that Citibank
Geneva had possession of the original copy of the pledge. While petitioner
Citibank in Manila and its branch in Geneva may be separate and distinct
entities, they are still incontestably related, and between petitioner Citibank
and respondent, the former had more influence and resources to convince
CitibankGeneva to return, albeit temporarily, the original Declaration of
Pledge. Petitioner Citibank did not present any evidence to convince this
Court that it had exerted diligent efforts to secure the original copy of the
pledge, nor did it proffer the reason why CitibankGeneva obstinately
refused to give it back, when such document would have been very vital to
the case of petitioner Citibank. There is thus no justification to allow the
presentation of a mere photocopy of the Declaration of Pledge in lieu of the
original, and the photocopy of the pledge presented by petitioner Citibank
has nil probative value. In addition, even if this Court cannot make a
categorical finding that respondent’s signature on the original copy of the
pledge was forged, it is persuaded that petitioner Citibank willfully
suppressed the presentation of the original document, and takes into
consideration the presumption that the evidence willfully suppressed would
be adverse to petitioner Citibank if produced.
Appeals; Review of matters, even those not assigned as errors in the
appeal, may be authorized 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 appellant.—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 consid
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 appellant. 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
petitioner Citibank to effect legal compensation of respondent’s local
deposits, as well as its right to the proceeds of PNs No. 20138 and 20139 by
virtue of the notarized Deeds of Assignment, to partly extinguish
respondent’s outstanding loans, it finds that petitioner Citibank did commit
wrong when it failed to pay and properly account for the proceeds of
respondent’s money market placements, evidenced by PNs No. 23356 and
23357, and when it sought the remittance of respondent’s dollar accounts
from CitibankGeneva by virtue of a highlysuspect Declaration of Pledge to
be applied to the remaining balance of respondent’s outstanding loans. It
bears to emphasize that banking is impressed with public interest and its
fiduciary character requires high standards of integrity and performance. 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. The bank must record every single transaction
accurately, down to the last centavo, and as promptly as possible. Petitioner
Citibank evidently failed to exercise the required degree of care and
transparency in its transactions with respondent, thus, resulting in the
wrongful deprivation of her property.
Damages; The award of moral damages is meant to compensate for the
actual injury suffered by a party, not to enrich her.—For the mental anguish,
serious anxiety, besmirched reputation, moral shock and social humiliation
suffered by the respondent, the award of moral damages is but proper.
However, this Court reduces the amount thereof to P300,000.00, for the
award of moral damages is
395
VOL. 504, OCTOBER 16, 2006 395
meant to compensate for the actual injury suffered by the respondent, not to
enrich her.
PETITION for review on certiorari of the decision and resolution of
the Court of Appeals.
The facts are stated in the opinion of the Court.
Agcaoili & Associates for petitioners.
Angara, Abello, Concepcion, Regala & Cruz cocounsel for
petitioners.
Moises R. Tolentino, Jr. for respondent.
CHICONAZARIO, J.:
1
Before this Court is a Petition for Review on Certiorari, 2
under Rule
45 of the Revised Rules of Court, of the Decision of the Court of
Appeals in CAG.R. CV No. 51930, dated 26 March 2002, and the
3
Resolution, dated 20 November 2002, of the same court which,
although modifying its earlier Decision, still denied for the most part
the Motion for Reconsideration of herein petitioners.
Petitioner Citibank, N.A. (formerly known as the First National
City Bank) is a banking corporation duly authorized and existing
under the laws of the United States of America and licensed to do
commercial banking activities and perform trust functions in the
Philippines.
Petitioner Investor’s Finance Corporation, which did business
under the name and style of FNCB Finance, was an affiliate
company of petitioner Citibank, specifically handling money market
placements for its clients. It is now, by virtue
_______________
1 Rollo, pp. 165325.
2 Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices
Conrado M. Vasquez, Jr. and Amelita G. Tolentino, concurring; Id., at pp. 327366.
3 Id., at pp. 368374.
396
of a merger, doing business as part of its successorininterest, BPI
Card Finance Corporation. However, so as to consistently establish
its identity in the Petition at bar, the
4
said petitioner shall still be
referred to herein as FNCB Finance.
Respondent Modesta R. Sabeniano was a client of both
petitioners Citibank and FNCB Finance. Regrettably, the business
relations among the parties subsequently went awry. 5
On 8 August 1985, respondent filed a Complaint against
petitioners, docketed as Civil Case No. 11336, before the Regional
Trial Court (RTC) of Makati City. Respondent claimed to have
substantial deposits and money market placements with the
petitioners, as well as money market placements with the Ayala
Investment and Development Corporation (AIDC), the proceeds of
which were supposedly deposited automatically and directly to
respondent’s accounts with petitioner Citibank. Respondent alleged
that petitioners refused to return her deposits and the proceeds of her
money market placements despite her repeated demands, thus,
compelling respondent to file Civil Case No. 11336 against
petitioners for “Accounting, Sum of Money and 6
Damages.”
Respondent eventually filed an Amended Complaint on 9 October
1985 to include additional claims to deposits and money market
placements inadvertently left out from her original Complaint.
7 8
In their joint Answer and Answer to Amended Complaint, filed
on 12 September 1985 and 6 November 1985, respectively,
petitioners admitted that respondent had deposits and money market
placements with them, including dollar accounts in the Citibank
branch in Geneva, Switzerland (CitibankGeneva). Petitioners
further alleged that the respondent
_______________
4 TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 910.
5 Records, Vol. I, pp. 18.
6 Id., at pp. 148157.
7 Id., at pp. 4051.
8 Id., at pp. 208227.
397
VOL. 504, OCTOBER 16, 2006 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 CitibankGeneva, 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 offset 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 CitibankGeneva 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 9 parties failed to reach a compromise during the pre
trial hearing, trial proper ensued and the parties proceeded with the
presentation of their respective evidence. Ten years after the filing of
10
the Complaint on 8 August 1985, a Decision was finally rendered 11
in Civil Case No. 11336 on 24 August 1995 by the fourth Judge
who handled the said case,
_______________
9 Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes, Records,
Vol. I, p. 346.
10 Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 16071621.
11 Civil Case No. 11336 was raffled and rereffled to four different Judges of the
Makati RTC before it was finally resolved. It was originally raffled to Makati RTC,
Branch 140, presided by Judge Ansberto P. Paredes. On 4 February 1987, before the
termination of the redirect examination of herein respondent (plaintiff before the
398
Judge Manuel D. Victorio, the dispositive portion of which reads—
“WHEREFORE, in view of all the foregoing, decision is hereby rendered as
follows:
(1) Declaring as illegal, null and void the setoff effected by the
defendant Bank [petitioner Citibank] of plaintiff’s [respondent Sabeniano]
dollar deposit with Citibank, Switzerland, in the amount of US$149,632.99,
and ordering the said defendant [petitioner Citibank] to refund the said
amount to the plaintiff with legal interest at the rate of twelve percent (12%)
per annum, compounded yearly, from 31 October 1979 until fully paid, or its
peso equivalent at the time of payment;
(2) Declaring the plaintiff [respondent Sabeniano] indebted to the
defendant Bank [petitioner Citibank] in the amount of P1,069,847.40 as of 5
September 1979 and ordering the plaintiff [respondent Sabeniano] to pay
said amount, however, there shall be no interest and penalty charges from the
time the illegal setoff was effected on 31 October 1979;
(3) Dismissing all other claims and counterclaims interposed by the
parties against each other.
Costs against the defendant Bank.”
_______________
RTC), the case was transferred to Makati RTC, Branch 57, presided by Judge
Francisco X. Velez, for reasons not disclosed in the Records. Judge Velez was able to
try and hear the case until the presentation of the evidence by herein petitioners
(defendants before the RTC). Respondent again took the stand to present rebuttal
evidence, but even before she could finish her testimony, Judge Velez inhibited
himself upon petitioners’ motion (Order, dated 10 April 1992, penned by Judge
Francisco X. Velez, Records, Vol. 11, p. 1085). The case was transferred to Makati
RTC, Branch 141, presided by Judge Marcelino F. Bautista, Jr. For reasons not
disclosed in the Records, Judge Manuel D. Victorio took over Makati RTC, Branch
141. After the parties submitted their respective Memoranda, Judge Victorio declared
the case submitted for decision (Order, dated 9 December 1994, penned by Judge
Manuel D. Victorio, Records, Vol. III, p. 1602). Judge Victorio rendered his Decision in
Civil Case No. 11336 on 24 August 1995 (Records, Vol. III, pp. 16071621).
399
VOL. 504, OCTOBER 16, 2006 399
All the parties appealed the foregoing Decision of the RTC to the
Court of Appeals, docketed as CAG.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 CitibankGeneva, 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
On 26 March 2002, the Court of Appeals rendered its Decision
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 setoff effected by the defendant
appellant Bank of the plaintiffappellant’s dollar deposit with Citibank,
Switzerland, in the amount of US$149,632.99, and ordering defendant
appellant Citibank to refund the said amount to the plaintiffappellant with
legal interest at the rate of twelve percent (12%) per annum, compounded
yearly, from 31 October 1979 until fully paid, or its peso equivalent at the
time of payment;
2. As defendantappellant Citibank failed to establish by competent
evidence the alleged indebtedness of plaintiffappellant, the setoff of
P1,069,847.40 in the account of Ms. Sabeniano is hereby declared as without
legal and factual basis;
3. As defendantsappellants failed to account the following plaintiff
appellant’s money market placements, savings account and current accounts,
the former is hereby ordered to return the same, in accordance with the terms
and conditions agreed upon by the con
_______________
12 Rollo, pp. 365366.
400
tending 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 defendantsappellants to jointly and severally pay the

plaintiffappellant the sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) by way of moral damages, FIVE HUNDRED THOUSAND
PESOS (P500,000.00) as exemplary damages, and ONE HUNDRED
THOUSAND PESOS (P100,000.00) as attorney’s fees.
Apparently, the parties to the case, namely, the respondent, on one
hand, and the petitioners, on the other, made separate attempts to
bring the aforementioned Decision of the Court of Appeals, dated 26
March 2002, before this Court for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the Decision of

the Court of Appeals in CAG.R. CV No. 51930, dated 26 March
2002, and instead, filed immediately with this Court on 3 May 2002
a Motion for Extension of Time to File a
401
VOL. 504, OCTOBER 16, 2006 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
appeal continued to run and still expired on 3 May 2002.
Respondent failed to file any Petition for Review within the
prescribed 15period for appeal and, hence, this Court issued a
Resolution, dated 13 November 2002, in which it pronounced that
—
G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals, et al.).—It
appearing that petitioner failed to file the intended petition for review on
certiorari within the period which expired on May 3, 2002, the Court
Resolves to DECLARE THIS CASE TERMINATED and DIRECT the
Division Clerk of Court to INFORM the parties that the judgment sought to
be reviewed has become final and executory.
_______________
13 Rollo of G.R. No. 152985, pp. 34.
14 The filing of a motion for extension does not automatically suspend the running
of the period for appeal, since the purpose of such motion is to merely ask the court to
grant an enlargement of the time fixed by law. The movant, therefore, has no right to
assume that his motion would be granted, and should check with the court as to the
outcome of his motion, so that if the same is denied, he can still perfect his appeal.
(Hon. Bello and Ferrer v. Fernando, 114 Phil. 101, 104; 4 SCRA 135, 138 [1962]).
15 Rollo of G.R. No. 156132, p. 1227.
402
The said Resolution was duly recorded in the Book of Entriesof
Judgments on 3 January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a Motion for
Reconsideration of its Decision in CAG.R. CV No. 51930, dated 26
March 2002. Acting upon
16
the said Motion, the Court of Appeals
issued the Resolution, dated 20 November 2002, modifying its
Decision of 26 March 2002, as follows—
“WHEREFORE, premises considered, the instant Motion for

Reconsideration is PARTIALLY GRANTED as Subparagraph (V)
paragraph 3 of the assailed Decision’s dispositive portion is hereby ordered

DELETED.
The challenged 26 March 2002 Decision of the Court is AFFIRMED
with MODIFICATION.”
Assailing the Decision and Resolution of the Court of Appeals in
CAG.R. CV No. 51930, dated 26 March 2002 and 20 November
2002, respectively, petitioners filed the present Petition, docketed as
17
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.
_______________
16 Rollo, p. 374.
17 Resolution, dated 29 January 2003; Rollo, pp. 980AB.
18 Resolution, dated 23 June 2003; Id., at pp. 13111312.
403
VOL. 504, OCTOBER 16, 2006 403
The Resolution of this Court, dated 13 November 2002, in G.R. No.
152985, declaring the Decision of the Court of Appeals, dated 26
March 2002, final and executory, pertains to respondent Sabeniano
alone.
Before proceeding to a discussion of the merits of the instant
Petition, this Court wishes to address first the argument, persistently
advanced by respondent in her pleadings on record, as well as her
numerous personal and unofficial letters to this Court which were no
longer made part of the record, that the Decision of the Court of
Appeals in CAG.R. CV No. 51930, dated 26 March 2002, had
already become final and executory by virtue of the Resolution of
this Court in G.R. No. 152985, dated 13 November 2002.
G.R. No. 152985 was the docket number assigned by this Court
to respondent’s Motion for Extension of Time to File a Petition for
Review. Respondent, though, did not file her supposed Petition.

Thus, after the lapse of the prescribed period for the filing of the
Petition, this Court issued the Resolution, dated 13 November 2002,
declaring the Decision of the Court of Appeals, dated 26 March
2002, final and executory. It should be pointed out, however, that the
Resolution, dated 13 November 2002, referred only to G.R. No.
152985, respondent’s appeal, which she failed to perfect through
the filing of a Petition for Review within the prescribed period. The
declaration of this Court in the same Resolution would bind
respondent solely, and not petitioners which filed their own separate
appeal before this Court, docketed as G.R. No. 156132, the Petition
at bar. This would mean that respondent, on her part, should be
bound by the findings of fact and law of the Court of Appeals,
including the monetary amounts consequently awarded to her by the
appellate court in its
404
Decision, dated 26 March

19
2002; and she can no longer refute or
assail any part thereof.
This Court already
20
explained the matter to respondent when it
issued a Resolution in G.R. No. 156132, dated 2 February 2004,
which addressed her Urgent Motion for the Release of the Decision
with the Implementation of the Entry of Judgment in the following
manner—
[A]cting on Citibank’s and FNCB Finance’s Motion for Reconsideration, we
resolved to grant the motion, reinstate the petition and require Sabeniano to
file a comment thereto in our Resolution of June 23, 2003. Sabeniano filed a
Comment dated July 17, 2003 to which Citibank and FNCB Finance filed a
Reply dated August 20, 2003.
From the foregoing, it is clear that Sabeniano had knowledge of, and in
fact participated in, the proceedings in G.R. No. 156132. She cannot feign
ignorance of the proceedings therein and claim that the Decision of the Court
of Appeals has become final and executory. More precisely, the Decision
became final and executory only with regard to Sabeniano in view of her
failure to file a petition for review within the extended period granted by the
Court, and not to Citibank and FNCB Finance whose Petition for Review
was duly reinstated and is now submitted for decision.
Accordingly, the instant Urgent Motion is hereby DENIED. (Emphasis
supplied.)
To sustain the argument of respondent would result in an unjust and
incongruous situation wherein one party may frustrate the efforts of
the opposing party to appeal the case by merely filing with this
Court a Motion for Extension of Time to File a Petition for Review,
ahead of the opposing
_______________
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., 118 Phil. 532,

