Rodrigo Rivera Vs.
Spouses Salvador C. Chua and Violeta S. Chua/Spouses Salvador C. Chua and
Violeta S. Chua Vs. Rodrigo Rivera
G.R. Nos.
184458/184472. January 14, 2015
J. Perez (Commercial
Law)
A negotiable promissory note within the meaning of this Act
is an unconditional promise in writing made by one person to another, signed by
the maker, engaging to pay on demand, or at a fixed or determinable future
time, a sum certain in money to order or to bearer. Where a note is drawn to
the maker’s own order, it is not complete until indorsed by him.
FACTS:
Petitioner Rodrigo Rivera obtained a load from his friends
Spouses Salvador and Violeta Chua:
PROMISSORY
NOTE
120,000.00
FOR VALUE
RECEIVED, I, RODRIGO RIVERA promise to pay spouses SALVADOR C. CHUA and VIOLETA
SY CHUA, the sum of One Hundred Twenty Thousand Philippine Currency (120,000.00)
on December 31, 1995.
It is
agreed and understood that failure on my part to pay the amount of (120,000.00)
One Hundred Twenty Thousand Pesos on December 31, 1995. (sic) I agree to pay
the sum equivalent to FIVE PERCENT (5%) interest monthly from the date of
default until the entire obligation is fully paid for.
x x x x
In October 1998, Rivera issued and delivered to the Spouses
Chua, as payee, a check numbered 012467, dated 30 December 1998, in the amount
of 25,000.00 and on 21 December 1998,
another check numbered 013224, duly signed and dated, but blank as to payee.
The second check was issued, as per understanding by the parties, n the amount
of 133,454.00 with “cash” as payee. Both checks were dishonored for the reason
“account closed.”
Due to Rivera’s unjustified refusal to pay, respondents were
constrained to file a suit on 11 June 1999.
In his Answer with Compulsory Counterclaim, Rivera
countered, among others, that the subject Promissory Note was forged and that
here was no demand for payment of the amount of 120,000.00 prior to the
encashment of PCIB Check No. 0132224. Respondents presented documentary and
oral evidence of NBI Senior Document Examiner Antonio Magbojos who concluded
that the questioned signature appearing in the Promissory Note and the Rivera’s
specimen signatures on other documents written by one and the same person.
The MeTC ruled in Spouses Chua’s favor. On appeal, the RTC
affirmed the MeTC decision but deleted the award of attorney’s fees. The CA
also affirmed Rivera’s liability under the Promissory Note but reduced the
imposition of interest on the loan from 60% to 12% per annum.
Both parties appealed before the SC. Respondent’s petition
for review on certiorari was denied for failure to show any reversible on the
CA ruling concerning the correct rate of interest on Rivera’s indebtnesses
under the Promissory Note. Rivera continued to deny that he executed the
Promissory Note and alleged that the Spouses Chua “never demanded payment for
the loan nor interest thereof (sic) from [Rivera] for almost four (4) years
from the time of the alleged default in payment.
ISSUES:
1. Whether the CA erred in ruling that there was a valid
promissory note.
2. Whether the promissory note is negotiable instrument,
thus the Negotiable Instruments Law (NIL) applies to this case.
3. Whether Rivera is still liable under the terms of the
Promissory Note assuming that it is not a negotiable instrument.
4. Whether the CA erred in reducing the interest rate from
60% to 12% per annum.
HELD:
1. Yes.
First, [the court] cannot give credence to such a naked
claim of forgery over the testimony of the National Bureau of Investigation
(NBI) handwriting expert on the integrity of the promissory note.
Indeed, Rivera had the burden of proving the material
allegations which he sets up in his Answer to the plaintiff’s claim or cause of
action, upon which issue is joined, whether they relate to the whole case or
only to certain issues in the case.
In this case, Rivera’s bare assertion is unsubstantiated and
directly disputed by the testimony of a handwriting expert from the NBI. While it
is true that resort to experts is not mandatory or indispensable to the
examination or the comparison of handwriting, the trial courts in this case, on
its own, using the handwriting expert testimony only as an aid, found the
disputed document valid.
