CITIBANK, N.A. (Formerly First National G.R. No.

156132
City Bank) and INVESTORS FINANCE
CORPORATION, doing business under Present:
the name and style of FNCB Finance,
Petitioners, PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
- versus- AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
MODESTA R. SABENIANO,
Respondent. Promulgated:

October 16, 2006

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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 Decision[2] of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, and the
Resolution,[3] dated 20 November 2002, of the same court which, although modifying its earlier Decision,
still denied for the most part the Motion for Reconsideration of herein petitioners.

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 Investors 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 Complaint[5] 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 respondents 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.

1
 In their joint Answer[7] 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 respondents 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 respondents 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 attorneys 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 Decision [10] was finally rendered in Civil Case No. 11336 on 24 August
1995 by the fourth Judge[11]who handled the said case, Judge Manuel D. Victorio, the dispositive portion
of which reads

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

follows:

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

(2) Declaring the plaintiff [respondent Sabeniano] indebted to the defendant Bank
[petitioner Citibank] in the amount of P1,069,847.40 as of 5 September 1979 and
ordering the plaintiff [respondent Sabeniano] to pay said amount, however, there shall be
no interest and penalty charges from the time the illegal setoff was effected on 31
October 1979;

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

Costs against the defendant Bank.

All the parties appealed the foregoing Decision of the RTC to the Court of Appeals, docketed as CA-G.R.
CV No. 51930. Respondent questioned the findings of the RTC that she was still indebted to petitioner
Citibank, as well as the failure of the RTC to order petitioners to render an accounting of respondents
deposits and money market placements with them. On the other hand, petitioners argued that petitioner
Citibank validly compensated respondents outstanding loans with her dollar accounts with Citibank-
Geneva, in accordance with the Declaration of Pledge she executed in its favor. Petitioners also alleged
that the RTC erred in not declaring respondent liable for damages and interest.

On 26 March 2002, the Court of Appeals rendered its Decision [12] affirming with modification the RTC
Decision in Civil Case No. 11336, dated 24 August 1995, and ruling entirely in favor of respondent in this
wise

2
 Wherefore, premises considered, the assailed 24 August 1995 Decision of the
court a quo is hereby AFFIRMED with MODIFICATION, as follows:

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

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

alleged indebtedness of plaintiff-appellant, the set-off of P1,069,847.40 in the account of
Ms. Sabeniano is hereby declared as without legal and factual basis;

3. As defendants-appellants failed to account the following plaintiff-appellants

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

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

NNPN No. 22526) issued on 17 March 1977, P318,897.34 with 14.50%
interest p.a.;

(ii) Citibank NNPN Serial No. 23357 (Cancels and Supersedes

NNPN No. 22528) issued on 17 March 1977, P203,150.00 with 14.50
interest p.a.;

(iii) FNCB NNPN Serial No. 05757 (Cancels and Supersedes

NNPN No. 04952), issued on 02 June 1977, P500,000.00 with 17%
interest p.a.;

(iv) FNCB NNPN Serial No. 05758 (Cancels and Supersedes

NNPN No. 04962), issued on 02 June 1977, P500,000.00 with 17%
interest per annum;

(v) The Two Million (P2,000,000.00) money market placements

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

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

appellant the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00) by way of
moral damages, FIVE HUNDRED THOUSAND PESOS (P500,000.00) as exemplary
damages, and ONE HUNDRED THOUSAND PESOS (P100,000.00) as attorneys fees.

Apparently, the parties to the case, namely, the respondent, on one hand, and the petitioners, on the
other, made separate attempts to bring the aforementioned Decision of the Court of Appeals, dated 26
March 2002, before this Court for review.

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

3
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 respondents 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 Decisionsdispositive 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 resolved[18] 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

4
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 respondents 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, respondents 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
[19]
longer refute or assail any part thereof.

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 Citibanks and FNCB Finances 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
Reviewwas 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

5
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.

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 respondents 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.

