G.R. No.

156132             October 12, 2006 The court also ordered Citibank to return the amount of P318,897.34 and P203,150.00 plus 14.5%
CITIBANK, N.A. (Formerly First National City Bank) and INVESTORS' FINANCE per annum to Sabeniano. This is the total amount from the 2 PNs which were executed despite being
CORPORATION, doing business under the name and style of FNCB Finance,  petitioners, reinvested in said bank. The bank was also ordered to pay moral damages of P300,000, exemplary
vs. damages for P250,000, attorney’s fees of P200,000.
MODESTA R. SABENIANO, respondent.
The SC however affirmed the RTC’s decision regarding the pledge. Being a separate entity, Citibank
cannot exercise automatic remittance from Sabeniano’s Citibank Geneva account to off-set her
outstanding loan.
DECISION
CHICO-NAZARIO, J.:
The court also noted that the pledge was filled out irregularly – it was not notarized and Citibank’s
copy bore no date. The original copy was not also produced in court.
BACKGROUND: Before this Court is a Petition for Review on Certiorari,  under Rule 45 of the
Revised Rules of Court, of the Decision  of the Court of Appeals in CA-G.R. CV No. 51930, dated 26
Regarding Sabeniano’s obligation, the Supreme Court affirmed RTC’s decision and ordered her to
March 2002, and the Resolution,  dated 20 November 2002, of the same court which, although
pay the remaining balance of her loan which amounts to P1,069,847.40 as of 5 September 1979.
modifying its earlier Decision, still denied for the most part the Motion for Reconsideration of herein
These loans continue to earn interest based on the maturity date that were agreed and stipulated
petitioners.
upon by the parties.
SUMMARY: Modesta Sabeniano is a client of Citibank and FNCB Finance. On February 1978,
The Supreme Court laid down the requirements for legal compensation to take place. The SC cited
Sabeniano obtained a loan of Php 200,000 from Citibank. This loan was followed with several other
Articles 1278 and 1279 of the Civil Code:
loans – some were paid, while some were not. Those that were not paid upon maturity were rolled
over, reflecting a total unpaid loan of Php 1,069,847.40 as of September 1979.
Art. 1278. Compensation shall take place when two persons, in their own right, are
creditors and debtors of each other.
These loans were secured by Sabeniano’s money market placements with FNCB Finance through a
Art. 1279. In order that compensation may be proper, it is necessary;
Deed of Assignment plus a Declaration of Pledge which states that all present and future fiduciary
(1) That each one of the obligors be bound principally, and that he be at the
placements held in her personal and/or joint name with Citibank Switzerland, will secure all claims
same time a principal creditor of the other;
that Citibank may have or, in the future, acquire against her.
(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
The Deeds of Assignment were duly notarized, while the Declaration of Pledge was not notarized and
has been stated;
Citibank’s copy was undated, while that of Sabeniano bore the date, September 24, 1979.
(3) That the two debts be due;
(4) That they be liquidated and demandable;
Since Sabeniano failed to pay her obligations to Citibank, the latter sent demand letters to request
(5) That over neither of them there be any retention or controversy, commenced
payment. Her total unpaid loan initially amounted to Php 2,123,843.20 (inclusive of interests).
by third persons and communicated in due time to the debtor.
Still failing to pay, Citibank executed the Deeds of Assignment and used the proceeds of Sabeniano’s
As already found by this Court, petitioner Citibank was the creditor of respondent for her outstanding
money market placement from FNCB Finance which totaled Php 1,022,916.66 and her deposits with
loans. At the same time, respondent was the creditor of petitioner Citibank, as far as her deposit
Citibank which totaled Php 31,079.14 to set-off her loan.
account was concerned, since bank deposits, whether fixed, savings, or current, should be
considered as simple loan or mutuum by the depositor to the banking institution. 122 Both debts consist
This reduced the unpaid balance to Php 1,069,847.40 as previously mentioned. Since the loan
in sums of money. By June 1979, all of respondent's PNs in the second set had matured and became
remains unpaid, Citibank proceeded to execute the Declaration of Pledge and remitted a total of
demandable, while respondent's savings account was demandable anytime. Neither was there any
$149,632.99 from Sabeniano’s Citibank-Geneva accounts to off-set the loan.
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.
Sabeniano then filed a complaint against Citibank for damages and specific performance (for proper
accounting and return of the remitted proceeds from her personal accounts). She also contended that
Regarding the money market placements, the SC held that there was a valid off-setting but
the proceeds of 2 promissory notes (PN) from her money market placements with Citibank were
technically Citibank did not effect a legal compensation or off-set under Article 1278 of the Civil Code.
rolled over or reinvested into the petitioner bank, and these should also be returned to her.
Rather, it partly extinguished respondent's obligations through the application of the security given by
the respondent for her loans.
Regarding the execution of the pledge, the RTC declared this illegal, null and void. Citibank was
ordered to return the $149,632.99 to Sabeniano’s Citibank-Geneva account with a legal interest of
Respondent's money market placements were with petitioner FNCB Finance, and after several roll-
12% per annum. The RTC also ordered Sabeniano to pay her outstanding loan to Citibank without
overs, they were ultimately covered by PNs No. 20138 and 20139, which, by 3 September 1979, the
interests and penalty charges.
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
Both parties appealed to the CA which affirmed the RTC’s decision, but further ruled entirely in favor
creditor and petitioner FNCB Finance the debtor (thereby implying that money market placement is a
of Sabeniano – holding that Citibank failed to establish her indebtedness and that all the executed
simple loan or mutuum); while, as to the outstanding loans, petitioner Citibank was the creditor and
deeds should be returned to her account. The case has now reached the Supreme Court.
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
Issue: Whether or not Citibank’s execution of deeds and pledge to off-set Sabeniano’s loan was valid
bound principally, and that he be at the same time a principal creditor of the other, was not met.
and legal.
What petitioner Citibank actually did was to exercise its rights to the proceeds of respondent's money
Held: The Supreme Court reversed the CA’s findings regarding Sabeniano’s Citibank loan as this
market placements with petitioner FNCB Finance by virtue of the Deeds of Assignment executed by
was properly documented and sufficient in evidence. Thus, the execution of deeds was valid,
respondent in its favor. Petitioner Citibank was only acting upon the authority granted to it under the
especially that the agreement was duly notarized, signed and prepared in accordance with the law.
foregoing Deeds when it finally used the proceeds of PNs No. 20138 and 20139, paid by petitioner
FNCB Finance, to partly pay for respondent's outstanding loans. Strictly speaking, it did not effect a
legal compensation or off-set under Article 1278 of the Civil Code, but rather, it partly extinguished (1) Declaring as illegal, null and void the setoff effected by the defendant
respondent's obligations through the application of the security given by the respondent for her loans. Bank [petitioner Citibank] of plaintiff's [respondent Sabeniano] dollar deposit
Although the pertinent documents were entitled Deeds of Assignment, they were, in reality, more of a with Citibank, Switzerland, in the amount of US$149,632.99, and ordering the
pledge by respondent to petitioner Citibank of her credit due from petitioner FNCB Finance by virtue said defendant [petitioner Citibank] to refund the said amount to the plaintiff with
of her money market placements with the latter. According to Article 2118 of the Civil Code – 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
ART. 2118. If a credit has been pledged becomes due before it is redeemed, the pledgee payment;
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. (2) Declaring the plaintiff [respondent Sabeniano] indebted to the defendant
Bank [petitioner Citibank] in the amount of ₱1,069,847.40 as of 5 September
1979 and ordering the plaintiff [respondent Sabeniano] to pay said amount,
FACTS: Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a banking however, there shall be no interest and penalty charges from the time the illegal
corporation duly authorized and existing under the laws of the United States of America and setoff was effected on 31 October 1979;
licensed to do commercial banking activities and perform trust functions in the Philippines.
(3) Dismissing all other claims and counterclaims interposed by the parties
Petitioner Investor's Finance Corporation, which did business under the name and style of FNCB against each other.
Finance, was an affiliate company of petitioner Citibank, specifically handling money market
placements for its clients. It is now, by virtue of a merger, doing business as part of its successor-in- Costs against the defendant Bank.
interest, BPI Card Finance Corporation. However, so as to consistently establish its identity in the
Petition at bar, the said petitioner shall still be referred to herein as FNCB Finance. All the parties appealed the foregoing Decision of the RTC to the Court of Appeals, docketed as CA-
G.R. CV No. 51930. Respondent questioned the findings of the RTC that she was still indebted to
Respondent Modesta R. Sabeniano was a client of both petitioners Citibank and FNCB petitioner Citibank, as well as the failure of the RTC to order petitioners to render an accounting of
Finance. Regrettably, the business relations among the parties subsequently went awry. 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
On 8 August 1985, respondent filed a Complaint  against petitioners, docketed as Civil Case No. dollar accounts with Citibank-Geneva, in accordance with the Declaration of Pledge she executed in
11336, before the Regional Trial Court (RTC) of Makati City. Respondent claimed to have its favor. Petitioners also alleged that the RTC erred in not declaring respondent liable for damages
substantial deposits and money market placements with the petitioners, as well as money and interest.
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 On 26 March 2002, the Court of Appeals rendered its Decision  affirming with modification the
Citibank. Respondent alleged that petitioners refused to return her deposits and the proceeds of her RTC Decision in Civil Case No. 11336, dated 24 August 1995, and ruling entirely in favor of
money market placements despite her repeated demands, thus, compelling respondent to file Civil respondent in this wise –
Case No. 11336 against petitioners for "Accounting, Sum of Money and Damages." Respondent
eventually filed an Amended Complaint  on 9 October 1985 to include additional claims to deposits Wherefore, premises considered, the assailed 24 August 1995 Decision of the court a
and money market placements inadvertently left out from her original Complaint. quo is hereby AFFIRMED with MODIFICATION, as follows:

In their joint Answer  and Answer to Amended Complaint,  filed on 12 September 1985 and 6 1. Declaring as illegal, null and void the set-off effected by the defendant-
November 1985, respectively, petitioners admitted that respondent had deposits and money appellant Bank of the plaintiff-appellant's dollar deposit with Citibank,
market placements with them, including dollar accounts in the Citibank branch in Geneva, Switzerland, in the amount of US$149,632.99, and ordering defendant-appellant
Switzerland (Citibank-Geneva). Petitioners further alleged that the respondent later obtained Citibank to refund the said amount to the plaintiff-appellant with legal interest at
several loans from petitioner Citibank, for which she executed Promissory Notes (PNs), and the rate of twelve percent (12%) per annum, compounded yearly, from 31
secured by (a) a Declaration of Pledge of her dollar accounts in Citibank-Geneva, and (b) Deeds of October 1979 until fully paid, or its peso equivalent at the time of payment;
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 2. As defendant-appellant Citibank failed to establish by competent evidence the
right to off-set or compensate respondent's outstanding loans with her deposits and money alleged indebtedness of plaintiff-appellant, the set-off of ₱1,069,847.40 in the
market placements, pursuant to the Declaration of Pledge and the Deeds of Assignment executed account of Ms. Sabeniano is hereby declared as without legal and factual basis;
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 3. As defendants-appellants failed to account the following plaintiff-appellant's
were therefore surprised when six years later, in 1985, respondent and her counsel made repeated money market placements, savings account and current accounts, the former is
requests for the withdrawal of respondent's deposits and money market placements with petitioner hereby ordered to return the same, in accordance with the terms and conditions
Citibank, including her dollar accounts with Citibank-Geneva and her money market placements with agreed upon by the contending parties as evidenced by the certificates of
petitioner FNCB Finance. Thus, petitioners prayed for the dismissal of the Complaint and for the investments, to wit:
award of actual, moral, and exemplary damages, and attorney's fees.
(i) Citibank NNPN Serial No. 023356 (Cancels and
When the parties failed to reach a compromise during the pre-trial hearing,  trial proper ensued and Supersedes NNPN No. 22526) issued on 17 March 1977,
the parties proceeded with the presentation of their respective evidence. Ten years after the filing of ₱318,897.34 with 14.50% interest p.a.;
the Complaint on 8 August 1985, a Decision  was finally rendered in Civil Case No. 11336 on 24
August 1995 by the fourth Judge  who handled the said case, Judge Manuel D. Victorio, the (ii) Citibank NNPN Serial No. 23357 (Cancels and
dispositive portion of which reads – Supersedes NNPN No. 22528) issued on 17 March 1977,
₱203,150.00 with 14.50 interest p.a.;
WHEREFORE, in view of all the foregoing, decision is hereby rendered as follows:
 (iii) FNCB NNPN Serial No. 05757 (Cancels and Supersedes failure of the petitioners to attach thereto a Certification against Forum Shopping. However, upon petitioners' Motion and compliance
with the requirements, this Court resolved  to reinstate the Petition.
NNPN No. 04952), issued on 02 June 1977, ₱500,000.00
with 17% interest p.a.;
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
(iv) FNCB NNPN Serial No. 05758 (Cancels and
which this Court, for the sake of expediency, discusses jointly, whenever possible, in the succeeding
Supersedes NNPN No. 04962), issued on 02 June 1977,
paragraphs.
₱500,000.00 with 17% interest per annum;
ISSUES:
(v) The Two Million (₱2,000,000.00) money market
(1) WON it was proper for Citibank to off-set Sabeniano’s debt with the latter’s deposit with
placements of Ms. Sabeniano with the Ayala Investment &
Citibank (yes)
Development Corporation (AIDC) with legal interest at the
(2) WON it was proper for Citibank to off-set Sabeniano’s debt with the latter’s money market
rate of twelve percent (12%) per annum compounded yearly,
placements (yes, but not actually legal compensation but rather Citibank merely exercised
from 30 September 1976 until fully paid;
its rights based on the deeds of assignment)
4. Ordering defendants-appellants to jointly and severally pay the plaintiff-
RULING: IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED. The assailed
appellant the sum of FIVE HUNDRED THOUSAND PESOS (₱500,000.00) by
Decision of the Court of Appeals in CA-G.R. No. 51930, dated 26 March 2002, as already modified by
way of moral damages, FIVE HUNDRED THOUSAND PESOS (₱500,000.00) as
its Resolution, dated 20 November 2002, is hereby AFFIRMED WITH MODIFICATION, as follows –
exemplary damages, and ONE HUNDRED THOUSAND PESOS (₱100,000.00)
as attorney's fees.
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,
Apparently, the parties to the case, namely, the respondent, on one hand, and the petitioners, on the
amounting to Three Hundred Eighteen Thousand Eight Hundred Ninety-Seven Pesos and
other, made separate attempts to bring the aforementioned Decision of the Court of Appeals, dated
Thirty-Four Centavos (₱318,897.34) and Two Hundred Three Thousand One Hundred Fifty
26 March 2002, before this Court for review.
Pesos (₱203,150.00), respectively, plus the stipulated interest of Fourteen and a half
percent (14.5%) per annum, beginning 17 March 1977;
G.R. No. 152985

