CITIBANK, N.A. (Formerly First National City Bank)
and INVESTORS’ FINANCE CORPORATION, doing
business under the name and style of FNCB Finance,
Petitioners,
G.R. No. 156132
October 12, 2006
- versus-
MODESTA R. SABENIANO,
Respondent.
x---------------------------------------------------------------------x
D E C I S I O N
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on
Certiorari,[1] under Rule 45 of the Revised Rules of Court,
of the decision[2] of the Court of Appeals in CA-G.R. CV No. 51930,
dated 26 March 2002, and the resolution,[3] dated 20 November 2002, of
the same court which, although modifying its earlier Decision, still
denied for the most part the Motion for Reconsideration of herein
petitioners.
Petitioner Citibank, N.A. (formerly known as the First National City
Bank) is a banking corporation duly authorized and existing under the
laws of the United States of America and licensed to do commercial
banking activities and perform trust functions in the Philippines.
Petitioner Investor’s Finance Corporation, which did business under the
name and style of FNCB Finance, was an affiliate company of petitioner
Citibank, specifically handling money market placements for its
clients. It is now, by virtue of a merger, doing business as part
of its successor-in-interest, BPI Card Finance Corporation.
However, so as to consistently establish its identity in the Petition
at bar, the said petitioner shall still be referred to herein as FNCB
Finance.[4]
chan robles virtual law library
Respondent Modesta R. Sabeniano was a client of both petitioners
Citibank and FNCB Finance. Regrettably, the business relations
among the parties subsequently went awry.
On 8 August 1985, respondent filed a Complaint[5] against petitioners,
docketed as Civil Case No. 11336, before the Regional Trial Court (RTC)
of Makati City. Respondent claimed to have substantial deposits
and money market placements with the petitioners, as well as money
market placements with the Ayala Investment and Development Corporation
(AIDC), the proceeds of which were supposedly deposited automatically
and directly to respondent’s accounts with petitioner Citibank.
Respondent alleged that petitioners refused to return her deposits and
the proceeds of her money market placements despite her repeated
demands, thus, compelling respondent to file Civil Case No. 11336
against petitioners for “Accounting, Sum of Money and Damages.”
Respondent eventually filed an Amended Complaint[6] on 9 October 1985
to include additional claims to deposits and money market placements
inadvertently left out from her original Complaint. chanroblesvirtualawlibrary
In their joint Answer[7] and Answer to Amended Complaint,[8] filed on
12 September 1985 and 6 November 1985, respectively, petitioners
admitted that respondent had deposits and money market placements with
them, including dollar accounts in the Citibank branch in Geneva,
Switzerland (Citibank-Geneva). Petitioners further alleged that
the respondent later obtained several loans from petitioner Citibank,
for which she executed Promissory Notes (PNs), and secured by (a) a
Declaration of Pledge of her dollar accounts in Citibank-Geneva, and
(b) Deeds of Assignment of her money market placements with petitioner
FNCB Finance. When respondent failed to pay her loans despite
repeated demands by petitioner Citibank, the latter exercised its right
to off-set or compensate respondent’s outstanding loans with her
deposits and money market placements, pursuant to the Declaration of
Pledge and the Deeds of Assignment executed by respondent in its
favor. Petitioner Citibank supposedly informed respondent
Sabeniano of the foregoing compensation through letters, dated 28
September 1979 and 31 October 1979. Petitioners were therefore
surprised when six years later, in 1985, respondent and her counsel
made repeated requests for the withdrawal of respondent’s deposits and
money market placements with petitioner Citibank, including her dollar
accounts with Citibank-Geneva and her money market placements with
petitioner FNCB Finance. Thus, petitioners prayed for the
dismissal of the Complaint and for the award of actual, moral, and
exemplary damages, and attorney’s fees.
When the parties failed to reach a compromise during the pre-trial
hearing,[9] trial proper ensued and the parties proceeded with the
presentation of their respective evidence. Ten years after the
filing of the Complaint on 8 August 1985, a Decision[10] was finally
rendered in Civil Case No. 11336 on 24 August 1995 by the fourth
Judge[11] who handled the said case, Judge Manuel D. Victorio, the
dispositive portion of which reads:cralaw:red
WHEREFORE, in view of all the foregoing, decision is hereby rendered as follows:cralaw:red
(1) Declaring as illegal, null and void the setoff effected
by the defendant Bank [petitioner Citibank] of plaintiff’s [respondent
Sabeniano] dollar deposit with Citibank, Switzerland, in the amount of
US$149,632.99, and ordering the said defendant [petitioner Citibank] to
refund the said amount to the plaintiff with legal interest at the rate
of twelve percent (12%) per annum, compounded yearly, from 31 October
1979 until fully paid, or its peso equivalent at the time of payment;chanroblesvirtualawlibrary
(2) Declaring the plaintiff [respondent Sabeniano] indebted
to the defendant Bank [petitioner Citibank] in the amount of
P1,069,847.40 as of 5 September 1979 and ordering the plaintiff
[respondent Sabeniano] to pay said amount, however, there shall be no
interest and penalty charges from the time the illegal setoff was
effected on 31 October 1979;
chan robles virtual law library
(3) Dismissing all other claims and counterclaims interposed by the parties against each other.
Costs against the defendant Bank.
All the parties appealed the foregoing Decision of the RTC to the Court
of Appeals, docketed as CA-G.R. CV No. 51930. Respondent
questioned the findings of the RTC that she was still indebted to
petitioner Citibank, as well as the failure of the RTC to order
petitioners to render an accounting of respondent’s deposits and money
market placements with them. On the other hand, petitioners
argued that petitioner Citibank validly compensated respondent’s
outstanding loans with her dollar accounts with Citibank-Geneva, in
accordance with the Declaration of Pledge she executed in its
favor. Petitioners also alleged that the RTC erred in not
declaring respondent liable for damages and interest.
On 26 March 2002, the Court of Appeals rendered its Decision[12]
affirming with modification the RTC Decision in Civil Case No. 11336,
dated 24 August 1995, and ruling entirely in favor of respondent in
this wise –chanroblesvirtualawlibrary
WHEREFORE, premises
considered, the assailed 24 August 1995 Decision of the court a
quo is hereby AFFIRMED with MODIFICATION, as follows:cralaw:red
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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
3. As defendants-appellants failed to account the
following plaintiff-appellant’s money market placements, savings
account and current accounts, the former is hereby ordered to return
the same, in accordance with the terms and conditions agreed upon by
the contending parties as evidenced by the certificates of investments,
to wit:cralaw:red
(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.;chanroblesvirtualawlibrary
(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.;chanroblesvirtualawlibrary
(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.;chanroblesvirtualawlibrary
(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;chanroblesvirtualawlibrary
(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.
chan robles virtual law library
G.R. No. 152985
Respondent no longer sought a reconsideration of the Decision of the
Court of Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, and
instead, filed immediately with this Court on 3 May 2002 a Motion for
Extension of Time to File a Petition for Review,[13] which, after
payment of the docket and other lawful fees, was assigned the docket
number G.R. No. 152985. In the said Motion, respondent alleged
that she received a copy of the assailed Court of Appeals Decision on
18 April 2002 and, thus, had 15 days therefrom or until 3 May 2002
within which to file her Petition for Review. Since she informed
her counsel of her desire to pursue an appeal of the Court of Appeals
Decision only on 29 April 2002, her counsel neither had enough time to
file a motion for reconsideration of the said Decision with the Court
of Appeals, nor a Petition for Certiorari with this Court. Yet,
the Motion failed to state the exact extension period respondent was
requesting for.
Since this Court did not act upon respondent’s Motion for Extension of
Time to file her Petition for Review, then the period for appeal
continued to run and still expired on 3 May 2002.[14] Respondent
failed to file any Petition for Review within the prescribed period for
appeal and, hence, this Court issued a Resolution,[15] dated 13
November 2002, in which it pronounced that:cralaw:red
G.R. No. 152985 (Modesta R.
Sabeniano vs. Court of Appeals, et al.). – It appearing that petitioner
failed to file the intended petition for review on certiorari within
the period which expired on May 3, 2002, the Court Resolves to DECLARE
THIS CASE TERMINATED and DIRECT the Division Clerk of Court to INFORM
the parties that the judgment sought to be reviewed has become final
and executory.
The said Resolution was duly recorded in the Book of Entries of Judgments on 3 January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a Motion for
Reconsideration of its Decision in CA-G.R. CV No. 51930, dated 26 March
2002. Acting upon the said Motion, the Court of Appeals issued
the Resolution,[16] dated 20 November 2002, modifying its Decision of
26 March 2002, as follows:cralaw:red
WHEREFORE, premises
considered, the instant Motion for Reconsideration is PARTIALLY GRANTED
as Sub-paragraph (V) paragraph 3 of the assailed Decision’s dispositive
portion is hereby ordered DELETED.
The challenged 26 March 2002 Decision of the Court is AFFIRMED with MODIFICATION.
Assailing the Decision and Resolution of the Court of Appeals in
CA-G.R. CV No. 51930, dated 26 March 2002 and 20 November 2002,
respectively, petitioners filed the present petition, docketed as G.R.
No. 156132. The Petition was initially denied[17] by this Court
for failure of the petitioners to attach thereto a Certification
against Forum Shopping. However, upon petitioners’ Motion and
compliance with the requirements, this Court resolved[18] to reinstate
the petition.
The petition presented fourteen (14) assignments of errors allegedly
committed by the Court of Appeals in its Decision, dated 26 March 2002,
involving both questions of fact and questions of law which this Court,
for the sake of expediency, discusses jointly, whenever possible, in
the succeeding paragraphs.
I
The Resolution of this Court, dated 13 November 2002, in G.R. No.
152985, declaring the Decision of the Court of Appeals, dated 26 March
2002, final and executory, pertains to respondent Sabeniano alone.
Before proceeding to a discussion of the merits of the instant
Petition, this Court wishes to address first the argument, persistently
advanced by respondent in her pleadings on record, as well as her
numerous personal and unofficial letters to this Court which were no
longer made part of the record, that the Decision of the Court of
Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, had already
become final and executory by virtue of the Resolution of this Court in
G.R. No. 152985, dated 13 November 2002.
G.R. No. 152985 was the docket number assigned by this Court to
respondent’s Motion for Extension of Time to File a Petition for
Review. Respondent, though, did not file her supposed
Petition. Thus, after the lapse of the prescribed period for the
filing of the Petition, this Court issued the Resolution, dated 13
November 2002, declaring the Decision of the Court of Appeals, dated 26
March 2002, final and executory. It should be pointed out,
however, that the Resolution, dated 13 November 2002, referred only to
G.R. No. 152985, respondent’s appeal, which she failed to perfect
through the filing of a Petition for Review within the prescribed
period. The declaration of this Court in the same Resolution
would bind respondent solely, and not petitioners which filed their own
separate appeal before this Court, docketed as G.R. No. 156132, the
Petition at bar. This would mean that respondent, on her part,
should be bound by the findings of fact and law of the Court of
Appeals, including the monetary amounts consequently awarded to her by
the appellate court in its Decision, dated 26 March 2002; and she can
no longer refute or assail any part thereof. [19] chanroblesvirtualawlibrary
This Court already explained the matter to respondent when it issued a
Resolution[20] in G.R. No. 156132, dated 2 February 2004, which
addressed her Urgent Motion for the Release of the Decision with the
Implementation of the Entry of Judgment in the following manner:
chan robles virtual law library
[A]cting on Citibank’s and
FNCB Finance’s Motion for Reconsideration, we resolved to grant the
motion, reinstate the petition and require Sabeniano to file a comment
thereto in our Resolution of June 23, 2003. Sabeniano filed a
Comment dated July 17, 2003 to which Citibank and FNCB Finance filed a
Reply dated August 20, 2003.
From the foregoing, it is
clear that Sabeniano had knowledge of, and in fact participated in, the
proceedings in G.R. No. 156132. She cannot feign ignorance of the
proceedings therein and claim that the Decision of the Court of Appeals
has become final and executory. More precisely, the Decision
became final and executory only with regard to Sabeniano in view of her
failure to file a petition for review within the extended period
granted by the Court, and not to Citibank and FNCB Finance whose
Petition for Review was duly reinstated and is now submitted for
decision.
Accordingly, the instant Urgent Motion is hereby DENIED. (Emphasis supplied)
To sustain the argument of respondent would result in an unjust and
incongruous situation wherein one party may frustrate the efforts of
the opposing party to appeal the case by merely filing with this Court
a Motion for Extension of Time to File a Petition for Review, ahead of
the opposing party, then not actually filing the intended
Petition.[21] The party who fails to file its intended Petition
within the reglementary or extended period should solely bear the
consequences of such failure.
Respondent Sabeniano did not commit forum shopping.
Another issue that does not directly involve the merits of the present
Petition, but raised by petitioners, is whether respondent should be
held liable for forum shopping.
Petitioners contend that respondent committed forum shopping on the basis of the following facts:cralaw:red
While petitioners’ Motion for Reconsideration of the Decision in
CA-G.R. CV No. 51930, dated 26 March 2002, was still pending before the
Court of Appeals, respondent already filed with this Court on 3 May
2002 her Motion for Extension of Time to File a Petition for Review of
the same Court of Appeals Decision, docketed as G.R. No. 152985.
Thereafter, respondent continued to participate in the proceedings
before the Court of Appeals in CA-G.R. CV No. 51930 by filing her
Comment, dated 17 July 2002, to petitioners’ Motion for
Reconsideration; and a Rejoinder, dated 23 September 2002, to
petitioners’ Reply. Thus, petitioners argue that by seeking relief
concurrently from this Court and the Court of Appeals, respondent is
undeniably guilty of forum shopping, if not indirect contempt.
This Court, however, finds no sufficient basis to hold respondent liable for forum shopping.
Forum shopping has been defined as the filing of two or more suits
involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a
favorable judgment.[22] The test for determining forum shopping
is whether in the two (or more) cases pending, there is an identity of
parties, rights or causes of action, and relief sought.[23] To
guard against this deplorable practice, Rule 7, Section 5 of the
revised Rules of Court imposes the following requirement:cralaw:red
Sec. 5. Certification
against forum shopping. – The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading
asserting a claim for relief, or in a sworn certification annexed
thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and, to the best
of his knowledge, no such other action or claim is pending therein; (b)
if there is such other pending action or claim, a complete statement of
the present status thereof; and (c) if he should thereafter learn that
the same or similar action or claim has been filed or is pending, he
shall report that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not
be curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification or
non-compliance with any of the undertakings therein shall constitute
indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or
his counsel clearly constitute willful and deliberate forum shopping,
the same shall be ground for summary dismissal with prejudice and shall
constitute direct contempt, as well as cause for administrative
sanctions.
Although it may seem at first glance that respondent was simultaneously
seeking recourse from the Court of Appeals and this Court, a careful
and closer scrutiny of the details of the case at bar would reveal
otherwise.
It should be recalled that respondent did nothing more in G.R. No.
152985 than to file with this Court a Motion for Extension of Time
within which to file her Petition for Review. For unexplained
reasons, respondent failed to submit to this Court her intended
Petition within the reglementary period. Consequently, this Court
was prompted to issue a Resolution, dated 13 November 2002, declaring
G.R. No. 152985 terminated, and the therein assailed Court of Appeals
Decision final and executory. G.R. No. 152985, therefore, did not
progress and respondent’s appeal was unperfected.
chan robles virtual law library
The Petition for Review would constitute the initiatory pleading before
this Court, upon the timely filing of which, the case before this Court
commences; much in the same way a case is initiated by the filing of a
Complaint before the trial court. The Petition for Review
establishes the identity of parties, rights or causes of action, and
relief sought from this Court, and without such a Petition, there is
technically no case before this Court. The Motion filed by
respondent seeking extension of time within which to file her Petition
for Review does not serve the same purpose as the Petition for Review
itself. Such a Motion merely presents the important dates and the
justification for the additional time requested for, but it does not go
into the details of the appealed case.