6
 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 respondents 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 respondents 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 petitioners 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 courts 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 Courts 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.

7
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 plaintiffs 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 plaintiffs bare testimony that she had indeed applied for
loan with the Development Bank of the Philippines.

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

Finally, there were sufficient evidence wherein the plaintiff had admitted the
existence of her loans with the defendant Bank in the total amount of P1,920,000.00
exclusive of interests and penalty charges (Exhibits 28, 31, 32, and 33).

In fine, this Court hereby finds that the defendants had established the
genuineness and due execution of the various promissory notes heretofore identified as
well as the two deeds of assignments of the plaintiffs money market placements with
defendant FNCB Finance, on the strength of which the said money market placements
were applied to partially pay the plaintiffs past due obligation with the defendant
Bank. Thus, the total sum of P1,053,995.80 of the plaintiffs past due obligation was
partially offset by the said money market placement leaving a balance of P1,069,847.40
as of 5 September 1979 (Exhibit 34).

Disagreeing in the foregoing findings, the Court of Appeals stressed, in its Decision in 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-appellants 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.

8
 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-appellants contention that the trial judge did not have the opportunity to
observe the conduct and demeanor of the witnesses since he was not the same judge
who conducted the hearing is also untenable. While it is true that the trial judge who
conducted the hearing would be in a better position to ascertain the truth and falsity of the
testimonies of the witnesses, it does not necessarily follow that a judge who was not
present during the trial cannot render a valid and just decision since the latter can also
rely on the transcribed stenographic notes taken during the trial as the basis of his
decision.

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

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

Irrefragably, by reason alone that the judge who penned the RTC Decision was not the same judge who
heard the case and received the evidence therein would not render the findings in the said Decision
erroneous and unreliable. While the 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
judges 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,
respondents 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

9
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 per annum
(p.a.) P 318,897.34
Money market placement with Citibank, evidenced by PN No.
23357 (which cancels and supersedes PN No. 22528), earning
14.5% interest p.a. P 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. P 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. P 500,000.00
This Court is tasked to determine whether petitioners are indeed liable to return the foregoing amounts,
together with the appropriate interests and penalties, to respondent. It shall trace respondents
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 respondents money market placements with petitioner Citibank began on 6
December 1976, when she made a placement of P500,000.00 as principal amount, which was supposed
to earn an interest of 16% p.a. and for which PN No. 20773 was issued. Respondent did not yet claim the
proceeds of her placement and, instead, 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 respondents original placement and the subsequent roll-
overs thereof, as follows

Maturity Date
Date PN No. Cancels PN (mm/dd/yyyy) Amount Interest
(mm/dd/yyyy) No. (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%
02/09/1977 22526 21686 03/16/1977 313,952.59 15-3/4%
22528 21686 03/16/1977 200,000.00 15-3/4%
03/17/1977 23356 22526 04/20/1977 318,897.34 14-1/2%
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 P500,000.00 from the payment of PNs No. 23356 and 23357, plus P600,000.00
sourced from her other funds, to open two time deposit (TD) accounts with petitioner Citibank, namely, TD
Accounts No. 17783 and 17784.

10
 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. Escao, 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
Espaol-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]

11
 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 respondents 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 portion[37] of Mr. Pujedas 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:

12
 Q Now, basing on the notes that you prepared, Mr. Witness, and according to you basing
also on your personal recollection about all the transactions involved between
Modesta Sabeniano and defendant City Bank [sic] in this case. Now, would you
tell us what happened to the money market placements of Modesta Sabeniano
that you have earlier identified in Exhs. 47 and 48?

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

Q And you are saying time deposits with what bank?

A With First National Citibank.

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

A Yes, sir.

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

A In the amount of P500,000.00.

Q And outside this P500,000.00 which you said was booked out of the proceeds of Exhs.
47 and 48, were there other time deposits opened by Mrs. Modesta Sabeniano at
that time.

A Yes, she also opened another time deposit for P600,000.00.