Respondent no longer sought a reconsideration of the Decision of the Court of Appeals in CA-G.R. CV No. 51930,
2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US
dated 26 March 2002, and instead, filed immediately with this Court on 3 May 2002 a Motion for Extension of Time Dollars and Ninety-Nine Cents (US$149,632.99) from respondent's Citibank-Geneva
to File a Petition for Review,  which, after payment of the docket and other lawful fees, was assigned the docket accounts to petitioner Citibank in Manila, and the application of the same against
number G.R. No. 152985. In the said Motion, respondent alleged that she received a copy of the assailed Court of respondent's outstanding loans with the latter, is DECLARED illegal, null and void.
Appeals Decision on 18 April 2002 and, thus, had 15 days therefrom or until 3 May 2002 within which to file her Petitioner Citibank is ORDERED to refund to respondent the said amount, or its equivalent
Petition for Review. Since she informed her counsel of her desire to pursue an appeal of the Court of Appeals in Philippine currency using the exchange rate at the time of payment, plus the stipulated
Decision only on 29 April 2002, her counsel neither had enough time to file a motion for reconsideration of the said interest for each of the fiduciary placements and current accounts involved, beginning 26
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.
October 1979;

Since this Court did not act upon respondent's Motion for Extension of Time to file her Petition for 3. Petitioner Citibank is ORDERED to pay respondent moral damages in the amount of
Review, then the period for appeal continued to run and still expired on 3 May 2002.  Respondent Three Hundred Thousand Pesos (₱300,000.00); exemplary damages in the amount of Two
failed to file any Petition for Review within the prescribed period for appeal and, hence, this Hundred Fifty Thousand Pesos (₱250,000.00); and attorney's fees in the amount of Two
Court issued a Resolution,  dated 13 November 2002, in which it pronounced that – Hundred Thousand Pesos (₱200,000.00); and

G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals, et al.). – It appearing 4. Respondent is ORDERED to pay petitioner Citibank the balance of her outstanding
that petitioner failed to file the intended petition for review on certiorari within the period loans, which, from the respective dates of their maturity to 5 September 1979, was
which expired on May 3, 2002, the Court Resolves to DECLARE THIS CASE computed to be in the sum of One Million Sixty-Nine Thousand Eight Hundred Forty-Seven
TERMINATED and DIRECT the Division Clerk of Court to INFORM the parties that the Pesos and Forty Centavos (₱1,069,847.40), inclusive of interest. These outstanding loans
judgment sought to be reviewed has become final and executory. shall continue to earn interest, at the rates stipulated in the corresponding PNs, from 5
September 1979 until payment thereof.
The said Resolution was duly recorded in the Book of Entries of Judgments on 3 January 2003.
SO ORDERED.
G.R. No. 156132
RATIO:
Meanwhile, petitioners filed with the Court of Appeals a Motion for Reconsideration of its
Decision in CA-G.R. CV No. 51930, dated 26 March 2002. Acting upon the said Motion, the Court of I The Resolution of this Court, dated 13 November 2002, in G.R. No. 152985, declaring the
Appeals issued the Resolution,  dated 20 November 2002, modifying its Decision of 26 March Decision of the Court of Appeals, dated 26 March 2002, final and executory, pertains to
2002, as follows – respondent Sabeniano alone.

WHEREFORE, premises considered, the instant Motion for (Procedural Matters; SKIP)

Reconsideration is PARTIALLY GRANTED as Sub-paragraph (V) paragraph 3 of the
assailed Decision's dispositive portion is hereby ordered DELETED. 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
The challenged 26 March 2002 Decision of the Court is AFFIRMED with MODIFICATION. unofficial letters to this Court which were no longer made part of the record, that the Decision of the Court of
Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, had already become final and executory by virtue of the
Assailing the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002 and 20 November 2002, Resolution of this Court in G.R. No. 152985, dated 13 November 2002.
respectively, petitioners filed the present Petition, docketed as G.R. No. 156132. The Petition was initially denied  by this Court for
G.R. No. 152985 was the docket number assigned by this Court to respondent's Motion for Extension of Time to File 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
a Petition for Review. Respondent, though, did not file her supposed Petition. Thus, after the lapse of the prescribed 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.
period for the filing of the Petition, this Court issued the Resolution, dated 13 November 2002, declaring the
No. 152985 terminated, and the therein assailed Court of Appeals Decision final and executory. G.R. No. 152985, therefore, did not
Decision of the Court of Appeals, dated 26 March 2002, final and executory. It should be pointed out, however, that progress and respondent's appeal was unperfected.
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 The Petition for Review would constitute the initiatory pleading before this Court, upon the timely filing of which, the case before this
same Resolution would bind respondent solely, and not petitioners which filed their own separate appeal 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
Court, docketed as G.R. No. 156132, the Petition at bar. This would mean that respondent, on her part, should be 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
bound by the findings of fact and law of the Court of Appeals, including the monetary amounts consequently
Review does not serve the same purpose as the Petition for Review itself. Such a Motion merely presents the important dates and the
awarded to her by the appellate court in its Decision, dated 26 March 2002; and she can no longer refute or assail justification for the additional time requested for, but it does not go into the details of the appealed case.
any part thereof. 
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
This Court already explained the matter to respondent when it issued a Resolution  in G.R. No. 156132, dated 2 to file her Petition for Review, there is actually no second case involving the same parties, rights or causes of action, and relief sought,
February 2004, which addressed her Urgent Motion for the Release of the Decision with the Implementation of the as that in CA-G.R. CV No. 51930.
Entry of Judgment in the following manner –
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]cting on Citibank's and FNCB Finance's Motion for Reconsideration, we resolved to grant the motion, (a) she has not commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to
reinstate the petition and require Sabeniano to file a comment thereto in our Resolution of June 23, 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
2003. Sabeniano filed a Comment dated July 17, 2003 to which Citibank and FNCB Finance filed presenting a complete statement of the present status thereof; and (c) if she should thereafter learn that the same or similar action or
a Reply dated August 20, 2003. 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.
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 Lastly, the fact alone that the Decision of the Court of Appeals, dated 26 March 2002, essentially ruled in favor of respondent, does not
the Decision of the Court of Appeals has become final and executory. More precisely, necessarily preclude her from appealing the same. Granted that such a move is ostensibly irrational, nonetheless, it does not amount to
the Decision became final and executory only with regard to Sabeniano in view of her failure to file a 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
petition for review within the extended period granted by the Court, and not to Citibank and FNCB 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
Finance whose Petition for Review was duly reinstated and is now submitted for decision.
2002 Decision would be grounded on mere speculations, to which this Court cannot give credence.

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

SC SETTLES QUESTIONS OF LAW (SKIP)
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 It is already a well-settled rule that the jurisdiction of this Court in cases brought before it from the Court of Appeals by virtue of Rule 45
of the Revised Rules of Court is limited to reviewing errors of law. Findings of fact of the Court of Appeals are conclusive upon this
Time to File a Petition for Review, ahead of the opposing party, then not actually filing the intended Petition.  The
Court. There are, however, recognized exceptions to the foregoing rule, namely: (1) when the findings are grounded entirely on
party who fails to file its intended Petition within the reglementary or extended period should solely bear the speculation, surmises, or conjectures; (2) when the interference made is manifestly mistaken, absurd, or impossible; (3) when there is
consequences of such failure. 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
RESPONDENT SABENIANO DID NOT COMMIT FORUM SHOPPING (SKIP). 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
Another issue that does not directly involve the merits of the present Petition, but raised by petitioners, is whether respondent should be absence of evidence and contradicted by the evidence on record.
held liable for forum shopping.
Several of the enumerated exceptions pertain to the Petition at bar.
Petitioners contend that respondent committed forum shopping on the basis of the following facts:
It is indubitable that the Court of Appeals made factual findings that are contrary to those of the RTC,  thus, resulting in its substantial
While petitioners' Motion for Reconsideration of the Decision in CA-G.R. CV No. 51930, dated 26 March 2002, was still pending before modification of the trial court's Decision, and a ruling entirely in favor of the respondent. In addition, petitioners invoked in the instant
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 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
Review of the same Court of Appeals Decision, docketed as G.R. No. 152985. Thereafter, respondent continued to participate in the of Appeals made conflicting findings of fact; findings of fact which went beyond the issues raised on appeal before it; as well as findings
proceedings before the Court of Appeals in CA-G.R. CV No. 51930 by filing her Comment, dated 17 July 2002, to petitioners' Motion for of fact premised on the supposed absence of evidence and contradicted by the evidence on record.
Reconsideration; and a Rejoinder, dated 23 September 2002, to petitioners' Reply. Thus, petitioners argue that by seeking relief
concurrently from this Court and the Court of Appeals, respondent is undeniably guilty of forum shopping, if not indirect contempt. On the basis of the foregoing, this Court shall proceed to reviewing and re-evaluating the evidence on record in order to settle questions
of fact raised in the Petition at bar.
This Court, however, finds no sufficient basis to hold respondent liable for forum shopping.
The fact that the trial judge who rendered the RTC Decision in Civil Case No. 11336, dated 24 August 1995, was not the same
Forum shopping has been defined as the filing of two or more suits involving the same parties for the same cause of action, either judge who heard and tried the case, does not, by itself, render the said Decision erroneous.
simultaneously or successively, 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 identity of parties, rights or causes of action, and relief sought.  To guard against this 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,
deplorable practice, Rule 7, Section 5 of the revised Rules of Court imposes the following requirement – 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 RTC Decision, dated 24 August 1995. In his Decision,  Judge Victorio made the following findings –
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 After carefully evaluating the mass of evidence adduced by the parties, this Court is not inclined to believe the plaintiff's
therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, assertion that the promissory notes as well as the deeds of assignments of her FNCB Finance money market placements
tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if were simulated. The evidence is overwhelming that the plaintiff received the proceeds of the loans evidenced by the
there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should various promissory notes she had signed. What is more, there was not an iota of proof save the plaintiff's bare testimony
thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) that she had indeed applied for loan with the Development Bank of the Philippines.
days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.
More importantly, the two deeds of assignment were notarized, hence they partake the nature of a public document. It
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other makes more than preponderant proof to overturn the effect of a notarial attestation. Copies of the deeds of assignments
initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon were actually filed with the Records Management and Archives Office.
motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein
shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the Finally, there were sufficient evidence wherein the plaintiff had admitted the existence of her loans with the defendant
acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for Bank in the total amount of ₱1,920,000.00 exclusive of interests and penalty charges (Exhibits "28", "31", "32", and "33").
summary dismissal with prejudice and shall constitute direct contempt, as well as cause for administrative sanctions.
In fine, this Court hereby finds that the defendants had established the genuineness and due execution of the various
Although it may seem at first glance that respondent was simultaneously seeking recourse from the Court of Appeals and this Court, a promissory notes heretofore identified as well as the two deeds of assignments of the plaintiff's money market placements
careful and closer scrutiny of the details of the case at bar would reveal otherwise. 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 ₱1,053,995.80 of the plaintiff's past due
 obligation was partially offset by the said money market placement leaving a balance of ₱1,069,847.40 as of 5 September
1979 (Exhibit "34").
Deposit/Placement Amount
Disagreeing in the foregoing findings, the Court of Appeals stressed, in its Decision in CA-G.R. CV No. 51930, dated 26 March 2002,
"that the ponente of the herein assailed Decision is not the Presiding Judge who heard and tried the case."  This brings us to the Dollar deposit with Citibank-Geneva $
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? 149,632.99

This Court rules in the negative. Money market placement with Citibank, evidenced by Promissory Note (PN) No. ₱
23356 (which cancels and supersedes PN No. 22526), earning 14.5% interest per 318,897.34
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
annum (p.a.)
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 Money market placement with Citibank, evidenced by PN No. 23357 (which cancels ₱
judge who heard the case and received the evidence is of little consequence when the records and transcripts of stenographic notes and supersedes PN No. 22528), earning 14.5% interest p.a. 203,150.00
(TSNs) are complete and available for consideration by the former.
Money market placement with FNCB Finance, evidenced by PN No. 5757 (which ₱
In People v. Gazmen,  this Court already elucidated its position on such an issue –
cancels and supersedes PN No. 4952), earning 17% interest p.a. 500,000.00
Accused-appellant makes an issue of the fact that the judge who penned the decision was not the judge who heard and
tried the case and concludes therefrom that the findings of the former are erroneous. Accused-appellant's argument does Money market placement with FNCB Finance, evidenced by PN No. 5758 (which ₱
not merit a lengthy discussion. It is well-settled that the decision of a judge who did not try the case is not by that reason cancels and supersedes PN No. 2962), earning 17% interest p.a. 500,000.00
alone erroneous.
This Court is tasked to determine whether petitioners are indeed liable to return the foregoing
It is true that the judge who ultimately decided the case had not heard the controversy at all, the trial having been amounts, together with the appropriate interests and penalties, to respondent. It shall trace
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
respondent's transactions with petitioners, from her money market placements with petitioner Citibank
before he rendered his decision. It is not unusual for a judge who did not try a case to decide it on the basis of the record. and petitioner FNCB Finance, to her savings and current accounts with petitioner Citibank, and to her
The fact that he did not have the opportunity to observe the demeanor of the witnesses during the trial but merely relied dollar accounts with Citibank-Geneva.
on the transcript of their testimonies does not for that reason alone render the judgment erroneous.

