CITIBANK, N.A.

(Formerly First National City Bank) and INVESTORS' FINANCE

CORPORATION, doing business under the name and style of FNCB Finance, petitioners,
vs.
MODESTA R. SABENIANO, respondent.

DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari,1 under Rule 45 of the Revised Rules of
Court, of the Decision2 of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002,
and the Resolution,3 dated 20 November 2002, of the same court which, although modifying its
earlier Decision, still denied for the most part the Motion for Reconsideration of herein petitioners.
Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a banking corporation
duly authorized and existing under the laws of the United States of America and licensed to do
commercial banking activities and perform trust functions in the Philippines.
Petitioner Investor's Finance Corporation, which did business under the name and style of FNCB
Finance, was an affiliate company of petitioner Citibank, specifically handling money market
placements for its clients. It is now, by virtue of a merger, doing business as part of its successorin-interest, BPI Card Finance Corporation. However, so as to consistently establish its identity in
the Petition at bar, the said petitioner shall still be referred to herein as FNCB Finance. 4
Respondent Modesta R. Sabeniano was a client of both petitioners Citibank and FNCB Finance.
Regrettably, the business relations among the parties subsequently went awry.
On 8 August 1985, respondent filed a Complaint5 against petitioners, docketed as Civil Case No.
11336, before the Regional Trial Court (RTC) of Makati City. Respondent claimed to have
substantial deposits and money market placements with the petitioners, as well as money market
placements with the Ayala Investment and Development Corporation (AIDC), the proceeds of
which were supposedly deposited automatically and directly to respondent's accounts with
petitioner Citibank. Respondent alleged that petitioners refused to return her deposits and the
proceeds of her money market placements despite her repeated demands, thus, compelling
respondent to file Civil Case No. 11336 against petitioners for "Accounting, Sum of Money and
Damages." Respondent eventually filed an Amended Complaint6 on 9 October 1985 to include
additional claims to deposits and money market placements inadvertently left out from her
original Complaint.
In their joint Answer7 and Answer to Amended Complaint,8 filed on 12 September 1985 and 6
November 1985, respectively, petitioners admitted that respondent had deposits and money
market placements with them, including dollar accounts in the Citibank branch in Geneva,
Switzerland (Citibank-Geneva). Petitioners further alleged that the respondent later obtained
several loans from petitioner Citibank, for which she executed Promissory Notes (PNs), and
secured by (a) a Declaration of Pledge of her dollar accounts in Citibank-Geneva, and (b) Deeds
of Assignment of her money market placements with petitioner FNCB Finance. When respondent
failed to pay her loans despite repeated demands by petitioner Citibank, the latter exercised its
right to off-set or compensate respondent's outstanding loans with her deposits and money
market placements, pursuant to the Declaration of Pledge and the Deeds of Assignment
executed by respondent in its favor. Petitioner Citibank supposedly informed respondent
Sabeniano of the foregoing compensation through letters, dated 28 September 1979 and 31
October 1979. Petitioners were therefore surprised when six years later, in 1985, respondent and

her counsel made repeated requests for the withdrawal of respondent's deposits and money
market placements with petitioner Citibank, including her dollar accounts with Citibank-Geneva
and her money market placements with petitioner FNCB Finance. Thus, petitioners prayed for
the dismissal of the Complaint and for the award of actual, moral, and exemplary damages, and
attorney's fees.
When the parties failed to reach a compromise during the pre-trial hearing, 9 trial proper ensued
and the parties proceeded with the presentation of their respective evidence. Ten years after the
filing of the Complaint on 8 August 1985, a Decision10 was finally rendered in Civil Case No.
11336 on 24 August 1995 by the fourth Judge11who handled the said case, Judge Manuel D.
Victorio, the dispositive portion of which reads
WHEREFORE, in view of all the foregoing, decision is hereby rendered as follows:
(1) Declaring as illegal, null and void the setoff effected by the defendant Bank
[petitioner Citibank] of plaintiff's [respondent Sabeniano] dollar deposit with
Citibank, Switzerland, in the amount of US$149,632.99, and ordering the said
defendant [petitioner Citibank] to refund the said amount to the plaintiff with legal
interest at the rate of twelve percent (12%) per annum, compounded yearly, from
31 October 1979 until fully paid, or its peso equivalent at the time of payment;
(2) Declaring the plaintiff [respondent Sabeniano] indebted to the defendant Bank
[petitioner Citibank] in the amount of 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 respondent's deposits and money market placements with them. On the other
hand, petitioners argued that petitioner Citibank validly compensated respondent's outstanding
loans with her dollar accounts with Citibank-Geneva, in accordance with the Declaration of
Pledge she executed in its favor. Petitioners also alleged that the RTC erred in not declaring
respondent liable for damages and interest.
On 26 March 2002, the Court of Appeals rendered its Decision 12 affirming with modification the
RTC Decision in Civil Case No. 11336, dated 24 August 1995, and ruling entirely in favor of
respondent in this wise
Wherefore, premises considered, the assailed 24 August 1995 Decision of the court a
quo is hereby AFFIRMED with MODIFICATION, as follows:
1. Declaring as illegal, null and void the set-off effected by the defendantappellant Bank of the plaintiff-appellant's dollar deposit with Citibank, Switzerland,
in the amount of US$149,632.99, and ordering defendant-appellant Citibank to
refund the said amount to the plaintiff-appellant with legal interest at the rate of
twelve percent (12%) per annum, compounded yearly, from 31 October 1979 until
fully paid, or its peso equivalent at the time of payment;

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

alleged indebtedness of plaintiff-appellant, the set-off of 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-appellant's
money market placements, savings account and current accounts, the former is
hereby ordered to return the same, in accordance with the terms and conditions
agreed upon by the contending parties as evidenced by the certificates of
investments, to wit:
(i) Citibank NNPN Serial No. 023356 (Cancels and Supersedes
NNPN No. 22526) issued on 17 March 1977, 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 plaintiffappellant the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00) by
way of moral damages, FIVE HUNDRED THOUSAND PESOS (P500,000.00) as
exemplary damages, and ONE HUNDRED THOUSAND PESOS (P100,000.00)
as attorney's fees.
Apparently, the parties to the case, namely, the respondent, on one hand, and the petitioners, on
the other, made separate attempts to bring the aforementioned Decision of the Court of Appeals,
dated 26 March 2002, before this Court for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the Decision of the Court of Appeals in CAG.R. CV No. 51930, dated 26 March 2002, and instead, filed immediately with this Court on 3
May 2002 a Motion for Extension of Time to File a Petition for Review,13 which, after payment of
the docket and other lawful fees, was assigned the docket number G.R. No. 152985. In the said
Motion, respondent alleged that she received a copy of the assailed Court of Appeals Decision
on 18 April 2002 and, thus, had 15 days therefrom or until 3 May 2002 within which to file her
Petition for Review. Since she informed her counsel of her desire to pursue an appeal of the
Court of Appeals Decision only on 29 April 2002, her counsel neither had enough time to file a
motion for reconsideration of the said Decision with the Court of Appeals, nor a Petition
for Certiorari with this Court. Yet, the Motion failed to state the exact extension period respondent
was requesting for.

Since this Court did not act upon respondent's Motion for Extension of Time to file her Petition for
Review, then the period for appeal continued to run and still expired on 3 May
2002.14 Respondent failed to file any Petition for Review within the prescribed period for appeal
and, hence, this Court issued a Resolution,15 dated 13 November 2002, in which it pronounced
that
G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals, et al.). It appearing
that petitioner failed to file the intended petition for review on certiorari within the period
which expired on May 3, 2002, the Court Resolves to DECLARE THIS CASE
TERMINATED and DIRECT the Division Clerk of Court to INFORM the parties that the
judgment sought to be reviewed has become final and executory.
The said Resolution was duly recorded in the Book of Entries of Judgments on 3 January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a Motion for Reconsideration of its
Decision in CA-G.R. CV No. 51930, dated 26 March 2002. Acting upon the said Motion, the
Court of Appeals issued the Resolution,16dated 20 November 2002, modifying its Decision of 26
March 2002, as follows
WHEREFORE, premises considered, the instant Motion for
Reconsideration is PARTIALLY GRANTED as Sub-paragraph (V) paragraph 3 of the
assailed Decision's dispositive portion is hereby ordered DELETED.
The challenged 26 March 2002 Decision of the Court
is AFFIRMED with MODIFICATION.
Assailing the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 51930, dated
26 March 2002 and 20 November 2002, respectively, petitioners filed the present Petition,
docketed as G.R. No. 156132. The Petition was initially denied 17 by this Court for failure of the
petitioners to attach thereto a Certification against Forum Shopping. However, upon petitioners'
Motion and compliance with the requirements, this Court resolved 18to 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.
I
The Resolution of this Court, dated 13 November 2002, in G.R. No. 152985, declaring the
Decision of the Court of Appeals, dated 26 March 2002, final and executory, pertains to
respondent Sabeniano alone.
Before proceeding to a discussion of the merits of the instant Petition, this Court wishes to
address first the argument, persistently advanced by respondent in her pleadings on record, as
well as her numerous personal and unofficial letters to this Court which were no longer made part
of the record, that the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated 26
March 2002, had already become final and executory by virtue of the Resolution of this Court in
G.R. No. 152985, dated 13 November 2002.
G.R. No. 152985 was the docket number assigned by this Court to respondent's Motion for
Extension of Time to File a Petition for Review. Respondent, though, did not file her supposed
Petition. Thus, after the lapse of the prescribed period for the filing of the Petition, this Court

issued the Resolution, dated 13 November 2002, declaring the Decision of the Court of Appeals,
dated 26 March 2002, final and executory. It should be pointed out, however, that the Resolution,
dated 13 November 2002, referred only to G.R. No. 152985, respondent's appeal, which she
failed to perfect through the filing of a Petition for Review within the prescribed period. The
declaration of this Court in the same Resolution would bind respondent solely, and not petitioners
which filed their own separate appeal before this Court, docketed as G.R. No. 156132, the
Petition at bar. This would mean that respondent, on her part, should be bound by the findings of
fact and law of the Court of Appeals, including the monetary amounts consequently awarded to
her by the appellate court in its Decision, dated 26 March 2002; and she can no longer refute or
assail any part thereof. 19
This Court already explained the matter to respondent when it issued a Resolution 20 in G.R. No.
156132, dated 2 February 2004, which addressed her Urgent Motion for the Release of the
Decision with the Implementation of the Entry of Judgment in the following manner
[A]cting on Citibank's and FNCB Finance's Motion for Reconsideration, we resolved to
grant the motion, reinstate the petition and require Sabeniano to file a comment thereto in
our Resolution of June 23, 2003. Sabeniano filed a Comment dated July 17, 2003 to
which Citibank and FNCB Finance filed a Reply dated August 20, 2003.
From the foregoing, it is clear that Sabeniano had knowledge of, and in fact participated
in, the proceedings in G.R. No. 156132. She cannot feign ignorance of the proceedings
therein and claim that the Decision of the Court of Appeals has become final and
executory. More precisely, the Decision became final and executory only with regard to
Sabeniano in view of her failure to file a petition for review within the extended period
granted by the Court, and not to Citibank and FNCB Finance whose Petition for
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. 21The party who fails to file its
intended Petition within the reglementary or extended period should solely bear the
consequences of such failure.
Respondent Sabeniano did not commit forum shopping.
Another issue that does not directly involve the merits of the present Petition, but raised by
petitioners, is whether respondent should be held liable for forum shopping.
Petitioners contend that respondent committed forum shopping on the basis of the following
facts:
While petitioners' Motion for Reconsideration of the Decision in CA-G.R. CV No. 51930, dated 26
March 2002, was still pending before the Court of Appeals, respondent already filed with this
Court on 3 May 2002 her Motion for Extension of Time to File a Petition for Review of the same
Court of Appeals Decision, docketed as G.R. No. 152985. Thereafter, respondent continued to
participate in the proceedings before the Court of Appeals in CA-G.R. CV No. 51930 by filing her
Comment, dated 17 July 2002, to petitioners' Motion for Reconsideration; and a Rejoinder, dated
23 September 2002, to petitioners' Reply. Thus, petitioners argue that by seeking relief
concurrently from this Court and the Court of Appeals, respondent is undeniably guilty of forum
shopping, if not indirect contempt.
This Court, however, finds no sufficient basis to hold respondent liable for forum shopping.