Q So all in all Mr. Witness, sometime in April of 1978 Mrs. Modesta Sabeneano [sic] had
time deposit placements with Citibank in the amount of P500,000.00 which is the
proceeds of Exh. 47 and 48 and another P600,000.00, is it not?

A Yes, sir.

Q And would you know where did the other P600,000 placed by Mrs. Sabeneano [sic] in
a time deposit with Citibank, N.A. came [sic] from?

A She funded it directly.

Q What are you saying Mr. Witness is that the P600,000 is a [sic] fresh money coming
from Mrs. Modesta Sabeneano [sic]?

A That is right.

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.

13
 Atty. Mabasa : Exhibits E and F?

Before anything else, it should be noted that when Mr. Pujedas testimony before the RTC was
made on 12 March 1990 and Mr. Tans 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 respondents money
market placements with petitioner Citibank, from the original PN No. 20773, rolled-over several times to,
finally, PNs No. 23356 and 23357, there is an evident absence of any documentary evidence on the
payment of these last two PNs and the use of the proceeds thereof by respondent for opening TD
accounts. The paper trail seems to have ended with the copies of PNs No. 23356 and 23357. Although
both Mr. Pujeda and Mr. Tan said that they based their testimonies, not just on their memories but also on
the documents on file, the supposed documents on which they based those portions of their testimony on
the payment of PNs No. 23356 and 23357 and the opening of the TD accounts from the proceeds
thereof, were never presented before the courts nor made part of the records of the
case. Respondents money market placements were of substantial amounts consisting of the principal
amount of P500,000.00, plus the interest it should have earned during the years of placement and it is
difficult for this Court to believe that petitioner Citibank would not have had documented the payment
thereof.
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 P500,000.00.Respondents 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. Pujedas 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 Courts 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 P1,100,000.00, to petitioner FNCB Finance for money market placements. While
respondents 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

14
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 respondents money market
placements with the latter.

Money market placements with petitioner FNCB Finance

According to petitioners, respondents TD Accounts No. 17783 and 17784, in the total amount
of P1,100,000.00, 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 Managers Checks (MC) No. 199253 [41] and 199251[42] for the amounts of P500,000.00
and P600,00.00, 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 respondents 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 P500,000.00
and P600,000.00, respectively, payable to respondents 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

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

As presented by the petitioner FNCB Finance, respondent rolled-over only the principal amounts of her
money market placements as she chose to receive the interest income therefrom. Petitioner FNCB
Finance also pointed out that when PN No. 4962, with principal amount of P600,000.00, matured on 1
June 1977, respondent received a partial payment of the principal which, together with the interest,
amounted to P102,633.33;[44] thus, only the amount of P500,000.00 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 respondents
savings account with petitioner Citibank, with the following details

Date of Issuance Amount

15
 (mm/dd/yyyy) Check No. (P) Notation
09/01/1978 76962 12,833.34 Interest payment on PN#08167

09/01/1978 76961 12,833.34 Interest payment on PN#08169

09/05/1978 77035 500,000.00 Full payment of principal on PN#08167

which is hereby cancelled
09/05/ 1978 77034 500,000.00 Full payment of principal on PN#08169
which is hereby cancelled

Then again, Checks No. 77035 and 77034 were 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 P1,000,000.00,
were to be returned to respondents account with instructions to book the said amount in money market
placements for one more year. Pursuant to the said memo, Checks No. 77035 and 77034 were invested
by petitioner FNCB Finance, on behalf of respondent, in money market placements for which it issued
PNs No. 20138 and 20139. The PNs each covered P500,000.00, to earn 11% interest per annum, and to
mature on 3 September 1979.

On 3 September 1979, petitioner FNCB Finance issued Check No. 100168, pay to the order of Citibank
N.A. A/C Modesta Sabeniano, in the amount of P1,022,916.66, as full payment of the principal amounts
and interests of both PNs 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
[49]
proceeds thereof were turned over to petitioner Citibank. Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the allegations of petitioner Citibank itself, the
proceeds of PNs No. 20138 and 20139, amounting to P1,022,916.66, was used by it to liquidate
respondents 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 respondents 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 P3,812,712.32, had there been no
withdrawals or debits from the said accounts from the time the said deposits were made.

