7 Citibank V Sabeniano

10/21/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 504
378 SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs.
Sabeniano
*
G.R. No. 156132. October 16, 2006.
CITIBANK, N.A. (Formerly First National City Bank) and

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

for Extension of Time; The Petition for Review would constitute the
initiatory pleading before the Supreme Court, upon the timely
filing of which, the case before the Court commences, much in the
same way a case is initiated by the filing of a Complaint before the
trial court—and, without such a Petition, there is technically no
case before the Court; A Motion for Extension of Time within
which to file a Petition for Review does not serve the same purpose
as the Petition for Review itself.—Although it may seem at first
glance that respondent was simultaneously seeking recourse from
the Court of Appeals and this Court, a careful and closer scrutiny
of the details of the case at bar would reveal otherwise. It should
be recalled that respondent did nothing more in G.R. No. 152985
than to file with this Court a Motion for Extension of Time within
which to file her Petition for Review. For unexplained reasons,
respondent failed to submit to this Court her intended Petition
within the reglementary period. Consequently, this Court was
prompted to issue a Resolution, dated 13 November 2002,
declaring G.R. No. 152985 terminated, and the therein assailed
Court of Appeals Decision final and executory. G.R. No. 152985,
therefore, did not progress and respondent’s appeal was
unperfected. The Petition for Review would constitute the
initiatory pleading before this Court, upon the timely filing of
which, the case before this Court commences; much in the same
way a case is initiated by the filing of a Complaint before the trial
court. The Petition for Review establishes the identity of parties,
rights or causes of action, and relief sought from this Court, and
without such a Petition, there is technically no case before this
Court. The Motion filed by respondent seeking extension of time
within which to file her Petition for Review does not serve the
http://www.central.com.ph/sfsreader/session/000001669621371a5892fb41003600fb002c009e/t/?o=False 1/107
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
_______________
* FIRST DIVISION.
379
VOL. 504, OCTOBER 16, 2006 379
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
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.
Same; Same; Same; Certification Against Forum Shopping;

Contents; The Certification against Forum Shopping is required to
be attached to the initiatory pleading.—It should also be noted
that the Certification against Forum Shopping is required to be
attached to the initiatory pleading, which, in G.R. No. 152985,
should have been respondent’s Petition for Review. It is in that
Certification wherein respondent certifies, under oath, that: (a)
she has not commenced any action or filed any claim involving the
same issues in any court, tribunal or 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.
Appeals; Findings of fact of the Court of Appeals are

conclusive upon the Supreme Court; Exceptions.—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
380
appellee; (7) when the findings are contrary to those of the trial
court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner’s main and reply
briefs are not disputed by the respondent; and (10) when the
findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record.
Judges; That the trial court judge who decided a case is not
the same judge who heard the case and received the evidence is of
little consequence when the records and transcripts of stenographic
notes (TSNs) are complete and available for consideration by the
former.—What deserves stressing is that, in this jurisdiction,
there exists a disputable presumption that the RTC Decision was
rendered by the judge in the regular performance of his official
duties. While the said presumption is only disputable, it is
satisfactory unless contradicted or overcame by other evidence.
Encompassed in this presumption of regularity is the
presumption that the RTC judge, in resolving the case and
drafting his Decision, reviewed, evaluated, and weighed all the
evidence on record. That the said RTC judge is not the same judge
who heard the case and received the evidence is of little
consequence when the records and transcripts of stenographic
notes (TSNs) are complete and available for consideration by the
former.
Evidence; Admissions; Documentary Evidence; Promissory

Notes; By the admission of the genuineness and due execution of
an instrument is meant that the party whose signature it bears

admits that he signed it or that it was signed by another for him
with his authority, that at the time it was signed it was in words
and figures exactly as set out in the pleading of the party relying
on it, that the document was delivered, and that any formal
requisites required by law, are waived by him; The effect of an
admission is such that in the case of a promissory note a prima
facie case is made for the plaintiff which dispenses with the
necessity of evidence on his part and entitles him to a judgment on
the pleadings unless a special defense of new matter, such as
payment, is interposed by the defendant.—Petitioner Citibank did
not deny the existence nor questioned the authenticity of PNs No.
23356 and 23357 it issued in favor of respondent for her money
market placements. In fact, it admitted the genuineness and due
execution of the said PNs, but qualified that they were no longer
outstanding. In Hibberd v. Rohde and McMillian, 32 Phil. 476,
this
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Court delineated the consequences of such an admission—By the

admission of the genuineness and due execution of an instrument,
as provided in this section, is meant that the party whose
signature it bears admits that he signed it or that it was signed by
another for him with his authority; that at the time it was signed
it was in words and figures exactly as set out in the pleading of
the party relying upon it; that the document was delivered; and
that any formal requisites required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by
him. Hence, such defenses as that the signature is a forgery
(Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425; Cox vs.
Northwestern Stage Co., 1 Idaho, 376; Woollen vs. Whitacre, 73
Ind., 198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escaño, 11
Phil. Rep., 92); or that it was unauthorized, as in the case of an
agent signing for his principal, or one signing in behalf of a
partnership (Country Bank vs. Greenberg, 127 Cal., 26; Henshaw
vs. Root, 60 Inc., 220; Naftzker vs. Lantz, 137 Mich., 441) or of a
corporation (Merchant vs. International Banking Corporation, 6
Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs.
Spencer & Barnes Co., 162 Mich., 509); or that, in the case of the
latter, that the corporation was authorized under its charter to
sign the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed the
instrument in some other capacity than that alleged in the

pleading setting it out (Payne vs. National Bank, 16 Kan., 147); or
that it was never delivered (Hunt vs. Weir, 29 Ill., 83; Elbring vs.
Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co., 48 N.Y., 253;
Fire Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut off
by the admission of its genuineness and due execution. The effect
of the admission is such that in the case of a promissory note a
prima facie case is made for the plaintiff which dispenses with the
necessity of evidence on his part and entitles him to a judgment
on the pleadings unless a special defense of new matter, such as
payment, is interposed by the defendant (Papa vs. Martinez, 12
Phil. Rep., 613; Chinese Chamber of Commerce vs. Pua To Ching,
14 Phil. Rep., 222; Banco Español-Filipino vs. McKay & Zoeller,
27 Phil. Rep., 183). x x x
Same; Obligations and Contracts; Payments; As a general

rule, one who pleads payment has the burden of proving it—even
where the plaintiff must allege non-payment, the general rule is
that the burden rests on the defendant to prove payment, rather
than on the plaintiff to prove non-payment.—Since the
genuineness and due execution of
382
PNs No. 23356 and 23357 are uncontested, respondent was able
to establish prima facie that petitioner Citibank is liable to her for
the amounts stated therein. The assertion of petitioner Citibank
of payment of the said PNs is an affirmative allegation of a new
matter, the burden of proof as to such resting on petitioner
Citibank. Respondent having proved the existence of the
obligation, the burden of proof was upon petitioner Citibank to
show that it had been discharged. It has already been established
by this Court that—As a general rule, one who pleads payment
has the burden of proving it. Even where the plaintiff must allege
non-payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove
non-payment. The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment.
When the existence of a debt is fully established by the evidence
contained in the record, the burden of proving that it has been
extinguished by payment devolves upon the debtor who offers
such defense to the claim of the creditor. Where the debtor
introduces some evidence of payment, the burden of going forward
with the evidence—as distinct from the general burden of proof—

shifts to the creditor, who is then under the duty of producing
some evidence of non-payment.
Same; Witnesses; Taking into consideration the substantial

length of time between the transactions and the witnesses’
testimonies, as well as the undeniable fact that bank officers deal
with multiple clients and process numerous transactions during
their tenure, the Court is reluctant to give much weight to such
bank officials’ testimonies regarding the payment of promissory
notes and the use of the proceeds thereof for opening time deposit
accounts—the Court finds it implausible that they should
remember, after all these years, the particular transaction with
respondent involving her promissory notes and her time deposit
accounts.—Before anything else, it should be noted that when Mr.
Pujeda’s testimony before the RTC was made on 12 March 1990
and Mr. Tan’s deposition in Hong Kong was conducted on 3
September 1990, more than a decade had passed from the time
the transactions they were testifying on took place. This Court
had previously recognized the frailty and unreliability of human
memory with regards to figures after the lapse of five years.
Taking into consideration the substantial length of time between
the transactions and the witnesses’ testimonies, as well as the
undeniable fact that bank officers deal with multiple clients and
process
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numerous transactions during their tenure, this Court is

reluctant to give much weight to the testimonies of Mr. Pujeda
and Mr. Tan regarding the payment of PNs No. 23356 and 23357
and the use by respondent of the proceeds thereof for opening TD
accounts. This Court finds it implausible that they should
remember, after all these years, this particular transaction with
respondent involving her PNs No. 23356 and 23357 and TD
accounts. Both witnesses did not give any reason as to why, from
among all the clients they had dealt with and all the transactions
they had processed as officers of petitioner Citibank, they
specially remembered respondent and her PNs No. 23356 and
23357. Their testimonies likewise lacked details on the
circumstances surrounding the payment of the two PNs and the
opening of the time deposit accounts by respondent, such as the
date of payment of the two PNs, mode of payment, and the
manner and context by which respondent relayed her instructions

to the officers of petitioner Citibank to use the proceeds of her two
PNs in opening the TD accounts.
Same; Preponderance of Evidence; Words and Phrases;

Preponderant evidence means that, as a whole, the evidence
adduced by one side outweighs that of the adverse party.—After
going through the testimonial and documentary evidence
presented by both sides to this case, it is this Court’s assessment
that respondent did indeed have outstanding loans with
petitioner Citibank at the time it effected the 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.
Banks and Banking; Checks; Manager’s Checks (MCs) are

drawn by the bank’s manager upon the bank itself and regarded to
be as good as the money it represents.—It bears to emphasize that
the proceeds of the loans were paid to respondent in MCs, with
the respondent specifically named as payee. MCs checks are
drawn by the bank’s manager upon the bank itself and regarded
to be as good
384
as the money it represents. Moreover, the MCs were crossed

checks, with the words “Payee’s Account Only.”
Same; Same; Crossed Checks; A crossed check cannot be

presented to the drawee bank for payment in cash—the check can
only be deposited with the payee’s bank which, in turn, must
present it for payment against the drawee bank in the course of
normal banking hours; The crossed check can only be deposited
and the drawee bank may only pay to another bank in the payee’s
or indorser’s account.—In general, a crossed check cannot be
presented to the drawee bank for payment in cash. Instead, the
check can only be deposited with the payee’s bank which, in turn,
must present it for payment against the drawee bank in the
course of normal banking hours. The crossed check cannot be

presented for payment, but it can only be deposited and the
drawee bank may only pay to another bank in the payee’s or
indorser’s account. The effect of crossing a check was described by
this Court in Philippine Commercial International Bank v. Court
of Appeals, 350 SCRA 446 (2001)—[T]he crossing of a check with
the phrase “Payee’s Account Only” is a warning that the check
should be deposited in the account of the payee. Thus, it is the
duty of the collecting bank PCI Bank to ascertain that the check
be deposited in payee’s account only. It is bound to scrutinize the
check and to know its depositors before it can make the clearing
indorsement “all prior indorsements and/or lack of indorsement
guaranteed.”
Same; Same; Same; Presumptions; Given that a check is more

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

said MCs, duly stamped “Paid” gives rise to the presumption that
the said MCs were already paid out to the intended payee, who
was in this case, the respondent.
Same; Same; Same; Same; It is presumed that private

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

account only were actually deposited, cleared, and paid, then the
presumption would be that the said checks were properly deposited
to the account of the payee, who was clearly named as such in the
checks; The mere fact that the Manager’s Checks (MCs) do not bear
the payee’s signature at the back does not negate deposit thereof in
her account.—Respondent denied ever receiving MCs No. 220701
and 226467. However, considering that the said checks were
crossed for payee’s account only, and that they were actually
deposited, cleared, and paid, then the presumption would be that
the said checks were properly deposited to the account of
respondent, who was clearly named the payee in the checks.
Respondent’s bare allegations that she did not receive the two
checks fail to convince this Court, for to sustain her, would be for
this Court to conclude that an irregularity had occurred
somewhere from the time of the issuance of the said checks, to
their deposit, clearance, and payment, and which would
386
have involved not only petitioner Citibank, but also BPI, which
accepted the checks for deposit, and the Central Bank of the
Philippines, which cleared the checks. It falls upon the
respondent to overcome or dispute the presumption that the
crossed checks were issued, accepted for deposit, cleared, and paid
for by the banks involved following the ordinary course of their
business. The mere fact that MCs No. 220701 and 226467 do not
bear respondent’s signature at the back does not negate deposit

thereof in her account. The liability for the lack of indorsement on
the MCs no longer fall on petitioner Citibank, but on the bank
who received the same for deposit, in this case, BPI Cubao
Branch. Once again, it must be noted that the MCs were crossed,
for payee’s account only, and the payee named in both checks was
none other than respondent. The crossing of the MCs was already
a warning to BPI to receive said checks for deposit only in
respondent’s account. It was up to BPI to verify whether it was
receiving the crossed MCs in accordance with the instructions on
the face thereof. If, indeed, the MCs were deposited in accounts
other than respondent’s, then the respondent would have a cause
of action against BPI.
Same; Same; Same; A check, whether a manager’s check or

ordinary check, is not legal tender, and an offer of a check in
payment of a debt is not a valid tender of payment and may be
refused receipt by the obligee or creditor.—Mr. Tan, in his
deposition, further explained that provisional receipts were issued
when payment to the bank was made using checks, since the
checks would still be subject to clearing. The purpose for the
provisional receipts was merely to acknowledge the delivery of the
checks to the possession of the bank, but not yet of payment. This
bank practice finds legitimacy in the pronouncement of this Court
that a check, whether an MC or an ordinary check, is not legal
tender and, therefore, cannot constitute valid tender of payment.
In Philippine Airlines, Inc. v. Court of Appeals, 181 SCRA 557
(1990), this Court elucidated that: Since a negotiable instrument
is only a substitute for money and not money, the delivery of such
an instrument does not, by itself, operate as payment (Sec. 189,
Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co.
v. American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44;
21 R.C.L. 60, 61). A check, whether a manager’s check or ordinary
check, is not legal tender, and an offer of a check in payment of a
debt is not a valid tender of payment and may be refused receipt
by the obligee or creditor. Mere delivery of checks
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VOL. 504, OCTOBER 16, 2006 387
does not discharge the obligation under a judgment. The

obligation is not extinguished and remains suspended until the
payment by commercial document is actually realized (Art. 1249,
Civil Code, par. 3).
Same; Loans; Words and Phrases; Booking the loan means

recording it in the General Ledger.—Ms. Cristina Dondoyano, who
worked at petitioner Citibank as a loan processor, was responsible
for booking respondent’s loans. Booking the loans means
recording it in the General Ledger. She explained the procedure
for booking loans, as follows: The account officer, in the Marketing
Department, deals directly with the clients who wish to borrow
money from petitioner Citibank. The Marketing Department will
forward a loan booking checklist, together with the borrowing
client’s PNs and other supporting documents, to the loan 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.
Evidence; Preponderance of Evidence; Words and Phrases;

