FIRST DIVISION

G.R. No. 156132             October 12, 2006

CITIBANK, N.A. (Formerly First National City Bank) and INVESTORS' FINANCE
CORPORATION, doing business under the name and style of FNCB Finance, petitioners,
vs.
MODESTA R. SABENIANO, respondent.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari,1 under Rule 45 of the Revised Rules of Court,
of the Decision2 of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, and the
Resolution,3 dated 20 November 2002, of the same court which, although modifying its earlier
Decision, still denied for the most part the Motion for Reconsideration of herein petitioners.

Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a banking corporation
duly authorized and existing under the laws of the United States of America and licensed to do
commercial banking activities and perform trust functions in the Philippines.

Petitioner Investor's Finance Corporation, which did business under the name and style of FNCB
Finance, was an affiliate company of petitioner Citibank, specifically handling money market
placements for its clients. It is now, by virtue of a merger, doing business as part of its successor-in-
interest, BPI Card Finance Corporation. However, so as to consistently establish its identity in the
Petition at bar, the said petitioner shall still be referred to herein as FNCB Finance. 4

Respondent Modesta R. Sabeniano was a client of both petitioners Citibank and FNCB Finance.
Regrettably, the business relations among the parties subsequently went awry.

On 8 August 1985, respondent filed a Complaint5 against petitioners, docketed

as Civil Case No. 11336, before the Regional Trial Court (RTC) of Makati
City. Respondent claimed to have substantial deposits and money market placements with the
petitioners, as well as money market placements with the Ayala Investment and Development
Corporation (AIDC), the proceeds of which were supposedly deposited automatically and directly to
respondent's accounts with petitioner Citibank. Respondent alleged that petitioners refused to return
her deposits and the proceeds of her money market placements despite her repeated demands,
thus, compelling respondent to file Civil Case No. 11336 against petitioners for "Accounting, Sum of
Money and Damages." Respondent eventually filed an Amended Complaint 6 on 9 October 1985 to
include additional claims to deposits and money market placements inadvertently left out from her
original Complaint.

In their joint Answer7 and Answer to Amended Complaint,8 filed on 12 September 1985 and 6

November 1985, respectively, petitioners admitted that respondent had deposits and money market
placements with them, including dollar accounts in the Citibank branch in Geneva, Switzerland
(Citibank-Geneva). Petitioners further alleged that the respondent later obtained several loans from
petitioner Citibank, for which she executed Promissory Notes (PNs), and secured by (a) a
Declaration of Pledge of her dollar accounts in Citibank-Geneva, and (b) Deeds of Assignment of her
money market placements with petitioner FNCB Finance. When respondent failed to pay her loans
despite repeated demands by petitioner Citibank, the latter exercised its right to off-set or
compensate respondent's outstanding loans with her deposits and money market placements,
pursuant to the Declaration of Pledge and the Deeds of Assignment executed by respondent in its
favor. Petitioner Citibank supposedly informed respondent Sabeniano of the foregoing compensation
through letters, dated 28 September 1979 and 31 October 1979. Petitioners were therefore
surprised when six years later, in 1985, respondent and her counsel made repeated requests for the
withdrawal of respondent's deposits and money market placements with petitioner Citibank,
including her dollar accounts with Citibank-Geneva and her money market placements with
petitioner FNCB Finance. Thus, petitioners prayed for the dismissal of the Complaint and for the
award of actual, moral, and exemplary damages, and attorney's fees.

When the parties failed to reach a compromise during the pre-trial hearing, 9 trial proper ensued and
the parties proceeded with the presentation of their respective evidence. Ten years after the
filing of the Complaint on 8 August 1985, a Decision10 was finally rendered in Civil Case No. 11336
on 24 August 1995 by the fourth Judge11 who handled the said case, Judge Manuel D. Victorio, the
dispositive portion of which reads –

WHEREFORE, in view of all the foregoing, decision is hereby rendered as follows:

(1) Declaring as illegal, null and void the setoff effected by the defendant Bank
[petitioner Citibank] of plaintiff's [respondent Sabeniano] dollar deposit with Citibank,
Switzerland, in the amount of US$149,632.99, and ordering the said defendant
[petitioner Citibank] to refund the said amount to the plaintiff with legal interest at the
rate of twelve percent (12%) per annum, compounded yearly, from 31 October 1979
until fully paid, or its peso equivalent at the time of payment;

(2) Declaring the plaintiff [respondent Sabeniano] indebted to the defendant Bank
[petitioner Citibank] in the amount of ₱1,069,847.40 as of 5 September 1979 and
ordering the plaintiff [respondent Sabeniano] to pay said amount, however, there
shall be no interest and penalty charges from the time the illegal setoff was effected
on 31 October 1979;

(3) Dismissing all other claims and counterclaims interposed by the parties against
each other.

Costs against the defendant Bank.

All the parties appealed the foregoing Decision of the RTC to the Court of Appeals, docketed as CA-
G.R. CV No. 51930. Respondent questioned the findings of the RTC that she was still indebted to
petitioner Citibank, as well as the failure of the RTC to order petitioners to render an accounting of
respondent's deposits and money market placements with them. On the other hand, petitioners
argued that petitioner Citibank validly compensated respondent's outstanding loans with her dollar
accounts with Citibank-Geneva, in accordance with the Declaration of Pledge she executed in its
favor. Petitioners also alleged that the RTC erred in not declaring respondent liable for damages and
interest.
On 26 March 2002, the Court of Appeals rendered its Decision 12 affirming with modification the RTC
Decision in Civil Case No. 11336, dated 24 August 1995, and ruling entirely in favor of respondent in
this wise –

Wherefore, premises considered, the assailed 24 August 1995 Decision of the court a quo is
hereby AFFIRMED with MODIFICATION, as follows:

1. Declaring as illegal, null and void the set-off effected by the defendant-appellant
Bank of the plaintiff-appellant's dollar deposit with Citibank, Switzerland, in the
amount of US$149,632.99, and ordering defendant-appellant Citibank to refund the
said amount to the plaintiff-appellant with legal interest at the rate of twelve percent
(12%) per annum, compounded yearly, from 31 October 1979 until fully paid, or its
peso equivalent at the time of payment;

2. As defendant-appellant Citibank failed to establish by competent evidence the

alleged indebtedness of plaintiff-appellant, the set-off of ₱1,069,847.40 in the
account of Ms. Sabeniano is hereby declared as without legal and factual basis;

3. As defendants-appellants failed to account the following plaintiff-appellant's money

market placements, savings account and current accounts, the former is hereby
ordered to return the same, in accordance with the terms and conditions agreed
upon by the contending parties as evidenced by the certificates of investments, to
wit:

(i) Citibank NNPN Serial No. 023356 (Cancels and Supersedes

NNPN No. 22526) issued on 17 March 1977, ₱318,897.34 with
14.50% interest p.a.;

(ii) Citibank NNPN Serial No. 23357 (Cancels and Supersedes NNPN
No. 22528) issued on 17 March 1977, ₱203,150.00 with 14.50
interest p.a.;

(iii) FNCB NNPN Serial No. 05757 (Cancels and Supersedes NNPN
No. 04952), issued on 02 June 1977, ₱500,000.00 with 17% interest
p.a.;

(iv) FNCB NNPN Serial No. 05758 (Cancels and Supersedes NNPN
No. 04962), issued on 02 June 1977, ₱500,000.00 with 17% interest
per annum;

(v) The Two Million (₱2,000,000.00) money market placements of

Ms. Sabeniano with the Ayala Investment & Development
Corporation (AIDC) with legal interest at the rate of twelve percent
(12%) per annum compounded yearly, from 30 September 1976 until
fully paid;

4. Ordering defendants-appellants to jointly and severally pay the plaintiff-appellant

the sum of FIVE HUNDRED THOUSAND PESOS (₱500,000.00) by way of moral
damages, FIVE HUNDRED THOUSAND PESOS (₱500,000.00) as exemplary
damages, and ONE HUNDRED THOUSAND PESOS (₱100,000.00) as attorney's
fees.
Apparently, the parties to the case, namely, the respondent, on one hand, and the petitioners, on the
other, made separate attempts to bring the aforementioned Decision of the Court of Appeals, dated
26 March 2002, before this Court for review.

G.R. No. 152985

Respondent no longer sought a reconsideration of the Decision of the Court of Appeals in CA-G.R.
CV No. 51930, dated 26 March 2002, and instead, filed immediately with this Court on 3 May 2002 a
Motion for Extension of Time to File a Petition for Review,13 which, after payment of the docket and
other lawful fees, was assigned the docket number G.R. No. 152985. In the said Motion, respondent
alleged that she received a copy of the assailed Court of Appeals Decision on 18 April 2002 and,
thus, had 15 days therefrom or until 3 May 2002 within which to file her Petition for Review. Since
she informed her counsel of her desire to pursue an appeal of the Court of Appeals Decision only on
29 April 2002, her counsel neither had enough time to file a motion for reconsideration of the said
Decision with the Court of Appeals, nor a Petition for Certiorari with this Court. Yet, the Motion failed
to state the exact extension period respondent was requesting for.

Since this Court did not act upon respondent's Motion for Extension of Time to file her Petition for
Review, then the period for appeal continued to run and still expired on 3 May 2002. 14 Respondent
failed to file any Petition for Review within the prescribed period for appeal and, hence, this Court
issued a Resolution,15 dated 13 November 2002, in which it pronounced that –

G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals, et al.). – It appearing that
petitioner failed to file the intended petition for review on certiorari within the period which
expired on May 3, 2002, the Court Resolves to DECLARE THIS CASE
TERMINATED and DIRECT the Division Clerk of Court to INFORM the parties that the
judgment sought to be reviewed has become final and executory.

The said Resolution was duly recorded in the Book of Entries of Judgments on 3 January 2003.

G.R. No. 156132

Meanwhile, petitioners filed with the Court of Appeals a Motion for Reconsideration of its Decision in
CA-G.R. CV No. 51930, dated 26 March 2002. Acting upon the said Motion, the Court of Appeals
issued the Resolution,16 dated 20 November 2002, modifying its Decision of 26 March 2002, as
follows –

WHEREFORE, premises considered, the instant Motion for Reconsideration is PARTIALLY

GRANTED as Sub-paragraph (V) paragraph 3 of the assailed Decision's dispositive portion
is hereby ordered DELETED.

The challenged 26 March 2002 Decision of the Court is AFFIRMED with MODIFICATION.

Assailing the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 51930, dated 26
March 2002 and 20 November 2002, respectively, petitioners filed the present Petition, docketed as
G.R. No. 156132. The Petition was initially denied 17 by this Court for failure of the petitioners to
attach thereto a Certification against Forum Shopping. However, upon petitioners' Motion and
compliance with the requirements, this Court resolved18 to reinstate the Petition.

The Petition presented fourteen (14) assignments of errors allegedly committed by the Court of
Appeals in its Decision, dated 26 March 2002, involving both questions of fact and questions of law
which this Court, for the sake of expediency, discusses jointly, whenever possible, in the succeeding
paragraphs.

The Resolution of this Court, dated 13 November 2002, in G.R. No. 152985, declaring the
Decision of the Court of Appeals, dated 26 March 2002, final and executory, pertains to
respondent Sabeniano alone.

Before proceeding to a discussion of the merits of the instant Petition, this Court wishes to address
first the argument, persistently advanced by respondent in her pleadings on record, as well as her
numerous personal and unofficial letters to this Court which were no longer made part of the record,
that the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, had
already become final and executory by virtue of the Resolution of this Court in G.R. No. 152985,
dated 13 November 2002.

G.R. No. 152985 was the docket number assigned by this Court to respondent's Motion for
Extension of Time to File a Petition for Review. Respondent, though, did not file her supposed
Petition. Thus, after the lapse of the prescribed period for the filing of the Petition, this Court issued
the Resolution, dated 13 November 2002, declaring the Decision of the Court of Appeals, dated 26
March 2002, final and executory. It should be pointed out, however, that the Resolution, dated 13
November 2002, referred only to G.R. No. 152985, respondent's appeal, which she failed to perfect
through the filing of a Petition for Review within the prescribed period. The declaration of this Court
in the same Resolution would bind respondent solely, and not petitioners which filed their own
separate appeal before this Court, docketed as G.R. No. 156132, the Petition at
bar. This would mean that respondent, on her part, should be bound by the findings of fact and law
of the Court of Appeals, including the monetary amounts consequently awarded to her by the
appellate court in its Decision, dated 26 March 2002; and she can no longer refute or assail any part
thereof. 19

This Court already explained the matter to respondent when it issued a Resolution 20 in G.R. No.
156132, dated 2 February 2004, which addressed her Urgent Motion for the Release of the Decision
with the Implementation of the Entry of Judgment in the following manner –

[A]cting on Citibank's and FNCB Finance's Motion for Reconsideration, we resolved to grant

the motion, reinstate the petition and require Sabeniano to file a comment thereto in
our Resolution of June 23, 2003. Sabeniano filed a Comment dated July 17, 2003 to which
Citibank and FNCB Finance filed a Reply dated August 20, 2003.

From the foregoing, it is clear that Sabeniano had knowledge of, and in fact participated in,
the proceedings in G.R. No. 156132. She cannot feign ignorance of the proceedings therein
and claim that the Decision of the Court of Appeals has become final and executory. More
precisely, the Decision became final and executory only with regard to Sabeniano in view
of her failure to file a petition for review within the extended period granted by the Court, and
not to Citibank and FNCB Finance whose Petition for Review was duly reinstated and is now
submitted for decision.

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

To sustain the argument of respondent would result in an unjust and incongruous situation wherein
one party may frustrate the efforts of the opposing party to appeal the case by merely filing with this
Court a Motion for Extension of Time to File a Petition for Review, ahead of the opposing party, then
not actually filing the intended Petition. 21 The party who fails to file its intended Petition within the
reglementary or extended period should solely bear the consequences of such failure.

Respondent Sabeniano did not commit forum shopping.

Another issue that does not directly involve the merits of the present Petition, but raised by
petitioners, is whether respondent should be held liable for forum shopping.

Petitioners contend that respondent committed forum shopping on the basis of the following facts:

While petitioners' Motion for Reconsideration of the Decision in CA-G.R. CV No. 51930, dated 26
March 2002, was still pending before the Court of Appeals, respondent already filed with this Court
on 3 May 2002 her Motion for Extension of Time to File a Petition for Review of the same Court of
Appeals Decision, docketed as G.R. No. 152985. Thereafter, respondent continued to participate in
the proceedings before the Court of Appeals in CA-G.R. CV No. 51930 by filing her Comment, dated
17 July 2002, to petitioners' Motion for Reconsideration; and a Rejoinder, dated 23 September 2002,
to petitioners' Reply. Thus, petitioners argue that by seeking relief concurrently from this Court and
the Court of Appeals, respondent is undeniably guilty of forum shopping, if not indirect contempt.

Di naman ito topic pero mainam na rin na mahighlight kasi yung doctrine involved:

This Court, however, finds no sufficient basis to hold respondent liable for forum shopping.