(People vs. Jaymalin, 214 SCRA 685, 692 [1992]) Money market placements with petitioner Citibank
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
The history of respondent's money market placements with petitioner Citibank began on 6 December
follow that a judge who was not present during the trial cannot render a valid decision since he can rely on the transcript of 1976, when she made a placement of ₱500,000.00 as principal amount, which was supposed to earn
stenographic notes taken during the trial as basis of his decision. an interest of 16% p.a. and for which PN No. 20773 was issued. Respondent did not yet claim the
Accused-appellant's contention that the trial judge did not have the opportunity to observe the conduct and demeanor of
proceeds of her placement and, instead, rolled-over or re-invested the principal and proceeds several
the witnesses since he was not the same judge who conducted the hearing is also untenable. While it is true that the trial times in the succeeding years for which new PNs were issued by petitioner Citibank to replace the
judge who conducted the hearing would be in a better position to ascertain the truth and falsity of the testimonies of the ones which matured. Petitioner Citibank accounted for respondent's original placement and 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
subsequent roll-overs thereof, as follows –
decision.
Maturity Date Amount
Date PN No. Cancels PN No.
(People vs. De Paz, 212 SCRA 56, 63 [1992]) (mm/dd/yyyy) (P)
(mm/dd/yyyy)
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 12/06/1976 20773 None 01/13/1977 500,000.00
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 01/14/1977 21686 20773 02/08/1977 508,444.44
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.
22526 21686 03/16/1977 313,952.59
Irrefragably, by reason alone that the judge who penned the RTC Decision was not the same judge who heard the case and received 02/09/1977
the evidence therein would not render the findings in the said Decision erroneous and unreliable. While the conduct and demeanor of 22528 21686 03/16/1977 200,000.00
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 23356 22526 04/20/1977 318,897.34
object and documentary evidence submitted and made part of the records of the case. 03/17/1977
23357 22528 04/20/1977 203,150.00
This Court proceeds to making its own findings of fact. 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
Since the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, has averred that respondent used the ₱500,000.00 from the payment of PNs No. 23356 and
become final and executory as to the respondent, due to her failure to interpose an appeal therefrom 23357, plus ₱600,000.00 sourced from her other funds, to open two time deposit (TD)
within the reglementary period, she is already bound by the factual findings in the said Decision. accounts with petitioner Citibank, namely, TD Accounts No. 17783 and 17784.
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, Petitioner Citibank did not deny the existence nor questioned the authenticity of PNs No.
which modified its earlier Decision by deleting paragraph 3(v) of its dispositive portion, ordering 23356 and 23357 it issued in favor of respondent for her money market placements. In fact,
petitioners to return to respondent the proceeds of her money market placement with AIDC, shall it admitted the genuineness and due execution of the said PNs, but qualified that they were
already bar her from questioning such modification before this Court. Thus, what is for review before no longer outstanding.  In Hibberd v. Rohde and McMillian,  this Court delineated the
this Court is the Decision of the Court of Appeals, dated 26 March 2002, as modified by the consequences of such an admission –
Resolution of the same court, dated 20 November 2002.
By the admission of the genuineness and due execution of an instrument, as
Respondent alleged that she had several deposits and money market placements with petitioners. provided in this section, is meant that the party whose signature it bears admits
These deposits and money market placements, as determined by the Court of Appeals in its that he signed it or that it was signed by another for him with his authority; that at
Decision, dated 26 March 2002, and as modified by its Resolution, dated 20 November 2002, are as the time it was signed it was in words and figures exactly as set out in the
follows – 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 Atty. Mabasa:
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; Okey [sic]. Now Mr. Witness, you were asked to testify in this case and
Cox vs. Northwestern Stage Co., 1 Idaho, 376; Woollen vs. Whitacre, 73 Ind., this case is [sic] consist [sic] of several documents involving
198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escaño, 11 Phil. Rep., 92); or transactions between the plaintiff and the defendant. Now, were you
that it was unauthorized, as in the case of an agent signing for his principal, or able to make your own memorandum regarding all these transactions?
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 A Yes, based on my recollection of these facts, I did come up of [sic] the outline
corporation (Merchant vs. International Banking Corporation, 6 Phil Rep., 314; of the chronological sequence of events.
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 Court:
its charter to sign the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed the instrument in some Are you trying to say that you have personal knowledge or participation
other capacity than that alleged in the pleading setting it out (Payne vs. National to these transactions?
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 A Yes, your Honor, I was the officer-in charge of the unit that was processing
Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut off by the admission these transactions. Some of the documents bear my signature.
of its genuineness and due execution.
Court:
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 And this resume or summary that you have prepared is based on
evidence on his part and entitles him to a judgment on the pleadings unless a purely your recollection or documents?
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 A Based on documents, your Honor.
To Ching, 14 Phil. Rep., 222; Banco Español-Filipino vs. McKay & Zoeller, 27
Phil. Rep., 183). x x x Court:

Since the genuineness and due execution of PNs No. 23356 and 23357 are uncontested, Are these documents still available now?
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 A Yes, your honor.
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 Court:
proof was upon petitioner Citibank to show that it had been discharged.  It has already been
established by this Court that – Better present the documents.

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

When the existence of a debt is fully established by the evidence contained in the Q Now, basing on the notes that you prepared, Mr. Witness, and according to
record, the burden of proving that it has been extinguished by payment devolves you basing also on your personal recollection about all the transactions involved
upon the debtor who offers such defense to the claim of the creditor. Where the between Modesta Sabeniano and defendant City Bank [sic] in this case. Now,
debtor introduces some evidence of payment, the burden of going forward with would you tell us what happened to the money market placements of Modesta
the evidence – as distinct from the general burden of proof – shifts to the creditor, Sabeniano that you have earlier identified in Exhs. "47" and "48"?
who is then under the duty of producing some evidence of non-payment.
A The transactions which I said earlier were terminated and booked to time
Reviewing the evidence on record, this Court finds that petitioner Citibank failed to deposits.
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 Q And you are saying time deposits with what bank?
Citibank.
A With First National Citibank.
Petitioner Citibank presented the testimonies of two witnesses to support its contention of
payment: (1) That of Mr. Herminio Pujeda,  the officer-in-charge of loans and placements at Q Is it the same bank as Citibank, N.A.?
the time when the questioned transactions took place; and (2) that of Mr. Francisco Tan,
the former Assistant Vice-President of Citibank, who directly dealt with respondent with A Yes, sir.
regard to her deposits and loans.
Q And how much was the amount booked as time deposit with defendant
The relevant portion  of Mr. Pujeda's testimony as to PNs No. 23356 and 23357 (referred to Citibank?
therein as Exhibits No. "47" and "48," respectively) is reproduced below –
A In the amount of ₱500,000.00.
 Moreover, while there are documentary evidences to support and trace respondent's
Q And outside this ₱500,000.00 which you said was booked out of the proceeds money market placements with petitioner Citibank, from the original PN No. 20773, rolled-
of Exhs. "47" and "48", were there other time deposits opened by Mrs. Modesta over several times to, finally, PNs No. 23356 and 23357, there is an evident absence of any
Sabeniano at that time. 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
A Yes, she also opened another time deposit for ₱600,000.00. 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,
Q So all in all Mr. Witness, sometime in April of 1978 Mrs. Modesta Sabeneano the supposed documents on which they based those portions of their testimony on the
[sic] had time deposit placements with Citibank in the amount of ₱500,000.00 payment of PNs No. 23356 and 23357 and the opening of the TD accounts from the
which is the proceeds of Exh. "47" and "48" and another ₱600,000.00, is it not? 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
A Yes, sir. amounts – consisting of the principal amount of ₱500,000.00, plus the interest it should
have earned during the years of placement – and it is difficult for this Court to believe that
Q And would you know where did the other ₱600,000 placed by Mrs. Sabeneano petitioner Citibank would not have had documented the payment thereof.
[sic] in a time deposit with Citibank, N.A. came [sic] from?
When Mr. Pujeda testified before the RTC on 6 February 1990,  petitioners' counsel
A She funded it directly. attempted to present in evidence a document that would supposedly support the claim of
petitioner Citibank that the proceeds of PNs No. 23356 and 23357 were used by
Q What are you saying Mr. Witness is that the ₱600,000 is a [sic] fresh money respondent to open one of her two TD accounts in the amount of ₱500,000.00.
coming from Mrs. Modesta Sabeneano [sic]? 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
A That is right. 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.
In his deposition in Hong Kong, Mr. Tan recounted what happened to PNs No. 23356 and Pujeda's testimony on 12 March 1990, petitioners' counsel no longer referred to the said
23357 (referred to therein as Exhibits "E" and "F," respectively), as follows – document.

Atty. Mabasa : Now from the Exhibits that you have identified Mr. Tan from As respondent had established a prima facie case that petitioner Citibank is obligated to
Exhibits "A" to "F", which are Exhibits of the plaintiff. Now, do I understand from her for the amounts stated in PNs No. 23356 and 23357, and as petitioner Citibank failed to
you that the original amount is Five Hundred Thousand and thereafter renewed present sufficient proof of payment of the said PNs and the use by the respondent of the
in the succeeding exhibits? 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
Mr. Tan : Yes, Sir. amounts stated therein.