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 becomes the
determining factor.—This Court finds that the preponderance of
evidence supports the existence of the respondent’s loans, in the
principal sum of P1,920,000.00, as of 5 September 1979. While it
is 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
388
state of facts. For instance, one or two witnesses may testify to a

given state of facts, and six or seven witnesses of equal candor,
fairness, intelligence, and truthfulness, and equally well
corroborated by all the remaining evidence, who have no greater
interest in the result of the suit, testify against such state of facts.
Then the preponderance of evidence is determined by the number
of witnesses. (Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep.,
761.)
Same; Best Evidence Rule; Words and Phrases; In general, the

best evidence rule requires that the highest available degree of
proof must be produced, and, for documentary evidence, the
contents of a document are best proved by the production of the
document itself, to the exclusion of any secondary or
substitutionary evidence.—The best evidence rule requires that
the highest available degree of proof must be produced.
Accordingly, for documentary evidence, the contents of a
document are best proved by the production of the document
itself, to the exclusion of any secondary or substitutionary
evidence. The best evidence rule has been made part of the
revised Rules of Court, Rule 130, Section 3, which reads—SEC. 3.
Original document must be produced; exceptions.—When the
subject of inquiry is the contents of a document, no evidence shall
be admissible other than the original document itself, except in
the following cases: (a) When the original has been lost or
destroyed, or cannot be produced in court, without bad faith on
the part of the offeror; (b) When the original is in the custody or
under the control of the party against whom the evidence is
offered, and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other
documents which cannot be examined in court without great loss
of time and the fact sought to be established from them is only the
general result of the whole; and (d) When the original is a public
record in the custody of a public officer or is recorded in a public
office.
Same; Same; Even with respect to documentary evidence, the

best evidence rule applies only when the content of such document
is the subject of the inquiry.—As the 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
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VOL. 504, OCTOBER 16, 2006 389
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
Same; A basic rule of evidence states that “evidence that one

did or did not do a certain thing at one time is not admissible to
prove that he did or did not do the same or similar thing at
another time, but it may be received to prove a specific intent or
knowledge, identity, plan, system, scheme, habit, custom or usage,
and the like.”—While the Court of Appeals can take judicial notice
of the Decision of its Third Division in the Dy case, it should not
have given the said case much weight when it rendered the
assailed Decision, since the former does not constitute a
precedent. The Court of Appeals, in the challenged Decision, did
not apply any legal argument or principle established in the Dy
case but, rather, adopted the findings therein of wrongdoing or
misconduct on the part of herein petitioner Citibank and Mr. Tan.
Any finding of wrongdoing or misconduct as against herein
petitioners should be made based on the factual background and
pieces of evidence submitted in this case, not those in another
case. It is apparent that the Court of Appeals took judicial notice
of the Dy case not as a legal precedent for the present case, but
rather as evidence of similar acts committed by petitioner
Citibank and Mr. Tan. A basic rule of evidence, however, states
that, “Evidence that one did or did not do a certain thing at one
time is not admissible to prove that he did or did not do the same
or similar thing at another time; but it may be received to prove a
specific intent or knowledge, identity, plan, system, scheme,
habit, custom or usage, and the like.” The rationale for the rule is
explained thus—The rule is founded upon reason, public policy,
justice and judicial convenience. The fact that a person has
committed the same or similar acts at some prior time affords, as
a general rule, no logical guaranty that he committed the act in
question. This is so because, subjectively, a man’s mind and even
his modes of life may change; and, objectively, the conditions
under which he may find himself at a given time may likewise

change and thus induce him to act in a
390
different way. Besides, if evidence of similar acts are to be

invariably admitted, they will give rise to a multiplicity of
collateral issues and will subject the defendant to surprise as well
as confuse the court and prolong the trial.
Banks and Banking; Compensation; Compensation takes

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

documents, it should be recalled that the notarization of a private
document converts it into a public one and renders it admissible in
court without further proof of its authenticity.—The Deeds of
Assignment of the money market placements with petitioner
FNCB Finance were notarized documents, thus, admissible in
evidence. Rule 132, Section 30 of the Rules of Court provides that
—SEC. 30. Proof of notarial documents.—Every instrument duly
acknowledged or proved and certified as provided by law, may be
presented in evidence without further proof, the certificate of
acknowledgement being prima facie evidence of the execution of
the instrument or document involved. Significant herein is this

Court’s elucidation in De Jesus v. Court of Appeals, 217 SCRA 307
(1993), which reads—On the evidentiary value of these
documents, it should be recalled that the notarization of a private
document converts it into a public
391
VOL. 504, OCTOBER 16, 2006 391
one and renders it admissible in court without further proof of its

authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This is so
because a public document duly executed and entered in the
proper registry is presumed to be valid and genuine until the
contrary is shown by clear and convincing proof (Asido vs.
Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil. 241
[1902]; Favor vs. Court of Appeals, 194 SCRA 308 [1991]). As
such, the party challenging the recital of the document must
prove his claim with clear and convincing evidence (Diaz vs. Court
of Appeals, 145 SCRA 346 [1986]).
Same; Same; The certificate of acknowledgment in notarized

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

Deeds of Assignment, they were, in reality, more of a pledge.—
Petitioner Citibank was only acting upon the authority granted to
it under the foregoing Deeds when it finally used the proceeds of
PNs No. 20138 and 20139, paid by petitioner FNCB Finance, to
partly pay for respondent’s outstanding loans. Strictly speaking, it

did not effect a legal compensation or 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
392
to Article 2118 of the Civil Code—ART. 2118. If a credit has been

pledged becomes due before it is redeemed, the pledgee may
collect and receive the amount due. He shall apply the same to the
payment of his claim, and deliver the surplus, should there be
any, to the pledgor.
Same; Same; Conflict of Laws; Processual Presumptions;

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

assailed on the basis of forgery, the best evidence rule applies;
Without the original document containing the alleged forged
signature, one cannot make a definitive comparison which would
establish forgery—a comparison based on a mere xerox copy or
reproduction of the document under controversy cannot produce
reliable results.—Respondent denied that it was her signature on
the Declaration of Pledge. She claimed that the signature was a
forgery. When a document is assailed on the basis of forgery, the
best evidence rule applies—Basic is the rule of evidence that
when the subject of inquiry is the contents of a document, no
evidence is admissible other than the original document itself

except in the instances mentioned in Section 3, Rule 130 of the
Revised Rules of Court. Mere photocopies of documents are
inadmissible pursuant to the best evidence rule. This is
especially true when the issue is that of forgery. As a rule,
forgery cannot be presumed and must be proved by clear, positive
and convincing evidence and the burden of proof lies on the party
alleging forgery. The best evidence of a forged signature in an
instrument is the instrument itself reflecting the alleged forged
signature. The fact of forgery can only be established by a
comparison between the alleged forged signature and the
authentic and
393
VOL. 504, OCTOBER 16, 2006 393
genuine signature of the person whose signature is theorized

upon to have been forged. Without the original document
containing the alleged forged signature, one cannot make a
definitive comparison which would establish forgery. A
comparison based on a mere xerox copy or reproduction of the
document under controversy cannot produce reliable results.
Same; Presumptions; It is presumed that evidence willfully

suppressed by a party would be adverse to said party if the
evidence is produced.—Respondent made several attempts to have
the original copy of the pledge produced before the RTC so as to
have it examined by experts. Yet, despite several Orders by the
RTC, petitioner Citibank failed to comply with the production of
the original Declaration of Pledge. It is admitted that Citibank-
Geneva had possession of the original copy of the pledge. While
petitioner Citibank in Manila and its branch in Geneva may be
separate and distinct entities, they are still incontestably related,
and between petitioner Citibank and respondent, the former had
more influence and resources to convince 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. In addition, even if this Court cannot make a

categorical finding that respondent’s signature on the original
copy of the pledge was forged, it is persuaded that petitioner
Citibank willfully suppressed the presentation of the original
document, and takes into consideration the presumption that the
evidence willfully suppressed would be adverse to petitioner
Citibank if produced.
Appeals; Review of matters, even those not assigned as errors

in the appeal, may be authorized if the consideration thereof is
necessary in arriving at a just decision of the case, and there is a
close interrelation between the omitted assignment of error and
those actually assigned and discussed by the appellant.—While it
is true that the general rule is that only errors which have been
stated in the assignment of errors and properly argued in the
brief shall be consid-
394
ered, this Court has also recognized exceptions to the general

rule, wherein it authorized the review of matters, even those not
assigned as errors in the appeal, if the consideration thereof is
necessary in arriving at a just decision of the case, and there is a
close interrelation between the omitted assignment of error and
those actually assigned and discussed by the appellant. Thus, the
Court of Appeals did not err in awarding the damages when it
already made findings that would justify and support the said
award.
Banks and Banking; Banking is impressed with public

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

compensate for the actual injury suffered by a party, not to enrich
her.—For the mental anguish, serious anxiety, besmirched
reputation, moral shock and social humiliation suffered by the
respondent, the award of moral damages is but proper. However,
this Court reduces the amount thereof to P300,000.00, for the
award of moral damages is
395
VOL. 504, OCTOBER 16, 2006 395
meant to compensate for the actual injury suffered by the

respondent, not to enrich her.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Agcaoili & Associates for petitioners.
Angara, Abello, Concepcion, Regala & Cruz co-
counsel for petitioners.
Moises R. Tolentino, Jr. for respondent.
CHICO-NAZARIO, J.:
1
Before this Court is a Petition for Review on Certiorari,
under Rule
2
45 of the Revised Rules of Court, of the
Decision of the Court of Appeals in CA-G.R. CV3 No. 51930,
dated 26 March 2002, and the Resolution, dated 20
November 2002, of the same court which, although
modifying its earlier Decision, still denied for the most part
the Motion for Reconsideration of herein petitioners.
Petitioner Citibank, N.A. (formerly known as the First
National City Bank) is a banking corporation duly
authorized and existing under the laws of the United
States of America and licensed to do commercial banking
activities and perform trust functions in the Philippines.
Petitioner Investor’s Finance Corporation, which did
business under the name and style of FNCB Finance, was
an affiliate company of petitioner Citibank, specifically
handling money market placements for its clients. It is
now, by virtue
_______________
1 Rollo, pp. 165-325.

2 Penned by Associate Justice Andres B. Reyes, Jr. with Associate
Justices Conrado M. Vasquez, Jr. and Amelita G. Tolentino, concurring;
Id., at pp. 327-366.
3 Id., at pp. 368-374.
396

Sabeniano
of a merger, doing business as part of its successor-in-

interest, BPI Card Finance Corporation. However, so as to
consistently establish its identity in the Petition at bar, the
said petitioner
4
shall still be referred to herein as FNCB
Finance.
Respondent Modesta R. Sabeniano was a client of both
petitioners Citibank and FNCB Finance. Regrettably, the
business relations among the parties subsequently went
awry. 5
On 8 August 1985, respondent filed a Complaint
against petitioners, docketed as Civil Case No. 11336,
before the Regional Trial Court (RTC) of Makati City.
Respondent claimed to have substantial deposits and
money market placements with the petitioners, as well as
money market placements with the Ayala Investment and
Development Corporation (AIDC), the proceeds of which
were supposedly deposited automatically and directly to
respondent’s accounts with petitioner Citibank.
Respondent alleged that petitioners refused to return her
deposits and the proceeds of her money market placements
despite her repeated demands, thus, compelling respondent
to file Civil Case No. 11336 against petitioners for

“Accounting, Sum of Money and Damages.” 6
Respondent
eventually filed an Amended Complaint on 9 October 1985
to include additional claims to deposits and money market
placements inadvertently left out from her original
Complaint. 7
In their8 joint Answer and Answer to Amended
Complaint, filed on 12 September 1985 and 6 November
1985, respectively, petitioners admitted that respondent
had deposits and money market placements with them,
including dollar accounts in the Citibank branch in
Geneva, Switzerland (Citibank-Geneva). Petitioners
further alleged that the respondent
_______________
4 TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.

5 Records, Vol. I, pp. 1-8.
6 Id., at pp. 148-157.
7 Id., at pp. 40-51.
8 Id., at pp. 208-227.
397
VOL. 504, OCTOBER 16, 2006 397

Sabeniano
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 9failed to reach a compromise during
the pre-trial hearing, trial proper ensued and the parties
proceeded with the presentation of their respective
evidence. Ten years after 10the filing of the Complaint on 8
August 1985, a Decision was finally rendered in Civil 11
Case No. 11336 on 24 August 1995 by the fourth Judge
who handled the said case,
_______________
9 Order, dated 11 December 1985, penned by Judge Ansberto P.

Paredes, Records, Vol. I, p. 346.
10 Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 1607-
1621.
11 Civil Case No. 11336 was raffled and re-reffled to four different
Judges of the Makati RTC before it was finally resolved. It was originally
raffled to Makati RTC, Branch 140, presided by Judge Ansberto P.
Paredes. On 4 February 1987, before the termination of the re-direct
examination of herein respondent (plaintiff before the
398

Sabeniano
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 set-off 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 set-off
was effected on 31 October 1979;
(3) Dismissing all other claims and counterclaims interposed by

the parties against each other.
Costs against the defendant Bank.”
_______________
RTC), the case was transferred to Makati RTC, Branch 57, presided by
Judge Francisco X. Velez, for reasons not disclosed in the Records. Judge
Velez was able to try and hear the case until the presentation of the
evidence by herein petitioners (defendants before the RTC). Respondent
again took the stand to present rebuttal evidence, but even before she
could finish her testimony, Judge Velez inhibited himself upon petitioners’
motion (Order, dated 10 April 1992, penned by Judge Francisco X. Velez,
Records, Vol. 11, p. 1085). The case was transferred to Makati RTC,
Branch 141, presided by Judge Marcelino F. Bautista, Jr. For reasons not
disclosed in the Records, Judge Manuel D. Victorio took over Makati RTC,
Branch 141. After the parties submitted their respective Memoranda,
Judge Victorio declared the case submitted for decision (Order, dated 9
December 1994, penned by Judge Manuel D. Victorio, Records, Vol. III, p.
1602). Judge Victorio rendered his Decision in Civil Case No. 11336 on 24
August 1995 (Records, Vol. III, pp. 1607-1621).
399
VOL. 504, OCTOBER 16, 2006 399

Sabeniano
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 2612 March 2002, the Court of Appeals rendered its
Decision affirming with modification the RTC Decision in
Civil Case No. 11336, dated 24 August 1995, and ruling
entirely in favor of respondent in this wise—
“Wherefore, premises considered, the assailed 24 August 1995

Decision of the court a quo is hereby AFFIRMED with
MODIFICATION, as follows:
1. Declaring as illegal, null and void the set-off effected by the
defendant-appellant Bank of the plaintiff-appellant’s dollar
deposit with Citibank, Switzerland, in the amount of
US$149,632.99, and ordering defendant-appellant Citibank to
refund the said amount to the plaintiff-appellant with legal
interest at the rate of twelve percent (12%) per annum,
compounded yearly, from 31 October 1979 until fully paid, or its
peso equivalent at the time of payment;
2. As defendant-appellant Citibank failed to establish by
competent evidence the alleged indebtedness of plaintiff-
appellant, the set-off of 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 con-
_______________
12 Rollo, pp. 365-366.
400