Forum shopping has been defined as the filing of two or more suits involving the same parties for
the same cause of action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment.22 The test for determining forum shopping is whether in the two (or more)
cases pending, there is an identity of parties, rights or causes of action, and relief sought. 23 To
guard against this deplorable practice, Rule 7, Section 5 of the revised Rules of Court imposes
the following requirement
SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any
court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other
action or claim is pending therein; (b) if there is such other pending action or claim, a
complete statement of the present status thereof; and (c) if he should thereafter learn that
the same or similar action or claim has been filed or is pending, he shall report that fact
within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to the
corresponding administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as cause
for administrative sanctions.
Although it may seem at first glance that respondent was simultaneously seeking recourse from
the Court of Appeals and this Court, a careful and closer scrutiny of the details of the case at bar
would reveal otherwise.
It should be recalled that respondent did nothing more in G.R. No. 152985 than to file with this
Court a Motion for Extension of Time within which to file her Petition for Review. For unexplained
reasons, respondent failed to submit to this Court her intended Petition within the reglementary
period. Consequently, this Court was prompted to issue a Resolution, dated 13 November 2002,
declaring G.R. No. 152985 terminated, and the therein assailed Court of Appeals Decision final
and executory. G.R. No. 152985, therefore, did not progress and respondent's appeal was
unperfected.
The Petition for Review would constitute the initiatory pleading before this Court, upon the timely
filing of which, the case before this Court commences; much in the same way a case is initiated
by the filing of a Complaint before the trial court. The Petition for Review establishes the identity
of parties, rights or causes of action, and relief sought from this Court, and without such a
Petition, there is technically no case before this Court. The Motion filed by respondent seeking
extension of time within which to file her Petition for Review does not serve the same purpose as
the Petition for Review itself. Such a Motion merely presents the important dates and the
justification for the additional time requested for, but it does not go into the details of the
appealed case.
Without any particular idea as to the assignments of error or the relief respondent intended to
seek from this Court, in light of her failure to file her Petition for Review, there is actually no
second case involving the same parties, rights or causes of action, and relief sought, as that in
CA-G.R. CV No. 51930.

It should also be noted that the Certification against Forum Shopping is required to be attached
to the initiatory pleading, which, in G.R. No. 152985, should have been respondent's Petition for
Review. It is in that Certification wherein respondent certifies, under oath, that: (a) she has not
commenced any action or filed any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of her knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, that she is presenting a complete
statement of the present status thereof; and (c) if she should thereafter learn that the same or
similar action or claim has been filed or is pending, she shall report that fact within five days
therefrom to this Court. Without her Petition for Review, respondent had no obligation to execute
and submit the foregoing Certification against Forum Shopping. Thus, respondent did not violate
Rule 7, Section 5 of the Revised Rules of Court; neither did she mislead this Court as to the
pendency of another similar case.
Lastly, the fact alone that the Decision of the Court of Appeals, dated 26 March 2002, essentially
ruled in favor of respondent, does not necessarily preclude her from appealing the same.
Granted that such a move is ostensibly irrational, nonetheless, it does not amount to malice, bad
faith or abuse of the court processes in the absence of further proof. Again, it should be noted
that the respondent did not file her intended Petition for Review. The Petition for Review would
have presented before this Court the grounds for respondent's appeal and her arguments in
support thereof. Without said Petition, any reason attributed to the respondent for appealing the
26 March 2002 Decision would be grounded on mere speculations, to which this Court cannot
give credence.
II
As an exception to the general rule, this Court takes cognizance of questions of fact
raised in the Petition at bar.
It is already a well-settled rule that the jurisdiction of this Court in cases brought before it from the
Court of Appeals by virtue of Rule 45 of the Revised Rules of Court is limited to reviewing errors
of law. Findings of fact of the Court of Appeals are conclusive upon this Court. There are,
however, recognized exceptions to the foregoing rule, namely: (1) when the findings are
grounded entirely on speculation, surmises, or conjectures; (2) when the interference made is
manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when
the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting;
(6) when in making its findings, the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7) when the
findings are contrary to those of the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the petition
as well as in the petitioner's main and reply briefs are not disputed by the respondent; and (10)
when the findings of fact are premised on the supposed absence of evidence and contradicted
by the evidence on record.24
Several of the enumerated exceptions pertain to the Petition at bar.
It is indubitable that the Court of Appeals made factual findings that are contrary to those of the
RTC,25 thus, resulting in its substantial modification of the trial court's Decision, and a ruling
entirely in favor of the respondent. In addition, petitioners invoked in the instant Petition for
Review several exceptions that would justify this Court's review of the factual findings of the
Court of Appeals, i.e., the Court of Appeals made conflicting findings of fact; findings of fact which
went beyond the issues raised on appeal before it; as well as findings of fact premised on the
supposed absence of evidence and contradicted by the evidence on record.
On the basis of the foregoing, this Court shall proceed to reviewing and re-evaluating the
evidence on record in order to settle questions of fact raised in the Petition at bar.

The fact that the trial judge who rendered the RTC Decision in Civil Case No. 11336, dated
24 August 1995, was not the same judge who heard and tried the case, does not, by itself,
render the said Decision erroneous.
The Decision in Civil Case No. 11336 was rendered more than 10 years from the institution of the
said case. In the course of its trial, the case was presided over by four (4) different RTC
judges.26 It was Judge Victorio, the fourth judge assigned to the case, who wrote the RTC
Decision, dated 24 August 1995. In his Decision,27 Judge Victorio made the following findings
After carefully evaluating the mass of evidence adduced by the parties, this Court is not
inclined to believe the plaintiff's assertion that the promissory notes as well as the deeds
of assignments of her FNCB Finance money market placements were simulated. The
evidence is overwhelming that the plaintiff received the proceeds of the loans evidenced
by the various promissory notes she had signed. What is more, there was not an iota of
proof save the plaintiff's bare testimony that she had indeed applied for loan with the
Development Bank of the Philippines.
More importantly, the two deeds of assignment were notarized, hence they partake the
nature of a public document. It makes more than preponderant proof to overturn the
effect of a notarial attestation. Copies of the deeds of assignments were actually filed
with the Records Management and Archives Office.
Finally, there were sufficient evidence wherein the plaintiff had admitted the existence of
her loans with the defendant Bank in the total amount of P1,920,000.00 exclusive of
interests and penalty charges (Exhibits "28", "31", "32", and "33").
In fine, this Court hereby finds that the defendants had established the genuineness and
due execution of the various promissory notes heretofore identified as well as the two
deeds of assignments of the plaintiff's money market placements with defendant FNCB
Finance, on the strength of which the said money market placements were applied to
partially pay the plaintiff's past due obligation with the defendant Bank. Thus, the total
sum of P1,053,995.80 of the plaintiff's past due obligation was partially offset by the said
money market placement leaving a balance of P1,069,847.40 as of 5 September 1979
(Exhibit "34").
Disagreeing in the foregoing findings, the Court of Appeals stressed, in its Decision in CA-G.R.
CV No. 51930, dated 26 March 2002, "that the ponente of the herein assailed Decision is not the
Presiding Judge who heard and tried the case."28 This brings us to the question of whether the
fact alone that the RTC Decision was rendered by a judge other than the judge who actually
heard and tried the case is sufficient justification for the appellate court to disregard or set aside
the findings in the Decision of the court a quo?
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there exists a disputable presumption that the
RTC Decision was rendered by the judge in the regular performance of his official duties. While
the said presumption is only disputable, it is satisfactory unless contradicted or overcame by
other evidence.29 Encompassed in this presumption of regularity is the presumption that the RTC
judge, in resolving the case and drafting his Decision, reviewed, evaluated, and weighed all the
evidence on record. That the said RTC judge is not the same judge who heard the case and
received the evidence is of little consequence when the records and transcripts of stenographic
notes (TSNs) are complete and available for consideration by the former.
In People v. Gazmen,30 this Court already elucidated its position on such an issue

Accused-appellant makes an issue of the fact that the judge who penned the decision
was not the judge who heard and tried the case and concludes therefrom that the
findings of the former are erroneous. Accused-appellant's argument does not merit a
lengthy discussion. It is well-settled that the decision of a judge who did not try the case
is not by that reason alone erroneous.
It is true that the judge who ultimately decided the case had not heard the controversy at
all, the trial having been conducted by then Judge Emilio L. Polig, who was indefinitely
suspended by this Court. Nonetheless, the transcripts of stenographic notes taken during
the trial were complete and were presumably examined and studied by Judge Baguilat
before he rendered his decision. It is not unusual for a judge who did not try a case to
decide it on the basis of the record. The fact that he did not have the opportunity to
observe the demeanor of the witnesses during the trial but merely relied on the transcript
of their testimonies does not for that reason alone render the judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
Although it is true that the judge who heard the witnesses testify is in a better position to
observe the witnesses on the stand and determine by their demeanor whether they are
telling the truth or mouthing falsehood, it does not necessarily follow that a judge who
was not present during the trial cannot render a valid decision since he can rely on the
transcript of stenographic notes taken during the trial as basis of his decision.
Accused-appellant's contention that the trial judge did not have the opportunity to
observe the conduct and demeanor of the witnesses since he was not the same judge
who conducted the hearing is also untenable. While it is true that the trial judge who
conducted the hearing would be in a better position to ascertain the truth and falsity of
the testimonies of the witnesses, it does not necessarily follow that a judge who was not
present during the trial cannot render a valid and just decision since the latter can also
rely on the transcribed stenographic notes taken during the trial as the basis of his
decision.
(People vs. De Paz, 212 SCRA 56, 63 [1992])
At any rate, the test to determine the value of the testimony of the witness is whether or
not such is in conformity with knowledge and consistent with the experience of mankind
(People vs. Morre, 217 SCRA 219 [1993]). Further, the credibility of witnesses can also
be assessed on the basis of the substance of their testimony and the surrounding
circumstances (People v. Gonzales, 210 SCRA 44 [1992]). A critical evaluation of the
testimony of the prosecution witnesses reveals that their testimony accords with the
aforementioned tests, and carries with it the ring of truth end perforce, must be given full
weight and credit.
Irrefragably, by reason alone that the judge who penned the RTC Decision was not the same
judge who heard the case and received the evidence therein would not render the findings in the
said Decision erroneous and unreliable. While the conduct and demeanor of witnesses may
sway a trial court judge in deciding a case, it is not, and should not be, his only consideration.
Even more vital for the trial court judge's decision are the contents and substance of the
witnesses' testimonies, as borne out by the TSNs, as well as the object and documentary
evidence submitted and made part of the records of the case.
This Court proceeds to making its own findings of fact.
Since the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, has
become final and executory as to the respondent, due to her failure to interpose an appeal
therefrom within the reglementary period, she is already bound by the factual findings in the said

Decision. Likewise, respondent's failure to file, within the reglementary period, a Motion for
Reconsideration or an appeal of the Resolution of the Court of Appeals in the same case, dated
20 November 2002, which modified its earlier Decision by deleting paragraph 3(v) of its
dispositive portion, ordering petitioners to return to respondent the proceeds of her money
market placement with AIDC, shall already bar her from questioning such modification before this
Court. Thus, what is for review before this Court is the Decision of the Court of Appeals, dated 26
March 2002, as modified by the Resolution of the same court, dated 20 November 2002.
Respondent alleged that she had several deposits and money market placements with
petitioners. These deposits and money market placements, as determined by the Court of
Appeals in its Decision, dated 26 March 2002, and as modified by its Resolution, dated 20
November 2002, are as follows
Deposit/Placement

Amount

Dollar deposit with Citibank-Geneva

$ 149,632.99

Money market placement with Citibank, evidenced by Promissory Note (PN)

No. 23356 (which cancels and supersedes PN No. 22526), earning 14.5%
interest 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
respondent's transactions with petitioners, from her money market placements with petitioner
Citibank and petitioner FNCB Finance, to her savings and current accounts with petitioner
Citibank, and to her dollar accounts with Citibank-Geneva.
Money market placements with petitioner Citibank
The history of respondent's money market placements with petitioner Citibank began on 6
December 1976, when she made a placement of 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
respondent's original placement and the subsequent roll-overs thereof, as follows
Date
(mm/dd/yyyy)

PN No.