Without any particular idea as to the assignments of error or the
relief respondent intended to seek from this Court, in light of her
failure to file her Petition for Review, there is actually no second
case involving the same parties, rights or causes of action, and relief
sought, as that in CA-G.R. CV No. 51930.
It should also be noted that the Certification against Forum Shopping
is required to be attached to the initiatory pleading, which, in G.R.
No. 152985, should have been respondent’s Petition for Review. It is in
that Certification wherein respondent certifies, under oath, that: (a)
she has not commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and, to the best
of her knowledge, no such other action or claim is pending therein; (b)
if there is such other pending action or claim, that she is presenting
a complete statement of the present status thereof; and (c) if she
should thereafter learn that the same or similar action or claim has
been filed or is pending, she shall report that fact within five days
therefrom to this Court. Without her Petition for Review,
respondent had no obligation to execute and submit the foregoing
Certification against Forum Shopping. Thus, respondent did not
violate Rule 7, Section 5 of the Revised Rules of Court; neither did
she mislead this Court as to the pendency of another similar case.
Lastly, the fact alone that the Decision of the Court of Appeals, dated
26 March 2002, essentially ruled in favor of respondent, does not
necessarily preclude her from appealing the same. Granted that
such a move is ostensibly irrational, nonetheless, it does not amount
to malice, bad faith or abuse of the court processes in the absence of
further proof. Again, it should be noted that the respondent did
not file her intended Petition for Review. The Petition for
Review would have presented before this Court the grounds for
respondent’s appeal and her arguments in support thereof. Without
said Petition, any reason attributed to the respondent for appealing
the 26 March 2002 Decision would be grounded on mere speculations, to
which this Court cannot give credence. chanroblesvirtualawlibrary
II
As an exception to the general rule, this Court takes cognizance of questions of fact raised in the Petition at bar.
It is already a well-settled rule that the jurisdiction of this Court
in cases brought before it from the Court of Appeals by virtue of Rule
45 of the Revised Rules of Court is limited to reviewing errors of
law. Findings of fact of the Court of Appeals are conclusive upon
this Court. There are, however, recognized exceptions to the
foregoing rule, namely: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the interference made
is manifestly mistaken, absurd, or impossible; (3) when there is grave
abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings, the Court of Appeals went
beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the
findings are contrary to those of the trial court; (8) when the
findings are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as
in the petitioner’s main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on
record.[24]
Several of the enumerated exceptions pertain to the Petition at bar.
It is indubitable that the Court of Appeals made factual findings that
are contrary to those of the RTC,[25] thus, resulting in its
substantial modification of the trial court’s Decision, and a ruling
entirely in favor of the respondent. In addition, petitioners
invoked in the instant Petition for Review several exceptions that
would justify this Court’s review of the factual findings of the Court
of Appeals, i.e., the Court of Appeals made conflicting findings of
fact; findings of fact which went beyond the issues raised on appeal
before it; as well as findings of fact premised on the supposed absence
of evidence and contradicted by the evidence on record.
On the basis of the foregoing, this Court shall proceed to reviewing
and re-evaluating the evidence on record in order to settle questions
of fact raised in the Petition at bar.
The fact that the trial judge who rendered the RTC Decision in Civil
Case No. 11336, dated 24 August 1995, was not the same judge who heard
and tried the case, does not, by itself, render the said Decision
erroneous.
The Decision in Civil Case No. 11336 was rendered more than 10 years
from the institution of the said case. In the course of its
trial, the case was presided over by four (4) different RTC
judges.[26] It was Judge Victorio, the fourth judge assigned to
the case, who wrote the RTC Decision, dated 24 August 1995. In
his Decision,[27] Judge Victorio made the following findings:cralaw:red
After carefully evaluating the mass of evidence adduced by the parties,
this Court is not inclined to believe the plaintiff’s assertion that
the promissory notes as well as the deeds of assignments of her FNCB
Finance money market placements were simulated. The evidence is
overwhelming that the plaintiff received the proceeds of the loans
evidenced by the various promissory notes she had signed. What is
more, there was not an iota of proof save the plaintiff’s bare
testimony that she had indeed applied for loan with the Development
Bank of the Philippines.
More importantly, the two deeds of assignment were notarized, hence
they partake the nature of a public document. It makes more than
preponderant proof to overturn the effect of a notarial
attestation. Copies of the deeds of assignments were actually
filed with the Records Management and Archives Office.
Finally, there were sufficient evidence wherein the plaintiff had
admitted the existence of her loans with the defendant Bank in the
total amount of P1,920,000.00 exclusive of interests and penalty
charges (Exhibits “28”, “31”, “32”, and “33”).
In fine, this Court hereby finds that the defendants had established
the genuineness and due execution of the various promissory notes
heretofore identified as well as the two deeds of assignments of the
plaintiff’s money market placements with defendant FNCB Finance, on the
strength of which the said money market placements were applied to
partially pay the plaintiff’s past due obligation with the defendant
Bank. Thus, the total sum of P1,053,995.80 of the plaintiff’s
past due obligation was partially offset by the said money market
placement leaving a balance of P1,069,847.40 as of 5 September 1979
(Exhibit “34”).
Disagreeing in the foregoing findings, the Court of Appeals stressed,
in its Decision in CA-G.R. CV No. 51930, dated 26 March 2002, “that the
ponente of the herein assailed Decision is not the Presiding Judge who
heard and tried the case.”[28] This brings us to the question of
whether the fact alone that the RTC Decision was rendered by a judge
other than the judge who actually heard and tried the case is
sufficient justification for the appellate court to disregard or set
aside the findings in the Decision of the court a quo?
chan robles virtual law library
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there exists a
disputable presumption that the RTC Decision was rendered by the judge
in the regular performance of his official duties. While the said
presumption is only disputable, it is satisfactory unless contradicted
or overcame by other evidence.[29] Encompassed in this
presumption of regularity is the presumption that the RTC judge, in
resolving the case and drafting his Decision, reviewed, evaluated, and
weighed all the evidence on record. That the said RTC judge is
not the same judge who heard the case and received the evidence is of
little consequence when the records and transcripts of stenographic
notes (TSNs) are complete and available for consideration by the former.
In People v. Gazmen,[30] this Court already elucidated its position on such an issue:cralaw:red
Accused-appellant makes an
issue of the fact that the judge who penned the decision was not the
judge who heard and tried the case and concludes therefrom that the
findings of the former are erroneous. Accused-appellant’s
argument does not merit a lengthy discussion. It is well-settled
that the decision of a judge who did not try the case is not by that
reason alone erroneous.
It is true that the judge who ultimately decided the case
had not heard the controversy at all, the trial having been conducted
by then Judge Emilio L. Polig, who was indefinitely suspended by this
Court. Nonetheless, the transcripts of stenographic notes taken
during the trial were complete and were presumably examined and studied
by Judge Baguilat before he rendered his decision. It is not
unusual for a judge who did not try a case to decide it on the basis of
the record. The fact that he did not have the opportunity to
observe the demeanor of the witnesses during the trial but merely
relied on the transcript of their testimonies does not for that reason
alone render the judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
Although it is true that the
judge who heard the witnesses testify is in a better position to
observe the witnesses on the stand and determine by their demeanor
whether they are telling the truth or mouthing falsehood, it does not
necessarily follow that a judge who was not present during the trial
cannot render a valid decision since he can rely on the transcript of
stenographic notes taken during the trial as basis of his decision.
Accused-appellant’s
contention that the trial judge did not have the opportunity to observe
the conduct and demeanor of the witnesses since he was not the same
judge who conducted the hearing is also untenable. While it is
true that the trial judge who conducted the hearing would be in a
better position to ascertain the truth and falsity of the testimonies
of the witnesses, it does not necessarily follow that a judge who was
not present during the trial cannot render a valid and just decision
since the latter can also rely on the transcribed stenographic notes
taken during the trial as the basis of his decision.
(People vs. De Paz, 212 SCRA 56, 63 [1992])
At any rate, the test to
determine the value of the testimony of the witness is whether or not
such is in conformity with knowledge and consistent with the experience
of mankind (People vs. Morre, 217 SCRA 219 [1993]). Further, the
credibility of witnesses can also be assessed on the basis of the
substance of their testimony and the surrounding circumstances (People
v. Gonzales, 210 SCRA 44 [1992]). A critical evaluation of the
testimony of the prosecution witnesses reveals that their testimony
accords with the aforementioned tests, and carries with it the ring of
truth end perforce, must be given full weight and credit.
Irrefragably, by reason
alone that the judge who penned the RTC Decision was not the same judge
who heard the case and received the evidence therein would not render
the findings in the said Decision erroneous and unreliable. While
the conduct and demeanor of witnesses may sway a trial court judge in
deciding a case, it is not, and should not be, his only
consideration. Even more vital for the trial court judge’s
decision are the contents and substance of the witnesses’ testimonies,
as borne out by the TSNs, as well as the object and documentary
evidence submitted andmade 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:cralaw:red
Deposit/Placement |
Amount |
Dollar deposit with Citibank-Geneva |
$
149,632.99 |
Money market placement with Citibank, evidenced by
Promissory Note (PN) No. 23356 (which cancels and supersedes PN No. 22526),
earning 14.5% interest per annum (p.a.) |
P
318,897.34 |
Money market placement with Citibank, evidenced by PN
No. 23357 (which cancels and supersedes PN No. 22528), earning 14.5% interest
p.a. |
P 203,150.00 |
Money market placement with FNCB Finance, evidenced by
PN No. 5757 (which cancels and supersedes PN No. 4952), earning 17% interest
p.a. |
P
500,000.00 |
Money market placement with FNCB Finance, evidenced by
PN No. 5758 (which cancels and supersedes PN No. 2962), earning 17% interest
p.a. |
P
500,000.00 |
This Court is tasked to determine whether petitioners are
indeed liable to return the foregoing amounts, together with the
appropriate interests and penalties, to respondent. It shall
trace respondent’s transactions with petitioners, from her money market
placements with petitioner Citibank and petitioner FNCB Finance, to her
savings and current accounts with petitioner Citibank, and to her
dollar accounts with Citibank-Geneva.
chan robles virtual law library
Money market placements with petitioner Citibank
The history of respondent’s money market placements with petitioner
Citibank began on 6 December 1976, when she made a placement of
P500,000.00 as principal amount, which was supposed to earn an interest
of 16% p.a. and for which PN No. 20773 was issued. Respondent did
not yet claim the proceeds of her placement and, instead, rolled-over
or re-invested the principal and proceeds several times in the
succeeding years for which new PNs were issued by petitioner Citibank
to replace the ones which matured. Petitioner Citibank accounted
for respondent’s original placement and the subsequent roll-overs
thereof, as follows:
Date
(mm/dd/yyyy) |
PN No. |
Cancels PN No. |
Maturity Date
(mm/dd/yyyy) |
Amount
(P) |
Interest
(p.a.) |
12/06/1976 |
20773 |
None |
01/13/1977 |
500,000.00 |
16% |
01/14/1977 |
21686 |
20773 |
02/08/1977 |
508,444.44 |
15% |
02/09/1977 |
22526 |
21686 |
03/16/1977 |
313,952.59 |
15-3/4% |
22528 |
21686 |
03/16/1977 |
200,000.00 |
15-3/4% |
03/17/1977 |
23356 |
22526 |
04/20/1977 |
318,897.34 |
14-1/2% |
23357 |
22528 |
04/20/1977 |
203,150.00 |
14-1/2% |
Petitioner Citibank alleged that it had already paid to respondent the
principal amounts and proceeds of PNs No. 23356 and 23357, upon their
maturity. Petitioner Citibank further averred that respondent
used the P500,000.00 from the payment of PNs No. 23356 and 23357, plus
P600,000.00 sourced from her other funds, to open two time deposit (TD)
accounts with petitioner Citibank, namely, TD Accounts No. 17783 and
17784.
Petitioner Citibank did not deny the existence nor questioned the
authenticity of PNs No. 23356 and 23357 it issued in favor of
respondent for her money market placements. In fact, it admitted
the genuineness and due execution of the said PNs, but qualified that
they were no longer outstanding.[31] In Hibberd v. Rohde and
McMillian,[32] this Court delineated the consequences of such an
admission:cralaw:red
By the admission of the
genuineness and due execution of an instrument, as provided in this
section, is meant that the party whose signature it bears admits that
he signed it or that it was signed by another for him with his
authority; that at the time it was signed it was in words and figures
exactly as set out in the pleading of the party relying upon it; that
the document was delivered; and that any formal requisites required by
law, such as a seal, an acknowledgment, or revenue stamp, which it
lacks, are waived by him. Hence, such defenses as that the
signature is a forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N.
M., 425; Cox vs. Northwestern Stage Co., 1 Idaho, 376; Woollen vs.
Whitacre, 73 Ind., 198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs.
Escaño, 11 Phil. Rep., 92); or that it was unauthorized, as in
the case of an agent signing for his principal, or one signing in
behalf of a partnership (Country Bank vs. Greenberg, 127 Cal.,
26; Henshaw vs. Root, 60 Inc., 220; Naftzker vs. Lantz, 137 Mich., 441)
or of a corporation (Merchant vs. International Banking Corporation, 6
Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs. Spencer
& Barnes Co., 162 Mich., 509); or that, in the case of the latter,
that the corporation was authorized under its charter to sign the
instrument (Merchant vs. International Banking Corporation, supra); or
that the party charged signed the instrument in some other capacity
than that alleged in the pleading setting it out (Payne vs. National
Bank, 16 Kan., 147); or that it was never delivered (Hunt vs. Weir, 29
Ill., 83; Elbring vs. Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co.,
48 N.Y., 253; Fire Association of Philadelphia vs. Ruby, 60 Neb., 216)
are cut off by the admission of its genuineness and due execution.
The effect of the admission is such that in the case of a
promissory note a prima facie case is made for the plaintiff which
dispenses with the necessity of evidence on his part and entitles him
to a judgment on the pleadings unless a special defense of new matter,
such as payment, is interposed by the defendant (Papa vs. Martinez, 12
Phil. Rep., 613; Chinese Chamber of Commerce vs. Pua To Ching, 14 Phil.
Rep., 222; Banco Español-Filipino vs. McKay & Zoeller, 27
Phil. Rep., 183). x x x
Since the genuineness and due execution of PNs No. 23356 and
23357 are uncontested, respondent was able to establish prima facie
that petitioner Citibank is liable to her for the amounts stated
therein. The assertion of petitioner Citibank of payment of the
said PNs is an affirmative allegation of a new matter, the burden of
proof as to such resting on petitioner Citibank. Respondent
having proved the existence of the obligation, the burden of proof was
upon petitioner Citibank to show that it had been discharged.[33]
It has already been established by this Court that:cralaw:red
As a general rule, one who pleads payment has the burden of
proving it. Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment.
When the existence of a debt is fully established by the
evidence contained in the record, the burden of proving that it has
been extinguished by payment devolves upon the debtor who offers such
defense to the claim of the creditor. Where the debtor introduces
some evidence of payment, the burden of going forward with the evidence
– as distinct from the general burden of proof – shifts to the
creditor, who is then under the duty of producing some evidence of
non-payment.[34]
chan robles virtual law library
Reviewing the evidence on record, this Court finds that petitioner
Citibank failed to satisfactorily prove that PNs No. 23356 and 23357
had already been paid, and that the amount so paid was actually used to
open one of respondent’s TD accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two witnesses to
support its contention of payment: (1) That of Mr. Herminio Pujeda,[35]
the officer-in-charge of loans and placements at the time when the
questioned transactions took place; and (2) that of Mr. Francisco
Tan,[36] the former Assistant Vice-President of Citibank, who directly
dealt with respondent with regard to her deposits and loans.