Atty. Mabasa : Alright, after these Exhibits "E" and "F" matured, what happened The significance of this Court's declaration that PNs No. 23356 and 23357 are still
thereafter? 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
Mr. Tan : Split into two time deposits. TD Accounts No. 17783 and 17784 with petitioner Citibank; and, subsequently, respondent
pre-terminated these TD accounts and transferred the proceeds thereof, amounting to
Atty. Mabasa : Exhibits "E" and "F"? ₱1,100,000.00, to petitioner FNCB Finance for money market placements. While
respondent's money market placements with petitioner FNCB Finance may be traced back
Before anything else, it should be noted that when Mr. Pujeda's testimony before the RTC with definiteness to TD Accounts No. 17783 and 17784, there is only flimsy and
was made on 12 March 1990 and Mr. Tan's deposition in Hong Kong was conducted on 3 unsubstantiated connection between the said TD accounts and the supposed proceeds
September 1990, more than a decade had passed from the time the transactions they were paid from PNs No. 23356 and 23357. With PNs No. 23356 and 23357 still unpaid, then
testifying on took place. This Court had previously recognized the frailty and unreliability of they represent an obligation of petitioner Citibank separate and distinct from the obligation
human memory with regards to figures after the lapse of five years.  Taking into of petitioner FNCB Finance arising from respondent's money market placements with the
consideration the substantial length of time between the transactions and the witnesses' latter.
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 Money market placements with petitioner FNCB Finance
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 According to petitioners, respondent's TD Accounts No. 17783 and 17784, in the total
accounts. This Court finds it implausible that they should remember, after all these years, amount of ₱1,100,000.00, were supposed to mature on 15 March 1978. However,
this particular transaction with respondent involving her PNs No. 23356 and 23357 and TD respondent, through a letter dated 28 April 1977,  pre-terminated the said TD accounts and
accounts. Both witnesses did not give any reason as to why, from among all the clients transferred all the proceeds thereof to petitioner FNCB Finance for money market
they had dealt with and all the transactions they had processed as officers of petitioner placement. Pursuant to her instructions, TD Accounts No. 17783 and 17784 were pre-
Citibank, they specially remembered respondent and her PNs No. 23356 and 23357. Their terminated and petitioner Citibank (then still named First National City Bank) issued
testimonies likewise lacked details on the circumstances surrounding the payment of the Manager's Checks (MC) No. 199253  and 199251  for the amounts of ₱500,000.00 and
two PNs and the opening of the time deposit accounts by respondent, such as the date of ₱600,00.00, respectively. Both MCs were payable to Citifinance (which, according to Mr.
payment of the two PNs, mode of payment, and the manner and context by which Pujeda,  was one with and the same as petitioner FNCB Finance), with the additional
respondent relayed her instructions to the officers of petitioner Citibank to use the proceeds notation that "A/C MODESTA R. SABENIANO." Typewritten on MC No. 199253 is the
of her two PNs in opening the TD accounts. phrase "Ref. Proceeds of TD 17783," and on MC No. 199251 is a similar phrase, "Ref.
Proceeds of TD 17784." These phrases purportedly established that the MCs were paid
from the proceeds of respondent's pre-terminated TD accounts with petitioner Citibank.
 Upon receipt of the MCs, petitioner FNCB Finance deposited the same to its account with placements for which it issued PNs No. 20138 and 20139. The PNs each covered ₱500,000.00, to
Feati Bank and Trust Co., as evidenced by the rubber stamp mark of the latter found at the earn 11% interest per annum, and to mature on 3 September 1979.
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 On 3 September 1979, petitioner FNCB Finance issued Check No. 100168, pay to the order of
amounts of ₱500,000.00 and ₱600,000.00, respectively, payable to respondent's savings "Citibank N.A. A/C Modesta Sabeniano," in the amount of ₱1,022,916.66, as full payment of the
account with petitioner Citibank, S/A No. 25-13703-4, upon their maturity on 1 June 1977. principal amounts and interests of both PNs No. 20138 and 20139 and, resultantly, canceling the said
Once again, respondent rolled-over several times the principal amounts of her money PNs.  Respondent actually admitted the issuance and existence of Check No. 100168, but with the
market placements with petitioner FNCB Finance, as follows – qualification that 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
Maturity Date Amount Interest petitioner Citibank itself, the proceeds of PNs No. 20138 and 20139, amounting to ₱1,022,916.66,
Date PN No. Cancels PN No.
(mm/dd/yyyy) (₱) (p.a.) was used by it to liquidate respondent's outstanding loans. Therefore, the determination of whether or
(mm/dd/yyyy)
not respondent is still entitled to the return of the proceeds of PNs No. 20138 and 20139 shall be
4952 None 06/01/1977 500,000.00 17% dependent on the resolution of the issues raised as to the existence of the loans and the authority of
04/29/1977 petitioner Citibank to use the proceeds of the said PNs, together with respondent's other deposits and
4962 None 06/01/1977 600,000.00 17% money market placements, to pay for the same.
5757 4952 08/31/1977 500,000.00 17%
06/02/1977 Savings and current accounts with petitioner Citibank
5758 4962 08/31/1977 500,000.00 17%
Respondent presented and submitted before the RTC deposit slips and bank statements to prove
8167 5757 08/25/1978 500,000.00 14% deposits made to several of her accounts with petitioner Citibank, particularly, Accounts No.
08/31/1977
8169 5752 08/25/1978 500,000.00 14% 00484202, 59091, and 472-751, which would have amounted to a total of ₱3,812,712.32, had there
been no withdrawals or debits from the said accounts from the time the said deposits were made.
As presented by the petitioner FNCB Finance, respondent rolled-over only the principal amounts of Although the RTC and the Court of Appeals did not make any definitive findings as to the status of
her money market placements as she chose to receive the interest income therefrom. Petitioner respondent's savings and current accounts with petitioner Citibank, the Decisions of both the trial and
FNCB Finance also pointed out that when PN No. 4962, with principal amount of ₱600,000.00, appellate courts effectively recognized only the ₱31,079.14 coming from respondent's savings
matured on 1 June 1977, respondent received a partial payment of the principal which, together with account which was used to off-set her alleged outstanding loans with petitioner Citibank.
the interest, amounted to ₱102,633.33;  thus, only the amount of ₱500,000.00 from PN No. 4962 was
rolled-over to PN No. 5758. Since both the RTC and the Court of Appeals had consistently recognized only the ₱31,079.14 of
respondent's savings account with petitioner Citibank, and that respondent failed to move for
Based on the foregoing records, the principal amounts of PNs No. 5757 and 5758, upon their reconsideration or to appeal this particular finding of fact by the trial and appellate courts, it is already
maturity, were rolled over to PNs No. 8167 and 8169, respectively. PN No. 8167  expressly canceled binding upon this Court. Respondent is already precluded from claiming any greater amount in her
and superseded PN No. 5757, while PN No. 8169  also explicitly canceled and superseded PN No. savings and current accounts with petitioner Citibank. Thus, this Court shall limit itself to determining
5758. Thus, it is patently erroneous for the Court of Appeals to still award to respondent the principal whether or not respondent is entitled to the return of the amount of ₱31,079.14 should the off-set
amounts and interests covered by PNs No. 5757 and 5758 when these were already canceled and thereof by petitioner Citibank against her supposed loans be found invalid.
superseded. It is now incumbent upon this Court to determine what subsequently happened to PNs
No. 8167 and 8169. Dollar accounts with Citibank-Geneva
Petitioner FNCB Finance presented four checks as proof of payment of the principal amounts and Respondent made an effort of preparing and presenting before the RTC her own computations of her
interests of PNs No. 8167 and 8169 upon their maturity. All the checks were payable to respondent's money market placements and dollar accounts with Citibank-Geneva, purportedly amounting to a
savings account with petitioner Citibank, with the following details – 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-Geneva,
Date of Check Amount Notation totaling US$1,336,638.65.  However, respondent herself also submitted as part of her formal offer of
Issuance No. (₱) evidence the computation of her money market placements and dollar accounts with Citibank-Geneva
(mm/dd/yyyy as determined by the latter.  Citibank-Geneva accounted for respondent's money market placements
) and dollar accounts as follows –
09/01/1978 76962 12,833.34 Interest payment on PN#08167
MODESTA SABENIANO &/OR
09/01/1978 76961 12,833.34 Interest payment on PN#08169 ==================
09/05/1978 77035 500,000.00 Full payment of principal on PN#08167 which is US$ 30'000.-- Principal Fid. Placement
hereby cancelled
+ US$ 339.06 Interest at 3,875% p.a. from 12.07. –
09/05/ 1978 77034 500,000.00 Full payment of principal on PN#08169 which is 25.10.79
hereby cancelled
- US$ 95.-- Commission (minimum)
Then again, Checks No. 77035 and 77034 were later returned to petitioner FNCB Finance together US$ 30'244.06 Total proceeds on 25.10.1979
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 US$ 114'000.-- Principal Fid. Placement
₱1,000,000.00, were to be returned to respondent's account with instructions to book the said amount + US$ 1'358.50 Interest at 4,125% p.a. from 12.07. –
in money market placements for one more year. Pursuant to the said memo, Checks No. 77035 and 25.10.79
77034 were invested by petitioner FNCB Finance, on behalf of respondent, in money market
 - US$ 41.17 Commission were rolled-over or renewed. Significant to the Petition at bar are the loans which respondent
obtained from July 1978 to January 1979, appropriately covered by PNs (first set).  The aggregate
US$ 115'317.33 Total proceeds on 25.10.1979 principal amount of these loans was ₱1,920,000.00, which could be broken down as follows –
US$ 145'561.39 Total proceeds of both placements on
25.10.1979 Date of
Date of Maturity Principal Date of Release
PN No. Issuance MC No.
(mm/dd/yyyy) Amount (mm/dd/yyyy)
+ US$ 11'381.31 total of both current accounts (mm/dd/yyyy)
US$ 156'942.70 Total funds available 32935 07/20/1978 09/18/1978 ₱ 400,000.00 07/20/1978 220701
- US$ 149'632.99 Transfer to Citibank Manila on 26.10.1979 33751 10/13/1978 12/12/1978 100,000.00 Unrecovered
(counter value of Pesos 1'102'944.78)
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978 226285
US$ 7'309.71 Balance in current accounts
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978 226439
- US$ 6'998.84 Transfer to Citibank Zuerich – ac no. 121359
on March 13, 1980 34079 11/21/1978 01/19/1979 250,000.00 11/21/1978 226467

US$ 310.87 various charges including closing charges 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
According to the foregoing computation, by 25 October 1979, respondent had a total of
US$156,942.70, from which, US$149,632.99 was transferred by Citibank-Geneva to petitioner 34534 01/09/1979 03/09/1979 150,000.00 01/09/1979 228270
Citibank in Manila, and was used by the latter to off-set respondent's outstanding loans. The balance 34609 01/17/1979 03/19/1979 150,000.00 01/17/1979 228357
of respondent's accounts with Citibank-Geneva, after the remittance to petitioner Citibank in Manila,
amounted to US$7,309.71, which was subsequently expended by a transfer to another account with 34740 01/30/1979 03/30/1979 220,000.00 01/30/1979 228400
Citibank-Zuerich, in the amount of US$6,998.84, and by payment of various bank charges, including
closing charges, in the amount of US$310.87. Rightly so, both the RTC and the Court of Appeals    
gave more credence to the computation of Citibank-Geneva as to the status of respondent's accounts Total ₱ 1,920,000.00
with the said bank, rather than the one prepared by respondent herself, which was evidently self-
serving. Once again, this Court shall limit itself to determining whether or not respondent is entitled to When respondent was unable to pay the first set of PNs upon their maturity, these were rolled-over or
the return of the amount of US$149,632.99 should the off-set thereof by petitioner Citibank against renewed several times, necessitating the execution by respondent of new PNs in favor of petitioner
her alleged outstanding loans be found invalid. Respondent cannot claim any greater amount since Citibank. As of 5 April 1979, respondent had the following outstanding PNs (second set),  the principal
she did not perfect an appeal of the Decision of the Court of Appeals, dated 26 March 2002, which amount of which remained at ₱1,920,000.00 –
found that she is entitled only to the return of the said amount, as far as her accounts with Citibank-
Geneva is concerned.
Date of Issuance Date of Maturity
PN No. Principal Amount
III Petitioner Citibank was able to establish by preponderance of evidence the existence of (mm/dd/yyyy) (mm/dd/yyyy)
respondent's loans. 34510 01/01/1979 03/02/1979 P 400,000.00
Petitioners' version of events 34509 01/02/1979 03/02/1979 100,000.00

In sum, the following amounts were used by petitioner Citibank to liquidate respondent's purported 34534 01/09/1979 03/09/1979 150,000.00
outstanding loans – 34612 01/19/1979 03/16/1979 150,000.00
Amount 34741 01/26/1979 03/12/1979 100,000.00
Description
Principal and interests of PNs No. 20138 and 20139 35689 02/23/1979 05/29/1979 300,000.00
(money market placements with petitioner FNCB 35694 03/19/1979 05/29/1979 150,000.00
Finance) ₱ 1,022,916.66
35695 03/19/1979 05/29/1979 100,000.00
Savings account with petitioner Citibank 31,079.14
356946 03/20/1979 05/29/1979 250,000.00
Dollar remittance from Citibank-Geneva (peso
equivalent of US$149,632.99) 1,102,944.78 35697 03/30/1979 05/29/1979 220,000.00
Total ₱ 1,920,000.00
Total ₱ 2,156,940.58
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."
According to petitioner Citibank, respondent incurred her loans under the circumstances narrated
below.
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
As early as 9 February 1978, respondent obtained her first loan from petitioner Citibank in the
executed in favor of petitioner Citibank a Deed of Assignment  of PN No. 8169, which was issued by
principal amount of ₱200,000.00, for which she executed PN No. 31504.  Petitioner Citibank extended
petitioner FNCB Finance, to secure payment of the credit and banking facilities extended to her by
to her several other loans in the succeeding months. Some of these loans were paid, while others
petitioner Citibank, in the aggregate principal amount of ₱500,000.00. On 9 March 1978, respondent
executed in favor of petitioner Citibank another Deed of Assignment,  this time, of PN No. 8167, also In this regard, please entrust to bearer, our Comtrust check for ₱62,683.33 to be replaced
issued by petitioner FNCB Finance, to secure payment of the credit and banking facilities extended to by another check with amount resulting from the new computation. Also, to facilitate the
her by petitioner Citibank, in the aggregate amount of ₱500,000.00. When PNs No. 8167 and 8169, processing of the same, may we request for another set of promissory notes for the
representing respondent's money market placements with petitioner FNCB Finance, matured and signature of Mrs. Sabeniano and to cancel the previous ones she has signed and
were rolled-over to PNs No. 20138 and 20139, respondent executed new Deeds of Assignment,  in forwarded to you.
favor of petitioner Citibank, on 25 August 1978. According to the more recent Deeds, respondent
assigned PNs No. 20138 and 20139, representing her rolled-over money market placements with This was followed by a telegram,  dated 5 June 1979, and received by petitioner Citibank the following
petitioner FNCB Finance, to petitioner Citibank as security for the banking and credit facilities it day. The telegram was sent by a Dewey G. Soriano, Legal Counsel. The telegram acknowledged
extended to her, in the aggregate principal amount of ₱500,000.00 per Deed. 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
In addition to the Deeds of Assignment of her money market placements with petitioner FNCB International Palace, was presently abroad negotiating for a big loan. Thus, he was requesting for an
Finance, respondent also executed a Declaration of Pledge,  in which she supposedly pledged "[a]ll extension of the due date of the obligation until respondent's arrival on or before 31 July 1979.
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 The next letter,  dated 21 June 1979, was signed by respondent herself and addressed to Mr. Bobby
respondent. The petitioners' copy of the Declaration of Pledge is undated, while that of the Mendoza, a Manager of petitioner FNCB Finance. Respondent wrote therein –
respondent, a copy certified by a Citibank-Geneva officer, bore the date 24 September 1979.
Re: PN No. 20138 for ₱500,000.00 & PN No. 20139 for ₱500,000.00 totalling ₱1
When respondent failed to pay the second set of PNs upon their maturity, an exchange of letters Million, both PNs will mature on 9/3/1979.
ensued between respondent and/or her representatives, on one hand, and the representatives of
petitioners, on the other. 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,
The first letter  was dated 5 April 1979, addressed to respondent and signed by Mr. Tan, as the Manager, to apply to my interest payable on my outstanding loan with Citibank.
manager of petitioner Citibank, which stated, in part, that –
Please note that the captioned two placements are continuously pledged/hypothecated to
Despite our repeated requests and follow-up, we regret you have not granted us with any Citibank, Manila to support my personal outstanding loan. Therefore, please do not release
response or payment. the captioned placements upon maturity until you have received the instruction from
Citibank, Manila.
We, therefore, have no alternative but to call your loan of ₱1,920,000.00 plus interests and
other charges due and demandable. If you still fail to settle this obligation by 4/27/79, we On even date, respondent sent another letter  to Mr. Tan of petitioner Citibank, stating that –
shall have no other alternative but to refer your account to our lawyers for legal action to
protect the interest of the bank. Re: S/A No. 25-225928
and C/A No. 484-946
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 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.
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. Unlike respondent's earlier letters, both letters, dated 21 June 1979, are printed on plain paper,
Tan, you allow us to pay the interests due for the meantime. without the letterhead of her company, MC Adore International Palace.