535; 8 SCRA 517, 519520 (1963).
20 Rollo, pp. 14431445.
405
VOL. 504, OCTOBER 16, 2006 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.
Respondent Sabeniano did not commit forum shopping.
Another issue that does not directly involve the merits of the present
Petition, but raised by petitioners, is whether respondent should be
held liable for forum shopping.
Petitioners contend that respondent committed forum shopping
on the basis of the following facts:
While petitioners’ Motion for Reconsideration of the Decision in
CAG.R. CV No. 51930, dated 26 March 2002, was still pending
before the Court of Appeals, respondent already filed with this Court
on 3 May 2002 her Motion for Extension of Time to File a Petition
for Review of the same Court of Appeals Decision, docketed as G.R.
No. 152985. Thereafter, respondent continued to participate in the
proceedings before the Court of Appeals in CAG.R. CV No. 51930
by filing her Comment, dated 17 July 2002, to petitioners’ Motion
for Reconsideration; and a Rejoinder, dated 23 September 2002, to
petitioners’ Reply. Thus, petitioners argue that by seeking relief
concurrently from this Court and the Court of Appeals,
_______________
21 See the case of Borromeo v. Court of Appeals (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 adversely affects him. If the perfection of an appeal by one party would
not bar the right of the other party to appeal from the same decision, then an
unperfected appeal, as in the case at bar, would have far less effect.
406
respondent is undeniably guilty of forum shopping, if not indirect
contempt.
This Court, however, finds no sufficient basis to hold respondent
liable for forum shopping.
Forum shopping has been defined as the filing of two or more
suits involving the same parties for the same cause of action, either
simultaneously or successively,
22
for the purpose of obtaining a
favorable judgment. The test for determining forum shopping is
whether in the two (or more) cases pending, there is an 23 identity of
parties, rights or causes of action, and relief sought. To guard
against this deplorable practice, Rule 7, Section 5 of the revised
Rules of Court imposes the following requirement—
“SEC. 5. Certification against forum shopping.—The plaintiff or principal

party shall certify under oath in the complaint or other initiatory pleading
asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced
any action or filed any claim involving the same issues in any court, tribunal
or quasijudicial agency and, to the best of his knowledge, no such other
action or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he should
thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory pleading but shall be
cause for the dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission of a false
certification or noncompliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to the corresponding
administrative and criminal
_______________
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
VOL. 504, OCTOBER 16, 2006 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.”
Although it may seem at first glance that respondent was
simultaneously seeking recourse from the Court of Appeals and this
Court, a careful and closer scrutiny of the details of the case at bar
would reveal otherwise.
It should be recalled that respondent did nothing more in G.R.
No. 152985 than to file with this Court a Motion for Extension of
Time within which to file her Petition for Review. For unexplained
reasons, respondent failed to submit to this Court her intended
Petition within the reglementary period. Consequently, this Court
was prompted to issue a Resolution, dated 13 November 2002,
declaring G.R. No. 152985 terminated, and the therein assailed
Court of Appeals Decision final and executory. G.R. No. 152985,
therefore, did not progress and respondent’s appeal was unperfected.
The Petition for Review would constitute the initiatory pleading
before this Court, upon the timely filing of which, the case before
this Court commences; much in the same way a case is initiated by
the filing of a Complaint before the trial court. The Petition for
Review establishes the identity of parties, rights or causes of action,
and relief sought from this Court, and without such a Petition, there
is technically no case before this Court. The Motion filed by
respondent seeking extension of time within which to file her
Petition for Review does not serve the same purpose as the Petition
for Review itself. Such a Motion merely presents the important dates
and the justification for the additional time requested for, but it does
not go into the details of the appealed case.
Without any particular idea as to the assignments of error or the
relief respondent intended to seek from this Court, in light of her
failure to file her Petition for Review, there is actually no second
case involving the same parties, rights or
408
causes of action, and relief sought, as that in CAG.R. CV No.
51930.
It should also be noted that the Certification against Forum
Shopping is required to be attached to the initiatory pleading, which,
in G.R. No. 152985, should have been respondent’s Petition for
Review. It is in that Certification wherein respondent certifies, under
oath, that: (a) she has not commenced any action or filed any claim
involving the same issues in any court, tribunal or quasijudicial
agency and, to the best of her knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or
claim, that she is presenting a complete statement of the present
status thereof; and (c) if she should thereafter learn that the same or
similar action or claim has been filed or is pending, she shall report
that fact within five days therefrom to this Court. Without her
Petition for Review, respondent had no obligation to execute and
submit the foregoing Certification against Forum Shopping. Thus,
respondent did not violate Rule 7, Section 5 of the Revised Rules of
Court; neither did she mislead this Court as to the pendency of
another similar case.
Lastly, the fact alone that the Decision of the Court of Appeals,
dated 26 March 2002, essentially ruled in favor of respondent, does
not necessarily preclude her from appealing the same. Granted that
such a move is ostensibly irrational, nonetheless, it does not amount
to malice, bad faith or abuse of the court processes in the absence of
further proof. Again, it should be noted that the respondent did not
file her intended Petition for Review. The Petition for Review would
have presented before this Court the grounds for respondent’s appeal
and her arguments in support thereof. Without said Petition, any
reason attributed to the respondent for appealing the 26 March 2002
Decision would be grounded on mere speculations, to which this
Court cannot give credence.
409
VOL. 504, OCTOBER 16, 2006 409
II
As an exception to the general rule, this Court takes cognizance of
questions of fact raised in the Petition at bar.
It is already a wellsettled rule that the jurisdiction of this Court in
cases brought before it from the Court of Appeals by virtue of Rule
45 of the Revised Rules of Court is limited to reviewing errors of
law. Findings of fact of the Court of Appeals are conclusive upon
this Court. There are, however, recognized exceptions to the
foregoing rule, namely: (1) when the findings are grounded entirely
on speculation, surmises, or conjectures; (2) when the interference
made is manifestly mistaken, absurd, or impossible; (3) when there
is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings, the Court of Appeals
went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the
findings are contrary to those of the trial court; (8) when the findings
are conclusions without citation of specific evidence on which they
are based; (9) when the facts set forth in the petition as well as in the
petitioner’s main and reply briefs are not disputed by the respondent;
and (10) when the findings of fact are premised on the supposed
24
absence of evidence and contradicted by the evidence on record.
Several of the enumerated exceptions pertain to the Petition at
bar.
It is indubitable that the Court of Appeals made factual findings
25
that are contrary to those of the RTC, thus, result
_______________
24 Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282283; 285 SCRA 351, 357
358 (1998).
25 The Court of Appeals modified the trial court’s findings and conclusions, as
follows: (1) By declaring the P1,069,847.40 alleged indebtedness of Ms. Sabeniano as
nonexisting for failure of Citibank
410
ing in its substantial modification of the trial court’s Decision, and a
ruling entirely in favor of the respondent. In addition, petitioners
invoked in the instant Petition for Review several exceptions that
would justify this Court’s review of the factual findings of the Court
of Appeals, i.e., the Court of Appeals made conflicting findings of
fact; findings of fact which went beyond the issues raised on appeal
before it; as well as findings of fact premised on the supposed
absence of evidence and contradicted by the evidence on record.
On the basis of the foregoing, this Court shall proceed to
reviewing and reevaluating the evidence on record in order to settle
questions of fact raised in the Petition at bar.
The fact that the trial judge who rendered the RTC Decision in Civil
Case No. 11336, dated 24 August 1995, was not the same judge who
heard and tried the case, does not, by itself, render the said Decision
erroneous.
The Decision in Civil Case No. 11336 was rendered more than 10
years from the institution of the said case. In the course of its trial,
26
the case was presided over by four (4) different RTC judges. It was
Judge Victorio, the fourth judge assigned to the case, who wrote the
27
RTC Decision, dated 24 August 1995. In his Decision, Judge
Victorio made the following findings—
“After carefully evaluating the mass of evidence adduced by the parties, this
Court is not inclined to believe the plaintiff’s assertion that the promissory
notes as well as the deeds of assignments of
_______________
to substantiate its allegations; (2) By declaring that there are unpaid money market
placements, current accounts and savings account of Ms. Sabeniano; and (3) The
awarding of damages in favor of Ms. Sabeniano and against Citibank.
26 Supra note 11.
27 Records, Vol. III, pp. 16121613.
411
VOL. 504, OCTOBER 16, 2006 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 notarized, hence
they partake the nature of a public document. It makes more than
preponderant proof to overturn the effect of a notarial attestation. Copies of
the deeds of assignments were actually filed with the Records Management
and Archives Office.
Finally, there were sufficient evidence wherein the plaintiff had admitted
the existence of her loans with the defendant Bank in the total amount of
P1,920,000.00 exclusive of interests and penalty charges (Exhibits “28,”
“31,” “32,” and “33”).
In fine, this Court hereby finds that the defendants had established the
genuineness and due execution of the various promissory notes heretofore
identified as well as the two deeds of assignments of the plaintiff’s money
market placements with defendant FNCB Finance, on the strength of which
the said money market placements were applied to partially pay the
plaintiff’s past due obligation with the defendant Bank. Thus, the total sum
of P1,053,995.80 of the plaintiff’s past due obligation was partially offset by
the said money market placement leaving a balance of P1,069,847.40 as of 5
September 1979 (Exhibit “34”).”
Disagreeing in the foregoing findings, the Court of Appeals stressed,
in its Decision in CAG.R. CV No. 51930, dated 26 March 2002,
“that the ponente of the herein assailed Decision is not the Presiding
28
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 Penned by Associate Justice Andres B. Reyes with Associate Justices Conrado
M. Vasquez, Jr. and Amelita G. Tolentino, concurring; Rollo, p. 344.
412
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there exists a
disputable presumption that the RTC Decision was rendered by the
judge in the regular performance of his official duties. While the
said presumption is only disputable, it 29is 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.30
In People v. Gazmen, this Court already elucidated its position
on such an issue—
“Accusedappellant 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. Accusedappellant’s
argument does not merit a lengthy discussion. It is wellsettled 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 of the REVISED RULES OF COURT reads—
SEC. 3. Disputable presumptions.—The following presumptions are satisfactory if

uncontradicted, but may be contradicted and overcome by other evidence:
x x x x
(m) That official duty has been regularly performed.
30 317 Phil. 495, 501503; 247 SCRA 414, 419420 (1995).
413
VOL. 504, OCTOBER 16, 2006 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.”
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
“Although it is true that the judge who heard the witnesses testify is in a
better position to observe the witnesses on the stand and determine by their
demeanor whether they are telling the truth or mouthing falsehood, it does
not necessarily follow that a judge who was not present during the trial
cannot render a valid decision since he can rely on the transcript of
stenographic notes taken during the trial as basis of his decision.
Accusedappellant’s contention that the trial judge did not have the
opportunity to observe the conduct and demeanor of the witnesses since he
was not the same judge who conducted the hearing is also untenable. While
it is true that the trial judge who conducted the hearing would be in a better
position to ascertain the truth and falsity of the testimonies of the witnesses,
it does not necessarily follow that a judge who was not present during the
trial cannot render a valid and just decision since the latter can also rely on
the transcribed stenographic notes taken during the trial as the basis of his
decision.”
(People vs. De Paz, 212 SCRA 56, 63 [1992])
“At any rate, the test to determine the value of the testimony of the
witness is whether or not such is in conformity with knowledge and
consistent with the experience of mankind (People vs. Morre, 217 SCRA
219 [1993]). Further, the credibility of witnesses can also be assessed on the
basis of the substance of their testimony and the surrounding circumstances
(People v. Gonzales, 210 SCRA 44 [1992]). A critical evaluation of the
testimony of the prosecution witnesses reveals that their testimony accords
with the aforementioned tests, and carries with it the ring of truth end
perforce, must be given full weight and credit.”
Irrefragably, by reason alone that the judge who penned the RTC
Decision was not the same judge who heard the case and received
the evidence therein would not render the findings in the said
Decision erroneous and unreliable. While the
414
conduct and demeanor of witnesses may sway a trial court judge in
deciding a case, it is not, and should not be, his only consideration.
Even more vital for the trial court judge’s decision are the contents
and substance of the witnesses’ testimonies, as borne out by the
TSNs, as well as the object and documentary evidence submitted
and made part of the records of the case.
This Court proceeds to making its own findings of fact.
Since the Decision of the Court of Appeals in CAG.R. CV No.
51930, dated 26 March 2002, has become final and executory as to
the respondent, due to her failure to interpose an appeal therefrom
within the reglementary period, she is already bound by the factual
findings in the said Decision. Likewise, respondent’s failure to file,
within the reglementary period, a Motion for Reconsideration or an
appeal of the Resolution of the Court of Appeals in the same case,
dated 20 November 2002, which modified its earlier Decision by
deleting paragraph 3(v) of its dispositive portion, ordering
petitioners to return to respondent the proceeds of her money market
placement with AIDC, shall already bar her from questioning such
modification before this Court. Thus, what is for review before this
Court is the Decision of the Court of Appeals, dated 26 March 2002,
as modified by the Resolution of the same court, dated 20 November
2002.
Respondent alleged that she had several deposits and money
market placements with petitioners. These deposits and money
market placements, as determined by the Court of Appeals in its
Decision, dated 26 March 2002, and as modified by its Resolution,
dated 20 November 2002, are as follows—
415
VOL. 504, OCTOBER 16, 2006 415
Deposit/Placement Amount
Dollar deposit with CitibankGeneva $
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
interest per annum (p.a.) 318,897.34
Deposit/Placement Amount
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
This Court is tasked to determine whether petitioners are indeed
liable to return the foregoing amounts, together with the appropriate
interests and penalties, to respondent. It shall trace respondent’s
transactions with petitioners, from her money market placements
with petitioner Citibank and petitioner FNCB Finance, to her
savings and current accounts with petitioner Citibank, and to her
dollar accounts with CitibankGeneva.
Money market placements with petitioner Citibank
The history of respondent’s money market placements with
petitioner Citibank began on 6 December 1976, when she made a
placement of P500,000.00 as principal amount, which was supposed
to earn an interest of 16% p.a. and for which PN No. 20773 was
issued. Respondent did not yet claim the proceeds of her placement
and, instead, rolledover or re
416
invested the principal and proceeds several times in the succeeding
years for which new PNs were issued by petitioner Citibank to
replace the ones which matured. Petitioner Citibank accounted for
respondent’s original placement and the subsequent rollovers
thereof, as follows—
Date PN No. Cancels Maturity Amount Interest

(mm/dd/ PN No. Date (P) (p.a.)
yyyy) (mm/dd/
yyyy)
12/06/1976 20773 None 01/13/1977 500,000.00 16%