Sabeniano
tending parties as evidenced by the certificates of investments, to

wit:
(i) Citibank NNPN Serial No. 023356 (Cancels and

Supersedes NNPN No. 22526) issued on 17 March 1977,
P318,897.34 with 14.50% interest p.a.;
(ii) Citibank NNPN Serial No. 23357 (Cancels and Supersedes
NNPN No. 22528) issued on 17 March 1977, P203,150.00
with 14.50 interest p.a.;
(iii) FNCB NNPN Serial No. 05757 (Cancels and Supersedes
NNPN No. 04952), issued on 02 June 1977, P500,000.00
with 17% interest p.a.;
(iv) FNCB NNPN Serial No. 05758 (Cancels and Supersedes
NNPN No. 04962), issued on 02 June 1977, P500,000.00
with 17% interest per annum;
(v) The Two Million (P2,000,000.00) money market
placements of Ms. Sabeniano with the Ayala Investment
& Development Corporation (AIDC) with legal interest at
the rate of twelve percent (12%) per annum compounded

yearly, from 30 September 1976 until fully paid;
4. Ordering defendants-appellants to jointly and severally pay

the plaintiff-appellant the sum of FIVE HUNDRED THOUSAND
PESOS (P500,000.00) by way of moral damages, FIVE
HUNDRED THOUSAND PESOS (P500,000.00) as exemplary
damages, and ONE HUNDRED THOUSAND PESOS
(P100,000.00) as attorney’s fees.
Apparently, the parties to the case, namely, the

respondent, on one hand, and the petitioners, on the other,
made separate attempts to bring the aforementioned
Decision of the Court of Appeals, dated 26 March 2002,
before this Court for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the

Decision of the Court of Appeals in CA-G.R. CV No. 51930,
dated 26 March 2002, and instead, filed immediately with
this Court on 3 May 2002 a Motion for Extension of Time to
File a
401
VOL. 504, OCTOBER 16, 2006 401

Sabeniano
13
Petition for Review, which, after payment of the docket
and other lawful fees, was assigned the docket number
G.R. No. 152985. In the said Motion, respondent alleged
that she received a copy of the assailed Court of Appeals
Decision on 18 April 2002 and, thus, had 15 days therefrom
or until 3 May 2002 within which to file her Petition for
Review. Since she informed her counsel of her desire to
pursue an appeal of the Court of Appeals Decision only on
29 April 2002, her counsel neither had enough time to file a
motion for reconsideration of the said Decision with the
Court of Appeals, nor a Petition for Certiorari with this
Court. Yet, the Motion failed to state the exact extension
period respondent was requesting for.
Since this Court did not act upon respondent’s Motion
for Extension of Time to file her Petition for Review, then
the period for
14
appeal continued to run and still expired on 3
May 2002. Respondent failed to file any Petition for
Review within the prescribed period for appeal and, hence,
15
15
this Court issued a Resolution, dated 13 November 2002,
in which it pronounced that—
G.R. No. 152985 (Modesta R. Sabeniano vs. Court of

Appeals, et al.).—It appearing that petitioner failed to file the
intended petition for review on certiorari within the period which
expired on May 3, 2002, the Court Resolves to DECLARE THIS
CASE TERMINATED and DIRECT the Division Clerk of Court
to INFORM the parties that the judgment sought to be reviewed
has become final and executory.
_______________
13 Rollo of G.R. No. 152985, pp. 3-4.

14 The filing of a motion for extension does not automatically suspend
the running of the period for appeal, since the purpose of such motion is to
merely ask the court to grant an enlargement of the time fixed by law. The
movant, therefore, has no right to assume that his motion would be
granted, and should check with the court as to the outcome of his motion,
so that if the same is denied, he can still perfect his appeal. (Hon. Bello
and Ferrer v. Fernando, 114 Phil. 101, 104; 4 SCRA 135, 138 [1962]).
15 Rollo of G.R. No. 156132, p. 1227.
402

Sabeniano
The said Resolution was duly recorded in the Book of

Entriesof Judgments on 3 January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a

Motion for Reconsideration of its Decision in CA-G.R. CV
No. 51930, dated 26 March 2002. Acting upon the 16
said
Motion, the Court of Appeals issued the Resolution, dated
20 November 2002, modifying its Decision of 26 March
2002, as follows—
“WHEREFORE, premises considered, the instant Motion for

Reconsideration is PARTIALLY GRANTED as 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
17
as G.R. No. 156132. The Petition
was initially denied by this Court for failure of the
petitioners to attach thereto a Certification against Forum
Shopping. However, upon petitioners’ Motion 18 and
compliance with the requirements, this Court resolved to
reinstate the Petition.
The Petition presented fourteen (14) assignments of
errors allegedly committed by the Court of Appeals in its
Decision, dated 26 March 2002, involving both questions of
fact and questions of law which this Court, for the sake of
expediency, discusses jointly, whenever possible, in the
succeeding paragraphs.
_______________
16 Rollo, p. 374.
17 Resolution, dated 29 January 2003; Rollo, pp. 980-A-B.
18 Resolution, dated 23 June 2003; Id., at pp. 1311-1312.
403
VOL. 504, OCTOBER 16, 2006 403

Sabeniano
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, respon-dent’s appeal, which she failed to
perfect through the filing of a Petition for Review within
the prescribed period. The declaration of this Court in the
same Resolution would bind respondent solely, and not
petitioners which filed their own separate appeal before
this Court, docketed as G.R. No. 156132, the Petition at
bar. This would mean that respondent, on her part, should
be bound by the findings of fact and law of the Court of
Appeals, including the monetary amounts consequently
awarded to her by the appellate court in its
404

Sabeniano
Decision, dated 26 March 2002; 19

and she can no longer
refute or assail any part thereof.
This Court already explained
20
the matter to respondent
when it issued a Resolution in G.R. No. 156132, dated 2
February 2004, which addressed her Urgent Motion for the
Release of the Decision with the Implementation of the
Entry of Judgment in the following manner—
[A]cting on Citibank’s and FNCB Finance’s Motion for

Reconsideration, we resolved to grant the motion, reinstate the
petition and require Sabeniano to file a comment thereto in our
Resolution of June 23, 2003. Sabeniano filed a Comment dated
July 17, 2003 to which Citibank and FNCB Finance filed a Reply
dated August 20, 2003.
From the foregoing, it is clear that Sabeniano had knowledge
of, and in fact participated in, the proceedings in G.R. No. 156132.
She cannot feign ignorance of the proceedings therein and claim
that the Decision of the Court of Appeals has become final and
executory. More precisely, the Decision became final and
executory only with regard to Sabeniano in view of her failure
to file a petition for review within the extended period granted by
the Court, and not to Citibank and FNCB Finance whose Petition
for Review was duly reinstated and is now submitted for decision.
Accordingly, the instant Urgent Motion is hereby DENIED.
(Emphasis supplied.)
To sustain the argument of respondent would result in an

unjust and incongruous situation wherein one party may
frustrate the efforts of the opposing party to appeal the
case by merely filing with this Court a Motion for
Extension of Time to File a Petition for Review, ahead of
the opposing
_______________
19 Firestone Tire and Rubber Company of the Philippines v. Tempongko,

137 Phil. 239, 244; 27 SCRA 418, 422 (1969); Singh v. Liberty Insurance
Corp., 118 Phil. 532, 535; 8 SCRA 517, 519-520 (1963).
20 Rollo, pp. 1443-1445.
405
VOL. 504, OCTOBER 16, 2006 405

Sabeniano
21
party, then not actually filing the intended Petition. The
party who fails to file its intended Petition within the
reglementary or extended period should solely bear the
consequences of such failure.
Respondent Sabeniano did not commit forum shopping.

Another issue that does not directly involve the merits of
the present Petition, but raised by petitioners, is whether
respondent should be held liable for forum shopping.
Petitioners contend that respondent committed forum
shopping on the basis of the following facts:
While petitioners’ Motion for Reconsideration of the
Decision in 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,
_______________
21 See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438; 70
SCRA 329 [1976]) wherein this Court pronounced that a party’s right to
appeal shall not be affected by the perfection of another appeal from the
same decision; otherwise, it would lead to the absurd proposition that one
party may be deprived of the right to appeal from the portion of a decision
against him just because the other party who had been notified of the
decision ahead had already perfected his appeal in so far as the said
decision adversely affects him. If the perfection of an appeal by one party
would not bar the right of the other party to appeal from the same
decision, then an unperfected appeal, as in the case at bar, would have far
less effect.
406

Sabeniano
respondent is undeniably guilty of forum shopping, if not

indirect contempt.
This Court, however, finds no sufficient basis to hold
respondent liable for forum shopping.
Forum shopping has been defined as the filing of two or
more suits involving the same parties for the same cause of
action, either simultaneously or successively,22
for the
purpose of obtaining a favorable judgment. The test for
determining forum shopping is whether in the two (or
more) cases pending, there is an identity
23
of parties, rights
or causes of action, and relief sought. To guard against
this deplorable practice, Rule 7, Section 5 of the revised
Rules of Court imposes the following requirement—
“SEC. 5. Certification against forum shopping.—The plaintiff or

principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any
claim involving the same issues in any court, tribunal or 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
_______________
22 The Executive Secretary v. Gordon, 359 Phil. 266, 271; 298 SCRA 736,
740 (1998).
23 Young v. John Keng Seng, 446 Phil. 823, 833; 398 SCRA 629, 638
(2003).
407
VOL. 504, OCTOBER 16, 2006 407

Sabeniano
actions. If the acts of the party or his counsel clearly constitute

willful and deliberate forum shopping, the same shall be ground
for summary dismissal with prejudice and shall constitute direct
contempt, as well as cause for administrative sanctions.”
Although it may seem at first glance that respondent was

simultaneously seeking recourse from the Court of Appeals
and this Court, a careful and closer scrutiny of the details
of the case at bar would reveal otherwise.
It should be recalled that respondent did nothing more
in G.R. No. 152985 than to file with this Court a Motion for
Extension of Time within which to file her Petition for
Review. For unexplained reasons, respondent failed to
submit to this Court her intended Petition within the
reglementary period. Consequently, this Court was
prompted to issue a Resolution, dated 13 November 2002,
declaring G.R. No. 152985 terminated, and the therein
assailed Court of Appeals Decision final and executory.
G.R. No. 152985, therefore, did not progress and
respondent’s appeal was unperfected.
The Petition for Review would constitute the initiatory
pleading before this Court, upon the timely filing of which,
the case before this Court commences; much in the same
way a case is initiated by the filing of a Complaint before

the trial court. The Petition for Review establishes the
identity of parties, rights or causes of action, and relief
sought from this Court, and without such a Petition, there
is technically no case before this Court. The Motion filed by
respondent seeking extension of time within which to file
her Petition for Review does not serve the same purpose as
the Petition for Review itself. Such a Motion merely
presents the important dates and the justification for the
additional time requested for, but it does not go into the
details of the appealed case.
Without any particular idea as to the assignments of
error or the relief respondent intended to seek from this
Court, in light of her failure to file her Petition for Review,
there is actually no second case involving the same parties,
rights or
408

Sabeniano
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 re-
spondent’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.
409
VOL. 504, OCTOBER 16, 2006 409

Sabeniano
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 24of evidence and contradicted by the
evidence on record.
Several of the enumerated exceptions pertain to the

Petition at bar.
It is indubitable that the Court of Appeals made 25factual
findings that are contrary to those of the RTC, thus,
result-
_______________
24 Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283; 285
SCRA 351, 357-358 (1998).
25 The Court of Appeals modified the trial court’s findings and
conclusions, as follows: (1) By declaring the P1,069,847.40 alleged
indebtedness of Ms. Sabeniano as non-existing for failure of Citibank
410

Sabeniano
ing in its substantial modification of the trial court’s

Decision, and a ruling entirely in favor of the respondent.
In addition, petitioners invoked in the instant Petition for
Review several exceptions that would justify this Court’s
review of the factual findings of the Court of Appeals, i.e.,
the Court of Appeals made conflicting findings of fact;
findings of fact which went beyond the issues raised on
appeal before it; as well as findings of fact premised on the
supposed absence of evidence and contradicted by the
evidence on record.
On the basis of the foregoing, this Court shall proceed to
reviewing and 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, the26 case was presided over by four (4)
different RTC judges. It was Judge Victorio, the fourth
judge assigned to the case, who wrote the 27
RTC Decision,
dated 24 August 1995. In his Decision, Judge Victorio
made the following findings—
“After carefully evaluating the mass of evidence adduced by the

parties, this Court is not inclined to believe the plaintiff’s
assertion that the promissory notes as well as the deeds of

assignments of
_______________
to substantiate its allegations; (2) By declaring that there are unpaid

money market placements, current accounts and savings account of Ms.
Sabeniano; and (3) The awarding of damages in favor of Ms. Sabeniano
and against Citibank.
26 Supra note 11.
27 Records, Vol. III, pp. 1612-1613.
411
VOL. 504, OCTOBER 16, 2006 411

Sabeniano
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
28
28
the case.” This brings us to the question of whether the
fact alone that the RTC Decision was rendered by a judge
other than the judge who actually heard and tried the case
is sufficient justification for the appellate court to disregard
or set aside the findings in the Decision of the court a quo?
_______________
28 Penned by Associate Justice Andres B. Reyes with Associate Justices

Conrado M. Vasquez, Jr. and Amelita G. Tolentino, concurring; Rollo, p.
344.
412

Sabeniano
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
29
unless
contradicted or overcame by other evidence. Encompassed
in this presumption of regularity is the presumption that
the RTC judge, in resolving the case and drafting his
Decision, reviewed, evaluated, and weighed all the evidence
on record. That the said RTC judge is not the same judge
who heard the case and received the evidence is of little
consequence when the records and transcripts of
stenographic notes (TSNs) are complete and available for
consideration by the former.
30
In People v. Gazmen, this Court already elucidated its
position on such an issue—
“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
_______________
29 Section 3(m) of Rule 131 of the REVISED RULES OF COURT reads

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

uncontradicted, but may be contradicted and overcome by other evidence:
xxxx
(m) That official duty has been regularly performed.
30 317 Phil. 495, 501-503; 247 SCRA 414, 419-420 (1995).
413
VOL. 504, OCTOBER 16, 2006 413

Sabeniano
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
414

Sabeniano
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—
415
VOL. 504, OCTOBER 16, 2006 415

Sabeniano
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% P
interest per annum (p.a.) 318,897.34
Money market placement with Citibank,
evidenced by
PN No. 23357 (which cancels and supersedes
PN No. 22528), P
earning 14.5% interest p.a. 203,150.00
Money market placement with FNCB
Finance, evidenced
by PN No. 5757 (which cancels and
supersedes PN No. 4952), P
earning 17% interest p.a. 500,000.00
Money market placement with FNCB
Finance, evidenced
by PN No. 5758 (which cancels and
supersedes PN No. 2962), P
earning 17% interest p.a. 500,000.00
This Court is tasked to determine whether petitioners are

indeed liable to return the foregoing amounts, together
with the appropriate interests and penalties, to respondent.
It shall trace respondent’s transactions with petitioners,
from her money market placements with petitioner
Citibank and petitioner FNCB Finance, to her savings and
current accounts with petitioner Citibank, and to her dollar
accounts with 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-
416

Sabeniano
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 PN Cancels Maturity Amount Interest

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

respondent the principal amounts and proceeds of PNs No.
23356 and 23357, upon their maturity. Petitioner Citibank
further averred that respondent used the P500,000.00 from
the payment of PNs No. 23356 and 23357, plus
P600,000.00 sourced from her other funds, to open two time
deposit (TD) accounts with petitioner Citibank, namely, TD
Accounts No. 17783 and 17784.
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 said31 PNs, but qualified that they were no
32
longer out-standing. In Hibberd v. Rohde and McMillian,
this Court delineated the consequences of such an
admission—
_______________
31 Records, Vol. I, p. 515.