Please accept our Comtrust Check in the amount of ₱62,683.33. By 5 September 1979, respondent's outstanding and past due obligations to petitioner Citibank
totaled ₱2,123,843.20, representing the principal amounts plus interests. Relying on respondent's
Please bear with us for a little while, at most ninety days. As you know, we have a pending Deeds of Assignment, petitioner Citibank applied the proceeds of respondent's money market
loan with the Development Bank of the Philippines in the amount of ₱11-M. This loan has placements with petitioner FNCB Finance, as well as her deposit account with petitioner Citibank, to
already been recommended for approval and would be submitted to the Board of partly liquidate respondent's outstanding loan balance,  as follows –
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. Respondent's outstanding obligation (principal and interest) ₱ 2,123,843.20
You will be doing our corporation a very viable service, should you grant us our request for Less: Proceeds from respondent's money market placements  
a little more time.
  with petitioner FNCB Finance (principal and interest) (1,022,916.66)
A week later or on 3 May 1979, a certain C. N. Pugeda, designated as "Executive Secretary," sent a   Deposits in respondent's bank accounts with petitioner  
letter  to petitioner Citibank, on behalf of respondent. The letter was again printed on paper bearing
the letterhead of MC Adore International Palace. The pertinent paragraphs of the said letter are   Citibank (31,079.14)
reproduced below –
Balance of respondent's obligation ₱ 1,069,847.40
Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for a re-
computation of the interest and penalty charges on her loan in the aggregate amount of Mr. Tan of petitioner Citibank subsequently sent a letter,  dated 28 September 1979, notifying
₱1,920,000.00 with maturity date of all promissory notes at June 30, 1979. As she has respondent of the status of her loans and the foregoing compensation which petitioner Citibank
personally discussed with you yesterday, this date will more or less assure you of early effected. In the letter, Mr. Tan informed respondent that she still had a remaining past-due obligation
settlement. in the amount of ₱1,069,847.40, as of 5 September 1979, and should respondent fail to pay the
amount by 15 October 1979, then petitioner Citibank shall proceed to off-set the unpaid amount with non-negotiable note, signed copy given to Mr. Tan., (sic) per agreement to be shown to DBP representative. itwill (sic) be returned to
me if the ₱11=M (sic) loan for MC Adore Palace Hotel is approved by DBP."
respondent's other collateral, particularly, a money market placement in Citibank-Hongkong.
FINDINGS OF THIS COURT AS TO THE EXISTENCE OF THE LOANS
On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on paper bearing the letterhead
of MC Adore International Palace, as regards the ₱1,920,000.00 loan account supposedly of MC
After going through the testimonial and documentary evidence presented by both sides to this case, it
Adore Finance & Investment, Inc., and requested for a statement of account covering the principal
is this Court's assessment that respondent did indeed have outstanding loans with petitioner
and interest of the loan as of 31 October 1979. She stated therein that the loan obligation shall be
Citibank at the time it effected the off-set or compensation on 25 July 1979 (using respondent's
paid within 60 days from receipt of the statement of account.
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
Almost three weeks later, or on 25 October 1979, a certain Atty. Moises Tolentino dropped by the
dollar accounts remitted from Citibank-Geneva). The totality of petitioners' evidence as to the
office of petitioner Citibank, with a letter, dated 9 October 1979, and printed on paper with the
existence of the said loans preponderates over respondent's. Preponderant evidence means that, as
letterhead of MC Adore International Palace, which authorized the bearer thereof to represent the
a whole, the evidence adduced by one side outweighs that of the adverse party.
respondent in settling the overdue account, this time, purportedly, of MC Adore International Palace
Hotel. The letter was signed by respondent as the President and Chairman of the Board.
Respondent's outstanding obligation for ₱1,920,000.00 had been sufficiently documented by
petitioner Citibank.
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
The second set of PNs is a mere renewal of the prior loans originally covered by the first set of PNs,
effected an off-set using her account with Citibank-Geneva, in the amount of US$149,632.99,
except for PN No. 34534. The first set of PNs is supported, in turn, by the existence of the MCs that
against her "outstanding, overdue, demandable and unpaid obligation" to petitioner Citibank.
represent the proceeds thereof received by the respondent.
Atty. Agcaoili claimed therein that the compensation or off-set was made pursuant to and in
accordance with the provisions of Articles 1278 through 1290 of the Civil Code. He further
It bears to emphasize that the proceeds of the loans were paid to respondent in MCs, with the
declared that respondent's obligation to petitioner Citibank was now fully paid and liquidated.
respondent specifically named as payee. MCs checks are drawn by the bank's manager upon the
Unfortunately, on 7 October 1987, a fire gutted the 7  floor of petitioner Citibank's building at Paseo de Roxas St.,
bank itself and regarded to be as good as the money it represents.  Moreover, the MCs were crossed
Makati, Metro Manila. Petitioners submitted a Certification  to this effect, dated 17 January 1991, issued by the Chief checks, with the words "Payee's Account Only."
of the Arson Investigation Section, Fire District III, Makati Fire Station, Metropolitan Police Force. The 7  floor of
petitioner Citibank's building housed its Control Division, which was in charge of keeping the necessary documents In general, a crossed check cannot be presented to the drawee bank for payment in cash. Instead,
for cases in which it was involved. After compiling the documentary evidence for the present case, Atty. Renato J. the check can only be deposited with the payee's bank which, in turn, must present it for payment
Fernandez, internal legal counsel of petitioner Citibank, forwarded them to the Control Division. The original copies against the drawee bank in the course of normal banking hours. The crossed check cannot be
of the MCs, which supposedly represent the proceeds of the first set of PNs, as well as that of other documentary presented for payment, but it can only be deposited and the drawee bank may only pay to another
evidence related to the case, were among those burned in the said fire.
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  –
RESPONDENT'S VERSION OF EVENTS
[T]he crossing of a check with the phrase "Payee's Account Only" is a warning that the
Respondent disputed petitioners' narration of the circumstances surrounding her loans with
check should be deposited in the account of the payee. Thus, it is the duty of the collecting
petitioner Citibank and the alleged authority she gave for the off-set or compensation of her
bank PCI Bank to ascertain that the check be deposited in payee's account only. It is bound
money market placements and deposit accounts with petitioners against her loan obligation.
to scrutinize the check and to know its depositors before it can make the clearing
Respondent denied outright executing the first set of PNs, except for one (PN No. 34534 in particular). Although she admitted that she indorsement "all prior indorsements and/or lack of indorsement guaranteed."
obtained several loans from petitioner Citibank, these only amounted to ₱1,150,000.00, and she had already paid them. She secured
from petitioner Citibank two loans of ₱500,000.00 each. She executed in favor of petitioner Citibank the corresponding PNs for the
loans and the Deeds of Assignment of her money market placements with petitioner FNCB Finance as security.  To prove payment of The crossed MCs presented by petitioner Bank were indeed deposited in several different bank
these loans, respondent presented two provisional receipts of petitioner Citibank – No. 19471,  dated 11 August 1978, and No. 12723, accounts and cleared by the Clearing Office of the Central Bank of the Philippines, as evidenced by
dated 10 November 1978 – both signed by Mr. Tan, and acknowledging receipt from respondent of several checks in the total amount the stamp marks and notations on the said checks. The crossed MCs are already in the possession
of ₱500,744.00 and ₱500,000.00, respectively, for "liquidation of loan."
of petitioner Citibank, the drawee bank, which was ultimately responsible for the payment of the
She borrowed another ₱150,000.00 from petitioner Citibank for personal investment, and for which she executed PN No. 34534, on 9 amount stated in the checks. Given that a check is more than just an instrument of credit used in
January 1979. Thus, she admitted to receiving the proceeds of this loan via MC No. 228270. She invested the loan amount in another commercial transactions for it also serves as a receipt or evidence for the drawee bank of the
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 ₱150,000.00 loan from petitioner Citibank. When she failed to pay the loan when it became due, petitioner cancellation of the said check due to payment,  then, the possession by petitioner Citibank of the said
Citibank allegedly forfeited her money market placement with petitioner FNCB Finance and, thus, the loan was already paid. 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.
Respondent likewise questioned the MCs presented by petitioners, except for one (MC No. 228270 in particular), as proof that she
received the proceeds of the loans covered by the first set of PNs. As recounted in the preceding paragraph, respondent admitted to
obtaining a loan of ₱150,000.00, covered by PN No. 34534, and receiving MC No. 228270 representing the proceeds thereof, but This Court finds applicable herein the presumptions that private transactions have been fair and
claimed that she already paid the same. She denied ever receiving MCs No. 220701 (for the loan of ₱400,000.00, covered by PN No. regular,  and that the ordinary course of business has been followed.  There is no question that the
33935) and No. 226467 (for the loan of ₱250,000.00, 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, loan transaction between petitioner Citibank and the respondent is a private transaction. The
but as payment of the principal amounts and/or interests from her money market placements with petitioner Citibank. She also raised transactions revolving around the crossed MCs – from their issuance by petitioner Citibank to
doubts as to the notation on each of the checks that reads "RE: Proceeds of PN#[corresponding PN No.]," saying that such notation did respondent as payment of the proceeds of her loans; to its deposit in respondent's accounts with
not appear on the MCs when she originally received them and that the notation appears to have been written by a typewriter different
from that used in writing all other information on the checks (i.e., date, payee, and amount).  She even testified that MCs were not several different banks; to the clearing of the MCs by an independent clearing house; and finally, to
supposed to bear notations indicating the purpose for which they were issued. 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
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 addition, the banks involved in the foregoing transactions are also presumed to have followed the
loan application for a big amount with the Development Bank of the Philippines (DBP), and when Mr. Tan found out about this, he ordinary course of business in the acceptance of the crossed MCs for deposit in respondent's
suggested that they could make it appear that the respondent had outstanding loans with petitioner Citibank and the latter was already accounts, submitting them for clearing, and their eventual payment and cancellation.
demanding payment thereof; this might persuade DBP to approve respondent's loan application. Mr. Tan made the respondent sign the
second set of PNs, so that he may have something to show the DBP investigator who might inquire with petitioner Citibank as to
respondent's loans with the latter. On her own copies of the said PNs, respondent wrote by hand the notation, "This isa (sic) simulated
The afore-stated presumptions are disputable, meaning, they are satisfactory if uncontradicted, but Another inconsistency in respondent's denial of receipt of MC No. 226467 and her deposit of the
may be contradicted and overcome by other evidence.  Respondent, however, was unable to present same in her account, is her presentation of Exhibit "HHH," a provisional receipt which was supposed
sufficient and credible evidence to dispute these presumptions. to prove that respondent turned over ₱500,000.00 to Mr. Tan of petitioner Citibank, that the said
amount was split into three money market placements, and that MC No. 226467 represented the
It should be recalled that out of the nine MCs presented by petitioner Citibank, respondent admitted to return on her investment from one of these placements.  Because of her Exhibit "HHH," respondent
receiving one as proceeds of a loan (MC No. 228270), denied receiving two (MCs No. 220701 and effectively admitted receipt of MC No. 226467, although for reasons other than as proceeds of a loan.
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. 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
Respondent admitted receiving MC No. 228270 representing the proceeds of her loan covered by PN and that the notations appeared to be written by a typewriter different from that used to write the other
No. 34534. Although the principal amount of the loan is ₱150,000.00, respondent only received information on the checks. Once more, respondent's allegations were uncorroborated by any other
₱146,312.50, because the interest and handling fee on the loan transaction were already deducted evidence. Her and her counsel's observation that the notations on the MCs appear to be written by a
therefrom.  Stamps and notations at the back of MC No. 228270 reveal that it was deposited at the typewriter different from that used to write the other information on the checks hardly convinces this
Bank of the Philippine Islands (BPI), Cubao Branch, in Account No. 0123-0572-28.  The check also Court considering that it constitutes a mere opinion on the appearance of the notation by a witness
bore the signature of respondent at the back.  And, although respondent would later admit that she who does not possess the necessary expertise on the matter. In addition, the notations on the MCs
did sign PN No. 34534 and received MC No. 228270 as proceeds of the loan extended to her by were written using both capital and small letters, while the other information on the checks were
petitioner Citibank, she contradicted herself when, in an earlier testimony, she claimed that PN No. written using capital letters only, such difference could easily confuse an untrained eye and lead to a
34534 was among the PNs she executed as simulated loans with petitioner Citibank. hasty conclusion that they were written by different typewriters.

