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(Citibank, N.A. v. Sabeniano, G.R. No.

156132, [October 16, 2006], 535 PHIL 384-480)

FACTS: Modesta Sabeniano is a client of Citibank and FNCB Finance. On February 1978, Sabeniano
obtained a loan of Php 200,000 from Citibank. This loan was followed with several other loans – some
were paid, while some were not. Those that were not paid upon maturity were rolled over, reflecting a
total unpaid loan of Php 1,069,847.40 as of September 1979.

These loans were secured by Sabeniano’s money market placements with FNCB Finance through a Deed
of Assignment plus a Declaration of Pledge which states that all present and future fiduciary placements
held in her personal and/or joint name with Citibank Switzerland, will secure all claims that Citibank may
have or, in the future, acquire against her.

The Deeds of Assignment were duly notarized, while the Declaration of Pledge was not notarized and
Citibank’s copy was undated, while that of Sabeniano bore the date, September 24, 1979.

Since Sabeniano failed to pay her obligations to Citibank, the latter sent demand letters to request
payment. Her total unpaid loan initially amounted to Php 2,123,843.20 (inclusive of interests).

Still failing to pay, Citibank executed the Deeds of Assignment and used the proceeds of Sabeniano’s
money market placement from FNCB Finance which totaled Php 1,022,916.66 and her deposits with
Citibank which totaled Php 31,079.14 to set-off her loan.

This reduced the unpaid balance to Php 1,069,847.40 as previously mentioned. Since the loan remains
unpaid, Citibank proceeded to execute the Declaration of Pledge and remitted a total of $149,632.99
from Sabeniano’s Citibank-Geneva accounts to off-set the loan.

Sabeniano then filed a complaint against Citibank for damages and specific performance (for proper
accounting and return of the remitted proceeds from her personal accounts). She also contended that
the proceeds of 2 promissory notes (PN) from her money market placements with Citibank were rolled
over or reinvested into the petitioner bank, and these should also be returned to her.

Regarding the execution of the pledge, the RTC declared this illegal, null and void. Citibank was ordered
to return the $149,632.99 to Sabeniano’s Citibank-Geneva account with a legal interest of 12% per
annum. The RTC also ordered Sabeniano to pay her outstanding loan to Citibank without interests and
penalty charges.

Both parties appealed to the CA which affirmed the RTC’s decision, but further ruled entirely in favor of
Sabeniano – holding that Citibank failed to establish her indebtedness and that all the executed deeds
should be returned to her account. The case has now reached the Supreme Court.

ISSUE: Whether or not Citibank’s execution of deeds and pledge to off-set Sabeniano’s loan was valid
and legal.

HELD: The Supreme Court reversed the CA’s findings regarding Sabeniano’s Citibank loan as this was
properly documented and sufficient in evidence. Thus, the execution of deeds was valid, especially that
the agreement was duly notarized, signed and prepared in accordance with the law.
The court also ordered Citibank to return the amount of P318,897.34 and P203,150.00 plus 14.5% per
annum to Sabeniano. This is the total amount from the 2 PNs which were executed despite being
reinvested in said bank. The bank was also ordered to pay moral damages of P300,000, exemplary
damages for P250,000, attorney’s fees of P200,000.

The SC however affirmed the RTC’s decision regarding the pledge. Being a separate entity, Citibank
cannot exercise automatic remittance from Sabeniano’s Citibank Geneva account to off-set her
outstanding loan.

The court also noted that the pledge was filled out irregularly – it was not notarized and Citibank’s copy
bore no date. The original copy was not also produced in court.

Regarding Sabeniano’s obligation, the Supreme Court affirmed RTC’s decision and ordered her to pay
the remaining balance of her loan which amounts to P1,069,847.40 as of 5 September 1979. These loans
continue to earn interest based on the maturity date that were agreed and stipulated upon by the

Disagreeing in the foregoing findings, the Court of Appeals stressed, in its Decision in CA-G.R. CV No.
51930, dated 26 March 2002, "that the ponente of the herein assailed Decision is not the Presiding
Judge who heard and tried the case." 28 This brings us to the question of whether the fact alone that
the RTC Decision was rendered by a judge other than the judge who actually heard and tried the case is
sufficient justification for the appellate court to disregard or set aside the findings in the Decision of the
court a quo?

This Court rules in the negative.

What deserves stressing is that, in this jurisdiction, there exists a disputable presumption that the RTC
Decision was rendered by the judge in the regular performance of his official duties. While the said
presumption is only disputable, it is satisfactory unless contradicted or overcame by other evidence. 29
Encompassed in this presumption of regularity is the presumption that the RTC judge, in resolving the
case and drafting his Decision, reviewed, evaluated, and weighed all the evidence on record. That the
said RTC judge is not the same judge who heard the case and received the evidence is of little
consequence when the records and transcripts of stenographic notes (TSNs) are complete and available
for consideration by the former.

In People v. Gazmen, 30 this Court already elucidated its position on such an issue —

Accused-appellant makes an issue of the fact that the judge who penned the decision was not the judge
who heard and tried the case and concludes therefrom that the findings of the former are erroneous.
Accused-appellant's argument does not merit a lengthy discussion. It is well-settled that the decision of
a judge who did not try the case is not by that reason alone erroneous. DAEaTS

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

Irrefragably, by reason alone that the judge who penned the RTC Decision was not the same judge who
heard the case and received the evidence therein would not render the findings in the said Decision
erroneous and unreliable. While the conduct and demeanor of witnesses may sway a trial court judge in
deciding a case, it is not, and should not be, his only consideration. Even more vital for the trial court
judge's decision are the contents and substance of the witnesses' testimonies, as borne out by the TSNs,
as well as the object and documentary evidence submitted and made part of the records of the case.