Cancels PN No.

Maturity Date
(mm/dd/yyyy)

12/06/1976

20773

None

01/13/1977

500,000.00

16%

01/14/1977

21686

20773

02/08/1977

508,444.44

15%

22526

21686

03/16/1977

313,952.59

15-3/4%

22528

21686

03/16/1977

200,000.00

15-3/4%

23356

22526

04/20/1977

318,897.34

14-1/2%

02/09/1977
03/17/1977

Amount
(P)

Interest
(p.a.)

23357

22528

04/20/1977

203,150.00

Petitioner Citibank alleged that it had already paid to respondent the principal amounts
and proceeds of PNs No. 23356 and 23357, upon their maturity. Petitioner Citibank
further averred that respondent used the P500,000.00 from the payment of PNs No.
23356 and 23357, plus P600,000.00 sourced from her other funds, to open two time
deposit (TD) accounts with petitioner Citibank, namely, TD Accounts No. 17783 and
17784.
Petitioner Citibank did not deny the existence nor questioned the authenticity of PNs No.
23356 and 23357 it issued in favor of respondent for her money market placements. In
fact, it admitted the genuineness and due execution of the 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

14-1/2%

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 nonpayment. The debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment.
When the existence of a debt is fully established by the evidence contained in the
record, the burden of proving that it has been extinguished by payment devolves
upon the debtor who offers such defense to the claim of the creditor. Where the
debtor introduces some evidence of payment, the burden of going forward with
the evidence as distinct from the general burden of proof shifts to the creditor,
who is then under the duty of producing some evidence of non-payment. 34
Reviewing the evidence on record, this Court finds that petitioner Citibank failed to
satisfactorily prove that PNs No. 23356 and 23357 had already been paid, and that the
amount so paid was actually used to open one of respondent's TD accounts with
petitioner Citibank.
Petitioner Citibank presented the testimonies of two witnesses to support its contention of
payment: (1) That of Mr. Herminio Pujeda,35 the officer-in-charge of loans and placements
at the time when the questioned transactions took place; and (2) that of Mr. Francisco
Tan,36 the former Assistant Vice-President of Citibank, who directly dealt with respondent
with regard to her deposits and loans.
The relevant portion37 of Mr. Pujeda's testimony as to PNs No. 23356 and 23357 (referred
to therein as Exhibits No. "47" and "48," respectively) is reproduced below
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to testify in this case and
this case is [sic] consist [sic] of several documents involving transactions
between the plaintiff and the defendant. Now, were you able to make your
own memorandum regarding all these transactions?
A Yes, based on my recollection of these facts, I did come up of [sic] the outline of
the chronological sequence of events.
Court:
Are you trying to say that you have personal knowledge or participation to
these transactions?
A Yes, your Honor, I was the officer-in charge of the unit that was processing
these transactions. Some of the documents bear my signature.
Court:
And this resume or summary that you have prepared is based on purely
your recollection or documents?
A Based on documents, your Honor.
Court:
Are these documents still available now?

A Yes, your honor.

Court:
Better present the documents.
Atty. Mabasa:
Yes, your Honor, that is why your Honor.
Atty. Mabasa:
Q Now, basing on the notes that you prepared, Mr. Witness, and according to you
basing also on your personal recollection about all the transactions involved
between Modesta Sabeniano and defendant City Bank [sic] in this case. Now,
would you tell us what happened to the money market placements of Modesta
Sabeniano that you have earlier identified in Exhs. "47" and "48"?
A The transactions which I said earlier were terminated and booked to time
deposits.
Q And you are saying time deposits with what bank?
A With First National Citibank.
Q Is it the same bank as Citibank, N.A.?
A Yes, sir.
Q And how much was the amount booked as time deposit with defendant
Citibank?
A In the amount of 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.
Atty. Mabasa : Exhibits "E" and "F"?
Before anything else, it should be noted that when Mr. Pujeda's testimony before the
RTC was made on 12 March 1990 and Mr. Tan's deposition in Hong Kong was conducted
on 3 September 1990, more than a decade had passed from the time the transactions
they were testifying on took place. This Court had previously recognized the frailty and
unreliability of human memory with regards to figures after the lapse of five
years.38 Taking into consideration the substantial length of time between the transactions
and the witnesses' testimonies, as well as the undeniable fact that bank officers deal with
multiple clients and process numerous transactions during their tenure, this Court is
reluctant to give much weight to the testimonies of Mr. Pujeda and Mr. Tan regarding the
payment of PNs No. 23356 and 23357 and the use by respondent of the proceeds
thereof for opening TD accounts. This Court finds it implausible that they should
remember, after all these years, this particular transaction with respondent involving her
PNs No. 23356 and 23357 and TD accounts. Both witnesses did not give any reason as
to why, from among all the clients they had dealt with and all the transactions they had
processed as officers of petitioner Citibank, they specially remembered respondent and
her PNs No. 23356 and 23357. Their testimonies likewise lacked details on the
circumstances surrounding the payment of the two PNs and the opening of the time
deposit accounts by respondent, such as the date of payment of the two PNs, mode of
payment, and the manner and context by which respondent relayed her instructions to
the officers of petitioner Citibank to use the proceeds of her two PNs in opening the TD
accounts.
Moreover, while there are documentary evidences to support and trace respondent's
money market placements with petitioner Citibank, from the original PN No. 20773,
rolled-over several times to, finally, PNs No. 23356 and 23357, there is an evident
absence of any documentary evidence on the payment of these last two PNs and the use
of the proceeds thereof by respondent for opening TD accounts. The paper trail seems to
have ended with the copies of PNs No. 23356 and 23357. Although both Mr. Pujeda and
Mr. Tan said that they based their testimonies, not just on their memories but also on the
documents on file, the supposed documents on which they based those portions of their
testimony on the payment of PNs No. 23356 and 23357 and the opening of the TD
accounts from the proceeds thereof, were never presented before the courts nor
made part of the records of the case. Respondent's money market placements were of
substantial amounts consisting of the principal amount of 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.
Respondent's counsel objected to the presentation of the document since it was a mere
"xerox" copy, and was blurred and hardly readable. Petitioners' counsel then asked for a
continuance of the hearing so that they can have time to produce a better document,
which was granted by the court. However, during the next hearing and continuance of Mr.
Pujeda's testimony on 12 March 1990, petitioners' counsel no longer referred to the said
document.
As respondent had established a prima facie case that petitioner Citibank is obligated to
her for the amounts stated in PNs No. 23356 and 23357, and as petitioner Citibank failed
to present sufficient proof of payment of the said PNs and the use by the respondent of
the proceeds thereof to open her TD accounts, this Court finds that PNs No. 23356 and
23357 are still outstanding and petitioner Citibank is still liable to respondent for
the amounts stated therein.
The significance of this Court's declaration that PNs No. 23356 and 23357 are still
outstanding becomes apparent in the light of petitioners' next contentions that
respondent used the proceeds of PNs No. 23356 and 23357, together with additional
money, to open TD Accounts No. 17783 and 17784 with petitioner Citibank; and,
subsequently, respondent pre-terminated these TD accounts and transferred the
proceeds thereof, amounting to P1,100,000.00, to petitioner FNCB Finance for money
market placements. While respondent's money market placements with petitioner FNCB
Finance may be traced back with definiteness to TD Accounts No. 17783 and 17784,
there is only flimsy and unsubstantiated connection between the said TD accounts and
the supposed proceeds paid from PNs No. 23356 and 23357. With PNs No. 23356 and
23357 still unpaid, then they represent an obligation of petitioner Citibank separate and
distinct from the obligation of petitioner FNCB Finance arising from respondent's money
market placements with the latter.
Money market placements with petitioner FNCB Finance
According to petitioners, respondent's TD Accounts No. 17783 and 17784, in the total
amount of P1,100,000.00, were supposed to mature on 15 March 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 preterminated and petitioner Citibank (then still named First National City Bank) issued
Manager's Checks (MC) No. 19925341 and 19925142 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 respondent's pre-terminated TD accounts with petitioner Citibank.
Upon receipt of the MCs, petitioner FNCB Finance deposited the same to its account with
Feati Bank and Trust Co., as evidenced by the rubber stamp mark of the latter found at
the back of both MCs. In exchange, petitioner FNCB Finance booked the amounts
received as money market placements, and accordingly issued PNs No. 4952 and 4962,
for the amounts of P500,000.00 and P600,000.00, respectively, payable to respondent's
savings account with petitioner Citibank, S/A No. 25-13703-4, upon their maturity on 1
June 1977. Once again, respondent rolled-over several times the principal amounts of
her money market placements with petitioner FNCB Finance, as follows

Date
(mm/dd/yyyy)
04/29/1977

06/02/1977

08/31/1977

PN No.

Cancels PN No.

Maturity Date
(mm/dd/yyyy)

Amount
(P)

Interest
(p.a.)

4952

None

06/01/1977

500,000.00

17%

4962

None

06/01/1977

600,000.00

17%

5757

4952

08/31/1977

500,000.00

17%

5758

4962

08/31/1977

500,000.00

17%

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
respondent's savings account with petitioner Citibank, with the following details
Date of
Issuance
(mm/dd/yyyy)

Check
No.

Amount
(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 respondent's account with instructions to book
the said amount in money market placements for one more year. Pursuant to the said memo,
Checks No. 77035 and 77034 were invested by petitioner FNCB Finance, on behalf of
respondent, in money market placements for which it issued PNs No. 20138 and 20139. The
PNs each covered P500,000.00, 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 proceeds thereof were turned over to petitioner
Citibank.49 Respondent did not clarify the circumstances attending the supposed turn over, but on
the basis of the allegations of petitioner Citibank itself, the proceeds of PNs No. 20138 and
20139, amounting to P1,022,916.66, was used by it to liquidate respondent's outstanding loans.
Therefore, the determination of whether or not respondent is still entitled to the return of the
proceeds of PNs No. 20138 and 20139 shall be dependent on the resolution of the issues raised
as to the existence of the loans and the authority of petitioner Citibank to use the proceeds of the
said PNs, together with respondent's other deposits and money market placements, to pay for
the same.
Savings and current accounts with petitioner Citibank
Respondent presented and submitted before the RTC deposit slips and bank statements to
prove deposits made to several of her accounts with petitioner Citibank, particularly, Accounts
No. 00484202, 59091, and 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 respondent's 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 respondent's
savings account which was used to off-set her alleged outstanding loans with petitioner
Citibank.50
Since both the RTC and the Court of Appeals had consistently recognized only the P31,079.14 of
respondent's savings account with petitioner Citibank, and that respondent failed to move for
reconsideration or to appeal this particular finding of fact by the trial and appellate courts, it is
already binding upon this Court. Respondent is already precluded from claiming any greater
amount in her savings and current accounts with petitioner Citibank. Thus, this Court shall limit
itself to determining whether or not respondent is entitled to the return of the amount
of P31,079.14 should the off-set thereof by petitioner Citibank against her supposed loans be
found invalid.
Dollar accounts with Citibank-Geneva
Respondent made an effort of preparing and presenting before the RTC her own computations of
her money market placements and dollar accounts with Citibank-Geneva, purportedly amounting
to a total of United States (US) $343,220.98, as of 23 June 1985. 51 In her Memorandum filed with
the RTC, she claimed a much bigger amount of deposits and money market placements with
Citibank-Geneva, totaling US$1,336,638.65.52 However, respondent herself also submitted as
part of her formal offer of evidence the computation of her money market placements and dollar
accounts with Citibank-Geneva as determined by the latter.53 Citibank-Geneva accounted for
respondent's money market placements and dollar accounts as follows
MODESTA SABENIANO &/OR
==================
US$

30'000.--

+ US$

339.06

- US$

95.--

Principal Fid. Placement

Interest at 3,875% p.a. from 12.07.
25.10.79
Commission (minimum)

US$

30'244.06

Total proceeds on 25.10.1979

US$

114'000.--

Principal Fid. Placement

+ US$

1'358.50

Interest at 4,125% p.a. from 12.07.

25.10.79

- US$

41.17

US$

115'317.33

Total proceeds on 25.10.1979

US$

145'561.39

Total proceeds of both placements on

25.10.1979

+ US$

11'381.31

US$

156'942.70

Total funds available

- US$

149'632.99

Transfer to Citibank Manila on 26.10.1979

(counter value of Pesos 1'102'944.78)

US$

7'309.71

Balance in current accounts

- US$

6'998.84

Transfer to Citibank Zuerich ac no.