The relevant portion[37] 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:cralaw:red
Atty. Mabasa:cralaw:red
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:cralaw:red
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:cralaw:red
And this resume or summary that you have prepared is based on purely your recollection or documents?
A Based on documents, your Honor.
Court: chanroblesvirtualawlibrary
Are these documents still available now?
A Yes, your honor.
Court:cralaw:red
Better present the documents.
Atty. Mabasa:cralaw:red
Yes, your Honor, that is why your Honor.
Atty. Mabasa:
chan robles virtual law library
Q Now,
basing on the notes that you prepared, Mr. Witness, and according to
you basing also on your personal recollection about all the
transactions involved between Modesta Sabeniano and defendant City Bank
[sic] in this case. Now, would you tell us what happened to the
money market placements of Modesta Sabeniano that you have earlier
identified in Exhs. “47” and “48”?
A The
transactions which I said earlier were terminated and booked to time
deposits.
Q And you are saying time deposits with what bank?
A With First National Citibank.
Q Is it the same bank as Citibank, N.A.?
A Yes, sir.
Q And how much was the amount booked as time deposit with defendant Citibank?
A In the amount of P500,000.00.
Q And
outside this P500,000.00 which you said was booked out of the proceeds
of Exhs. “47” and “48”, were there other time deposits opened by Mrs.
Modesta Sabeniano at that time.
A Yes, she also opened another time deposit for P600,000.00.
Q So all in
all Mr. Witness, sometime in April of 1978 Mrs. Modesta Sabeneano [sic]
had time deposit placements with Citibank in the amount of P500,000.00
which is the proceeds of Exh. “47” and “48” and another P600,000.00, is
it not?
A Yes, sir.
Q And would
you know where did the other P600,000 placed by Mrs. Sabeneano [sic] in
a time deposit with Citibank, N.A. came [sic] from?
A She funded it directly.
Q What are
you saying Mr. Witness is that the P600,000 is a [sic] fresh money
coming from Mrs. Modesta Sabeneano [sic]?
A That is right.
In his deposition in Hong Kong, Mr. Tan recounted what happened to PNs
No. 23356 and 23357 (referred to therein as Exhibits “E” and “F,”
respectively), as follows:cralaw:red
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.
chan robles virtual law library
Atty. Mabasa : Exhibits “E” and “F”?
Before anything else, it should be noted that when Mr. Pujeda’s
testimony before the RTC was made on 12 March 1990 and Mr. Tan’s
deposition in Hong Kong was conducted on 3 September 1990, more than a
decade had passed from the time the transactions they were testifying
on took place. This Court had previously recognized the frailty
and unreliability of human memory with regards to figures after the
lapse of five years.[38] Taking into consideration the
substantial length of time between the transactions and the witnesses’
testimonies, as well as the undeniable fact that bank officers deal
with multiple clients and process numerous transactions during their
tenure, this Court is reluctant to give much weight to the testimonies
of Mr. Pujeda and Mr. Tan regarding the payment of PNs No. 23356 and
23357 and the use by respondent of the proceeds thereof for opening TD
accounts. This Court finds it implausible that they should
remember, after all these years, this particular transaction with
respondent involving her PNs No. 23356 and 23357 and TD accounts.
Both witnesses did not give any reason as to why, from among all the
clients they had dealt with and all the transactions they had processed
as officers of petitioner Citibank, they specially remembered
respondent and her PNs No. 23356 and 23357. Their testimonies
likewise lacked details on the circumstances surrounding the payment of
the two PNs and the opening of the time deposit accounts by respondent,
such as the date of payment of the two PNs, mode of payment, and the
manner and context by which respondent relayed her instructions to the
officers of petitioner Citibank to use the proceeds of her two PNs in
opening the TD accounts.
Moreover, while there are documentary evidences to support and trace
respondent’s money market placements with petitioner Citibank, from the
original PN No. 20773, rolled-over several times to, finally, PNs No.
23356 and 23357, there is an evident absence of any documentary
evidence on the payment of these last two PNs and the use of the
proceeds thereof by respondent for opening TD accounts. The paper
trail seems to have ended with the copies of PNs No. 23356 and
23357. Although both Mr. Pujeda and Mr. Tan said that they based
their testimonies, not just on their memories but also on the documents
on file, the supposed documents on which they based those portions of
their testimony on the payment of PNs No. 23356 and 23357 and the
opening of the TD accounts from the proceeds thereof, were never
presented before the courts nor made part of the records of the
case. Respondent’s money market placements were of substantial
amounts – consisting of the principal amount of P500,000.00, plus the
interest it should have earned during the years of placement – and it
is difficult for this Court to believe that petitioner Citibank would
not have had documented the payment thereof. chanroblesvirtualawlibrary
When Mr. Pujeda testified before the RTC on 6 February 1990,[39]
petitioners’ counsel attempted to present in evidence a document that
would supposedly support the claim of petitioner Citibank that the
proceeds of PNs No. 23356 and 23357 were used by respondent to open one
of her two TD accounts in the amount of P500,000.00. Respondent’s
counsel objected to the presentation of the document since it was a
mere “xerox" copy, and was blurred and hardly readable.
Petitioners’ counsel then asked for a continuance of the hearing so
that they can have time to produce a better document, which was granted
by the court. However, during the next hearing and continuance of
Mr. Pujeda’s testimony on 12 March 1990, petitioners’ counsel no longer
referred to the said document. chanroblesvirtualawlibrary
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. chanroblesvirtualawlibrary
Money market placements with petitioner FNCB Finance
According to petitioners, respondent’s TD Accounts No. 17783 and 17784,
in the total amount of P1,100,000.00, were supposed to mature on 15
March 1978. However, respondent, through a letter dated 28 April
1977,[40] pre-terminated the said TD accounts and transferred all the
proceeds thereof to petitioner FNCB Finance for money market
placement. Pursuant to her instructions, TD Accounts No. 17783
and 17784 were pre-terminated and petitioner Citibank (then still named
First National City Bank) issued Manager’s Checks (MC) No. 199253[41]
and 199251[42] for the amounts of P500,000.00 and P600,00.00,
respectively. Both MCs were payable to Citifinance (which,
according to Mr. Pujeda,[43] was one with and the same as petitioner
FNCB Finance), with the additional notation that “A/C MODESTA R.
SABENIANO.” Typewritten on MC No. 199253 is the phrase “Ref.
Proceeds of TD 17783,” and on MC No. 199251 is a similar phrase, “Ref.
Proceeds of TD 17784.” These phrases purportedly established that
the MCs were paid from the proceeds of respondent’s pre-terminated TD
accounts with petitioner Citibank. Upon receipt of the MCs,
petitioner FNCB Finance deposited the same to its account with Feati
Bank and Trust Co., as evidenced by the rubber stamp mark of the latter
found at the back of both MCs. In exchange, petitioner FNCB
Finance booked the amounts received as money market placements, and
accordingly issued PNs No. 4952 and 4962, for the amounts of
P500,000.00 and P600,000.00, respectively, payable to respondent’s
savings account with petitioner Citibank, S/A No. 25-13703-4, upon
their maturity on 1 June 1977. Once again, respondent rolled-over
several times the principal amounts of her money market placements with
petitioner FNCB Finance, as follows:
Date
(mm/dd/yyyy) |
PN No. |
Cancels PN No. |
Maturity Date
(mm/dd/yyyy) |
Amount
(P) |
Interest
(p.a.) |
04/29/1977 |
4952 |
None |
06/01/1977 |
500,000.00 |
17% |
4962 |
None |
06/01/1977 |
600,000.00 |
17% |
06/02/1977 |
5757 |
4952 |
08/31/1977 |
500,000.00 |
17% |
5758 |
4962 |
08/31/1977 |
500,000.00 |
17% |
08/31/1977 |
8167 |
5757 |
08/25/1978 |
500,000.00 |
14% |
8169 |
5752 |
08/25/1978 |
500,000.00 |
14% |
Â
As presented by the petitioner FNCB Finance, respondent
rolled-over only the principal amounts of her money market placements
as she chose to receive the interest income therefrom. Petitioner
FNCB Finance also pointed out that when PN No. 4962, with principal
amount of P600,000.00, matured on 1 June 1977, respondent received a
partial payment of the principal which, together with the interest,
amounted to P102,633.33;[44] thus, only the amount of P500,000.00 from
PN No. 4962 was rolled-over to PN No. 5758.
Based on the foregoing records, the principal amounts of PNs No. 5757
and 5758, upon their maturity, were rolled over to PNs No. 8167 and
8169, respectively. PN No. 8167[45] expressly canceled and
superseded PN No. 5757, while PN No. 8169[46] also explicitly canceled
and superseded PN No. 5758. Thus, it is patently erroneous for
the Court of Appeals to still award to respondent the principal amounts
and interests covered by PNs No. 5757 and 5758 when these were already
canceled and superseded. It is now incumbent upon this Court to
determine what subsequently happened to PNs No. 8167 and 8169.
chan robles virtual law library
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:cralaw:red
Date of
Issuance
(mm/dd/yyyy) |
Check No. |
Amount
(P) |
Notation |
09/01/1978
|
76962 |
12,833.34 |
Interest payment on PN#08167 |
09/01/1978
|
76961 |
12,833.34 |
Interest payment on PN#08169 |
09/05/1978 |
77035 |
500,000.00 |
Full payment of principal on PN#08167 which is hereby
cancelled |
09/05/ 1978 |
77034 |
500,000.00 |
Full payment of principal on PN#08169 which is hereby
cancelled |
Then again, Checks No. 77035 and 77034 were later returned
to petitioner FNCB Finance together with a memo,[47] dated 6 September
1978, from Mr. Tan of petitioner Citibank, to a Mr. Bobby Mendoza of
petitioner FNCB Finance. According to the memo, the two checks,
in the total amount of P1,000,000.00, were to be returned to
respondent’s account with instructions to book the said amount in money
market placements for one more year. Pursuant to the said memo,
Checks No. 77035 and 77034 were invested by petitioner FNCB Finance, on
behalf of respondent, in money market placements for which it issued
PNs No. 20138 and 20139. The PNs each covered P500,000.00, to
earn 11% interest per annum, and to mature on 3 September 1979.
On 3 September 1979, petitioner FNCB Finance issued Check No. 100168,
pay to the order of “Citibank N.A. A/C Modesta Sabeniano,” in the
amount of P1,022,916.66, as full payment of the principal amounts and
interests of both PNs No. 20138 and 20139 and, resultantly, canceling
the said PNs.[48] Respondent actually admitted the issuance and
existence of Check No. 100168, but with the qualification that the
proceeds thereof were turned over to petitioner
Citibank.[49] Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the allegations
of petitioner Citibank itself, the proceeds of PNs No. 20138 and 20139,
amounting to P1,022,916.66, was used by it to liquidate respondent’s
outstanding loans. Therefore, the determination of whether or not
respondent is still entitled to the return of the proceeds of PNs No.
20138 and 20139 shall be dependent on the resolution of the issues
raised as to the existence of the loans and the authority of petitioner
Citibank to use the proceeds of the said PNs, together with
respondent’s other deposits and money market placements, to pay for the
same.
Savings and current accounts with petitioner Citibank
Respondent presented and submitted before the RTC deposit slips and
bank statements to prove deposits made to several of her accounts with
petitioner Citibank, particularly, Accounts No. 00484202, 59091, and
472-751, which would have amounted to a total of P3,812,712.32, had
there been no withdrawals or debits from the said accounts from the
time the said deposits were made.
Although the RTC and the Court of Appeals did not make any definitive
findings as to the status of respondent’s savings and current accounts
with petitioner Citibank, the Decisions of both the trial and appellate
courts effectively recognized only the P31,079.14 coming from
respondent’s savings account which was used to off-set her alleged
outstanding loans with petitioner Citibank.[50] chanroblesvirtualawlibrary
Since both the RTC and the Court of Appeals had consistently recognized
only the P31,079.14 of respondent’s savings account with petitioner
Citibank, and that respondent failed to move for reconsideration or to
appeal this particular finding of fact by the trial and appellate
courts, it is already binding upon this Court. Respondent is
already precluded from claiming any greater amount in her savings and
current accounts with petitioner Citibank. Thus, this Court shall
limit itself to determining whether or not respondent is entitled to
the return of the amount of P31,079.14 should the off-set thereof by
petitioner Citibank against her supposed loans be found invalid.
Dollar accounts with Citibank-Geneva
Respondent made an effort of preparing and presenting before the RTC
her own computations of her money market placements and dollar accounts
with Citibank-Geneva, purportedly amounting to a total of United States
(US) $343,220.98, as of 23 June 1985.[51] In her Memorandum filed
with the RTC, she claimed a much bigger amount of deposits and money
market placements with Citibank-Geneva, totaling
US$1,336,638.65.[52] However, respondent herself also submitted
as part of her formal offer of evidence the computation of her money
market placements and dollar accounts with Citibank-Geneva as
determined by the latter.[53] Citibank-Geneva accounted for
respondent’s money market placements and dollar accounts as follows:
MODESTA
SABENIANO &/OR
= = = = = = = =
= = = = = = = = = =
|
US$ |
30’000.-- |
|
Principal Fid. Placement |
+
US$ |
339.06 |
|
Interest at 3,875% p.a. from 12.07. – 25.10.79 |
-
US$ |
95.-- |
|
Commission (minimum) |
|
|
|
|
US$ |
30’244.06 |
|
Total proceeds on 25.10.1979 |
|
|
|
|
|
|
|
|
US$ |
114’000.-- |
|
Principal Fid. Placement |
+
US$ |
1’358.50 |
|
Interest at 4,125% p.a. from 12.07. – 25.10.79 |
-
US$ |
41.17 |
|
Commission |
|
|
|
|
US$ |
115’317.33 |
|
Total proceeds on 25.10.1979 |
|
|
|
|
|
|
|
|
US$ |
145’561.39 |
|
Total proceeds of both placements on 25.10.1979 |
+
US$ |
11’381.31 |
|
total of both current accounts |
|
|
|
|
US$ |
156’942.70 |
|
Total funds available |
|
|
|
|
-
US$ |
149’632.99 |
|
Transfer to Citibank Manila on 26.10.1979 |
|
|
|
(counter value of Pesos 1’102’944.78) |
|
|
|
|
US$ |
7’309.71 |
|
Balance in current accounts |
|
|
|
|
-
US$ |
6’998.84 |
|
Transfer to Citibank Zuerich – ac no. 121359 on March |
|
|
|
13, 1980 |
|
|
|
|
US$ |
310.87 |
|
various charges including closing charges |
According to the foregoing computation, by 25 October 1979,
respondent had a total of US$156,942.70, from which, US$149,632.99 was
transferred by Citibank-Geneva to petitioner Citibank in Manila, and
was used by the latter to off-set respondent’s outstanding loans.
The balance of respondent’s accounts with Citibank-Geneva, after the
remittance to petitioner Citibank in Manila, amounted to US$7,309.71,
which was subsequently expended by a transfer to another account with
Citibank-Zuerich, in the amount of US$6,998.84, and by payment of
various bank charges, including closing charges, in the amount of
US$310.87. Rightly so, both the RTC and the Court of Appeals gave
more credence to the computation of Citibank-Geneva as to the status of
respondent’s accounts with the said bank, rather than the one prepared
by respondent herself, which was evidently self-serving. Once
again, this Court shall limit itself to determining whether or not
respondent is entitled to the return of the amount of US$149,632.99
should the off-set thereof by petitioner Citibank against her alleged
outstanding loans be found invalid. Respondent cannot claim any
greater amount since she did not perfect an appeal of the Decision of
the Court of Appeals, dated 26 March 2002, which found that she is
entitled only to the return of the said amount, as far as her accounts
with Citibank-Geneva is concerned.
chan robles virtual law library
III
Petitioner Citibank was able to establish by preponderance of evidence the existence of respondent’s loans.
