Professional Documents
Culture Documents
*
G.R. No. 156132. October 16, 2006.
* FIRST DIVISION.
379
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.
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.
382
382 SUPREME COURT REPORTS ANNOTATED
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.
383
384
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
385
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.
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.
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.
389
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
391
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.
393
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.
395
meant to compensate for the actual injury suffered by the respondent, not to
enrich her.
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. CV No. 51930, dated 26 March 2002, and the
3
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
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396
_______________
397
later obtained several loans from petitioner Citibank, for which she
executed Promissory Notes (PNs), and secured by (a) a Declaration
of Pledge of her dollar accounts in Citibank-Geneva, and (b) Deeds
of Assignment of her money market placements with petitioner
FNCB Finance. When respondent failed to pay her loans despite
repeated demands by petitioner Citibank, the latter exercised its right
to off-set or compensate respondent’s outstanding loans with her
deposits and money market placements, pursuant to the Declaration
of Pledge and the Deeds of Assignment executed by respondent in
its favor. Petitioner Citibank supposedly informed respondent
Sabeniano of the foregoing compensation through letters, dated 28
September 1979 and 31 October 1979. Petitioners were therefore
surprised when six years later, in 1985, respondent and her counsel
made repeated requests for the withdrawal of respondent’s deposits
and money market placements with petitioner Citibank, including
her dollar accounts with Citibank-Geneva and her money market
placements with petitioner FNCB Finance. Thus, petitioners prayed
for the dismissal of the Complaint and for the award of actual,
moral, and exemplary damages, and attorney’s fees.
When the parties failed to reach a compromise during the pre-
9
trial hearing, trial proper ensued and the parties proceeded with the
presentation of their respective evidence. Ten years after the filing of
10
the Complaint on 8 August 1985, a Decision was finally rendered
11
in Civil Case No. 11336 on 24 August 1995 by the fourth Judge
who handled the said case,
_______________
398
_______________
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
Citibank, N.A. (Formerly First National City Bank) vs. 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.
12
On 26 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—
_______________
400
401
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, this Court issued a
15
Resolution, dated 13 November 2002, in which it pronounced that
—
_______________
402
_______________
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
404
_______________
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
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.
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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
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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
408
409
II
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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
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,
26
the case was presided over by four (4) different RTC judges. It was
Judge Victorio, the fourth judge assigned to the case, who wrote the
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
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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
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”).”
_______________
412
“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
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413
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.”
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
414 SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
415
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
22528), P
416
(mm/dd/ PN No.
Date
(P)
(p.a.)
yyyy)
(mm/dd/
yyyy)
_______________
417
418
“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
34
producing some evidence of non-payment.”
_______________
419
36
place; and (2) that of Mr. Francisco Tan, the former Assistant Vice-
President of Citibank, who directly dealt with respondent with
regard to her deposits and loans.
37
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
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
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”?
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38 Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
422
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.
39
When 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-
_______________
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
_______________
425
(mm/dd/yyyy)
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%
_______________
426
(mm/dd/yyyy)
Then again, Checks No. 77035 and 77034 were later returned to
47
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,
_______________
427
_______________
428
_______________
429
430
III
Description Amount
Description Amount
Principal and interests of PNs No. 20138 and 20139
(money market placements with petitioner FNCB P
Finance) 1,022,916.66
Savings account with petitioner Citibank 31,079.14
Dollar remittance from Citibank-Geneva
431
(peso equivalent
Of US$149,632.99) 1,102,944.78
Total P 2,156,940.58
_______________
432
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,
56
respondent had the
following outstanding PNs (second set), the principal amount of
which remained at 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 57
executed 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
_______________
433
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. 59
20138 and 20139, respondent executed new Deeds of Assignment,
in favor of petitioner Citibank, on 25 August 1978. According to the
more recent Deeds, respondent assigned PNs No. 20138 and 20139,
representing her rolled-over money market placements with
petitioner FNCB Finance, to petitioner Citibank as security for the
banking and credit facilities it extended to her, in the aggregate
principal amount of P500,000.00 per Deed.
In addition to the Deeds of Assignment of her money market
placements with petitioner60 FNCB Finance, 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
61
by a Citibank-
Geneva 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.
_______________
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—
You will be doing our corporation a very viable service, should you
grant us our request for a little more time. A week later or on 3 May
1979, a certain C. N. Pugeda, designated as “Executive Secretary,”
64
sent a letter to petitioner
_______________
435
_______________
436
_______________
437
69
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
_______________
438
_______________
439
_______________
440
proof that she received the proceeds of the loans covered by the first
set of PNs. As recounted in the preceding paragraph, respondent
admitted to obtaining a loan of P150,000.00, covered by PN No.