Forum shopping has been defined as the filing of two or more suits involving the same parties for the
same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable
judgment.22 The test for determining forum shopping is whether in the two (or more) cases pending,
there is an identity of parties, rights or causes of action, and relief sought. 23 To guard against this
deplorable practice, Rule 7, Section 5 of the revised Rules of Court imposes the following
requirement –

SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any court,
tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or
similar action or claim has been filed or is pending, he shall report that fact within five (5)
days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been
filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment
of the complaint or other initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided, upon motion and after hearing. The submission
of a false certification or 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 acts of the party or his counsel clearly constitute willful and deliberate forum
shopping, the same shall be ground for summary dismissal with prejudice and shall
constitute direct contempt, as well as cause for administrative sanctions.
Although it may seem at first glance that respondent was simultaneously seeking recourse from the
Court of Appeals and this Court, a careful and closer scrutiny of the details of the case at bar would
reveal otherwise.

It should be recalled that respondent did nothing more in G.R. No. 152985 than to file with this Court
a Motion for Extension of Time within which to file her Petition for Review. For unexplained reasons,
respondent failed to submit to this Court her intended Petition within the reglementary period.
Consequently, this Court was prompted to issue a Resolution, dated 13 November 2002, declaring
G.R. No. 152985 terminated, and the therein assailed Court of Appeals Decision final and executory.
G.R. No. 152985, therefore, did not progress and respondent's appeal was unperfected.

The Petition for Review would constitute the initiatory pleading before this Court, upon the timely
filing of which, the case before this Court commences; much in the same way a case is initiated by
the filing of a Complaint before the trial court. The Petition for Review establishes the identity of
parties, rights or causes of action, and relief sought from this Court, and without such a Petition,
there is technically no case before this Court. The Motion filed by respondent seeking extension of
time within which to file her Petition for Review does not serve the same purpose as the Petition for
Review itself. Such a Motion merely presents the important dates and the justification for the
additional time requested for, but it does not go into the details of the appealed case.

Without any particular idea as to the assignments of error or the relief respondent intended to seek
from this Court, in light of her failure to file her Petition for Review, there is actually no second case
involving the same parties, rights or causes of action, and relief sought, as that in CA-G.R. CV No.
51930.

It should also be noted that the Certification against Forum Shopping is required to be attached to
the initiatory pleading, which, in G.R. No. 152985, should have been respondent's Petition for
Review. It is in that Certification wherein respondent certifies, under oath, that: (a) she has not
commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-
judicial agency and, to the best of her knowledge, no such other action or claim is pending therein;
(b) if there is such other pending action or claim, that she is presenting a complete statement of the
present status thereof; and (c) if she should thereafter learn that the same or similar action or claim
has been filed or is pending, she shall report that fact within five days therefrom to this Court.
Without her Petition for Review, respondent had no obligation to execute and submit the foregoing
Certification against Forum Shopping. Thus, respondent did not violate Rule 7, Section 5 of the
Revised Rules of Court; neither did she mislead this Court as to the pendency of another similar
case.

Lastly, the fact alone that the Decision of the Court of Appeals, dated 26 March 2002, essentially
ruled in favor of respondent, does not necessarily preclude her from appealing the same. Granted
that such a move is ostensibly irrational, nonetheless, it does not amount to malice, bad faith or
abuse of the court processes in the absence of further proof. Again, it should be noted that the
respondent did not file her intended Petition for Review. The Petition for Review would have
presented before this Court the grounds for respondent's appeal and her arguments in support
thereof. Without said Petition, any reason attributed to the respondent for appealing the 26 March
2002 Decision would be grounded on mere speculations, to which this Court cannot give credence.

II

As an exception to the general rule, this Court takes cognizance of questions of fact raised in
the Petition at bar.
It is already a well-settled rule that the jurisdiction of this Court in cases brought before it from the
Court of Appeals by virtue of Rule 45 of the Revised Rules of Court is limited to reviewing errors of
law. Findings of fact of the Court of Appeals are conclusive upon this Court. There are, however,
recognized exceptions to the foregoing rule, namely: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the interference made is manifestly mistaken,
absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based
on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its
findings, the Court of Appeals went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are contrary to those of the
trial court; (8) when the findings are conclusions without citation of specific evidence on which they
are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record. 24

Several of the enumerated exceptions pertain to the Petition at bar.

It is indubitable that the Court of Appeals made factual findings that are contrary to those of the
RTC,25 thus, resulting in its substantial modification of the trial court's Decision, and a ruling entirely
in favor of the respondent. In addition, petitioners invoked in the instant Petition for Review several
exceptions that would justify this Court's review of the factual findings of the Court of Appeals, i.e.,
the Court of Appeals made conflicting findings of fact; findings of fact which went beyond the issues
raised on appeal before it; as well as findings of fact premised on the supposed absence of evidence
and contradicted by the evidence on record.

On the basis of the foregoing, this Court shall proceed to reviewing and re-evaluating the evidence
on record in order to settle questions of fact raised in the Petition at bar.

The fact that the trial judge who rendered the RTC Decision in Civil Case No. 11336, dated 24
August 1995, was not the same judge who heard and tried the case, does not, by itself,
render the said Decision erroneous.

The Decision in Civil Case No. 11336 was rendered more than 10 years from the institution of the
said case. In the course of its trial, the case was presided over by four (4) different RTC judges. 26 It
was Judge Victorio, the fourth judge assigned to the case, who wrote the RTC Decision, dated 24
August 1995. In his Decision,27 Judge Victorio made the following findings –

After carefully evaluating the mass of evidence adduced by the parties, this Court is not
inclined to believe the plaintiff's assertion that the promissory notes as well as the deeds of
assignments of her FNCB Finance money market placements were simulated. The evidence
is overwhelming that the plaintiff received the proceeds of the loans evidenced by the
various promissory notes she had signed. What is more, there was not an iota of proof save
the plaintiff's bare testimony that she had indeed applied for loan with the Development Bank
of the Philippines.

More importantly, the two deeds of assignment were notarized, hence they partake the
nature of a public document. It makes more than preponderant proof to overturn the effect of
a notarial attestation. Copies of the deeds of assignments were actually filed with the
Records Management and Archives Office.

Finally, there were sufficient evidence wherein the plaintiff had admitted the existence of her
loans with the defendant Bank in the total amount of ₱1,920,000.00 exclusive of interests
and penalty charges (Exhibits "28", "31", "32", and "33").
 In fine, this Court hereby finds that the defendants had established the genuineness and due
execution of the various promissory notes heretofore identified as well as the two deeds of
assignments of the plaintiff's money market placements with defendant FNCB Finance, on
the strength of which the said money market placements were applied to partially pay the
plaintiff's past due obligation with the defendant Bank. Thus, the total sum of ₱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").

Disagreeing in the foregoing findings, the Court of Appeals stressed, in its Decision in CA-G.R. CV
No. 51930, dated 26 March 2002, "that the ponente of the herein assailed Decision is not the
Presiding Judge who heard and tried the case."28 This brings us to the question of whether the fact
alone that the RTC Decision was rendered by a judge other than the judge who actually heard
and tried the case is sufficient justification for the appellate court to disregard or set aside the
findings in the Decision of the court a quo?

This Court rules in the negative.

What deserves stressing is that, in this jurisdiction, there exists a disputable presumption that the
RTC Decision was rendered by the judge in the regular performance of his official duties. While the
said presumption is only disputable, it is satisfactory unless contradicted or overcame by other
evidence.29 Encompassed in this presumption of regularity is the presumption that the RTC judge, in
resolving the case and drafting his Decision, reviewed, evaluated, and weighed all the evidence on
record. That the said RTC judge is not the same judge who heard the case and received the
evidence is of little consequence when the records and transcripts of stenographic notes (TSNs) are
complete and available for consideration by the former.

In People v. Gazmen,30 this Court already elucidated its position on such an issue –

Accused-appellant makes an issue of the fact that the judge who penned the decision was
not the judge who heard and tried the case and concludes therefrom that the findings of the
former are erroneous. Accused-appellant's argument does not merit a lengthy discussion. It
is well-settled that the decision of a judge who did not try the case is not by that reason alone
erroneous.

It is true that the judge who ultimately decided the case had not heard the controversy at all,
the trial having been conducted by then Judge Emilio L. Polig, who was indefinitely
suspended by this Court. Nonetheless, the transcripts of stenographic notes taken during the
trial were complete and were presumably examined and studied by Judge Baguilat before he
rendered his decision. It is not unusual for a judge who did not try a case to decide it on the
basis of the record. The fact that he did not have the opportunity to observe the demeanor of
the witnesses during the trial but merely relied on the transcript of their testimonies does not
for that reason alone render the judgment erroneous.

(People vs. Jaymalin, 214 SCRA 685, 692 [1992])

Although it is true that the judge who heard the witnesses testify is in a better position to
observe the witnesses on the stand and determine by their demeanor whether they are
telling the truth or mouthing falsehood, it does not necessarily follow that a judge who was
not present during the trial cannot render a valid decision since he can rely on the transcript
of stenographic notes taken during the trial as basis of his decision.
 Accused-appellant's contention that the trial judge did not have the opportunity to observe
the conduct and demeanor of the witnesses since he was not the same judge who
conducted the hearing is also untenable. While it is true that the trial judge who conducted
the hearing would be in a better position to ascertain the truth and falsity of the testimonies
of the witnesses, it does not necessarily follow that a judge who was not present during the
trial cannot render a valid and just decision since the latter can also rely on the transcribed
stenographic notes taken during the trial as the basis of his decision.

(People vs. De Paz, 212 SCRA 56, 63 [1992])

At any rate, the test to determine the value of the testimony of the witness is whether or not
such is in conformity with knowledge and consistent with the experience of mankind (People
vs. Morre, 217 SCRA 219 [1993]). Further, the credibility of witnesses can also be assessed
on the basis of the substance of their testimony and the surrounding circumstances (People
v. Gonzales, 210 SCRA 44 [1992]). A critical evaluation of the testimony of the prosecution
witnesses reveals that their testimony accords with the aforementioned tests, and carries
with it the ring of truth end perforce, must be given full weight and credit.

Irrefragably (ano raw?), by reason alone that the judge who penned the RTC Decision was
not the same judge who heard the case and received the evidence therein would not render the
findings in the said Decision erroneous and unreliable. While the conduct and demeanor of
witnesses may sway a trial court judge in deciding a case, it is not, and should not be, his only
consideration. Even more vital for the trial court judge's decision are the contents and substance of
the witnesses' testimonies, as borne out by the TSNs, as well as the object and documentary
evidence submitted and made part of the records of the case.

This Court proceeds to making its own findings of fact.

Since the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, has
become final and executory as to the respondent, due to her failure to interpose an appeal therefrom
within the reglementary period, she is already bound by the factual findings in the said Decision.
Likewise, respondent's failure to file, within the reglementary period, a Motion for Reconsideration or
an appeal of the Resolution of the Court of Appeals in the same case, dated 20 November 2002,
which modified its earlier Decision by deleting paragraph 3(v) of its dispositive portion, ordering
petitioners to return to respondent the proceeds of her money market placement with AIDC, shall
already bar her from questioning such modification before this Court. Thus, what is for review before
this Court is the Decision of the Court of Appeals, dated 26 March 2002, as modified by the
Resolution of the same court, dated 20 November 2002.

Respondent alleged that she had several deposits and money market placements with petitioners.
These deposits and money market placements, as determined by the Court of Appeals in its
Decision, dated 26 March 2002, and as modified by its Resolution, dated 20 November 2002, are as
follows –

Deposit/Placement Amount
Dollar deposit with Citibank-Geneva $
149,632.99
Money market placement with Citibank, evidenced by Promissory Note (PN) No. ₱
23356 (which cancels and supersedes PN No. 22526), earning 14.5% interest 318,897.34
per annum (p.a.)
 Money market placement with Citibank, evidenced by PN No. 23357 (which ₱
cancels and supersedes PN No. 22528), earning 14.5% interest p.a. 203,150.00
Money market placement with FNCB Finance, evidenced by PN No. 5757 (which ₱
cancels and supersedes PN No. 4952), earning 17% interest p.a. 500,000.00
Money market placement with FNCB Finance, evidenced by PN No. 5758 (which ₱
cancels and supersedes PN No. 2962), earning 17% interest p.a. 500,000.00

Ito kaya ang issue? Haba kasi ng kwento

This Court is tasked to determine whether petitioners are indeed liable to return the
foregoing amounts, together with the appropriate interests and penalties, to
respondent. It shall trace respondent's transactions with petitioners, from her money market
placements with petitioner Citibank and petitioner FNCB Finance, to her savings and current
accounts with petitioner Citibank, and to her dollar accounts with Citibank-Geneva.

Money market placements with petitioner Citibank

The history of respondent's money market placements with petitioner Citibank began on 6 December
1976, when she made a placement of ₱500,000.00 as principal amount, which was supposed to
earn an interest of 16% p.a. and for which PN No. 20773 was issued. Respondent did not yet claim
the proceeds of her placement and, instead, rolled-over or re-invested the principal and proceeds
several times in the succeeding years for which new PNs were issued by petitioner Citibank to
replace the ones which matured. Petitioner Citibank accounted for respondent's original placement
and the subsequent roll-overs thereof, as follows –

Date Maturity Date Amount Interest

PN No. Cancels PN No.
(mm/dd/yyyy) (mm/dd/yyyy) (P) (p.a.)
12/06/1976 20773 None 01/13/1977 500,000.00 16%
01/14/1977 21686 20773 02/08/1977 508,444.44 15%
22526 21686 03/16/1977 313,952.59 15-3/4%
02/09/1977
22528 21686 03/16/1977 200,000.00 15-3/4%
23356 22526 04/20/1977 318,897.34 14-1/2%
03/17/1977
23357 22528 04/20/1977 203,150.00 14-1/2%

Petitioner Citibank alleged that it had already paid to respondent the principal amounts and
proceeds of PNs No. 23356 and 23357, upon their maturity. Petitioner Citibank further
averred that respondent used the ₱500,000.00 from the payment of PNs No. 23356 and
23357, plus ₱600,000.00 sourced from her other funds, to open two time deposit (TD)
accounts with petitioner Citibank, namely, TD Accounts No. 17783 and 17784.

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

By the admission of the genuineness and due execution of an instrument, as

provided in this section, is meant that the party whose signature it bears admits that
he signed it or that it was signed by another for him with his authority; that at the time
it was signed it was in words and figures exactly as set out in the pleading of the
party relying upon it; that the document was delivered; and that any formal requisites
required by law, such as a seal, an acknowledgment, or revenue stamp, which it
lacks, are waived by him. Hence, such defenses as that the signature is a forgery
(Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425; Cox vs. Northwestern Stage Co., 1
Idaho, 376; Woollen vs. Whitacre, 73 Ind., 198; Smith vs. Ehnert, 47 Wis., 479;
Faelnar vs. Escaño, 11 Phil. Rep., 92); or that it was unauthorized, as in the case of
an agent signing for his principal, or one signing in behalf of a partnership (Country
Bank vs. Greenberg, 127 Cal., 26; Henshaw vs. Root, 60 Inc., 220;
Naftzker vs. Lantz, 137 Mich., 441) or of a corporation (Merchant vs. International
Banking Corporation, 6 Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253;
Barnes vs. Spencer & Barnes Co., 162 Mich., 509); or that, in the case of the latter,
that the corporation was authorized under its charter to sign the instrument
(Merchant vs. International Banking Corporation, supra); or that the party charged
signed the instrument in some other capacity than that alleged in the pleading setting
it out (Payne vs. National Bank, 16 Kan., 147); or that it was never delivered
(Hunt vs. Weir, 29 Ill., 83; Elbring vs. Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal
Co., 48 N.Y., 253; Fire Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut
off by the admission of its genuineness and due execution.