Petitioners’ version of events
In sum, the following amounts were used by petitioner Citibank to liquidate respondent’s purported outstanding loans:
Description |
Amount |
Principal and interests of PNs No. 20138 and 20139 |
|
(money market placements with petitioner FNCB Finance) |
P
1,022,916.66 |
Savings account with petitioner Citibank |
31,079.14 |
Dollar remittance from Citibank-Geneva (peso
equivalent |
|
Of US$149,632.99) |
1,102,944.78 |
Total |
P
2,156,940.58 |
According to petitioner Citibank, respondent incurred her loans under the circumstances narrated below.
As early as 9 February 1978, respondent obtained her first loan from
petitioner Citibank in the principal amount of P200,000.00, for which
she executed PN No. 31504.[54] Petitioner Citibank extended to
her several other loans in the succeeding months. Some of these
loans were paid, while others were rolled-over or renewed. Significant
to the Petition at bar are the loans which respondent obtained from
July 1978 to January 1979, appropriately covered by PNs (first
set).[55] The aggregate principal amount of these loans was
P1,920,000.00, which could be broken down as follows:
PN No. |
Date of
Issuance
(mm/dd/yyyy) |
Date of
Maturity
(mm/dd/yyyy) |
Principal
Amount |
Date of
Release
(mm/dd/yyyy) |
MC No. |
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 |
P
1,920,000.00 |
|
|
Â
When respondent was unable to pay the first set of PNs upon their
maturity, these were rolled-over or renewed several times,
necessitating the execution by respondent of new PNs in favor of
petitioner Citibank. As of 5 April 1979, respondent had the
following outstanding PNs (second set),[56] the principal amount of
which remained at P1,920,000.00:cralaw:red
PN No. |
Date of
Issuance
(mm/dd/yyyy) |
Date of
Maturity
(mm/dd/yyyy) |
Principal
Amount |
34510 |
01/01/1979 |
03/02/1979 |
P
400,000.00 |
34509 |
01/02/1979 |
03/02/1979 |
100,000.00 |
34534 |
01/09/1979 |
03/09/1979 |
150,000.00 |
34612 |
01/19/1979 |
03/16/1979 |
150,000.00 |
34741 |
01/26/1979 |
03/12/1979 |
100,000.00 |
35689 |
02/23/1979 |
05/29/1979 |
300,000.00 |
35694 |
03/19/1979 |
05/29/1979 |
150,000.00 |
35695 |
03/19/1979 |
05/29/1979 |
100,000.00 |
356946 |
03/20/1979 |
05/29/1979 |
250,000.00 |
35697 |
03/30/1979 |
05/29/1979 |
220,000.00 |
Total |
P
1,920,000.00 |
Â
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.”chanroblesvirtualawlibrary
Respondent secured her foregoing loans with petitioner Citibank by
executing Deeds of Assignment of her money market placements with
petitioner FNCB Finance. On 2 March 1978, respondent executed in
favor of petitioner Citibank a Deed of Assignment[57] of PN No. 8169,
which was issued by petitioner FNCB Finance, to secure payment of the
credit and banking facilities extended to her by petitioner Citibank,
in the aggregate principal amount of P500,000.00. On 9 March
1978, respondent executed in favor of petitioner Citibank another Deed
of Assignment,[58] this time, of PN No. 8167, also issued by petitioner
FNCB Finance, to secure payment of the credit and banking facilities
extended to her by petitioner Citibank, in the aggregate amount of
P500,000.00. When PNs No. 8167 and 8169, representing
respondent’s money market placements with petitioner FNCB Finance,
matured and were rolled-over to PNs No. 20138 and 20139, respondent
executed new Deeds of Assignment,[59] in favor of petitioner Citibank,
on 25 August 1978. According to the more recent Deeds,
respondent assigned PNs No. 20138 and 20139, representing her
rolled-over money market placements with petitioner FNCB Finance, to
petitioner Citibank as security for the banking and credit facilities
it extended to her, in the aggregate principal amount of P500,000.00
per Deed.
In addition to the Deeds of Assignment of her money market placements
with petitioner FNCB Finance, respondent also executed a Declaration of
Pledge,[60] in which she supposedly pledged “[a]ll present and future
fiduciary placements held in my personal and/or joint name with
Citibank, Switzerland,” to secure all claims the petitioner
Citibank may have or, in the future, acquire against respondent.
The petitioners’ copy of the Declaration of Pledge is undated, while
that of the respondent, a copy certified by a Citibank-Geneva officer,
bore the date 24 September 1979.[61]
When respondent failed to pay the second set of PNs upon their
maturity, an exchange of letters ensued between respondent and/or her
representatives, on one hand, and the representatives of petitioners,
on the other.
The first letter[62] was dated 5 April 1979, addressed to respondent
and signed by Mr. Tan, as the manager of petitioner Citibank, which
stated, in part, that:cralaw:red
Despite our repeated requests and follow-up, we regret you have not granted us with any response or payment.
We, therefore, have no alternative but to call your loan of
P1,920,000.00 plus interests and other charges due and
demandable. If you still fail to settle this obligation by
4/27/79, we shall have no other alternative but to refer your account
to our lawyers for legal action to protect the interest of the bank.
Respondent sent a reply letter[63] dated 26 April 1979,
printed on paper bearing the letterhead of respondent’s company, MC
Adore International Palace, the body of which reads –chanroblesvirtualawlibrary
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.
chan robles virtual law library
You will be doing our corporation a very viable service, should you grant us our request for a little more time.
A week later or on 3 May 1979, a certain C. N. Pugeda,
designated as “Executive Secretary,” sent a letter[64] to petitioner
Citibank, on behalf of respondent. The letter was again printed
on paper bearing the letterhead of MC Adore International Palace. The
pertinent paragraphs of the said letter are reproduced below:cralaw:red
Per instructions of Mrs.
Modesta R. Sabeniano, we would like to request for a re-computation of
the interest and penalty charges on her loan in the aggregate amount of
P1,920,000.00 with maturity date of all promissory notes at June 30,
1979. As she has personally discussed with you yesterday, this
date will more or less assure you of early settlement.
In this regard, please entrust to bearer, our Comtrust check
for P62,683.33 to be replaced by another check with amount resulting
from the new computation. Also, to facilitate the processing of
the same, may we request for another set of promissory notes for the
signature of Mrs. Sabeniano and to cancel the previous ones she has
signed and forwarded to you.
This was followed by a telegram,[65] dated 5 June 1979, and received by
petitioner Citibank the following day. The telegram was sent by a Dewey
G. Soriano, Legal Counsel. The telegram acknowledged receipt of
the telegram sent by petitioner Citibank regarding the “re-past due
obligation” of McAdore International Palace. However, it reported
that respondent, the President and Chairman of MC Adore International
Palace, was presently abroad negotiating for a big loan. Thus, he
was requesting for an extension of the due date of the obligation until
respondent’s arrival on or before 31 July 1979.
The next letter,[66] dated 21 June 1979, was signed by respondent
herself and addressed to Mr. Bobby Mendoza, a Manager of petitioner
FNCB Finance. Respondent wrote therein:cralaw:red
Re:
PN No. 20138 for P500,000.00 & PN No. 20139 for P500,000.00
totalling P1 Million, both PNs will mature on 9/3/1979.
This is to authorize you to release the accrued quarterly
interests payment from my captioned placements and forward directly to
Citibank, Manila Attention: Mr. F. A. Tan, Manager, to apply to my
interest payable on my outstanding loan with Citibank.
Please note that the
captioned two placements are continuously pledged/hypothecated to
Citibank, Manila to support my personal outstanding loan.
Therefore, please do not release the captioned placements upon maturity
until you have received the instruction from Citibank, Manila.
On even date, respondent sent another letter[67] to Mr. Tan of petitioner Citibank, stating that:
Re: S/A No. 25-225928 and C/A No. 484-946
This letter serves as an authority to debit whatever the
outstanding balance from my captioned accounts and credit the amount to
my loan outstanding account with you.
Unlike respondent’s earlier letters, both letters, dated 21 June 1979,
are printed on plain paper, without the letterhead of her company, MC
Adore International Palace.
By 5 September 1979, respondent’s outstanding and past due obligations
to petitioner Citibank totaled P2,123,843.20, representing the
principal amounts plus interests. Relying on respondent’s Deeds
of Assignment, petitioner Citibank applied the proceeds of respondent’s
money market placements with petitioner FNCB Finance, as well as her
deposit account with petitioner Citibank, to partly liquidate
respondent’s outstanding loan balance,[68] as follows:cralaw:red
Respondent’s outstanding obligation (principal and
interest) |
P
2,123,843.20 |
Less: |
Proceeds from respondent’s money market placements |
|
|
with petitioner FNCB Finance
(principal and interest) |
(1,022,916.66) |
|
Deposits in respondent’s bank accounts with petitioner |
|
|
Citibank |
(31,079.14) |
Balance of respondent’s obligation |
P
1,069,847.40 |
Mr. Tan of petitioner Citibank subsequently sent a
letter,[69] dated 28 September 1979, notifying respondent of the status
of her loans and the foregoing compensation which petitioner Citibank
effected. In the letter, Mr. Tan informed respondent that she
still had a remaining past-due obligation in the amount of
P1,069,847.40, as of 5 September 1979, and should respondent fail to
pay the amount by 15 October 1979, then petitioner Citibank shall
proceed to off-set the unpaid amount with respondent’s other
collateral, particularly, a money market placement in Citibank-Hongkong.
chan robles virtual law library
On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on
paper bearing the letterhead of MC Adore International Palace, as
regards the P1,920,000.00 loan account supposedly of MC Adore Finance
& Investment, Inc., and requested for a statement of account
covering the principal and interest of the loan as of 31 October
1979. She stated therein that the loan obligation shall be paid
within 60 days from receipt of the statement of account.
Almost three weeks later, or on 25 October 1979, a certain Atty. Moises
Tolentino dropped by the office of petitioner Citibank, with a letter,
dated 9 October 1979, and printed on paper with the letterhead of MC
Adore International Palace, which authorized the bearer thereof to
represent the respondent in settling the overdue account, this time,
purportedly, of MC Adore International Palace Hotel. The letter
was signed by respondent as the President and Chairman of the Board.
Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as
counsel of petitioner Citibank, sent a letter to respondent, dated 31
October 1979, informing her that petitioner Citibank had effected an
off-set using her account with Citibank-Geneva, in the amount of
US$149,632.99, against her “outstanding, overdue, demandable and unpaid
obligation” to petitioner Citibank. Atty. Agcaoili claimed
therein that the compensation or off-set was made pursuant to and in
accordance with the provisions of Articles 1278 through 1290 of the
Civil Code. He further declared that respondent’s obligation to
petitioner Citibank was now fully paid and liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7th floor of
petitioner Citibank’s building at Paseo de Roxas St., Makati, Metro
Manila. Petitioners submitted a Certification[70] to this effect,
dated 17 January 1991, issued by the Chief of the Arson Investigation
Section, Fire District III, Makati Fire Station, Metropolitan Police
Force. The 7th floor of petitioner Citibank’s building housed its
Control Division, which was in charge of keeping the necessary
documents for cases in which it was involved. After compiling the
documentary evidence for the present case, Atty. Renato J. Fernandez,
internal legal counsel of petitioner Citibank, forwarded them to the
Control Division. The original copies of the MCs, which
supposedly represent the proceeds of the first set of PNs, as well as
that of other documentary evidence related to the case, were among
those burned in the said fire.[71] chanroblesvirtualawlibrary
Respondent’s version of events
Respondent disputed petitioners’ narration of the circumstances
surrounding her loans with petitioner Citibank and the alleged
authority she gave for the off-set or compensation of her money market
placements and deposit accounts with petitioners against her loan
obligation.
Respondent denied outright executing the first set of PNs, except for
one (PN No. 34534 in particular). Although she admitted that she
obtained several loans from petitioner Citibank, these only amounted to
P1,150,000.00, and she had already paid them. She secured from
petitioner Citibank two loans of P500,000.00 each. She executed
in favor of petitioner Citibank the corresponding PNs for the loans and
the Deeds of Assignment of her money market placements with petitioner
FNCB Finance as security.[72] To prove payment of these loans,
respondent presented two provisional receipts of petitioner Citibank –
No. 19471,[73] dated 11 August 1978, and No. 12723,[74] dated 10
November 1978 – both signed by Mr. Tan, and acknowledging receipt from
respondent of several checks in the total amount of P500,744.00 and
P500,000.00, respectively, for “liquidation of loan.”chanroblesvirtualawlibrary
She borrowed another P150,000.00 from petitioner Citibank for personal
investment, and for which she executed PN No. 34534, on 9 January
1979. Thus, she admitted to receiving the proceeds of this loan
via MC No. 228270. She invested the loan amount in another money
market placement with petitioner FNCB Finance. In turn, she used
the very same money market placement with petitioner FNCB Finance as
security for her P150,000.00 loan from petitioner Citibank. When
she failed to pay the loan when it became due, petitioner Citibank
allegedly forfeited her money market placement with petitioner FNCB
Finance and, thus, the loan was already paid.[75]
Respondent likewise questioned the MCs presented by petitioners, except
for one (MC No. 228270 in particular), as proof that she received the
proceeds of the loans covered by the first set of PNs. As
recounted in the preceding paragraph, respondent admitted to obtaining
a loan of P150,000.00, covered by PN No. 34534, and receiving MC No.
228270 representing the proceeds thereof, but claimed that she already
paid the same. She denied ever receiving MCs No. 220701 (for the loan
of P400,000.00, covered by PN No. 33935) and No. 226467 (for the loan
of P250,000.00, covered by PN No. 34079), and pointed out that the
checks did not bear her indorsements. She did not
deny receiving all other checks but she interposed that she received
these checks, not as proceeds of loans, but as payment of the principal
amounts and/or interests from her money market placements with
petitioner Citibank. She also raised doubts as to the notation on
each of the checks that reads “RE: Proceeds of PN#[corresponding PN
No.],” saying that such notation did not appear on the MCs when she
originally received them and that the notation appears to have been
written by a typewriter different from that used in writing all other
information on the checks (i.e., date, payee, and amount).[76]
She even testified that MCs were not supposed to bear notations
indicating the purpose for which they were
issued. chanroblesvirtualawlibrary
As to the second set of PNs, respondent acknowledged having signed them
all. However, she asserted that she only executed these PNs as
part of the simulated loans she and Mr. Tan of petitioner Citibank
concocted. Respondent explained that she had a pending loan
application for a big amount with the Development Bank of the
Philippines (DBP), and when Mr. Tan found out about this, he suggested
that they could make it appear that the respondent had outstanding
loans with petitioner Citibank and the latter was already demanding
payment thereof; this might persuade DBP to approve respondent’s loan
application. Mr. Tan made the respondent sign the second set of
PNs, so that he may have something to show the DBP investigator who
might inquire with petitioner Citibank as to respondent’s loans with
the latter. On her own copies of the said PNs, respondent wrote
by hand the notation, “This isa (sic) simulated non-negotiable note,
signed copy given to Mr. Tan., (sic) per agreement to be shown to DBP
representative. itwill (sic) be returned to me if the P11=M (sic) loan
for MC Adore Palace Hotel is approved by DBP.”[77]
chan robles virtual law library
Findings of this Court as to the existence of the loans
After going through the testimonial and documentary evidence presented
by both sides to this case, it is this Court’s assessment that
respondent did indeed have outstanding loans with petitioner Citibank
at the time it effected the off-set or compensation on 25 July 1979
(using respondent’s savings deposit with petitioner Citibank), 5
September 1979 (using the proceeds of respondent’s money market
placements with petitioner FNCB Finance) and 26 October 1979 (using
respondent’s dollar accounts remitted from Citibank-Geneva). The
totality of petitioners’ evidence as to the existence of the said loans
preponderates over respondent’s. Preponderant evidence means
that, as a whole, the evidence adduced by one side outweighs that of
the adverse party.[78]
Respondent’s outstanding obligation for P1,920,000.00 had been sufficiently documented by petitioner Citibank.