Although the RTC and the Court of Appeals did not make any definitive findings as to the status of
respondents savings and current accounts with petitioner Citibank, the Decisions of both the trial and
appellate courts effectively recognized only the P31,079.14 coming from respondents 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 P31,079.14 of
respondents savings account with petitioner Citibank, and that respondent failed to move for
reconsideration or to appeal this particular finding of fact by the trial and appellate courts, it is already
binding upon this Court. Respondent is already precluded from claiming any greater amount in her
savings and current accounts with petitioner Citibank. Thus, this Court shall limit itself to determining
whether or not respondent is entitled to the return of the amount of P31,079.14 should the off-set thereof
by petitioner Citibank against her supposed loans be found invalid.

Dollar accounts with Citibank-Geneva

16
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
[53]
determined by the latter. Citibank-Geneva accounted for respondents money market placements and
dollar accounts as follows

MODESTA SABENIANO &/OR

==================

US$ 30000.-- Principal Fid. Placement

+ US$ 339.06 Interest at 3,875% p.a. from 12.07. 25.10.79
- US$ 95.-- Commission (minimum)

US$ 30244.06 Total proceeds on 25.10.1979

US$ 114000.-- Principal Fid. Placement

+ US$ 1358.50 Interest at 4,125% p.a. from 12.07. 25.10.79
- US$ 41.17 Commission

US$ 115317.33 Total proceeds on 25.10.1979

US$ 145561.39 Total proceeds of both placements on 25.10.1979

+ US$ 11381.31 total of both current accounts

US$ 156942.70 Total funds available

- US$ 149632.99 Transfer to Citibank Manila on 26.10.1979

(counter value of Pesos 1102944.78)

US$ 7309.71 Balance in current accounts

- US$ 6998.84 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 respondents outstanding loans. The balance of respondents 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 respondents 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.

17
 III

Petitioner Citibank was able to establish by

preponderance of evidence the existence of
respondents loans.

Petitioners version of events

In sum, the following amounts were used by petitioner Citibank to liquidate respondents purported
outstanding loans

Description Amount
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB Finance) P 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 P 2,156,940.58

According to petitioner Citibank, respondent incurred her loans under the circumstances narrated below.
As early as 9 February 1978, respondent obtained her first loan from petitioner Citibank in the
[54]
principal amount of P200,000.00, for which she executed PN No. 31504. Petitioner Citibank extended to
her several other loans in the succeeding months. Some of these loans were paid, while others were
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 P1,920,000.00, which could be broken down as follows

Date of Date of Date of Release

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

Total P1,920,000.00

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 P1,920,000.00

Date of Issuance Date of Maturity

PN No. (mm/dd/yyyy) (mm/dd/yyyy) Principal Amount
34510 01/01/1979 03/02/1979 P 400,000.00
34509 01/02/1979 03/02/1979 100,000.00

18
 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 P 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 P500,000.00. 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 P500,000.00. When PNs No. 8167 and 8169,
representing respondents money market placements with petitioner FNCB Finance, matured and were
[59]
rolled-over to PNs No. 20138 and 20139, respondent executed new Deeds of Assignment, in favor of
petitioner Citibank, on 25 August 1978. According to the more recent Deeds, respondent assigned PNs
No. 20138 and 20139, representing her rolled-over money market placements with petitioner FNCB
Finance, to petitioner Citibank as security for the banking and credit facilities it extended to her, in the
aggregate principal amount of P500,000.00 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 letter[62] 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 P1,920,000.00 plus interests
and other charges due and demandable. If you still fail to settle this obligation by 4/27/79,
we shall have no other alternative but to refer your account to our lawyers for legal action
to protect the interest of the bank.