The effect of the admission is such that in the case of a promissory note a prima
facie case is made for the plaintiff which dispenses with the necessity of evidence on
his part and entitles him to a judgment on the pleadings unless a special defense of
new matter, such as payment, is interposed by the defendant (Papa vs. Martinez, 12
Phil. Rep., 613; Chinese Chamber of Commerce vs. Pua To Ching, 14 Phil. Rep.,
222; Banco Español-Filipino vs. McKay & Zoeller, 27 Phil. Rep., 183). x x x

Since the genuineness and due execution of PNs No. 23356 and 23357 are uncontested,
respondent was able to establish prima facie that petitioner Citibank is liable to her for the
amounts stated therein. The assertion of petitioner Citibank of payment of the said PNs is an
affirmative allegation of a new matter, the burden of proof as to such resting on petitioner
Citibank. Respondent having proved the existence of the obligation, the burden of proof was
upon petitioner Citibank to show that it had been discharged. 33 It has already been
established by this Court that –

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

When the existence of a debt is fully established by the evidence contained in the
record, the burden of proving that it has been extinguished by payment devolves
upon the debtor who offers such defense to the claim of the creditor. Where the
debtor introduces some evidence of payment, the burden of going forward with the
 evidence – as distinct from the general burden of proof – shifts to the creditor, who is
then under the duty of producing some evidence of non-payment. 34

Reviewing the evidence on record, this Court finds that petitioner Citibank failed to
satisfactorily prove that PNs No. 23356 and 23357 had already been paid, and that the
amount so paid was actually used to open one of respondent's TD accounts with petitioner
Citibank.

Petitioner Citibank presented the testimonies of two witnesses to support its contention of
payment: (1) That of Mr. Herminio Pujeda, 35 the officer-in-charge of loans and placements at
the time when the questioned transactions took place; and (2) that of Mr. Francisco
Tan,36 the former Assistant Vice-President of Citibank, who directly dealt with respondent
with regard to her deposits and loans.

The relevant portion37 of Mr. Pujeda's testimony as to PNs No. 23356 and 23357 (referred to
therein as Exhibits No. "47" and "48," respectively) is reproduced below –

Atty. Mabasa:

Okey [sic]. Now Mr. Witness, you were asked to testify in this case and this
case is [sic] consist [sic] of several documents involving transactions
between the plaintiff and the defendant. Now, were you able to make your
own memorandum regarding all these transactions?

A Yes, based on my recollection of these facts, I did come up of [sic] the outline of
the chronological sequence of events.

Court:

Are you trying to say that you have personal knowledge or participation to
these transactions?

A Yes, your Honor, I was the officer-in charge of the unit that was processing these
transactions. Some of the documents bear my signature.

Court:

And this resume or summary that you have prepared is based on purely your
recollection or documents?

A Based on documents, your Honor.

Court:

Are these documents still available now?

A Yes, your honor.

Court:
 Better present the documents.

Atty. Mabasa:

Yes, your Honor, that is why your Honor.

Atty. Mabasa:

Q Now, basing on the notes that you prepared, Mr. Witness, and according to you
basing also on your personal recollection about all the transactions involved between
Modesta Sabeniano and defendant City Bank [sic] in this case. Now, would you tell
us what happened to the money market placements of Modesta Sabeniano that you
have earlier identified in Exhs. "47" and "48"?

A The transactions which I said earlier were terminated and booked to time deposits.

Q And you are saying time deposits with what bank?

A With First National Citibank.

Q Is it the same bank as Citibank, N.A.?

A Yes, sir.

Q And how much was the amount booked as time deposit with defendant Citibank?

A In the amount of ₱500,000.00.

Q And outside this ₱500,000.00 which you said was booked out of the proceeds of
Exhs. "47" and "48", were there other time deposits opened by Mrs. Modesta
Sabeniano at that time.

A Yes, she also opened another time deposit for ₱600,000.00.

Q So all in all Mr. Witness, sometime in April of 1978 Mrs. Modesta Sabeneano [sic]
had time deposit placements with Citibank in the amount of ₱500,000.00 which is the
proceeds of Exh. "47" and "48" and another ₱600,000.00, is it not?

A Yes, sir.

Q And would you know where did the other ₱600,000 placed by Mrs. Sabeneano
[sic] in a time deposit with Citibank, N.A. came [sic] from?

A She funded it directly.

Q What are you saying Mr. Witness is that the ₱600,000 is a [sic] fresh money
coming from Mrs. Modesta Sabeneano [sic]?

A That is right.
In his deposition in Hong Kong, Mr. Tan recounted what happened to PNs No. 23356 and
23357 (referred to therein as Exhibits "E" and "F," respectively), as follows –

Atty. Mabasa : Now from the Exhibits that you have identified Mr. Tan from Exhibits
"A" to "F", which are Exhibits of the plaintiff. Now, do I understand from you that the
original amount is Five Hundred Thousand and thereafter renewed in the succeeding
exhibits?

Mr. Tan : Yes, Sir.

Atty. Mabasa : Alright, after these Exhibits "E" and "F" matured, what happened
thereafter?

Mr. Tan : Split into two time deposits.

Atty. Mabasa : Exhibits "E" and "F"?

Before anything else, it should be noted that when Mr. Pujeda's testimony before the RTC
was made on 12 March 1990 and Mr. Tan's deposition in Hong Kong was conducted on 3
September 1990, more than a decade had passed from the time the transactions they were
testifying on took place. This Court had previously recognized the frailty and unreliability of
human memory with regards to figures after the lapse of five years. 38 Taking into
consideration the substantial length of time between the transactions and the witnesses'
testimonies, as well as the undeniable fact that bank officers deal with multiple clients and
process numerous transactions during their tenure, this Court is reluctant to give much
weight to the testimonies of Mr. Pujeda and Mr. Tan regarding the payment of PNs No.
23356 and 23357 and the use by respondent of the proceeds thereof for opening TD
accounts. This Court finds it implausible that they should remember, after all these years,
this particular transaction with respondent involving her PNs No. 23356 and 23357 and TD
accounts. Both witnesses did not give any reason as to why, from among all the clients they
had dealt with and all the transactions they had processed as officers of petitioner Citibank,
they specially remembered respondent and her PNs No. 23356 and 23357. Their
testimonies likewise lacked details on the circumstances surrounding the payment of the two
PNs and the opening of the time deposit accounts by respondent, such as the date of
payment of the two PNs, mode of payment, and the manner and context by which
respondent relayed her instructions to the officers of petitioner Citibank to use the proceeds
of her two PNs in opening the TD accounts.

Moreover, while there are documentary evidences to support and trace respondent's money
market placements with petitioner Citibank, from the original PN No. 20773, rolled-over
several times to, finally, PNs No. 23356 and 23357, there is an evident absence of any
documentary evidence on the payment of these last two PNs and the use of the proceeds
thereof by respondent for opening TD accounts. The paper trail seems to have ended with
the copies of PNs No. 23356 and 23357. Although both Mr. Pujeda and Mr. Tan said that
they based their testimonies, not just on their memories but also on the documents on file,
the supposed documents on which they based those portions of their testimony on the
payment of PNs No. 23356 and 23357 and the opening of the TD accounts from the
proceeds thereof, were never presented before the courts nor made part of the records
of the case. Respondent's money market placements were of substantial amounts –
consisting of the principal amount of ₱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 petitioner
Citibank would not have had documented the payment thereof.
When Mr. Pujeda testified before the RTC on 6 February 1990, 39 petitioners' counsel
attempted to present in evidence a document that would supposedly support the claim of
petitioner Citibank that the proceeds of PNs No. 23356 and 23357 were used by respondent
to open one of her two TD accounts in the amount of ₱500,000.00. Respondent's counsel
objected to the presentation of the document since it was a mere "xerox" copy, and was
blurred and hardly readable. Petitioners' counsel then asked for a continuance of the hearing
so that they can have time to produce a better document, which was granted by the court.
However, during the next hearing and continuance of Mr. Pujeda's testimony on 12 March
1990, petitioners' counsel no longer referred to the said document.

As respondent had established a prima facie case that petitioner Citibank is obligated to her
for the amounts stated in PNs No. 23356 and 23357, and as petitioner Citibank failed to
present sufficient proof of payment of the said PNs and the use by the respondent of the
proceeds thereof to open her TD accounts, this Court finds that PNs No. 23356 and 23357
are still outstanding and petitioner Citibank is still liable to respondent for the
amounts stated therein.

The significance of this Court's declaration that PNs No. 23356 and 23357 are still
outstanding becomes apparent in the light of petitioners' next contentions – that respondent
used the proceeds of PNs No. 23356 and 23357, together with additional money, to open TD
Accounts No. 17783 and 17784 with petitioner Citibank; and, subsequently, respondent pre-
terminated these TD accounts and transferred the proceeds thereof, amounting to
₱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
with definiteness to TD Accounts No. 17783 and 17784, there is only flimsy and
unsubstantiated connection between the said TD accounts and the supposed proceeds paid
from PNs No. 23356 and 23357. With PNs No. 23356 and 23357 still unpaid, then they
represent an obligation of petitioner Citibank separate and distinct from the obligation of
petitioner FNCB Finance arising from respondent's money market placements with the latter.

Money market placements with petitioner FNCB Finance

According to petitioners, respondent's TD Accounts No. 17783 and 17784, in the total
amount of ₱1,100,000.00, were supposed to mature on 15 March 1978. However,
respondent, through a letter dated 28 April 1977, 40 pre-terminated the said TD accounts and
transferred all the proceeds thereof to petitioner FNCB Finance for money market placement.
Pursuant to her instructions, TD Accounts No. 17783 and 17784 were pre-terminated and
petitioner Citibank (then still named First National City Bank) issued Manager's Checks (MC)
No. 19925341 and 19925142 for the amounts of ₱500,000.00 and ₱600,00.00, respectively.
Both MCs were payable to Citifinance (which, according to Mr. Pujeda, 43 was one with and
the same as petitioner FNCB Finance), with the additional notation that "A/C MODESTA R.
SABENIANO." Typewritten on MC No. 199253 is the phrase "Ref. Proceeds of TD 17783,"
and on MC No. 199251 is a similar phrase, "Ref. Proceeds of TD 17784." These phrases
purportedly established that the MCs were paid from the proceeds of respondent's pre-
terminated TD accounts with petitioner Citibank. Upon receipt of the MCs, petitioner FNCB
Finance deposited the same to its account with Feati Bank and Trust Co., as evidenced by
the rubber stamp mark of the latter found at the back of both MCs. In exchange, petitioner
FNCB Finance booked the amounts received as money market placements, and accordingly
issued PNs No. 4952 and 4962, for the amounts of ₱500,000.00 and ₱600,000.00,
respectively, payable to respondent's savings account with petitioner Citibank, S/A No. 25-
13703-4, upon their maturity on 1 June 1977. Once again, respondent rolled-over several
 times the principal amounts of her money market placements with petitioner FNCB Finance,
as follows –

Date Maturity Date Amount Interest

PN No. Cancels PN No.
(mm/dd/yyyy) (mm/dd/yyyy) (₱) (p.a.)
4952 None 06/01/1977 500,000.00 17%
04/29/1977
4962 None 06/01/1977 600,000.00 17%
5757 4952 08/31/1977 500,000.00 17%
06/02/1977
5758 4962 08/31/1977 500,000.00 17%
8167 5757 08/25/1978 500,000.00 14%
08/31/1977
8169 5752 08/25/1978 500,000.00 14%

As presented by the petitioner FNCB Finance, respondent rolled-over only the principal amounts of
her money market placements as she chose to receive the interest income therefrom. Petitioner
FNCB Finance also pointed out that when PN No. 4962, with principal amount of ₱600,000.00,
matured on 1 June 1977, respondent received a partial payment of the principal which, together with
the interest, amounted to ₱102,633.33;44 thus, only the amount of ₱500,000.00 from PN No. 4962
was rolled-over to PN No. 5758.

Based on the foregoing records, the principal amounts of PNs No. 5757 and 5758, upon their
maturity, were rolled over to PNs No. 8167 and 8169, respectively. PN No. 8167 45 expressly
canceled and superseded PN No. 5757, while PN No. 8169 46 also explicitly canceled and
superseded PN No. 5758. Thus, it is patently erroneous for the Court of Appeals to still award to
respondent the principal amounts and interests covered by PNs No. 5757 and 5758 when these
were already canceled and superseded. It is now incumbent upon this Court to determine what
subsequently happened to PNs No. 8167 and 8169.

Petitioner FNCB Finance presented four checks as proof of payment of the principal amounts and
interests of PNs No. 8167 and 8169 upon their maturity. All the checks were payable to respondent's
savings account with petitioner Citibank, with the following details –

Date of Chec Amount Notation

Issuance k No. (₱)
(mm/dd/yyyy
)
09/01/1978 76962 12,833.34 Interest payment on PN#08167
09/01/1978 76961 12,833.34 Interest payment on PN#08169
09/05/1978 77035 500,000.0 Full payment of principal on PN#08167 which is hereby
0 cancelled
09/05/ 1978 77034 500,000.0 Full payment of principal on PN#08169 which is hereby
0 cancelled

Then again, Checks No. 77035 and 77034 were later returned to petitioner FNCB Finance together
with a memo,47 dated 6 September 1978, from Mr. Tan of petitioner Citibank, to a Mr. Bobby
Mendoza of petitioner FNCB Finance. According to the memo, the two checks, in the total amount of
₱1,000,000.00, were to be returned to respondent's account with instructions to book the said
amount in money market placements for one more year. Pursuant to the said memo, Checks No.
77035 and 77034 were invested by petitioner FNCB Finance, on behalf of respondent, in money
market placements for which it issued PNs No. 20138 and 20139. The PNs each covered
₱500,000.00, to earn 11% interest per annum, and to mature on 3 September 1979.

Dito palang pero bored na ako.

On 3 September 1979, petitioner FNCB Finance issued Check No. 100168, pay to the order of
"Citibank N.A. A/C Modesta Sabeniano," in the amount of ₱1,022,916.66, as full payment of the
principal amounts and interests of both PNs No. 20138 and 20139 and, resultantly, canceling the
said PNs.48 Respondent actually admitted the issuance and existence of Check No. 100168, but with
the qualification that the proceeds thereof were turned over to petitioner Citibank. 49 Respondent did
not clarify the circumstances attending the supposed turn over, but on the basis of the allegations of
petitioner Citibank itself, the proceeds of PNs No. 20138 and 20139, amounting to ₱1,022,916.66,
was used by it to liquidate respondent's outstanding loans. Therefore, the determination of whether
or not respondent is still entitled to the return of the proceeds of PNs No. 20138 and 20139 shall be
dependent on the resolution of the issues raised as to the existence of the loans and the authority of
petitioner Citibank to use the proceeds of the said PNs, together with respondent's other deposits
and money market placements, to pay for the same.

Savings and current accounts with petitioner Citibank

Respondent presented and submitted before the RTC deposit slips and bank statements to prove
deposits made to several of her accounts with petitioner Citibank, particularly, Accounts No.
00484202, 59091, and 472-751, which would have amounted to a total of ₱3,812,712.32, had there
been no withdrawals or debits from the said accounts from the time the said deposits were made.