The second set of PNs is a mere renewal of the prior loans originally
covered by the first set of PNs, except for PN No. 34534. The
first set of PNs is supported, in turn, by the existence of the MCs
that represent the proceeds thereof received by the respondent.
It bears to emphasize that the proceeds of the loans were paid to
respondent in MCs, with the respondent specifically named as
payee. MCs checks are drawn by the bank’s manager upon the bank
itself and regarded to be as good as the money it represents.[79]
Moreover, the MCs were crossed checks, with the words “Payee’s Account
Only.”chanroblesvirtualawlibrary
In general, a crossed check cannot be presented to the drawee bank for
payment in cash. Instead, the check can only be deposited with
the payee’s bank which, in turn, must present it for payment against
the drawee bank in the course of normal banking hours. The
crossed check cannot be presented for payment, but it can only be
deposited and the drawee bank may only pay to another bank in the
payee’s or indorser’s account.[80] The effect of crossing a check
was described by this Court in Philippine Commercial International Bank
v. Court of Appeals[81]:cralaw:red
[T]he crossing of a check
with the phrase “Payee’s Account Only” is a warning that the check
should be deposited in the account of the payee. Thus, it is the
duty of the collecting bank PCI Bank to ascertain that the check be
deposited in payee’s account only. It is bound to scrutinize the
check and to know its depositors before it can make the clearing
indorsement “all prior indorsements and/or lack of indorsement
guaranteed.”
The crossed MCs presented by petitioner Bank were indeed deposited in
several different bank accounts and cleared by the Clearing Office of
the Central Bank of the Philippines, as evidenced by the stamp marks
and notations on the said checks. The crossed MCs are already in
the possession of petitioner Citibank, the drawee bank, which was
ultimately responsible for the payment of the amount stated in the
checks. Given that a check is more than just an instrument of
credit used in commercial transactions for it also serves as a receipt
or evidence for the drawee bank of the cancellation of the said check
due to payment,[82] then, the possession by petitioner Citibank of the
said MCs, duly stamped “Paid” gives rise to the presumption that the
said MCs were already paid out to the intended payee, who was in this
case, the respondent.
This Court finds applicable herein the presumptions that private
transactions have been fair and regular,[83] and that the ordinary
course of business has been followed.[84] There is no question
that the loan transaction between petitioner Citibank and the
respondent is a private transaction. The transactions revolving
around the crossed MCs – from their issuance by petitioner Citibank to
respondent as payment of the proceeds of her loans; to its deposit in
respondent’s accounts with several different banks; to the clearing of
the MCs by an independent clearing house; and finally, to the payment
of the MCs by petitioner Citibank as the drawee bank of the said checks
– are all private transactions which shall be presumed to have been
fair and regular to all the parties concerned. In addition, the
banks involved in the foregoing transactions are also presumed to have
followed the ordinary course of business in the acceptance of the
crossed MCs for deposit in respondent’s accounts, submitting them for
clearing, and their eventual payment and cancellation.
The afore-stated presumptions are disputable, meaning, they are
satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence.[85] Respondent, however, was unable to present
sufficient and credible evidence to dispute these presumptions.
It should be recalled that out of the nine MCs presented by petitioner
Citibank, respondent admitted to receiving one as proceeds of a loan
(MC No. 228270), denied receiving two (MCs No. 220701 and 226467), and
admitted to receiving all the rest, but not as proceeds of her loans,
but as return on the principal amounts and interests from her money
market placements.
Respondent admitted receiving MC No. 228270 representing the proceeds
of her loan covered by PN No. 34534. Although the principal
amount of the loan is P150,000.00, respondent only received
P146,312.50, because the interest and handling fee on the loan
transaction were already deducted therefrom.[86] Stamps and
notations at the back of MC No. 228270 reveal that it was deposited at
the Bank of the Philippine Islands (BPI), Cubao Branch, in Account No.
0123-0572-28.[87] The check also bore the signature of respondent at
the back.[88] And, although respondent would later admit that she did
sign PN No. 34534 and received MC No. 228270 as proceeds of the loan
extended to her by petitioner Citibank, she contradicted herself when,
in an earlier testimony, she claimed that PN No. 34534 was among the
PNs she executed as simulated loans with petitioner Citibank.[89]
Respondent denied ever receiving MCs No. 220701 and 226467.
However, considering that the said checks were crossed for payee’s
account only, and that they were actually deposited, cleared, and paid,
then the presumption would be that the said checks were properly
deposited to the account of respondent, who was clearly named the payee
in the checks. Respondent’s bare allegations that she did not
receive the two checks fail to convince this Court, for to sustain her,
would be for this Court to conclude that an irregularity had occurred
somewhere from the time of the issuance of the said checks, to their
deposit, clearance, and payment, and which would have involved not only
petitioner Citibank, but also BPI, which accepted the checks for
deposit, and the Central Bank of the Philippines, which cleared the
checks. It falls upon the respondent to overcome or dispute the
presumption that the crossed checks were issued, accepted for deposit,
cleared, and paid for by the banks involved following the ordinary
course of their business.
The mere fact that MCs No. 220701 and 226467 do not bear respondent’s
signature at the back does not negate deposit thereof in her
account. The liability for the lack of indorsement on the MCs no
longer fall on petitioner Citibank, but on the bank who received the
same for deposit, in this case, BPI Cubao Branch. Once again, it
must be noted that the MCs were crossed, for payee’s account only, and
the payee named in both checks was none other than respondent. The
crossing of the MCs was already a warning to BPI to receive said checks
for deposit only in respondent’s account. It was up to BPI to
verify whether it was receiving the crossed MCs in accordance with the
instructions on the face thereof. If, indeed, the MCs were
deposited in accounts other than respondent’s, then the respondent
would have a cause of action against BPI.[90]
BPI further stamped its guarantee on the back of the checks to the
effect that, “All prior endorsement and/or Lack of endorsement
guaranteed.” Thus, BPI became the indorser of the MCs, and
assumed all the warranties of an indorser,[91] specifically, that the
checks were genuine and in all respects what they purported to be; that
it had a good title to the checks; that all prior parties had capacity
to contract; and that the checks were, at the time of their
indorsement, valid and subsisting.[92]
So even if the MCs deposited by BPI's client, whether it be by
respondent herself or some other person, lacked the necessary
indorsement, BPI, as the collecting bank, is bound by its warranties as
an indorser and cannot set up the defense of lack of indorsement as
against petitioner Citibank, the drawee bank.[93]
Furthermore, respondent’s bare and unsubstantiated denial of receipt of
the MCs in question and their deposit in her account is rendered
suspect when MC No. 220701 was actually deposited in Account No.
0123-0572-28 of BPI Cubao Branch, the very same account in which MC No.
228270 (which respondent admitted to receiving as proceeds of her loan
from petitioner Citibank), and MCs No. 228203, 228357, and 228400
(which respondent admitted to receiving as proceeds from her money
market placements) were deposited. Likewise, MC No. 226467 was
deposited in Account No. 0121-002-43 of BPI Cubao Branch, to which MCs
No. 226285 and 226439 (which respondent admitted to receiving as
proceeds from her money market placements) were deposited. It is
an apparent contradiction for respondent to claim having received the
proceeds of checks deposited in an account, and then deny receiving the
proceeds of another check deposited in the very same
account. chanroblesvirtualawlibrary
Another inconsistency in respondent’s denial of receipt of MC No.
226467 and her deposit of the same in her account, is her presentation
of Exhibit “HHH,” a provisional receipt which was supposed to prove
that respondent turned over P500,000.00 to Mr. Tan of petitioner
Citibank, that the said amount was split into three money market
placements, and that MC No. 226467 represented the return on her
investment from one of these placements.[94] Because of her
Exhibit “HHH,” respondent effectively admitted receipt of MC No.
226467, although for reasons other than as proceeds of a loan.
Neither can this Court give credence to respondent’s contention that
the notations on the MCs, stating that they were the proceeds of
particular PNs, were not there when she received the checks and that
the notations appeared to be written by a typewriter different from
that used to write the other information on the checks.
Once more, respondent’s allegations were uncorroborated by any other
evidence. Her and her counsel’s observation that the notations on
the MCs appear to be written by a typewriter different from that used
to write the other information on the checks hardly convinces this
Court considering that it constitutes a mere opinion on the appearance
of the notation by a witness who does not possess the necessary
expertise on the matter. In addition, the notations on the MCs
were written using both capital and small letters, while the other
information on the checks were written using capital letters only, such
difference could easily confuse an untrained eye and lead to a hasty
conclusion that they were written by different typewriters.
Respondent’s testimony, that based on her experience transacting with
banks, the MCs were not supposed to include notations on the purpose
for which the checks were issued, also deserves scant
consideration. While respondent may have extensive experience
dealing with banks, it still does not qualify her as a competent
witness on banking procedures and practices. Her testimony on
this matter is even belied by the fact that the other MCs issued by
petitioner Citibank (when it was still named First National City Bank)
and by petitioner FNCB Finance, the existence and validity of which
were not disputed by respondent, also bear similar notations that state
the reason for which they were issued.
Respondent presented several more pieces of evidence to substantiate
her claim that she received MCs No. 226285, 226439, 226467, 226057,
228357, and 228400, not as proceeds of her loans from petitioner
Citibank, but as the return of the principal amounts and payment of
interests from her money market placements with petitioners. Part
of respondent’s exhibits were personal checks[95] drawn by respondent
on her account with Feati Bank & Trust Co., which she allegedly
invested in separate money market placements with both petitioners, the
returns from which were paid to her via MCs No. 226285 and
228400. Yet, to this Court, the personal checks only managed to
establish respondent’s issuance thereof, but there was nothing on the
face of the checks that would reveal the purpose for which they were
issued and that they were actually invested in money market placements
as respondent claimed.
Respondent further submitted handwritten notes that purportedly
computed and presented the returns on her money market placements,
corresponding to the amount stated in the MCs she received from
petitioner Citibank. Exhibit “HHH-1”[96] was a handwritten note,
which respondent attributed to Mr. Tan of petitioner Citibank, showing
the breakdown of her BPI Check for P500,000.00 into three different
money market placements with petitioner Citibank. This Court,
however, noticed several factors which render the note highly
suspect. One, it was written on the reversed side of Provisional
Receipt No. 12724 of petitioner Citibank which bore the initials of Mr.
Tan acknowledging receipt of respondent’s BPI Check No. 120989 for
P500,000.00; but the initials on the handwritten note appeared to be
that of Mr. Bobby Mendoza of petitioner FNCB Finance.[97] Second,
according to Provisional Receipt No. 12724, BPI Check No. 120989 for
P500,000.00 was supposed to be invested in three money market
placements with petitioner Citibank for the period of 60 days.
Since all these money market placements were made through one check
deposited on the same day, 10 November 1978, it made no sense that the
handwritten note at the back of Provisional Receipt No. 12724 provided
for different dates of maturity for each of the money market placements
(i.e., 16 November 1978, 17 January 1979, and 21 November 1978), and
such dates did not correspond to the 60 day placement period stated on
the face of the provisional receipt. And third, the
principal amounts of the money market placements as stated in the
handwritten note – P145,000.00, P145,000.00 and P242,000.00 – totaled
P532,000.00, and was obviously in excess of the P500,000.00
acknowledged on the face of Provisional Receipt No. 12724.
Exhibits “III” and “III-1,” the front and bank pages of a handwritten
note of Mr. Bobby Mendoza of petitioner FNCB Finance,[98] also did not
deserve much evidentiary weight, and this Court cannot rely on the
truth and accuracy of the computations presented therein. Mr.
Mendoza was not presented as a witness during the trial before the RTC,
so that the document was not properly authenticated nor its contents
sufficiently explained. No one was able to competently identify
whether the initials as appearing on the note were actually Mr.
Mendoza’s.
chan robles virtual law library
Also, going by the information on the front page of the note, this
Court observes that payment of respondent’s alleged money market
placements with petitioner FNCB Finance were made using Citytrust
Checks; the MCs in question, including MC No. 228057, were issued by
petitioner Citibank. Although Citytrust (formerly Feati Bank
& Trust Co.), petitioner FNCB Finance, and petitioner Citibank may
be affiliates of one another, they each remained separate and distinct
corporations, each having its own financial system and records.
Thus, this Court cannot simply assume that one corporation, such as
petitioner Citibank or Citytrust, can issue a check to discharge an
obligation of petitioner FNCB Finance. It should be recalled that
when petitioner FNCB Finance paid for respondent’s money market
placements, covered by its PNs No. 8167 and 8169, as well as PNs No.
20138 and 20139, petitioner FNCB Finance issued its own checks.
As a last point on this matter, if respondent truly had money market
placements with petitioners, then these would have been evidenced by
PNs issued by either petitioner Citibank or petitioner FNCB Finance,
acknowledging the principal amounts of the investments, and stating the
applicable interest rates, as well as the dates of their of issuance
and maturity. After respondent had so meticulously reconstructed
her other money market placements with petitioners and consolidated the
documentary evidence thereon, she came surprisingly short of offering
similar details and substantiation for these particular money market
placements.
Since this Court is satisfied that respondent indeed received the
proceeds of the first set of PNs, then it proceeds to analyze her
evidence of payment thereof.
In support of respondent’s assertion that she had already paid whatever
loans she may have had with petitioner Citibank, she presented as
evidence Provisional Receipts No. 19471, dated 11 August 1978, and No.
12723, dated 10 November 1978, both of petitioner Citibank and signed
by Mr. Tan, for the amounts of P500,744.00 and P500,000.00,
respectively. While these provisional receipts did state that Mr.
Tan, on behalf of petitioner Citibank, received respondent’s checks as
payment for her loans, they failed to specifically identify which loans
were actually paid. Petitioner Citibank was able to present
evidence that respondent had executed several PNs in the years 1978 and
1979 to cover the loans she secured from the said bank.
Petitioner Citibank did admit that respondent was able to pay for some
of these PNs, and what it identified as the first and second sets of
PNs were only those which remained unpaid. It thus became
incumbent upon respondent to prove that the checks received by Mr. Tan
were actually applied to the PNs in either the first or second set; a
fact that, unfortunately, cannot be determined from the provisional
receipts submitted by respondent since they only generally stated that
the checks received by Mr. Tan were payment for respondent’s loans.
Mr. Tan, in his deposition, further explained that provisional receipts
were issued when payment to the bank was made using checks, since the
checks would still be subject to clearing. The purpose for the
provisional receipts was merely to acknowledge the delivery of the
checks to the possession of the bank, but not yet of payment.[99]
This bank practice finds legitimacy in the pronouncement of this Court
that a check, whether an MC or an ordinary check, is not legal tender
and, therefore, cannot constitute valid tender of payment. In
Philippine Airlines, Inc. v. Court of Appeals, [100] this Court
elucidated that:cralaw:red
Since a negotiable
instrument is only a substitute for money and not money, the delivery
of such an instrument does not, by itself, operate as payment (Sec.
189, Act 2031 on Negs. Insts.; Art. 1249,
Civil Code
;
Bryan Landon Co. v. American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9
Phil. 44; 21 R.C.L. 60, 61). A check, whether a manager's check or
ordinary check, is not legal tender, and an offer of a check in payment
of a debt is not a valid tender of payment and may be refused receipt
by the obligee or creditor. Mere delivery of checks does not discharge
the obligation under a judgment. The obligation is not extinguished and
remains suspended until the payment by commercial document is actually
realized (Art. 1249, Civil Code, par. 3).
In the case at bar, the issuance of an official receipt by petitioner
Citibank would have been dependent on whether the checks delivered by
respondent were actually cleared and paid for by the drawee banks.