121359 on March 13, 1980

US$

310.87

Commission

total of both current accounts

various charges including closing charges

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

US$156,942.70, from which, US$149,632.99 was transferred by Citibank-Geneva to petitioner
Citibank in Manila, and was used by the latter to off-set respondent's outstanding loans. The
balance of respondent's accounts with Citibank-Geneva, after the remittance to petitioner
Citibank in Manila, amounted to US$7,309.71, which was subsequently expended by a transfer
to another account with Citibank-Zuerich, in the amount of US$6,998.84, and by payment of
various bank charges, including closing charges, in the amount of US$310.87. Rightly so, both
the RTC and the Court of Appeals gave more credence to the computation of Citibank-Geneva
as to the status of respondent's accounts with the said bank, rather than the one prepared by
respondent herself, which was evidently self-serving. Once again, this Court shall limit itself to
determining whether or not respondent is entitled to the return of the amount of US$149,632.99
should the off-set thereof by petitioner Citibank against her alleged outstanding loans be found
invalid. Respondent cannot claim any greater amount since she did not perfect an appeal of the
Decision of the Court of Appeals, dated 26 March 2002, which found that she is entitled only to
the return of the said amount, as far as her accounts with Citibank-Geneva is concerned.
III
Petitioner Citibank was able to establish by preponderance of evidence the existence of
respondent's loans.
Petitioners' version of events
In sum, the following amounts were used by petitioner Citibank to liquidate respondent's
purported outstanding loans
Description
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB
Finance)

Amount

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)
Total

1,102,944.78
P 2,156,940.58

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

PN No.

Date of
Issuance
(mm/dd/yyyy)

Date of
Maturity
(mm/dd/yyyy)

32935

07/20/1978

09/18/1978

P 400,000.00

33751

10/13/1978

12/12/1978

100,000.00

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

Principal
Amount

Date of Release
(mm/dd/yyyy)

MC No.

07/20/1978

220701

Unrecovered

P 1,920,000.00

When respondent was unable to pay the first set of PNs upon their maturity, these were rolledover or renewed several times, necessitating the execution by respondent of new PNs in favor of
petitioner Citibank. As of 5 April 1979, respondent had the following outstanding PNs (second
set),56 the principal amount of which remained at P1,920,000.00
PN No.

Date of Issuance
(mm/dd/yyyy)

Date of Maturity
(mm/dd/yyyy)

Principal Amount

34510

34509

01/01/1979

03/02/1979

P 400,000.00

01/02/1979

03/02/1979

100,000.00

34534

01/09/1979

03/09/1979

150,000.00

34612

01/19/1979

03/16/1979

150,000.00

34741

01/26/1979

03/12/1979

100,000.00

35689

02/23/1979

05/29/1979

300,000.00

35694

03/19/1979

05/29/1979

150,000.00

35695

03/19/1979

05/29/1979

100,000.00

356946

03/20/1979

05/29/1979

250,000.00

35697

03/30/1979

05/29/1979

220,000.00

Total

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 respondent's
money market placements with petitioner FNCB Finance, matured and were rolled-over to PNs
No. 20138 and 20139, respondent executed new Deeds of Assignment, 59 in favor of petitioner
Citibank, on 25 August 1978. According to the more recent Deeds, respondent assigned PNs No.
20138 and 20139, representing her rolled-over money market placements with petitioner FNCB
Finance, to petitioner Citibank as security for the banking and credit facilities it extended to her, in
the aggregate principal amount of 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 letter62 was dated 5 April 1979, addressed to respondent and signed by Mr. Tan, as the
manager of petitioner Citibank, which stated, in part, that
Despite our repeated requests and follow-up, we regret you have not granted us with any
response or payment.
We, therefore, have no alternative but to call your loan of 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 letter63 dated 26 April 1979, printed on paper bearing the letterhead of
respondent's company, MC Adore International Palace, the body of which reads
This is in reply to your letter dated April 5, 1979 inviting my attention to my loan which
has become due. Pursuant to our representation with you over the telephone through Mr.
F. A. Tan, you allow us to pay the interests due for the meantime.
Please accept our Comtrust Check in the amount of 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 letter64 to petitioner Citibank, on behalf of respondent. The letter was again printed on
paper bearing the letterhead of MC Adore International Palace. The pertinent paragraphs of the
said letter are reproduced below
Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for a recomputation of the interest and penalty charges on her loan in the aggregate amount
of P1,920,000.00 with maturity date of all promissory notes at June 30, 1979. As she has
personally discussed with you yesterday, this date will more or less assure you of early
settlement.
In this regard, please entrust to bearer, our Comtrust check for P62,683.33 to be
replaced by another check with amount resulting from the new computation. Also, to
facilitate the processing of the same, may we request for another set of promissory notes

for the signature of Mrs. Sabeniano and to cancel the previous ones she has signed and
forwarded to you.
This was followed by a telegram,65 dated 5 June 1979, and received by petitioner Citibank the
following day. The telegram was sent by a Dewey G. Soriano, Legal Counsel. The telegram
acknowledged receipt of the telegram sent by petitioner Citibank regarding the "re-past due
obligation" of McAdore International Palace. However, it reported that respondent, the President
and Chairman of MC Adore International Palace, was presently abroad negotiating for a big loan.
Thus, he was requesting for an extension of the due date of the obligation until respondent's
arrival on or before 31 July 1979.
The next letter,66 dated 21 June 1979, was signed by respondent herself and addressed to Mr.
Bobby Mendoza, a Manager of petitioner FNCB Finance. Respondent wrote therein
Re: PN No. 20138 for 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.
On even date, respondent sent another letter 67 to Mr. Tan of petitioner Citibank, stating that
Re: S/A No. 25-225928
and C/A No. 484-946
This letter serves as an authority to debit whatever the outstanding balance from my
captioned accounts and credit the amount to my loan outstanding account with you.
Unlike respondent's earlier letters, both letters, dated 21 June 1979, are printed on plain paper,
without the letterhead of her company, MC Adore International Palace.
By 5 September 1979, respondent's outstanding and past due obligations to petitioner Citibank
totaled P2,123,843.20, representing the principal amounts plus interests. Relying on
respondent's Deeds of Assignment, petitioner Citibank applied the proceeds of respondent's
money market placements with petitioner FNCB Finance, as well as her deposit account with
petitioner Citibank, to partly liquidate respondent's outstanding loan balance, 68 as follows
Respondent's outstanding obligation (principal and interest)

P2,123,843.20

Less: Proceeds from respondent's money market placements

with petitioner FNCB Finance (principal and interest)

(1,022,916.66)

Deposits in respondent's bank accounts with petitioner

Citibank
Balance of respondent's obligation

(31,079.14)
P1,069,847.40

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 respondent's other collateral, particularly, a money market placement in
Citibank-Hongkong.
On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on paper bearing the
letterhead of MC Adore International Palace, as regards the 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
respondent's obligation to petitioner Citibank was now fully paid and liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7th floor of petitioner Citibank's building at
Paseo de Roxas St., Makati, Metro Manila. Petitioners submitted a Certification70 to this effect,
dated 17 January 1991, issued by the Chief of the Arson Investigation Section, Fire District III,
Makati Fire Station, Metropolitan Police Force. The 7thfloor of petitioner Citibank's building
housed its Control Division, which was in charge of keeping the necessary documents for cases
in which it was involved. After compiling the documentary evidence for the present case, Atty.
Renato J. Fernandez, internal legal counsel of petitioner Citibank, forwarded them to the Control
Division. The original copies of the MCs, which supposedly represent the proceeds of the first set
of PNs, as well as that of other documentary evidence related to the case, were among those
burned in the said fire.71
Respondent's version of events
Respondent disputed petitioners' narration of the circumstances surrounding her loans with
petitioner Citibank and the alleged authority she gave for the off-set or compensation of her
money market placements and deposit accounts with petitioners against her loan obligation.
Respondent denied outright executing the first set of PNs, except for one (PN No. 34534 in
particular). Although she admitted that she obtained several loans from petitioner Citibank, these
only amounted to 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 respondent's loan application. Mr. Tan made the respondent sign the
second set of PNs, so that he may have something to show the DBP investigator who might
inquire with petitioner Citibank as to respondent's loans with the latter. On her own copies of the
said PNs, respondent wrote by hand the notation, "This isa (sic) simulated non-negotiable note,
signed copy given to Mr. Tan., (sic) per agreement to be shown to DBP representative. itwill (sic)
be returned to me if the 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 Court's assessment that respondent did indeed have outstanding loans with
petitioner Citibank at the time it effected the off-set or compensation on 25 July 1979 (using
respondent's savings deposit with petitioner Citibank), 5 September 1979 (using the proceeds of
respondent's money market placements with petitioner FNCB Finance) and 26 October 1979
(using respondent's dollar accounts remitted from Citibank-Geneva). The totality of petitioners'
evidence as to the existence of the said loans preponderates over respondent's. Preponderant
evidence means that, as a whole, the evidence adduced by one side outweighs that of the
adverse party.78
Respondent's outstanding obligation for 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 bank's manager upon
the bank itself and regarded to be as good as the money it represents. 79 Moreover, the MCs were
crossed checks, with the words "Payee's Account Only."
In general, a crossed check cannot be presented to the drawee bank for payment in cash.
Instead, the check can only be deposited with the payee's bank which, in turn, must present it for
payment against the drawee bank in the course of normal banking hours. The crossed check
cannot be presented for payment, but it can only be deposited and the drawee bank may only
pay to another bank in the payee's or indorser's account. 80 The effect of crossing a check was
described by this Court in Philippine Commercial International Bank v. Court of Appeals81
[T]he crossing of a check with the phrase "Payee's Account Only" is a warning that the
check should be deposited in the account of the payee. Thus, it is the duty of the
collecting bank PCI Bank to ascertain that the check be deposited in payee's account
only. It is bound to scrutinize the check and to know its depositors before it can make the
clearing indorsement "all prior indorsements and/or lack of indorsement guaranteed."
The crossed MCs presented by petitioner Bank were indeed deposited in several different bank
accounts and cleared by the Clearing Office of the Central Bank of the Philippines, as evidenced
by the stamp marks and notations on the said checks. The crossed MCs are already in the
possession of petitioner Citibank, the drawee bank, which was ultimately responsible for the
payment of the amount stated in the checks. Given that a check is more than just an instrument
of credit used in commercial transactions for it also serves as a receipt or evidence for the
drawee bank of the cancellation of the said check due to payment,82 then, the possession by
petitioner Citibank of the said MCs, duly stamped "Paid" gives rise to the presumption that the
said MCs were already paid out to the intended payee, who was in this case, the respondent.
This Court finds applicable herein the presumptions that private transactions have been fair and
regular,83 and that the ordinary course of business has been followed.84 There is no question that
the loan transaction between petitioner Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCs from their issuance by petitioner Citibank to
respondent as payment of the proceeds of her loans; to its deposit in respondent's accounts with
several different banks; to the clearing of the MCs by an independent clearing house; and finally,
to the payment of the MCs by petitioner Citibank as the drawee bank of the said checks are all
private transactions which shall be presumed to have been fair and regular to all the parties
concerned. In addition, the banks involved in the foregoing transactions are also presumed to
have followed the ordinary course of business in the acceptance of the crossed MCs for deposit
in respondent's accounts, submitting them for clearing, and their eventual payment and
cancellation.
The afore-stated presumptions are disputable, meaning, they are satisfactory if uncontradicted,
but may be contradicted and overcome by other evidence. 85 Respondent, however, was unable to
present sufficient and credible evidence to dispute these presumptions.
It should be recalled that out of the nine MCs presented by petitioner Citibank, respondent
admitted to receiving one as proceeds of a loan (MC No. 228270), denied receiving two (MCs
No. 220701 and 226467), and admitted to receiving all the rest, but not as proceeds of her loans,
but as return on the principal amounts and interests from her money market placements.
Respondent admitted receiving MC No. 228270 representing the proceeds of her loan covered
by PN No. 34534. Although the principal amount of the loan is 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. 01230572-28.87 The check also bore the signature of respondent at the back. 88 And, although