Although the RTC and the Court of Appeals did not make any definitive findings as to the status of
respondent's savings and current accounts with petitioner Citibank, the Decisions of both the trial
and appellate courts effectively recognized only the ₱31,079.14 coming from respondent's savings
account which was used to off-set her alleged outstanding loans with petitioner Citibank. 50

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
reconsideration or to appeal this particular finding of fact by the trial and appellate courts, it is
already binding upon this Court. Respondent is already precluded from claiming any greater amount
in her savings and current accounts with petitioner Citibank. Thus, this Court shall limit itself to
determining whether or not respondent is entitled to the return of the amount of ₱31,079.14 should
the off-set thereof by petitioner Citibank against her supposed loans be found invalid.

Dollar accounts with Citibank-Geneva

Respondent made an effort of preparing and presenting before the RTC her own computations of
her money market placements and dollar accounts with Citibank-Geneva, purportedly amounting to
a total of United States (US) $343,220.98, as of 23 June 1985. 51 In her Memorandum filed with the
RTC, she claimed a much bigger amount of deposits and money market placements with Citibank-
Geneva, totaling US$1,336,638.65. 52 However, respondent herself also submitted as part of her
formal offer of evidence the computation of her money market placements and dollar accounts with
Citibank-Geneva as determined by the latter.53 Citibank-Geneva accounted for respondent's money
market placements and dollar accounts as follows –
 MODESTA SABENIANO &/OR
==================
US$ 30'000.-- Principal Fid. Placement
+ US$ 339.06 Interest at 3,875% p.a. from 12.07. –
25.10.79
- US$ 95.-- Commission (minimum)
US$ 30'244.06 Total proceeds on 25.10.1979
US$ 114'000.-- Principal Fid. Placement
+ US$ 1'358.50 Interest at 4,125% p.a. from 12.07. –
25.10.79
- US$ 41.17 Commission
US$ 115'317.33 Total proceeds on 25.10.1979
US$ 145'561.39 Total proceeds of both placements on
25.10.1979
+ US$ 11'381.31 total of both current accounts
US$ 156'942.70 Total funds available
- US$ 149'632.99 Transfer to Citibank Manila on 26.10.1979
(counter value of Pesos 1'102'944.78)
US$ 7'309.71 Balance in current accounts
- US$ 6'998.84 Transfer to Citibank Zuerich – ac no.
121359 on March 13, 1980
US$ 310.87 various charges including closing charges

According to the foregoing computation, by 25 October 1979, respondent had a total of

US$156,942.70, from which, US$149,632.99 was transferred by Citibank-Geneva to petitioner
Citibank in Manila, and was used by the latter to off-set respondent's outstanding loans. The balance
of respondent's accounts with Citibank-Geneva, after the remittance to petitioner Citibank in Manila,
amounted to US$7,309.71, which was subsequently expended by a transfer to another account with
Citibank-Zuerich, in the amount of US$6,998.84, and by payment of various bank charges, including
closing charges, in the amount of US$310.87. Rightly so, both the RTC and the Court of Appeals
gave more credence to the computation of Citibank-Geneva as to the status of respondent's
accounts with the said bank, rather than the one prepared by respondent herself, which was
evidently self-serving. Once again, this Court shall limit itself to determining whether or not
respondent is entitled to the return of the amount of US$149,632.99 should the off-set thereof by
petitioner Citibank against her alleged outstanding loans be found invalid. Respondent cannot claim
any greater amount since she did not perfect an appeal of the Decision of the Court of Appeals,
dated 26 March 2002, which found that she is entitled only to the return of the said amount, as far as
her accounts with Citibank-Geneva is concerned.

III

Petitioner Citibank was able to establish by preponderance of evidence the existence of

respondent's loans.
Petitioners' version of events

In sum, the following amounts were used by petitioner Citibank to liquidate respondent's purported
outstanding loans –

Description Amount
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB
Finance) ₱ 1,022,916.66
Savings account with petitioner Citibank 31,079.14
Dollar remittance from Citibank-Geneva (peso
equivalent of US$149,632.99) 1,102,944.78

Total ₱ 2,156,940.58

According to petitioner Citibank, respondent incurred her loans under the circumstances narrated
below.

As early as 9 February 1978, respondent obtained her first loan from petitioner Citibank in the
principal amount of ₱200,000.00, for which she executed PN No. 31504. 54 Petitioner Citibank
extended to her several other loans in the succeeding months. Some of these loans were paid, while
others were rolled-over or renewed. Significant to the Petition at bar are the loans which respondent
obtained from July 1978 to January 1979, appropriately covered by PNs (first set). 55 The aggregate
principal amount of these loans was ₱1,920,000.00, which could be broken down as follows –

Date of
Date of Maturity Principal Date of Release
PN No. Issuance MC No.
(mm/dd/yyyy) Amount (mm/dd/yyyy)
(mm/dd/yyyy)
32935 07/20/1978 09/18/1978 ₱ 400,000.00 07/20/1978 220701
33751 10/13/1978 12/12/1978 100,000.00 Unrecovered
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978 226285
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978 226439
34079 11/21/1978 01/19/1979 250,000.00 11/21/1978 226467
34192 12/04/1978 01/18/1979 100,000.00 12/05/1978 228057
34402 12/26/1978 02/23/1979 300,000.00 12/26/1978 228203
34534 01/09/1979 03/09/1979 150,000.00 01/09/1979 228270
34609 01/17/1979 03/19/1979 150,000.00 01/17/1979 228357
34740 01/30/1979 03/30/1979 220,000.00 01/30/1979 228400
   
Total ₱ 1,920,000.00

When respondent was unable to pay the first set of PNs upon their maturity, these were rolled-over
or renewed several times, necessitating the execution by respondent of new PNs in favor of
petitioner Citibank. As of 5 April 1979, respondent had the following outstanding PNs (second
set),56 the principal amount of which remained at ₱1,920,000.00 –

Date of Issuance Date of Maturity

PN No. Principal Amount
(mm/dd/yyyy) (mm/dd/yyyy)
34510 01/01/1979 03/02/1979 P 400,000.00
34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
34612 01/19/1979 03/16/1979 150,000.00
34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
35694 03/19/1979 05/29/1979 150,000.00
35695 03/19/1979 05/29/1979 100,000.00
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 220,000.00
Total ₱ 1,920,000.00

All the PNs stated that the purpose of the loans covered thereby is "To liquidate existing obligation,"
except for PN No. 34534, which stated for its purpose "personal investment."

Respondent secured her foregoing loans with petitioner Citibank by executing Deeds of Assignment
of her money market placements with petitioner FNCB Finance. On 2 March 1978, respondent
executed in favor of petitioner Citibank a Deed of Assignment 57 of PN No. 8169, which was issued by
petitioner FNCB Finance, to secure payment of the credit and banking facilities extended to her by
petitioner Citibank, in the aggregate principal amount of ₱500,000.00. On 9 March 1978, respondent
executed in favor of petitioner Citibank another Deed of Assignment, 58 this time, of PN No. 8167,
also issued by petitioner FNCB Finance, to secure payment of the credit and banking facilities
extended to her by petitioner Citibank, in the aggregate amount of ₱500,000.00. When PNs No.
8167 and 8169, representing respondent's money market placements with petitioner FNCB Finance,
matured and were rolled-over to PNs No. 20138 and 20139, respondent executed new Deeds of
Assignment,59 in favor of petitioner Citibank, on 25 August 1978. According to the more recent
Deeds, respondent assigned PNs No. 20138 and 20139, representing her rolled-over money market
placements with petitioner FNCB Finance, to petitioner Citibank as security for the banking and
credit facilities it extended to her, in the aggregate principal amount of ₱500,000.00 per Deed.

In addition to the Deeds of Assignment of her money market placements with petitioner FNCB
Finance, respondent also executed a Declaration of Pledge, 60 in which she supposedly pledged "[a]ll
present and future fiduciary placements held in my personal and/or joint name with Citibank,
Switzerland," to secure all claims the petitioner Citibank may have or, in the future, acquire against
respondent. The petitioners' copy of the Declaration of Pledge is undated, while that of the
respondent, a copy certified by a Citibank-Geneva officer, bore the date 24 September 1979. 61

When respondent failed to pay the second set of PNs upon their maturity, an exchange of letters
ensued between respondent and/or her representatives, on one hand, and the representatives of
petitioners, on the other.
The first letter62 was dated 5 April 1979, addressed to respondent and signed by Mr. Tan, as the
manager of petitioner Citibank, which stated, in part, that –

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

We, therefore, have no alternative but to call your loan of ₱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
shall have no other alternative but to refer your account to our lawyers for legal action to
protect the interest of the bank.

Respondent sent a reply letter63 dated 26 April 1979, printed on paper bearing the letterhead of
respondent's company, MC Adore International Palace, the body of which reads –

This is in reply to your letter dated April 5, 1979 inviting my attention to my loan which has
become due. Pursuant to our representation with you over the telephone through Mr. F. A.
Tan, you allow us to pay the interests due for the meantime.

Please accept our Comtrust Check in the amount of ₱62,683.33.

Please bear with us for a little while, at most ninety days. As you know, we have a pending
loan with the Development Bank of the Philippines in the amount of ₱11-M. This loan has
already been recommended for approval and would be submitted to the Board of Governors.
In fact, to further facilitate the early release of this loan, we have presented and furnished
Gov. J. Tengco a xerox copy of your letter.

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

A week later or on 3 May 1979, a certain C. N. Pugeda, designated as "Executive Secretary," sent a
letter64 to petitioner Citibank, on behalf of respondent. The letter was again printed on paper bearing
the letterhead of MC Adore International Palace. The pertinent paragraphs of the said letter are
reproduced below –

Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for a re-computation
of the interest and penalty charges on her loan in the aggregate amount of ₱1,920,000.00
with maturity date of all promissory notes at June 30, 1979. As she has personally discussed
with you yesterday, this date will more or less assure you of early settlement.

In this regard, please entrust to bearer, our Comtrust check for ₱62,683.33 to be replaced by
another check with amount resulting from the new computation. Also, to facilitate the
processing of the same, may we request for another set of promissory notes for the
signature of Mrs. Sabeniano and to cancel the previous ones she has signed and forwarded
to you.

This was followed by a telegram, 65 dated 5 June 1979, and received by petitioner Citibank the
following day. The telegram was sent by a Dewey G. Soriano, Legal Counsel. The telegram
acknowledged receipt of the telegram sent by petitioner Citibank regarding the "re-past due
obligation" of McAdore International Palace. However, it reported that respondent, the President and
Chairman of MC Adore International Palace, was presently abroad negotiating for a big loan. Thus,
he was requesting for an extension of the due date of the obligation until respondent's arrival on or
before 31 July 1979.

The next letter,66 dated 21 June 1979, was signed by respondent herself and addressed to Mr.
Bobby Mendoza, a Manager of petitioner FNCB Finance. Respondent wrote therein –

Re: PN No. 20138 for ₱500,000.00 & PN No. 20139 for ₱500,000.00 totalling ₱1
Million, both PNs will mature on 9/3/1979.

This is to authorize you to release the accrued quarterly interests payment from my
captioned placements and forward directly to Citibank, Manila Attention: Mr. F. A. Tan,
Manager, to apply to my interest payable on my outstanding loan with Citibank.

Please note that the captioned two placements are continuously pledged/hypothecated to
Citibank, Manila to support my personal outstanding loan. Therefore, please do not release
the captioned placements upon maturity until you have received the instruction from
Citibank, Manila.

On even date, respondent sent another letter 67 to Mr. Tan of petitioner Citibank, stating that –

Re: S/A No. 25-225928

and C/A No. 484-946

This letter serves as an authority to debit whatever the outstanding balance from my
captioned accounts and credit the amount to my loan outstanding account with you.

Unlike respondent's earlier letters, both letters, dated 21 June 1979, are printed on plain paper,
without the letterhead of her company, MC Adore International Palace.

By 5 September 1979, respondent's outstanding and past due obligations to petitioner Citibank
totaled ₱2,123,843.20, representing the principal amounts plus interests. Relying on respondent's
Deeds of Assignment, petitioner Citibank applied the proceeds of respondent's money market
placements with petitioner FNCB Finance, as well as her deposit account with petitioner Citibank, to
partly liquidate respondent's outstanding loan balance, 68 as follows –

Respondent's outstanding obligation (principal and interest) ₱ 2,123,843.20

Less: Proceeds from respondent's money market placements  
  with petitioner FNCB Finance (principal and interest) (1,022,916.66)
  Deposits in respondent's bank accounts with petitioner  
  Citibank (31,079.14)
Balance of respondent's obligation ₱ 1,069,847.40

Mr. Tan of petitioner Citibank subsequently sent a letter, 69 dated 28 September 1979, notifying
respondent of the status of her loans and the foregoing compensation which petitioner Citibank
effected. In the letter, Mr. Tan informed respondent that she still had a remaining past-due obligation
in the amount of ₱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
respondent's other collateral, particularly, a money market placement in Citibank-Hongkong.
On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on paper bearing the letterhead
of MC Adore International Palace, as regards the ₱1,920,000.00 loan account supposedly of MC
Adore Finance & Investment, Inc., and requested for a statement of account covering the principal
and interest of the loan as of 31 October 1979. She stated therein that the loan obligation shall be
paid within 60 days from receipt of the statement of account.

Almost three weeks later, or on 25 October 1979, a certain Atty. Moises Tolentino dropped by the
office of petitioner Citibank, with a letter, dated 9 October 1979, and printed on paper with the
letterhead of MC Adore International Palace, which authorized the bearer thereof to represent the
respondent in settling the overdue account, this time, purportedly, of MC Adore International Palace
Hotel. The letter was signed by respondent as the President and Chairman of the Board.

Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as counsel of petitioner Citibank, sent a
letter to respondent, dated 31 October 1979, informing her that petitioner Citibank had effected an
off-set using her account with Citibank-Geneva, in the amount of US$149,632.99, against her
"outstanding, overdue, demandable and unpaid obligation" to petitioner Citibank. Atty. Agcaoili
claimed therein that the compensation or off-set was made pursuant to and in accordance with the
provisions of Articles 1278 through 1290 of the Civil Code. He further declared that respondent's
obligation to petitioner Citibank was now fully paid and liquidated.

Unfortunately, on 7 October 1987, a fire gutted the 7th floor of petitioner Citibank's building at Paseo
de Roxas St., Makati, Metro Manila. Petitioners submitted a Certification 70 to this effect, dated 17
January 1991, issued by the Chief of the Arson Investigation Section, Fire District III, Makati Fire
Station, Metropolitan Police Force. The 7th floor of petitioner Citibank's building housed its Control
Division, which was in charge of keeping the necessary documents for cases in which it was
involved. After compiling the documentary evidence for the present case, Atty. Renato J. Fernandez,
internal legal counsel of petitioner Citibank, forwarded them to the Control Division. The original
copies of the MCs, which supposedly represent the proceeds of the first set of PNs, as well as that
of other documentary evidence related to the case, were among those burned in the said fire. 71

Respondent's version of events

Respondent disputed petitioners' narration of the circumstances surrounding her loans with
petitioner Citibank and the alleged authority she gave for the off-set or compensation of her money
market placements and deposit accounts with petitioners against her loan obligation.