As for PN No. 34534, respondent asserted payment thereof at two
separate instances by two different means. In her formal offer of
exhibits, respondent submitted a deposit slip of petitioner Citibank,
dated 11 August 1978, evidencing the deposit of BPI Check No. 5785 for
P150,000.00.[101] In her Formal Offer of Documentary Exhibits, dated 7
July 1989, respondent stated that the purpose for the presentation of
the said deposit slip was to prove that she already paid her loan
covered by PN No. 34534.[102] In her testimony before the RTC
three years later, on 28 November 1991, she changed her story.
This time she narrated that the loan covered by PN No. 34534 was
secured by her money market placement with petitioner FNCB Finance, and
when she failed to pay the said PN when it became due, the security was
applied to the loan, therefore, the loan was considered paid.[103]
Given the foregoing, respondent’s assertion of payment of PN No. 34534
is extremely dubious.
According to petitioner Citibank, the PNs in the second set, except for
PN No. 34534, were mere renewals of the unpaid PNs in the first set,
which was why the PNs stated that they were for the purpose of
liquidating existing obligations. PN No. 34534, however, which
was part of the first set, was still valid and subsisting and so it was
included in the second set without need for its renewal, and it still
being the original PN for that particular loan, its stated purpose was
for personal investment.[104] Respondent essentially admitted
executing the second set of PNs, but they were only meant to cover
simulated loans. Mr. Tan supposedly convinced her that her
pending loan application with DBP would have a greater chance of being
approved if they made it appear that respondent urgently needed the
money because petitioner Citibank was already demanding payment for her
simulated loans.
Respondent’s defense of simulated loans to escape liability for the
second set of PNs is truly a novel one. It is regrettable,
however, that she was unable to substantiate the same. Yet again,
respondent’s version of events is totally based on her own
uncorroborated testimony. The notations on the second set of PNs,
that they were non-negotiable simulated notes, were admittedly made by
respondent herself and were, thus, self-serving. Equally
self-serving was respondent’s letter, written on 7 October 1985, or
more than six years after the execution of the second set of PNs, in
which she demanded return of the simulated or fictitious PNs, together
with the letters relating thereto, which Mr. Tan purportedly asked her
to execute. Respondent further failed to present any proof of her
alleged loan application with the DBP, and of any circumstance or
correspondence wherein the simulated or fictitious PNs were indeed used
for their supposed purpose.
In contrast, petitioner Citibank, as supported by the testimonies of
its officers and available documentation, consistently treated the said
PNs as regular loans – accepted, approved, and paid in the ordinary
course of its business.
The PNs executed by the respondent in favor of petitioner Citibank to
cover her loans were duly-filled out and signed, including the
disclosure statement found at the back of the said PNs, in adherence to
the Central Bank requirement to disclose the full finance charges to a
loan granted to borrowers.
Mr. Tan, then an account officer with the Marketing Department of
petitioner Citibank, testified that he dealt directly with respondent;
he facilitated the loans; and the PNs, at least in the second set, were
signed by respondent in his presence.[105]
Mr. Pujeda, the officer who was previously in charge of loans and
placements, confirmed that the signatures on the PNs were verified
against respondent’s specimen signature with the bank.[106]
Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan
processor, was responsible for booking respondent’s loans.
Booking the loans means recording it in the General Ledger. She
explained the procedure for booking loans, as follows: The account
officer, in the Marketing Department, deals directly with the clients
who wish to borrow money from petitioner Citibank. The Marketing
Department will forward a loan booking checklist, together with the
borrowing client’s PNs and other supporting documents, to the loan
pre-processor, who will check whether the details in the loan booking
checklist are the same as those in the PNs. The documents are
then sent to Signature Control for verification of the client’s
signature in the PNs, after which, they are returned to the loan
pre-processor, to be forwarded finally to the loan processor. The
loan processor shall book the loan in the General Ledger, indicating
therein the client name, loan amount, interest rate, maturity date, and
the corresponding PN number. Since she booked respondent’s loans
personally, Ms. Dondoyano testified that she saw the original
PNs. In 1986, Atty. Fernandez of petitioner Citibank requested
her to prepare an accounting of respondent’s loans, which she did, and
which was presented as Exhibit “120” for the petitioners. The
figures from the said exhibit were culled from the bookings in the
General Ledger, a fact which respondent’s counsel was even willing to
stipulate.[107]
Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at
the Control Department of petitioner Citibank. She was presented
by petitioner Citibank to expound on the microfilming procedure at the
bank, since most of the copies of the PNs were retrieved from
microfilm. Microfilming of the documents are actually done by people at
the Operations Department. At the end of the day or during the
day, the original copies of all bank documents, not just those
pertaining to loans, are microfilmed. She refuted the possibility
that insertions could be made in the microfilm because the microfilm is
inserted in a cassette; the cassette is placed in the microfilm machine
for use; at the end of the day, the cassette is taken out of the
microfilm machine and put in a safe vault; and the cassette is returned
to the machine only the following day for use, until the spool is
full. This is the microfilming procedure followed everyday.
When the microfilm spool is already full, the microfilm is developed,
then sent to the Control Department, which double checks the contents
of the microfilms against the entries in the General Ledger. The
Control Department also conducts a random comparison of the contents of
the microfilms with the original documents; a random review of the
contents is done on every role of microfilm.[108]
Ms. Renee Rubio worked for petitioner Citibank for 20 years. She
rose from the ranks, initially working as a secretary in the Personnel
Group; then as a secretary to the Personnel Group Head; a Service
Assistant with the Marketing Group, in 1972 to 1974, dealing directly
with corporate and individual clients who, among other things, secured
loans from petitioner Citibank; the Head of the Collection Group of the
Foreign Department in 1974 to 1976; the Head of the Money Transfer Unit
in 1976 to 1978; the Head of the Loans and Placements Unit up to the
early 1980s; and, thereafter, she established operations training
for petitioner Citibank in the Asia-Pacific Region responsible for the
training of the officers of the bank. She testified on the
standard loan application process at petitioner Citibank.
According to Ms. Rubio, the account officer or marketing person submits
a proposal to grant a loan to an individual or corporation.
Petitioner Citibank has a worldwide policy that requires a credit
committee, composed of a minimum of three people, which would approve
the loan and amount thereof. There can be no instance when only
one officer has the power to approve the loan application. When
the loan is approved, the account officer in charge will obtain the
corresponding PNs from the client. The PNs are sent to the
signature verifier who would validate the signatures therein against
those appearing in the signature cards previously submitted by the
client to the bank. The Operations Unit will check and review the
documents, including the PNs, if it is a clean loan, and securities and
deposits, if it is collateralized. The loan is then recorded in
the General Ledger. The Loans and Placements Department will not
book the loans without the PNs. When the PNs are liquidated,
whether they are paid or rolled-over, they are returned to the
client.[109] Ms. Rubio further explained that she was familiar
with respondent’s accounts since, while she was still the Head of the
Loan and Placements Unit, she was asked by Mr. Tan to prepare a list of
respondent’s outstanding obligations.[110] She thus calculated
respondent’s outstanding loans, which was sent as an attachment to Mr.
Tan’s letter to respondent, dated 28 September 1979, and presented
before the RTC as Exhibits “34-B” and “34-C.”[111]
Lastly, the exchange of letters between petitioner Citibank and
respondent, as well as the letters sent by other people working for
respondent, had consistently recognized that respondent owed petitioner
Citibank money.
In consideration of the foregoing discussion, this Court finds that the
preponderance of evidence supports the existence of the respondent’s
loans, in the principal sum of 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 –chanroblesvirtualawlibrary
The preponderance of evidence may be determined, under certain
conditions, by the number of witnesses testifying to a particular fact
or state of facts. For instance, one or two witnesses may testify to a
given state of facts, and six or seven witnesses of equal candor,
fairness, intelligence, and truthfulness, and equally well corroborated
by all the remaining evidence, who have no greater interest in the
result of the suit, testify against such state of facts. Then the
preponderance of evidence is determined by the number of witnesses.
(Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep., 761.)[112]
Best evidence rule
This Court disagrees in the pronouncement made by the Court of Appeals
summarily dismissing the documentary evidence submitted by petitioners
based on its broad and indiscriminate application of the best evidence
rule.
In general, the best evidence rule requires that the highest available
degree of proof must be produced. Accordingly, for documentary
evidence, the contents of a document are best proved by the production
of the document itself,[113] to the exclusion of any secondary or
substitutionary evidence.[114]
The best evidence rule has been made part of the Revised Rules of Court, Rule 130, Section 3, which reads:cralaw:red
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:cralaw:red
(a) When the original
has been lost or destroyed, or cannot be produced in court, without bad
faith on the part of the offeror;chanroblesvirtualawlibrary
(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;chanroblesvirtualawlibrary
(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:cralaw:red
But even with respect to
documentary evidence, the best evidence rule applies only when the
content of such document is the subject of the inquiry. Where the
issue is only as to whether such document was actually executed, or
exists, or on the circumstances relevant to or surrounding its
execution, the best evidence rule does not apply and testimonial
evidence is admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op.
cit., p. 78). Any other substitutionary evidence is likewise
admissible without need for accounting for the original.
Thus, when a document is presented to prove its existence or
condition it is offered not as documentary, but as real,
evidence. Parol evidence of the fact of execution of the
documents is allowed (Hernaez, et al. vs. McGrath, etc., et al., 91
Phil 565). x x x [115]
In Estrada v. Desierto,[116] this Court had occasion to rule that:cralaw:red
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
“In several Canadian provinces, the principle of
unavailability has been abandoned, for certain documents in which
ordinarily no real dispute arised. This measure is a sensible and
progressive one and deserves universal adoption (post, sec.
1233). Its essential feature is that a copy may be used
unconditionally, if the opponent has been given an opportunity to
inspect it.” (Emphasis supplied)
This Court did not violate the best evidence rule when it considered
and weighed in evidence the photocopies and microfilm copies of the
PNs, MCs, and letters submitted by the petitioners to establish the
existence of respondent’s loans. The terms or contents of these
documents were never the point of contention in the Petition at
bar. It was respondent’s position that the PNs in the first set
(with the exception of PN No. 34534) never existed, while the PNs in
the second set (again, excluding PN No. 34534) were merely executed to
cover simulated loan transactions. As for the MCs representing
the proceeds of the loans, the respondent either denied receipt of
certain MCs or admitted receipt of the other MCs but for another
purpose. Respondent further admitted the letters she wrote
personally or through her representatives to Mr. Tan of petitioner
Citibank acknowledging the loans, except that she claimed that these
letters were just meant to keep up the ruse of the simulated loans.
Thus, respondent questioned the documents as to their existence or
execution, or when the former is admitted, as to the purpose for which
the documents were executed, matters which are, undoubtedly, external
to the documents, and which had nothing to do with the contents
thereof.
chan robles virtual law library
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:cralaw:red
Sec. 5. When the
original document is unavailable. – When the original document has been
lost or destroyed, or cannot be produced in court, the offeror, upon
proof of its execution or existence and the cause of its unavailability
without bad faith on his part, may prove its contents by a copy, or by
a recital of its contents in some authentic document, or by the
testimony of witnesses in the order stated.
The execution or existence of the original copies of the documents was
established through the testimonies of witnesses, such as Mr. Tan,
before whom most of the documents were personally executed by
respondent. The original PNs also went through the whole loan
booking system of petitioner Citibank – from the account officer in its
Marketing Department, to the pre-processor, to the signature verifier,
back to the pre-processor, then to the processor for
booking.[117] The original PNs were seen by Ms. Dondoyano, the
processor, who recorded them in the General Ledger. Mr. Pujeda
personally saw the original MCs, proving respondent’s receipt of the
proceeds of her loans from petitioner Citibank, when he helped Attys.
Cleofe and Fernandez, the bank’s legal counsels, to reconstruct the
records of respondent’s loans. The original MCs were presented to
Atty. Cleofe who used the same during the preliminary investigation of
the case, sometime in years 1986-1987. The original MCs were
subsequently turned over to the Control and Investigation Division of
petitioner Citibank.[118]
It was only petitioner FNCB Finance who claimed that they lost the
original copies of the PNs when it moved to a new office.
Citibank did not make a similar contention; instead, it explained that
the original copies of the PNs were returned to the borrower upon
liquidation of the loan, either through payment or roll-over.
Petitioner Citibank proffered the excuse that they were still looking
for the documents in their storage or warehouse to explain the delay
and difficulty in the retrieval thereof, but not their absence or
loss. The original documents in this case, such as the MCs and
letters, were destroyed and, thus, unavailable for presentation before
the RTC only on 7 October 1987, when a fire broke out on the 7th floor
of the office building of petitioner Citibank. There is no
showing that the fire was intentionally set. The fire destroyed
relevant documents, not just of the present case, but also of other
cases, since the 7th floor housed the Control and Investigation
Division, in charge of keeping the necessary documents for cases in
which petitioner Citibank was involved.
The foregoing would have been sufficient to allow the presentation of
photocopies or microfilm copies of the PNs, MCs, and letters by the
petitioners as secondary evidence to establish the existence of
respondent’s loans, as an exception to the best evidence rule.
The impact of the Decision of the Court of Appeals in the Dy case
In its assailed Decision, the Court of Appeals made the following pronouncement:cralaw:red
Besides, We find the declaration and conclusions of this Court in
CA-G.R. CV No. 15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O. Dy
vs. City Bank, N.A., et al, promulgated on 15 January 1990, as
disturbing taking into consideration the similarities of the fraud,
machinations, and deceits employed by the defendant-appellant Citibank
and its Account Manager Francisco Tan.
Worthy of note is the fact that Our declarations and conclusions
against Citibank and the person of Francisco Tan in CA-G.R. CV No.
15934 were affirmed in toto by the Highest Magistrate in a Minute
Resolution dated 22 August 1990 entitled Citibank, N.A., vs. Court of
Appeals, G.R. 93350.
As the factual milieu of the present appeal created reasonable doubts
as to whether the nine (9) Promissory Notes were indeed executed with
considerations, the doubts, coupled by the findings and conclusions of
this Court in CA-G.R. CV No. 15934 and the Supreme Court in G.R. No.
93350. should be construed against herein defendants-appellants
Citibank and FNCB Finance.
What this Court truly finds disturbing is the significance given by the
Court of Appeals in its assailed Decision to the Decision[119] of its
Third Division in CA-G.R. CV No. 15934 (or the Dy case), when there is
an absolute lack of legal basis for doing such.
Although petitioner Citibank and its officer, Mr. Tan, were also
involved in the Dy case, that is about the only connection between the
Dy case and the one at bar. Not only did the Dy case tackle
transactions between parties other than the parties presently before
this Court, but the transactions are absolutely independent and
unrelated to those in the instant Petition.
In the Dy case, Severino Chua Caedo managed to obtain loans from herein
petitioner Citibank amounting to P7,000,000.00, secured to the extent
of P5,000,000.00 by a Third Party Real Estate Mortgage of the
properties of Caedo’s aunt, Rosalind Dy. It turned out that
Rosalind Dy and her husband were unaware of the said loans and the
mortgage of their properties. The transactions were carried out
exclusively between Caedo and Mr. Tan of petitioner Citibank. The
RTC found Mr. Tan guilty of fraud for his participation in the
questionable transactions, essentially because he allowed Caedo to take
out the signature cards, when these should have been signed by the Dy
spouses personally before him. Although the Dy spouses’
signatures in the PNs and Third Party Real Estate Mortgage were forged,
they were approved by the signature verifier since the signature cards
against which they were compared to were also forged. Neither the
RTC nor the Court of Appeals, however, categorically declared Mr. Tan
personally responsible for the forgeries, which, in the narration of
the facts, were more likely committed by Caedo.