01/14/1977 21686 20773 02/08/1977 508,444.44 15%
02/09/1977 22526 21686 03/16/1977 313,952.59 153/4%
22528 21686 03/16/1977 200,000.00 153/4%
03/17/1977 23356 22526 04/20/1977 318,897.34 141/2%
23357 22528 04/20/1977 203,150.00 141/2%
Petitioner Citibank alleged that it had already paid to respondent the
principal amounts and proceeds of PNs No. 23356 and 23357, upon
their maturity. Petitioner Citibank further averred that respondent
used the P500,000.00 from the payment of PNs No. 23356 and
23357, plus P600,000.00 sourced from her other funds, to open two
time deposit (TD) accounts with petitioner Citibank, namely, TD
Accounts No. 17783 and 17784.
Petitioner Citibank did not deny the existence nor questioned the
authenticity of PNs No. 23356 and 23357 it issued in favor of
respondent for her money market placements. In fact, it admitted the
genuineness and due execution of the
31
said PNs, but qualified that
they were 32no longer outstanding. In Hibberd v. Rohde and
McMillian, this Court delineated the consequences of such an
admission—
_______________
31 Records, Vol. I, p. 515.
32 32 Phil. 476, 478479.
417
VOL. 504, OCTOBER 16, 2006 417
“By the admission of the genuineness and due execution of an instrument, as
provided in this section, is meant that the party whose signature it bears
admits that he signed it or that it was signed by another for him with his
authority; that at the time it was signed it was in words and figures exactly
as set out in the pleading of the party relying upon it; that the document was
delivered; and that any formal requisites required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by him.
Hence, such defenses as that the signature is a forgery (Puritan Mfg. Co. vs.
Toti & Gradi, 14 N. M., 425; Cox vs. Northwestern Stage Co., 1 Idaho,
376; Woollen vs. Whitacre, 73 Ind., 198; Smith vs. Ehnert, 47 Wis., 479;
Faelnar vs. Escaño, 11 Phil. Rep., 92); or that it was unauthorized, as in the
case of an agent signing for his principal, or one signing in behalf of a
partnership (Country Bank vs. Greenberg, 127 Cal., 26; Henshaw vs. Root,
60 Inc., 220; Naftzker vs. Lantz, 137 Mich., 441) or of a corporation
(Merchant vs. International Banking Corporation, 6 Phil. Rep., 314; Wanita
vs. Rollins, 75 Miss., 253; Barnes vs. Spencer & Barnes Co., 162 Mich.,
509); or that, in the case of the latter, that the corporation was authorized
under its charter to sign the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed the instrument in some
other capacity than that alleged in the pleading setting it out (Payne vs.
National Bank, 16 Kan., 147); or that it was never delivered (Hunt vs. Weir,
29 Ill., 83; Elbring vs. Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co., 48
N.Y., 253; Fire Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut
off by the admission of its genuineness and due execution.
The effect of the admission is such that in the case of a promissory
note a prima facie case is made for the plaintiff which dispenses
with the necessity of evidence on his part and entitles him to a
judgment on the pleadings unless a special defense of new matter,
such as payment, is interposed by the defendant (Papa vs. Martinez,
12 Phil. Rep., 613; Chinese Chamber of Commerce vs. Pua To
Ching, 14 Phil. Rep., 222; Banco EspañolFilipino vs. McKay &
Zoeller, 27 Phil. Rep., 183). x x x”
Since the genuineness and due execution of PNs No. 23356 and
23357 are uncontested, respondent was able to establish prima facie
that petitioner Citibank is liable to her for the amounts stated therein.
The assertion of petitioner Citibank
418
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 33was 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 nonpayment, the general rule is that the
burden rests on the defendant to prove payment, rather than on the plaintiff
to prove nonpayment. 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, 34who is then under the duty of
producing some evidence of nonpayment.”
Reviewing the evidence on record, this Court finds that petitioner
Citibank failed to satisfactorily prove that PNs No. 23356 and 23357
had already been paid, and that the amount so paid was actually used
to open one of respondent’s TD accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two witnesses to
support 35 its contention of payment: (1) That of Mr. Herminio
Pujeda, the officerincharge of loans and placements at the time
when the questioned transactions took
_______________
33 Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).
34 Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95; 256 SCRA
84, 8990 (1996).
35 Mr. Herminio Pujeda, at the time he testified before the RTC in 1990, was
already the Vice President of petitioner Citibank.
419
VOL. 504, OCTOBER 16, 2006 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
The relevant portion of Mr. Pujeda’s testimony as to PNs No.
23356 and 23357 (referred to therein as Exhibits No. “47” and “48,”
respectively) is reproduced below—
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to testify in this
case and this case is [sic] consist [sic] of several documents
involving transactions between the plaintiff and the defendant.
Now, were you able to make your own memorandum regarding all
these transactions?
A Yes, based on my recollection of these facts, I did come up of [sic]
the outline of the chronological sequence of events.
Court:
Are you trying to say that you have personal knowledge or
participation to these transactions?
A Yes, your Honor, I was the officerin charge of the unit that was
processing these transactions. Some of the documents bear my
signature.
Court:
And this resume or summary that you have prepared is based on
purely your recollection or documents?
A Based on documents, your Honor.
Court:
Are these documents still available now?
A Yes, your honor.
Court:
Better present the documents.
Atty. Mabasa:
Yes, your Honor, that is why your Honor.
_______________
36 Mr. Francisco Tan, at the time of his deposition in 1990, was already working as
Assistant General Manager for DaiChi Kangyo Bank in Hong Kong.
37 TSN, 12 March 1990, pp. 610.
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
VOL. 504, OCTOBER 16, 2006 421
In his deposition in Hong Kong, Mr. Tan recounted what happened
to PNs No. 23356 and 23357 (referred to therein as Exhibits “E” and
“F,” respectively), as follows—
Atty. Mabasa: Now from the Exhibits that you have identified Mr. Tan from
Exhibits “A” to “F,” which are Exhibits of the plaintiff. Now, do I
understand from you that the original amount is Five Hundred Thousand
and thereafter renewed in the succeeding exhibits?
Mr. Tan: Yes, Sir.
Atty. Mabasa: Alright, after these Exhibits “E” and “F” matured, what
happened thereafter?
Mr. Tan: Split into two time deposits.
Atty. Mabasa: Exhibits “E” and “F”?
Before anything else, it should be noted that when Mr. Pujeda’s
testimony before the RTC was made on 12 March 1990 and Mr.
Tan’s deposition in Hong Kong was conducted on 3 September
1990, more than a decade had passed from the time the transactions
they were testifying on took place. This Court had previously
recognized the frailty and unreliability of human 38memory with
regards to figures after the lapse of five years. Taking into
consideration the substantial length of time between the transactions
and the witnesses’ testimonies, as well as the undeniable fact that
bank officers deal with multiple clients and process numerous
transactions during their tenure, this Court is reluctant to give much
weight to the testimonies of Mr. Pujeda and Mr. Tan regarding the
payment of PNs No. 23356 and 23357 and the use by respondent of
the proceeds thereof for opening TD accounts. This Court finds it
implausible that they should remember, after all these years, this
particular transaction with respondent involving her PNs No. 23356
and 23357 and TD accounts. Both witnesses did not give any reason
as to why,
_______________
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, rolledover several times
to, finally, PNs No. 23356 and 23357, there is an evident absence of
any documentary evidence on the payment of these last two PNs and
the use of the proceeds thereof by respondent for opening TD
accounts. The paper trail seems to have ended with the copies of
PNs No. 23356 and 23357. Although both Mr. Pujeda and Mr. Tan
said that they based their testimonies, not just on their memories but
also on the documents on file, the supposed documents on which
they based those portions of their testimony on the payment of PNs
No. 23356 and 23357 and the opening of the TD accounts from the
proceeds thereof, were never presented before the courts nor
made part of the records of the case. Respondent’s money market
placements were of substantial amounts—consisting of the principal
amount of P500,000.00, plus the interest it should have earned
during the years of placement—and it is difficult for this Court to
believe that petitioner Citibank would not have had documented the
payment thereof. 39
When Mr. Pujeda testified before the RTC on 6 February 1990,
petitioners’ counsel attempted to present in evidence a document
that would supposedly support the claim of peti
_______________
39 TSN, 6 February 1990, Vol. V, pp. 1624.
423
VOL. 504, OCTOBER 16, 2006 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 finds that
PNs No. 23356 and 23357 are still outstanding and petitioner
Citibank is still liable to respondent for the amounts stated
therein.
The significance of this Court’s declaration that PNs No. 23356
and 23357 are still outstanding becomes apparent in the light of
petitioners’ next contentions—that respondent used the proceeds of
PNs No. 23356 and 23357, together with additional money, to open
TD Accounts No. 17783 and 17784 with petitioner Citibank; and,
subsequently, respondent preterminated these TD accounts and
transferred the proceeds thereof, amounting to P1,100,000.00, to
petitioner FNCB Finance for money market placements. While
respondent’s money market placements with petitioner FNCB
Finance may be traced back with definiteness to TD Accounts No.
17783 and 17784, there is only flimsy and unsubstantiated
connection between the said TD accounts and the supposed proceeds
paid from PNs No. 23356 and 23357. With PNs No. 23356 and
23357 still unpaid, then they represent an obligation of petitioner
Citibank separate and distinct from the obligation of petitioner
FNCB Finance arising from respondent’s money market placements
with the latter.
424
Money market placements with petitioner FNCB Finance
According to petitioners, respondent’s TD Accounts No. 17783 and
17784, in the total amount of P1,100,000.00, were supposed to
mature on 15 March 401978. However, respondent, through a letter

dated 28 April 1977, preterminated the said TD accounts and
transferred all the proceeds thereof to petitioner FNCB Finance for
money market placement. Pursuant to her instructions, TD Accounts
No. 17783 and 17784 were preterminated and petitioner Citibank
(then still named First National City Bank) issued Manager’s Checks
41 42
(MC) No. 199253 and 199251 for the amounts of P500,000.00
and P600,00.00, respectively. Both MCs were payable to Citifinance
43
(which, according to Mr. Pujeda, was one with and the same as
petitioner FNCB Finance), with the additional notation that “A/C
MODESTA R. SABENIANO.” Typewritten on MC No. 199253 is
the phrase “Ref. Proceeds of TD 17783,” and on MC No. 199251 is
a similar phrase, “Ref. Proceeds of TD 17784.” These phrases
purportedly established that the MCs were paid from the proceeds of
respondent’s preterminated TD accounts with petitioner Citibank.
Upon receipt of the MCs, petitioner FNCB Finance deposited the
same to its account with Feati Bank and Trust Co., as evidenced by
the rubber stamp mark of the latter found at the back of both MCs.
In exchange, petitioner FNCB Finance booked the amounts received
as money market placements, and accordingly issued PNs No. 4952
and 4962, for the amounts of P500,000.00 and P600,000.00,
respectively, payable to respondent’s savings account with petitioner
Citibank, S/A No. 25137034, upon their maturity on 1 June 1977.
Once again, respondent rolledover several times the principal
_______________
40 Exhibit “37,” defendants’ folder of exhibits, p. 106.
41 Exhibit “37C,” Id., at p. 107.
42 Exhibit “37F,” Id., at p. 108.
43 TSN, 12 March 1990, p. 13.
425
VOL. 504, OCTOBER 16, 2006 425
amounts of her money market placements with petitioner FNCB

Finance, as follows—
Date PN Cancels Maturity Date Amount Interest

(mm/dd/ No. PN No. (mm/dd/yyyy) (P) (p.a.)
yyyy)
04/29/1977 4952 None 06/01/1977 500,000.00 17%
4962 None 06/01/1977 600,000.00 17%
06/02/1977 5757 4952 08/31/1977 500,000.00 17%
Date PN Cancels Maturity Date Amount Interest

(mm/dd/ No. PN No. (mm/dd/yyyy) (P) (p.a.)
yyyy)
5758 4962 08/31/1977 500,000.00 17%
8167 5757 08/25/1978 500,000.00 14%
08/31/1977
8169 5752 08/25/1978 500,000.00 14%
As presented by the petitioner FNCB Finance, respondent rolled

over only the principal amounts of her money market placements as
she chose to receive the interest income therefrom. Petitioner FNCB
Finance also pointed out that when PN No. 4962, with principal
amount of P600,000.00, matured on 1 June 1977, respondent
received a partial payment of the principal which, together with the
44
interest, amounted to P102,633.33; thus, only the amount of
P500,000.00 from PN No. 4962 was rolledover to PN No. 5758.
Based on the foregoing records, the principal amounts of PNs
No. 5757 and 5758, upon their maturity, were rolled over to PNs No.
45
8167 and 8169, respectively. PN No. 8167 expressly canceled and
46
superseded PN No. 5757, while PN No. 8169 also explicitly
canceled and superseded PN No. 5758. Thus, it is patently erroneous
for the Court of Appeals to still award to respondent the principal
amounts and interests covered by PNs No. 5757 and 5758 when
these were already canceled and superseded. It is now incumbent
upon this Court to determine what subsequently happened to PNs
No. 8167 and 8169.
_______________
44 Exhibit “104C,” defendants’ folder of exhibits, p. 111.
45 Exhibit “105,” Id., at p. 112.
46 Exhibit “106,” Id., at p. 114.
426
Petitioner FNCB Finance presented four checks as proof of payment
of the principal amounts and interests of PNs No. 8167 and 8169
upon their maturity. All the checks were payable to respondent’s
savings account with petitioner Citibank, with the following details
—
Date of Check Amount Notation

Issuance No. (P)
(mm/dd/yyyy)
09/01/1978 76962 12,833.34 Interest payment on PN#08167

09/01/1978 76961 12,833.34 Interest payment on PN#08169
09/05/1978 77035 500,000.00 Full payment of principal on
PN#08167 which is hereby
cancelled
09/05/ 1978 77034 500,000.00 Full payment of principal on
PN#08169 which is hereby
cancelled
Then again, Checks No. 77035 and 77034 were 47

later returned to
petitioner FNCB Finance together with a memo, dated 6 September
1978, from Mr. Tan of petitioner Citibank, to a Mr. Bobby Mendoza
of petitioner FNCB Finance. According to the memo, the two
checks, in the total amount of P1,000,000.00, were to be returned to
respondent’s account with instructions to book the said amount in
money market placements for one more year. Pursuant to the said
memo, Checks No. 77035 and 77034 were invested by petitioner
FNCB Finance, on behalf of respondent, in money market
placements for which it issued PNs No. 20138 and 20139. The PNs
each covered P500,000.00,
_______________
47 Exhibit “108,” Id., at p. 118.
427
VOL. 504, OCTOBER 16, 2006 427
to earn 11% interest per annum, and to mature on 3 September 1979.
On 3 September 1979, petitioner FNCB Finance issued Check
No. 100168, pay to the order of “Citibank N.A. A/C Modesta
Sabeniano,” in the amount of P1,022,916.66, as full payment of the
principal amounts and interests of both PNs 48
No. 20138 and 20139
and, resultantly, canceling the said PNs. Respondent actually
admitted the issuance and existence of Check No. 100168, but with
the qualification that
49
the proceeds thereof were turned over to
petitioner Citibank. Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the allegations
of petitioner Citibank itself, the proceeds of PNs No. 20138 and
20139, amounting to P1,022,916.66, was used by it to liquidate
respondent’s outstanding loans. Therefore, the determination of
whether or not respondent is still entitled to the return of the
proceeds of PNs No. 20138 and 20139 shall be dependent on the
resolution of the issues raised as to the existence of the loans and the
authority of petitioner Citibank to use the proceeds of the said PNs,
together with respondent’s other deposits and money market

placements, to pay for the same.
Savings and current accounts with petitioner Citibank
Respondent presented and submitted before the RTC deposit slips
and bank statements to prove deposits made to several of her
accounts with petitioner Citibank, particularly, Accounts No.
00484202, 59091, and 472751, which would have amounted to a
total of P3,812,712.32, had there been no withdrawals or debits from
the said accounts from the time the said deposits were made.
Although the RTC and the Court of Appeals did not make any
definitive findings as to the status of respondent’s savings
_______________
48 Exhibits “112” and “119,” Id., at pp. 121A, 124.
49 Records, Vol. III, p. 1367.
428
and current accounts with petitioner Citibank, the Decisions of both
the trial and appellate courts effectively recognized only the
P31,079.14 coming from respondent’s savings account which was
used to 50offset her alleged outstanding loans with petitioner
Citibank.
Since both the RTC and the Court of Appeals had consistently
recognized only the P31,079.14 of respondent’s savings account
with petitioner Citibank, and that respondent failed to move for
reconsideration or to appeal this particular finding of fact by the trial
and appellate courts, it is already binding upon this Court.
Respondent is already precluded from claiming any greater amount
in her savings and current accounts with petitioner Citibank. Thus,
this Court shall limit itself to determining whether or not respondent
is entitled to the return of the amount of P31,079.14 should the off
set thereof by petitioner Citibank against her supposed loans be
found invalid.
Dollar accounts with CitibankGeneva
Respondent made an effort of preparing and presenting before the
RTC her own computations of her money market placements and
dollar accounts with CitibankGeneva, purportedly amounting
51
to a
total of United States (US) $343,220.98, as of 23 June 1985. In her
Memorandum filed with the RTC, she claimed a much bigger
amount of deposits and money market placements with Citibank
52
Geneva, totaling US$1,336,638.65. However, respondent
http://www.central.com.ph/sfsreader/session/0000015ad2f4c506839d060d003600fb002c009e/t/?o=False herself 46/95
52
Geneva, totaling US$1,336,638.65. However, respondent herself
also submitted as part of her formal offer of evidence the
computation of her money market placements and
53
dollar accounts
with CitibankGeneva as determined by the latter. Citibank
_______________
50 Exhibit “34B,” petitioners’ folder of exhibits, p. 102.
51 Exhibit “G,” plaintiff’s folder of exhibits, pp. 415.
52 Records, Vol. III, p. 1, 562.
53 Exhibit “J,” plaintiff’s folder of exhibits, p. 49.
429
VOL. 504, OCTOBER 16, 2006 429
Geneva accounted for respondent’s money market placements and