34534, and receiving MC No. 228270 representing the proceeds
thereof, but claimed that she already paid the same. She denied ever
receiving MCs No. 220701 (for the loan of P400,000.00, covered by
PN No. 33935) and No. 226467 (for the loan of P250,000.00,
covered by PN No. 34079), and pointed out that the checks did not
bear her indorsements. She did not deny receiving all other checks
but she interposed that she received these checks, not as proceeds of
loans, but as payment of the principal amounts and/or interests from
her money market placements with petitioner Citibank. She also
raised doubts as to the notation on each of the checks that reads
“RE: Proceeds of PN#[corresponding PN No.],” saying that such
notation did not appear on the MCs when she originally received
them and that the notation appears to have been written by a
typewriter different from that used in writing all other information
76
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
_______________
441
_______________
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
named as payee. MCs checks are drawn by the bank’s manager upon
the bank 79itself and regarded to be as good as 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 to another bank in the payee’s or
80
indorser’s account. The effect of crossing a check was described by
this Court
81
in Philippine Commercial International Bank v. Court of
Appeals —
_______________
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
_______________
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
_______________
445
_______________
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
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 of93lack of
indorsement 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-
_______________
447
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.
_______________
448
_______________
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
_______________
450
450 SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
451
identified as the first and second sets of PNs were only those which
remained unpaid. It thus became incumbent upon respondent to
prove that the checks received by Mr. Tan were actually applied to
the PNs in either the first or second set; a fact that, unfortunately,
cannot be determined from the provisional receipts submitted by
respondent since they only generally stated that the checks received
by Mr. Tan were payment for respondent’s loans.
Mr. Tan, in his deposition, further explained that provisional
receipts were issued when payment to the bank was made using
checks, since the checks would still be subject to clearing. The
purpose for the provisional receipts was merely to acknowledge the
delivery of the checks to the possession of the bank, but not yet of
99
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
100
of
payment. 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).”
_______________
452
_______________
453
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,
454
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.
455
_______________
108 TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp. 31-34.
456
456 SUPREME COURT REPORTS ANNOTATED
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
_______________
457
_______________
458
The best evidence rule has been made part of the revised Rules of
Court, Rule 130, Section 3, which reads—
“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.
459
“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
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—
_______________
461
_______________
462
_______________
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.
463
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
“The rule is founded upon reason, public policy, justice and judicial
convenience. The fact that a person has committed the same or similar acts
at some prior time affords, as a general rule, no logical guaranty that he
committed the act in question. This is so because, subjectively, a man’s
mind and even his modes of life may change; and, objectively, the
conditions under which he may find himself at a given time may likewise
change and thus induce him to act in a different way. Besides, if evidence of
similar acts are to be invariably admitted, they will give rise to a multiplicity
of collateral issues and will subject the defendant to surprise as well as
121
confuse the court and prolong the trial.”
_______________
465
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.
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.
466
_______________
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
468
Significant
124
herein is 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]).”
_______________
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
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 even127secured certified 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 to prevent the loss
128
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 law129
between the parties and should be complied with in good
faith. Standard clauses in all of the Deeds provide that—
_______________
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
2. In the event the OBLIGATIONS are not paid at maturity or upon demand,
as the case may be, the ASSIGNEE is fully authorized and empowered to
collect and receive the PLACEMENT (or so much thereof as may be
necessary) and apply the same in payment of the OBLIGATIONS.
Furthermore, the ASSIGNOR agrees that at any time, and from time to time,
upon request by the ASSIGNEE, the ASSIGNOR will promptly execute and
deliver any and all such further instruments and documents as may be
necessary to effectuate this Assignment.
xxxx
5. This Assignment shall be considered as sufficient authority to FNCB
Finance to pay and deliver the PLACEMENT or so much thereof as may be
necessary to liquidate the OBLIGATIONS, to the ASSIGNEE in accordance
130
with terms and provisions hereof.
“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.
471
VOL. 504, OCTOBER 16, 2006 471
Citibank, N.A. (Formerly First National City Bank) vs. Sabeniano
_______________
131 Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396; 342
SCRA 213, 223 (2000).
472
_______________
473
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
_______________
474
_______________
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.
475
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 pledge presented by
137
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
138
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
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
VI
478
_______________
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
481
145
the 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, 146
in the 147
amount of P250,000.00, in
accordance with Article 2229 and 2234 of the Civil Code.
With the award of exemplary damages,148 then respondent shall also
be entitled to an award of attorney’s fees. Additionally, attorney's
fees may be awarded when a party is compelled to litigate or to
incur expenses to149 protect his 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 150
resulting 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
_______________
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
SO ORDERED.
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484