respondent would later admit that she did sign PN No. 34534 and received MC No. 228270 as
proceeds of the loan extended to her by petitioner Citibank, she contradicted herself when, in an
earlier testimony, she claimed that PN No. 34534 was among the PNs she executed as
simulated loans with petitioner Citibank.89
Respondent denied ever receiving MCs No. 220701 and 226467. However, considering that the
said checks were crossed for payee's account only, and that they were actually deposited,
cleared, and paid, then the presumption would be that the said checks were properly deposited
to the account of respondent, who was clearly named the payee in the checks. Respondent's
bare allegations that she did not receive the two checks fail to convince this Court, for to sustain
her, would be for this Court to conclude that an irregularity had occurred somewhere from the
time of the issuance of the said checks, to their deposit, clearance, and payment, and which
would have involved not only petitioner Citibank, but also BPI, which accepted the checks for
deposit, and the Central Bank of the Philippines, which cleared the checks. It falls upon the
respondent to overcome or dispute the presumption that the crossed checks were issued,
accepted for deposit, cleared, and paid for by the banks involved following the ordinary course of
their business.
The mere fact that MCs No. 220701 and 226467 do not bear respondent's signature at the back
does not negate deposit thereof in her account. The liability for the lack of indorsement on the
MCs no longer fall on petitioner Citibank, but on the bank who received the same for deposit, in
this case, BPI Cubao Branch. Once again, it must be noted that the MCs were crossed, for
payee's account only, and the payee named in both checks was none other than respondent.
The crossing of the MCs was already a warning to BPI to receive said checks for deposit only in
respondent's account. It was up to BPI to verify whether it was receiving the crossed MCs in
accordance with the instructions on the face thereof. If, indeed, the MCs were deposited in
accounts other than respondent's, then the respondent would have a cause of action against
BPI.90
BPI further stamped its guarantee on the back of the checks to the effect that, "All prior
endorsement and/or Lack of endorsement guaranteed." Thus, BPI became the indorser of the
MCs, and assumed all the warranties of an indorser,91 specifically, that the checks were genuine
and in all respects what they purported to be; that it had a good title to the checks; that all prior
parties had capacity to contract; and that the checks were, at the time of their indorsement, valid
and subsisting.92 So even if the MCs deposited by BPI's client, whether it be by respondent
herself or some other person, lacked the necessary indorsement, BPI, as the collecting bank, is
bound by its warranties as an indorser and cannot set up the defense of lack of indorsement as
against petitioner Citibank, the drawee bank.93
Furthermore, respondent's bare and unsubstantiated denial of receipt of the MCs in question and
their deposit in her account is rendered suspect when MC No. 220701 was actually deposited in
Account No. 0123-0572-28 of BPI Cubao Branch, the very same account in which MC No.
228270 (which respondent admitted to receiving as proceeds of her loan from petitioner
Citibank), and MCs No. 228203, 228357, and 228400 (which respondent admitted to receiving
as proceeds from her money market placements) were deposited. Likewise, MC No. 226467 was
deposited in Account No. 0121-002-43 of BPI Cubao Branch, to which MCs No. 226285 and
226439 (which respondent admitted to receiving as proceeds from her money market
placements) were deposited. It is an apparent contradiction for respondent to claim having
received the proceeds of checks deposited in an account, and then deny receiving the proceeds
of another check deposited in the very same account.
Another inconsistency in respondent's denial of receipt of MC No. 226467 and her deposit of the
same in her account, is her presentation of Exhibit "HHH," a provisional receipt which was
supposed to prove that respondent turned over 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 one of these placements. 94Because of her Exhibit

"HHH," respondent effectively admitted receipt of MC No. 226467, although for reasons other
than as proceeds of a loan.
Neither can this Court give credence to respondent's contention that the notations on the MCs,
stating that they were the proceeds of particular PNs, were not there when she received the
checks and that the notations appeared to be written by a typewriter different from that used to
write the other information on the checks. Once more, respondent's allegations were
uncorroborated by any other evidence. Her and her counsel's observation that the notations on
the MCs appear to be written by a typewriter different from that used to write the other
information on the checks hardly convinces this Court considering that it constitutes a mere
opinion on the appearance of the notation by a witness who does not possess the necessary
expertise on the matter. In addition, the notations on the MCs were written using both capital and
small letters, while the other information on the checks were written using capital letters only,
such difference could easily confuse an untrained eye and lead to a hasty conclusion that they
were written by different typewriters.
Respondent's testimony, that based on her experience transacting with banks, the MCs were not
supposed to include notations on the purpose for which the checks were issued, also deserves
scant consideration. While respondent may have extensive experience dealing with banks, it still
does not qualify her as a competent witness on banking procedures and practices. Her testimony
on this matter is even belied by the fact that the other MCs issued by petitioner Citibank (when it
was still named First National City Bank) and by petitioner FNCB Finance, the existence and
validity of which were not disputed by respondent, also bear similar notations that state the
reason for which they were issued.
Respondent presented several more pieces of evidence to substantiate her claim that she
received MCs No. 226285, 226439, 226467, 226057, 228357, and 228400, not as proceeds of
her loans from petitioner Citibank, but as the return of the principal amounts and payment of
interests from her money market placements with petitioners. Part of respondent's exhibits were
personal checks95 drawn by respondent on her account with Feati Bank & Trust Co., which she
allegedly invested in separate money market placements with both petitioners, the returns from
which were paid to her via MCs No. 226285 and 228400. Yet, to this Court, the personal checks
only managed to establish respondent's issuance thereof, but there was nothing on the face of
the checks that would reveal the purpose for which they were issued and that they were actually
invested in money market placements as respondent claimed.
Respondent further submitted handwritten notes that purportedly computed and presented the
returns on her money market placements, corresponding to the amount stated in the MCs she
received from petitioner Citibank. Exhibit "HHH-1"96 was a handwritten note, which respondent
attributed to Mr. Tan of petitioner Citibank, showing the breakdown of her BPI Check
for P500,000.00 into three different money market placements with petitioner Citibank. This
Court, however, noticed several factors which render the note highly suspect. One, it was written
on the reversed side of Provisional Receipt No. 12724 of petitioner Citibank which bore the
initials of Mr. Tan acknowledging receipt of respondent's BPI Check No. 120989 for P500,000.00;
but the initials on the handwritten note appeared to be that of Mr. Bobby Mendoza 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. Mendoza's.
Also, going by the information on the front page of the note, this Court observes that payment of
respondent's alleged money market placements with petitioner FNCB Finance were made using
Citytrust Checks; the MCs in question, including MC No. 228057, were issued by petitioner
Citibank. Although Citytrust (formerly Feati Bank & Trust Co.), petitioner FNCB Finance, and
petitioner Citibank may be affiliates of one another, they each remained separate and distinct
corporations, each having its own financial system and records. Thus, this Court cannot simply
assume that one corporation, such as petitioner Citibank or Citytrust, can issue a check to
discharge an obligation of petitioner FNCB Finance. It should be recalled that when petitioner
FNCB Finance paid for respondent's money market placements, covered by its PNs No. 8167
and 8169, as well as PNs No. 20138 and 20139, petitioner FNCB Finance issued its own checks.
As a last point on this matter, if respondent truly had money market placements with petitioners,
then these would have been evidenced by PNs issued by either petitioner Citibank or petitioner
FNCB Finance, acknowledging the principal amounts of the investments, and stating the
applicable interest rates, as well as the dates of their of issuance and maturity. After respondent
had so meticulously reconstructed her other money market placements with petitioners and
consolidated the documentary evidence thereon, she came surprisingly short of offering similar
details and substantiation for these particular money market placements.
Since this Court is satisfied that respondent indeed received the proceeds of the first set of PNs,
then it proceeds to analyze her evidence of payment thereof.
In support of respondent's assertion that she had already paid whatever loans she may have had
with petitioner Citibank, she presented as evidence Provisional Receipts No. 19471, dated 11
August 1978, and No. 12723, dated 10 November 1978, both of petitioner Citibank and signed
by Mr. Tan, for the amounts of P500,744.00 and P500,000.00, respectively. While these
provisional receipts did state that Mr. Tan, on behalf of petitioner Citibank, received respondent's
checks as payment for her loans, they failed to specifically identify which loans were actually
paid. Petitioner Citibank was able to present evidence that respondent had executed several PNs
in the years 1978 and 1979 to cover the loans she secured from the said bank. Petitioner
Citibank did admit that respondent was able to pay for some of these PNs, and what it identified
as the first and second sets of PNs were only those which remained unpaid. It thus became
incumbent upon respondent to prove that the checks received by Mr. Tan were actually applied to
the PNs in either the first or second set; a fact that, unfortunately, cannot be determined from the
provisional receipts submitted by respondent since they only generally stated that the checks
received by Mr. Tan were payment for respondent's loans.
Mr. Tan, in his deposition, further explained that provisional receipts were issued when payment
to the bank was made using checks, since the checks would still be subject to clearing. The
purpose for the provisional receipts was merely to acknowledge the delivery of the checks to the
possession of the bank, but not yet of payment.99This 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, respondent's assertion of
payment of PN No. 34534 is extremely dubious.
According to petitioner Citibank, the PNs in the second set, except for PN No. 34534, were mere
renewals of the unpaid PNs in the first set, which was why the PNs stated that they were for the
purpose of liquidating existing obligations. PN No. 34534, however, which was part of the first
set, was still valid and subsisting and so it was included in the second set without need for its
renewal, and it still being the original PN for that particular loan, its stated purpose was for
personal investment.104 Respondent essentially admitted executing the second set of PNs, but
they were only meant to cover simulated loans. Mr. Tan supposedly convinced her that her
pending loan application with DBP would have a greater chance of being approved if they made
it appear that respondent urgently needed the money because petitioner Citibank was already
demanding payment for her simulated loans.
Respondent's defense of simulated loans to escape liability for the second set of PNs is truly a
novel one. It is regrettable, however, that she was unable to substantiate the same. Yet again,
respondent's version of events is totally based on her own uncorroborated testimony. The
notations on the second set of PNs, that they were non-negotiable simulated notes, were
admittedly made by respondent herself and were, thus, self-serving. Equally self-serving was
respondent's letter, written on 7 October 1985, or more than six years after the execution of the
second set of PNs, in which she demanded return of the simulated or fictitious PNs, together with
the letters relating thereto, which Mr. Tan purportedly asked her to execute. Respondent further
failed to present any proof of her alleged loan application with the DBP, and of any circumstance
or correspondence wherein the simulated or fictitious PNs were indeed used for their supposed
purpose.
1wphi1

In contrast, petitioner Citibank, as supported by the testimonies of its officers and available
documentation, consistently treated the said PNs as regular loans accepted, approved, and
paid in the ordinary course of its business.
The PNs executed by the respondent in favor of petitioner Citibank to cover her loans were dulyfilled out and signed, including the disclosure statement found at the back of the said PNs, in
adherence to the Central Bank requirement to disclose the full finance charges to a loan granted
to borrowers.