Respondent denied ever receiving MCs No. 220701 and 226467. However, considering that the said Respondent's testimony, that based on her experience transacting with banks, the MCs were not
checks were crossed for payee's account only, and that they were actually deposited, cleared, and supposed to include notations on the purpose for which the checks were issued, also deserves scant
paid, then the presumption would be that the said checks were properly deposited to the account of consideration. While respondent may have extensive experience dealing with banks, it still does not
respondent, who was clearly named the payee in the checks. Respondent's bare allegations that she qualify her as a competent witness on banking procedures and practices. Her testimony on this
did not receive the two checks fail to convince this Court, for to sustain her, would be for this Court to matter is even belied by the fact that the other MCs issued by petitioner Citibank (when it was still
conclude that an irregularity had occurred somewhere from the time of the issuance of the said named First National City Bank) and by petitioner FNCB Finance, the existence and validity of which
checks, to their deposit, clearance, and payment, and which would have involved not only petitioner were not disputed by respondent, also bear similar notations that state the reason for which they were
Citibank, but also BPI, which accepted the checks for deposit, and the Central Bank of the issued.
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 Respondent presented several more pieces of evidence to substantiate her claim that she received
banks involved following the ordinary course of their business. 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
The mere fact that MCs No. 220701 and 226467 do not bear respondent's signature at the back does money market placements with petitioners. Part of respondent's exhibits were personal checks  drawn
not negate deposit thereof in her account. The liability for the lack of indorsement on the MCs no by respondent on her account with Feati Bank & Trust Co., which she allegedly invested in separate
longer fall on petitioner Citibank, but on the bank who received the same for deposit, in this case, BPI money market placements with both petitioners, the returns from which were paid to her via MCs No.
Cubao Branch. Once again, it must be noted that the MCs were crossed, for payee's account only, 226285 and 228400. Yet, to this Court, the personal checks only managed to establish respondent's
and the payee named in both checks was none other than respondent. The crossing of the MCs was issuance thereof, but there was nothing on the face of the checks that would reveal the purpose for
already a warning to BPI to receive said checks for deposit only in respondent's account. It was up to which they were issued and that they were actually invested in money market placements as
BPI to verify whether it was receiving the crossed MCs in accordance with the instructions on the face respondent claimed.
thereof. If, indeed, the MCs were deposited in accounts other than respondent's, then the respondent
would have a cause of action against BPI. Respondent further submitted handwritten notes that purportedly computed and presented the returns
on her money market placements, corresponding to the amount stated in the MCs she received from
BPI further stamped its guarantee on the back of the checks to the effect that, "All prior endorsement petitioner Citibank. Exhibit "HHH-1"  was a handwritten note, which respondent attributed to Mr. Tan
and/or Lack of endorsement guaranteed." Thus, BPI became the indorser of the MCs, and assumed of petitioner Citibank, showing the breakdown of her BPI Check for ₱500,000.00 into three different
all the warranties of an indorser,  specifically, that the checks were genuine and in all respects what money market placements with petitioner Citibank. This Court, however, noticed several factors which
they purported to be; that it had a good title to the checks; that all prior parties had capacity to render the note highly suspect. One, it was written on the reversed side of Provisional Receipt No.
contract; and that the checks were, at the time of their indorsement, valid and subsisting.  So even if 12724 of petitioner Citibank which bore the initials of Mr. Tan acknowledging receipt of respondent's
the MCs deposited by BPI's client, whether it be by respondent herself or some other person, lacked BPI Check No. 120989 for ₱500,000.00; but the initials on the handwritten note appeared to be that
the necessary indorsement, BPI, as the collecting bank, is bound by its warranties as an indorser and of Mr. Bobby Mendoza of petitioner FNCB Finance.  Second, according to Provisional Receipt No.
cannot set up the defense of lack of indorsement as against petitioner Citibank, the drawee bank. 12724, BPI Check No. 120989 for ₱500,000.00 was supposed to be invested in three money market
placements with petitioner Citibank for the period of 60 days. Since all these money market
Furthermore, respondent's bare and unsubstantiated denial of receipt of the MCs in question and placements were made through one check deposited on the same day, 10 November 1978, it made
their deposit in her account is rendered suspect when MC No. 220701 was actually deposited in no sense that the handwritten note at the back of Provisional Receipt No. 12724 provided for different
Account No. 0123-0572-28 of BPI Cubao Branch, the very same account in which MC No. 228270 dates of maturity for each of the money market placements (i.e., 16 November 1978, 17 January
(which respondent admitted to receiving as proceeds of her loan from petitioner Citibank), and MCs 1979, and 21 November 1978), and such dates did not correspond to the 60 day placement period
No. 228203, 228357, and 228400 (which respondent admitted to receiving as proceeds from her stated on the face of the provisional receipt. And third, the principal amounts of the money market
money market placements) were deposited. Likewise, MC No. 226467 was deposited in Account No. placements as stated in the handwritten note – ₱145,000.00, ₱145,000.00 and ₱242,000.00 – totaled
0121-002-43 of BPI Cubao Branch, to which MCs No. 226285 and 226439 (which respondent ₱532,000.00, and was obviously in excess of the ₱500,000.00 acknowledged on the face of
admitted to receiving as proceeds from her money market placements) were deposited. It is an Provisional Receipt No. 12724.
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 Exhibits "III" and "III-1," the front and bank pages of a handwritten note of Mr. Bobby Mendoza of
account. 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 As for PN No. 34534, respondent asserted payment thereof at two separate instances by two
contents sufficiently explained. No one was able to competently identify whether the initials as different means. In her formal offer of exhibits, respondent submitted a deposit slip of petitioner
appearing on the note were actually Mr. Mendoza's. Citibank, dated 11 August 1978, evidencing the deposit of BPI Check No. 5785 for ₱150,000.00.  In
her Formal Offer of Documentary Exhibits, dated 7 July 1989, respondent stated that the purpose for
Also, going by the information on the front page of the note, this Court observes that payment of the presentation of the said deposit slip was to prove that she already paid her loan covered by PN
respondent's alleged money market placements with petitioner FNCB Finance were made using No. 34534.  In her testimony before the RTC three years later, on 28 November 1991, she changed
Citytrust Checks; the MCs in question, including MC No. 228057, were issued by petitioner Citibank. her story. This time she narrated that the loan covered by PN No. 34534 was secured by her money
Although Citytrust (formerly Feati Bank & Trust Co.), petitioner FNCB Finance, and petitioner Citibank market placement with petitioner FNCB Finance, and when she failed to pay the said PN when it
may be affiliates of one another, they each remained separate and distinct corporations, each having became due, the security was applied to the loan, therefore, the loan was considered paid.  Given the
its own financial system and records. Thus, this Court cannot simply assume that one corporation, foregoing, respondent's assertion of payment of PN No. 34534 is extremely dubious.
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 According to petitioner Citibank, the PNs in the second set, except for PN No. 34534, were mere
market placements, covered by its PNs No. 8167 and 8169, as well as PNs No. 20138 and 20139, renewals of the unpaid PNs in the first set, which was why the PNs stated that they were for the
petitioner FNCB Finance issued its own checks. 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,
As a last point on this matter, if respondent truly had money market placements with petitioners, then and it still being the original PN for that particular loan, its stated purpose was for personal
these would have been evidenced by PNs issued by either petitioner Citibank or petitioner FNCB investment.  Respondent essentially admitted executing the second set of PNs, but they were only
Finance, acknowledging the principal amounts of the investments, and stating the applicable interest meant to cover simulated loans. Mr. Tan supposedly convinced her that her pending loan application
rates, as well as the dates of their of issuance and maturity. After respondent had so meticulously with DBP would have a greater chance of being approved if they made it appear that respondent
reconstructed her other money market placements with petitioners and consolidated the documentary urgently needed the money because petitioner Citibank was already demanding payment for her
evidence thereon, she came surprisingly short of offering similar details and substantiation for these simulated loans.
particular money market placements.
Respondent's defense of simulated loans to escape liability for the second set of PNs is truly a novel
Since this Court is satisfied that respondent indeed received the proceeds of the first set of PNs, then one.1âwphi1 It is regrettable, however, that she was unable to substantiate the same. Yet again,
it proceeds to analyze her evidence of payment thereof. respondent's version of events is totally based on her own uncorroborated testimony. The notations
on the second set of PNs, that they were non-negotiable simulated notes, were admittedly made by
In support of respondent's assertion that she had already paid whatever loans she may have had with respondent herself and were, thus, self-serving. Equally self-serving was respondent's letter, written
petitioner Citibank, she presented as evidence Provisional Receipts No. 19471, dated 11 August on 7 October 1985, or more than six years after the execution of the second set of PNs, in which she
1978, and No. 12723, dated 10 November 1978, both of petitioner Citibank and signed by Mr. Tan, demanded return of the simulated or fictitious PNs, together with the letters relating thereto, which Mr.
for the amounts of ₱500,744.00 and ₱500,000.00, respectively. While these provisional receipts did Tan purportedly asked her to execute. Respondent further failed to present any proof of her alleged
state that Mr. Tan, on behalf of petitioner Citibank, received respondent's checks as payment for her loan application with the DBP, and of any circumstance or correspondence wherein the simulated or
loans, they failed to specifically identify which loans were actually paid. Petitioner Citibank was able to fictitious PNs were indeed used for their supposed purpose.
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 In contrast, petitioner Citibank, as supported by the testimonies of its officers and available
for some of these PNs, and what it identified as the first and second sets of PNs were only those documentation, consistently treated the said PNs as regular loans – accepted, approved, and paid in
which remained unpaid. It thus became incumbent upon respondent to prove that the checks the ordinary course of its business.
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 The PNs executed by the respondent in favor of petitioner Citibank to cover her loans were duly-filled
only generally stated that the checks received by Mr. Tan were payment for respondent's loans. 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, 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 Mr. Tan, then an account officer with the Marketing Department of petitioner Citibank, testified that he
the provisional receipts was merely to acknowledge the delivery of the checks to the possession of dealt directly with respondent; he facilitated the loans; and the PNs, at least in the second set, were
the bank, but not yet of payment.  This bank practice finds legitimacy in the pronouncement of this signed by respondent in his presence.
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,   this Court Mr. Pujeda, the officer who was previously in charge of loans and placements, confirmed that the
elucidated that: signatures on the PNs were verified against respondent's specimen signature with the bank.

Since a negotiable instrument is only a substitute for money and not money, the delivery of Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan processor, was responsible for
such an instrument does not, by itself, operate as payment (Sec. 189, Act 2031 on Negs. booking respondent's loans. Booking the loans means recording it in the General Ledger. She
Insts.; Art. 1249, Civil Code; Bryan Landon Co. v. American Bank, 7 Phil. 255; Tan Sunco, explained the procedure for booking loans, as follows: The account officer, in the Marketing
v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check, whether a manager's check or ordinary Department, deals directly with the clients who wish to borrow money from petitioner Citibank. The
check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender Marketing Department will forward a loan booking checklist, together with the borrowing client's PNs
of payment and may be refused receipt by the obligee or creditor. Mere delivery of checks and other supporting documents, to the loan pre-processor, who will check whether the details in the
does not discharge the obligation under a judgment. The obligation is not extinguished and loan booking checklist are the same as those in the PNs. The documents are then sent to Signature
remains suspended until the payment by commercial document is actually realized (Art. Control for verification of the client's signature in the PNs, after which, they are returned to the loan
1249, Civil Code, par. 3). 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
In the case at bar, the issuance of an official receipt by petitioner Citibank would have been the corresponding PN number. Since she booked respondent's loans personally, Ms. Dondoyano
dependent on whether the checks delivered by respondent were actually cleared and paid for by the testified that she saw the original PNs. In 1986, Atty. Fernandez of petitioner Citibank requested her
drawee banks. 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. 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.

Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at the Control Department of In general, the best evidence rule requires that the highest available degree of proof must be produced. Accordingly, for documentary
petitioner Citibank. She was presented by petitioner Citibank to expound on the microfilming 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.
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 The best evidence rule has been made part of the revised Rules of Court, Rule 130, Section 3, which reads –
of the day or during the day, the original copies of all bank documents, not just those pertaining to
SEC. 3. Original document must be produced; exceptions. – When the subject of inquiry is the contents of a document, no
loans, are microfilmed. She refuted the possibility that insertions could be made in the microfilm evidence shall be admissible other than the original document itself, except in the following cases:
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; (a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the
part of the offeror;
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 (b) When the original is in the custody or under the control of the party against whom the evidence is offered,
microfilm is developed, then sent to the Control Department, which double checks the contents of the and the latter fails to produce it after reasonable notice;
microfilms against the entries in the General Ledger. The Control Department also conducts a (c) When the original consists of numerous accounts or other documents which cannot be examined in court
random comparison of the contents of the microfilms with the original documents; a random review of without great loss of time and the fact sought to be established from them is only the general result of the
the contents is done on every role of microfilm. whole; and