32 32 Phil. 476, 478-479.
417
VOL. 504, OCTOBER 16, 2006 417

Sabeniano
“By the admission of the genuineness and due execution of an

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

promissory note a prima facie case is made for the plaintiff
which dispenses with the necessity of evidence on his part

and entitles him to a judgment on the pleadings unless a
special defense of new matter, such as payment, is
interposed by the defendant (Papa vs. Martinez, 12 Phil.
Rep., 613; Chinese Chamber of Commerce vs. Pua To Ching,
14 Phil. Rep., 222; Banco Español-Filipino vs. McKay &
Zoeller, 27 Phil. Rep., 183). x x x”
Since the genuineness and due execution of PNs No.
23356 and 23357 are uncontested, respondent was able to
establish prima facie that petitioner Citibank is liable to
her for the amounts stated therein. The assertion of
petitioner Citibank
418

Sabeniano
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
33
petitioner Citibank to show that it had been discharged. It
has already been established by this Court that—
“As a general rule, one who pleads payment has the burden of
proving it. Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment.
When the existence of a debt is fully established by the
evidence contained in the record, the burden of proving that it has
been extinguished by payment devolves upon the debtor who
offers such defense to the claim of the creditor. Where the debtor
introduces some evidence of payment, the burden of going forward
with the evidence—as distinct from the general burden of proof—
shifts to the creditor, who is then
34
under the duty of producing
some evidence of non-payment.”
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
35
35
Mr. Herminio Pujeda, the officer-in-charge of loans and
placements at the time when the questioned transactions
took
_______________
33 Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).

34 Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95;
256 SCRA 84, 89-90 (1996).
35 Mr. Herminio Pujeda, at the time he testified before the RTC in
1990, was already the Vice President of petitioner Citibank.
419
VOL. 504, OCTOBER 16, 2006 419

Sabeniano
36
place; and (2) that of Mr. Francisco Tan, the former
Assistant Vice-President of Citibank, who directly dealt
with respondent with regard
37
to her deposits and loans.
The relevant portion of Mr. Pujeda’s testimony as to
PNs No. 23356 and 23357 (referred to therein as Exhibits
No. “47” and “48,” respectively) is reproduced below—
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to testify
in this case and this case is [sic] consist [sic] of several
documents involving transactions between the plaintiff
and the defendant. Now, were you able to make your
own memorandum regarding all these transactions?
A Yes, based on my recollection of these facts, I did come
up of [sic] the outline of the chronological sequence of
events.
Court:
Are you trying to say that you have personal knowledge
or participation to these transactions?
A Yes, your Honor, I was the 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.
_______________
36 Mr. Francisco Tan, at the time of his deposition in 1990, was already
working as Assistant General Manager for Dai-Chi Kangyo Bank in Hong
Kong.
37 TSN, 12 March 1990, pp. 6-10.
420

Sabeniano
Atty. Mabasa:
Q Now, basing on the notes that you prepared, Mr. Witness, and
according to you basing also on your personal recollection
about all the transactions involved between Modesta
Sabeniano and defendant City Bank [sic] in this case. Now,
would you tell us what happened to the money market
placements of Modesta Sabeniano that you have earlier
identified in Exhs. “47” and “48”?
A The transactions which I said earlier were terminated and
booked to time deposits.
Q And you are saying time deposits with what bank?
A With First National Citibank.
Q Is it the same bank as Citibank, N.A.?
A Yes, sir.
Q And how much was the amount booked as time deposit with
defendant Citibank?
A In the amount of P500,000.00.
Q And outside this P500,000.00 which you said was booked out of
the proceeds of Exhs. “47” and “48,” were there other time
deposits opened by Mrs. Modesta Sabeniano at that time.
A Yes, she also opened another time deposit for P600,000.00.
Q So all in all Mr. Witness, sometime in April of 1978 Mrs.
Modesta Sabeneano [sic] had time deposit placements with
Citibank in the amount of P500,000.00 which is the proceeds
of Exhs. “47” and “48” and another P600,000.00, is it not?
A Yes, sir.
Q And would you know where did the other P600,000 placed by
Mrs. Sabeneano [sic] in a time deposit with Citibank, N.A.
came [sic] from?
A She funded it directly.
Q What are you saying Mr. Witness is that the P600,000 is a [sic]
fresh money coming from Mrs. Modesta Sabeneano [sic]?
A That is right.
421
VOL. 504, OCTOBER 16, 2006 421

Sabeniano
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 38with regards to
figures after the lapse of five years. Taking into
consideration the substantial length of time between the
transactions and the witnesses’ testimonies, as well as the
undeniable fact that bank officers deal with multiple
clients and process numerous transactions during their
tenure, this Court is reluctant to give much weight to the
testimonies of Mr. Pujeda and Mr. Tan regarding the
payment of PNs No. 23356 and 23357 and the use by
respondent of the proceeds thereof for opening TD
accounts. This Court finds it implausible that they should
remember, after all these years, this particular transaction
with respondent involving her PNs No. 23356 and 23357
and TD accounts. Both witnesses did not give any reason as

to why,
_______________
38 Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
422

Sabeniano
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
39
Mr. Pujeda testified before the RTC on 6 February
1990, petitioners’ counsel attempted to present in
evidence a document that would supposedly support the

claim of peti-
_______________
39 TSN, 6 February 1990, Vol. V, pp. 16-24.
423
VOL. 504, OCTOBER 16, 2006 423

Sabeniano
tioner Citibank that the proceeds of PNs No. 23356 and

23357 were used by respondent to open one of her two TD
accounts in the amount of P500,000.00. Respondent’s
counsel objected to the presentation of the document since
it was a mere “xerox” copy, and was blurred and hardly
readable. Petitioners’ counsel then asked for a continuance
of the hearing so that they can have time to produce a
better document, which was granted by the court. However,
during the next hearing and continuance of Mr. Pujeda’s
testimony on 12 March 1990, petitioners’ counsel no longer
referred to the said document.
As respondent had established a prima facie case that
petitioner Citibank is obligated to her for the amounts
stated in PNs No. 23356 and 23357, and as petitioner
Citibank failed to present sufficient proof of payment of the
said PNs and the use by the respondent of the proceeds
thereof to open her TD accounts, this Court finds that PNs
No. 23356 and 23357 are still outstanding and
petitioner Citibank is still liable to respondent for
the amounts stated therein.
The significance of this Court’s declaration that PNs No.
23356 and 23357 are still outstanding becomes apparent in
the light of petitioners’ next contentions—that respondent
used the proceeds of PNs No. 23356 and 23357, together
with additional money, to open TD Accounts No. 17783 and
17784 with petitioner Citibank; and, subsequently,
respondent 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.
424

Sabeniano
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, 40
respondent, through a letter dated 28 April 1977, pre-
terminated the said TD accounts and transferred all the
proceeds thereof to petitioner FNCB Finance for money
market placement. Pursuant to her instructions, TD
Accounts No. 17783 and 17784 were pre-terminated and
petitioner Citibank (then still named First National41 City
Bank) 42issued Manager’s Checks (MC) No. 199253 and
199251 for the amounts of P500,000.00 and P600,00.00,
respectively. Both MCs were
43
payable to Citifinance (which,
according to Mr. Pujeda, was one with and the same as
petitioner FNCB Finance), with the additional notation
that “A/C MODESTA R. SABENIANO.” Typewritten on
MC No. 199253 is the phrase “Ref. Proceeds of TD 17783,”
and on MC No. 199251 is a similar phrase, “Ref. Proceeds
of TD 17784.” These phrases purportedly established that
the MCs were paid from the proceeds of respondent’s 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
_______________
40 Exhibit “37,” defendants’ folder of exhibits, p. 106.

41 Exhibit “37-C,” Id., at p. 107.

42 Exhibit “37-F,” Id., at p. 108.
43 TSN, 12 March 1990, p. 13.
425
VOL. 504, OCTOBER 16, 2006 425

Sabeniano
amounts of her money market placements with petitioner

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

(mm/dd/ No. PN No. Date (P) (p.a.)
yyyy) (mm/dd/yyyy)
04/29/1977 4952 None 06/01/1977 500,000.00 17%
4962 None 06/01/1977 600,000.00 17%
06/02/1977 5757 4952 08/31/1977 500,000.00 17%
5758 4962 08/31/1977 500,000.00 17%
8167 5757 08/25/1978 500,000.00 14%
08/31/1977
8169 5752 08/25/1978 500,000.00 14%
As presented by the petitioner FNCB Finance, respondent

rolled-over only the principal amounts of her money market
placements as she chose to receive the interest income
therefrom. Petitioner FNCB Finance also pointed out that
when PN No. 4962, with principal amount of P600,000.00,
matured on 1 June 1977, respondent received a partial
payment of the principal which,
44
together with the interest,
amounted to P102,633.33; 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 45
over to PNs No. 8167 and 8169, respectively. PN No. 8167
expressly46canceled and superseded PN No. 5757, while PN
No. 8169 also explicitly canceled and superseded PN No.
5758. Thus, it is patently erroneous for the Court of
Appeals to still award to respondent the principal amounts
and interests covered by PNs No. 5757 and 5758 when
these were already canceled and superseded. It is now
incumbent upon this Court to determine what
subsequently happened to PNs No. 8167 and 8169.
_______________
44 Exhibit “104-C,” defendants’ folder of exhibits, p. 111.

45 Exhibit “105,” Id., at p. 112.
46 Exhibit “106,” Id., at p. 114.
426

Sabeniano
Petitioner FNCB Finance presented four checks as proof of

payment of the principal amounts and interests of PNs No.
8167 and 8169 upon their maturity. All the checks were
payable to respondent’s savings account with petitioner
Citibank, with the following details—
Date of Check Amount Notation

Issuance No. (P)
(mm/dd/yyyy)
09/01/1978 76962 12,833.34 Interest payment on
PN#08167
09/01/1978 76961 12,833.34 Interest payment on
PN#08169
09/05/1978 77035 500,000.00 Full payment of
principal on
PN#08167 which is
hereby cancelled
09/05/ 1978 77034 500,000.00 Full payment of
principal on
PN#08169 which is
hereby cancelled
Then again, Checks No. 77035 and 77034 were later

returned
47
to petitioner FNCB Finance together with a
memo, dated 6 September 1978, from Mr. Tan of
petitioner Citibank, to a Mr. Bobby Mendoza of petitioner
FNCB Finance. According to the memo, the two checks, in
the total amount of P1,000,000.00, were to be returned to
respondent’s account with instructions to book the said
amount in money market placements for one more year.
Pursuant to the said memo, Checks No. 77035 and 77034
were invested by petitioner FNCB Finance, on behalf of
respondent, in money market placements for which it
issued PNs No. 20138 and 20139. The PNs each covered
P500,000.00,
_______________
47 Exhibit “108,” Id., at p. 118.
427
VOL. 504, OCTOBER 16, 2006 427

Sabeniano
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
48
and 20139 and, resultantly, canceling the
said PNs. Respondent actually admitted the issuance and
existence of Check No. 100168, but with the qualification
that the 49proceeds thereof were turned over to petitioner
Citibank. Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the
allegations of petitioner Citibank itself, the proceeds of PNs
No. 20138 and 20139, amounting to P1,022,916.66, was
used by it to liquidate respondent’s outstanding loans.
Therefore, the determination of whether or not respondent
is still entitled to the return of the proceeds of PNs No.
20138 and 20139 shall be dependent on the resolution of
the issues raised as to the existence of the loans and the
authority of petitioner Citibank to use the proceeds of the
said PNs, together with respondent’s other deposits and
money market placements, to pay for the same.
Savings and current accounts with petitioner Citibank

Respondent presented and submitted before the RTC
deposit slips and bank statements to prove deposits made
to several of her accounts with petitioner Citibank,
particularly, Accounts No. 00484202, 59091, and 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
_______________
48 Exhibits “112” and “119,” Id., at pp. 121-A, 124.
49 Records, Vol. III, p. 1367.
428

Sabeniano
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 50
her alleged
outstanding loans with petitioner Citibank.
Since both the RTC and the Court of Appeals had
consistently recognized only the P31,079.14 of respondent’s
savings account with petitioner Citibank, and that
respondent failed to move for reconsideration or to appeal
this particular finding of fact by the trial and appellate
courts, it is already binding upon this Court. Respondent is
already precluded from claiming any greater amount in her
savings and current accounts with petitioner Citibank.
Thus, this Court shall limit itself to determining whether
or not respondent is entitled to the return of the amount of
P31,079.14 should the off-set thereof by petitioner Citibank
against her supposed loans be found invalid.
Dollar accounts with 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 total51 of United States (US)
$343,220.98, as of 23 June 1985. In her Memorandum
filed with the RTC, she claimed a much bigger amount of
deposits and money market placements
52
with Citibank-
Geneva, totaling US$1,336,638.65. However, respondent
herself also submitted as part of her formal offer of
evidence the computation of her money market placements
and dollar accounts
53
with Citibank-Geneva as determined
by the latter. Citibank-
_______________
50 Exhibit “34-B,” petitioners’ folder of exhibits, p. 102.

