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7. G.R. No.

156132 October 12, 2006

CITIBANK, N.A. (Formerly First National City Bank) and INVESTORS' FINANCE CORPORATION, doing
business under the name and style of FNCB Finance vs.


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 of petitioner Citibank,
specifically handling money market placements for its clients. Respondent Modesta R. Sabeniano was a
client of both petitioners Citibank and FNCB Finance. Regrettably, respondent filed a Complaint against
petitioners to recover substantial 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.

Petitioners admitted that respondent had deposits and money market placements with them but
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 in its favour. The trial court declared as null and void the setoff effected by the
defendant Bank ordering the refund of US$149,632.99 but also held plaintiff indebted in the amount of
₱1,069,847.40. Both parties appealed the foregoing Decisio. The Court of Appeals affirmed the decision
and again the parties to the case made separate attempts to bring the case before this Court for review.


Whether the fact that the trial judge who rendered the RTC Decision was not the same judge who
heard and tried the case render the said Decision erroneous?


In the course of its trial, the case was presided over by four (4) different RTC judges. It was Judge
Victorio, the fourth judge assigned to the case, who wrote the RTC Decision and made the findings that
the evidence is overwhelming that the plaintiff received the proceeds of the loans evidenced by the
various promissory notes she had signed. 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. In fine, the defendants had established the genuineness and due
execution of the various promissory notes heretofore identified.

What deserves stressing is that, in this jurisdiction, there exists a disputable presumption that the
RTC Decision was rendered by the judge in the regular performance of his official duties. While the said
presumption is only disputable, it is satisfactory unless contradicted or overcame by other
evidence. Encompassed in this presumption of regularity is the presumption that the RTC judge, in
resolving the case and drafting his Decision, reviewed, evaluated, and weighed all the evidence on record.
That the said RTC judge is not the same judge who heard the case and received the evidence is of little
consequence when the records and transcripts of stenographic notes are complete and available for
consideration by the former.

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. 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. Further, the
credibility of witnesses can also be assessed on the basis of the substance of their testimony and the
surrounding circumstances.

Since the genuineness and due execution of promissory notes 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. 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. 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.

Mr. Tan’s deposition, as a former Assistant Vice-President of Citibank was conducted more than
a decade had passed from the time the transactions they were testifying on took place. This Court had
previously recognized the frailty and unreliability of human memory with regards to figures after the lapse
of five years. Taking into consideration that the witness 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 likewise lacked details on the circumstances
surrounding the mode of payment, and the manner and context by which respondent relayed her
instructions to the officers of petitioner Citibank in opening the time deposit accounts.

With respect the right to setoff, respondent secured her foregoing loans with petitioner Citibank
by executing Deeds of Assignment in addition to a declaration of pledge of her money market placements
with petitioner FNCB Finance. Subsequently, a letter was sent notifying respondent of the status of her
loans and the foregoing compensation which petitioner Citibank effected which informed respondent that
she still had a remaining past-due obligation in the amount of ₱1,069,847.40.respondent failed to pay the
amount that petitioner Citibank proceed to off-set the unpaid amount with respondent's other collateral,
particularly, a money market placement in Citibank-Hongkong. Unfortunately a fire gutted the necessary
documents for the present case thus testimonial and documentary evidence were presented to which 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.

Given that a check is more than just an instrument of credit used in commercial transactions for
it also serves as a receipt or evidence for the drawee bank of the cancellation of the said check due to
payment, then, the possession by 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, and that the ordinary course of business has been followed. 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.

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 it do not bear respondent's
signature at the back does not negate deposit thereof in her account. The liability for the lack of
indorsement no longer fall on petitioner Citibank, but on the bank who received the same for deposit, in
this case, BPI Cubao Branch.

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 could 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. While respondent may have extensive experience dealing with banks, it still does not qualify her
as a competent witness on banking procedures and practices.

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 ₱1,920,000.00, 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
when witnesses are 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.

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, to the exclusion of any secondary or substitutionary evidence, except
in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on
the part of the offeror;

(b) When the original is in the custody or under the control of the party against whom the evidence is
offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be examined in
court without great loss of time and the fact sought to be established from them is only the general result
of the whole; and

(d) When the original is a public record in the custody of a public officer or is recorded in a public office.

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
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. 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 never existed, while the PNs in
the second set were merely executed to cover simulated loan transactions. Thus, respondent questioned
the documents as to their existence or execution, or when the former is admitted, as to the purpose for
which the documents were executed, matters which are, undoubtedly, external to the documents, and
which had nothing to do with the contents thereof.

Alternatively, the best evidence rule admits that 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 documents in this case, such as the MCs and letters, were destroyed and, thus,
unavailable for presentation 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.

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. While the Court can take judicial
notice the former case does not constitute a precedent. 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. 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."

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. 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. When a document is assailed on the basis of forgery, the best evidence rule applies. 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.. Without the original document containing the
alleged forged signature, one cannot make a definitive comparison which would establish forgery.
petitioner Citibank failed to comply with the production of the original Declaration of Pledge despite 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 have 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. It is persuaded that petitioner Citibank wilfully suppressed the
presentation of the original document, and takes into consideration the presumption that the evidence
wilfully suppressed would be adverse to petitioner Citibank if produced.