dollar accounts as follows—
MODESTA SABENIANO &/OR
US$ 30’000. Principal Fid. Placement
+ 339.06 Interest at 3,875% p.a. from 12.07.—25.10.79
US$
95. Commission (minimum)
US$
US$ 30’244.06 Total proceeds on 25.10.1979
US$ 114’000. Principal Fid. Placement
+ 1’358.50 Interest at 4,125% p.a. from 12.07.—25.10.79
US$
41.17 Commission
US$
US$ 115’317.33 Total proceeds on 25.10.1979
US$ 145’561.39 Total proceeds of both placements on 25.10.1979
+ 11’381.31 total of both current accounts
US$
US$ 156’942.70 Total funds available
149’632.99
US$ Transfer to Citibank Manila on 26.10.1979
(counter value of Pesos 1’102’944.78)
US$ 7’309.71 Balance in current accounts
6’998.84 Transfer to Citibank Zuerich—ac no. 121359 on
US$ March 13, 1980
MODESTA SABENIANO &/OR
US$ 310.87 various charges including closing charges
According to the foregoing computation, by 25 October 1979,

respondent had a total of US$156,942.70, from which,
US$149,632.99 was transferred by CitibankGeneva to petitioner
Citibank in Manila, and was used by the latter to offset respondent’s
outstanding loans. The balance of respondent’s accounts with
CitibankGeneva, after the remittance to petitioner Citibank in
Manila, amounted to US$7,309.71,
430
which was subsequently expended by a transfer to another account

with CitibankZuerich, in the amount of US$6,998.84, and by
payment of various bank charges, including closing charges, in the
amount of US$310.87. Rightly so, both the RTC and the Court of
Appeals gave more credence to the computation of CitibankGeneva
as to the status of respondent’s accounts with the said bank, rather
than the one prepared by respondent herself, which was evidently
selfserving. Once again, this Court shall limit itself to determining
whether or not respondent is entitled to the return of the amount of
US$149,632.99 should the offset thereof by petitioner Citibank
against her alleged outstanding loans be found invalid. Respondent
cannot claim any greater amount since she did not perfect an appeal
of the Decision of the Court of Appeals, dated 26 March 2002,
which found that she is entitled only to the return of the said amount,
as far as her accounts with CitibankGeneva is concerned.
III
Petitioner Citibank was able to establish by preponderance of

evidence the existence of respondent’s loans.
Petitioners’ version of events
In sum, the following amounts were used by petitioner Citibank to
liquidate respondent’s purported outstanding loans—
Description Amount
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB P
Finance) 1,022,916.66
Description Amount
Savings account with petitioner Citibank 31,079.14
Dollar remittance from CitibankGeneva
431
VOL. 504, OCTOBER 16, 2006 431
(peso equivalent
Of US$149,632.99) 1,102,944.78
Total P 2,156,940.58
According to petitioner Citibank, respondent incurred her loans

under the circumstances narrated below.
As early as 9 February 1978, respondent obtained her first loan
from petitioner Citibank in the principal amount of P200,000.00, for
54
which she executed PN No. 31504. Petitioner Citibank extended to
her several other loans in the succeeding months. Some of these
loans were paid, while others were rolledover or renewed.
Significant to the Petition at bar are the loans which respondent
obtained from July 1978 to January 1979, appropriately covered by
55
PNs (first set). The aggregate principal amount of these loans was
P1,920,000.00, which could be broken down as follows—
PN Date of Date of Principal Date of MC

No. Issuance Maturity Amount Release No.
(mm/dd/yyyy) (mm/dd/yyyy) (mm/dd/yyyy)
32935 07/20/1978 09/18/1978 P 400,000.00 07/20/1978 220701
33751 10/13/1978 12/12/1978 100,000.00 Unrecovered
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978 226285
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978 226439
34079 11/21/1978 01/19/1979 250,000.00 11/21/1978 226467
34192 12/04/1978 01/18/1979 100,000.00 12/05/1978 228057
34402 12/26/1978 02/23/1979 300,000.00 12/26/1978 228203
34534 01/09/1979 03/09/1979 150,000.00 01/09/1979 228270
34609 01/17/1979 03/19/1979 150,000.00 01/17/1979 228357
34740 01/30/1979 03/30/1979 220,000.00 01/30/1979 228400
Total P1,920,000.00
_______________
54 Exhibit “120H,” defendants’ folder of exhibits, p. 131.
55 Exhibits “1” to “9,” Id., at pp. 4452.
432
When respondent was unable to pay the first set of PNs upon their
maturity, these were rolledover or renewed several times,
necessitating the execution by respondent of new PNs in favor of
petitioner Citibank. As of 5 April 1979,
56
respondent had the
following outstanding PNs (second set), the principal amount of
which remained at P1,920,000.00—
PN No. Date of Issuance Date of Maturity Principal

(mm/dd/yyyy) (mm/dd/yyyy) Amount
34510 01/01/1979 03/02/1979 P 400,000.00
34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
34612 01/19/1979 03/16/1979 150,000.00
34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
35694 03/19/1979 05/29/1979 150,000.00
35695 03/19/1979 05/29/1979 100,000.00
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 220,000.00
Total P1,920,000.00
All the PNs stated that the purpose of the loans covered thereby is
“To liquidate existing obligation,” except for PN No. 34534, which
stated for its purpose “personal investment.” Respondent secured her
foregoing loans with petitioner Citibank by executing Deeds of
Assignment of her money market placements with petitioner FNCB
Finance. On 2 March 1978, respondent 57
executed in favor of
petitioner Citibank a Deed of Assignment of PN No. 8169, which
was issued by petitioner FNCB Finance, to secure payment of the
credit and banking facilities extended to her by petitioner Citibank,
in the aggregate principal amount of P500,000.00. On 9 March
1978, respondent executed in favor of petitioner
_______________
56 Exhibits “18” to “26,” Id., at pp. 8392.
57 Exhibit “13E,” Id., at pp. 6567.
433
VOL. 504, OCTOBER 16, 2006 433
58
Citibank another Deed of Assignment, this time, of PN No. 8167,
also issued by petitioner FNCB Finance, to secure payment of the
credit and banking facilities extended to her by petitioner Citibank,
in the aggregate amount of P500,000.00. When PNs No. 8167 and
8169, representing respondent’s money market placements with
petitioner FNCB Finance, matured and were rolledover to PNs No.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 rolledover money market placements with
petitioner FNCB Finance, to petitioner Citibank as security for the
banking and credit facilities it extended to her, in the aggregate
principal amount of P500,000.00 per Deed.
In addition to the Deeds of Assignment of her money market
placements with petitioner FNCB Finance, respondent also executed
60
a Declaration of Pledge, in which she supposedly pledged “[a]ll
present and future fiduciary placements held in my personal and/or
joint name with Citibank, Switzerland,” to secure all claims the
petitioner Citibank may have or, in the future, acquire against
respondent. The petitioners’ copy of the Declaration of Pledge is
undated, while that of the respondent, a copy certified by a Citibank
61
Geneva officer, bore the date 24 September 1979.
When respondent failed to pay the second set of PNs upon their
maturity, an exchange of letters ensued between respondent and/or
her representatives, on one hand, and the representatives of
petitioners, on the other.
_______________
58 Exhibit “14G,” Id., at pp. 7274.
59 Exhibit “15” and “Exhibit 17D,” Id., at pp. 7778, 8182.
60 Exhibit “38,” Id., at pp. 109110.
61 Exhibit “K1,” plaintiff’s folder of exhibits, pp. 5455.
434
62
The first letter was dated 5 April 1979, addressed to respondent and
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 followup, we regret you have
not granted us with any response or payment. We, therefore, have no
alternative but to call your loan of P1,920,000.00 plus interests and
other charges due and demandable. If you still fail to settle this
obligation by 4/27/79, we shall have no other alternative but to refer
your account to our lawyers for legal action to protect the interest of
the bank. 63
Respondent sent a reply letter dated 26 April 1979, printed on
paper bearing the letterhead of respondent’s company, MC Adore
International Palace, the body of which reads—
This is in reply to your letter dated April 5, 1979 inviting my attention to my
loan which has become due. Pursuant to our representation with you over the
telephone through Mr. F. A. Tan, you allow us to pay the interests due for
the meantime.
Please accept our Comtrust Check in the amount of P62,683.33.
Please bear with us for a little while, at most ninety days. As you know,
we have a pending loan with the Development Bank of the Philippines in the
amount of P11M. This loan has already been recommended for approval
and would be submitted to the Board of Governors. In fact, to further
facilitate the early release of this loan, we have presented and furnished Gov.
J. Tengco a xerox copy of your letter.
You will be doing our corporation a very viable service, should you
grant us our request for a little more time. A week later or on 3 May
1979, a certain C. N. Pugeda, designated as “Executive Secretary,”
64
sent a letter to petitioner
_______________
63 Exhibit “28,” Id., at p. 94.
64 Exhibit “29,” Id., at p. 95.
435
VOL. 504, OCTOBER 16, 2006 435
Citibank, on behalf of respondent. The letter was again printed on
paper bearing the letterhead of MC Adore International Palace. The
pertinent paragraphs of the said letter are reproduced below—
Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for
a recomputation of the interest and penalty charges on her loan in the
aggregate amount of P1,920,000.00 with maturity date of all promissory
notes at June 30, 1979. As she has personally discussed with you yesterday,
this date will more or less assure you of early settlement.
In this regard, please entrust to bearer, our Comtrust check for
P62,683.33 to be replaced by another check with amount resulting from the
new computation. Also, to facilitate the processing of the same, may we
request for another set of promissory notes for the signature of Mrs.
Sabeniano and to cancel the previous ones she has signed and forwarded to
you.
65
This was followed by a telegram, dated 5 June 1979, and received
by petitioner Citibank the following day. The telegram was sent by a
Dewey G. Soriano, Legal Counsel. The telegram acknowledged
receipt of the telegram sent by petitioner Citibank regarding the “re
past due obligation” of McAdore International Palace. However, it
reported that respondent, the President and Chairman of MC Adore
International Palace, was presently abroad negotiating for a big loan.
Thus, he was requesting for an extension of the due date of the
obligation until respondent’s arrival on or before 31 July 1979.
66
The next letter, dated 21 June 1979, was signed by respondent
herself and addressed to Mr. Bobby Mendoza, a Manager of
petitioner FNCB Finance. Respondent wrote therein—
_______________
65 Exhibit “30,” Id., at p. 96.
66 Exhibit “31,” Id., at p. .97.
436
Re: PN No. 20138 for P500,000.00 & PN No.
20139 for P500,000.00 totalling P1 Mil
lion, both PNs will mature on 9/3/1979.
This is to authorize you to release the accrued quarterly interests payment
from my captioned placements and forward directly to Citibank, Manila
Attention: Mr. F. A. Tan, Manager, to apply to my interest payable on my
outstanding loan with Citibank.
Please note that the captioned two placements are continuously
pledged/hypothecated to Citibank, Manila to support my personal
outstanding loan. Therefore, please do not release the captioned placements
upon maturity until you have received the instruction from Citibank, Manila.
67
On even date, respondent sent another letter to Mr. Tan of
petitioner Citibank, stating that—
Re: S/A No. 25225928
and C/A No. 484946
This letter serves as an authority to debit whatever the outstanding balance
from my captioned accounts and credit the amount to my loan outstanding
account with you.
Unlike respondent’s earlier letters, both letters, dated 21 June 1979,
are printed on plain paper, without the letterhead of her company,
MC Adore International Palace.
By 5 September 1979, respondent’s outstanding and past due
obligations to petitioner Citibank totaled P2,123,843.20,
representing the principal amounts plus interests. Relying on
respondent’s Deeds of Assignment, petitioner Citibank applied the
proceeds of respondent’s money market placements with petitioner
FNCB Finance, as well as her deposit account with petitioner 68
Citibank, to partly liquidate respondent’s outstanding loan balance,
as follows—
_______________
67 Exibit “32,” Id., at p. 98.
68 Exhibits “34B” and “34C,” Id., at pp. 102103.
437
VOL. 504, OCTOBER 16, 2006 437
Respondent’s outstanding obligation (principal and P
interest) 2,123,843.20
Less: Proceeds from respondent’s money market (1,022,916.66)
placements
with petitioner FNCB Finance (principal
and interest)
Deposits in respondent’s bank accounts (31,079.14)
with petitioner
Citibank
Balance of respondent’s obligation P
1,069,847.40
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
pastdue obligation in the amount of P1,069,847.40, as of 5
September 1979, and should respondent fail to pay the amount by 15
October 1979, then petitioner Citibank shall proceed to offset the
unpaid amount with respondent’s other collateral, particularly, a
money market placement in CitibankHongkong.
On 5 October 1979, respondent wrote Mr. Tan of petitioner

Citibank, on paper bearing the letterhead of MC Adore International
Palace, as regards the P1,920,000.00 loan account supposedly of
MC Adore Finance & Investment, Inc., and requested for a
statement of account covering the principal and interest of the loan
as of 31 October 1979. She stated therein that the loan obligation
shall be paid within 60 days from receipt of the statement of
account.
Almost three weeks later, or on 25 October 1979, a certain Atty.
Moises Tolentino dropped by the office of petitioner 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
_______________
69 Exhibit “34,” Id., at p. 100.
438
MC Adore International Palace Hotel. The letter was signed by

respondent as the President and Chairman of the Board.
Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as
counsel of petitioner Citibank, sent a letter to respondent, dated 31
October 1979, informing her that petitioner Citibank had effected an
offset using her account with CitibankGeneva, in the amount of
US$149,632.99, against her “outstanding, overdue, demandable and
unpaid obligation” to petitioner Citibank. Atty. Agcaoili claimed
therein that the compensation or offset was made pursuant to and in
accordance with the provisions of Articles 1278 through 1290 of the
Civil Code. He further declared that respondent’s obligation to
petitioner Citibank was now fully paid and liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7th floor of
petitioner Citibank’s building at Paseo de Roxas St., Makati, Metro
70
Manila. Petitioners submitted a Certification to this effect, dated 17
January 1991, issued by the Chief of the Arson Investigation
Section, Fire District III, Makati Fire Station, Metropolitan Police
Force. The 7th floor of petitioner Citibank’s building housed its
Control Division, which was in charge of keeping the necessary
documents for cases in which it was involved. After compiling the
documentary evidence for the present case, Atty. Renato J.
Fernandez, internal legal counsel of petitioner Citibank, forwarded
them to the Control Division. The original copies of the MCs, which
supposedly represent the proceeds of the first set of PNs, as well as
that of other documentary evidence related to the case, were among
71
those burned in the said fire.
Respondent’s version of events
Respondent disputed petitioners’ narration of the circumstances
surrounding her loans with petitioner Citibank and the alleged
authority she gave for the offset or compensation
_______________
70 Exhibit “121,” Id., at p. 207.
71 TSN, 14 May 1991, Vol. XI, pp. 1214.
439
VOL. 504, OCTOBER 16, 2006 439
of her money market placements and deposit accounts with