(d) When the original is a public record in the custody of a public officer or is recorded in a public office.
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 As the afore-quoted provision states, the best evidence rule applies only when the subject of the inquiry is the contents of the
document. The scope of the rule is more extensively explained thus –
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 But even with respect to documentary evidence, the best evidence rule applies only when the content of such document is
Collection Group of the Foreign Department in 1974 to 1976; the Head of the Money Transfer Unit in 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
1976 to 1978; the Head of the Loans and Placements Unit up to the early 1980s; and, thereafter, she admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78). Any other substitutionary evidence is likewise admissible
established operations training for petitioner Citibank in the Asia-Pacific Region responsible for the without need for accounting for the original.
training of the officers of the bank. She testified on the standard loan application process at petitioner
Thus, when a document is presented to prove its existence or condition it is offered not as documentary, but as real,
Citibank. According to Ms. Rubio, the account officer or marketing person submits a proposal to grant evidence. Parol evidence of the fact of execution of the documents is allowed (Hernaez, et al. vs. McGrath, etc., et al., 91
a loan to an individual or corporation. Petitioner Citibank has a worldwide policy that requires a credit Phil 565). x x x 
committee, composed of a minimum of three people, which would approve the loan and amount
In Estrada v. Desierto,  this Court had occasion to rule that –
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 It is true that the Court relied not upon the original but only copy of the Angara Diary as published in the Philippine Daily
PNs from the client. The PNs are sent to the signature verifier who would validate the signatures Inquirer on February 4-6, 2001. In doing so, the Court, did not, however, violate the best evidence rule. Wigmore, in his
book on evidence, states that:
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 "Production of the original may be dispensed with, in the trial court's discretion, whenever in the case in hand the
securities and deposits, if it is collateralized. The loan is then recorded in the General Ledger. The opponent does not bona fide dispute the contents of the document  and no other useful purpose will be served by requiring
production.24
Loans and Placements Department will not book the loans without the PNs. When the PNs are
liquidated, whether they are paid or rolled-over, they are returned to the client.  Ms. Rubio further "x x x x
explained that she was familiar with respondent's accounts since, while she was still the Head of the
"In several Canadian provinces, the principle of unavailability has been abandoned, for certain documents in which
Loan and Placements Unit, she was asked by Mr. Tan to prepare a list of respondent's outstanding ordinarily no real dispute arised. This measure is a sensible and progressive one and deserves universal adoption (post,
obligations.  She thus calculated respondent's outstanding loans, which was sent as an attachment to sec. 1233). Its essential feature is that a copy may be used unconditionally, if the opponent has been given an opportunity
Mr. Tan's letter to respondent, dated 28 September 1979, and presented before the RTC as Exhibits to inspect it." (Emphasis supplied.)
"34-B" and "34-C." 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
Lastly, the exchange of letters between petitioner Citibank and respondent, as well as the letters sent 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
by other people working for respondent, had consistently recognized that respondent owed petitioner cover simulated loan transactions. As for the MCs representing the proceeds of the loans, the respondent either denied receipt of
Citibank money. certain MCs or admitted receipt of the other MCs but for another purpose. Respondent further admitted the letters she wrote personally
or through her representatives to Mr. Tan of petitioner Citibank acknowledging the loans, except that she claimed that these letters were
just meant to keep up the ruse of the simulated loans. Thus, respondent questioned the documents as to their existence or execution,
In consideration of the foregoing discussion, this Court finds that the preponderance of evidence or when the former is admitted, as to the purpose for which the documents were executed, matters which are, undoubtedly, external to
supports the existence of the respondent's loans, in the principal sum of ₱1,920,000.00, as of 5 the documents, and which had nothing to do with the contents thereof.
September 1979. While it is well-settled that the term "preponderance of evidence" should not be
Alternatively, even if it is granted that the best evidence rule should apply to the evidence presented by petitioners regarding the
wholly dependent on the number of witnesses, there are certain instances when the number of 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
witnesses become the determining factor – the revised Rules of Court –

SEC. 5. When the original document is unavailable. – When the original document has been lost or destroyed, or cannot
The preponderance of evidence may be determined, under certain conditions, by the be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad
number of witnesses testifying to a particular fact or state of facts. For instance, one or two 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
witnesses may testify to a given state of facts, and six or seven witnesses of equal candor, testimony of witnesses in the order stated.
fairness, intelligence, and truthfulness, and equally well corroborated by all the remaining The execution or existence of the original copies of the documents was established through the testimonies of witnesses, such as Mr.
evidence, who have no greater interest in the result of the suit, testify against such state of Tan, before whom most of the documents were personally executed by respondent. The original PNs also went through the whole loan
facts. Then the preponderance of evidence is determined by the number of witnesses. booking system of petitioner Citibank – from the account officer in its Marketing Department, to the pre-processor, to the signature
verifier, back to the pre-processor, then to the processor for booking.  The original PNs were seen by Ms. Dondoyano, the processor,
(Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep., 761.) who recorded them in the General Ledger. Mr. Pujeda personally saw the original MCs, proving respondent's receipt of the proceeds of
her loans from petitioner Citibank, when he helped Attys. Cleofe and Fernandez, the bank's legal counsels, to reconstruct the records of
BEST EVIDENCE RULE (SKIP) respondent's loans. The original MCs were presented to Atty. Cleofe who used the same during the preliminary investigation of the
case, sometime in years 1986-1987. The original MCs were subsequently turned over to the Control and Investigation Division of
petitioner Citibank.
While the Court of Appeals can take judicial notice of the Decision of its Third Division in the Dy case,
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 it should not have given the said case much weight when it rendered the assailed Decision, since the
did not make a similar contention; instead, it explained that the original copies of the PNs were returned to the borrower upon liquidation former does not constitute a precedent. The Court of Appeals, in the challenged Decision, did not
of the loan, either through payment or roll-over. Petitioner Citibank proffered the excuse that they were still looking for the documents in
their storage or warehouse to explain the delay and difficulty in the retrieval thereof, but not their absence or loss. The original apply any legal argument or principle established in the Dy case but, rather, adopted the findings
documents in this case, such as the MCs and letters, were destroyed and, thus, unavailable for presentation before the RTC only on 7 therein of wrongdoing or misconduct on the part of herein petitioner Citibank and Mr. Tan. Any finding
October 1987, when a fire broke out on the 7  floor of the office building of petitioner Citibank. There is no showing that the fire was of wrongdoing or misconduct as against herein petitioners should be made based on the factual
intentionally set. The fire destroyed relevant documents, not just of the present case, but also of other cases, since the 7  floor housed
the Control and Investigation Division, in charge of keeping the necessary documents for cases in which petitioner Citibank was background and pieces of evidence submitted in this case, not those in another case.
involved.
It is apparent that the Court of Appeals took judicial notice of the Dy case not as a legal precedent for
The foregoing would have been sufficient to allow the presentation of photocopies or microfilm copies of the PNs, MCs, and letters by
the petitioners as secondary evidence to establish the existence of respondent's loans, as an exception to the best evidence rule. the 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
The impact of the Decision of the Court of Appeals in the Dy case 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,
In its assailed Decision, the Court of Appeals made the following pronouncement – custom or usage, and the like."  The rationale for the rule is explained thus –

Besides, We find the declaration and conclusions of this Court in CA-G.R. CV No. The rule is founded upon reason, public policy, justice and judicial convenience. The fact
15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et al, that a person has committed the same or similar acts at some prior time affords, as a
promulgated on 15 January 1990, as disturbing taking into consideration the similarities of general rule, no logical guaranty that he committed the act in question. This is so because,
the fraud, machinations, and deceits employed by the defendant-appellant Citibank and its subjectively, a man's mind and even his modes of life may change; and, objectively, the
Account Manager Francisco Tan. 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
Worthy of note is the fact that Our declarations and conclusions against Citibank and the admitted, they will give rise to a multiplicity of collateral issues and will subject the
person of Francisco Tan in CA-G.R. CV No. 15934 were affirmed in toto by the Highest defendant to surprise as well as confuse the court and prolong the trial.
Magistrate in a Minute Resolution dated 22 August 1990 entitled Citibank, N.A., vs. Court
of Appeals, G.R. 93350. The factual backgrounds of the two cases are so different and unrelated that the Dy case cannot be
used to prove specific intent, knowledge, identity, plan, system, scheme, habit, custom or usage on
As the factual milieu of the present appeal created reasonable doubts as to whether the the part of petitioner Citibank or its officer, Mr. Tan, to defraud respondent in the present case.
nine (9) Promissory Notes were indeed executed with considerations, the doubts, coupled
by the findings and conclusions of this Court in CA-G.R. CV No. 15934 and the Supreme LEGAL COMPENSATION (TOPIC)
Court in G.R. No. 93350. should be construed against herein defendants-appellants
Citibank and FNCB Finance. 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
What this Court truly finds disturbing is the significance given by the Court of Appeals in its assailed petitioner FNCB Finance; but illegal and void in so far as petitioner Citibank used
Decision to the Decision  of its Third Division in CA-G.R. CV No. 15934 (or the Dy case), when there respondent's dollar accounts with Citibank-Geneva.
is an absolute lack of legal basis for doing such.
Savings Account with petitioner Citibank
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 Compensation is a recognized mode of extinguishing obligations. Relevant provisions of the
transactions between parties other than the parties presently before this Court, but the transactions Civil Code provides –
are absolutely independent and unrelated to those in the instant Petition.
Art. 1278. Compensation shall take place when two persons, in their own right, are
In the Dy case, Severino Chua Caedo managed to obtain loans from herein petitioner Citibank creditors and debtors of each other.
amounting to ₱7,000,000.00, secured to the extent of ₱5,000,000.00 by a Third Party Real Estate
Mortgage of the properties of Caedo's aunt, Rosalind Dy. It turned out that Rosalind Dy and her Art. 1279. In order that compensation may be proper, it is necessary;
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 (1) That each one of the obligors be bound principally, and that he be at the
guilty of fraud for his participation in the questionable transactions, essentially because he allowed same time a principal creditor of the other;
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 (2) That both debts consist in a sum of money, or if the things due are
Mortgage were forged, they were approved by the signature verifier since the signature cards against consumable, they be of the same kind, and also of the same quality if the latter
which they were compared to were also forged. Neither the RTC nor the Court of Appeals, however, has been stated;
categorically declared Mr. Tan personally responsible for the forgeries, which, in the narration of the
facts, were more likely committed by Caedo. (3) That the two debts be due;