Respondent sent a reply letter [63] dated 26 April 1979, printed on paper bearing the letterhead of
respondents company, MC Adore International Palace, the body of which reads

19
 This is in reply to your letter dated April 5, 1979 inviting my attention to my loan which
has become due. Pursuant to our representation with you over the telephone through Mr.
F. A. Tan, you allow us to pay the interests due for the meantime.

Please accept our Comtrust Check in the amount of P62,683.33.

Please bear with us for a little while, at most ninety days. As you know, we have a
pending loan with the Development Bank of the Philippines in the amount of P11-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 letter[64] 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 P1,920,000.00 with maturity date of all promissory notes at June 30, 1979. As she has
personally discussed with you yesterday, this date will more or less assure you of early
settlement.

In this regard, please entrust to bearer, our Comtrust check for P62,683.33 to be
replaced by another check with amount resulting from the new computation. Also, to
facilitate the processing of the same, may we request for another set of promissory notes
for the signature of Mrs. Sabeniano and to cancel the previous ones she has signed and
forwarded to you.

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 respondents arrival on or before 31 July 1979.
[66]
The next letter, dated 21 June 1979, was signed by respondent herself and addressed to Mr.
Bobby Mendoza, a Manager of petitioner FNCB Finance. Respondent wrote therein

Re: PN No. 20138 for P500,000.00 & PN No. 20139

for P500,000.00 totalling P1 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.

20
 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 respondents 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, respondents outstanding and past due obligations to petitioner Citibank
totaled P2,123,843.20, representing the principal amounts plus interests. Relying on respondents Deeds
of Assignment, petitioner Citibank applied the proceeds of respondents money market placements with
petitioner FNCB Finance, as well as her deposit account with petitioner Citibank, to partly liquidate
respondents outstanding loan balance,[68] as follows

Respondents outstanding obligation (principal and interest) P 2,123,843.20

Less: Proceeds from respondents money market placements
with petitioner FNCB Finance (principal and interest) (1,022,916.66)
Deposits in respondents bank accounts with petitioner
Citibank (31,079.14)

Balance of respondents obligation P 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 P1,069,847.40, as of 5 September 1979, and should respondent fail to pay the amount by
15 October 1979, then petitioner Citibank shall proceed to off-set the unpaid amount with respondents
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 P1,920,000.00 loan account supposedly of MC Adore
Finance & Investment, Inc., and requested for a statement of account covering the principal and interest
of the loan as of 31 October 1979. She stated therein that the loan obligation shall be paid within 60 days
from receipt of the statement of account.

Almost three weeks later, or on 25 October 1979, a certain Atty. Moises Tolentino dropped by the office of
petitioner Citibank, with a letter, dated 9 October 1979, and printed on paper with the letterhead of MC
Adore International Palace, which authorized the bearer thereof to represent the respondent in settling
the overdue account, this time, purportedly, of 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 respondents obligation to petitioner Citibank was
now fully paid and liquidated.

Unfortunately, on 7 October 1987, a fire gutted the 7 th floor of petitioner Citibanks building at Paseo de
Roxas St., Makati, Metro Manila. Petitioners submitted a Certification [70] to this effect, dated 17 January

21
1991, issued by the Chief of the Arson Investigation Section, Fire District III, Makati Fire Station,
Metropolitan Police Force.The 7th floor of petitioner Citibanks 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
[71]
related to the case, were among those burned in the said fire.

Respondents version of events

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

Respondent denied outright executing the first set of PNs, except for one (PN No. 34534 in
particular). Although she admitted that she obtained several loans from petitioner Citibank, these only
amounted to P1,150,000.00, and she had already paid them. She secured from petitioner Citibank two
loans of P500,000.00 each. She executed in favor of petitioner Citibank the corresponding PNs for the
loans and the Deeds of Assignment of her money 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 P500,744.00 and P500,000.00, respectively, for liquidation of loan.