51 Exhibit “G,” plaintiff’s folder of exhibits, pp. 4-15.
52 Records, Vol. III, p. 1, 562.
53 Exhibit “J,” plaintiff’s folder of exhibits, p. 49.
429
VOL. 504, OCTOBER 16, 2006 429

Sabeniano
Geneva accounted for respondent’s money market

placements and dollar accounts as follows—
MODESTA SABENIANO &/OR

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

1979, respondent had a total of US$156,942.70, from
which, US$149,632.99 was transferred by Citibank-Geneva
to petitioner Citibank in Manila, and was used by the
latter to offset 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,
430

Sabeniano
which was subsequently expended by a transfer to another

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

of evidence the existence of respondent’s loans.
Petitioners’ version of events

In sum, the following amounts were used by petitioner
Citibank to liquidate respondent’s purported outstanding
loans—
Description Amount
Principal and interests of PNs No. 20138 and
20139
(money market placements with petitioner P
FNCB Finance) 1,022,916.66
Savings account with petitioner Citibank 31,079.14
Dollar remittance from Citibank-Geneva
431
VOL. 504, OCTOBER 16, 2006 431

Sabeniano
(peso equivalent
Of US$149,632.99) 1,102,944.78
Total P 2,156,940.58
According to petitioner Citibank, respondent incurred her

loans under the circumstances narrated below.
As early as 9 February 1978, respondent obtained her
first loan from petitioner Citibank in the principal amount54
of P200,000.00, for which she executed PN No. 31504.
Petitioner Citibank extended to her several other loans in
the succeeding months. Some of these loans were paid,
while others were rolled-over or renewed. Significant to the
Petition at bar are the loans which respondent obtained
from July 197855to January 1979, appropriately covered by
PNs (first set). The aggregate principal amount of these
loans was P1,920,000.00, which could be broken down as
follows—
PN Date of Date of Principal Date of MC

No. Issuance Maturity Amount Release No.
(mm/dd/yyyy) (mm/dd/yyyy) (mm/dd/yyyy)
32935 07/20/1978 09/18/1978 P 400,000.00 07/20/1978 220701
33751 10/13/1978 12/12/1978 100,000.00 Unrecovered
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978 226285
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978 226439
34079 11/21/1978 01/19/1979 250,000.00 11/21/1978 226467
34192 12/04/1978 01/18/1979 100,000.00 12/05/1978 228057
34402 12/26/1978 02/23/1979 300,000.00 12/26/1978 228203
34534 01/09/1979 03/09/1979 150,000.00 01/09/1979 228270
34609 01/17/1979 03/19/1979 150,000.00 01/17/1979 228357
34740 01/30/1979 03/30/1979 220,000.00 01/30/1979 228400
Total P1,920,000.00
_______________
54 Exhibit “120-H,” defendants’ folder of exhibits, p. 131.

55 Exhibits “1” to “9,” Id., at pp. 44-52.
432

Sabeniano
When respondent was unable to pay the first set of PNs

upon their maturity, these were rolled-over or renewed
several times, necessitating the execution by respondent of
new PNs in favor of petitioner Citibank. As of 5 April 1979,
respondent
56
had the following outstanding PNs (second
set), the principal amount of which remained at
P1,920,000.00—
PN Date of Date of Principal

No. Issuance Maturity Amount
(mm/dd/yyyy) (mm/dd/yyyy)
34510 01/01/1979 03/02/1979 P 400,000.00
34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
34612 01/19/1979 03/16/1979 150,000.00
34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
35694 03/19/1979 05/29/1979 150,000.00
35695 03/19/1979 05/29/1979 100,000.00
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 220,000.00
Total P1,920,000.00
All the PNs stated that the purpose of the loans covered
thereby is “To liquidate existing obligation,” except for PN
No. 34534, which stated for its purpose “personal
investment.” Respondent secured her foregoing loans with
petitioner Citibank by executing Deeds of Assignment of
her money market placements with petitioner FNCB
Finance. On 2 March 1978, respondent executed
57
in favor of
petitioner Citibank a Deed of Assignment of PN No. 8169,
which was issued by petitioner FNCB Finance, to secure
payment of the credit and banking facilities extended to
her by petitioner Citibank, in the aggregate principal
amount of P500,000.00. On 9 March 1978, respondent
executed in favor of petitioner
_______________
56 Exhibits “18” to “26,” Id., at pp. 83-92.
57 Exhibit “13-E,” Id., at pp. 65-67.
433
VOL. 504, OCTOBER 16, 2006 433

Sabeniano
58
Citibank another Deed of Assignment, this time, of PN
No. 8167, also issued by petitioner FNCB Finance, to
secure payment of the credit and banking facilities
extended to her by petitioner Citibank, in the aggregate
amount of P500,000.00. When PNs No. 8167 and 8169,
representing respondent’s money market placements with
petitioner FNCB Finance, matured and were rolled-over to
PNs No. 20138 59and 20139, respondent executed new Deeds
of Assignment, in favor of petitioner Citibank, on 25
August 1978. According to the more recent Deeds,
respondent assigned PNs No. 20138 and 20139,
representing her rolled-over money market placements
with petitioner FNCB Finance, to petitioner Citibank as
security for the banking and credit facilities it extended to
her, in the aggregate principal amount of P500,000.00 per
Deed.
In addition to the Deeds of Assignment of her money
market placements with petitioner FNCB Finance, 60
respondent also executed a Declaration of Pledge, in
which she supposedly pledged “[a]ll present and future
fiduciary placements held in my personal and/or joint name
with Citibank, Switzerland,” to secure all claims the
petitioner Citibank may have or, in the future, acquire
against respondent. The petitioners’ copy of the Declaration
of Pledge is undated, while that of the respondent, a copy
certified by a Citibank-Geneva
61
officer, bore the date 24
September 1979.
When respondent failed to pay the second set of PNs
upon their maturity, an exchange of letters ensued between
respondent and/or her representatives, on one hand, and
the representatives of petitioners, on the other.
_______________
58 Exhibit “14-G,” Id., at pp. 72-74.

59 Exhibit “15” and “Exhibit 17-D,” Id., at pp. 77-78, 81-82.
60 Exhibit “38,” Id., at pp. 109-110.
61 Exhibit “K-1,” plaintiff’s folder of exhibits, pp. 54-55.
434

Sabeniano
62
The first letter was dated 5 April 1979, addressed to
respondent and signed by Mr. Tan, as the manager of
petitioner Citibank, which stated, in part, that—
Despite our repeated requests and 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. 63
Respondent sent a reply letter dated 26 April 1979,
printed on paper bearing the letterhead of respondent’s
company, MC Adore International Palace, the body of
which reads—
This is in reply to your letter dated April 5, 1979 inviting my

attention to my loan which has become due. Pursuant to our
representation with you over the telephone through Mr. F. A.
Tan, you allow us to pay the interests due for the meantime.
Please accept our Comtrust Check in the amount of
P62,683.33.
Please bear with us for a little while, at most ninety days. As
you know, we have a pending loan with the Development Bank of
the Philippines in the amount of 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, 64
designated as “Executive Secretary,” sent a letter to
petitioner
_______________

63 Exhibit “28,” Id., at p. 94.
64 Exhibit “29,” Id., at p. 95.
435
VOL. 504, OCTOBER 16, 2006 435

Sabeniano
Citibank, on behalf of respondent. The letter was again

printed on paper bearing the letterhead of MC Adore
International Palace. The pertinent paragraphs of the said
letter are reproduced below—
Per instructions of Mrs. Modesta R. Sabeniano, we would like to

request for a re-computation of the interest and penalty charges
on her loan in the aggregate amount of P1,920,000.00 with
maturity date of all promissory notes at June 30, 1979. As she has
personally discussed with you yesterday, this date will more or
less assure you of early settlement.
In this regard, please entrust to bearer, our Comtrust check for
P62,683.33 to be replaced by another check with amount resulting
from the new computation. Also, to facilitate the processing of the
same, may we request for another set of promissory notes for the
signature of Mrs. Sabeniano and to cancel the previous ones she
has signed and forwarded to you.
65
This was followed by a telegram, dated 5 June 1979, and
received by petitioner Citibank the following day. The
telegram was sent by a Dewey G. Soriano, Legal Counsel.
The telegram acknowledged receipt of the telegram sent by
petitioner Citibank regarding the “re-past due obligation”
of McAdore International Palace. However, it reported that
respondent, the President and Chairman of MC Adore
International Palace, was presently abroad negotiating for
a big loan. Thus, he was requesting for an extension of the
due date of the obligation until respondent’s arrival on or
before 31 July 1979.66
The next letter, dated 21 June 1979, was signed by
respondent herself and addressed to Mr. Bobby Mendoza, a
Manager of petitioner FNCB Finance. Respondent wrote
therein—
_______________
65 Exhibit “30,” Id., at p. 96.

66 Exhibit “31,” Id., at p. .97.
436

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

20139 for P500,000.00 totalling P1 Mil
lion, both PNs will mature on 9/3/1979.
This is to authorize you to release the accrued quarterly interests
payment from my captioned placements and forward directly to
Citibank, Manila Attention: Mr. F. A. Tan, Manager, to apply to
my interest payable on my outstanding loan with Citibank.
Please note that the captioned two placements are
continuously pledged/hypothecated to Citibank, Manila to support
my personal outstanding loan. Therefore, please do not release
the captioned placements upon maturity until you have received
the instruction from Citibank, Manila.
67
On even date, respondent sent another letter to Mr. Tan
of petitioner Citibank, stating that—
Re: S/A No. 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,
68
to
partly liquidate respondent’s outstanding loan balance, as
follows—
_______________
67 Exibit “32,” Id., at p. 98.

68 Exhibits “34-B” and “34-C,” Id., at pp. 102-103.
437
VOL. 504, OCTOBER 16, 2006 437

Sabeniano
Respondent’s outstanding obligation P

(principal and interest) 2,123,843.20
Less: Proceeds from respondent’s money (1,022,916.66)

market placements
with petitioner FNCB Finance
(principal and interest)
Deposits in respondent’s bank (31,079.14)
accounts with petitioner
Citibank
Balance of respondent’s obligation P
1,069,847.40
69
Mr. Tan of petitioner Citibank subsequently sent a letter,
dated 28 September 1979, notifying respondent of the
status of her loans and the foregoing compensation which
petitioner Citibank effected. In the letter, Mr. Tan
informed respondent that she still had a remaining 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
_______________
69 Exhibit “34,” Id., at p. 100.
438

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

Respondent disputed petitioners’ narration of the
circumstances surrounding her loans with petitioner
Citibank and the alleged authority she gave for the off-set
or compensation
_______________
70 Exhibit “121,” Id., at p. 207.

71 TSN, 14 May 1991, Vol. XI, pp. 12-14.
439
VOL. 504, OCTOBER 16, 2006 439

Sabeniano
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 market72
placements with petitioner FNCB Finance
as security. To prove payment of these loans, respondent
presented two
73
provisional receipts of petitioner Citibank—
74
No. 19471, dated 11 August 1978, and No. 12723, dated
10 November 1978—both signed by Mr. Tan, and
acknowledging receipt from respondent of several checks in
the total amount of P500,744.00 and P500,000.00,
respectively, for “liquidation of loan.”
She borrowed another P150,000.00 from petitioner
Citibank for personal investment, and for which she
executed PN No. 34534, on 9 January 1979. Thus, she
admitted to receiving the proceeds of this loan via MC No.
228270. She invested the loan amount in another money
market placement with petitioner FNCB Finance. In turn,
she used the very same money market placement with
petitioner FNCB Finance as security for her P150,000.00
loan from petitioner Citibank. When she failed to pay the
loan when it became due, petitioner Citibank allegedly
forfeited her money market placement with petitioner 75
FNCB Finance and, thus, the loan was already paid.
Respondent likewise questioned the MCs presented by
petitioners, except for one (MC No. 228270 in particular),
as
_______________
72 TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 28-29.

73 Exhibit “QQQ,” plaintiff’s folder of exhibits, p. 117.
74 Exhibit “AAAA,” Id., at p. 124.
75 TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.
440

Sabeniano
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 76information on the checks (i.e., date,
payee, and amount). She even testified that MCs were not
supposed to bear notations indicating the purpose for
which they were issued.
As to the second set of PNs, respondent acknowledged
having signed them all. However, she asserted that she
only executed these PNs as part of the simulated loans she
and Mr. Tan of petitioner Citibank concocted. Respondent
explained that she had a pending loan application for a big
amount with the Development Bank of the Philippines
(DBP), and when Mr. Tan found out about this, he
suggested that they could make it appear that the
respondent had outstanding loans with petitioner Citibank
and the latter was already demanding payment thereof;
this might persuade DBP to approve respondent’s loan
application. Mr. Tan made the respondent sign the second
set of PNs, so that he may have something to show the
DBP investigator who might
_______________
76 Id., at pp. 16-23.
441
VOL. 504, OCTOBER 16, 2006 441

Sabeniano
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
77
(sic) loan for MC Adore Palace Hotel is approved by DBP.”
Findings of this Court as to the existence of the loans

After going through the testimonial and documentary
evidence presented by both sides to this case, it is this
Court’s assessment that respondent did indeed have
outstanding loans with petitioner Citibank at the time it
effected the offset or compensation on 25 July 1979 (using
respondent’s savings deposit with petitioner Citibank), 5
September 1979 (using the proceeds of respondent’s money
market placements with petitioner FNCB Finance) and 26
October 1979 (using respondent’s dollar accounts remitted
from 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 evidence78
adduced by one side outweighs that of
the adverse party.
Respondent’s outstanding obligation for P1,920,000.00
had been sufficiently documented by petitioner Citibank.
The second set of PNs is a mere renewal of the prior
loans originally covered by the first set of PNs, except for
PN No. 34534. The first set of PNs is supported, in turn, by
the existence of the MCs that represent the proceeds
thereof received by the respondent.
It bears to emphasize that the proceeds of the loans were
paid to respondent in MCs, with the respondent specifically
_______________
77 TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-
28.
78 Sarmiento v. Court of Appeals, 364 Phil. 613, 621; 305 SCRA 138, 146
(1999).
442

Sabeniano
named as payee. MCs checks are drawn by the bank’s

manager upon the bank itself and regarded to be as good as
79
79
the money it represents. Moreover, the MCs were crossed
checks, with the words “Payee’s Account Only.” In
general, a crossed check cannot be presented to the drawee
bank for payment in cash. Instead, the check can only be
deposited with the payee’s bank which, in turn, must
present it for payment against the drawee bank in the
course of normal banking hours. The crossed check cannot
be presented for payment, but it can only be deposited and
the drawee bank may only pay 80
to another bank in the
payee’s or indorser’s account. The effect of crossing a
check was described by this Court in Philippine 81
Commercial International Bank v. Court of Appeals —
“[T]he crossing of a check with the phrase “Payee’s Account Only”

is a warning that the check should be deposited in the account of
the payee. Thus, it is the duty of the collecting bank PCI Bank to
ascertain that the check be deposited in payee’s account only. It is
bound to scrutinize the check and to know its depositors before it
can make the clearing indorsement “all prior indorsements and/or
lack of indorsement guaranteed.”
The crossed MCs presented by petitioner Bank were indeed

deposited in several different bank accounts and cleared by
the Clearing Office of the Central Bank of the Philippines,
as evidenced by the stamp marks and notations on the said
checks. The crossed MCs are already in the possession of
petitioner Citibank, the drawee bank, which was
ultimately responsible for the payment of the amount
stated in the checks. Given that a check is more than just
an instrument of
_______________
79 Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538,

553; 326 SCRA 641, 656 (2000), with reference to Tan v. Court of Appeals,
239 SCRA 310, 322 (1994).
80 Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218
SCRA 682, 695.
81 403 Phil. 361, 383; 350 SCRA 446, 467 (2001).
443
VOL. 504, OCTOBER 16, 2006 443