petitioners against her loan obligation.
Respondent denied outright executing the first set of PNs, except
for one (PN No. 34534 in particular). Although she admitted that she
obtained several loans from petitioner Citibank, these only
amounted to P1,150,000.00, and she had already paid them. She
secured from petitioner Citibank two loans of P500,000.00 each. She
executed in favor of petitioner Citibank the corresponding PNs for
the loans and the Deeds of Assignment of her money 72
market
placements with petitioner FNCB Finance as security. To prove
payment of these loans, respondent presented
73
two provisional
receipts of petitioner Citibank—No. 19471,
74
dated 11 August 1978,
and No. 12723, dated 10 November 1978—both signed by Mr. Tan,
and acknowledging receipt from respondent of several checks in the
total amount of P500,744.00 and P500,000.00, respectively, for
“liquidation of loan.”
She borrowed another P150,000.00 from petitioner Citibank for
personal investment, and for which she executed PN No. 34534, on
9 January 1979. Thus, she admitted to receiving the proceeds of this
loan via MC No. 228270. She invested the loan amount in another
money market placement with petitioner FNCB Finance. In turn, she
used the very same money market placement with petitioner FNCB
Finance as security for her P150,000.00 loan from petitioner
Citibank. When she failed to pay the loan when it became due,
petitioner Citibank allegedly forfeited her money market placement 75
with petitioner FNCB Finance and, thus, the loan was already paid.
Respondent likewise questioned the MCs presented by
petitioners, except for one (MC No. 228270 in particular), as
_______________
72 TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 2829.
73 Exhibit “QQQ,” plaintiff’s folder of exhibits, p. 117.
74 Exhibit “AAAA,” Id., at p. 124.
75 TSN, 28 November 1991, Vol. XIII, pp. 78, 23.
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 P150,000.00, covered by PN No.
34534, and receiving MC No. 228270 representing the proceeds
thereof, but claimed that she already paid the same. She denied ever
receiving MCs No. 220701 (for the loan of P400,000.00, covered by
PN No. 33935) and No. 226467 (for the loan of P250,000.00,
covered by PN No. 34079), and pointed out that the checks did not
bear her indorsements. She did not deny receiving all other checks
but she interposed that she received these checks, not as proceeds of
loans, but as payment of the principal amounts and/or interests from
her money market placements with petitioner Citibank. She also
raised doubts as to the notation on each of the checks that reads
“RE: Proceeds of PN#[corresponding PN No.],” saying that such
notation did not appear on the MCs when she originally received
them and that the notation appears to have been written by a
typewriter different from that used in writing all
76
other information
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
_______________
76 Id., at pp. 1623.
441
VOL. 504, OCTOBER 16, 2006 441
inquire with petitioner Citibank as to respondent’s loans with the
latter. On her own copies of the said PNs, respondent wrote by hand
the notation, “This isa (sic) simulated nonnegotiable note, signed
copy given to Mr. Tan., (sic) per agreement to be shown to DBP
representative. itwill (sic) be returned to me if the P11=M (sic) loan
77
for MC Adore Palace Hotel is approved by DBP.”
Findings of this Court as to the existence of the loans
After going through the testimonial and documentary evidence
presented by both sides to this case, it is this Court’s assessment that
respondent did indeed have outstanding loans with petitioner
Citibank at the time it effected the offset or compensation on 25 July
1979 (using respondent’s savings deposit with petitioner Citibank), 5
September 1979 (using the proceeds of respondent’s money market
placements with petitioner FNCB Finance) and 26 October 1979
(using respondent’s dollar accounts remitted from CitibankGeneva).
The totality of petitioners’ evidence as to the existence of the said
loans preponderates over respondent’s. Preponderant evidence
means that, as a whole, the evidence adduced by one side outweighs
78
that of the adverse party.
Respondent’s outstanding obligation for P1,920,000.00 had been
sufficiently documented by petitioner Citibank.
The second set of PNs is a mere renewal of the prior loans
originally covered by the first set of PNs, except for PN No. 34534.
The first set of PNs is supported, in turn, by the existence of the
MCs that represent the proceeds thereof received by the respondent.
It bears to emphasize that the proceeds of the loans were paid to
respondent in MCs, with the respondent specifically
_______________
77 TSN, 7 May 1986, Vol. II, pp. 4252; TSN, 19 May 1986, Vol. II, pp. 328.
78 Sarmiento v. Court of Appeals, 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 79itself and regarded to be as good as the money it
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 turn, must present it for payment against the drawee
bank in the course of normal banking hours. The crossed check
cannot be presented for payment, but it can only be deposited and
the drawee bank may
80
only pay to another bank in the payee’s or
indorser’s account. The effect of crossing a check was described by
this Court in Philippine Commercial International Bank v. Court of
81
Appeals —
“[T]he crossing of a check with the phrase “Payee’s Account Only” is a
warning that the check should be deposited in the account of the payee. Thus,
it is the duty of the collecting bank PCI Bank to ascertain that the check be
deposited in payee’s account only. It is bound to scrutinize the check and to
know its depositors before it can make the clearing indorsement “all prior
indorsements and/or lack of indorsement guaranteed.”
The crossed MCs presented by petitioner Bank were indeed

deposited in several different bank accounts and cleared by the
Clearing Office of the Central Bank of the Philippines, as evidenced
by the stamp marks and notations on the said checks. The crossed
MCs are already in the possession of petitioner Citibank, the drawee
bank, which was ultimately responsible for the payment of the
amount stated in the checks. Given that a check is more than just an
instrument of
_______________
79 Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538, 553; 326 SCRA
641, 656 (2000), with reference to Tan v. Court of Appeals, 239 SCRA 310, 322 (1994).
80 Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218 SCRA 682,
695.
81 403 Phil. 361, 383; 350 SCRA 446, 467 (2001).
443
VOL. 504, OCTOBER 16, 2006 443
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
82
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.
This Court finds applicable herein the presumptions that private
83
transactions have been fair and regular, and that the ordinary course
84
of business has been followed. There is no question that the loan
84
of business has been followed. There is no question that the loan
transaction between petitioner Citibank and the respondent is a
private transaction. The transactions revolving around the crossed
MCs—from their issuance by petitioner Citibank to respondent as
payment of the proceeds of her loans; to its deposit in respondent’s
accounts with several different banks; to the clearing of the MCs by
an independent clearing house; and finally, to the payment of the
MCs by petitioner Citibank as the drawee bank of the said checks—
are all private transactions which shall be presumed to have been
fair and regular to all the parties concerned. In addition, the banks
involved in the foregoing transactions are also presumed to have
followed the ordinary course of business in the acceptance of the
crossed MCs for deposit in respondent’s accounts, submitting them
for clearing, and their eventual payment and cancellation.
The aforestated presumptions are disputable, meaning, they are
satisfactory if uncontradicted, 85
but may be contradicted and
overcome by other evidence. Respondent, however, was unable to
present sufficient and credible evidence to dispute these
presumptions.
_______________
82 Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA 799, 311
312.
83 REVISED RULES OF COURT, Rule 131, Section 3(p).
84 Id., Rule 131, Section 3(q).
85 Id., Section 3.
444
It should be recalled that out of the nine MCs presented by petitioner
Citibank, respondent admitted to receiving one as proceeds of a loan
(MC No. 228270), denied receiving two (MCs No. 220701 and
226467), and admitted to receiving all the rest, but not as proceeds
of her loans, but as return on the principal amounts and interests
from her money market placements.
Respondent admitted receiving MC No. 228270 representing the
proceeds of her loan covered by PN No. 34534. Although the
principal amount of the loan is P150,000.00, respondent only
received P146,312.50, because the interest and handling 86
fee on the
loan transaction were already deducted therefrom. Stamps and
notations at the back of MC No. 228270 reveal that it was deposited
at the Bank of the Philippine
87
Islands (BPI), Cubao Branch, in
Account No. 0123057228. 88
The check also bore the signature of
respondent at the back. And, although respondent would later
admit that she did sign PN No. 34534 and received MC No. 228270
as proceeds of the loan extended to her by petitioner Citibank, she
contradicted herself when, in an earlier testimony, she claimed that
PN No. 34534 was among the PNs she executed as simulated loans
89
with petitioner Citibank.
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
_______________
87 Exhibits “9D” and “9G,” Id., at p. 52.
88 Exhibit “9F,” Id., at p. 52.
89 TSN, 19 May 1986, Vol. II, p. 10.
445
VOL. 504, OCTOBER 16, 2006 445
their deposit, clearance, and payment, and which would have

involved not only petitioner Citibank, but also BPI, which accepted
the checks for deposit, and the Central Bank of the Philippines,
which cleared the checks. It falls upon the respondent to overcome
or dispute the presumption that the crossed checks were issued,
accepted for deposit, cleared, and paid for by the banks involved
following the ordinary course of their business.
The mere fact that MCs No. 220701 and 226467 do not bear
respondent’s signature at the back does not negate deposit thereof in
her account. The liability for the lack of indorsement on the MCs no
longer fall on petitioner Citibank, but on the bank who received the
same for deposit, in this case, BPI Cubao Branch. Once again, it
must be noted that the MCs were crossed, for payee’s account only,
and the payee named in both checks was none other than respondent.
The crossing of the MCs was already a warning to BPI to receive
said checks for deposit only in respondent’s account. It was up to
BPI to verify whether it was receiving the crossed MCs in
accordance with the instructions on the face thereof. If, indeed, the
MCs were deposited in accounts other than respondent’s,
90
then the
respondent would have a cause of action against BPI.
BPI further stamped its guarantee on the back of the checks to the
effect that, “All prior endorsement and/or Lack of endorsement
guaranteed.” Thus, BPI became the indorser 91
of the MCs, and
assumed all the warranties of an indorser, specifically, that the
checks were genuine and in all respects what they purported to be;
that it had a good title to the checks; that all prior parties had
capacity to contract; and that the checks were, at the time of their
indorsement, valid
_______________
90 Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA
465, 469471.
91 Banco de Oro Savings and Mortgage Bank v Equitable Banking Corporation,
G.R. No. 74917, 20 January 1988, 157 SCRA 188, 199.
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 93 lack of
indorsement as against petitioner Citibank, the drawee bank.
Furthermore, respondent’s bare and unsubstantiated denial of
receipt of the MCs in question and their deposit in her account is
rendered suspect when MC No. 220701 was actually deposited in
Account No. 0123057228 of BPI Cubao Branch, the very same
account in which MC No. 228270 (which respondent admitted to
receiving as proceeds of her loan from petitioner Citibank), and
MCs No. 228203, 228357, and 228400 (which respondent admitted
to receiving as proceeds from her money market placements) were
deposited. Likewise, MC No. 226467 was deposited in Account No.
012100243 of BPI Cubao Branch, to which MCs No. 226285 and
226439 (which respondent admitted to receiving as proceeds from
her money market placements) were deposited. It is an apparent
contradiction for respondent to claim having received the proceeds
of checks deposited in an account, and then deny receiving the
proceeds of another check deposited in the very same account.
Another inconsistency in respondent’s denial of receipt of MC
No. 226467 and her deposit of the same in her account, is her
presentation of Exhibit “HHH,” a provisional receipt which was
supposed to prove that respondent turned over P500,000.00 to Mr.
Tan of petitioner Citibank, that the said amount was split into three
money market placements, and that MC No. 226467 represented the
return on her invest
_______________
92 NEGOTIABLE INSTRUMENTS LAW, Section 66, in connection with Section
65.
93 Associated Bank v. Court of Appeals, 322 Phil. 677, 697; 252 SCRA 620, 630631
(1996); Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA
465, 472.
447
VOL. 504, OCTOBER 16, 2006 447
94
ment from one of these placements. Because of her Exhibit
“HHH,” respondent effectively admitted receipt of MC No. 226467,
although for reasons other than as proceeds of a loan.
Neither can this Court give credence to respondent’s contention
that the notations on the MCs, stating that they were the proceeds of
particular PNs, were not there when she received the checks and that
the notations appeared to be written by a typewriter different from
that used to write the other information on the checks. Once more,
respondent’s allegations were uncorroborated by any other evidence.
Her and her counsel’s observation that the notations on the MCs
appear to be written by a typewriter different from that used to write
the other information on the checks hardly convinces this Court
considering that it constitutes a mere opinion on the appearance of
the notation by a witness who does not possess the necessary
expertise on the matter. In addition, the notations on the MCs were
written using both capital and small letters, while the other
information on the checks were written using capital letters only,
such difference could easily confuse an untrained eye and lead to a
hasty conclusion that they were written by different typewriters.
Respondent’s testimony, that based on her experience transacting
with banks, the MCs were not supposed to include notations on the
purpose for which the checks were issued, also deserves scant
consideration. While respondent may have extensive experience
dealing with banks, it still does not qualify her as a competent
witness on banking procedures and practices. Her testimony on this
matter is even belied by the fact that the other MCs issued by
petitioner Citibank (when it was still named First National City
Bank) and by petitioner FNCB Finance, the existence and validity of
which were not disputed by respondent, also bear similar notations
that state the reason for which they were issued.
_______________
94 Plaintiff’s Formal Offer of Documentary Exhibits, Records, Vol. I, pp. 504505;
plaintiff’s folder of exhibits, p. 110.
448
Respondent presented several more pieces of evidence to

substantiate her claim that she received MCs No. 226285, 226439,
226467, 226057, 228357, and 228400, not as proceeds of her loans
from petitioner Citibank, but as the return of the principal amounts
and payment of interests from her money market placements with95
petitioners. Part of respondent’s exhibits were personal checks
drawn by respondent on her account with Feati Bank & Trust Co.,
which she allegedly invested in separate money market placements
with both petitioners, the returns from which were paid to her via
MCs No. 226285 and 228400. Yet, to this Court, the personal checks
only managed to establish respondent’s issuance thereof, but there
was nothing on the face of the checks that would reveal the purpose
for which they were issued and that they were actually invested in
money market placements as respondent claimed.
Respondent further submitted handwritten notes that purportedly
computed and presented the returns on her money market
placements, corresponding to the amount stated in the 96MCs she
received from petitioner Citibank. Exhibit “HHH1” was a
handwritten note, which respondent attributed to Mr. Tan of
petitioner Citibank, showing the breakdown of her BPI Check for
P500,000.00 into three different money market placements with
petitioner Citibank. This Court, however, noticed several factors
which render the note highly suspect. One, it was written on the
reversed side of Provisional Receipt No. 12724 of petitioner
Citibank which bore the initials of Mr. Tan acknowledging receipt of
respondent’s BPI Check No. 120989 for P500,000.00; but the initials
on the handwritten note appeared to be that of Mr. Bobby Mendoza
97
of petitioner FNCB Finance. Second, according to
_______________
95 Exhibits “GGG” and “JJJ,” plaintiff’s folder of exhibits, pp. 109, 113.
96 Plaintiff’s folder of exhibits, p. 110.
97 See the initials on Exhibit “III1,” plaintiff’s folder of exhibits, p. 112.
449
VOL. 504, OCTOBER 16, 2006 449
Provisional Receipt No. 12724, BPI Check No. 120989 for

P500,000.00 was supposed to be invested in three money market
placements with petitioner Citibank for the period of 60 days. Since
all these money market placements were made through one check
deposited on the same day, 10 November 1978, it made no sense that
the handwritten note at the back of Provisional Receipt No. 12724
provided for different dates of maturity for each of the money
market placements (i.e., 16 November 1978, 17 January 1979, and
21 November 1978), and such dates did not correspond to the 60 day
placement period stated on the face of the provisional receipt. And
third, the principal amounts of the money market placements as
stated in the handwritten note—P145,000.00, P145,000.00 and
P242,000.00—totaled P532,000.00, and was obviously in excess of
the P500,000.00 acknowledged on the face of Provisional Receipt
No. 12724.
Exhibits “III” and “III1,” the front and bank pages of a
handwritten
98
note of Mr. Bobby Mendoza of petitioner FNCB
Finance, also did not deserve much evidentiary weight, and this
Court cannot rely on the truth and accuracy of the computations
presented therein. Mr. Mendoza was not presented as a witness
during the trial before the RTC, so that the document was not
properly authenticated nor its contents sufficiently explained. No
one was able to competently identify whether the initials as
appearing on the note were actually Mr. Mendoza’s.
Also, going by the information on the front page of the note, this
Court observes that payment of respondent’s alleged money market
placements with petitioner FNCB Finance were made using
Citytrust Checks; the MCs in question, including MC No. 228057,
were issued by petitioner Citibank. Although Citytrust (formerly
Feati Bank & Trust Co.), petitioner FNCB Finance, and petitioner
Citibank may be affiliates of one another, they each remained
separate and distinct
_______________
98 Plaintiff’s folder of exhibits, p. 112.
450
corporations, each having its own financial system and records.