Mr. Tan, then an account officer with the Marketing Department of petitioner Citibank, testified
that he dealt directly with respondent; he facilitated the loans; and the PNs, at least in the second
set, were signed by respondent in his presence. 105
Mr. Pujeda, the officer who was previously in charge of loans and placements, confirmed that the
signatures on the PNs were verified against respondent's specimen signature with the bank. 106
Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan processor, was responsible
for booking respondent's loans. Booking the loans means recording it in the General Ledger. She
explained the procedure for booking loans, as follows: The account officer, in the Marketing
Department, deals directly with the clients who wish to borrow money from petitioner Citibank.
The Marketing Department will forward a loan booking checklist, together with the borrowing
client's PNs and other supporting documents, to the loan pre-processor, who will check whether
the details in the loan booking checklist are the same as those in the PNs. The documents are
then sent to Signature Control for verification of the client's signature in the PNs, after which,
they are returned to the loan pre-processor, to be forwarded finally to the loan processor. The
loan processor shall book the loan in the General Ledger, indicating therein the client name, loan
amount, interest rate, maturity date, and the corresponding PN number. Since she booked
respondent's loans personally, Ms. Dondoyano testified that she saw the original PNs. In 1986,
Atty. Fernandez of petitioner Citibank requested her to prepare an accounting of respondent's
loans, which she did, and which was presented as Exhibit "120" for the petitioners. The figures
from the said exhibit were culled from the bookings in the General Ledger, a fact which
respondent's counsel was even willing to stipulate. 107
Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at the Control Department
of petitioner Citibank. She was presented by petitioner Citibank to expound on the microfilming
procedure at the bank, since most of the copies of the PNs were retrieved from microfilm.
Microfilming of the documents are actually done by people at the Operations Department. At the
end of the day or during the day, the original copies of all bank documents, not just those
pertaining to loans, are microfilmed. She refuted the possibility that insertions could be made in
the microfilm because the microfilm is inserted in a cassette; the cassette is placed in the
microfilm machine for use; at the end of the day, the cassette is taken out of the microfilm
machine and put in a safe vault; and the cassette is returned to the machine only the following
day for use, until the spool is full. This is the microfilming procedure followed everyday. When the
microfilm spool is already full, the microfilm is developed, then sent to the Control Department,
which double checks the contents of the microfilms against the entries in the General Ledger.
The Control Department also conducts a random comparison of the contents of the microfilms
with the original documents; a random review of the contents is done on every role of microfilm. 108
Ms. Renee Rubio worked for petitioner Citibank for 20 years. She rose from the ranks, initially
working as a secretary in the Personnel Group; then as a secretary to the Personnel Group
Head; a Service Assistant with the Marketing Group, in 1972 to 1974, dealing directly with
corporate and individual clients who, among other things, secured loans from petitioner Citibank;
the Head of the Collection Group of the Foreign Department in 1974 to 1976; the Head of the
Money Transfer Unit in 1976 to 1978; the Head of the Loans and Placements Unit up to the early
1980s; and, thereafter, she established operations training for petitioner Citibank in the AsiaPacific Region responsible for the training of the officers of the bank. She testified on the
standard loan application process at petitioner Citibank. According to Ms. Rubio, the account
officer or marketing person submits a proposal to grant a loan to an individual or corporation.
Petitioner Citibank has a worldwide policy that requires a credit committee, composed of a
minimum of three people, which would approve the loan and amount thereof. There can be no
instance when only one officer has the power to approve the loan application. When the loan is
approved, the account officer in charge will obtain the corresponding PNs from the client. The
PNs are sent to the signature verifier who would validate the signatures therein against those
appearing in the signature cards previously submitted by the client to the bank. The Operations
Unit will check and review the documents, including the PNs, if it is a clean loan, and securities
and deposits, if it is collateralized. The loan is then recorded in the General Ledger. The Loans

and Placements Department will not book the loans without the PNs. When the PNs are
liquidated, whether they are paid or rolled-over, they are returned to the client. 109 Ms. Rubio
further explained that she was familiar with respondent's accounts since, while she was still the
Head of the Loan and Placements Unit, she was asked by Mr. Tan to prepare a list of
respondent's outstanding obligations.110 She thus calculated respondent's outstanding loans,
which was sent as an attachment to Mr. Tan's letter to respondent, dated 28 September 1979,
and presented before the RTC as Exhibits "34-B" and "34-C."111
Lastly, the exchange of letters between petitioner Citibank and respondent, as well as the letters
sent by other people working for respondent, had consistently recognized that respondent owed
petitioner Citibank money.
In consideration of the foregoing discussion, this Court finds that the preponderance of evidence
supports the existence of the respondent's loans, in the principal sum of P1,920,000.00, as of 5
September 1979. While it is well-settled that the term "preponderance of evidence" should not be
wholly dependent on the number of witnesses, there are certain instances when the number of
witnesses become the determining factor
The preponderance of evidence may be determined, under certain conditions, by the
number of witnesses testifying to a particular fact or state of facts. For instance, one or
two witnesses may testify to a given state of facts, and six or seven witnesses of equal
candor, fairness, intelligence, and truthfulness, and equally well corroborated by all the
remaining evidence, who have no greater interest in the result of the suit, testify against
such state of facts. Then the preponderance of evidence is determined by the number of
witnesses. (Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep., 761.)112
Best evidence rule
This Court disagrees in the pronouncement made by the Court of Appeals summarily dismissing
the documentary evidence submitted by petitioners based on its broad and indiscriminate
application of the best evidence rule.
In general, the best evidence rule requires that the highest available degree of proof must be
produced. Accordingly, for documentary evidence, the contents of a document are best proved
by the production of the document itself,113 to the exclusion of any secondary or substitutionary
evidence.114
The best evidence rule has been made part of the revised Rules of Court, Rule 130, Section 3,
which reads
SEC. 3. Original document must be produced; exceptions. When the subject of inquiry
is the contents of a document, no evidence shall be admissible other than the original
document itself, except in the following cases:
(a) When the original has been lost or destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party against
whom the evidence is offered, and the latter fails to produce it after reasonable
notice;
(c) When the original consists of numerous accounts or other documents which
cannot be examined in court without great loss of time and the fact sought to be
established from them is only the general result of the whole; and

(d) When the original is a public record in the custody of a public officer or is
recorded in a public office.
As the afore-quoted provision states, the best evidence rule applies only when the subject of the
inquiry is the contents of the document. The scope of the rule is more extensively explained thus

But even with respect to documentary evidence, the best evidence rule applies only
when the content of such document is the subject of the inquiry. Where the issue is only
as to whether such document was actually executed, or exists, or on the circumstances
relevant to or surrounding its execution, the best evidence rule does not apply and
testimonial evidence is admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78).
Any other substitutionary evidence is likewise admissible without need for accounting for
the original.
Thus, when a document is presented to prove its existence or condition it is offered not
as documentary, but as real, evidence. Parol evidence of the fact of execution of the
documents is allowed (Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565). x x x 115
In Estrada v. Desierto,116 this Court had occasion to rule that
It is true that the Court relied not upon the original but only copy of the Angara Diary as
published in the Philippine Daily Inquirer on February 4-6, 2001. In doing so, the Court,
did not, however, violate the best evidence rule. Wigmore, in his book on evidence,
states that:
"Production of the original may be dispensed with, in the trial court's discretion, whenever
in the case in hand the opponent does not bona fide dispute the contents of the
document and no other useful purpose will be served by requiring production.24
"x x x x
"In several Canadian provinces, the principle of unavailability has been abandoned, for
certain documents in which ordinarily no real dispute arised. This measure is a sensible
and progressive one and deserves universal adoption (post, sec. 1233). Its essential
feature is that a copy may be used unconditionally, if the opponent has been given an
opportunity to inspect it." (Emphasis supplied.)
This Court did not violate the best evidence rule when it considered and weighed in evidence the
photocopies and microfilm copies of the PNs, MCs, and letters submitted by the petitioners to
establish the existence of respondent's loans. The terms or contents of these documents were
never the point of contention in the Petition at bar. It was respondent's position that the PNs in
the first set (with the exception of PN No. 34534) never existed, while the PNs in the second set
(again, excluding PN No. 34534) were merely executed to cover simulated loan transactions. As
for the MCs representing the proceeds of the loans, the respondent either denied receipt of
certain MCs or admitted receipt of the other MCs but for another purpose. Respondent further
admitted the letters she wrote personally or through her representatives to Mr. Tan of petitioner
Citibank acknowledging the loans, except that she claimed that these letters were just meant to
keep up the ruse of the simulated loans. Thus, respondent questioned the documents as to their
existence or execution, or when the former is admitted, as to the purpose for which the
documents were executed, matters which are, undoubtedly, external to the documents, and
which had nothing to do with the contents thereof.
Alternatively, even if it is granted that the best evidence rule should apply to the evidence
presented by petitioners regarding the existence of respondent's loans, it should be borne in

mind that the rule admits of the following exceptions under Rule 130, Section 5 of the revised
Rules of Court
SEC. 5. When the original document is unavailable. When the original document has
been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its
execution or existence and the cause of its unavailability without bad faith on his part,
may prove its contents by a copy, or by a recital of its contents in some authentic
document, or by the testimony of witnesses in the order stated.
The execution or existence of the original copies of the documents was established through the
testimonies of witnesses, such as Mr. Tan, before whom most of the documents were personally
executed by respondent. The original PNs also went through the whole loan booking system of
petitioner Citibank from the account officer in its Marketing Department, to the pre-processor, to
the signature verifier, back to the pre-processor, then to the processor for booking. 117 The original
PNs were seen by Ms. Dondoyano, the processor, who recorded them in the General Ledger. Mr.
Pujeda personally saw the original MCs, proving respondent's receipt of the proceeds of her
loans from petitioner Citibank, when he helped Attys. Cleofe and Fernandez, the bank's legal
counsels, to reconstruct the records of respondent's loans. The original MCs were presented to
Atty. Cleofe who used the same during the preliminary investigation of the case, sometime in
years 1986-1987. The original MCs were subsequently turned over to the Control and
Investigation Division of petitioner Citibank.118
It was only petitioner FNCB Finance who claimed that they lost the original copies of the PNs
when it moved to a new office. Citibank did not make a similar contention; instead, it explained
that the original copies of the PNs were returned to the borrower upon liquidation of the loan,
either through payment or roll-over. Petitioner Citibank proffered the excuse that they were still
looking for the documents in their storage or warehouse to explain the delay and difficulty in the
retrieval thereof, but not their absence or loss. The original documents in this case, such as the
MCs and letters, were destroyed and, thus, unavailable for presentation before the RTC only on
7 October 1987, when a fire broke out on the 7th floor of the office building of petitioner Citibank.
There is no showing that the fire was intentionally set. The fire destroyed relevant documents,
not just of the present case, but also of other cases, since the 7 th floor housed the Control and
Investigation Division, in charge of keeping the necessary documents for cases in which
petitioner Citibank was involved.
The foregoing would have been sufficient to allow the presentation of photocopies or microfilm
copies of the PNs, MCs, and letters by the petitioners as secondary evidence to establish the
existence of respondent's loans, as an exception to the best evidence rule.
The impact of the Decision of the Court of Appeals in the Dy case
In its assailed Decision, the Court of Appeals made the following pronouncement
Besides, We find the declaration and conclusions of this Court in CA-G.R. CV No.
15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et al,
promulgated on 15 January 1990, as disturbing taking into consideration the similarities
of the fraud, machinations, and deceits employed by the defendant-appellant Citibank
and its Account Manager Francisco Tan.
Worthy of note is the fact that Our declarations and conclusions against Citibank and the
person of Francisco Tan in CA-G.R. CV No. 15934 were affirmed in toto by the Highest
Magistrate in a Minute Resolution dated 22 August 1990 entitled Citibank, N.A., vs. Court
of Appeals, G.R. 93350.
As the factual milieu of the present appeal created reasonable doubts as to whether the
nine (9) Promissory Notes were indeed executed with considerations, the doubts,