Respondent denied outright executing the first set of PNs, except for one (PN No. 34534 in
particular). Although she admitted that she obtained several loans from petitioner Citibank, these
only amounted to ₱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.72 To prove payment of these loans, respondent presented
two provisional receipts of petitioner Citibank – No. 19471, 73 dated 11 August 1978, and No.
12723,74 dated 10 November 1978 – both signed by Mr. Tan, and acknowledging receipt from
respondent of several checks in the total amount of ₱500,744.00 and ₱500,000.00, respectively, for
"liquidation of loan."

She borrowed another ₱150,000.00 from petitioner Citibank for personal investment, and for which
she executed PN No. 34534, on 9 January 1979. Thus, she admitted to receiving the proceeds of
this loan via MC No. 228270. She invested the loan amount in another money market placement
with petitioner FNCB Finance. In turn, she used the very same money market placement with
petitioner FNCB Finance as security for her ₱150,000.00 loan from petitioner Citibank. When she
failed to pay the loan when it became due, petitioner Citibank allegedly forfeited her money market
placement with petitioner FNCB Finance and, thus, the loan was already paid. 75

Respondent likewise questioned the MCs presented by petitioners, except for one (MC No. 228270
in particular), as proof that she received the proceeds of the loans covered by the first set of PNs. As
recounted in the preceding paragraph, respondent admitted to obtaining a loan of ₱150,000.00,
covered by PN No. 34534, and receiving MC No. 228270 representing the proceeds thereof, but
claimed that she already paid the same. She denied ever receiving MCs No. 220701 (for the loan of
₱400,000.00, covered by PN No. 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, but as payment of the principal amounts and/or interests from her money market placements
with petitioner Citibank. She also raised doubts as to the notation on each of the checks that reads
"RE: Proceeds of PN#[corresponding PN No.]," saying that such notation did not appear on the MCs
when she originally received them and that the notation appears to have been written by a typewriter
different from that used in writing all other information on the checks (i.e., date, payee, and
amount).76 She even testified that MCs were not supposed to bear notations indicating the purpose
for which they were issued.

As to the second set of PNs, respondent acknowledged having signed them all. However, she
asserted that she only executed these PNs as part of the simulated loans she and Mr. Tan of
petitioner Citibank concocted. Respondent explained that she had a pending loan application for a
big amount with the Development Bank of the Philippines (DBP), and when Mr. Tan found out about
this, he suggested that they could make it appear that the respondent had outstanding loans with
petitioner Citibank and the latter was already demanding payment thereof; this might persuade DBP
to approve respondent's loan application. Mr. Tan made the respondent sign the second set of PNs,
so that he may have something to show the DBP investigator who might inquire with petitioner
Citibank as to respondent's loans with the latter. On her own copies of the said PNs, respondent
wrote by hand the notation, "This isa (sic) simulated non-negotiable note, signed copy given to Mr.
Tan., (sic) per agreement to be shown to DBP representative. itwill (sic) be returned to me if the
₱11=M (sic) loan for MC Adore Palace Hotel is approved by DBP."77

Findings of this Court as to the existence of the loans

After going through the testimonial and documentary evidence presented by both sides to this case,
it is this Court's assessment that respondent did indeed have outstanding loans with petitioner
Citibank at the time it effected the off-set or compensation on 25 July 1979 (using respondent's
savings deposit with petitioner Citibank), 5 September 1979 (using the proceeds of respondent's
money market placements with petitioner FNCB Finance) and 26 October 1979 (using respondent's
dollar accounts remitted from Citibank-Geneva). The totality of petitioners' evidence as to the
existence of the said loans preponderates over respondent's. Preponderant evidence means that, as
a whole, the evidence adduced by one side outweighs that of the adverse party. 78

Respondent's outstanding obligation for ₱1,920,000.00 had been sufficiently documented by

petitioner Citibank.

The second set of PNs is a mere renewal of the prior loans originally covered by the first set of PNs,
except for PN No. 34534. The first set of PNs is supported, in turn, by the existence of the MCs that
represent the proceeds thereof received by the respondent.

It bears to emphasize that the proceeds of the loans were paid to respondent in MCs, with the
respondent specifically named as payee. MCs checks are drawn by the bank's manager upon the
bank itself and regarded to be as good as the money it represents. 79 Moreover, the MCs were
crossed checks, with the words "Payee's Account Only."

In general, a crossed check cannot be presented to the drawee bank for payment in cash. Instead,
the check can only be deposited with the payee's bank which, in turn, must present it for payment
against the drawee bank in the course of normal banking hours. The crossed check cannot be
presented for payment, but it can only be deposited and the drawee bank may only pay to another
bank in the payee's or indorser's account.80 The effect of crossing a check was described by this
Court in Philippine Commercial International Bank v. Court of Appeals 81 –

[T]he crossing of a check with the phrase "Payee's Account Only" is a warning that the check
should be deposited in the account of the payee. Thus, it is the duty of the collecting bank
PCI Bank to ascertain that the check be deposited in payee's account only. It is bound to
scrutinize the check and to know its depositors before it can make the clearing indorsement
"all prior indorsements and/or lack of indorsement guaranteed."

The crossed MCs presented by petitioner Bank were indeed deposited in several different bank
accounts and cleared by the Clearing Office of the Central Bank of the Philippines, as evidenced by
the stamp marks and notations on the said checks. The crossed MCs are already in the possession
of petitioner Citibank, the drawee bank, which was ultimately responsible for the payment of the
amount stated in the checks. Given that a check is more than just an instrument of credit used in
commercial transactions for it also serves as a receipt or evidence for the drawee bank of the
cancellation of the said check due to payment, 82 then, the possession by petitioner Citibank of the
said MCs, duly stamped "Paid" gives rise to the presumption that the said MCs were already paid
out to the intended payee, who was in this case, the respondent.

This Court finds applicable herein the presumptions that private transactions have been fair and
regular,83 and that the ordinary course of business has been followed. 84 There is no question that the
loan transaction between petitioner Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCs – from their issuance by petitioner Citibank to
respondent as payment of the proceeds of her loans; to its deposit in respondent's accounts with
several different banks; to the clearing of the MCs by an independent clearing house; and finally, to
the payment of the MCs by petitioner Citibank as the drawee bank of the said checks – are all
private transactions which shall be presumed to have been fair and regular to all the parties
concerned. In addition, the banks involved in the foregoing transactions are also presumed to have
followed the ordinary course of business in the acceptance of the crossed MCs for deposit in
respondent's accounts, submitting them for clearing, and their eventual payment and cancellation.

The afore-stated presumptions are disputable, meaning, they are satisfactory if uncontradicted, but
may be contradicted and overcome by other evidence. 85 Respondent, however, was unable to
present sufficient and credible evidence to dispute these presumptions.

It should be recalled that out of the nine MCs presented by petitioner Citibank, respondent admitted
to receiving one as proceeds of a loan (MC No. 228270), denied receiving two (MCs No. 220701
and 226467), and admitted to receiving all the rest, but not as proceeds of her loans, but as return
on the principal amounts and interests from her money market placements.

Respondent admitted receiving MC No. 228270 representing the proceeds of her loan covered by
PN No. 34534. Although the principal amount of the loan is ₱150,000.00, respondent only received
₱146,312.50, because the interest and handling fee on the loan transaction were already deducted
therefrom.86 Stamps and notations at the back of MC No. 228270 reveal that it was deposited at the
Bank of the Philippine Islands (BPI), Cubao Branch, in Account No. 0123-0572-28. 87 The check also
bore the signature of respondent at the back.88 And, although respondent would later admit that she
did sign PN No. 34534 and received MC No. 228270 as proceeds of the loan extended to her by
petitioner Citibank, she contradicted herself when, in an earlier testimony, she claimed that PN No.
34534 was among the PNs she executed as simulated loans with petitioner Citibank. 89

Respondent denied ever receiving MCs No. 220701 and 226467. However, considering that the said
checks were crossed for payee's account only, and that they were actually deposited, cleared, and
paid, then the presumption would be that the said checks were properly deposited to the account of
respondent, who was clearly named the payee in the checks. Respondent's bare allegations that she
did not receive the two checks fail to convince this Court, for to sustain her, would be for this Court to
conclude that an irregularity had occurred somewhere from the time of the issuance of the said
checks, to their deposit, clearance, and payment, and which would have involved not only petitioner
Citibank, but also BPI, which accepted the checks for deposit, and the Central Bank of the
Philippines, which cleared the checks. It falls upon the respondent to overcome or dispute the
presumption that the crossed checks were issued, accepted for deposit, cleared, and paid for by the
banks involved following the ordinary course of their business.

The mere fact that MCs No. 220701 and 226467 do not bear respondent's signature at the back
does not negate deposit thereof in her account. The liability for the lack of indorsement on the MCs
no longer fall on petitioner Citibank, but on the bank who received the same for deposit, in this case,
BPI Cubao Branch. Once again, it must be noted that the MCs were crossed, for payee's account
only, and the payee named in both checks was none other than respondent. The crossing of the
MCs was already a warning to BPI to receive said checks for deposit only in respondent's account. It
was up to BPI to verify whether it was receiving the crossed MCs in accordance with the instructions
on the face thereof. If, indeed, the MCs were deposited in accounts other than respondent's, then
the respondent would have a cause of action against BPI.90

BPI further stamped its guarantee on the back of the checks to the effect that, "All prior endorsement
and/or Lack of endorsement guaranteed." Thus, BPI became the indorser of the MCs, and assumed
all the warranties of an indorser, 91 specifically, that the checks were genuine and in all respects what
they purported to be; that it had a good title to the checks; that all prior parties had capacity to
contract; and that the checks were, at the time of their indorsement, valid and subsisting. 92 So even if
the MCs deposited by BPI's client, whether it be by respondent herself or some other person, lacked
the necessary indorsement, BPI, as the collecting bank, is bound by its warranties as an indorser
and cannot set up the defense of lack of indorsement as against petitioner Citibank, the drawee
bank.93

Furthermore, respondent's bare and unsubstantiated denial of receipt of the MCs in question and
their deposit in her account is rendered suspect when MC No. 220701 was actually deposited in
Account No. 0123-0572-28 of BPI Cubao Branch, the very same account in which MC No. 228270
(which respondent admitted to receiving as proceeds of her loan from petitioner Citibank), and MCs
No. 228203, 228357, and 228400 (which respondent admitted to receiving as proceeds from her
money market placements) were deposited. Likewise, MC No. 226467 was deposited in Account No.
0121-002-43 of BPI Cubao Branch, to which MCs No. 226285 and 226439 (which respondent
admitted to receiving as proceeds from her money market placements) were deposited. It is an
apparent contradiction for respondent to claim having received the proceeds of checks deposited in
an account, and then deny receiving the proceeds of another check deposited in the very same
account.

Another inconsistency in respondent's denial of receipt of MC No. 226467 and her deposit of the
same in her account, is her presentation of Exhibit "HHH," a provisional receipt which was supposed
to prove that respondent turned over ₱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
return on her investment from one of these placements. 94 Because of her Exhibit "HHH," respondent
effectively admitted receipt of MC No. 226467, although for reasons other than as proceeds of a
loan.

Neither can this Court give credence to respondent's contention that the notations on the MCs,
stating that they were the proceeds of particular PNs, were not there when she received the checks
and that the notations appeared to be written by a typewriter different from that used to write the
other information on the checks. Once more, respondent's allegations were uncorroborated by any
other evidence. Her and her counsel's observation that the notations on the MCs appear to be
written by a typewriter different from that used to write the other information on the checks hardly
convinces this Court considering that it constitutes a mere opinion on the appearance of the notation
by a witness who does not possess the necessary expertise on the matter. In addition, the notations
on the MCs were written using both capital and small letters, while the other information on the
checks were written using capital letters only, such difference could easily confuse an untrained eye
and lead to a hasty conclusion that they were written by different typewriters.

Respondent's testimony, that based on her experience transacting with banks, the MCs were not
supposed to include notations on the purpose for which the checks were issued, also deserves scant
consideration. While respondent may have extensive experience dealing with banks, it still does not
qualify her as a competent witness on banking procedures and practices. Her testimony on this
matter is even belied by the fact that the other MCs issued by petitioner Citibank (when it was still
named First National City Bank) and by petitioner FNCB Finance, the existence and validity of which
were not disputed by respondent, also bear similar notations that state the reason for which they
were issued.

Respondent presented several more pieces of evidence to substantiate her claim that she received
MCs No. 226285, 226439, 226467, 226057, 228357, and 228400, not as proceeds of her loans from
petitioner Citibank, but as the return of the principal amounts and payment of interests from her
money market placements with petitioners. Part of respondent's exhibits were personal
checks95 drawn by respondent on her account with Feati Bank & Trust Co., which she allegedly
invested in separate money market placements with both petitioners, the returns from which were
paid to her via MCs No. 226285 and 228400. Yet, to this Court, the personal checks only managed
to establish respondent's issuance thereof, but there was nothing on the face of the checks that
would reveal the purpose for which they were issued and that they were actually invested in money
market placements as respondent claimed.

Respondent further submitted handwritten notes that purportedly computed and presented the
returns on her money market placements, corresponding to the amount stated in the MCs she
received from petitioner Citibank. Exhibit "HHH-1"96 was a handwritten note, which respondent
attributed to Mr. Tan of petitioner Citibank, showing the breakdown of her BPI Check for
₱500,000.00 into three different money market placements with petitioner Citibank. This Court,
however, noticed several factors which render the note highly suspect. One, it was written on the
reversed side of Provisional Receipt No. 12724 of petitioner Citibank which bore the initials of Mr.
Tan acknowledging receipt of respondent's BPI Check No. 120989 for ₱500,000.00; but the initials
on the handwritten note appeared to be that of Mr. Bobby Mendoza of petitioner FNCB
Finance.97 Second, according to Provisional Receipt No. 12724, BPI Check No. 120989 for
₱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 placements were made through
one check deposited on the same day, 10 November 1978, it made no sense that the handwritten
note at the back of Provisional Receipt No. 12724 provided for different dates of maturity for each of
the money market placements (i.e., 16 November 1978, 17 January 1979, and 21 November 1978),
and such dates did not correspond to the 60 day placement period stated on the face of the
provisional receipt. And third, the principal amounts of the money market placements as stated in the
handwritten note – ₱145,000.00, ₱145,000.00 and ₱242,000.00 – totaled ₱532,000.00, and was
obviously in excess of the ₱500,000.00 acknowledged on the face of Provisional Receipt No. 12724.

Exhibits "III" and "III-1," the front and bank pages of a handwritten note of Mr. Bobby Mendoza of
petitioner FNCB Finance,98 also did not deserve much evidentiary weight, and this Court cannot rely
on the truth and accuracy of the computations presented therein. Mr. Mendoza was not presented as
a witness during the trial before the RTC, so that the document was not properly authenticated nor
its contents sufficiently explained. No one was able to competently identify whether the initials as
appearing on the note were actually Mr. Mendoza's.

Also, going by the information on the front page of the note, this Court observes that payment of
respondent's alleged money market placements with petitioner FNCB Finance were made using
Citytrust Checks; the MCs in question, including MC No. 228057, were issued by petitioner Citibank.
Although Citytrust (formerly Feati Bank & Trust Co.), petitioner FNCB Finance, and petitioner
Citibank may be affiliates of one another, they each remained separate and distinct corporations,
each having its own financial system and records. Thus, this Court cannot simply assume that one
corporation, such as petitioner Citibank or Citytrust, can issue a check to discharge an obligation of
petitioner FNCB Finance. It should be recalled that when petitioner FNCB Finance paid for
respondent's money market placements, covered by its PNs No. 8167 and 8169, as well as PNs No.
20138 and 20139, petitioner FNCB Finance issued its own checks.