She borrowed another P150,000.00 from petitioner Citibank for personal investment, and for
which she executed PN No. 34534, on 9 January 1979. Thus, she admitted to receiving the proceeds of
this loan via MC No. 228270. She invested the loan amount in another money market placement with
petitioner FNCB Finance. In turn, she used the very same money market placement with petitioner FNCB
Finance as security for her P150,000.00 loan from petitioner Citibank. When she failed to pay the loan
when it became due, petitioner Citibank allegedly forfeited her money market placement 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 P150,000.00, covered
by PN No. 34534, and receiving MC No. 228270 representing the proceeds thereof, but claimed that she
already paid the same. She denied ever receiving MCs No. 220701 (for the loan of P400,000.00, covered
by PN No. 33935) and No. 226467 (for the loan of P250,000.00, covered by PN No. 34079), and pointed
out that the checks did not bear her indorsements. She did not deny receiving all other checks but she
interposed that she received these checks, not as proceeds of loans, but as payment of the principal
amounts and/or interests from her money market placements with petitioner Citibank. She also raised
doubts as to the notation on each of the checks that reads RE: Proceeds of PN#[corresponding PN No.],
saying that such notation did not appear on the MCs when she originally received them and that the
notation appears to have been written by a typewriter different from that used in writing all 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 respondents 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 respondents 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

22
representative. itwill (sic) be returned to me if the P11=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 Courts assessment that respondent did indeed have outstanding loans with petitioner Citibank at the
time it effected the off-set or compensation on 25 July 1979 (using respondents savings deposit with
petitioner Citibank), 5 September 1979 (using the proceeds of respondents money market placements
with petitioner FNCB Finance) and 26 October 1979 (using respondents dollar accounts remitted from
Citibank-Geneva).The totality of petitioners evidence as to the existence of the said loans preponderates
over respondents. Preponderant evidence means that, as a whole, the evidence adduced by one side
outweighs that of the adverse party.[78]

Respondents outstanding obligation for P1,920,000.00 had been sufficiently documented by petitioner
Citibank.

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 banks 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 Payees 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 payees 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 payees
[80]
or indorsers account. 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 Payees 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 payees 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 respondents accounts with several different banks; to the

23
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 respondents 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 P150,000.00, respondent only received P146,312.50,
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 payees 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. Respondents 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 respondents 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 payees 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 respondents 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 respondents, 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]

24
Furthermore, respondents 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 respondents denial of receipt of MC No. 226467 and her deposit of the same in
her account, is her presentation of Exhibit HHH, a provisional receipt which was supposed to prove that
respondent turned over P500,000.00 to Mr. Tan of petitioner Citibank, that the said amount was split into
three money market placements, and that MC No. 226467 represented the return on her investment from
[94]
one of these placements. Because of her Exhibit HHH, respondent effectively admitted receipt of MC
No. 226467, although for reasons other than as proceeds of a loan.

Neither can this Court give credence to respondents 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, respondents allegations were uncorroborated by any other evidence. Her and
her counsels 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.

Respondents 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
[95]
placements with petitioners. Part of respondents exhibits were personal checks drawn by respondent
on her account with Feati Bank & Trust Co., which she allegedly invested in separate money market
placements with both petitioners, the returns from which were paid to her via MCs No. 226285 and
228400. Yet, to this Court, the personal checks only managed to establish respondents 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 P500,000.00 into three different
money market placements with petitioner Citibank. This Court, however, noticed several factors which
render the note highly suspect. One, it was written on the reversed side of Provisional Receipt No. 12724
of petitioner Citibank which bore the initials of Mr. Tan acknowledging receipt of respondents BPI Check
No. 120989 for P500,000.00; but the initials on the handwritten note appeared to be that of Mr. Bobby

25
Mendoza of petitioner FNCB Finance.[97]Second, according to Provisional Receipt No. 12724, BPI Check
No. 120989 for P500,000.00 was supposed to be invested in three money market placements with
petitioner Citibank for the period of 60 days. Since all these money market placements were made
through one check deposited on the same day, 10 November 1978, it made no sense that the
handwritten note at the back of Provisional Receipt No. 12724 provided for different dates of maturity for
each of the money market placements (i.e., 16 November 1978, 17 January 1979, and 21 November
1978), and such dates did not correspond to the 60 day placement period stated on the face of the
provisional receipt. And third, the principal amounts of the money market placements as stated in the
handwritten note P145,000.00, P145,000.00 and P242,000.00 totaled P532,000.00, and was obviously in
excess of the P500,000.00 acknowledged on the face of Provisional Receipt No. 12724.