In the Petition at bar, respondent dealt with Mr. Tan directly, there
was no third party involved who could have perpetrated any fraud or
forgery in her loan transactions. Although respondent attempted
to raise suspicion as to the authenticity of her signatures on certain
documents, these were nothing more than naked allegations with no
corroborating evidence; worse, even her own allegations were replete
with inconsistencies. She could not even establish in what manner
or under what circumstances the fraud or forgery was committed, or how
Mr. Tan could have been directly responsible for the same.
While the Court of Appeals can take judicial notice of the Decision of
its Third Division in the Dy case, it should not have given the said
case much weight when it rendered the assailed Decision, since the
former does not constitute a precedent. The Court of Appeals, in
the challenged Decision, did not apply any legal argument or principle
established in the Dy case but, rather, adopted the findings therein of
wrongdoing or misconduct on the part of herein petitioner Citibank and
Mr. Tan. Any finding of wrongdoing or misconduct as against
herein petitioners should be made based on the factual background and
pieces of evidence submitted in this case, not those in another
case. chanroblesvirtualawlibrary
It is apparent that the Court of Appeals took judicial notice of the Dy
case not as a legal precedent for the present case, but rather as
evidence of similar acts committed by petitioner Citibank and Mr.
Tan. A basic rule of evidence, however, states that, “Evidence
that one did or did not do a certain thing at one time is not
admissible to prove that he did or did not do the same or similar thing
at another time; but it may be received to prove a specific intent or
knowledge, identity, plan, system, scheme, habit, custom or usage, and
the like.”[120] The rationale for the rule is explained thus:cralaw:red
The rule is founded upon reason, public policy, justice and judicial
convenience. The fact that a person has committed the same or
similar acts at some prior time affords, as a general rule, no logical
guaranty that he committed the act in question. This is so
because, subjectively, a man’s mind and even his modes of life may
change; and, objectively, the conditions under which he may find
himself at a given time may likewise change and thus induce him to act
in a different way. Besides, if evidence of similar acts are to
be invariably admitted, they will give rise to a multiplicity of
collateral issues and will subject the defendant to surprise as well as
confuse the court and prolong the trial.[121]
The factual backgrounds of the two cases are so different and unrelated
that the Dy case cannot be used to prove specific intent, knowledge,
identity, plan, system, scheme, habit, custom or usage on the part of
petitioner Citibank or its officer, Mr. Tan, to defraud respondent in
the present case.
IV
The liquidation of respondent’s outstanding loans were valid in so far
as petitioner Citibank used respondent’s savings account with the bank
and her money market placements with petitioner FNCB Finance; but
illegal and void in so far as petitioner Citibank used respondent’s
dollar accounts with Citibank-Geneva.
Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing obligations. Relevant provisions of the Civil Code provides:cralaw:red
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;chanroblesvirtualawlibrary
(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;
chan robles virtual law library
(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;chanroblesvirtualawlibrary
(3) That the two debts be due;chanroblesvirtualawlibrary
(4) That they be liquidated and demandable;chanroblesvirtualawlibrary
(5) That over neither of them there be any
retention or controversy, commenced by third persons and communicated
in due time to the debtor.
There is little controversy when it comes to the right of petitioner
Citibank to compensate respondent’s outstanding loans with her deposit
account. As already found by this Court, petitioner Citibank was
the creditor of respondent for her outstanding loans. At the same
time, respondent was the creditor of petitioner Citibank, as far as her
deposit account was concerned, since bank deposits, whether fixed,
savings, or current, should be considered as simple loan or mutuum by
the depositor to the banking institution.[122] Both debts consist
in sums of money. By June 1979, all of respondent’s PNs in the
second set had matured and became demandable, while respondent’s
savings account was demandable anytime. Neither was there any
retention or controversy over the PNs and the deposit account commenced
by a third person and communicated in due time to the debtor
concerned. Compensation takes place by operation of law,[123]
therefore, even in the absence of an expressed authority from
respondent, petitioner Citibank had the right to effect, on 25 June
1979, the partial compensation or off-set of respondent’s outstanding
loans with her deposit account, amounting to P31,079.14.
Money market placements with FNCB Finance
Things though are not as simple and as straightforward as regards to
the money market placements and bank account used by petitioner
Citibank to complete the compensation or off-set of respondent’s
outstanding loans, which came from persons other than petitioner
Citibank. chanroblesvirtualawlibrary
Respondent’s money market placements were with petitioner FNCB Finance,
and after several roll-overs, they were ultimately covered by PNs No.
20138 and 20139, which, by 3 September 1979, the date the check for the
proceeds of the said PNs were issued, amounted to P1,022,916.66,
inclusive of the principal amounts and interests. As to these
money market placements, respondent was the creditor and petitioner
FNCB Finance the debtor; while, as to the outstanding loans, petitioner
Citibank was the creditor and respondent the debtor.
Consequently, legal compensation, under Article 1278 of the Civil Code,
would not apply since the first requirement for a valid compensation,
that each one of the obligors be bound principally, and that he be at
the same time a principal creditor of the other, was not met.
What petitioner Citibank actually did was to exercise its rights to the
proceeds of respondent’s money market placements with petitioner FNCB
Finance by virtue of the Deeds of Assignment executed by respondent in
its favor.
The Court of Appeals did not consider these Deeds of Assignment because
of petitioners’ failure to produce the original copies thereof in
violation of the best evidence rule. This Court again finds
itself in disagreement in the application of the best evidence rule by
the appellate court.
To recall, the best evidence rule, in so far as documentary evidence is
concerned, requires the presentation of the original copy of the
document only when the context thereof is the subject of inquiry in the
case. Respondent does not question the contents of the Deeds of
Assignment. While she admitted the existence and execution of the
Deeds of Assignment, dated 2 March 1978 and 9 March 1978, covering PNs
No. 8169 and 8167 issued by petitioner FNCB Finance, she claimed, as
defense, that the loans for which the said Deeds were executed as
security, were already paid. She denied ever executing both Deeds
of Assignment, dated 25 August 1978, covering PNs No. 20138 and
20139. These are again issues collateral to the contents of the
documents involved, which could be proven by evidence other than the
original copies of the said documents.
Moreover, the Deeds of Assignment of the money market placements with
petitioner FNCB Finance were notarized documents, thus, admissible in
evidence. Rule 132, Section 30 of the Rules of Court provides that:cralaw:red
Sec. 30. Proof of
notarial documents. – Every instrument duly acknowledged or proved and
certified as provided by law, may be presented in evidence without
further proof, the certificate of acknowledgement being prima facie
evidence of the execution of the instrument or document involved.
Significant herein is this Court’s elucidation in De Jesus v. Court of Appeals,[124] which reads:cralaw:red
On the evidentiary value of
these documents, it should be recalled that the notarization of a
private document converts it into a public one and renders it
admissible in court without further proof of its authenticity (Joson
vs. Baltazar, 194 SCRA 114 [1991]). This is so because a public
document duly executed and entered in the proper registry is presumed
to be valid and genuine until the contrary is shown by clear and
convincing proof (Asido vs. Guzman, 57 Phil. 652 [1918]; U.S. vs.
Enriquez, 1 Phil 241 [1902]; Favor vs. Court of Appeals, 194 SCRA 308
[1991]). As such, the party challenging the recital of the document
must prove his claim with clear and convincing evidence (Diaz vs. Court
of Appeals, 145 SCRA 346 [1986]).
The rule on the evidentiary weight that must be accorded a notarized
document is clear and unambiguous. The certificate of
acknowledgement in the notarized Deeds of Assignment constituted prima
facie evidence of the execution thereof. Thus, the burden of
refuting this presumption fell on respondent. She could have
presented evidence of any defect or irregularity in the execution of
the said documents[125] or raised questions as to the verity of the
notary public’s acknowledgment and certificate in the Deeds.[126]
But again, respondent admitted executing the Deeds of Assignment, dated
2 March 1978 and 9 March 1978, although claiming that the loans for
which they were executed as security were already paid. And, she
assailed the Deeds of Assignment, dated 25 August 1978, with nothing
more than her bare denial of execution thereof, hardly the clear and
convincing evidence required to trounce the presumption of due
execution of a notarized document. chanroblesvirtualawlibrary
Petitioners not only presented the notarized Deeds of Assignment, but
even secured certified literal copies thereof from the National
Archives.[127] Mr. Renato Medua, an archivist, working at the
Records Management and Archives Office of the National Library,
testified that the copies of the Deeds presented before the RTC were
certified literal copies of those contained in the Notarial Registries
of the notary publics concerned, which were already in the possession
of the National Archives. He also explained that he could not
bring to the RTC the Notarial Registries containing the original copies
of the Deeds of Assignment, because the Department of Justice (DOJ)
Circular No. 97, dated 8 November 1968, prohibits the bringing of
original documents to the courts to prevent the loss of irreplaceable
and priceless documents.[128]
Accordingly, this Court gives the Deeds of Assignment grave importance
in establishing the authority given by the respondent to petitioner
Citibank to use as security for her loans her money her market
placements with petitioner FNCB Finance, represented by PNs No. 8167
and 8169, later to be rolled-over as PNs No. 20138 and 20139.
These Deeds of Assignment constitute the law between the parties, and
the obligations arising therefrom shall have the force of law between
the parties and should be complied with in good faith.[129] Standard
clauses in all of the Deeds provide that:
chan robles virtual law library
The ASSIGNOR and the ASSIGNEE hereby further agree as follows:cralaw:red
x x x
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.
x x x
5. This Assignment shall be considered as
sufficient authority to FNCB Finance to pay and deliver the PLACEMENT
or so much thereof as may be necessary to liquidate the OBLIGATIONS, to
the ASSIGNEE in accordance with terms and provisions hereof.[130]
Petitioner Citibank was only acting upon the authority granted to it
under the foregoing Deeds when it finally used the proceeds of PNs No.
20138 and 20139, paid by petitioner FNCB Finance, to partly pay for
respondent’s outstanding loans. Strictly speaking, it did not effect a
legal compensation or off-set under Article 1278 of the Civil Code, but
rather, it partly extinguished respondent’s obligations through the
application of the security given by the respondent for her
loans. Although the pertinent documents were entitled Deeds of
Assignment, they were, in reality, more of a pledge by respondent to
petitioner Citibank of her credit due from petitioner FNCB Finance by
virtue of her money market placements with the latter. According
to Article 2118 of the Civil Code:cralaw:red
Art. 2118. If a credit
has been pledged becomes due before it is redeemed, the pledgee may
collect and receive the amount due. He shall apply the same to
the payment of his claim, and deliver the surplus, should there be any,
to the pledgor.
PNs No. 20138 and 20139 matured on 3 September 1979, without them being
redeemed by respondent, so that petitioner Citibank collected from
petitioner FNCB Finance the proceeds thereof, which included the
principal amounts and interests earned by the money market placements,
amounting to P1,022,916.66, and applied the same against respondent’s
outstanding loans, leaving no surplus to be delivered to respondent.
Dollar Accounts with Citibank-Geneva
Despite the legal compensation of respondent’s savings account and the
total application of the proceeds of PNs No. 20138 and 20139 to
respondent’s outstanding loans, there still remained a balance of
P1,069,847.40. Petitioner Citibank then proceeded to applying
respondent’s dollar accounts with Citibank-Geneva against her remaining
loan balance, pursuant to a Declaration of Pledge supposedly executed
by respondent in its favor.
Certain principles of private international law should be considered
herein because the property pledged was in the possession of an entity
in a foreign country, namely, Citibank-Geneva. In the absence of
any allegation and evidence presented by petitioners of the specific
rules and laws governing the constitution of a pledge in Geneva,
Switzerland, they will be presumed to be the same as Philippine local
or domestic laws; this is known as processual presumption.[131]
Upon closer scrutiny of the Declaration of Pledge, this Court finds the same exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank took care
to have the Deeds of Assignment of the PNs notarized, yet left the
Declaration of Pledge unnotarized. This Court would think that
petitioner Citibank would take greater cautionary measures with the
preparation and execution of the Declaration of Pledge because it
involved respondent’s “all present and future fiduciary placements”
with a Citibank branch in another country, specifically, in Geneva,
Switzerland. While there is no express legal requirement that the
Declaration of Pledge had to be notarized to be effective, even so, it
could not enjoy the same prima facie presumption of due execution that
is extended to notarized documents, and petitioner Citibank must
discharge the burden of proving due execution and authenticity of the
Declaration of Pledge.
Second, petitioner Citibank was unable to establish the date when the
Declaration of Pledge was actually executed. The photocopy of the
Declaration of Pledge submitted by petitioner Citibank before the RTC
was undated.[132] It presented only a photocopy of the pledge
because it already forwarded the original copy thereof to
Citibank-Geneva when it requested for the remittance of respondent’s
dollar accounts pursuant thereto. Respondent, on the other hand,
was able to secure a copy of the Declaration of Pledge, certified by an
officer of Citibank-Geneva, which bore the date 24 September
1979.[133] Respondent, however, presented her passport and plane
tickets to prove that she was out of the country on the said date and
could not have signed the pledge. Petitioner Citibank insisted
that the pledge was signed before 24 September 1979, but could not
provide an explanation as to how and why the said date was written on
the pledge. Although Mr. Tan testified that the Declaration of
Pledge was signed by respondent personally before him, he could not
give the exact date when the said signing took place. It is
important to note that the copy of the Declaration of Pledge submitted
by the respondent to the RTC was certified by an officer of
Citibank-Geneva, which had possession of the original copy of the
pledge. It is dated 24 September 1979, and this Court shall abide
by the presumption that the written document is truly dated.[134]
Since it is undeniable that respondent was out of the country on 24
September 1979, then she could not have executed the pledge on the said
date.
Third, the Declaration of Pledge was irregularly filled-out. The
pledge was in a standard printed form. It was constituted in
favor of Citibank, N.A., otherwise referred to therein as the
Bank. It should be noted, however, that in the space which should
have named the pledgor, the name of petitioner Citibank was
typewritten, to wit:cralaw:red
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.
chan robles virtual law library
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:cralaw:red
Basic is the rule of evidence that when the subject of inquiry is the
contents of a document, no evidence is admissible other than the
original document itself except in the instances mentioned in Section
3, Rule 130 of the Revised Rules of Court. Mere photocopies of
documents are inadmissible pursuant to the best evidence rule. This is
especially true when the issue is that of forgery.
As a rule, forgery cannot be presumed and must be proved by clear,
positive and convincing evidence and the burden of proof lies on the
party alleging forgery. The best evidence of a forged signature in an
instrument is the instrument itself reflecting the alleged forged
signature. The fact of forgery can only be established by a comparison
between the alleged forged signature and the authentic and genuine
signature of the person whose signature is theorized upon to have been
forged. Without the original document containing the alleged forged
signature, one cannot make a definitive comparison which would
establish forgery. A comparison based on a mere xerox copy or
reproduction of the document under controversy cannot produce reliable
results.[135]
Respondent made several attempts to have the original copy of the
pledge produced before the RTC so as to have it examined by
experts. Yet, despite several Orders by the RTC,[136] petitioner
Citibank failed to comply with the production of the original
Declaration of Pledge. It is admitted that Citibank-Geneva had
possession of the original copy of the pledge. While petitioner
Citibank in Manila and its branch in Geneva may be separate and
distinct entities, they are still incontestably related, and between
petitioner Citibank and respondent, the former had more influence and
resources to convince Citibank-Geneva to return, albeit temporarily,
the original Declaration of Pledge. Petitioner Citibank did not
present any evidence to convince this Court that it had exerted
diligent efforts to secure the original copy of the pledge, nor did it
proffer the reason why Citibank-Geneva obstinately refused to give it
back, when such document would have been very vital to the case of
petitioner Citibank. There is thus no justification to allow the
presentation of a mere photocopy of the Declaration of Pledge in lieu
of the original, and the photocopy of the pledge presented by
petitioner Citibank has nil probative value.[137] In addition, even if
this Court cannot make a categorical finding that respondent’s
signature on the original copy of the pledge was forged, it is
persuaded that petitioner Citibank willfully suppressed the
presentation of the original document, and takes into consideration the
presumption that the evidence willfully suppressed would be adverse to
petitioner Citibank if produced.[138]
Without the Declaration of Pledge, petitioner Citibank had no authority
to demand the remittance of respondent’s dollar accounts with
Citibank-Geneva and to apply them to her outstanding loans. It
cannot effect legal compensation under Article 1278 of the Civil Code
since, petitioner Citibank itself admitted that Citibank-Geneva is a
distinct and separate entity. As for the dollar accounts,
respondent was the creditor and Citibank-Geneva is the debtor; and as
for the outstanding loans, petitioner Citibank was the creditor and
respondent was the debtor. The parties in these transactions were
evidently not the principal creditor of each other.
