Rivera v Spouses Chua
FACTS:
The parties were friends and kumpadres for a long time already. Rivera obtained a loan from the
Spouses Chua evidenced by a Promissory Note.
In October 1998, almost three years from the date of payment stipulated in the promissory note, Rivera,
as partial payment for the loan, issued and delivered to the Spouses Chua, as payee, a check numbered
012467, dated 30 December 1998, drawn against Rivera’s current account with the Philippine
Commercial International Bank (PCIB) in the amount of P25,000.00.
On 21 December 1998, the Spouses Chua received another check presumably issued by Rivera, likewise
drawn against Rivera’s PCIB current account, numbered 013224, duly signed and dated, but blank as to
payee and amount. Ostensibly, as per understanding by the parties, PCIB Check No. 013224 was issued
in the amount of P133,454.00 with “cash” as payee. Purportedly, both checks were simply partial
payment for Rivera’s loan in the principal amount of P120,000.00.
Upon presentment for payment, the two checks were dishonored for the reason “account closed.”
As of 31 May 1999, the amount due the Spouses Chua was pegged at P366,000.00 covering the principal
of P120,000.00 plus five percent (5%) interest per month from 1 January 1996 to 31 May 1999.
The Spouses Chua alleged that they have repeatedly demanded payment from Rivera to no avail.
Because of Rivera’s unjustified refusal to pay, the Spouses Chua were constrained to file a suit on 11
June 1999. The case was raffled before the MeTC, Branch 30, Manila and docketed as Civil Case No.
163661.
In his Answer with Compulsory Counterclaim, Rivera countered that: (1) he never executed the subject
Promissory Note; (2) in all instances when he obtained a loan from the Spouses Chua, the loans were
always covered by a security; (3) at the time of the filing of the complaint, he still had an existing
indebtedness to the Spouses Chua, secured by a real estate mortgage, but not yet in default; (4) PCIB
Check No. 132224 signed by him which he delivered to the Spouses Chua on 21 December 1998, should
have been issued in the amount of only P1,300.00, representing the amount he received from the
Spouses Chua’s saleslady; (5) contrary to the supposed agreement, the Spouses Chua presented the
check for payment in the amount of P133,454.00; and (6) there was no demand for payment of the
amount of P120,000.00 prior to the encashment of PCIB Check No. 0132224.
In the main, Rivera claimed forgery of the subject Promissory Note and denied his indebtedness
thereunder.
ISSUES:
1. Whether the instrument is considered as a negotiable instrument
RULING:
No. the Promissory Note executed as evidence of loan does not fall under Negotiable Instruments Law.
The instrument is still governed by the Civil Code as to interpretation of their obligations. The Supreme
Court held that the Instrument was not able to meet the requisites laid down by Section 1 of the
Negotiable Instruments Law as the instrument was made out to specific persons, herein respondents,
the Spouses Chua, and not to order or to bearer, or to the order of the Spouses Chua as payees.
However, even if Rivera’s Promissory Note is not a negotiable instrument and therefore outside the
coverage of Section 70 of the NIL which provides that presentment for payment is not necessary to
charge the person liable on the instrument, Rivera is still liable under the terms of the Promissory Note
that he issued.
Article 1169 of the Civil Code explicitly provides that the demand by the creditor shall not be necessary
in order that delay may exist when the obligation or the law expressly so declare. The clause in the
Promissory Note containing the stipulation of interest which expressly requires the debtor (Rivera) to
pay a 5% monthly interest from the “date of default” until the entire obligation is fully paid for. The
parties evidently agreed that the maturity of the obligation at a date certain, 31 December 1995, will
give rise to the obligation to pay interest.