Exhibits III and 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. Mendozas.

Also, going by the information on the front page of the note, this Court observes that payment of
respondents 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 respondents 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 respondents assertion that she had already paid whatever loans she may have had
with petitioner Citibank, she presented as evidence Provisional Receipts No. 19471, dated 11 August
1978, and No. 12723, dated 10 November 1978, both of petitioner Citibank and signed by Mr. Tan, for the
amounts of P500,744.00 and P500,000.00, respectively. While these provisional receipts did state that
Mr. Tan, on behalf of petitioner Citibank, received respondents 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 respondents 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

26
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 P150,000.00.[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, respondents
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.

Respondents 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, respondents
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 respondents 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.

27
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,
[105]
were signed by respondent in his presence.

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

Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan processor, was responsible
for booking respondents 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 clients 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 clients 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 respondents 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
respondents 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 respondents
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

28
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 respondents 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 respondents outstanding obligations. [110] She thus calculated respondents outstanding
loans, which was sent as an attachment to Mr. Tans 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 respondents loans, in the principal sum ofP1,920,000.00, as of 5 September
1979. While it is well-settled that the term preponderance of evidence should not be wholly dependent on
the number of witnesses, there are certain instances when the number of witnesses become the
determining factor

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

29
 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 courts 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

xxxx

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 respondents loans. The terms or contents of these documents were never the point of
contention in the Petition at bar. It was respondents 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 respondents 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.

30
 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 respondents receipt of the proceeds of her loans from petitioner Citibank, when he
helped Attys. Cleofe and Fernandez, the banks legal counsels, to reconstruct the records of respondents
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
respondents 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 Decision[119] 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.

31
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 P7,000,000.00, secured to the extent of P5,000,000.00 by a Third Party Real Estate Mortgage of the
properties of Caedos 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 mans 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

32
The liquidation of respondents outstanding loans
were valid in so far as petitioner Citibank used
respondents 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 respondents 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
respondents outstanding loans with her deposit account. As already found by this Court, petitioner
Citibank was the creditor of respondent for her outstanding loans. At the same time, respondent was the
creditor of petitioner Citibank, as far as her deposit account was concerned, since bank deposits, whether
fixed, savings, or current, should be considered as simple loan or mutuum by the depositor to the banking
institution.[122]Both debts consist in sums of money. By June 1979, all of respondents PNs in the second
set had matured and became demandable, while respondents savings account was demandable
anytime. Neither was there any retention or controversy over the PNs and the deposit account
commenced by a third person and communicated in due time to the debtor concerned. Compensation
takes place by operation of law,[123] therefore, even in the absence of an expressed authority from
respondent, petitioner Citibank had the right to effect, on 25 June 1979, the partial compensation or off-
set of respondents outstanding loans with her deposit account, amounting to P31,079.14.

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
respondents outstanding loans, which came from persons other than petitioner Citibank.

Respondents 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 P1,022,916.66, 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

33
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 respondents
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 Courts 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 documents[125] or raised questions as to the verity of the notary publics 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

34
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
[128]
documents.

Accordingly, this Court gives the Deeds of Assignment grave importance in establishing the authority
given by the respondent to petitioner Citibank to use as security for her loans her money her market
placements with petitioner FNCB Finance, represented by PNs No. 8167 and 8169, later to be 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
[130]
hereof.