Therefore, this Court declares that the remittance of respondent’s
dollar accounts from Citibank-Geneva and the application thereof to her
outstanding loans with petitioner Citibank was illegal, and null and
void. Resultantly, petitioner Citibank is obligated to return to
respondent the amount of US$149,632,99 from her Citibank-Geneva
accounts, or its present equivalent value in Philippine currency; and,
at the same time, respondent continues to be obligated to petitioner
Citibank for the balance of her outstanding loans which, as of 5
September 1979, amounted to P1,069,847.40. chanroblesvirtualawlibrary
V
The parties shall be liable for interests on their monetary obligations to each other, as determined herein.
In summary, petitioner Citibank is ordered by this Court to pay
respondent the proceeds of her money market placements, represented by
PNs No. 23356 and 23357, amounting to P318,897.34 and P203,150.00,
respectively, earning an interest of 14.5% per annum as stipulated in
the PNs,[139] beginning 17 March 1977, the date of the placements.
Petitioner Citibank is also ordered to refund to respondent the amount
of US$149,632.99, or its equivalent in Philippine currency, which had
been remitted from her Citibank-Geneva accounts. These dollar
accounts, consisting of two fiduciary placements and current accounts
with Citibank-Geneva shall continue earning their respective stipulated
interests from 26 October 1979, the date of their remittance by
Citibank-Geneva to petitioner Citibank in Manila and applied against
respondent’s outstanding loans.
As for respondent, she is ordered to pay petitioner Citibank the
balance of her outstanding loans, which amounted to P1,069,847.40 as of
5 September 1979. These loans continue to earn interest, as
stipulated in the corresponding PNs, from the time of their respective
maturity dates, since the supposed payment thereof using respondent’s
dollar accounts from Citibank-Geneva is deemed illegal, null and void,
and, thus, ineffective.
VI
Petitioner Citibank shall be liable for damages to respondent.
Petitioners protest the award by the Court of Appeals of moral damages,
exemplary damages, and attorney’s fees in favor of respondent.
They argued that the RTC did not award any damages, and respondent, in
her appeal before the Court of Appeals, did not raise in issue the
absence of such.
While it is true that the general rule is that only errors which have
been stated in the assignment of errors and properly argued in the
brief shall be considered, this Court has also recognized exceptions to
the general rule, wherein it authorized the review of matters, even
those not assigned as errors in the appeal, if the consideration
thereof is necessary in arriving at a just decision of the case, and
there is a close inter-relation between the omitted assignment of error
and those actually assigned and discussed by the appellant.[140]
Thus, the Court of Appeals did not err in awarding the damages when it
already made findings that would justify and support the said award.
Although this Court appreciates the right of petitioner Citibank to
effect legal compensation of respondent’s local deposits, as well as
its right to the proceeds of PNs No. 20138 and 20139 by virtue of the
notarized Deeds of Assignment, to partly extinguish respondent’s
outstanding loans, it finds that petitioner Citibank did commit wrong
when it failed to pay and properly account for the proceeds of
respondent’s money market placements, evidenced by PNs No. 23356 and
23357, and when it sought the remittance of respondent’s dollar
accounts from Citibank-Geneva by virtue of a highly-suspect Declaration
of Pledge to be applied to the remaining balance of respondent’s
outstanding loans. It bears to emphasize that banking is
impressed with public interest and its fiduciary character requires
high standards of integrity and performance.[141] A bank is under
the obligation to treat the accounts of its depositors with meticulous
care whether such accounts consist only of a few hundred pesos or of
millions of pesos.[142] The bank must record every single
transaction accurately, down to the last centavo, and as promptly as
possible.[143] Petitioner Citibank evidently failed to exercise
the required degree of care and transparency in its transactions with
respondent, thus, resulting in the wrongful deprivation of her
property.
Respondent had been deprived of substantial amounts of her investments
and deposits for more than two decades. During this span of
years, respondent had found herself in desperate need of the amounts
wrongfully withheld from her. In her testimony[144] before the
RTC, respondent narrated:cralaw:red
Q
By the way Mrs. Witness will you kindly tell us again, you said before
that you are a businesswoman, will you tell us again what are the
businesses you are engaged into [sic]?
A I am
engaged in real estate. I am the owner of the Modesta Village 1
and 2 in San Mateo, Rizal. I am also the President and Chairman
of the Board of Macador [sic] Co. and Business Inc. which operates the
Macador [sic] International Palace Hotel. I am also the President
of the Macador [sic] International Palace Hotel, and also the Treasures
Home Industries, Inc. which I am the Chairman and president of the
Board and also operating affiliated company in the name of Treasures
Motor Sales engaged in car dealers [sic] like Delta Motors, we are the
dealers of the whole Northern Luzon and I am the president of the Disto
Company, Ltd., based in Hongkong licensed in Honkong [sic] and now
operating in Los Angeles, California.
Q What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and construction.
Q Aside from
those businesses are you a member of any national or community
organization for social and civil activities?
A Yes sir.
Q What are those?
A I am the
Vice-President of thes [sic] Subdivision Association of the Philippines
in 1976, I am also an officer of the Chamber of Real Estate Business
Association; I am also an officer of the Chatholic [sic] Women’s League
and I am also a member of the CMLI, I forgot the definition.
Q How about any political affiliation or government position held if any?
A I was also a candidate for Mayo last January 30, 1980.
chan robles virtual law library
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
A I also ran
as an Assemblywoman last May, 1984, Independent party in Regional I,
Pangasinan.
Q What happened to your businesses
you mentioned as a result of your failure to recover you [sic]
investments and bank deposits from the defendants?
A They are
not all operating, in short, I was hampered to push through the
businesses that I have.
A [sic] Of all the businesses and enterprises that you
mentioned what are those that are paralyzed and what remain inactive?
A Of all the
company [sic] that I have, only the Disto Company that is now operating
in California.
Q How about
your candidacy as Mayor of Dagupan, [sic] City, and later as
Assemblywoman of Region I, what happened to this?
A I won by
voting but when election comes on [sic] the counting I lost and I
protested this, it is still pending and because I don’t have financial
resources I was not able to push through the case. I just have it
pending in the Comelec.
Q Now, do these things also affect your social and civic activities? chanroblesvirtualawlibrary
A Yes sir, definitely.
Q How?
A I was
embarrassed because being a businesswoman I would like to inform the
Honorable Court that I was awarded as the most outstanding
businesswoman of the year in 1976 but when this money was not given
back to me, I was not able to comply with the commitments that I have
promised to these associations that I am engaged into [sic], sir.
For the mental anguish, serious anxiety, besmirched reputation, moral
shock and social humiliation suffered by the respondent, the award of
moral damages is but proper. However, this Court reduces the
amount thereof to P300,000.00, for the award of moral damages is meant
to compensate for the actual injury suffered by the respondent, not to
enrich her.[145]
Having failed to exercise more care and prudence than a private
individual in its dealings with respondent, petitioner Citibank should
be liable for exemplary damages, in the amount of P250,000.00, in
accordance with Article 2229[146] and 2234[147] of the Civil Code.
With the award of exemplary damages, then respondent shall also be
entitled to an award of attorney’s fees.[148] Additionally, attorney's
fees may be awarded when a party is compelled to litigate or to incur
expenses to protect his interest by reason of an unjustified act of the
other party.[149] In this case, an award of P200,000.00
attorney’s fees shall be satisfactory.
In contrast, this Court finds no sufficient basis to award damages to
petitioners. Respondent was compelled to institute the present
case in the exercise of her rights and in the protection of her
interests. In fact, although her Complaint before the RTC was not
sustained in its entirety, it did raise meritorious points and on which
this Court rules in her favor. Any injury resulting from the
exercise of one’s rights is damnum absque injuria.[150] chanroblesvirtualawlibrary
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:cralaw:red
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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
3. Petitioner Citibank is ORDERED
to pay respondent moral damages in the amount of Three Hundred Thousand
Pesos (P300,000.00); exemplary damages in the amount of Two Hundred
Fifty Thousand Pesos (P250,000.00); and attorney’s fees in the amount
of Two Hundred Thousand Pesos (P200,000.00); and
4. Respondent is ORDERED
to pay petitioner Citibank the balance of her outstanding loans, which,
from the respective dates of their maturity to 5 September 1979, was
computed to be in the sum of One Million Sixty-Nine Thousand Eight
Hundred 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.
[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 327-366.
[3] Id. at 368-374.
chan robles virtual law library
[4]
TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.
[5] Records, Vol. I, pp. 1-8.
[6] Id. at 148-157.
[7] Id. at 40-51.
[8] Id. at 208-227.
[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
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).
chan robles virtual law library
[12] Rollo, pp. 365-366.
[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 [1962].)
[15] Rollo of G.R. No. 156132, p. 1227.
[16] Rollo, p. 374.
[17]
Resolution, dated 29 January 2003; rollo, pp. 980-A-B.
[18] Resolution, dated 23 June 2003; id. at 1311-1312.
[19]
Firestone Tire and Rubber Company of the Philippines v. Tempongko, 137
Phil. 239, 244 (1969); Singh v. Liberty Insurance Corp., 118 Phil. 532,
535 (1963).
[20] Rollo, pp. 1443-1445.
[21]
See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438
[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.
[22]
The Executive Secretary v. Gordon, 359 Phil. 266, 271 (1998).
[23] Young v. John Keng Seng, 446 Phil. 823, 833 (2003).
[24]
Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283 (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
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.
[28]
Penned by Associate Justice Andres B. Reyes with Associate Justices
Conrado M. Vasquez, Jr. and Amelita G. Tolentino, concurring; rollo, p.
344.
[29]
Section 3(m) of Rule 131 of the Revised Rules of Court reads –chanroblesvirtualawlibrary
SEC. 3. Disputable presumptions. – The following presumptions are
satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence:cralaw:red
x x x
(m) That official duty has been regularly performed.
[30] 317 Phil. 495, 501-503 (1995).
[31] Records, Vol. I, p. 515.
[32] 32 Phil. 476, 478-479.
[33]
Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).
[34]
Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95 (1996).
[35]
Mr. Herminio Pujeda, at the time he testified before the RTC in 1990,
was already the Vice President of petitioner Citibank.
chan robles virtual law library
[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.
[38]
Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
[39] TSN, 6 February 1990, Vol. V, pp. 16-24.
[40]
Exhibit “37,” defendants’ folder of exhibits, p. 106.
[41] Exhibit “37-C,” id. at 107.
[42] Exhibit “37-F,” id. at 108.
[43] TSN, 12 March 1990, p. 13.
[44]
Exhibit “104-C,” defendants’ folder of exhibits, p. 111.
[45] Exhibit “105,” id. at 112.
[46] Exhibit “106,” id. at 114.
[47] Exhibit “108,” id. at 118.
[48] Exhibits “112” and “119,” id. at 121-A, 124.
[49] Records, Vol. III, p. 1367.
[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.
[54]
Exhibit “120-H,” defendants’ folder of exhibits, pp. 131.
[55] Exhibits “1” to “9,” id. at 44-52.
[56] Exhibits “18” to “26,” id. at 83-92.
[57] Exhibit “13-E,” id. at 65-67.
[58] Exhibit “14-G,” id. at 72-74.
[59]
Exhibit “15” and “Exhibit 17-D,” id. at 77-78, 81-82.
[60] Exhibit “38,” id. at 109-110.
[61]
Exhibit “K-1,” plaintiff’s folder of exhibits, pp. 54-55
[62]
Exhibit “27,” defendants’ folder of exhibits, p. 93.
[63] Exhibit “28,” id. at 94.
[64] Exhibit “29,” id. at 95.
[65] Exhibit “30,” id. at 96.
[66] Exhibit “31,” id. at 97.
[67] Exhibit “32,” id. at 98.
[68] Exhibits “34-B” and “34-C,” id. at 102-103.
[69] Exhibit “34,” id. at 100.
[70] Exhibit “121,” id. at 207.
[71] TSN, 14 May 1991, Vol. XI , pp. 12-14.
[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 124.
[75] TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.
[76] Id. at 16-23.
[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 (1999).
[79] Bank of the
Philippine Islands v. Court of Appeals, 383 Phil. 538, 553 (2000), with
reference to Tan v. Court of Appeals, 239 Phil. 310, 322
(1994). chanroblesvirtualawlibrary
[80]
Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218 SCRA
682, 695.
[81] 403 Phil. 361, 383 (2001).
[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.
[86]
Exhibit “19,” defendants’ folder of exhibits, p. 84.
[87] Exhibits “9-D” and “9-G,” id. at 52.
[88] Exhibit “9-F,” id. at 52.
[89] TSN, 19 May 1986, Vol. II, p. 10.
[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.
[92] Negotiable Instruments Law, Section 66, in connection with Section 65.
[93]
Associated Bank v. Court of Appeals, 322 Phil. 677, 697 (1996);
Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992, 208
SCRA 465, 472.
[94]
Plaintiff’s Formal Offer of Documentary Exhibits, records, Vol. I, pp.
504-505; plaintiff’s folder of exhibits, p. 110.
[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.
[98] Plaintiff’s folder of exhibits, p. 112.
[99]
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
[100] G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.
[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.
[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.
[108]
TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp.
31-34.
[109] TSN, 18 April 1991, Vol. X, pp. 3-13.
[110] Id. at 15-23.
[111] Folder of defendants’ exhibits, pp. 102-103.
[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).
[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.
[117] TSN, 13 March 1991, Vol X, pp. 7-9.
[118] TSN, 22 May 1990, Vol. V, pp. 14-17.
[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. Kapunan and
Emeterio C. Cui, concurring.
[120] Revised Rules of Court, Rule 130, Section 34. chanroblesvirtualawlibrary
[121]
J.A.R. Sibal and J.N. Salazar, Jr., Compendium on Evidence 199-200 (4th
ed., 1995).
[122]
Civil Code, Article 1980; Guingona, Jr. v. City Fiscal of Manila, 213
Phil. 516,523-524 (1984).
[123] Civil Code, Article 1286.
[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).
[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 (1996).
[130]
Exhibits “13-E, “14-G,” “15-D,” and “17-D,” defendants’ folder of
exhibits, pp. 65-66, 72-73, 77-78, 81-82.
[131]
Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383, 396
(2000).
[132]
Exhibit “38,” defendants’ folder of exhibits, pp. 109-110.
[133] Exhibit “K-1,” plaintiff’s folder of exhibits, 54-55.
[134] Revised Rules of Court, Rule 131, Section 3(u).
[135]
Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763
(1998).
[136]
Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes,
records, Vol. I, p. 310; Order, dated 2 September 1988, id. at 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
[137]
Security Bank & Trust Co. v. Triumph Lumber and Construction
Corporation, 361 Phil. 463, 477 (1999).
[138] Revised Rules of Court, Rule 131, Section 3(e).
[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 –chanroblesvirtualawlibrary
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.
[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).
[141] The General Banking Law of 2000, Section 2.
[142]
Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948 (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.
[145]
Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995 (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 (1999).
[150] ABS-CBN Broadcasting Corporation v. Court
of Appeals, 361 Phil. 498, 531-532 (1999); Tierra International
Construction Corp. v. National Labor Relations Commission, G.R. 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.
|