coupled by the findings and conclusions of this Court in CA-G.R. CV No. 15934 and the
Supreme Court in G.R. No. 93350. should be construed against herein defendantsappellants Citibank and FNCB Finance.
What this Court truly finds disturbing is the significance given by the Court of Appeals in its
assailed Decision to the Decision119 of its Third Division in CA-G.R. CV No. 15934 (or the Dy
case), when there is an absolute lack of legal basis for doing such.
Although petitioner Citibank and its officer, Mr. Tan, were also involved in the Dy case, that is
about the only connection between the Dy case and the one at bar. Not only did the Dy case
tackle transactions between parties other than the parties presently before this Court, but the
transactions are absolutely independent and unrelated to those in the instant Petition.
In the Dy case, Severino Chua Caedo managed to obtain loans from herein petitioner Citibank
amounting to P7,000,000.00, secured to the extent of P5,000,000.00 by a Third Party Real
Estate Mortgage of the properties of Caedo's aunt, Rosalind Dy. It turned out that Rosalind Dy
and her husband were unaware of the said loans and the mortgage of their properties. The
transactions were carried out exclusively between Caedo and Mr. Tan of petitioner Citibank. The
RTC found Mr. Tan guilty of fraud for his participation in the questionable transactions, essentially
because he allowed Caedo to take out the signature cards, when these should have been signed
by the Dy spouses personally before him. Although the Dy spouses' signatures in the PNs and
Third Party Real Estate Mortgage were forged, they were approved by the signature verifier
since the signature cards against which they were compared to were also forged. Neither the
RTC nor the Court of Appeals, however, categorically declared Mr. Tan personally responsible for
the forgeries, which, in the narration of the facts, were more likely committed by Caedo.
In the Petition at bar, respondent dealt with Mr. Tan directly, there was no third party involved who
could have perpetrated any fraud or forgery in her loan transactions. Although respondent
attempted to raise suspicion as to the authenticity of her signatures on certain documents, these
were nothing more than naked allegations with no corroborating evidence; worse, even her own
allegations were replete with inconsistencies. She could not even establish in what manner or
under what circumstances the fraud or forgery was committed, or how Mr. Tan could have been
directly responsible for the same.
While the Court of Appeals can take judicial notice of the Decision of its Third Division in the Dy
case, it should not have given the said case much weight when it rendered the assailed Decision,
since the former does not constitute a precedent. The Court of Appeals, in the challenged
Decision, did not apply any legal argument or principle established in the Dy case but, rather,
adopted the findings therein of wrongdoing or misconduct on the part of herein petitioner Citibank
and Mr. Tan. Any finding of wrongdoing or misconduct as against herein petitioners should be
made based on the factual background and pieces of evidence submitted in this case, not those
in another case.
It is apparent that the Court of Appeals took judicial notice of the Dy case not as a legal
precedent for the present case, but rather as evidence of similar acts committed by petitioner
Citibank and Mr. Tan. A basic rule of evidence, however, states that, "Evidence that one did or did
not do a certain thing at one time is not admissible to prove that he did or did not do the same or
similar thing at another time; but it may be received to prove a specific intent or knowledge,
identity, plan, system, scheme, habit, custom or usage, and the like."120 The rationale for the rule
is explained thus
The rule is founded upon reason, public policy, justice and judicial convenience. The fact
that a person has committed the same or similar acts at some prior time affords, as a
general rule, no logical guaranty that he committed the act in question. This is so
because, subjectively, a man's mind and even his modes of life may change; and,
objectively, the conditions under which he may find himself at a given time may likewise

change and thus induce him to act in a different way. Besides, if evidence of similar acts
are to be invariably admitted, they will give rise to a multiplicity of collateral issues and
will subject the defendant to surprise as well as confuse the court and prolong the trial. 121
The factual backgrounds of the two cases are so different and unrelated that the Dy case cannot
be used to prove specific intent, knowledge, identity, plan, system, scheme, habit, custom or
usage on the part of petitioner Citibank or its officer, Mr. Tan, to defraud respondent in the
present case.
IV
The liquidation of respondent's outstanding loans were valid in so far as petitioner
Citibank used respondent's savings account with the bank and her money market
placements with petitioner FNCB Finance; but illegal and void in so far as petitioner
Citibank used respondent's dollar accounts with Citibank-Geneva.
Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing obligations. Relevant provisions of the Civil
Code provides
Art. 1278. Compensation shall take place when two persons, in their own right, are
creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is necessary;
(1) That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the latter
has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced
by third persons and communicated in due time to the debtor.
There is little controversy when it comes to the right of petitioner Citibank to compensate
respondent's outstanding loans with her deposit account. As already found by this Court,
petitioner Citibank was the creditor of respondent for her outstanding loans. At the same time,
respondent was the creditor of petitioner Citibank, as far as her deposit account was concerned,
since bank deposits, whether fixed, savings, or current, should be considered as simple loan
or mutuum by the depositor to the banking institution.122 Both debts consist in sums of money. By
June 1979, all of respondent's PNs in the second set had matured and became demandable,
while respondent's savings account was demandable anytime. Neither was there any retention or
controversy over the PNs and the deposit account commenced by a third person and
communicated in due time to the debtor concerned. Compensation takes place by operation of
law,123 therefore, even in the absence of an expressed authority from respondent, petitioner
Citibank had the right to effect, on 25 June 1979, the partial compensation or off-set of
respondent's outstanding loans with her deposit account, amounting to P31,079.14.
Money market placements with FNCB Finance

Things though are not as simple and as straightforward as regards to the money market
placements and bank account used by petitioner Citibank to complete the compensation or offset of respondent's outstanding loans, which came from persons other than petitioner Citibank.
Respondent's money market placements were with petitioner FNCB Finance, and after several
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 Code, would not apply since
the first requirement for a valid compensation, that each one of the obligors be bound principally,
and that he be at the same time a principal creditor of the other, was not met.
What petitioner Citibank actually did was to exercise its rights to the proceeds of respondent's
money market placements with petitioner FNCB Finance by virtue of the Deeds of Assignment
executed by respondent in its favor.
The Court of Appeals did not consider these Deeds of Assignment because of petitioners' failure
to produce the original copies thereof in violation of the best evidence rule. This Court again finds
itself in disagreement in the application of the best evidence rule by the appellate court.
To recall, the best evidence rule, in so far as documentary evidence is concerned, requires the
presentation of the original copy of the document only when the context thereof is the subject of
inquiry in the case. Respondent does not question the contents of the Deeds of Assignment.
While she admitted the existence and execution of the Deeds of Assignment, dated 2 March
1978 and 9 March 1978, covering PNs No. 8169 and 8167 issued by petitioner FNCB Finance,
she claimed, as defense, that the loans for which the said Deeds were executed as security,
were already paid. She denied ever executing both Deeds of Assignment, dated 25 August 1978,
covering PNs No. 20138 and 20139. These are again issues collateral to the contents of the
documents involved, which could be proven by evidence other than the original copies of the
said documents.
Moreover, the Deeds of Assignment of the money market placements with petitioner FNCB
Finance were notarized documents, thus, admissible in evidence. Rule 132, Section 30 of the
Rules of Court provides that
SEC. 30. Proof of notarial documents. Every instrument duly acknowledged or proved
and certified as provided by law, may be presented in evidence without further proof, the
certificate of acknowledgement being prima facie evidence of the execution of the
instrument or document involved.
Significant herein is this Court's elucidation in De Jesus v. Court of Appeals,124 which reads
On the evidentiary value of these documents, it should be recalled that the notarization of
a private document converts it into a public one and renders it admissible in court without
further proof of its authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This is so
because a public document duly executed and entered in the proper registry is presumed
to be valid and genuine until the contrary is shown by clear and convincing proof (Asido
vs. Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil 241 [1902]; Favor vs. Court of
Appeals, 194 SCRA 308 [1991]). As such, the party challenging the recital of the
document must prove his claim with clear and convincing evidence (Diaz vs. Court of
Appeals, 145 SCRA 346 [1986]).
The rule on the evidentiary weight that must be accorded a notarized document is clear and
unambiguous. The certificate of acknowledgement in the notarized Deeds of Assignment

constituted prima facie evidence of the execution thereof. Thus, the burden of refuting this
presumption fell on respondent. She could have presented evidence of any defect or irregularity
in the execution of the said documents125 or raised questions as to the verity of the notary public's
acknowledgment and certificate in the Deeds.126 But again, respondent admitted executing the
Deeds of Assignment, dated 2 March 1978 and 9 March 1978, although claiming that the loans
for which they were executed as security were already paid. And, she assailed the Deeds of
Assignment, dated 25 August 1978, with nothing more than her bare denial of execution thereof,
hardly the clear and convincing evidence required to trounce the presumption of due execution of
a notarized document.
Petitioners not only presented the notarized Deeds of Assignment, but even secured certified
literal copies thereof from the National Archives.127 Mr. Renato Medua, an archivist, working at the
Records Management and Archives Office of the National Library, testified that the copies of the
Deeds presented before the RTC were certified literal copies of those contained in the Notarial
Registries of the notary publics concerned, which were already in the possession of the National
Archives. He also explained that he could not bring to the RTC the Notarial Registries containing
the original copies of the Deeds of Assignment, because the Department of Justice (DOJ)
Circular No. 97, dated 8 November 1968, prohibits the bringing of original documents to the
courts to prevent the loss of irreplaceable and priceless documents.128
Accordingly, this Court gives the Deeds of Assignment grave importance in establishing the
authority given by the respondent to petitioner Citibank to use as security for her loans her
money her market placements with petitioner FNCB Finance, represented by PNs No. 8167 and
8169, later to be rolled-over as PNs No. 20138 and 20139. These Deeds of Assignment
constitute the law between the parties, and the obligations arising therefrom shall have the force
of law between the parties and should be complied with in good faith. 129 Standard clauses in all of
the Deeds provide that
The ASSIGNOR and the ASSIGNEE hereby further agree as follows:
xxxx
2. In the event the OBLIGATIONS are not paid at maturity or upon demand, as
the case may be, the ASSIGNEE is fully authorized and empowered to collect
and receive the PLACEMENT (or so much thereof as may be necessary) and
apply the same in payment of the OBLIGATIONS. Furthermore, the ASSIGNOR
agrees that at any time, and from time to time, upon request by the ASSIGNEE,
the ASSIGNOR will promptly execute and deliver any and all such further
instruments and documents as may be necessary to effectuate this Assignment.
xxxx
5. This Assignment shall be considered as sufficient authority to FNCB Finance to
pay and deliver the PLACEMENT or so much thereof as may be necessary to
liquidate the OBLIGATIONS, to the ASSIGNEE in accordance with terms and
provisions hereof.130
Petitioner Citibank was only acting upon the authority granted to it under the foregoing Deeds
when it finally used the proceeds of PNs No. 20138 and 20139, paid by petitioner FNCB Finance,
to partly pay for respondent's outstanding loans. Strictly speaking, it did not effect a legal
compensation or off-set under Article 1278 of the Civil Code, but rather, it partly extinguished
respondent's obligations through the application of the security given by the respondent for her
loans. Although the pertinent documents were entitled Deeds of Assignment, they were, in reality,
more of a pledge by respondent to petitioner Citibank of her credit due from petitioner FNCB
Finance by virtue of her money market placements with the latter. According to Article 2118 of the
Civil Code

ART. 2118. If a credit has been pledged becomes due before it is redeemed, the pledgee
may collect and receive the amount due. He shall apply the same to the payment of his
claim, and deliver the surplus, should there be any, to the pledgor.
PNs No. 20138 and 20139 matured on 3 September 1979, without them being redeemed by
respondent, so that petitioner Citibank collected from petitioner FNCB Finance the proceeds
thereof, which included the principal amounts and interests earned by the money market
placements, amounting to P1,022,916.66, and applied the same against respondent's
outstanding loans, leaving no surplus to be delivered to respondent.
Dollar accounts with Citibank-Geneva
Despite the legal compensation of respondent's savings account and the total application of the
proceeds of PNs No. 20138 and 20139 to respondent's outstanding loans, there still remained a
balance of P1,069,847.40. Petitioner Citibank then proceeded to applying respondent's dollar
accounts with Citibank-Geneva against her remaining loan balance, pursuant to a Declaration of
Pledge supposedly executed by respondent in its favor.
Certain principles of private international law should be considered herein because the property
pledged was in the possession of an entity in a foreign country, namely, Citibank-Geneva. In the
absence of any allegation and evidence presented by petitioners of the specific rules and laws
governing the constitution of a pledge in Geneva, Switzerland, they will be presumed to be the
same as Philippine local or domestic laws; this is known as processual presumption. 131
Upon closer scrutiny of the Declaration of Pledge, this Court finds the same exceedingly
suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank took care to have the Deeds of
Assignment of the PNs notarized, yet left the Declaration of Pledge unnotarized. This Court
would think that petitioner Citibank would take greater cautionary measures with the preparation
and execution of the Declaration of Pledge because it involved respondent's "all present and
future fiduciary placements" with a Citibank branch in another country, specifically, in Geneva,
Switzerland. While there is no express legal requirement that the Declaration of Pledge had to be
notarized to be effective, even so, it could not enjoy the same prima facie presumption of due
execution that is extended to notarized documents, and petitioner Citibank must discharge the
burden of proving due execution and authenticity of the Declaration of Pledge.
Second, petitioner Citibank was unable to establish the date when the Declaration of Pledge was
actually executed. The photocopy of the Declaration of Pledge submitted by petitioner Citibank
before the RTC was undated.132 It presented only a photocopy of the pledge because it already
forwarded the original copy thereof to Citibank-Geneva when it requested for the remittance of
respondent's dollar accounts pursuant thereto. Respondent, on the other hand, was able to
secure a copy of the Declaration of Pledge, certified by an officer of Citibank-Geneva, which bore
the date 24 September 1979.133 Respondent, however, presented her passport and plane tickets
to prove that she was out of the country on the said date and could not have signed the pledge.
Petitioner Citibank insisted that the pledge was signed before 24 September 1979, but could not
provide an explanation as to how and why the said date was written on the pledge. Although Mr.
Tan testified that the Declaration of Pledge was signed by respondent personally before him, he
could not give the exact date when the said signing took place. It is important to note that the
copy of the Declaration of Pledge submitted by the respondent to the RTC was certified by an
officer of Citibank-Geneva, which had possession of the original copy of the pledge. It is dated 24
September 1979, and this Court shall abide by the presumption that the written document is truly
dated.134 Since it is undeniable that respondent was out of the country on 24 September 1979,
then she could not have executed the pledge on the said date.