In the Petition at bar, respondent dealt with Mr. Tan directly, there was no third party involved who (4) That they be liquidated and demandable;
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 (5) That over neither of them there be any retention or controversy, commenced
more than naked allegations with no corroborating evidence; worse, even her own allegations were by third persons and communicated in due time to the debtor.
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 There is little controversy when it comes to the right of petitioner Citibank to compensate
responsible for the same. 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, 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.
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 Petitioners not only presented the notarized Deeds of Assignment, but even secured certified literal copies thereof from the National
simple loan or mutuum by the depositor to the banking institution.  Both debts consist in sums 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
of money. By June 1979, all of respondent's PNs in the second set had matured and became notary publics concerned, which were already in the possession of the National Archives. He also explained that he could not bring to
demandable, while respondent's savings account was demandable anytime. Neither was there any the RTC the Notarial Registries containing the original copies of the Deeds of Assignment, because the Department of Justice (DOJ)
retention or controversy over the PNs and the deposit account commenced by a third person and Circular No. 97, dated 8 November 1968, prohibits the bringing of original documents to the courts to prevent the loss of irreplaceable
and priceless documents.
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
Accordingly, this Court gives the Deeds of Assignment grave importance in establishing the
right to effect, on 25 June 1979, the partial compensation or off-set of respondent's outstanding loans
authority given by the respondent to petitioner Citibank to use as security for her loans her
with her deposit account, amounting to ₱31,079.14.
money her market placements with petitioner FNCB Finance, represented by PNs No. 8167 and
8169, later to be rolled-over as PNs No. 20138 and 20139. These Deeds of Assignment constitute the
Money market placements with FNCB Finance
law between the parties, and the obligations arising therefrom shall have the force of law between the
parties and should be complied with in good faith.  Standard clauses in all of the Deeds provide
Things though are not as simple and as straightforward as regards to the money market placements
that –
and bank account used by petitioner Citibank to complete the compensation or off-set of respondent's
outstanding loans, which came from persons other than petitioner Citibank.
The ASSIGNOR and the ASSIGNEE hereby further agree as follows:
Respondent's money market placements were with petitioner FNCB Finance, and after several
xxxx
roll-overs, they were ultimately covered by PNs No. 20138 and 20139, which, by 3 September 1979,
the date the check for the proceeds of the said PNs were issued, amounted to ₱1,022,916.66,
2. In the event the OBLIGATIONS are not paid at maturity or upon demand,
inclusive of the principal amounts and interests. As to these money market placements,
as the case may be, the ASSIGNEE is fully authorized and empowered to
respondent was the creditor and petitioner FNCB Finance the debtor; while, as to the
collect and receive the PLACEMENT (or so much thereof as may be
outstanding loans, petitioner Citibank was the creditor and respondent the debtor.
necessary) and apply the same in payment of the OBLIGATIONS.
Consequently, legal compensation, under Article 1278 of the Civil Code, would not apply since
Furthermore, the ASSIGNOR agrees that at any time, and from time to time,
the first requirement for a valid compensation, that each one of the obligors be bound
upon request by the ASSIGNEE, the ASSIGNOR will promptly execute and
principally, and that he be at the same time a principal creditor of the other, was not met.
deliver any and all such further instruments and documents as may be necessary
to effectuate this Assignment.
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
xxxx
executed by respondent in its favor.
5. This Assignment shall be considered as sufficient authority to FNCB Finance
The Court of Appeals did not consider these Deeds of Assignment because of petitioners' failure to
to pay and deliver the PLACEMENT or so much thereof as may be necessary to
produce the original copies thereof in violation of the best evidence rule. This Court again finds itself
liquidate the OBLIGATIONS, to the ASSIGNEE in accordance with terms and
in disagreement in the application of the best evidence rule by the appellate court.
provisions hereof.
BEST EVIDENCE RULE (EVIDENTIARY MATTERS; SKIP)
Petitioner Citibank was only acting upon the authority granted to it under the foregoing Deeds
To recall, the best evidence rule, in so far as documentary evidence is concerned, requires the presentation of the original copy of the when it finally used the proceeds of PNs No. 20138 and 20139, paid by petitioner FNCB
document only when the context thereof is the subject of inquiry in the case. Respondent does not question the contents of the Deeds Finance, to partly pay for respondent's outstanding loans. Strictly speaking, it did not effect a legal
of Assignment. While she admitted the existence and execution of the Deeds of Assignment, dated 2 March 1978 and 9 March 1978, compensation or off-set under Article 1278 of the Civil Code, but rather, it partly extinguished
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 respondent's obligations through the application of the security given by the respondent for her loans.
PNs No. 20138 and 20139. These are again issues collateral to the contents of the documents involved, which could be proven by Although the pertinent documents were entitled Deeds of Assignment, they were, in reality, more of a
evidence other than the original copies of the said documents. pledge by respondent to petitioner Citibank of her credit due from petitioner FNCB Finance by virtue
Moreover, the Deeds of Assignment of the money market placements with petitioner FNCB Finance were notarized documents, thus, of her money market placements with the latter. According to Article 2118 of the Civil Code –
admissible in evidence. Rule 132, Section 30 of the Rules of Court provides that –
ART. 2118. If a credit has been pledged becomes due before it is redeemed, the pledgee
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 may collect and receive the amount due. He shall apply the same to the payment of his
execution of the instrument or document involved. claim, and deliver the surplus, should there be any, to the pledgor.
Significant herein is this Court's elucidation in De Jesus v. Court of Appeals,  which reads –
PNs No. 20138 and 20139 matured on 3 September 1979, without them being redeemed by
On the evidentiary value of these documents, it should be recalled that the notarization of a respondent, so that petitioner Citibank collected from petitioner FNCB Finance the proceeds thereof,
private document converts it into a public one and renders it admissible in court without further proof of its authenticity which included the principal amounts and interests earned by the money market placements,
(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. amounting to ₱1,022,916.66, and applied the same against respondent's outstanding loans, leaving
Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil 241 [1902]; Favor vs. Court of Appeals, 194 SCRA 308 [1991]). As no surplus to be delivered to respondent.
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]).
Dollar accounts with Citibank-Geneva
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 Despite the legal compensation of respondent's savings account and the total application of the
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, proceeds of PNs No. 20138 and 20139 to respondent's outstanding loans, there still remained a
respondent admitted executing the Deeds of Assignment, dated 2 March 1978 and 9 March 1978, although claiming that the loans for balance of ₱1,069,847.40. Petitioner Citibank then proceeded to applying respondent's dollar
which they were executed as security were already paid. And, she assailed the Deeds of Assignment, dated 25 August 1978, with accounts with Citibank-Geneva against her remaining loan balance, pursuant to a Declaration of
Pledge supposedly executed by respondent in its favor.
 Basic is the rule of evidence that when the subject of inquiry is the contents of a document,
Certain principles of private international law should be considered herein because the property no evidence is admissible other than the original document itself except in the instances
pledged was in the possession of an entity in a foreign country, namely, Citibank-Geneva. In the mentioned in Section 3, Rule 130 of the Revised Rules of Court. Mere photocopies of
absence of any allegation and evidence presented by petitioners of the specific rules and laws documents are inadmissible pursuant to the best evidence rule. This is especially true
governing the constitution of a pledge in Geneva, Switzerland, they will be presumed to be the same when the issue is that of forgery.
as Philippine local or domestic laws; this is known as processual presumption.
As a rule, forgery cannot be presumed and must be proved by clear, positive and
Upon closer scrutiny of the Declaration of Pledge, this Court finds the same exceedingly suspicious convincing evidence and the burden of proof lies on the party alleging forgery. The best
and irregular. 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
First of all, it escapes this Court why petitioner Citibank took care to have the Deeds of Assignment of alleged forged signature and the authentic and genuine signature of the person whose
the PNs notarized, yet left the Declaration of Pledge unnotarized. This Court would think that signature is theorized upon to have been forged. Without the original document containing
petitioner Citibank would take greater cautionary measures with the preparation and execution of the the alleged forged signature, one cannot make a definitive comparison which would
Declaration of Pledge because it involved respondent's "all present and future fiduciary placements" establish forgery. A comparison based on a mere xerox copy or reproduction of the
with a Citibank branch in another country, specifically, in Geneva, Switzerland. While there is no document under controversy cannot produce reliable results.
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 Respondent made several attempts to have the original copy of the pledge produced before the RTC
documents, and petitioner Citibank must discharge the burden of proving due execution and so as to have it examined by experts. Yet, despite several Orders by the RTC,  petitioner Citibank
authenticity of the Declaration of Pledge. 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
Second, petitioner Citibank was unable to establish the date when the Declaration of Pledge was branch in Geneva may be separate and distinct entities, they are still incontestably related, and
actually executed. The photocopy of the Declaration of Pledge submitted by petitioner Citibank before between petitioner Citibank and respondent, the former had more influence and resources to
the RTC was undated.  It presented only a photocopy of the pledge because it already forwarded the convince Citibank-Geneva to return, albeit temporarily, the original Declaration of Pledge. Petitioner
original copy thereof to Citibank-Geneva when it requested for the remittance of respondent's dollar Citibank did not present any evidence to convince this Court that it had exerted diligent efforts to
accounts pursuant thereto. Respondent, on the other hand, was able to secure a copy of the secure the original copy of the pledge, nor did it proffer the reason why Citibank-Geneva obstinately
Declaration of Pledge, certified by an officer of Citibank-Geneva, which bore the date 24 September refused to give it back, when such document would have been very vital to the case of petitioner
1979.  Respondent, however, presented her passport and plane tickets to prove that she was out of Citibank. There is thus no justification to allow the presentation of a mere photocopy of the
the country on the said date and could not have signed the pledge. Petitioner Citibank insisted that Declaration of Pledge in lieu of the original, and the photocopy of the pledge presented by petitioner
the pledge was signed before 24 September 1979, but could not provide an explanation as to how Citibank has nil probative value.  In addition, even if this Court cannot make a categorical finding that
and why the said date was written on the pledge. Although Mr. Tan testified that the Declaration of respondent's signature on the original copy of the pledge was forged, it is persuaded that petitioner
Pledge was signed by respondent personally before him, he could not give the exact date when the Citibank willfully suppressed the presentation of the original document, and takes into consideration
said signing took place. It is important to note that the copy of the Declaration of Pledge submitted by the presumption that the evidence willfully suppressed would be adverse to petitioner Citibank if
the respondent to the RTC was certified by an officer of Citibank-Geneva, which had possession of produced.
the original copy of the pledge. It is dated 24 September 1979, and this Court shall abide by the
presumption that the written document is truly dated.  Since it is undeniable that respondent was out Without the Declaration of Pledge, petitioner Citibank had no authority to demand the
of the country on 24 September 1979, then she could not have executed the pledge on the said date. remittance of respondent's dollar accounts with Citibank-Geneva and to apply them to her
outstanding loans. It cannot effect legal compensation under Article 1278 of the Civil Code since,
Third, the Declaration of Pledge was irregularly filled-out. The pledge was in a standard printed form. petitioner Citibank itself admitted that Citibank-Geneva is a distinct and separate entity. As for the
It was constituted in favor of Citibank, N.A., otherwise referred to therein as the Bank. It should be dollar accounts, respondent was the creditor and Citibank-Geneva is the debtor; and as for the
noted, however, that in the space which should have named the pledgor, the name of petitioner outstanding loans, petitioner Citibank was the creditor and respondent was the debtor. The parties in
Citibank was typewritten, to wit – these transactions were evidently not the principal creditor of each other.

The pledge right herewith constituted shall secure all claims which the Bank now has or in Therefore, this Court declares that the remittance of respondent's dollar accounts from Citibank-
the future acquires against Citibank, N.A., Manila (full name and address of the Debtor), Geneva and the application thereof to her outstanding loans with petitioner Citibank was illegal, and
regardless of the legal cause or the transaction (for example current account, securities null and void. Resultantly, petitioner Citibank is obligated to return to respondent the amount of
transactions, collections, credits, payments, documentary credits and collections) which US$149,632,99 from her Citibank-Geneva accounts, or its present equivalent value in Philippine
gives rise thereto, and including principal, all contractual and penalty interest, commissions, currency; and, at the same time, respondent continues to be obligated to petitioner Citibank for the
charges, and costs. balance of her outstanding loans which, as of 5 September 1979, amounted to ₱1,069,847.40.

The pledge, therefore, made no sense, the pledgor and pledgee being the same entity. Was a V The parties shall be liable for interests on their monetary obligations to each other, as
mistake made by whoever filled-out the form? Yes, it could be a possibility. Nonetheless, considering determined herein.
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 In summary, petitioner Citibank is ordered by this Court to pay respondent the proceeds of her money
the authenticity and due execution of the same. The Declaration of Pledge had passed through the market placements, represented by PNs No. 23356 and 23357, amounting to ₱318,897.34 and
hands of several bank officers in the country and abroad, yet, surprisingly and implausibly, no one ₱203,150.00, respectively, earning an interest of 14.5% per annum as stipulated in the PNs,
noticed such a glaring mistake. beginning 17 March 1977, the date of the placements.

Lastly, respondent denied that it was her signature on the Declaration of Pledge. She claimed that the Petitioner Citibank is also ordered to refund to respondent the amount of US$149,632.99, or its
signature was a forgery. When a document is assailed on the basis of forgery, the best evidence rule equivalent in Philippine currency, which had been remitted from her Citibank-Geneva accounts.
applies – These dollar accounts, consisting of two fiduciary placements and current accounts with Citibank-
Geneva shall continue earning their respective stipulated interests from 26 October 1979, the date of
their remittance by Citibank-Geneva to petitioner Citibank in Manila and applied against respondent's A Yes sir.
outstanding loans.
Q What are those?
As for respondent, she is ordered to pay petitioner Citibank the balance of her outstanding loans,
which amounted to ₱1,069,847.40 as of 5 September 1979. These loans continue to earn interest, as A I am the Vice-President of thes [sic] Subdivision Association of the Philippines in 1976, I
stipulated in the corresponding PNs, from the time of their respective maturity dates, since the am also an officer of the … Chamber of Real Estate Business Association; I am also an
supposed payment thereof using respondent's dollar accounts from Citibank-Geneva is deemed officer of the Chatholic [sic] Women's League and I am also a member of the CMLI, I forgot
illegal, null and void, and, thus, ineffective. the definition.

VI Petitioner Citibank shall be liable for damages to respondent. Q How about any political affiliation or government position held if any?

Petitioners protest the award by the Court of Appeals of moral damages, exemplary damages, and A I was also a candidate for Mayo last January 30, 1980.
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. Q Where?

While it is true that the general rule is that only errors which have been stated in the assignment of A In Dagupan City, Pangasinan.
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 Q What else?
the appeal, if the consideration thereof is necessary in arriving at a just decision of the case, and
there is a close inter-relation between the omitted assignment of error and those actually assigned A I also ran as an Assemblywoman last May, 1984, Independent party in Regional I,
and discussed by the appellant.  Thus, the Court of Appeals did not err in awarding the damages Pangasinan.
when it already made findings that would justify and support the said award.
Q What happened to your businesses you mentioned as a result of your failure to recover
Although this Court appreciates the right of petitioner Citibank to effect legal compensation of you [sic] investments and bank deposits from the defendants?
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 A They are not all operating, in short, I was hampered to push through the businesses that I
that petitioner Citibank did commit wrong when it failed to pay and properly account for the proceeds have.
of respondent's money market placements, evidenced by PNs No. 23356 and 23357, and when it
sought the remittance of respondent's dollar accounts from Citibank-Geneva by virtue of a highly- A [sic] Of all the businesses and enterprises that you mentioned what are those that are
suspect Declaration of Pledge to be applied to the remaining balance of respondent's outstanding paralyzed and what remain inactive?
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 A Of all the company [sic] that I have, only the Disto Company that is now operating in
accounts of its depositors with meticulous care whether such accounts consist only of a few hundred California.
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 Q How about your candidacy as Mayor of Dagupan, [sic] City, and later as
degree of care and transparency in its transactions with respondent, thus, resulting in the wrongful Assemblywoman of Region I, what happened to this?
deprivation of her property.
A I won by voting but when election comes on [sic] the counting I lost and I protested this, it
Respondent had been deprived of substantial amounts of her investments and deposits for more than is still pending and because I don't have financial resources I was not able to push through
two decades. During this span of years, respondent had found herself in desperate need of the the case. I just have it pending in the Comelec.
amounts wrongfully withheld from her. In her testimony  before the RTC, respondent narrated –
Q Now, do these things also affect your social and civic activities?
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 Yes sir, definitely.

A I am engaged in real estate. I am the owner of the Modesta Village 1 and 2 in San Mateo, Q How?
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 A I was embarrassed because being a businesswoman I would like to inform the Honorable
President of the Macador [sic] International Palace Hotel, and also the Treasures Home Court that I was awarded as the most outstanding businesswoman of the year in 1976 but
Industries, Inc. which I am the Chairman and president of the Board and also operating when this money was not given back to me I was not able to comply with the commitments
affiliated company in the name of Treasures Motor Sales engaged in car dealers [sic] like that I have promised to these associations that I am engaged into [sic], sir.
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 For the mental anguish, serious anxiety, besmirched reputation, moral shock and social humiliation
Los Angeles, California. suffered by the respondent, the award of moral damages is but proper. However, this Court reduces
the amount thereof to ₱300,000.00, for the award of moral damages is meant to compensate for the
Q What is the business of that Disto Company Ltd.? actual injury suffered by the respondent, not to enrich her.

A Disto Company, Ltd., is engaged in real estate and construction. 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
Q Aside from those businesses are you a member of any national or community ₱250,000.00, in accordance with Article 2229  and 2234  of the Civil Code.
organization for social and civil activities?
With the award of exemplary damages, then respondent shall also 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 of the other party.  In this case,
an award of ₱200,000.00 attorney's fees shall be satisfactory.

In contrast, this Court finds no sufficient basis to award damages to petitioners.1âwphi1 Respondent

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