Thus, this Court cannot simply assume that one corporation, such as
petitioner Citibank or Citytrust, can issue a check to discharge an
obligation of petitioner FNCB Finance. It should be recalled that
when petitioner FNCB Finance paid for respondent’s money market
placements, covered by its PNs No. 8167 and 8169, as well as PNs
No. 20138 and 20139, petitioner FNCB Finance issued its own
checks.
As a last point on this matter, if respondent truly had money
market placements with petitioners, then these would have been
evidenced by PNs issued by either petitioner Citibank or petitioner
FNCB Finance, acknowledging the principal amounts of the
investments, and stating the applicable interest rates, as well as the
dates of their of issuance and maturity. After respondent had so
meticulously reconstructed her other money market placements with
petitioners and consolidated the documentary evidence thereon, she
came surprisingly short of offering similar details and substantiation
for these particular money market placements.
Since this Court is satisfied that respondent indeed received the
proceeds of the first set of PNs, then it proceeds to analyze her
evidence of payment thereof.
In support of respondent’s assertion that she had already paid
whatever loans she may have had with petitioner Citibank, she
presented as evidence Provisional Receipts No. 19471, dated 11
August 1978, and No. 12723, dated 10 November 1978, both of
petitioner Citibank and signed by Mr. Tan, for the amounts of
P500,744.00 and P500,000.00, respectively. While these provisional
receipts did state that Mr. Tan, on behalf of petitioner Citibank,
received respondent’s checks as payment for her loans, they failed to
specifically identify which loans were actually paid. Petitioner
Citibank was able to present evidence that respondent had executed
several PNs in the years 1978 and 1979 to cover the loans she
secured from the said bank. Petitioner Citibank did admit that
respondent was able to pay for some of these PNs, and what it
451
VOL. 504, OCTOBER 16, 2006 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
purpose 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
payment. In Philippine Airlines, Inc. v. Court of Appeals,
http://www.central.com.ph/sfsreader/session/0000015ad2f4c506839d060d003600fb002c009e/t/?o=False this 66/95
100
payment. In Philippine Airlines, Inc. v. Court of Appeals, this
Court elucidated that:
“Since a negotiable instrument is only a substitute for money and
not money, the delivery of such an instrument does not, by itself,
operate as payment (Sec. 189, Act 2031 on Negs. Insts.; Art. 1249,
Civil Code; Bryan Landon Co. v. American Bank, 7 Phil. 255; Tan
Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check, whether a
manager’s check or ordinary check, is not legal tender, and an offer
of a check in payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor. Mere delivery of
checks does not discharge the obligation under a judgment. The
obligation is not extinguished and remains suspended until the
payment by commercial document is actually realized (Art. 1249,
Civil Code, par. 3).”
_______________
99 TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
100 G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.
452
In the case at bar, the issuance of an official receipt by petitioner
Citibank would have been dependent on whether the checks
delivered by respondent were actually cleared and paid for by the
drawee banks.
As for PN No. 34534, respondent asserted payment thereof at
two separate instances by two different means. In her formal offer of
exhibits, respondent submitted a deposit slip of petitioner Citibank,
dated 11 August 1978, 101evidencing the deposit of BPI Check No.
5785 for P150,000.00. In her Formal Offer of Documentary
Exhibits, dated 7 July 1989, respondent stated that the purpose for
the presentation of the said deposit slip was to prove that she already
102
paid her loan covered by PN No. 34534. In her testimony before
the RTC three years later, on 28 November 1991, she changed her
story. This time she narrated that the loan covered by PN No. 34534
was secured by her money market placement with petitioner FNCB
Finance, and when she failed to pay the said PN when it became
due, the security 103was applied to the loan, therefore, the loan was
considered paid. Given the foregoing, respondent’s assertion of
payment of PN No. 34534 is extremely dubious.
According to petitioner Citibank, the PNs in the second set,
except for PN No. 34534, were mere renewals of the unpaid PNs in
the first set, which was why the PNs stated that they were for the
purpose of liquidating existing obligations. PN No. 34534, however,
which was part of the first set, was still valid and subsisting and so it
was included in the second set without need for its renewal, and it
still being the original PN for that particular loan, its stated purpose
104
was for personal investment. Respondent essentially admitted
executing the second set of PNs, but they were only meant to cover
simu
_______________
101 Exhibit “MMM,” plaintiff’s folder of exhibits, p. 115.
102 Records, Vol. I, p. 507.
103 TSN, 28 November 1991, Vol. XIII, pp. 78.
104 TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.
453
VOL. 504, OCTOBER 16, 2006 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
nonnegotiable simulated notes, were admittedly made by
respondent herself and were, thus, selfserving. Equally selfserving
was respondent’s letter, written on 7 October 1985, or more than six
years after the execution of the second set of PNs, in which she
demanded return of the simulated or fictitious PNs, together with the
letters relating thereto, which Mr. Tan purportedly asked her to
execute. Respondent further failed to present any proof of her
alleged loan application with the DBP, and of any circumstance or
correspondence wherein the simulated or fictitious PNs were indeed
used for their supposed purpose.
In contrast, petitioner Citibank, as supported by the testimonies
of its officers and available documentation, consistently treated the
said PNs as regular loans—accepted, approved, and paid in the
ordinary course of its business.
The PNs executed by the respondent in favor of petitioner
Citibank to cover her loans were dulyfilled 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
at least 105

in the second set, were signed by respondent in his
presence.
Mr. Pujeda, the officer who was previously in charge of loans and
placements, confirmed that the signatures on the PNs were verified
106
against respondent’s specimen signature with the bank.
Ms. Cristina Dondoyano, who worked at petitioner Citibank as a
loan processor, was responsible for booking respondent’s loans.
Booking the loans means recording it in the General Ledger. She
explained the procedure for booking loans, as follows: The account
officer, in the Marketing Department, deals directly with the clients
who wish to borrow money from petitioner Citibank. The Marketing
Department will forward a loan booking checklist, together with the
borrowing client’s PNs and other supporting documents, to the loan
preprocessor, who will check whether the details in the loan
booking checklist are the same as those in the PNs. The documents
are then sent to Signature Control for verification of the client’s
signature in the PNs, after which, they are returned to the loan pre
processor, to be forwarded finally to the loan processor. The loan
processor shall book the loan in the General Ledger, indicating
therein the client name, loan amount, interest rate, maturity date, and
the corresponding PN number. Since she booked respondent’s loans
personally, Ms. Dondoyano testified that she saw the original PNs.
In 1986, Atty. Fernandez of petitioner Citibank requested her to
prepare an accounting of respondent’s loans, which she did, and
which was presented as Exhibit “120” for the petitioners. The
figures from the said exhibit were culled from the bookings in the
General Ledger, a fact which respondent’s counsel was even willing
107
to stipulate.
_______________
105 TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 1316.
106 TSN, 22 May 1990, Vol. V, pp. 3161.
107 TSN, 7 March 1991, Vol. IX, pp. 1519; TSN, 13 March 1991, Vol. X, pp. 79.
455
VOL. 504, OCTOBER 16, 2006 455
Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk
at the Control Department of petitioner Citibank. She was presented
by petitioner Citibank to expound on the microfilming procedure at
the bank, since most of the copies of the PNs were retrieved from
microfilm. Microfilming of the documents are actually done by
people at the Operations Department. At the end of the day or during
the day, the original copies of all bank documents, not just those
pertaining to loans, are microfilmed. She refuted the possibility that
insertions could be made in the microfilm because the microfilm is
inserted in a cassette; the cassette is placed in the microfilm machine
for use; at the end of the day, the cassette is taken out of the
microfilm machine and put in a safe vault; and the cassette is
returned to the machine only the following day for use, until the
spool is full. This is the microfilming procedure followed everyday.
When the microfilm spool is already full, the microfilm is
developed, then sent to the Control Department, which double
checks the contents of the microfilms against the entries in the
General Ledger. The Control Department also conducts a random
comparison of the contents of the microfilms with the original
documents; a random review of the contents is done on every role of
108
microfilm.
Ms. Renee Rubio worked for petitioner Citibank for 20 years.
She rose from the ranks, initially working as a secretary in the
Personnel Group; then as a secretary to the Personnel Group Head; a
Service Assistant with the Marketing Group, in 1972 to 1974,
dealing directly with corporate and individual clients who, among
other things, secured loans from petitioner Citibank; the Head of the
Collection Group of the Foreign Department in 1974 to 1976; the
Head of the Money Transfer Unit in 1976 to 1978; the Head of the
Loans and Placements Unit up to the early 1980s; and, thereafter,
she established operations training for petitioner Citibank in
_______________
108 TSN, 19 March 1991, Vol. X, pp. 1721; TSN, 8 April 1991, Vol. X, pp. 3134.
456
the AsiaPacific Region responsible for the training of the officers of
the bank. She testified on the standard loan application process at
petitioner Citibank. According to Ms. Rubio, the account officer or
marketing person submits a proposal to grant a loan to an individual
or corporation. Petitioner Citibank has a worldwide policy that
requires a credit committee, composed of a minimum of three

people, which would approve the loan and amount thereof. There
can be no instance when only one officer has the power to approve
the loan application. When the loan is approved, the account officer
in charge will obtain the corresponding PNs from the client. The
PNs are sent to the signature verifier who would validate the
signatures therein against those appearing in the signature cards
previously submitted by the client to the bank. The Operations Unit
will check and review the documents, including the PNs, if it is a
clean loan, and securities and deposits, if it is collateralized. The
loan is then recorded in the General Ledger. The Loans and
Placements Department will not book the loans without the PNs.
When the PNs are liquidated, whether 109
they are paid or rolledover,
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 by 110
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 1979, and presented before the RTC as Exhibits “34B”
111
and “34C.”
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.
_______________
109 TSN, 18 April 1991, Vol. X, pp. 313.
110 Id., at pp. 1523.
111 Folder of defendants’ exhibits, pp. 102103.
457
VOL. 504, OCTOBER 16, 2006 457
In consideration of the foregoing discussion, this Court finds that the
preponderance of evidence supports the existence of the
respondent’s loans, in the principal sum of P1,920,000.00, as of 5
September 1979. While it is wellsettled that the term
“preponderance of evidence” should not be wholly dependent on the
number of witnesses, there are certain instances when the number of
witnesses become the determining factor—
“The preponderance of evidence may be determined, under certain

conditions, by the number of witnesses testifying to a particular fact or state
of facts. For instance, one or two witnesses may testify to a given state of
facts, and six or seven witnesses of equal candor, fairness, intelligence, and
truthfulness, and equally well corroborated by all the remaining evidence,
who have no greater interest in the result of the suit, testify against such
state of facts. Then the preponderance of evidence is determined by the
number 112
of witnesses. (Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep.,
761.)”
Best evidence rule
This Court disagrees in the pronouncement made by the Court of
Appeals summarily dismissing the documentary evidence submitted
by petitioners based on its broad and indiscriminate application of
the best evidence rule.
In general, the best evidence rule requires that the highest
available degree of proof must be produced. Accordingly, for
documentary evidence, the contents of a 113
document are best proved
by the production of the document itself,
114
to the exclusion of any
secondary or substitutionary evidence.
_______________
112 Municipality of Moncada v. Cajuigan, 21 Phil. 184, 190 (1912).
113 J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 31 (4th ed.,
1995).
114 F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, p. 571 (8th ed.,
2000).
458
The best evidence rule has been made part of the revised Rules of
Court, Rule 130, Section 3, which reads—
“SEC. 3. Original document must be produced; exceptions.—When the

subject of inquiry is the contents of a document, no evidence shall be
admissible other than the original document itself, except in the following
cases:
(a) When the original has been lost or destroyed, or cannot be produced
in court, without bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party
against whom the evidence is offered, and the latter fails to produce
it after reasonable notice;
(c) When the original consists of numerous accounts or other
documents which cannot be examined in court without great loss of
time and the fact sought to be established from them is only the
general result of the whole; and
(d) When the original is a public record in the custody of a public
officer or is recorded in a public office.”
As the aforequoted provision states, the best evidence rule applies
only when the subject of the inquiry is the contents of the document.
The scope of the rule is more extensively explained thus—
“But even with respect to documentary evidence, the best evidence rule
applies only when the content of such document is the subject of the inquiry.
Where the issue is only as to whether such document was actually executed,
or exists, or on the circumstances relevant to or surrounding its execution,
the best evidence rule does not apply and testimonial evidence is admissible
(5 Moran, op. cit., pp. 7666; 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
VOL. 504, OCTOBER 16, 2006 459
Parol evidence of the fact of execution of the documents
115
is allowed
(Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565). x x x”
116
In Estrada v. Desierto, this Court had occasion to rule that—
“It is true that the Court relied not upon the original but only copy of the
Angara Diary as published in the Philippine Daily Inquirer on February 46,
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
_______________
115 F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, 571 (8th ed., 2000).
116 G.R. Nos. 14671015, 3 April 2001, 356 SCRA 108, 137138.
460
but for another purpose. Respondent further admitted the letters she
wrote personally or through her representatives to Mr. Tan of
petitioner Citibank acknowledging the loans, except that she claimed
that these letters were just meant to keep up the ruse of the simulated
loans. Thus, respondent questioned the documents as to their
existence or execution, or when the former is admitted, as to the
purpose for which the documents were executed, matters which are,
undoubtedly, external to the documents, and which had nothing to
do with the contents thereof.
Alternatively, even if it is granted that the best evidence rule
should apply to the evidence presented by petitioners regarding the
existence of respondent’s loans, it should be borne in mind that the
rule admits of the following exceptions under Rule 130, Section 5 of
the revised Rules of Court—
“SEC. 5. When the original document is unavailable.—When the original
document has been lost or destroyed, or cannot be produced in court, the
offeror, upon proof of its execution or existence and the cause of its
unavailability without bad faith on his part, may prove its contents by a
copy, or by a recital of its contents in some authentic document, or by the
testimony of witnesses in the order stated.”
The execution or existence of the original copies of the documents

was established through the testimonies of witnesses, such as Mr.
Tan, before whom most of the documents were personally executed
by respondent. The original PNs also went through the whole loan
booking system of petitioner Citibank—from the account officer in
its Marketing Department, to the preprocessor, to the signature
verifier, back to the preprocessor, then to the processor for
117
booking. The original PNs were seen by Ms. Dondoyano,
http://www.central.com.ph/sfsreader/session/0000015ad2f4c506839d060d003600fb002c009e/t/?o=False the 74/95
117
booking. The original PNs were seen by Ms. Dondoyano, the
processor, who recorded them in the General Ledger. Mr. Pujeda
personally saw the original MCs, proving respondent’s receipt of the
proceeds of her loans from petitioner Citibank, when he
_______________
117 TSN, 13 March 1991, Vol X, pp. 79.
461
VOL. 504, OCTOBER 16, 2006 461
helped Attys. Cleofe and Fernandez, the bank’s legal counsels, to