Sabeniano
credit used in commercial transactions for it also serves as

a receipt or evidence for the drawee bank of the
82
82
cancellation of the said check due to payment, then, the
possession by petitioner Citibank of the said MCs, duly
stamped “Paid” gives rise to the presumption that the said
MCs were already paid out to the intended payee, who was
in this case, the respondent.
This Court finds applicable herein the presumptions83
that private transactions have been fair and regular, and 84
that the ordinary course of business has been followed.
There is no question that the loan transaction between
petitioner Citibank and the respondent is a private
transaction. The transactions revolving around the crossed
MCs—from their issuance by petitioner Citibank to
respondent as payment of the proceeds of her loans; to its
deposit in respondent’s accounts with several different
banks; to the clearing of the MCs by an independent
clearing house; and finally, to the payment of the MCs by
petitioner Citibank as the drawee bank of the said checks—
are all private transactions which shall be presumed to
have been fair and regular to all the parties concerned. In
addition, the banks involved in the foregoing transactions
are also presumed to have followed the ordinary course of
business in the acceptance of the crossed MCs for deposit in
respondent’s accounts, submitting them for clearing, and
their eventual payment and cancellation.
The afore-stated presumptions are disputable, meaning,
they are satisfactory if uncontradicted, 85but may be
contradicted and overcome by other evidence. Respondent,
however, was unable to present sufficient and credible
evidence to dispute these presumptions.
_______________
82 Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230

SCRA 799, 311-312.
83 REVISED RULES OF COURT, Rule 131, Section 3(p).
84 Id., Rule 131, Section 3(q).
85 Id., Section 3.
444

Sabeniano
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 86 on the loan
transaction were already deducted therefrom. Stamps and
notations at the back of MC No. 228270 reveal that it was
deposited at the Bank of the Philippine Islands 87
(BPI),
Cubao Branch, in Account No. 0123-0572-28. The88 check
also bore the signature of respondent at the back. And,
although respondent would later admit that she did sign
PN No. 34534 and received MC No. 228270 as proceeds of
the loan extended to her by petitioner Citibank, she
contradicted herself when, in an earlier testimony, she
claimed that PN No. 34534 was among the PNs 89
she
executed as simulated loans with petitioner Citibank.
Respondent denied ever receiving MCs No. 220701 and
226467. However, considering that the said checks were
crossed for payee’s account only, and that they were
actually deposited, cleared, and paid, then the presumption
would be that the said checks were properly deposited to
the account of respondent, who was clearly named the
payee in the checks. Respondent’s bare allegations that she
did not receive the two checks fail to convince this Court,
for to sustain her, would be for this Court to conclude that
an irregularity had occurred somewhere from the time of
the issuance of the said checks, to
_______________

87 Exhibits “9-D” and “9-G,” Id., at p. 52.
88 Exhibit “9-F,” Id., at p. 52.
89 TSN, 19 May 1986, Vol. II, p. 10.
445
VOL. 504, OCTOBER 16, 2006 445

Sabeniano
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,
then90the respondent would have a cause of action against
BPI.
BPI further stamped its guarantee on the back of the
checks to the effect that, “All prior endorsement and/or
Lack of endorsement guaranteed.” Thus, BPI became the
indorser 91of the MCs, and assumed all the warranties of an
indorser, specifically, that the checks were genuine and in
all respects what they purported to be; that it had a good
title to the checks; that all prior parties had capacity to
contract; and that the checks were, at the time of their
indorsement, valid
_______________
90 Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992,

208 SCRA 465, 469-471.
91 Banco de Oro Savings and Mortgage Bank v Equitable Banking
Corporation, G.R. No. 74917, 20 January 1988, 157 SCRA 188, 199.
446

Sabeniano
92
and subsisting. So even if the MCs deposited by BPI’s
client, whether it be by respondent herself or some other
person, lacked the necessary indorsement, BPI, as the
collecting bank, is bound by its warranties as an indorser
and cannot set up the defense of lack of indorsement

93
as
against petitioner Citibank, the drawee bank.
Furthermore, respondent’s bare and unsubstantiated
denial of receipt of the MCs in question and their deposit in
her account is rendered suspect when MC No. 220701 was
actually deposited in Account No. 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 invest-
_______________
92 NEGOTIABLE INSTRUMENTS LAW, Section 66, in connection with

Section 65.
93 Associated Bank v. Court of Appeals, 322 Phil. 677, 697; 252 SCRA
620, 630-631 (1996); Associated Bank v. Court of Appeals, G.R. No. 89802,
7 May 1992, 208 SCRA 465, 472.
447
VOL. 504, OCTOBER 16, 2006 447

Sabeniano
94
ment from one of these placements. Because of her
Exhibit “HHH,” respondent effectively admitted receipt of
MC No. 226467, although for reasons other than as
proceeds of a loan.
Neither can this Court give credence to respondent’s

contention that the notations on the MCs, stating that they
were the proceeds of particular PNs, were not there when
she received the checks and that the notations appeared to
be written by a typewriter different from that used to write
the other information on the checks. Once more,
respondent’s allegations were uncorroborated by any other
evidence. Her and her counsel’s observation that the
notations on the MCs appear to be written by a typewriter
different from that used to write the other information on
the checks hardly convinces this Court considering that it
constitutes a mere opinion on the appearance of the
notation by a witness who does not possess the necessary
expertise on the matter. In addition, the notations on the
MCs were written using both capital and small letters,
while the other information on the checks were written
using capital letters only, such difference could easily
confuse an untrained eye and lead to a hasty conclusion
that they were written by different typewriters.
Respondent’s testimony, that based on her experience
transacting with banks, the MCs were not supposed to
include notations on the purpose for which the checks were
issued, also deserves scant consideration. While respondent
may have extensive experience dealing with banks, it still
does not qualify her as a competent witness on banking
procedures and practices. Her testimony on this matter is
even belied by the fact that the other MCs issued by
petitioner Citibank (when it was still named First National
City Bank) and by petitioner FNCB Finance, the existence
and validity of which were not disputed by respondent, also
bear similar notations that state the reason for which they
were issued.
_______________
94 Plaintiff’s Formal Offer of Documentary Exhibits, Records, Vol. I, pp.

504-505; plaintiff’s folder of exhibits, p. 110.
448

Sabeniano
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.
95
Part
of respondent’s exhibits were personal checks drawn by
respondent on her account with Feati Bank & Trust Co.,
which she allegedly invested in separate money market
placements with both petitioners, the returns from which
were paid to her via MCs No. 226285 and 228400. Yet, to
this Court, the personal checks only managed to establish
respondent’s issuance thereof, but there was nothing on the
face of the checks that would reveal the purpose for which
they were issued and that they were actually invested in
money market placements as respondent claimed.
Respondent further submitted handwritten notes that
purportedly computed and presented the returns on her
money market placements, corresponding to the amount
stated in the MCs96 she received from petitioner Citibank.
Exhibit “HHH-1” 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 97
of Mr. Bobby Mendoza of
petitioner FNCB Finance. Second, according to
_______________
95 Exhibits “GGG” and “JJJ,” plaintiff’s folder of exhibits, pp. 109, 113.
96 Plaintiff’s folder of exhibits, p. 110.
97 See the initials on Exhibit “III-1,” plaintiff’s folder of exhibits, p. 112.
449
VOL. 504, OCTOBER 16, 2006 449

Sabeniano
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 98
of Mr. Bobby Mendoza of petitioner
FNCB Finance, also did not deserve much evidentiary
weight, and this Court cannot rely on the truth and
accuracy of the computations presented therein. Mr.
Mendoza was not presented as a witness during the trial
before the RTC, so that the document was not properly
authenticated nor its contents sufficiently explained. No
one was able to competently identify whether the initials as
appearing on the note were actually Mr. Mendoza’s.
Also, going by the information on the front page of the
note, this Court observes that payment of respondent’s
alleged money market placements with petitioner FNCB
Finance were made using Citytrust Checks; the MCs in
question, including MC No. 228057, were issued by
petitioner Citibank. Although Citytrust (formerly Feati
Bank & Trust Co.), petitioner FNCB Finance, and
petitioner Citibank may be affiliates of one another, they
each remained separate and distinct
_______________
98 Plaintiff’s folder of exhibits, p. 112.
450

Sabeniano
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
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Sabeniano
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
99
to the
possession of the bank, but not yet of payment. This bank
practice finds legitimacy in the pronouncement of this
Court that a check, whether an MC or an ordinary check, is
not legal tender and, therefore, cannot constitute valid
tender of100payment. In Philippine Airlines, Inc. v. Court of
Appeals, this Court elucidated that:
“Since a negotiable instrument is only a substitute for
money and not money, the delivery of such an instrument
does not, by itself, operate as payment (Sec. 189, Act 2031
on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v.
American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil.
44; 21 R.C.L. 60, 61). A check, whether a manager’s check
or ordinary check, is not legal tender, and an offer of a
check in payment of a debt is not a valid tender of payment
and may be refused receipt by the obligee or creditor. Mere
delivery of checks does not discharge the obligation under a
judgment. The obligation is not extinguished and remains
suspended until the payment by commercial document is
actually realized (Art. 1249, Civil Code, par. 3).”
_______________
99 TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.

100 G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.
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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
101
deposit of BPI Check No. 5785 for
P150,000.00. In her Formal Offer of Documentary
Exhibits, dated 7 July 1989, respondent stated that the
purpose for the presentation of the said deposit slip was to
prove that
102
she already paid her loan covered by PN No.
34534. In her testimony before the RTC three years later,
on 28 November 1991, she changed her story. This time she
narrated that the loan covered by PN No. 34534 was
secured by her money market placement with petitioner
FNCB Finance, and when she failed to pay the said PN
when it became due, the security was applied 103
to the loan,
therefore, the loan was considered paid. Given the
foregoing, respondent’s assertion of payment of PN No.
34534 is extremely dubious.
According to petitioner Citibank, the PNs in the second
set, except for PN No. 34534, were mere renewals of the
unpaid PNs in the first set, which was why the PNs stated
that they were for the purpose of liquidating existing
obligations. PN No. 34534, however, which was part of the
first set, was still valid and subsisting and so it was
included in the second set without need for its renewal, and
it still being the original PN for that particular
104
loan, its
stated purpose was for personal investment. Respondent
essentially admitted executing the second set of PNs, but
they were only meant to cover simu-
_______________
101 Exhibit “MMM,” plaintiff’s folder of exhibits, p. 115.

102 Records, Vol. I, p. 507.
103 TSN, 28 November 1991, Vol. XIII, pp. 7-8.
104 TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.
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lated loans. Mr. Tan supposedly convinced her that her

pending loan application with DBP would have a greater
chance of being approved if they made it appear that
respondent urgently needed the money because petitioner
Citibank was already demanding payment for her
simulated loans.
Respondent’s defense of simulated loans to escape
liability for the second set of PNs is truly a novel one. It is
regrettable, however, that she was unable to substantiate
the same. Yet again, respondent’s version of events is
totally based on her own uncorroborated testimony. The
notations on the second set of PNs, that they were non-
negotiable simulated notes, were admittedly made by
respondent herself and were, thus, self-serving. Equally

self-serving was respondent’s letter, written on 7 October
1985, or more than six years after the execution of the
second set of PNs, in which she demanded return of the
simulated or fictitious PNs, together with the letters
relating thereto, which Mr. Tan purportedly asked her to
execute. Respondent further failed to present any proof of
her alleged loan application with the DBP, and of any
circumstance or correspondence wherein the simulated or
fictitious PNs were indeed used for their supposed purpose.
In contrast, petitioner Citibank, as supported by the
testimonies of its officers and available documentation,
consistently treated the said PNs as regular loans—
accepted, approved, and paid in the ordinary course of its
business.
The PNs executed by the respondent in favor of
petitioner Citibank to cover her loans were duly-filled out
and signed, including the disclosure statement found at the
back of the said PNs, in adherence to the Central Bank
requirement to disclose the full finance charges to a loan
granted to borrowers.
Mr. Tan, then an account officer with the Marketing
Department of petitioner Citibank, testified that he dealt
directly with respondent; he facilitated the loans; and the
PNs,
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at least in105the second set, were signed by respondent in his

presence.
Mr. Pujeda, the officer who was previously in charge of
loans and placements, confirmed that the signatures on the
PNs were verified 106
against respondent’s specimen signature
with the bank.
Ms. Cristina Dondoyano, who worked at petitioner
Citibank as a loan processor, was responsible for booking
respondent’s loans. Booking the loans means recording it in
the General Ledger. She explained the procedure for
booking loans, as follows: The account officer, in the
Marketing Department, deals directly with the clients who
wish to borrow money from petitioner Citibank. The
Marketing Department will forward a loan booking
checklist, together with the borrowing client’s PNs and
other supporting documents, to the loan 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 107which respondent’s counsel was
even willing to stipulate.
_______________
105 TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 13-
16.
106 TSN, 22 May 1990, Vol. V, pp. 31-61.
107 TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol. X,
pp. 7-9.
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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 108
review of the contents is
done on every role of microfilm.
Ms. Renee Rubio worked for petitioner Citibank for 20
years. She rose from the ranks, initially working as a
secretary in the Personnel Group; then as a secretary to
the Personnel Group Head; a Service Assistant with the
Marketing Group, in 1972 to 1974, dealing directly with
corporate and individual clients who, among other things,
secured loans from petitioner Citibank; the Head of the
Collection Group of the Foreign Department in 1974 to
1976; the Head of the Money Transfer Unit in 1976 to
1978; the Head of the Loans and Placements Unit up to the
early 1980s; and, thereafter, she established operations
training for petitioner Citibank in
_______________
108 TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X,
pp. 31-34.
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Sabeniano
the Asia-Pacific Region responsible for the training of the

officers of the bank. She testified on the standard loan
application process at petitioner Citibank. According to Ms.
Rubio, the account officer or marketing person submits a
proposal to grant a loan to an individual or corporation.
Petitioner Citibank has a worldwide policy that requires a
credit committee, composed of a minimum of three people,
which would approve the loan and amount thereof. There
can be no instance when only one officer has the power to
approve the loan application. When the loan is approved,
the account officer in charge will obtain the corresponding
PNs from the client. The PNs are sent to the signature
verifier who would validate the signatures therein against
those appearing in the signature cards previously
submitted by the client to the bank. The Operations Unit
will check and review the documents, including the PNs, if
it is a clean loan, and securities and deposits, if it is

collateralized. The loan is then recorded in the General
Ledger. The Loans and Placements Department will not
book the loans without the PNs. When the PNs are
liquidated, whether they
109
are paid or rolled-over, they are
returned to the client. Ms. Rubio further explained that
she was familiar with respondent’s accounts since, while
she was still the Head of the Loan and Placements Unit,
she was asked by Mr. Tan 110
to prepare a list of respondent’s
outstanding obligations. She thus calculated respondent’s
outstanding loans, which was sent as an attachment to Mr.
Tan’s letter to respondent, dated 28 September 1979, and 111
presented before the RTC as Exhibits “34-B” and “34-C.”
Lastly, the exchange of letters between petitioner
Citibank and respondent, as well as the letters sent by
other people working for respondent, had consistently
recognized that respondent owed petitioner Citibank
money.
_______________
109 TSN, 18 April 1991, Vol. X, pp. 3-13.

110 Id., at pp. 15-23.
111 Folder of defendants’ exhibits, pp. 102-103.
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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.
112
(Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep.,
761.)”
Best evidence rule

This Court disagrees in the pronouncement made by the
Court of Appeals summarily dismissing the documentary
evidence submitted by petitioners based on its broad and
indiscriminate application of the best evidence rule.
In general, the best evidence rule requires that the
highest available degree of proof must be produced.
Accordingly, for documentary evidence, the contents of a
document are best113
proved by the production of the
document itself, to the114 exclusion of any secondary or
substitutionary evidence.
_______________
112 Municipality of Moncada v. Cajuigan, 21 Phil. 184, 190 (1912).