Petitioner Citibank was only acting upon the authority granted to it under the foregoing Deeds when it
finally used the proceeds of PNs No. 20138 and 20139, paid by petitioner FNCB Finance, to partly pay for
respondents 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 respondents 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 P1,022,916.66, and applied the same against respondents outstanding loans, leaving no surplus to be
delivered to respondent.

Dollar accounts with Citibank-Geneva

35
Despite the legal compensation of respondents savings account and the total application of the proceeds
of PNs No. 20138 and 20139 to respondents outstanding loans, there still remained a balance
of P1,069,847.40. Petitioner Citibank then proceeded to applying respondents 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 respondents 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 respondents 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.

36
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 respondents 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 respondents 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 respondents 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

37
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 P1,069,847.40.
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 P318,897.34
and P203,150.00, 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 respondents outstanding loans.

As for respondent, she is ordered to pay petitioner Citibank the balance of her outstanding loans,
which amounted to P1,069,847.40 as of 5 September 1979. These loans continue to earn interest, as
stipulated in the corresponding PNs, from the time of their respective maturity dates, since the supposed
payment thereof using respondents 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
attorneys 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
respondents 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 respondents outstanding loans, it finds that
petitioner Citibank did commit wrong when it failed to pay and properly account for the proceeds of
respondents money market placements, evidenced by PNs No. 23356 and 23357, and when it sought the
remittance of respondents dollar accounts from Citibank-Geneva by virtue of a highly-suspect Declaration
of Pledge to be applied to the remaining balance of respondents 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.

38
 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] Womens 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.

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 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 dont have financial resources I was not able to
push through the case.I just have it pending in the Comelec.

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

A Yes sir, definitely.

Q How?

A I was embarrassed because being a businesswoman I would like to inform the

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

For the mental anguish, serious anxiety, besmirched reputation, moral shock and social humiliation
suffered by the respondent, the award of moral damages is but proper.However, this Court reduces the
amount thereof to P300,000.00, for the award of moral damages is meant to compensate for 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 P250,000.00, in
accordance with Article 2229[146] and 2234[147] of the Civil Code.

With the award of exemplary damages, then respondent shall also be entitled to an award of attorneys
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 P200,000.00 attorneys fees shall be satisfactory.

In contrast, this Court finds no sufficient basis to award damages to petitioners. Respondent was
compelled to institute the present case in the exercise of her rights and in the protection of her
interests. In fact, although her Complaint before the RTC was not sustained in its entirety, it did raise
meritorious points and on which this Court rules in her favor. Any injury resulting from the exercise of
ones 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 (P318,897.34) and
Two Hundred Three Thousand One Hundred Fifty Pesos (P203,150.00), respectively, plus the stipulated
interest of Fourteen and a half percent (14.5%) per annum, beginning 17 March 1977;

40
 2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US Dollars and
Ninety-Nine Cents (US$149,632.99) from respondents Citibank-Geneva accounts to petitioner Citibank in
Manila, and the application of the same against respondents outstanding loans with the latter,
is DECLARED illegal, null and void. Petitioner Citibank is ORDERED to refund to respondent the said
amount, or its equivalent in Philippine currency using the exchange rate at the time of payment, plus the
stipulated interest for each of the fiduciary placements and current accounts involved, beginning 26
October 1979;

3. Petitioner Citibank is ORDERED to pay respondent moral damages in the amount of Three
Hundred Thousand Pesos (P300,000.00); exemplary damages in the amount of Two Hundred Fifty
Thousand Pesos (P250,000.00); and attorneys fees in the amount of Two Hundred Thousand Pesos
(P200,000.00); and

4. Respondent is ORDERED to pay petitioner Citibank the balance of her outstanding loans,
which, from the respective dates of their maturity to 5 September 1979, was computed to be in the sum of
One Million Sixty-Nine Thousand Eight Hundred Forty-Seven Pesos and Forty Centavos (P1,069,847.40),
inclusive of interest. These outstanding loans shall continue to earn interest, at the rates stipulated in the
corresponding PNs, from 5 September 1979 until payment thereof.
SO ORDERED.

41