As a last point on this matter, if respondent truly had money market placements with petitioners, then
these would have been evidenced by PNs issued by either petitioner Citibank or petitioner FNCB
Finance, acknowledging the principal amounts of the investments, and stating the applicable interest
rates, as well as the dates of their of issuance and maturity. After respondent had so meticulously
reconstructed her other money market placements with petitioners and consolidated the
documentary evidence thereon, she came surprisingly short of offering similar details and
substantiation for these particular money market placements.

Since this Court is satisfied that respondent indeed received the proceeds of the first set of PNs,
then it proceeds to analyze her evidence of payment thereof.

In support of respondent's assertion that she had already paid whatever loans she may have had
with petitioner Citibank, she presented as evidence Provisional Receipts No. 19471, dated 11
August 1978, and No. 12723, dated 10 November 1978, both of petitioner Citibank and signed by
Mr. Tan, for the amounts of ₱500,744.00 and ₱500,000.00, respectively. While these provisional
receipts did state that Mr. Tan, on behalf of petitioner Citibank, received respondent's checks as
payment for her loans, they failed to specifically identify which loans were actually paid. Petitioner
Citibank was able to present evidence that respondent had executed several PNs in the years 1978
and 1979 to cover the loans she secured from the said bank. Petitioner Citibank did admit that
respondent was able to pay for some of these PNs, and what it identified as the first and second sets
of PNs were only those which remained unpaid. It thus became incumbent upon respondent to prove
that the checks received by Mr. Tan were actually applied to the PNs in either the first or second set;
a fact that, unfortunately, cannot be determined from the provisional receipts submitted by
respondent since they only generally stated that the checks received by Mr. Tan were payment for
respondent's loans.

Mr. Tan, in his deposition, further explained that provisional receipts were issued when payment to
the bank was made using checks, since the checks would still be subject to clearing. The purpose
for the provisional receipts was merely to acknowledge the delivery of the checks to the possession
of the bank, but not yet of payment. 99 This bank practice finds legitimacy in the pronouncement of
this Court that a check, whether an MC or an ordinary check, is not legal tender and, therefore,
cannot constitute valid tender of payment. In Philippine Airlines, Inc. v. Court of Appeals, 100 this
Court elucidated that:

Since a negotiable instrument is only a substitute for money and not money, the delivery of
such an instrument does not, by itself, operate as payment (Sec. 189, Act 2031 on Negs.
Insts.; Art. 1249, Civil Code; Bryan Landon Co. v. American Bank, 7 Phil. 255; Tan Sunco, v.
Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check, whether a manager's check or ordinary check,
is not legal tender, and an offer of a check in payment of a debt is not a valid tender of
payment and may be refused receipt by the obligee or creditor. Mere delivery of checks does
not discharge the obligation under a judgment. The obligation is not extinguished and
remains suspended until the payment by commercial document is actually realized (Art.
1249, Civil Code, par. 3).

In the case at bar, the issuance of an official receipt by petitioner Citibank would have been
dependent on whether the checks delivered by respondent were actually cleared and paid for by the
drawee banks.

As for PN No. 34534, respondent asserted payment thereof at two separate instances by two
different means. In her formal offer of exhibits, respondent submitted a deposit slip of petitioner
Citibank, dated 11 August 1978, evidencing the deposit of BPI Check No. 5785 for ₱150,000.00. 101 In
her Formal Offer of Documentary Exhibits, dated 7 July 1989, respondent stated that the purpose for
the presentation of the said deposit slip was to prove that she already paid her loan covered by PN
No. 34534.102 In her testimony before the RTC three years later, on 28 November 1991, she changed
her story. This time she narrated that the loan covered by PN No. 34534 was secured by her money
market placement with petitioner FNCB Finance, and when she failed to pay the said PN when it
became due, the security was applied to the loan, therefore, the loan was considered paid. 103 Given
the foregoing, respondent's assertion of payment of PN No. 34534 is extremely dubious.

According to petitioner Citibank, the PNs in the second set, except for PN No. 34534, were mere
renewals of the unpaid PNs in the first set, which was why the PNs stated that they were for the
purpose of liquidating existing obligations. PN No. 34534, however, which was part of the first set,
was still valid and subsisting and so it was included in the second set without need for its renewal,
and it still being the original PN for that particular loan, its stated purpose was for personal
investment.104 Respondent essentially admitted executing the second set of PNs, but they were only
meant to cover simulated loans. Mr. Tan supposedly convinced her that her pending loan application
with DBP would have a greater chance of being approved if they made it appear that respondent
urgently needed the money because petitioner Citibank was already demanding payment for her
simulated loans.

Respondent's defense of simulated loans to escape liability for the second set of PNs is truly a novel
one.  It is regrettable, however, that she was unable to substantiate the same. Yet again,
1âwphi1

respondent's version of events is totally based on her own uncorroborated testimony. The notations
on the second set of PNs, that they were non-negotiable simulated notes, were admittedly made by
respondent herself and were, thus, self-serving. Equally self-serving was respondent's letter, written
on 7 October 1985, or more than six years after the execution of the second set of PNs, in which she
demanded return of the simulated or fictitious PNs, together with the letters relating thereto, which
Mr. Tan purportedly asked her to execute. Respondent further failed to present any proof of her
alleged loan application with the DBP, and of any circumstance or correspondence wherein the
simulated or fictitious PNs were indeed used for their supposed purpose.
In contrast, petitioner Citibank, as supported by the testimonies of its officers and available
documentation, consistently treated the said PNs as regular loans – accepted, approved, and paid in
the ordinary course of its business.

The PNs executed by the respondent in favor of petitioner Citibank to cover her loans were duly-
filled out and signed, including the disclosure statement found at the back of the said PNs, in
adherence to the Central Bank requirement to disclose the full finance charges to a loan granted to
borrowers.

Mr. Tan, then an account officer with the Marketing Department of petitioner Citibank, testified that
he dealt directly with respondent; he facilitated the loans; and the PNs, at least in the second set,
were signed by respondent in his presence.105

Mr. Pujeda, the officer who was previously in charge of loans and placements, confirmed that the
signatures on the PNs were verified against respondent's specimen signature with the bank. 106

Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan processor, was responsible for
booking respondent's loans. Booking the loans means recording it in the General Ledger. She
explained the procedure for booking loans, as follows: The account officer, in the Marketing
Department, deals directly with the clients who wish to borrow money from petitioner Citibank. The
Marketing Department will forward a loan booking checklist, together with the borrowing client's PNs
and other supporting documents, to the loan pre-processor, who will check whether the details in the
loan booking checklist are the same as those in the PNs. The documents are then sent to Signature
Control for verification of the client's signature in the PNs, after which, they are returned to the loan
pre-processor, to be forwarded finally to the loan processor. The loan processor shall book the loan
in the General Ledger, indicating therein the client name, loan amount, interest rate, maturity date,
and the corresponding PN number. Since she booked respondent's loans personally, Ms.
Dondoyano testified that she saw the original PNs. In 1986, Atty. Fernandez of petitioner Citibank
requested her to prepare an accounting of respondent's loans, which she did, and which was
presented as Exhibit "120" for the petitioners. The figures from the said exhibit were culled from the
bookings in the General Ledger, a fact which respondent's counsel was even willing to stipulate. 107

Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at the Control Department of
petitioner Citibank. She was presented by petitioner Citibank to expound on the microfilming
procedure at the bank, since most of the copies of the PNs were retrieved from microfilm.
Microfilming of the documents are actually done by people at the Operations Department. At the end
of the day or during the day, the original copies of all bank documents, not just those pertaining to
loans, are microfilmed. She refuted the possibility that insertions could be made in the microfilm
because the microfilm is inserted in a cassette; the cassette is placed in the microfilm machine for
use; at the end of the day, the cassette is taken out of the microfilm machine and put in a safe vault;
and the cassette is returned to the machine only the following day for use, until the spool is full. This
is the microfilming procedure followed everyday. When the microfilm spool is already full, the
microfilm is developed, then sent to the Control Department, which double checks the contents of
the microfilms against the entries in the General Ledger. The Control Department also conducts a
random comparison of the contents of the microfilms with the original documents; a random review
of the contents is done on every role of microfilm. 108

Ms. Renee Rubio worked for petitioner Citibank for 20 years. She rose from the ranks, initially
working as a secretary in the Personnel Group; then as a secretary to the Personnel Group Head; a
Service Assistant with the Marketing Group, in 1972 to 1974, dealing directly with corporate and
individual clients who, among other things, secured loans from petitioner Citibank; the Head of the
Collection Group of the Foreign Department in 1974 to 1976; the Head of the Money Transfer Unit in
1976 to 1978; the Head of the Loans and Placements Unit up to the early 1980s; and, thereafter,
she established operations training for petitioner Citibank in the Asia-Pacific Region responsible for
the training of the officers of the bank. She testified on the standard loan application process at
petitioner Citibank. According to Ms. Rubio, the account officer or marketing person submits a
proposal to grant a loan to an individual or corporation. Petitioner Citibank has a worldwide policy
that requires a credit committee, composed of a minimum of three people, which would approve the
loan and amount thereof. There can be no instance when only one officer has the power to approve
the loan application. When the loan is approved, the account officer in charge will obtain the
corresponding PNs from the client. The PNs are sent to the signature verifier who would validate the
signatures therein against those appearing in the signature cards previously submitted by the client
to the bank. The Operations Unit will check and review the documents, including the PNs, if it is a
clean loan, and securities and deposits, if it is collateralized. The loan is then recorded in the
General Ledger. The Loans and Placements Department will not book the loans without the PNs.
When the PNs are liquidated, whether they are paid or rolled-over, they are returned to the
client.109 Ms. Rubio further explained that she was familiar with respondent's accounts since, while
she was still the Head of the Loan and Placements Unit, she was asked by Mr. Tan to prepare a list
of respondent's outstanding obligations.110 She thus calculated respondent's outstanding loans,
which was sent as an attachment to Mr. Tan's letter to respondent, dated 28 September 1979, and
presented before the RTC as Exhibits "34-B" and "34-C."111

Lastly, the exchange of letters between petitioner Citibank and respondent, as well as the letters
sent by other people working for respondent, had consistently recognized that respondent owed
petitioner Citibank money.

In consideration of the foregoing discussion, this Court finds that the preponderance of evidence
supports the existence of the respondent's loans, in the principal sum of ₱1,920,000.00, as of 5
September 1979. While it is well-settled that the term "preponderance of evidence" should not be
wholly dependent on the number of witnesses, there are certain instances when the number of
witnesses become the determining factor –

The preponderance of evidence may be determined, under certain conditions, by the number
of witnesses testifying to a particular fact or state of facts. For instance, one or two witnesses
may testify to a given state of facts, and six or seven witnesses of equal candor, fairness,
intelligence, and truthfulness, and equally well corroborated by all the remaining evidence,
who have no greater interest in the result of the suit, testify against such state of facts. Then
the preponderance of evidence is determined by the number of witnesses. (Wilcox vs. Hines,
100 Tenn. 524, 66 Am. St. Rep., 761.)112

Best evidence rule

This Court disagrees in the pronouncement made by the Court of Appeals summarily dismissing the
documentary evidence submitted by petitioners based on its broad and indiscriminate application of
the best evidence rule.

In general, the best evidence rule requires that the highest available degree of proof must be
produced. Accordingly, for documentary evidence, the contents of a document are best proved by
the production of the document itself, 113 to the exclusion of any secondary or substitutionary
evidence.114

The best evidence rule has been made part of the revised Rules of Court, Rule 130, Section 3,
which reads –
 SEC. 3. Original document must be produced; exceptions. – When the subject of inquiry is
the contents of a document, no evidence shall be admissible other than the original
document itself, except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;

(b) When the original is in the custody or under the control of the party against whom
the evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which
cannot be examined in court without great loss of time and the fact sought to be
established from them is only the general result of the whole; and

(d) When the original is a public record in the custody of a public officer or is
recorded in a public office.

As the afore-quoted provision states, the best evidence rule applies only when the subject of the
inquiry is the contents of the document. The scope of the rule is more extensively explained thus –

But even with respect to documentary evidence, the best evidence rule applies only when
the content of such document is the subject of the inquiry. Where the issue is only as to
whether such document was actually executed, or exists, or on the circumstances relevant to
or surrounding its execution, the best evidence rule does not apply and testimonial evidence
is admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78). Any other substitutionary
evidence is likewise admissible without need for accounting for the original.

Thus, when a document is presented to prove its existence or condition it is offered not as
documentary, but as real, evidence. Parol evidence of the fact of execution of the documents
is allowed (Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565). x x x 115

In Estrada v. Desierto,116 this Court had occasion to rule that –

It is true that the Court relied not upon the original but only copy of the Angara Diary as
published in the Philippine Daily Inquirer on February 4-6, 2001. In doing so, the Court, did
not, however, violate the best evidence rule. Wigmore, in his book on evidence, states that:

"Production of the original may be dispensed with, in the trial court's discretion, whenever in
the case in hand the opponent does not bona fide dispute the contents of the document and
no other useful purpose will be served by requiring production.24

"x x x x

"In several Canadian provinces, the principle of unavailability has been abandoned, for
certain documents in which ordinarily no real dispute arised. This measure is a sensible and
progressive one and deserves universal adoption (post, sec. 1233). Its essential feature is
that a copy may be used unconditionally, if the opponent has been given an opportunity to
inspect it." (Emphasis supplied.)

This Court did not violate the best evidence rule when it considered and weighed in evidence the
photocopies and microfilm copies of the PNs, MCs, and letters submitted by the petitioners to
establish the existence of respondent's loans. The terms or contents of these documents were never
the point of contention in the Petition at bar. It was respondent's position that the PNs in the first set
(with the exception of PN No. 34534) never existed, while the PNs in the second set (again,
excluding PN No. 34534) were merely executed to cover simulated loan transactions. As for the
MCs representing the proceeds of the loans, the respondent either denied receipt of certain MCs or
admitted receipt of the other MCs but for another purpose. Respondent further admitted the letters
she wrote personally or through her representatives to Mr. Tan of petitioner Citibank acknowledging
the loans, except that she claimed that these letters were just meant to keep up the ruse of the
simulated loans. Thus, respondent questioned the documents as to their existence or execution, or
when the former is admitted, as to the purpose for which the documents were executed, matters
which are, undoubtedly, external to the documents, and which had nothing to do with the contents
thereof.

Alternatively, even if it is granted that the best evidence rule should apply to the evidence presented
by petitioners regarding the existence of respondent's loans, it should be borne in mind that the rule
admits of the following exceptions under Rule 130, Section 5 of the revised Rules of Court –

SEC. 5. When the original document is unavailable. – When the original document has been
lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or
existence and the cause of its unavailability without bad faith on his part, may prove its
contents by a copy, or by a recital of its contents in some authentic document, or by the
testimony of witnesses in the order stated.