113 J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE
31 (4th ed., 1995).
114 F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, p. 571
(8th ed., 2000).
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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.
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VOL. 504, OCTOBER 16, 2006 459

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Parol evidence of the fact of execution of the documents is 115 allowed

(Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565). x x x”
116
In Estrada v. Desierto, this Court had occasion to rule
that—
“It is true that the Court relied not upon the original but only
copy of the Angara Diary as published in the Philippine Daily
Inquirer on February 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
_______________
115 F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, 571 (8th
ed., 2000).
116 G.R. Nos. 146710-15, 3 April 2001, 356 SCRA 108, 137-138.
460

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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
117
to the pre-processor, then to the
processor for booking. The original PNs were seen by Ms.
Dondoyano, the processor, who recorded them in the
General Ledger. Mr. Pujeda personally saw the original
MCs, proving respondent’s receipt of the proceeds of her
loans from petitioner Citibank, when he
_______________
117 TSN, 13 March 1991, Vol X, pp. 7-9.
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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 118
Control and Investigation
Division of petitioner Citibank.
It was only petitioner FNCB Finance who claimed that
they lost the original copies of the PNs when it moved to a
new office. Citibank did not make a similar contention;
instead, it explained that the original copies of the PNs
were returned to the borrower upon liquidation of the loan,
either through payment or roll-over. Petitioner Citibank
proffered the excuse that they were still looking for the
documents in their storage or warehouse to explain the
delay and difficulty in the retrieval thereof, but not their
absence or loss. The original documents in this case, such
as the MCs and letters, were destroyed and, thus,
unavailable for presentation before the RTC only on 7
October 1987, when a fire broke out on the 7th floor of the
office building of petitioner Citibank. There is no showing
that the fire was intentionally set. The fire destroyed

relevant documents, not just of the present case, but also of
other cases, since the 7th floor housed the Control and
Investigation Division, in charge of keeping the necessary
documents for cases in which petitioner Citibank was
involved.
The foregoing would have been sufficient to allow the
presentation of photocopies or microfilm copies of the PNs,
MCs, and letters by the petitioners as secondary evidence
to establish the existence of respondent’s loans, as an
exception to the best evidence rule.
_______________
118 TSN, 22 May 1990, Vol. V, pp. 14-17.
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Sabeniano
The impact of the Decision of the Court of Appeals in the Dy

case
In its assailed Decision, the Court of Appeals made the
following pronouncement—
“Besides, We find the declaration and conclusions of this Court in

CA-G.R. CV No. 15934 entitled Sps. Dr. Ricardo L. Dy and
Rosalind O. Dy vs. City Bank, N.A., et al., promulgated on 15
January 1990, as disturbing taking into consideration the
similarities of the fraud, machinations, and deceits employed by
the defendant-appellant Citibank and its Account Manager
Francisco Tan.
Worthy of note is the fact that Our declarations and
conclusions against Citibank and the person of Francisco Tan in
CA-G.R. CV No. 15934 were affirmed in toto by the Highest
Magistrate in a Minute Resolution dated 22 August 1990 entitled
Citibank, N.A., vs. Court of Appeals, G.R. 93350.
As the factual milieu of the present appeal created reasonable
doubts as to whether the nine (9) Promissory Notes were indeed
executed with considerations, the doubts, coupled by the findings
and conclusions of this Court in CA-G.R. CV No. 15934 and the
Supreme Court in G.R. No. 93350. should be construed against
herein defendants-appellants Citibank and FNCB Finance.”
What this Court truly finds disturbing is the significance

given by 119
the Court of Appeals in its assailed Decision to the
Decision 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 par-
_______________
119 Dr. Ricardo L. Dy and Rosalind O. Dy vs. Citibank, N.A., CA-G.R.

CV No. 15934, 15 January 1990, penned by Associate Justice Nicolas P.
Lapeña, Jr. with Associate Justices Santiago M. Ka-punan and Emeterio
C. Cui, concurring.
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ties presently before this Court, but the transactions are

absolutely independent and unrelated to those in the
instant Petition.
In the Dy case, Severino Chua Caedo managed to obtain
loans from herein petitioner Citibank amounting to
P7,000,000.00, secured to the extent of P5,000,000.00 by a
Third Party Real Estate Mortgage of the properties of
Caedo’s aunt, Rosalind Dy. It turned out that Rosalind Dy
and her husband were unaware of the said loans and the
mortgage of their properties. The transactions were carried
out exclusively between Caedo and Mr. Tan of petitioner
Citibank. The RTC found Mr. Tan guilty of fraud for his
participation in the questionable transactions, essentially
because he allowed Caedo to take out the signature cards,
when these should have been signed by the Dy spouses
personally before him. Although the Dy spouses’ signatures
in the PNs and Third Party Real Estate Mortgage were
forged, they were approved by the signature verifier since
the signature cards against which they were compared to
were also forged. Neither the RTC nor the Court of
Appeals, however, categorically declared Mr. Tan
personally responsible for the forgeries, which, in the
narration of the facts, were more likely committed by
Caedo.
In the Petition at bar, respondent dealt with Mr. Tan

directly, there was no third party involved who could have
perpetrated any fraud or forgery in her loan transactions.
Although respondent attempted to raise suspicion as to the
authenticity of her signatures on certain documents, these
were nothing more than naked allegations with no
corroborating evidence; worse, even her own allegations
were replete with inconsistencies. She could not even
establish in what manner or under what circumstances the
fraud or forgery was committed, or how Mr. Tan could have
been directly responsible for the same.
While the Court of Appeals can take judicial notice of
the Decision of its Third Division in the Dy case, it should
not have given the said case much weight when it rendered
the
464

Sabeniano
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,
120
system, scheme, habit,
custom or usage, and the like.” The rationale for the rule
is explained thus—
“The rule is founded upon reason, public policy, justice and

judicial convenience. The fact that a person has committed the
same or similar acts at some prior time affords, as a general rule,
no logical guaranty that he committed the act in question. This is
so because, subjectively, a man’s mind and even his modes of life

may change; and, objectively, the conditions under which he may
find himself at a given time may likewise change and thus induce
him to act in a different way. Besides, if evidence of similar acts
are to be invariably admitted, they will give rise to a multiplicity
of collateral issues and will subject the defendant
121
to surprise as
well as confuse the court and prolong the trial.”
The factual backgrounds of the two cases are so different

and unrelated that the Dy case cannot be used to prove
specific
_______________
120 REVISED RULES OF COURT, Rule 130, Section 34.

121 J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE
199-200 (4th ed., 1995).
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Sabeniano
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 respon-dent’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
466

Sabeniano
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 loan122 or mutuum by the depositor to the banking
institution. Both debts consist in sums of money. By June
1979, all of respondent’s PNs in the second set had
matured and became demandable, while respondent’s
savings account was demandable anytime. Neither was
there any retention or controversy over the PNs and the
deposit account commenced by a third person and
communicated in due time to the debtor 123concerned.
Compensation takes place by operation of law, therefore,
even in the absence of an expressed authority from
respondent, petitioner Citibank had the right to effect, on
25 June 1979, the partial compensation or 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 off-set of respondent’s outstanding loans, which came

from persons other than petitioner Citibank.
Respondent’s money market placements were with
petitioner FNCB Finance, and after several roll-overs, they
were ultimately covered by PNs No. 20138 and 20139,
which, by 3 September 1979, the date the check for the
proceeds of the said PNs were issued, amounted to
P1,022,916.66, inclusive of the principal amounts and
interests. As to these money market placements,
respondent was the creditor and petitioner
_______________
122 CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal of Manila,
213 Phil. 516, 523-524; 128 SCRA 577, 584 (1984).
123 CIVIL CODE, Article 1286.
467
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FNCB Finance the debtor; while, as to the outstanding

loans, petitioner Citibank was the creditor and respondent
the debtor. Consequently, legal compensation, under
Article 1278 of the Civil Code, would not apply since the
first requirement for a valid compensation, that each one of
the obligors be bound principally, and that he be at the
same time a principal creditor of the other, was not met.
What petitioner Citibank actually did was to exercise its
rights to the proceeds of respondent’s money market
placements with petitioner FNCB Finance by virtue of the
Deeds of Assignment executed by respondent in its favor.
The Court of Appeals did not consider these Deeds of
Assignment because of petitioners’ failure to produce the
original copies thereof in violation of the best evidence rule.
This Court again finds itself in disagreement in the
application of the best evidence rule by the appellate court.
To recall, the best evidence rule, in so far as
documentary evidence is concerned, requires the
presentation of the original copy of the document only
when the context thereof is the subject of inquiry in the
case. Respondent does not question the contents of the
Deeds of Assignment. While she admitted the existence
and execution of the Deeds of Assignment, dated 2 March
1978 and 9 March 1978, covering PNs No. 8169 and 8167
issued by petitioner FNCB Finance, she claimed, as
defense, that the loans for which the said Deeds were
executed as security, were already paid. She denied ever
executing both Deeds of Assignment, dated 25 August
1978, covering PNs No. 20138 and 20139. These are again
issues collateral to the contents of the documents involved,
which could be proven by evidence other than the original
copies of the said documents.
Moreover, the Deeds of Assignment of the money market
placements with petitioner FNCB Finance were notarized
documents, thus, admissible in evidence. Rule 132, Section
30 of the Rules of Court provides that—
468

Sabeniano
“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 herein124is this Court’s elucidation in De Jesus v.

Court of Appeals, which reads—
“On the evidentiary value of these documents, it should be

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

notarized document is clear and unambiguous. The
certificate of acknowledgement in the notarized Deeds of
Assignment constituted prima facie evidence of the
execution thereof. Thus, the burden of refuting this
presumption fell on respondent. She could have presented
evidence of any 125
defect or irregularity in the execution of the
said documents or raised questions as to the verity of the
notary public’s acknowledgment and certificate in the
126
126
Deeds. But again, respondent admitted executing the
Deeds of Assignment, dated 2 March 1978 and 9 March
1978, although claiming that the loans for which they were
executed as security were already paid. And, she assailed
the Deeds of Assignment, dated 25 August 1978,
_______________
124 G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313-314.
125 Anachuelo v. Intermediate Appellate Court, G.R. No. L-71391, 29
January 1987, 147 SCRA 434, 441-442.
126 Antillon v. Barcelon, 37 Phil. 148, 150-151 (1917).
469
VOL. 504, OCTOBER 16, 2006 469

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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 127
literal copies
thereof from the National Archives. Mr. Renato Medua,
an archivist, working at the Records Management and
Archives Office of the National Library, testified that the
copies of the Deeds presented before the RTC were certified
literal copies of those contained in the Notarial Registries
of the notary publics concerned, which were already in the
possession of the National Archives. He also explained that
he could not bring to the RTC the Notarial Registries
containing the original copies of the Deeds of Assignment,
because the Department of Justice (DOJ) Circular No. 97,
dated 8 November 1968, prohibits the bringing of original
documents to the courts to128
prevent the loss of irreplaceable
and priceless documents.
Accordingly, this Court gives the Deeds of Assignment
grave importance in establishing the authority given by the
respondent to petitioner Citibank to use as security for her
loans her money her market placements with petitioner
FNCB Finance, represented by PNs No. 8167 and 8169,
later to be 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
129
129
with in good faith. Standard clauses in all of the Deeds
provide that—
The ASSIGNOR and the ASSIGNEE hereby further agree as

follows:
xxxx
_______________
127 See Exhibits “13-E, “14-G,” “15-D,”and “17-D,” defendants’ folder of

exhibits, pp. 65-67, 72-74, 77-78, 81-82.
128 TSN, 7 March 1991, Vol. IX, pp. 3-6.
129 Cuizon v. Court of Appeals, 329 Phil. 456, 482; 260 SCRA 645, 662
(1996).
470

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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, 130 to
the ASSIGNEE in accordance with terms and provisions hereof.
Petitioner Citibank was only acting upon the authority

granted to it under the foregoing Deeds when it finally
used the proceeds of PNs No. 20138 and 20139, paid by
petitioner FNCB Finance, to partly pay for respondent’s
outstanding loans. Strictly speaking, it did not effect a legal
compensation or 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.”
_______________
130 Exhibits “13-E,” “14-G,” “15-D,” and “17-D,” defendants’ folder of

exhibits, pp. 65-66, 72-73, 77-78, 81-82.
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VOL. 504, OCTOBER 16, 2006 471

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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
131
laws; this is known as
processual presumption.
Upon closer scrutiny of the Declaration of Pledge, this
Court finds the same exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank

took care to have the Deeds of Assignment of the PNs
notarized, yet left the Declaration of Pledge unnotarized.
This Court would think that petitioner Citibank would take
greater cautionary measures with the preparation and
execu-
_______________
131 Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383,
396; 342 SCRA 213, 223 (2000).
472

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tion of the Declaration of Pledge because it involved

respondent’s “all present and future fiduciary placements”
with a Citibank branch in another country, specifically, in
Geneva, Switzerland. While there is no express legal
requirement that the Declaration of Pledge had to be
notarized to be effective, even so, it could not enjoy the
same prima facie presumption of due execution that is
extended to notarized documents, and petitioner Citibank
must discharge the burden of proving due execution and
authenticity of the Declaration of Pledge.
Second, petitioner Citibank was unable to establish the
date when the Declaration of Pledge was actually executed.
The photocopy of the Declaration of Pledge submitted 132
by
petitioner Citibank before the RTC was undated. It
presented only a photocopy of the pledge because it already
forwarded the original copy thereof to Citibank-Geneva
when it requested for the remittance of respondent’s dollar
accounts pursuant thereto. Respondent, on the other hand,
was able to secure a copy of the Declaration of Pledge,
certified by an officer of133Citibank-Geneva, which bore the
date 24 September 1979. Respondent, however, presented
her passport and plane tickets to prove that she was out of
the country on the said date and could not have signed the
pledge. Petitioner Citibank insisted that the pledge was
signed before 24 September 1979, but could not provide an
explanation as to how and why the said date was written
on the pledge. Although Mr. Tan testified that the
Declaration of Pledge was signed by respondent personally
before him, he could not give the exact date when the said
signing took place. It is important to note that the copy of
the Declaration of Pledge submitted by the respondent to

the RTC was certified by an officer of Citibank-Geneva,
which had possession of the original copy of the pledge. It is
dated 24 September 1979, and this Court shall abide by the
presumption that the written document is truly
_______________
132 Exhibit “38,” defendants’ folder of exhibits, pp. 109-110.