reconstruct the records of respondent’s loans. The original MCs
were presented to Atty. Cleofe who used the same during the
preliminary investigation of the case, sometime in years 19861987.
The original MCs were subsequently turned over to the Control and
118
Investigation Division of petitioner Citibank.
It was only petitioner FNCB Finance who claimed that they lost
the original copies of the PNs when it moved to a new office.
Citibank did not make a similar contention; instead, it explained that
the original copies of the PNs were returned to the borrower upon
liquidation of the loan, either through payment or rollover.
Petitioner Citibank proffered the excuse that they were still looking
for the documents in their storage or warehouse to explain the delay
and difficulty in the retrieval thereof, but not their absence or loss.
The original documents in this case, such as the MCs and letters,
were destroyed and, thus, unavailable for presentation before the
RTC only on 7 October 1987, when a fire broke out on the 7th floor
of the office building of petitioner Citibank. There is no showing
that the fire was intentionally set. The fire destroyed relevant
documents, not just of the present case, but also of other cases, since
the 7th floor housed the Control and Investigation Division, in
charge of keeping the necessary documents for cases in which
petitioner Citibank was involved.
The foregoing would have been sufficient to allow the
presentation of photocopies or microfilm copies of the PNs, MCs,
and letters by the petitioners as secondary evidence to establish the
existence of respondent’s loans, as an exception to the best evidence
rule.
_______________
118 TSN, 22 May 1990, Vol. V, pp. 1417.
462
The impact of the Decision of the Court of Appeals in the Dy case
In its assailed Decision, the Court of Appeals made the following
pronouncement—
“Besides, We find the declaration and conclusions of this Court in CAG.R.
CV No. 15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy vs. City
Bank, N.A., et al., promulgated on 15 January 1990, as disturbing taking
into consideration the similarities of the fraud, machinations, and deceits
employed by the defendantappellant Citibank and its Account Manager
Francisco Tan.
Worthy of note is the fact that Our declarations and conclusions against
Citibank and the person of Francisco Tan in CAG.R. CV No. 15934 were
affirmed in toto by the Highest Magistrate in a Minute Resolution dated 22
August 1990 entitled Citibank, N.A., vs. Court of Appeals, G.R. 93350.
As the factual milieu of the present appeal created reasonable doubts as to
whether the nine (9) Promissory Notes were indeed executed with
considerations, the doubts, coupled by the findings and conclusions of this
Court in CAG.R. CV No. 15934 and the Supreme Court in G.R. No.
93350. should be construed against herein defendantsappellants Citibank
and FNCB Finance.”
What this Court truly finds disturbing is the significance given
119
by
the Court of Appeals in its assailed Decision to the Decision of its
Third Division in CAG.R. CV No. 15934 (or the Dy case), when
there is an absolute lack of legal basis for doing such. Although
petitioner Citibank and its officer, Mr. Tan, were
also involved in the Dy case, that is about the only connection
between the Dy case and the one at bar. Not only did the Dy case
tackle transactions between parties other than the par
_______________
119 Dr. Ricardo L. Dy and Rosalind O. Dy vs. Citibank, N.A., CAG.R. CV No.
15934, 15 January 1990, penned by Associate Justice Nicolas P. Lapeña, Jr. with
Associate Justices Santiago M. Kapunan and Emeterio C. Cui, concurring.
463
VOL. 504, OCTOBER 16, 2006 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
assailed Decision, since the former does not constitute a precedent.
The Court of Appeals, in the challenged Decision, did not apply any
legal argument or principle established in the Dy case but, rather,
adopted the findings therein of wrongdoing or misconduct on the
part of herein petitioner Citibank and Mr. Tan. Any finding of
wrongdoing or misconduct as against herein petitioners should be
made based on the factual background and pieces of evidence
submitted in this case, not those in another case.
It is apparent that the Court of Appeals took judicial notice of the
Dy case not as a legal precedent for the present case, but rather as
evidence of similar acts committed by petitioner Citibank and Mr.
Tan. A basic rule of evidence, however, states that, “Evidence that
one did or did not do a certain thing at one time is not admissible to
prove that he did or did not do the same or similar thing at another
time; but it may be received to prove a specific intent or knowledge,
identity,
120
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 find himself at a given time may likewise change and
thus induce him to act in a different way. Besides, if evidence of similar acts
are to be invariably admitted, they will give rise to a multiplicity of collateral
issues and will subject the defendant to surprise as well as confuse the court
121
and prolong the trial.”
The factual backgrounds of the two cases are so different and
unrelated that the Dy case cannot be used to prove specific
_______________
120 REVISED RULES OF COURT, Rule 130, Section 34.
121 J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE 199200
(4th ed., 1995).
465
VOL. 504, OCTOBER 16, 2006 465
intent, knowledge, identity, plan, system, scheme, habit, custom or

usage on the part of petitioner Citibank or its officer, Mr. Tan, to
defraud respondent in the present case.
IV
The liquidation of respondent’s outstanding loans were valid in so

far as petitioner Citibank used respondent’s savings account with the
bank and her money market placements with petitioner FNCB
Finance; but illegal and void in so far as petitioner Citibank used
respondent’s dollar accounts with CitibankGeneva.
Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing obligations.
Relevant provisions of the Civil Code provides—
Art. 1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is necessary;
(1) That each one of the obligors be bound principally, and that he be at
the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality
if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the
debtor.
There is little controversy when it comes to the right of petitioner
Citibank to compensate respondent’s outstanding
466
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
122
institution. Both debts consist in sums of money. By June 1979, all
of respondent’s PNs in the second set had matured and became
demandable, while respondent’s savings account was demandable
anytime. Neither was there any retention or controversy over the
PNs and the deposit account commenced by a third person and
communicated in due time to the 123
debtor concerned. Compensation
takes place by operation of law, therefore, even in the absence of
an expressed authority from respondent, petitioner Citibank had the
right to effect, on 25 June 1979, the partial compensation or offset
of respondent’s outstanding loans with her deposit account,
amounting to P31,079.14.
Money market placements with FNCB Finance
Things though are not as simple and as straightforward as regards to
the money market placements and bank account used by petitioner
Citibank to complete the compensation or offset of respondent’s
outstanding loans, which came from persons other than petitioner
Citibank.
Respondent’s money market placements were with petitioner

FNCB Finance, and after several rollovers, they were ultimately
covered by PNs No. 20138 and 20139, which, by 3 September 1979,
the date the check for the proceeds of the said PNs were issued,
amounted to P1,022,916.66, inclusive of the principal amounts and
interests. As to these money market placements, respondent was the
creditor and petitioner
_______________
122 CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal of Manila, 213 Phil.
516, 523524; 128 SCRA 577, 584 (1984).
123 CIVIL CODE, Article 1286.
467
VOL. 504, OCTOBER 16, 2006 467
FNCB Finance the debtor; while, as to the outstanding loans,
petitioner Citibank was the creditor and respondent the debtor.
Consequently, legal compensation, under Article 1278 of the Civil
Code, would not apply since the first requirement for a valid
compensation, that each one of the obligors be bound principally,
and that he be at the same time a principal creditor of the other, was
not met.
What petitioner Citibank actually did was to exercise its rights to
the proceeds of respondent’s money market placements with
petitioner FNCB Finance by virtue of the Deeds of Assignment
executed by respondent in its favor.
The Court of Appeals did not consider these Deeds of
Assignment because of petitioners’ failure to produce the original
copies thereof in violation of the best evidence rule. This Court
again finds itself in disagreement in the application of the best
evidence rule by the appellate court.
To recall, the best evidence rule, in so far as documentary
evidence is concerned, requires the presentation of the original copy
of the document only when the context thereof is the subject of
inquiry in the case. Respondent does not question the contents of the
Deeds of Assignment. While she admitted the existence and
execution of the Deeds of Assignment, dated 2 March 1978 and 9
March 1978, covering PNs No. 8169 and 8167 issued by petitioner
FNCB Finance, she claimed, as defense, that the loans for which the
said Deeds were executed as security, were already paid. She denied
ever executing both Deeds of Assignment, dated 25 August 1978,
covering PNs No. 20138 and 20139. These are again issues
collateral to the contents of the documents involved, which could be
proven by evidence other than the original copies of the said
documents.
Moreover, the Deeds of Assignment of the money market
placements with petitioner FNCB Finance were notarized
documents, thus, admissible in evidence. Rule 132, Section 30 of the
Rules of Court provides that—
468
“SEC. 30. Proof of notarial documents.—Every instrument duly

acknowledged or proved and certified as provided by law, may be presented
in evidence without further proof, the certificate of acknowledgement being
prima facie evidence of the execution of the instrument or document
involved.”
Significant herein is this Court’s elucidation in De Jesus v. Court of
124
Appeals, which reads—
“On the evidentiary value of these documents, it should be recalled that the
notarization of a private document converts it into a public one and renders it
admissible in court without further proof of its authenticity (Joson vs.
Baltazar, 194 SCRA 114 [1991]). This is so because a public document
duly executed and entered in the proper registry is presumed to be valid and
genuine until the contrary is shown by clear and convincing proof (Asido vs.
Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil. 241 [1902]; Favor
vs. Court of Appeals, 194 SCRA 308 [1991]). As such, the party
challenging the recital of the document must prove his claim with clear and
convincing evidence (Diaz vs. Court of Appeals, 145 SCRA 346 [1986]).”
The rule on the evidentiary weight that must be accorded a notarized
document is clear and unambiguous. The certificate of
acknowledgement in the notarized Deeds of Assignment constituted
prima facie evidence of the execution thereof. Thus, the burden of
refuting this presumption fell on respondent. She could have
presented evidence of any defect or irregularity in the execution of
125
the said documents or raised questions as to the verity of
126
the
notary public’s acknowledgment and certificate in the Deeds. But
again, respondent admitted executing the Deeds of Assignment,
dated 2 March 1978 and 9 March 1978, although claiming that the
loans for which they were executed as security were already paid.
And, she assailed the Deeds of Assignment, dated 25 August 1978,
_______________
124 G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313314.
125 Anachuelo v. Intermediate Appellate Court, G.R. No. L71391, 29 January 1987,
147 SCRA 434, 441442.
126 Antillon v. Barcelon, 37 Phil. 148, 150151 (1917).
469
VOL. 504, OCTOBER 16, 2006 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 127secured certified literal copies thereof from
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
of irreplaceable and priceless documents.
Accordingly, this Court gives the Deeds of Assignment grave
importance in establishing the authority given by the respondent to
petitioner Citibank to use as security for her loans her money her
market placements with petitioner FNCB Finance, represented by
PNs No. 8167 and 8169, later to be rolledover as PNs No. 20138
and 20139. These Deeds of Assignment constitute the law between
the parties, and the obligations arising therefrom shall have the force
of law
129
between the parties and should be complied with in good
faith. Standard clauses in all of the Deeds provide that—
The ASSIGNOR and the ASSIGNEE hereby further agree as follows:
x x x x
_______________
127 See Exhibits “13E, “14G,” “15D,”and “17D,” defendants’ folder of exhibits,
pp. 6567, 7274, 7778, 8182.
128 TSN, 7 March 1991, Vol. IX, pp. 36.
129 Cuizon v. Court of Appeals, 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 authorized and empowered to
collect and receive the PLACEMENT (or so much thereof as may be
necessary) and apply the same in payment of the OBLIGATIONS.
Furthermore, the ASSIGNOR agrees that at any time, and from time to time,
upon request by the ASSIGNEE, the ASSIGNOR will promptly execute and
deliver any and all such further instruments and documents as may be
necessary to effectuate this Assignment.
x x x x
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
with terms and provisions hereof.
Petitioner Citibank was only acting upon the authority granted to it
under the foregoing Deeds when it finally used the proceeds of PNs
No. 20138 and 20139, paid by petitioner FNCB Finance, to partly
pay for respondent’s outstanding loans. Strictly speaking, it did not
effect a legal compensation or offset under Article 1278 of the Civil
Code, but rather, it partly extinguished respondent’s obligations
through the application of the security given by the respondent for
her loans. Although the pertinent documents were entitled Deeds of
Assignment, they were, in reality, more of a pledge by respondent to
petitioner Citibank of her credit due from petitioner FNCB Finance
by virtue of her money market placements with the latter. According
to Article 2118 of the Civil Code—
“ART. 2118. If a credit has been pledged becomes due before it is redeemed,
the pledgee may collect and receive the amount due. He shall apply the same
to the payment of his claim, and deliver the surplus, should there be any, to
the pledgor.”
_______________
130 Exhibits “13E,” “14G,” “15D,” and “17D,” defendants’ folder of exhibits, pp.
6566, 7273, 7778, 8182.
471
VOL. 504, OCTOBER 16, 2006 471
PNs No. 20138 and 20139 matured on 3 September 1979, without
them being redeemed by respondent, so that petitioner Citibank
collected from petitioner FNCB Finance the proceeds thereof, which
included the principal amounts and interests earned by the money
market placements, amounting to P1,022,916.66, and applied the

same against respondent’s outstanding loans, leaving no surplus to
be delivered to respondent.
Dollar accounts with CitibankGeneva
Despite the legal compensation of respondent’s savings account and
the total application of the proceeds of PNs No. 20138 and 20139 to
respondent’s outstanding loans, there still remained a balance of
P1,069,847.40. Petitioner Citibank then proceeded to applying
respondent’s dollar accounts with CitibankGeneva against her
remaining loan balance, pursuant to a Declaration of Pledge
supposedly executed by respondent in its favor.
Certain principles of private international law should be
considered herein because the property pledged was in the
possession of an entity in a foreign country, namely, Citibank
Geneva. In the absence of any allegation and evidence presented by
petitioners of the specific rules and laws governing the constitution
of a pledge in Geneva, Switzerland, they will be presumed to be the
same as Philippine local 131
or domestic laws; this is known as
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
tion of the Declaration of Pledge because it involved respondent’s
“all present and future fiduciary placements” with a Citibank branch
in another country, specifically, in Geneva, Switzerland. While there
is no express legal requirement that the Declaration of Pledge had to
be notarized to be effective, even so, it could not enjoy the same
prima facie presumption of due execution that is extended to
notarized documents, and petitioner Citibank must discharge the
burden of proving due execution and authenticity of the Declaration
of Pledge.
Second, petitioner Citibank was unable to establish the date when
the Declaration of Pledge was actually executed. The photocopy of
the Declaration of Pledge
132
submitted by petitioner Citibank before
the RTC was undated. It presented only a photocopy of the pledge
because it already forwarded the original copy thereof to Citibank
Geneva when it requested for the remittance of respondent’s dollar
accounts pursuant thereto. Respondent, on the other hand, was able
to secure a copy of the Declaration of Pledge, certified by an officer 133
of CitibankGeneva, which bore the date 24 September 1979.
Respondent, however, presented her passport and plane tickets to
prove that she was out of the country on the said date and could not
have signed the pledge. Petitioner Citibank insisted that the pledge
was signed before 24 September 1979, but could not provide an
explanation as to how and why the said date was written on the
pledge. Although Mr. Tan testified that the Declaration of Pledge
was signed by respondent personally before him, he could not give
the exact date when the said signing took place. It is important to
note that the copy of the Declaration of Pledge submitted by the
respondent to the RTC was certified by an officer of Citibank
Geneva, which had possession of the original copy of the pledge. It
is dated 24 September 1979, and this Court shall abide by the
presumption that the written document is truly
_______________
132 Exhibit “38,” defendants’ folder of exhibits, pp. 109110.
133 Exhibit “K1,” plaintiff’s folder of exhibits, 5455.
473
VOL. 504, OCTOBER 16, 2006 473
134
dated. Since it is undeniable that respondent was out of the country
on 24 September 1979, then she could not have executed the pledge
on the said date.
Third, the Declaration of Pledge was irregularly filledout. The
pledge was in a standard printed form. It was constituted in favor of
Citibank, N.A., otherwise referred to therein as the Bank. It should
be noted, however, that in the space which should have named the
pledgor, the name of petitioner Citibank was typewritten, to wit—
“The pledge right herewith constituted shall secure all claims which the Bank
now has or in the future acquires against Citibank, N.A., Manila (full name
and address of the Debtor), regardless of the legal cause or the transaction
(for example current account, securities transactions, collections, credits,
payments, documentary credits and collections) which gives rise thereto, and
including principal, all contractual and penalty interest, commissions,

charges, and costs.”
The pledge, therefore, made no sense, the pledgor and pledgee being
the same entity. Was a mistake made by whoever filledout 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
_______________
134 REVISED RULES OF COURT, Rule 131, Section 3(u).
474
the original document itself except in the instances mentioned in Section 3,
Rule 130 of the Revised Rules of Court. Mere photocopies of documents are
inadmissible pursuant to the best evidence rule. This is especially true when
the issue is that of forgery.
As a rule, forgery cannot be presumed and must be proved by clear,
positive and convincing evidence and the burden of proof lies on the party
alleging forgery. The best evidence of a forged signature in an instrument is
the instrument itself reflecting the alleged forged signature. The fact of
forgery can only be established by a comparison between the alleged forged
signature and the authentic and genuine signature of the person whose
signature is theorized upon to have been forged. Without the original
document containing the alleged forged signature, one cannot make a
definitive comparison which would establish forgery. A comparison based on
a mere xerox copy or reproduction of the document under controversy cannot
135
produce reliable results.”
Respondent made several attempts to have the original copy of the