The execution or existence of the original copies of the documents was established through the
testimonies of witnesses, such as Mr. Tan, before whom most of the documents were personally
executed by respondent. The original PNs also went through the whole loan booking system of
petitioner Citibank – from the account officer in its Marketing Department, to the pre-processor, to
the signature verifier, back to the pre-processor, then to the processor for booking. 117 The original
PNs were seen by Ms. Dondoyano, the processor, who recorded them in the General Ledger. Mr.
Pujeda personally saw the original MCs, proving respondent's receipt of the proceeds of her loans
from petitioner Citibank, when he helped Attys. Cleofe and Fernandez, the bank's legal counsels, to
reconstruct the records of respondent's loans. The original MCs were presented to Atty. Cleofe who
used the same during the preliminary investigation of the case, sometime in years 1986-1987. The
original MCs were subsequently turned over to the Control and Investigation Division of petitioner
Citibank.118

It was only petitioner FNCB Finance who claimed that they lost the original copies of the PNs when it
moved to a new office. Citibank did not make a similar contention; instead, it explained that the
original copies of the PNs were returned to the borrower upon liquidation of the loan, either through
payment or roll-over. Petitioner Citibank proffered the excuse that they were still looking for the
documents in their storage or warehouse to explain the delay and difficulty in the retrieval thereof,
but not their absence or loss. The original documents in this case, such as the MCs and letters, were
destroyed and, thus, unavailable for presentation before the RTC only on 7 October 1987, when a
fire broke out on the 7th floor of the office building of petitioner Citibank. There is no showing that the
fire was intentionally set. The fire destroyed relevant documents, not just of the present case, but
also of other cases, since the 7th floor housed the Control and Investigation Division, in charge of
keeping the necessary documents for cases in which petitioner Citibank was involved.

The foregoing would have been sufficient to allow the presentation of photocopies or microfilm
copies of the PNs, MCs, and letters by the petitioners as secondary evidence to establish the
existence of respondent's loans, as an exception to the best evidence rule.
The impact of the Decision of the Court of Appeals in the Dy case

In its assailed Decision, the Court of Appeals made the following pronouncement –

Besides, We find the declaration and conclusions of this Court in CA-G.R. CV No.
15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et al,
promulgated on 15 January 1990, as disturbing taking into consideration the similarities of
the fraud, machinations, and deceits employed by the defendant-appellant Citibank and its
Account Manager Francisco Tan.

Worthy of note is the fact that Our declarations and conclusions against Citibank and the
person of Francisco Tan in CA-G.R. CV No. 15934 were affirmed in toto by the Highest
Magistrate in a Minute Resolution dated 22 August 1990 entitled Citibank, N.A., vs. Court of
Appeals, G.R. 93350.

As the factual milieu of the present appeal created reasonable doubts as to whether the nine
(9) Promissory Notes were indeed executed with considerations, the doubts, coupled by the
findings and conclusions of this Court in CA-G.R. CV No. 15934 and the Supreme Court
in G.R. No. 93350. should be construed against herein defendants-appellants Citibank and
FNCB Finance.

What this Court truly finds disturbing is the significance given by the Court of Appeals in its assailed
Decision to the Decision119 of its Third Division in CA-G.R. CV No. 15934 (or the Dy case), when
there is an absolute lack of legal basis for doing such.

Although petitioner Citibank and its officer, Mr. Tan, were also involved in the Dy case, that is about
the only connection between the Dy case and the one at bar. Not only did the Dy case tackle
transactions between parties other than the parties presently before this Court, but the transactions
are absolutely independent and unrelated to those in the instant Petition.

In the Dy case, Severino Chua Caedo managed to obtain loans from herein petitioner Citibank
amounting to ₱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
husband were unaware of the said loans and the mortgage of their properties. The transactions were
carried out exclusively between Caedo and Mr. Tan of petitioner Citibank. The RTC found Mr. Tan
guilty of fraud for his participation in the questionable transactions, essentially because he allowed
Caedo to take out the signature cards, when these should have been signed by the Dy spouses
personally before him. Although the Dy spouses' signatures in the PNs and Third Party Real Estate
Mortgage were forged, they were approved by the signature verifier since the signature cards
against which they were compared to were also forged. Neither the RTC nor the Court of Appeals,
however, categorically declared Mr. Tan personally responsible for the forgeries, which, in the
narration of the facts, were more likely committed by Caedo.

In the Petition at bar, respondent dealt with Mr. Tan directly, there was no third party involved who
could have perpetrated any fraud or forgery in her loan transactions. Although respondent attempted
to raise suspicion as to the authenticity of her signatures on certain documents, these were nothing
more than naked allegations with no corroborating evidence; worse, even her own allegations were
replete with inconsistencies. She could not even establish in what manner or under what
circumstances the fraud or forgery was committed, or how Mr. Tan could have been directly
responsible for the same.
While the Court of Appeals can take judicial notice of the Decision of its Third Division in the Dy
case, it should not have given the said case much weight when it rendered the assailed Decision,
since the former does not constitute a precedent. The Court of Appeals, in the challenged Decision,
did not apply any legal argument or principle established in the Dy case but, rather, adopted the
findings therein of wrongdoing or misconduct on the part of herein petitioner Citibank and Mr. Tan.
Any finding of wrongdoing or misconduct as against herein petitioners should be made based on the
factual background and pieces of evidence submitted in this case, not those in another case.

It is apparent that the Court of Appeals took judicial notice of the Dy case not as a legal precedent
for the present case, but rather as evidence of similar acts committed by petitioner Citibank and Mr.
Tan. A basic rule of evidence, however, states that, "Evidence that one did or did not do a certain
thing at one time is not admissible to prove that he did or did not do the same or similar thing at
another time; but it may be received to prove a specific intent or knowledge, identity, plan, system,
scheme, habit, custom or usage, and the like."120 The rationale for the rule is explained thus –

The rule is founded upon reason, public policy, justice and judicial convenience. The fact that
a person has committed the same or similar acts at some prior time affords, as a general
rule, no logical guaranty that he committed the act in question. This is so because,
subjectively, a man's mind and even his modes of life may change; and, objectively, the
conditions under which he may find himself at a given time may likewise change and thus
induce him to act in a different way. Besides, if evidence of similar acts are to be invariably
admitted, they will give rise to a multiplicity of collateral issues and will subject the defendant
to surprise as well as confuse the court and prolong the trial. 121

The factual backgrounds of the two cases are so different and unrelated that the Dy case cannot be
used to prove specific intent, knowledge, identity, plan, system, scheme, habit, custom or usage on
the part of petitioner Citibank or its officer, Mr. Tan, to defraud respondent in the present case.

IV

The liquidation of respondent's outstanding loans were valid in so far as petitioner Citibank
used respondent's savings account with the bank and her money market placements with
petitioner FNCB Finance; but illegal and void in so far as petitioner Citibank used
respondent's dollar accounts with Citibank-Geneva.

Savings Account with petitioner Citibank

Compensation is a recognized mode of extinguishing obligations. Relevant provisions of the Civil

Code provides –

Art. 1278. Compensation shall take place when two persons, in their own right, are creditors
and debtors of each other.

Art. 1279. In order that compensation may be proper, it is necessary;

(1) That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;

(2) That both debts consist in a sum of money, or if the things due are consumable,
they be of the same kind, and also of the same quality if the latter has been stated;
 (3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.

There is little controversy when it comes to the right of petitioner Citibank to compensate
respondent's outstanding loans with her deposit account. As already found by this Court, petitioner
Citibank was the creditor of respondent for her outstanding loans. At the same time, respondent was
the creditor of petitioner Citibank, as far as her deposit account was concerned, since bank deposits,
whether fixed, savings, or current, should be considered as simple loan or mutuum by the depositor
to the banking institution.122 Both debts consist in sums of money. By June 1979, all of respondent's
PNs in the second set had matured and became demandable, while respondent's savings account
was demandable anytime. Neither was there any retention or controversy over the PNs and the
deposit account commenced by a third person and communicated in due time to the debtor
concerned. Compensation takes place by operation of law, 123 therefore, even in the absence of an
expressed authority from respondent, petitioner Citibank had the right to effect, on 25 June 1979, the
partial compensation or off-set of respondent's outstanding loans with her deposit account,
amounting to ₱31,079.14.

Money market placements with FNCB Finance

Things though are not as simple and as straightforward as regards to the money market placements
and bank account used by petitioner Citibank to complete the compensation or off-set of
respondent's outstanding loans, which came from persons other than petitioner Citibank.

Respondent's money market placements were with petitioner FNCB Finance, and after several 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, inclusive
of the principal amounts and interests. As to these money market placements, respondent was the
creditor and petitioner FNCB Finance the debtor; while, as to the outstanding loans, petitioner
Citibank was the creditor and respondent the debtor. Consequently, legal compensation, under
Article 1278 of the Civil Code, would not apply since the first requirement for a valid compensation,
that each one of the obligors be bound principally, and that he be at the same time a principal
creditor of the other, was not met.

What petitioner Citibank actually did was to exercise its rights to the proceeds of respondent's
money market placements with petitioner FNCB Finance by virtue of the Deeds of Assignment
executed by respondent in its favor.

The Court of Appeals did not consider these Deeds of Assignment because of petitioners' failure to
produce the original copies thereof in violation of the best evidence rule. This Court again finds itself
in disagreement in the application of the best evidence rule by the appellate court.

To recall, the best evidence rule, in so far as documentary evidence is concerned, requires the
presentation of the original copy of the document only when the context thereof is the subject of
inquiry in the case. Respondent does not question the contents of the Deeds of Assignment. While
she admitted the existence and execution of the Deeds of Assignment, dated 2 March 1978 and 9
March 1978, covering PNs No. 8169 and 8167 issued by petitioner FNCB Finance, she claimed, as
defense, that the loans for which the said Deeds were executed as security, were already paid. She
denied ever executing both Deeds of Assignment, dated 25 August 1978, covering PNs No. 20138
and 20139. These are again issues collateral to the contents of the documents involved, which could
be proven by evidence other than the original copies of the said documents.

Moreover, the Deeds of Assignment of the money market placements with petitioner FNCB Finance
were notarized documents, thus, admissible in evidence. Rule 132, Section 30 of the Rules of Court
provides that –

SEC. 30. Proof of notarial documents. – Every instrument duly acknowledged or proved and
certified as provided by law, may be presented in evidence without further proof, the
certificate of acknowledgement being prima facie evidence of the execution of the instrument
or document involved.

Significant herein is this Court's elucidation in De Jesus v. Court of Appeals,124 which reads –

On the evidentiary value of these documents, it should be recalled that the notarization of a
private document converts it into a public one and renders it admissible in court without
further proof of its authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This is so
because a public document duly executed and entered in the proper registry is presumed to
be valid and genuine until the contrary is shown by clear and convincing proof (Asido vs.
Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil 241 [1902]; Favor vs. Court of
Appeals, 194 SCRA 308 [1991]). As such, the party challenging the recital of the document
must prove his claim with clear and convincing evidence (Diaz vs. Court of Appeals, 145
SCRA 346 [1986]).

The rule on the evidentiary weight that must be accorded a notarized document is clear and
unambiguous. The certificate of acknowledgement in the notarized Deeds of Assignment
constituted prima facie evidence of the execution thereof. Thus, the burden of refuting this
presumption fell on respondent. She could have presented evidence of any defect or irregularity in
the execution of the said documents125 or raised questions as to the verity of the notary public's
acknowledgment and certificate in the Deeds.126 But again, respondent admitted executing the
Deeds of Assignment, dated 2 March 1978 and 9 March 1978, although claiming that the loans for
which they were executed as security were already paid. And, she assailed the Deeds of
Assignment, dated 25 August 1978, with nothing more than her bare denial of execution thereof,
hardly the clear and convincing evidence required to trounce the presumption of due execution of a
notarized document.

Petitioners not only presented the notarized Deeds of Assignment, but even secured certified literal
copies thereof from the National Archives.127 Mr. Renato Medua, an archivist, working at the Records
Management and Archives Office of the National Library, testified that the copies of the Deeds
presented before the RTC were certified literal copies of those contained in the Notarial Registries of
the notary publics concerned, which were already in the possession of the National Archives. He
also explained that he could not bring to the RTC the Notarial Registries containing the original
copies of the Deeds of Assignment, because the Department of Justice (DOJ) Circular No. 97, dated
8 November 1968, prohibits the bringing of original documents to the courts to prevent the loss of
irreplaceable and priceless documents.128

Accordingly, this Court gives the Deeds of Assignment grave importance in establishing the authority
given by the respondent to petitioner Citibank to use as security for her loans her money her market
placements with petitioner FNCB Finance, represented by PNs No. 8167 and 8169, later to be
rolled-over as PNs No. 20138 and 20139. These Deeds of Assignment constitute the law between
the parties, and the obligations arising therefrom shall have the force of law between the parties and
should be complied with in good faith. 129 Standard clauses in all of the Deeds provide that –
 The ASSIGNOR and the ASSIGNEE hereby further agree as follows:

xxxx

2. In the event the OBLIGATIONS are not paid at maturity or upon demand, as the
case may be, the ASSIGNEE is fully authorized and empowered to collect and
receive the PLACEMENT (or so much thereof as may be necessary) and apply the
same in payment of the OBLIGATIONS. Furthermore, the ASSIGNOR agrees that at
any time, and from time to time, upon request by the ASSIGNEE, the ASSIGNOR will
promptly execute and deliver any and all such further instruments and documents as
may be necessary to effectuate this Assignment.

xxxx

5. This Assignment shall be considered as sufficient authority to FNCB Finance to

pay and deliver the PLACEMENT or so much thereof as may be necessary to
liquidate the OBLIGATIONS, to the ASSIGNEE in accordance with terms and
provisions hereof.130

Petitioner Citibank was only acting upon the authority granted to it under the foregoing Deeds when
it finally used the proceeds of PNs No. 20138 and 20139, paid by petitioner FNCB Finance, to partly
pay for respondent's outstanding loans. Strictly speaking, it did not effect a legal compensation or
off-set under Article 1278 of the Civil Code, but rather, it partly extinguished respondent's obligations
through the application of the security given by the respondent for her loans. Although the pertinent
documents were entitled Deeds of Assignment, they were, in reality, more of a pledge by respondent
to petitioner Citibank of her credit due from petitioner FNCB Finance by virtue of her money market
placements with the latter. According to Article 2118 of the Civil Code –

ART. 2118. If a credit has been pledged becomes due before it is redeemed, the pledgee
may collect and receive the amount due. He shall apply the same to the payment of his
claim, and deliver the surplus, should there be any, to the pledgor.

PNs No. 20138 and 20139 matured on 3 September 1979, without them being redeemed by
respondent, so that petitioner Citibank collected from petitioner FNCB Finance the proceeds thereof,
which included the principal amounts and interests earned by the money market placements,
amounting to ₱1,022,916.66, and applied the same against respondent's outstanding loans, leaving
no surplus to be delivered to respondent.

Dollar accounts with Citibank-Geneva

Despite the legal compensation of respondent's savings account and the total application of the
proceeds of PNs No. 20138 and 20139 to respondent's outstanding loans, there still remained a
balance of ₱1,069,847.40. Petitioner Citibank then proceeded to applying respondent's dollar
accounts with Citibank-Geneva against her remaining loan balance, pursuant to a Declaration of
Pledge supposedly executed by respondent in its favor.

Certain principles of private international law should be considered herein because the property
pledged was in the possession of an entity in a foreign country, namely, Citibank-Geneva. In the
absence of any allegation and evidence presented by petitioners of the specific rules and laws
governing the constitution of a pledge in Geneva, Switzerland, they will be presumed to be the same
as Philippine local or domestic laws; this is known as processual presumption. 131
Upon closer scrutiny of the Declaration of Pledge, this Court finds the same exceedingly suspicious
and irregular.