133 Exhibit “K-1,” plaintiff’s folder of exhibits, 54-55.
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VOL. 504, OCTOBER 16, 2006 473

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134
dated. Since it is undeniable that respondent was out of
the country on 24 September 1979, then she could not have
executed the pledge on the said date.
Third, the Declaration of Pledge was irregularly 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
_______________
134 REVISED RULES OF COURT, Rule 131, Section 3(u).
474

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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 135document under controversy cannot produce reliable
results.”
Respondent made several attempts to have the original

copy of the pledge produced before the RTC so as to have it
examined
136
by experts. Yet, despite several Orders by the
RTC, petitioner Citibank failed to comply with the
production of the original Declaration of Pledge. It is
admitted that 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 ex-
_______________
135 Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763;
300 SCRA 565, 574 (1998).
136 Order, dated 12 November 1985, penned by Judge Ansberto P.
Paredes, Records, Vol. I, p. 310; Order, dated 2 September 1988, Id. and
penned by Judge Francisco X. Velez, Records, Vol. I, p. 449; Order, dated
24 November 1988, penned by Judge Francisco X. Velez, Records, Vol. I, p.
458; Order, dated 25 April 1989, penned by Judge Francisco X. Velez,
Records, Vol. I, pp. 476-477.
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VOL. 504, OCTOBER 16, 2006 475

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erted 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
pledge137presented by petitioner Citibank has nil probative
value. In addition, even if this Court cannot make a
categorical finding that respondent’s signature on the
original copy of the pledge was forged, it is persuaded that
petitioner Citibank willfully suppressed the presentation of
the original document, and takes into consideration the
presumption that the evidence willfully suppressed
138
would
be adverse to petitioner Citibank if produced.
Without the Declaration of Pledge, petitioner Citibank
had no authority to demand the remittance of respondent’s
dollar accounts with Citibank-Geneva and to apply them to
her outstanding loans. It cannot effect legal compensation
under Article 1278 of the Civil Code since, petitioner
Citibank itself admitted that Citibank-Geneva is a distinct
and separate entity. As for the dollar accounts, respondent
was the creditor and Citibank-Geneva is the debtor; and as
for the outstanding loans, petitioner Citibank was the
creditor and respondent was the debtor. The parties in
these transactions were evidently not the principal creditor
of each other.
Therefore, this Court declares that the remittance of

respondent’s dollar accounts from Citibank-Geneva and the
application thereof to her outstanding loans with petitioner
Citibank was illegal, and null and void. Resultantly,
petitioner Citibank is obligated to return to respondent the
amount of US$149,632,99 from her Citibank-Geneva
accounts, or its present equivalent value in Philippine
currency; and, at the same time, respondent continues to be
obligated to
_______________
137 Security Bank & Trust Co. v. Triumph Lumber and Construction
Corporation, 361 Phil. 463, 477; 301 SCRA 537, 550 (1999).
138 REVISED RULES OF COURT, Rule 131, Section 3(e).
476

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petitioner Citibank for the balance of her outstanding loans

which, as of 5 September 1979, amounted to P1,069,847.40.
The parties shall be liable for interests on their monetary

obligations to each other, as determined herein.
In summary, petitioner Citibank is ordered by this Court to
pay respondent the proceeds of her money market
placements, represented by PNs No. 23356 and 23357,
amounting to P318,897.34 and P203,150.00, respectively,
earning an139
interest of 14.5% per annum as stipulated in
the PNs, beginning 17 March 1977, the date of the
placements.
Petitioner Citibank is also ordered to refund to
respondent the amount of US$149,632.99, or its equivalent
in Philippine currency, which had been remitted from her
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.
_______________
139 The stipulated interest shall apply as indemnity for the damages
incurred in the delay of payment as provided in Article 2209 of the CIVIL
CODE which reads—
ART. 2209. If the obligation consists in the payment of a sum of money, and the
debtor incurs delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the absence of a
stipulation, the legal interest, which is six percent per annum. [Emphasis
supplied.]
Note, however, that the legal interest has been increased from six
percent to twelve percent per annum by virtue of Central Bank Circulars
No. 416, dated 29 July 1974, and No. 905, dated 10 December 1982.
477
VOL. 504, OCTOBER 16, 2006 477

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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 140 those actually assigned and
discussed by the appellant. Thus, the Court of Appeals
did not err in awarding the damages when it already made
findings that would justify and support the said award.
_______________
140 Radio Communications of the Philippines, Inc. v. National Labor

Relations Commission, G.R. Nos. 101181-84, 22 June 1992, 210 SCRA 222,
226-227; Ortigas, Jr. v. Lufthansa German Airlines, G.R. No. L-28773, 30
June 1975, 64 SCRA 610, 633-634; Hernandez v. Andal, 78 Phil. 196, 209-
210 (1947).
478

Sabeniano
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
141
requires high standards of integrity and performance. A
bank is under the obligation to treat the accounts of its
depositors with meticulous care whether such accounts 142
consist only of a few hundred pesos or of millions of pesos.
The bank must record every single transaction accurately, 143
down to the last centavo, and as promptly as possible.
Petitioner Citibank evidently failed to exercise the required
degree of care and transparency in its transactions with
respondent, thus, resulting in the wrongful deprivation of
her property.
Respondent had been deprived of substantial amounts of
her investments and deposits for more than two decades.
During this span of years, respondent had found herself in
desperate need of the amounts wrongfully withheld from
144
144
her. In her testimony before the RTC, respondent
narrated—
_______________
141 THE GENERAL BANKING LAW OF 2000, Section 2.

142 Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948;
315 SCRA 309, 314 (1999).
143 Simex International (Manila), Inc, vs. Court of Appeals, G.R. No.
88013, 19 March 1990, 183 SCRA 360, 367; Bank of Philippine Islands vs.
Intermediate Appellate Court, G.R. No. 69162, 21 February 1992, 206
SCRA 408, 412-413.
144 TSN, 28 January 1986, Vol. I, pp. 5-7.
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VOL. 504, OCTOBER 16, 2006 479

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Q By the way Mrs. Witness will you kindly tell us again, you said
before that you are a businesswoman, will you tell us again
what are the businesses you are engaged into [sic]?
A I am engaged in real estate. I am the owner of the Modesta
Village 1 and 2 in San Mateo, Rizal. I am also the President
and Chairman of the Board of Macador [sic] Co. and Business
Inc. which operates the Macador [sic] International Palace
Hotel. I am also the President of the Macador [sic]
International Palace Hotel, and also the Treasures Home
Industries, Inc. which I am the Chairm an and president of the
Board and also operating affiliated company in the name of
Treasures Motor Sales engaged in car dealers [sic] like Delta
Motors, we are the dealers of the whole Northern Luzon and I
am the president of the Disto Company, Ltd., based in
Hongkong licensed in Honkong [sic] and now operating in Los
Angeles, California.
Q What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and
construction.
Q Aside from those businesses are you a member of any national
or community organization for social and civil activities?
A Yes sir.
Q What are those?
A I am the 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 Mayor last January 30, 1980.
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
480

Sabeniano
A I also ran as an Assemblywoman last May, 1984, Independent

party in Regional I, Pangasinan.
Q What happened to your businesses you mentioned as a result
of your failure to recover you [sic] investments and bank
deposits from the defendants?
A They are not all operating, in short, I was hampered to push
through the businesses that I have.
A [sic] Of all the businesses and enterprises that you mentioned
what are those that are paralyzed and what remain inactive?
A Of all the company [sic] that I have, only the Disto Company
that is now operating in California.
Q How about your candidacy as Mayor of Dagupan, [sic] City,
and later as Assemblywoman of Region I, what happened to
this?
A I won by voting but when election comes on [sic] the counting I
lost and I protested this, it is still pending and because I don’t
have financial resources I was not able to push through the
case. I just have it pending in the Comelec.
Q Now, do these things also affect your social and civic activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman I would
like to inform the Honorable Court that I was awarded as the
most outstanding businesswoman of the year in 1976 but
when this money was not given back to me I was not able to
comply with the commitments that I have promised to these
associations that I am engaged into [sic], sir.
For the mental anguish, serious anxiety, besmirched

reputation, moral shock and social humiliation suffered by
the respondent, the award of moral damages is but proper.
However, this Court reduces the amount thereof to
P300,000.00, for the award of moral damages is meant to
compensate for
481
VOL. 504, OCTOBER 16, 2006 481

Sabeniano
the 145
actual injury suffered by the respondent, not to enrich
her.
Having failed to exercise more care and prudence than a
private individual in its dealings with respondent,
petitioner Citibank should be liable for exemplary
damages, in 146
the amount147of P250,000.00, in accordance with
Article 2229 and 2234 of the Civil Code.
With the award of exemplary damages, then respondent 148
shall also be entitled to an award of attorney’s fees.
Additionally, attorney's fees may be awarded when a party
is compelled to litigate or to incur expenses to protect his149
interest by reason of an unjustified act of the other party.
In this case, an award of P200,000.00 attorney’s fees shall
be satisfactory.
In contrast, this Court finds no sufficient basis to award
damages to petitioners. Respondent was compelled to
institute the present case in the exercise of her rights and
in the protection of her interests. In fact, although her
Complaint before the RTC was not sustained in its
entirety, it did raise meritorious points and on which this
Court rules in her favor. Any injury resulting 150 from the
exercise of one’s rights is damnum absque injuria.
_______________
145 Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995; 317 SCRA 527, 541
(1999); Zenith Insurance Corporation v. Court of Appeals, G.R. No. 85296,
14 May 1990, 185 SCRA 398, 402-403.
146 Exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages.
147 While the amount of exemplary damages need not be proved, the
plaintiff must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of
whether or not exemplary damages should be awarded. x x x
148 CIVIL CODE, Article 2208(1).
149 Ching Sen Ben vs. Court of Appeals, 373 Phil. 544, 555; 314 SCRA
762, 772-773 (1999).
150 ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil.
498, 531-532; 301 SCRA 572, 604 (1999); Tierra International
Construction Corp. v. National Labor Relations Commission, G.R.
482

Sabeniano
IN VIEW OF THE FOREGOING, the instant Petition is

PARTLY GRANTED. The assailed Decision of the Court of
Appeals in CA-G.R. No. 51930, dated 26 March 2002, as
already modified by its Resolution, dated 20 November
2002, is hereby AFFIRMED WITH MODIFICATION, as
follows—
1. PNs No. 23356 and 23357 are DECLARED

subsisting and outstanding. Petitioner Citibank is
ORDERED to return to respondent the principal
amounts of the said PNs, amounting to Three
Hundred Eighteen Thousand Eight Hundred
Ninety-Seven Pesos and Thirty-Four Centavos
(P318,897.34) and Two Hundred Three Thousand
One Hundred Fifty Pesos (P203,150.00),
respectively, plus the stipulated interest of
Fourteen and a half percent (14.5%) per annum,
beginning 17 March 1977;
2. The remittance of One Hundred Forty-Nine
Thousand Six Hundred Thirty Two US Dollars and
Ninety-Nine Cents (US$149,632.99) from
respondent’s Citibank-Geneva accounts to
petitioner Citibank in Manila, and the application
of the same against respondent’s outstanding loans
with the latter, is DECLARED illegal, null and
void. Petitioner Citibank is ORDERED to refund to
respondent the said amount, or its equivalent in
Philippine currency using the exchange rate at the
time of payment, plus the stipulated interest for
each of the fiduciary placements and current
accounts involved, beginning 26 October 1979;
3. Petitioner Citibank is ORDERED to pay respondent
moral damages in the amount of Three Hundred
Thousand Pesos (P300,000.00); exemplary damages
in the amount of Two Hundred Fifty Thousand
Pesos (P250,000.00); and attorney’s fees in the
amount of Two Hundred Thousand Pesos
(P200,000.00); and
4. Respondent is ORDERED to pay petitioner
Citibank the balance of her outstanding loans,
which, from the respec
_______________
No. 88912, 3 July 1992, 211 SCRA 73, 81; Saba v. Court of Appeals,
G.R. No. 77950, 24 August 1990, 189 SCRA 50, 55.
483
VOL. 504, OCTOBER 16, 2006 483

Sabeniano
tive dates of their maturity to 5 September 1979,

was computed to be in the sum of One Million
Sixty-Nine Thousand Eight Hundred Forty-Seven
Pesos and Forty Centavos (P1,069,847.40), inclusive
of interest. These outstanding loans shall continue
to earn interest, at the rates stipulated in the
corresponding PNs, from 5 September 1979 until
payment thereof.
SO ORDERED.
Panganiban (C.J., Chairperson), Ynares-Santiago,

Austria-Martinez and Callejo, Sr., JJ., concur.
Petition partly granted, assailed decision and resolution

affirmed with modification.
Notes.—It is the collecting bank which is bound to

scrutinize the check and to know its depositors before it
could make the clearing indorsement “all prior
indorsements and/or lack of indorsement guaranteed.”
(Philippine Commercial International Bank vs. Court of
Appeals, 350 SCRA 446 [2001])
A treasurer of a corporation whose negligence in signing
a confirmation letter for rediscounting of crossed checks,
knowing fully well that the checks were strictly endorsed
for deposit only to the payee’s account and not to be further
negotiated, resulted in damage to the corporation may be
personally liable therefor. (Atrium Management
Corporation vs. Court of Appeals, 353 SCRA 23 [2001])
——o0o——
484
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10/21/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 504

378 SUPREME COURT REPORTS ANNOTATED

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

Actions; Pleadings and Practice; Forum Shopping; Motions

same purpose as the Petition for Review itself. Such a Motion

VOL. 504, OCTOBER 16, 2006 379

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

not go into the details of the appealed case. Without any

Same; Same; Same; Certification Against Forum Shopping;

Appeals; Findings of fact of the Court of Appeals are

brought before it from the Court of Appeals by virtue of Rule 45 of

380 SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

Evidence; Admissions; Documentary Evidence; Promissory

an instrument is meant that the party whose signature it bears

VOL. 504, OCTOBER 16, 2006 381

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

Court delineated the consequences of such an admission—By the

instrument in some other capacity than that alleged in the

Same; Obligations and Contracts; Payments; As a general

382 SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

with the evidence—as distinct from the general burden of proof—

Same; Witnesses; Taking into consideration the substantial

VOL. 504, OCTOBER 16, 2006 383

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

numerous transactions during their tenure, this Court is

manner and context by which respondent relayed her instructions

Same; Preponderance of Evidence; Words and Phrases;

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

384 SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

as the money it represents. Moreover, the MCs were crossed

Same; Same; Crossed Checks; A crossed check cannot be

course of normal banking hours. The crossed check cannot be

Same; Same; Same; Presumptions; Given that a check is more

VOL. 504, OCTOBER 16, 2006 385

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

due to payment, then, the possession by petitioner Citibank of the

Same; Same; Same; Same; It is presumed that private

Same; Same; Same; Same; Where checks crossed for payee’s

386 SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

bear respondent’s signature at the back does not negate deposit

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

VOL. 504, OCTOBER 16, 2006 387

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

does not discharge the obligation under a judgment. The

Same; Loans; Words and Phrases; Booking the loan means

Evidence; Preponderance of Evidence; Words and Phrases;

388 SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

state of facts. For instance, one or two witnesses may testify to a

Same; Best Evidence Rule; Words and Phrases; In general, the

Same; Same; Even with respect to documentary evidence, the

VOL. 504, OCTOBER 16, 2006 389

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

document was actually executed, or exists, or on the

Same; A basic rule of evidence states that “evidence that one

under which he may find himself at a given time may likewise

390 SUPREME COURT REPORTS ANNOTATED

Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano

different way. Besides, if evidence of similar acts are to be