Third, the Declaration of Pledge was irregularly filled-out. The pledge was in a standard printed
form. It was constituted in favor of Citibank, N.A., otherwise referred to therein as the Bank. It
should be noted, however, that in the space which should have named the pledgor, the name of
petitioner Citibank was typewritten, to wit
The pledge right herewith constituted shall secure all claims which the Bank now has or
in the future acquires against Citibank, N.A., Manila (full name and address of the
Debtor), regardless of the legal cause or the transaction (for example current account,
securities transactions, collections, credits, payments, documentary credits and
collections) which gives rise thereto, and including principal, all contractual and penalty
interest, commissions, charges, and costs.
The pledge, therefore, made no sense, the pledgor and pledgee being the same entity. Was a
mistake made by whoever filled-out the form? Yes, it could be a possibility. Nonetheless,
considering the value of such a document, the mistake as to a significant detail in the pledge
could only be committed with gross carelessness on the part of petitioner Citibank, and raised
serious doubts as to the authenticity and due execution of the same. The Declaration of Pledge
had passed through the hands of several bank officers in the country and abroad, yet,
surprisingly and implausibly, no one noticed such a glaring mistake.
Lastly, respondent denied that it was her signature on the Declaration of Pledge. She claimed
that the signature was a forgery. When a document is assailed on the basis of forgery, the best
evidence rule applies
Basic is the rule of evidence that when the subject of inquiry is the contents of a
document, no evidence is admissible other than the original document itself except in the
instances mentioned in Section 3, Rule 130 of the Revised Rules of Court. Mere
photocopies of documents are inadmissible pursuant to the best evidence rule. This is
especially true when the issue is that of forgery.
As a rule, forgery cannot be presumed and must be proved by clear, positive and
convincing evidence and the burden of proof lies on the party alleging forgery. The best
evidence of a forged signature in an instrument is the instrument itself reflecting the
alleged forged signature. The fact of forgery can only be established by a comparison
between the alleged forged signature and the authentic and genuine signature of the
person whose signature is theorized upon to have been forged. Without the original
document containing the alleged forged signature, one cannot make a definitive
comparison which would establish forgery. A comparison based on a mere xerox copy or
reproduction of the document under controversy cannot produce reliable results. 135
Respondent made several attempts to have the original copy of the pledge produced before the
RTC so as to have it examined by experts. Yet, despite several Orders by the RTC, 136 petitioner
Citibank failed to comply with the production of the original Declaration of Pledge. It is admitted
that Citibank-Geneva had possession of the original copy of the pledge. While petitioner Citibank
in Manila and its branch in Geneva may be separate and distinct entities, they are still
incontestably related, and between petitioner Citibank and respondent, the former had more
influence and resources to convince Citibank-Geneva to return, albeit temporarily, the original
Declaration of Pledge. Petitioner Citibank did not present any evidence to convince this Court
that it had exerted diligent efforts to secure the original copy of the pledge, nor did it proffer the
reason why Citibank-Geneva obstinately refused to give it back, when such document would
have been very vital to the case of petitioner Citibank. There is thus no justification to allow the
presentation of a mere photocopy of the Declaration of Pledge in lieu of the original, and the
photocopy of the pledge presented by petitioner Citibank has nil probative value. 137In addition,
even if this Court cannot make a categorical finding that respondent's signature on the original
copy of the pledge was forged, it is persuaded that petitioner Citibank willfully suppressed the

presentation of the original document, and takes into consideration the presumption that the
evidence willfully suppressed would be adverse to petitioner Citibank if produced. 138
Without the Declaration of Pledge, petitioner Citibank had no authority to demand the remittance
of respondent's dollar accounts with Citibank-Geneva and to apply them to her outstanding
loans. It cannot effect legal compensation under Article 1278 of the Civil Code since, petitioner
Citibank itself admitted that Citibank-Geneva is a distinct and separate entity. As for the dollar
accounts, respondent was the creditor and Citibank-Geneva is the debtor; and as for the
outstanding loans, petitioner Citibank was the creditor and respondent was the debtor. The
parties in these transactions were evidently not the principal creditor of each other.
Therefore, this Court declares that the remittance of respondent's dollar accounts from CitibankGeneva and the application thereof to her outstanding loans with petitioner Citibank was illegal,
and null and void. Resultantly, petitioner Citibank is obligated to return to respondent the amount
of US$149,632,99 from her Citibank-Geneva accounts, or its present equivalent value in
Philippine currency; and, at the same time, respondent continues to be obligated to petitioner
Citibank for the balance of her outstanding loans which, as of 5 September 1979, amounted
to 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 respondent's 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 respondent's dollar accounts from Citibank-Geneva is
deemed illegal, null and void, and, thus, ineffective.
VI
Petitioner Citibank shall be liable for damages to respondent.
Petitioners protest the award by the Court of Appeals of moral damages, exemplary damages,
and attorney's fees in favor of respondent. They argued that the RTC did not award any
damages, and respondent, in her appeal before the Court of Appeals, did not raise in issue the
absence of such.
While it is true that the general rule is that only errors which have been stated in the assignment
of errors and properly argued in the brief shall be considered, this Court has also recognized
exceptions to the general rule, wherein it authorized the review of matters, even those not
assigned as errors in the appeal, if the consideration thereof is necessary in arriving at a just

decision of the case, and there is a close inter-relation between the omitted assignment of error
and those actually assigned and discussed by the appellant.140 Thus, the Court of Appeals did not
err in awarding the damages when it already made findings that would justify and support the
said award.
Although this Court appreciates the right of petitioner Citibank to effect legal compensation of
respondent's local deposits, as well as its right to the proceeds of PNs No. 20138 and 20139 by
virtue of the notarized Deeds of Assignment, to partly extinguish respondent's outstanding loans,
it finds that petitioner Citibank did commit wrong when it failed to pay and properly account for
the proceeds of respondent's money market placements, evidenced by PNs No. 23356 and
23357, and when it sought the remittance of respondent's dollar accounts from Citibank-Geneva
by virtue of a highly-suspect Declaration of Pledge to be applied to the remaining balance of
respondent's outstanding loans. It bears to emphasize that banking is impressed with public
interest and its fiduciary character requires high standards of integrity and performance. 141 A bank
is under the obligation to treat the accounts of its depositors with meticulous care whether such
accounts consist only of a few hundred pesos or of millions of pesos. 142 The bank must record
every single transaction accurately, down to the last centavo, and as promptly as
possible.143 Petitioner Citibank evidently failed to exercise the required degree of care and
transparency in its transactions with respondent, thus, resulting in the wrongful deprivation of her
property.
Respondent had been deprived of substantial amounts of her investments and deposits for more
than two decades. During this span of years, respondent had found herself in desperate need of
the amounts wrongfully withheld from her. In her testimony144 before the RTC, respondent
narrated
Q By the way Mrs. Witness will you kindly tell us again, you said before that you are a
businesswoman, will you tell us again what are the businesses you are engaged into
[sic]?
A I am engaged in real estate. I am the owner of the Modesta Village 1 and 2 in San
Mateo, Rizal. I am also the President and Chairman of the Board of Macador [sic] Co.
and Business Inc. which operates the Macador [sic] International Palace Hotel. I am also
the President of the Macador [sic] International Palace Hotel, and also the Treasures
Home Industries, Inc. which I am the Chairman and president of the Board and also
operating affiliated company in the name of Treasures Motor Sales engaged in car
dealers [sic] like Delta Motors, we are the dealers of the whole Northern Luzon and I am
the president of the Disto Company, Ltd., based in Hongkong licensed in Honkong [sic]
and now operating in Los Angeles, California.
Q What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and construction.
Q Aside from those businesses are you a member of any national or community
organization for social and civil activities?
A Yes sir.
Q What are those?
A I am the Vice-President of thes [sic] Subdivision Association of the Philippines in 1976,
I am also an officer of the Chamber of Real Estate Business Association; I am also an
officer of the Chatholic [sic] Women's League and I am also a member of the CMLI, I
forgot the definition.

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

A I was also a candidate for Mayo last January 30, 1980.
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
A I also ran as an Assemblywoman last May, 1984, Independent party in Regional I,
Pangasinan.
Q What happened to your businesses you mentioned as a result of your failure to recover
you [sic] investments and bank deposits from the defendants?
A They are not all operating, in short, I was hampered to push through the businesses
that I have.
A [sic] Of all the businesses and enterprises that you mentioned what are those that are
paralyzed and what remain inactive?
A Of all the company [sic] that I have, only the Disto Company that is now operating in
California.
Q How about your candidacy as Mayor of Dagupan, [sic] City, and later as
Assemblywoman of Region I, what happened to this?
A I won by voting but when election comes on [sic] the counting I lost and I protested this,
it is still pending and because I don't have financial resources I was not able to push
through the case. I just have it pending in the Comelec.
Q Now, do these things also affect your social and civic activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman I would like to inform the
Honorable Court that I was awarded as the most outstanding businesswoman of the year
in 1976 but when this money was not given back to me I was not able to comply with the
commitments that I have promised to these associations that I am engaged into [sic], sir.
For the mental anguish, serious anxiety, besmirched reputation, moral shock and social
humiliation suffered by the respondent, the award of moral damages is but proper. However, this
Court reduces the amount thereof to 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 2229146 and 2234147 of the Civil Code.
With the award of exemplary damages, then respondent shall also be entitled to an award of
attorney's fees.148Additionally, 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 attorney's fees shall be satisfactory.
In contrast, this Court finds no sufficient basis to award damages to petitioners. Respondent was
compelled to institute the present case in the exercise of her rights and in the protection of her
interests. In fact, although her Complaint before the RTC was not sustained in its entirety, it did
raise meritorious points and on which this Court rules in her favor. Any injury resulting from the
exercise of one's rights is damnum absque injuria.150
1wphi1

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 ORDEREDto return to respondent the principal amounts of the said PNs,
amounting to Three Hundred Eighteen Thousand Eight Hundred Ninety-Seven Pesos
and Thirty-Four Centavos (P318,897.34) and Two Hundred Three Thousand One
Hundred Fifty Pesos (P203,150.00), respectively, plus the stipulated interest of Fourteen
and a half percent (14.5%) per annum, beginning 17 March 1977;
2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US
Dollars and Ninety-Nine Cents (US$149,632.99) from respondent's Citibank-Geneva
accounts to petitioner Citibank in Manila, and the application of the same against
respondent's outstanding loans with the latter, is DECLAREDillegal, null and void.
Petitioner Citibank is ORDERED to refund to respondent the said amount, or its
equivalent in Philippine currency using the exchange rate at the time of payment, plus the
stipulated interest for each of the fiduciary placements and current accounts involved,
beginning 26 October 1979;
3. Petitioner Citibank is ORDERED to pay respondent moral damages in the amount of
Three Hundred Thousand Pesos (P300,000.00); exemplary damages in the amount of
Two Hundred Fifty Thousand Pesos (P250,000.00); and attorney's fees in the amount of
Two Hundred Thousand Pesos (P200,000.00); and
4. Respondent is ORDERED to pay petitioner Citibank the balance of her outstanding
loans, which, from the respective dates of their maturity to 5 September 1979, was
computed to be in the sum of One Million Sixty-Nine Thousand Eight Hundred FortySeven Pesos and Forty Centavos (P1,069,847.40), inclusive of interest. These
outstanding loans shall continue to earn interest, at the rates stipulated in the
corresponding PNs, from 5 September 1979 until payment thereof.
SO ORDERED.
Panganiban, C.J. (Chairperson), Ynares-Santiago, Austria-Martinez, and Callejo, Sr., JJ., concur.