First of all, it escapes this Court why petitioner Citibank took care to have the Deeds of Assignment
of the PNs notarized, yet left the Declaration of Pledge unnotarized. This Court would think that
petitioner Citibank would take greater cautionary measures with the preparation and execution of the
Declaration of Pledge because it involved respondent's "all present and future fiduciary placements"
with a Citibank branch in another country, specifically, in Geneva, Switzerland. While there is no
express legal requirement that the Declaration of Pledge had to be notarized to be effective, even
so, it could not enjoy the same prima facie presumption of due execution that is extended to
notarized documents, and petitioner Citibank must discharge the burden of proving due execution
and authenticity of the Declaration of Pledge.

Second, petitioner Citibank was unable to establish the date when the Declaration of Pledge was
actually executed. The photocopy of the Declaration of Pledge submitted by petitioner Citibank
before the RTC was undated.132 It presented only a photocopy of the pledge because it already
forwarded the original copy thereof to Citibank-Geneva when it requested for the remittance of
respondent's dollar accounts pursuant thereto. Respondent, on the other hand, was able to secure a
copy of the Declaration of Pledge, certified by an officer of Citibank-Geneva, which bore the date 24
September 1979.133 Respondent, however, presented her passport and plane tickets to prove that
she was out of the country on the said date and could not have signed the pledge. Petitioner
Citibank insisted that the pledge was signed before 24 September 1979, but could not provide an
explanation as to how and why the said date was written on the pledge. Although Mr. Tan testified
that the Declaration of Pledge was signed by respondent personally before him, he could not give
the exact date when the said signing took place. It is important to note that the copy of the
Declaration of Pledge submitted by the respondent to the RTC was certified by an officer of Citibank-
Geneva, which had possession of the original copy of the pledge. It is dated 24 September 1979,
and this Court shall abide by the presumption that the written document is truly dated. 134 Since it is
undeniable that respondent was out of the country on 24 September 1979, then she could not have
executed the pledge on the said date.

Third, the Declaration of Pledge was irregularly filled-out. The pledge was in a standard printed form.
It was constituted in favor of Citibank, N.A., otherwise referred to therein as the Bank. It should be
noted, however, that in the space which should have named the pledgor, the name of petitioner
Citibank was typewritten, to wit –

The pledge right herewith constituted shall secure all claims which the Bank now has or in
the future acquires against Citibank, N.A., Manila (full name and address of the Debtor),
regardless of the legal cause or the transaction (for example current account, securities
transactions, collections, credits, payments, documentary credits and collections) which
gives rise thereto, and including principal, all contractual and penalty interest, commissions,
charges, and costs.

The pledge, therefore, made no sense, the pledgor and pledgee being the same entity. Was a
mistake made by whoever filled-out the form? Yes, it could be a possibility. Nonetheless, considering
the value of such a document, the mistake as to a significant detail in the pledge could only be
committed with gross carelessness on the part of petitioner Citibank, and raised serious doubts as to
the authenticity and due execution of the same. The Declaration of Pledge had passed through the
hands of several bank officers in the country and abroad, yet, surprisingly and implausibly, no one
noticed such a glaring mistake.
Lastly, respondent denied that it was her signature on the Declaration of Pledge. She claimed that
the signature was a forgery. When a document is assailed on the basis of forgery, the best evidence
rule applies –

Basic is the rule of evidence that when the subject of inquiry is the contents of a document,
no evidence is admissible other than the original document itself except in the instances
mentioned in Section 3, Rule 130 of the Revised Rules of Court. Mere photocopies of
documents are inadmissible pursuant to the best evidence rule. This is especially true
when the issue is that of forgery.

As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing
evidence and the burden of proof lies on the party alleging forgery. The best evidence of a
forged signature in an instrument is the instrument itself reflecting the alleged forged
signature. The fact of forgery can only be established by a comparison between the alleged
forged signature and the authentic and genuine signature of the person whose signature is
theorized upon to have been forged. Without the original document containing the alleged
forged signature, one cannot make a definitive comparison which would establish forgery. A
comparison based on a mere xerox copy or reproduction of the document under controversy
cannot produce reliable results.135

Respondent made several attempts to have the original copy of the pledge produced before the RTC
so as to have it examined by experts. Yet, despite several Orders by the RTC, 136 petitioner Citibank
failed to comply with the production of the original Declaration of Pledge. It is admitted that Citibank-
Geneva had possession of the original copy of the pledge. While petitioner Citibank in Manila and its
branch in Geneva may be separate and distinct entities, they are still incontestably related, and
between petitioner Citibank and respondent, the former had more influence and resources to
convince Citibank-Geneva to return, albeit temporarily, the original Declaration of Pledge. Petitioner
Citibank did not present any evidence to convince this Court that it had exerted diligent efforts to
secure the original copy of the pledge, nor did it proffer the reason why Citibank-Geneva obstinately
refused to give it back, when such document would have been very vital to the case of petitioner
Citibank. There is thus no justification to allow the presentation of a mere photocopy of the
Declaration of Pledge in lieu of the original, and the photocopy of the pledge presented by petitioner
Citibank has nil probative value.137 In addition, even if this Court cannot make a categorical finding
that respondent's signature on the original copy of the pledge was forged, it is persuaded that
petitioner Citibank willfully suppressed the presentation of the original document, and takes into
consideration the presumption that the evidence willfully suppressed would be adverse to petitioner
Citibank if produced.138

Without the Declaration of Pledge, petitioner Citibank had no authority to demand the remittance of
respondent's dollar accounts with Citibank-Geneva and to apply them to her outstanding loans. It
cannot effect legal compensation under Article 1278 of the Civil Code since, petitioner Citibank itself
admitted that Citibank-Geneva is a distinct and separate entity. As for the dollar accounts,
respondent was the creditor and Citibank-Geneva is the debtor; and as for the outstanding loans,
petitioner Citibank was the creditor and respondent was the debtor. The parties in these transactions
were evidently not the principal creditor of each other.

Therefore, this Court declares that the remittance of respondent's dollar accounts from Citibank-
Geneva and the application thereof to her outstanding loans with petitioner Citibank was illegal, and
null and void. Resultantly, petitioner Citibank is obligated to return to respondent the amount of
US$149,632,99 from her Citibank-Geneva accounts, or its present equivalent value in Philippine
currency; and, at the same time, respondent continues to be obligated to petitioner Citibank for the
balance of her outstanding loans which, as of 5 September 1979, amounted to ₱1,069,847.40.
 V

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

In summary, petitioner Citibank is ordered by this Court to pay respondent the proceeds of her
money market placements, represented by PNs No. 23356 and 23357, amounting to ₱318,897.34
and ₱203,150.00, respectively, earning an interest of 14.5% per annum as stipulated in the
PNs,139 beginning 17 March 1977, the date of the placements.

Petitioner Citibank is also ordered to refund to respondent the amount of US$149,632.99, or its
equivalent in Philippine currency, which had been remitted from her Citibank-Geneva accounts.
These dollar accounts, consisting of two fiduciary placements and current accounts with Citibank-
Geneva shall continue earning their respective stipulated interests from 26 October 1979, the date of
their remittance by Citibank-Geneva to petitioner Citibank in Manila and applied against respondent's
outstanding loans.

As for respondent, she is ordered to pay petitioner Citibank the balance of her outstanding loans,
which amounted to ₱1,069,847.40 as of 5 September 1979. These loans continue to earn interest,
as stipulated in the corresponding PNs, from the time of their respective maturity dates, since the
supposed payment thereof using respondent's dollar accounts from Citibank-Geneva is deemed
illegal, null and void, and, thus, ineffective.

VI

Petitioner Citibank shall be liable for damages to respondent.

Petitioners protest the award by the Court of Appeals of moral damages, exemplary damages, and
attorney's fees in favor of respondent. They argued that the RTC did not award any damages, and
respondent, in her appeal before the Court of Appeals, did not raise in issue the absence of such.

While it is true that the general rule is that only errors which have been stated in the assignment of
errors and properly argued in the brief shall be considered, this Court has also recognized
exceptions to the general rule, wherein it authorized the review of matters, even those not assigned
as errors in the appeal, if the consideration thereof is necessary in arriving at a just decision of the
case, and there is a close inter-relation between the omitted assignment of error and those actually
assigned and discussed by the appellant.140 Thus, the Court of Appeals did not err in awarding the
damages when it already made findings that would justify and support the said award.

Although this Court appreciates the right of petitioner Citibank to effect legal compensation of
respondent's local deposits, as well as its right to the proceeds of PNs No. 20138 and 20139 by
virtue of the notarized Deeds of Assignment, to partly extinguish respondent's outstanding loans, it
finds that petitioner Citibank did commit wrong when it failed to pay and properly account for the
proceeds of respondent's money market placements, evidenced by PNs No. 23356 and 23357, and
when it sought the remittance of respondent's dollar accounts from Citibank-Geneva by virtue of a
highly-suspect Declaration of Pledge to be applied to the remaining balance of respondent's
outstanding loans. It bears to emphasize that banking is impressed with public interest and its
fiduciary character requires high standards of integrity and performance. 141 A bank is under the
obligation to treat the accounts of its depositors with meticulous care whether such accounts consist
only of a few hundred pesos or of millions of pesos.142 The bank must record every single transaction
accurately, down to the last centavo, and as promptly as possible. 143 Petitioner Citibank evidently
failed to exercise the required degree of care and transparency in its transactions with respondent,
thus, resulting in the wrongful deprivation of her property.

Respondent had been deprived of substantial amounts of her investments and deposits for more
than two decades. During this span of years, respondent had found herself in desperate need of the
amounts wrongfully withheld from her. In her testimony 144 before the RTC, respondent narrated –

Q By the way Mrs. Witness will you kindly tell us again, you said before that you are a
businesswoman, will you tell us again what are the businesses you are engaged into [sic]?

A I am engaged in real estate. I am the owner of the Modesta Village 1 and 2 in San Mateo,
Rizal. I am also the President and Chairman of the Board of Macador [sic] Co. and Business
Inc. which operates the Macador [sic] International Palace Hotel. I am also the President of
the Macador [sic] International Palace Hotel, and also the Treasures Home Industries, Inc.
which I am the Chairman and president of the Board and also operating affiliated company in
the name of Treasures Motor Sales engaged in car dealers [sic] like Delta Motors, we are
the dealers of the whole Northern Luzon and I am the president of the Disto Company, Ltd.,
based in Hongkong licensed in Honkong [sic] and now operating in Los Angeles, California.

Q What is the business of that Disto Company Ltd.?

A Disto Company, Ltd., is engaged in real estate and construction.

Q Aside from those businesses are you a member of any national or community organization
for social and civil activities?

A Yes sir.

Q What are those?

A I am the Vice-President of thes [sic] Subdivision Association of the Philippines in 1976, I

am also an officer of the … Chamber of Real Estate Business Association; I am also an
officer of the Chatholic [sic] Women's League and I am also a member of the CMLI, I forgot
the definition.

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

A I was also a candidate for Mayo last January 30, 1980.

Q Where?

A In Dagupan City, Pangasinan.

Q What else?

A I also ran as an Assemblywoman last May, 1984, Independent party in Regional I,

Pangasinan.

Q What happened to your businesses you mentioned as a result of your failure to recover
you [sic] investments and bank deposits from the defendants?
 A They are not all operating, in short, I was hampered to push through the businesses that I
have.

A [sic] Of all the businesses and enterprises that you mentioned what are those that are
paralyzed and what remain inactive?

A Of all the company [sic] that I have, only the Disto Company that is now operating in
California.

Q How about your candidacy as Mayor of Dagupan, [sic] City, and later as Assemblywoman
of Region I, what happened to this?

A I won by voting but when election comes on [sic] the counting I lost and I protested this, it
is still pending and because I don't have financial resources I was not able to push through
the case. I just have it pending in the Comelec.

Q Now, do these things also affect your social and civic activities?

A Yes sir, definitely.

Q How?

A I was embarrassed because being a businesswoman I would like to inform the Honorable
Court that I was awarded as the most outstanding businesswoman of the year in 1976 but
when this money was not given back to me I was not able to comply with the commitments
that I have promised to these associations that I am engaged into [sic], sir.

For the mental anguish, serious anxiety, besmirched reputation, moral shock and social humiliation
suffered by the respondent, the award of moral damages is but proper. However, this Court reduces
the amount thereof to ₱300,000.00, for the award of moral damages is meant to compensate for the
actual injury suffered by the respondent, not to enrich her. 145

Having failed to exercise more care and prudence than a private individual in its dealings with
respondent, petitioner Citibank should be liable for exemplary damages, in the amount of
₱250,000.00, in accordance with Article 2229 146 and 2234147 of the Civil Code.

With the award of exemplary damages, then respondent shall also be entitled to an award of
attorney's fees.148 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. 149 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.  Respondent was
1âwphi1

compelled to institute the present case in the exercise of her rights and in the protection of her
interests. In fact, although her Complaint before the RTC was not sustained in its entirety, it did raise
meritorious points and on which this Court rules in her favor. Any injury resulting from the exercise of
one's rights is damnum absque injuria.150

IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED. The assailed Decision
of the Court of Appeals in CA-G.R. No. 51930, dated 26 March 2002, as already modified by its
Resolution, dated 20 November 2002, is hereby AFFIRMED WITH MODIFICATION, as follows –
 1. PNs No. 23356 and 23357 are DECLARED subsisting and outstanding. Petitioner
Citibank is ORDERED to return to respondent the principal amounts of the said PNs,
amounting to Three Hundred Eighteen Thousand Eight Hundred Ninety-Seven Pesos and
Thirty-Four Centavos (₱318,897.34) and Two Hundred Three Thousand One Hundred Fifty
Pesos (₱203,150.00), respectively, plus the stipulated interest of Fourteen and a half percent
(14.5%) per annum, beginning 17 March 1977;

2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US Dollars
and Ninety-Nine Cents (US$149,632.99) from respondent's Citibank-Geneva accounts to
petitioner Citibank in Manila, and the application of the same against respondent's
outstanding loans with the latter, is DECLARED illegal, null and void. Petitioner Citibank
is ORDERED to refund to respondent the said amount, or its equivalent in Philippine
currency using the exchange rate at the time of payment, plus the stipulated interest for each
of the fiduciary placements and current accounts involved, beginning 26 October 1979;

3. Petitioner Citibank is ORDERED to pay respondent moral damages in the amount of

Three Hundred Thousand Pesos (₱300,000.00); exemplary damages in the amount of Two
Hundred Fifty Thousand Pesos (₱250,000.00); and attorney's fees in the amount of Two
Hundred Thousand Pesos (₱200,000.00); and

4. Respondent is ORDERED to pay petitioner Citibank the balance of her outstanding loans,
which, from the respective dates of their maturity to 5 September 1979, was computed to be
in the sum of One Million Sixty-Nine Thousand Eight Hundred Forty-Seven Pesos and Forty
Centavos (₱1,069,847.40), inclusive of interest. These outstanding loans shall continue to
earn interest, at the rates stipulated in the corresponding PNs, from 5 September 1979 until
payment thereof.

SO ORDERED.

Panganiban, C.J. (Chairperson), Ynares-Santiago, Austria-Martinez, and Callejo, Sr., JJ., concur.