pledge produced before the RTC so as to have it examined
136
by
experts. Yet, despite several Orders by the RTC, petitioner
Citibank failed to comply with the production of the original
Declaration of Pledge. It is admitted that CitibankGeneva had
possession of the original copy of the pledge. While petitioner
Citibank in Manila and its branch in Geneva may be separate and
distinct entities, they are still incontestably related, and between
petitioner Citibank and respondent, the former had more influence
and resources to convince CitibankGeneva to return, albeit
temporarily, the original Declaration of Pledge. Petitioner Citibank
did not present any evidence to convince this Court that it had ex
_______________
135 Heirs of Severa P. Gregorio v. Court of Appeals, 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
VOL. 504, OCTOBER 16, 2006 475
erted diligent efforts to secure the original copy of the pledge, nor
did it proffer the reason why CitibankGeneva 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 137the pledge presented by
petitioner Citibank has nil probative value. In addition, even if this
Court cannot make a categorical finding that respondent’s signature
on the original copy of the pledge was forged, it is persuaded that
petitioner Citibank willfully suppressed the presentation of the
original document, and takes into consideration the presumption that
the evidence willfully 138
suppressed would be adverse to petitioner
Citibank if produced.
Without the Declaration of Pledge, petitioner Citibank had no
authority to demand the remittance of respondent’s dollar accounts
with CitibankGeneva and to apply them to her outstanding loans. It
cannot effect legal compensation under Article 1278 of the Civil
Code since, petitioner Citibank itself admitted that CitibankGeneva
is a distinct and separate entity. As for the dollar accounts,
respondent was the creditor and CitibankGeneva is the debtor; and
as for the outstanding loans, petitioner Citibank was the creditor and
respondent was the debtor. The parties in these transactions were
evidently not the principal creditor of each other.
Therefore, this Court declares that the remittance of respondent’s
dollar accounts from CitibankGeneva and the application thereof to
her outstanding loans with petitioner Citibank was illegal, and null
and void. Resultantly, petitioner Citibank is obligated to return to
respondent the amount of US$149,632,99 from her CitibankGeneva
accounts, or its present equivalent value in Philippine currency; and,
at the same time, respondent continues to be obligated to
_______________
137 Security Bank & Trust Co. v. Triumph Lumber and Construction Corporation,
361 Phil. 463, 477; 301 SCRA 537, 550 (1999).
138 REVISED RULES OF COURT, Rule 131, Section 3(e).
476
petitioner Citibank for the balance of her outstanding loans which,
as of 5 September 1979, amounted to P1,069,847.40.
The parties shall be liable for interests on their monetary
obligations to each other, as determined herein.
In summary, petitioner Citibank is ordered by this Court to pay
respondent the proceeds of her money market placements,
represented by PNs No. 23356 and 23357, amounting to
P318,897.34 and P203,150.00, respectively, 139earning an interest of
14.5% per annum as stipulated in the PNs, beginning 17 March
1977, the date of the placements.
Petitioner Citibank is also ordered to refund to respondent the
amount of US$149,632.99, or its equivalent in Philippine currency,
which had been remitted from her CitibankGeneva accounts. These
dollar accounts, consisting of two fiduciary placements and current
accounts with CitibankGeneva shall continue earning their
respective stipulated interests from 26 October 1979, the date of
their remittance by CitibankGeneva to petitioner Citibank in Manila
and applied against respondent’s outstanding loans.
_______________
139 The stipulated interest shall apply as indemnity for the damages incurred in the
delay of payment as provided in Article 2209 of the CIVIL CODE which reads—
ART. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs
delay, the indemnity for damages, there being no stipulation to the contrary, shall be the
payment of the interest agreed upon, and in the absence of a stipulation, the legal interest,
which is six percent per annum. [Emphasis supplied.]
Note, however, that the legal interest has been increased from six percent to
twelve percent per annum by virtue of Central Bank Circulars No. 416, dated 29 July
1974, and No. 905, dated 10 December 1982.
477
VOL. 504, OCTOBER 16, 2006 477
As for respondent, she is ordered to pay petitioner Citibank the
balance of her outstanding loans, which amounted to P1,069,847.40
as of 5 September 1979. These loans continue to earn interest, as
stipulated in the corresponding PNs, from the time of their
respective maturity dates, since the supposed payment thereof using
respondent’s dollar accounts from CitibankGeneva is deemed
illegal, null and void, and, thus, ineffective.
VI
Petitioner Citibank shall be liable for damages to respondent.
Petitioners protest the award by the Court of Appeals of moral
damages, exemplary damages, and attorney’s fees in favor of
respondent. They argued that the RTC did not award any damages,
and respondent, in her appeal before the Court of Appeals, did not
raise in issue the absence of such.
While it is true that the general rule is that only errors which have
been stated in the assignment of errors and properly argued in the
brief shall be considered, this Court has also recognized exceptions
to the general rule, wherein it authorized the review of matters, even
those not assigned as errors in the appeal, if the consideration
thereof is necessary in arriving at a just decision of the case, and
there is a close interrelation between the omitted assignment of 140
error and those actually assigned and discussed by the appellant.
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.
_______________
140 Radio Communications of the Philippines, Inc. v. National Labor Relations
Commission, G.R. Nos. 10118184, 22 June 1992, 210 SCRA 222, 226227; Ortigas, Jr.
v. Lufthansa German Airlines, G.R. No. L28773, 30 June 1975, 64 SCRA 610, 633
634; Hernandez v. Andal, 78 Phil. 196, 209210 (1947).
478
Although this Court appreciates the right of petitioner Citibank to

effect legal compensation of respondent’s local deposits, as well as
its right to the proceeds of PNs No. 20138 and 20139 by virtue of
the notarized Deeds of Assignment, to partly extinguish
respondent’s outstanding loans, it finds that petitioner Citibank did
commit wrong when it failed to pay and properly account for the
proceeds of respondent’s money market placements, evidenced by
PNs No. 23356 and 23357, and when it sought the remittance of
respondent’s dollar accounts from CitibankGeneva by virtue of a
highlysuspect Declaration of Pledge to be applied to the remaining
balance of respondent’s outstanding loans. It bears to emphasize that
banking is impressed with public interest and its fiduciary character
141
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 142
consist only of a few
hundred pesos or of millions of pesos. The bank must record every
single transaction accurately,
143
down to the last centavo, and as
promptly as possible. Petitioner Citibank evidently failed to
exercise the required degree of care and transparency in its
transactions with respondent, thus, resulting in the wrongful
deprivation of her property.
Respondent had been deprived of substantial amounts of her
investments and deposits for more than two decades. During this
span of years, respondent had found herself in desperate need of the
144
amounts wrongfully withheld from her. In her testimony before the
RTC, respondent narrated—
_______________
141 THE GENERAL BANKING LAW OF 2000, Section 2.
142 Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948; 315 SCRA
309, 314 (1999).
143 Simex International (Manila), Inc, vs. Court of Appeals, G.R. No. 88013, 19
March 1990, 183 SCRA 360, 367; Bank of Philippine Islands vs. Intermediate
Appellate Court, G.R. No. 69162, 21 February 1992, 206 SCRA 408, 412413.
144 TSN, 28 January 1986, Vol. I, pp. 57.
479
VOL. 504, OCTOBER 16, 2006 479
Q By the way Mrs. Witness will you kindly tell us again, you said before
that you are a businesswoman, will you tell us again what are the
businesses you are engaged into [sic]?
A I am engaged in real estate. I am the owner of the Modesta Village 1 and
2 in San Mateo, Rizal. I am also the President and Chairman of the
Board of Macador [sic] Co. and Business Inc. which operates the
Macador [sic] International Palace Hotel. I am also the President of the
Macador [sic] International Palace Hotel, and also the Treasures Home
Industries, Inc. which I am the Chairm 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 What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and construction.
Q Aside from those businesses are you a member of any national or
community organization for social and civil activities?
A Yes sir.
Q What are those?
A I am the VicePresident of thes [sic] Subdivision Association of the
Philippines in 1976, I am also an officer of the . . . Chamber of Real
Estate Business Association; I am also an officer of the Chatholic [sic]
Women’s League and I am also a member of the CMLI, I forgot the
definition.
Q How about any political affiliation or government position held if any?
A I was also a candidate for Mayor last January 30, 1980.
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
480
A I also ran as an Assemblywoman last May, 1984, Independent party in
Regional I, Pangasinan.
Q What happened to your businesses you mentioned as a result of your
failure to recover you [sic] investments and bank deposits from the
defendants?
A They are not all operating, in short, I was hampered to push through the
businesses that I have.
A [sic] Of all the businesses and enterprises that you mentioned what are
those that are paralyzed and what remain inactive?
A Of all the company [sic] that I have, only the Disto Company that is now
operating in California.
Q How about your candidacy as Mayor of Dagupan, [sic] City, and later as
Assemblywoman of Region I, what happened to this?
A I won by voting but when election comes on [sic] the counting I lost and
I protested this, it is still pending and because I don’t have financial
resources I was not able to push through the case. I just have it pending
in the Comelec.
Q Now, do these things also affect your social and civic activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman I would like to
inform the Honorable Court that I was awarded as the most outstanding
businesswoman of the year in 1976 but when this money was not given
back to me I was not able to comply with the commitments that I have
promised to these associations that I am engaged into [sic], sir.
For the mental anguish, serious anxiety, besmirched reputation,

moral shock and social humiliation suffered by the respondent, the
award of moral damages is but proper. However, this Court reduces
the amount thereof to P300,000.00, for the award of moral damages
is meant to compensate for
481
VOL. 504, OCTOBER 16, 2006 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 damages, in the amount of P250,000.00, in
146 147
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 protect his interest by reason of an unjustified act
149
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, 994995; 317 SCRA 527, 541 (1999);
Zenith Insurance Corporation v. Court of Appeals, G.R. No. 85296, 14 May 1990, 185
SCRA 398, 402403.
146 Exemplary or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate, liquidated or compensatory
damages.
147 While the amount of exemplary damages need not be proved, the plaintiff must
show that he is entitled to moral, temperate or compensatory damages before the court
may consider the question of whether or not exemplary damages should be awarded. x
x x
148 CIVIL CODE, Article 2208(1).
149 Ching Sen Ben vs. Court of Appeals, 373 Phil. 544, 555; 314 SCRA 762, 772773
(1999).
150 ABSCBN 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
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 NinetySeven Pesos and ThirtyFour 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 FortyNine Thousand Six
Hundred Thirty Two US Dollars and NinetyNine Cents
(US$149,632.99) from respondent’s CitibankGeneva
accounts to petitioner Citibank in Manila, and the
application of the same against respondent’s 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
attorney’s fees in the amount of Two Hundred Thousand
Pesos (P200,000.00); and
4. Respondent is ORDERED to pay petitioner Citibank the
balance of her outstanding loans, which, from the respec
_______________
No. 88912, 3 July 1992, 211 SCRA 73, 81; Saba v. Court of Appeals, G.R. No.
77950, 24 August 1990, 189 SCRA 50, 55.
483
VOL. 504, OCTOBER 16, 2006 483
tive dates of their maturity to 5 September 1979, was

computed to be in the sum of One Million SixtyNine
Thousand Eight Hundred FortySeven Pesos and Forty
Centavos (P1,069,847.40), inclusive of interest. These
outstanding loans shall continue to earn interest, at the rates
stipulated in the corresponding PNs, from 5 September
1979 until payment thereof.
SO ORDERED.
Panganiban (C.J., Chairperson), YnaresSantiago, Austria
Martinez and Callejo, Sr., JJ., concur.
Petition partly granted, assailed decision and resolution affirmed
with modification.
Notes.—It is the collecting bank which is bound to scrutinize the
check and to know its depositors before it could make the clearing
indorsement “all prior indorsements and/or lack of indorsement
guaranteed.” (Philippine Commercial International Bank vs. Court
of Appeals, 350 SCRA 446 [2001])
A treasurer of a corporation whose negligence in signing a
confirmation letter for rediscounting of crossed checks, knowing
fully well that the checks were strictly endorsed for deposit only to
the payee’s account and not to be further negotiated, resulted in
damage to the corporation may be personally liable therefor. (Atrium
Management Corporation vs. Court of Appeals, 353 SCRA 23
[2001])
——o0o——
484
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Cathay Pacific Vs Vasquez (399 SCRA 207)

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Cathay Pacific Vs Vasquez (399 SCRA 207)

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3/16/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 504

CITIBANK, N.A. (Formerly First National City Bank) and

Actions; Pleadings and Practice; Forum Shopping; Motions for

Same; Same; Same; Certification Against Forum Shopping; Contents;

Evidence; Admissions; Documentary Evidence; Promissory Notes; By

Same; Obligations and Contracts; Payments; As a general rule, one

Same; Witnesses; Taking into consideration the substantial length of

Same; Preponderance of Evidence; Words and Phrases; Preponderant

Banks and Banking; Checks; Manager’s Checks (MCs) are drawn by

Same; Same; Same; A check, whether a manager’s check or ordinary

Banks and Banking; Compensation; Compensation takes place by

Evidence; Notarial Law; On the evidentiary value of notarized

Same; Same; The certificate of acknowledgment in notarized Deeds of

Same; Same; Conflict of Laws; Processual Presumptions; Words and

Same; Best Evidence Rule; Forgery; When a document is assailed on

Banks and Banking; Banking is impressed with public interest and its

“Wherefore, premises considered, the assailed 24 August 1995 Decision of

4. Ordering defendants­appellants to jointly and severally pay the

Respondent no longer sought a reconsideration of the Decision of

“WHEREFORE, premises considered, the instant Motion for

paragraph 3 of the assailed Decision’s dispositive portion is hereby ordered

Review. Respondent, though, did not file her supposed Petition.

Decision, dated 26 March

239, 244; 27 SCRA 418, 422 (1969); Singh v. Liberty Insurance Corp., 118 Phil. 532,

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

SEC. 3. Disputable presumptions.—The following presumptions are satisfactory if

Date PN No. Cancels Maturity Amount Interest

12/06/1976 20773 None 01/13/1977 500,000.00 16%

34 Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95; 256 SCRA

mature on 15 March 401978. However, respondent, through a letter

amounts of her money market placements with petitioner FNCB

Date PN Cancels Maturity Date Amount Interest

Date PN Cancels Maturity Date Amount Interest

As presented by the petitioner FNCB Finance, respondent rolled­

Date of Check Amount Notation

09/01/1978 76962 12,833.34 Interest payment on PN#08167

Then again, Checks No. 77035 and 77034 were 47

together with respondent’s other deposits and money market

Geneva accounted for respondent’s money market placements and

According to the foregoing computation, by 25 October 1979,

which was subsequently expended by a transfer to another account

Petitioner Citibank was able to establish by preponderance of

According to petitioner Citibank, respondent incurred her loans

PN Date of Date of Principal Date of MC

PN No. Date of Issuance Date of Maturity Principal

On 5 October 1979, respondent wrote Mr. Tan of petitioner

MC Adore International Palace Hotel. The letter was signed by

of her money market placements and deposit accounts with

checks, with the words “Payee’s Account Only.” In general, a

The crossed MCs presented by petitioner Bank were indeed

their deposit, clearance, and payment, and which would have

90 Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208 SCRA

Respondent presented several more pieces of evidence to

Provisional Receipt No. 12724, BPI Check No. 120989 for

corporations, each having its own financial system and records.

at least 105

requires a credit committee, composed of a minimum of three

“The preponderance of evidence may be determined, under certain

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

The execution or existence of the original copies of the documents

helped Attys. Cleofe and Fernandez, the bank’s legal counsels, to

intent, knowledge, identity, plan, system, scheme, habit, custom or

The liquidation of respondent’s outstanding loans were valid in so

4. Ordering defendantsappellants to jointly and severally pay the

As presented by the petitioner FNCB Finance, respondent rolled