In all, Rivera’s evidence or lack thereof consisted only of
a barefaced claim of forgery and a discordant defense to assail the
authenticity and validity of the Promissory Note. Although the burden of proof
rested on the Spouses Chua having instituted the civil case and after they
established a prima facie case against Rivera, the burden of evidence shifted
to the latter to establish his defense. Consequently, Rivera failed to
discharge the burden of evidence, refute the existence of the Promissory Note
duly signed by him and subsequently, that he did not fail to pay his obligation
thereunder. On the whole, there was no question left on where the respective
evidence of the parties preponderated—in favor of plaintiffs, the Spouses Chua.
2. No. The subject promissory note is not a negotiable
instrument and the provisions of the NIL do not apply to this case. Section 1
of the NIL requires the concurrence of the following elements to be a
negotiable instrument:
(a)It must be in writing and signed by
the maker or drawer;
(b)Must contain an unconditional
promise or order to pay a sum certain in money;
(c)Must be payable on demand, or at a
fixed or determinable future time;
(d)Must be payable to order or to
bearer; and
(e)Where the instrument is addressed to
a drawee, he must be named or otherwise indicated therein with reasonable
certainty
On the other hand, Section 184 of the NIL defines what
negotiable promissory note is:
SECTION
184. Promissory Note, Defined. – A negotiable promissory note within the meaning
of this Act is an unconditional promise in writing made by one person to
another, signed by the maker, engaging to pay on demand, or at a fixed or
determinable future time, a sum certain in money to order or to bearer. Where a
note is drawn to the maker’s own order, it is not complete until indorsed by
him.
The Promissory Note in this case is 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.
3. Yes, 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.
The Promissory Note is unequivocal about the date when the
obligation falls due and becomes demandable—31 December 1995. As of 1 January
1996, Rivera had already incurred in delay when he failed to pay the amount of 120,000.00
due to the Spouses Chua on 31 December 1995 under the Promissory Note
Article 1169 of the Civil Code explicitly provides:
Art. 1169. Those obliged to deliver or
to do something incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary
in order that delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the
circumstances of the obligation it appears that the designation of the time
when the thing is to be delivered or the service is to be rendered was a
controlling motive for the establishment of the contract; or
(3) When demand would be useless, as
when the obligor has rendered it beyond his power to perform.
In reciprocal obligations, neither
party incurs in delay if the other does not comply or is not ready to comply in
a proper manner with what is incumbent upon him. From the moment one of the
parties fulfills his obligation, delay by the other begins.
There are four instances when demand is not necessary to
constitute the debtor in default: (1) when there is an express stipulation to
that effect; (2) where the law so provides; (3) when the period is the
controlling motive or the principal inducement for the creation of the
obligation; and (4) where demand would be useless. In the first two paragraphs,
it is not sufficient that the law or obligation fixes a date for performance;
it must further state expressly that after the period lapses, default will
commence.
The date of default under the Promissory Note is 1 January
1996, the day following 31 December 1995, the due date of the obligation. On
that date, Rivera became liable for the stipulated interest which the
Promissory Note says is equivalent to 5% a month. In sum, until 31 December
1995, demand was not necessary before Rivera could be held liable for the
principal amount of 120,000.00. Thereafter, on 1 January 1996, upon default,
Rivera became liable to pay the Spouses Chua damages, in the form of stipulated
interest.
The liability for damages of those who default, including
those who are guilty of delay, in the performance of their obligations is laid
down on Article 1170 of the Civil Code.
Corollary thereto, Article 2209 solidifies the consequence
of payment of interest as an indemnity for damages when the obligor incurs in
delay:
Art.
2209. If the obligation consists in the
payment of a sum of money, and the debtor incurs in 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 stipulation, the legal
interest, which is six percent per annum.
4. No.
At the time interest accrued from 1 January 1996, the date
of default under the Promissory Note, the then prevailing rate of legal
interest was 12% per annum under Central Bank (CB) Circular No. 416 in cases
involving the loan or forbearance of money. Thus, the legal interest accruing
from the Promissory Note is 12% per annum from the date of default on 1 January
1996.
However, the 12% per annum rate of legal interest is only
applicable until 30 June 2013, before the advent and effectivity of Bangko
Sentral ng Pilipinas (BSP) Circular No. 799, Series of 2013 reducing the rate
of legal interest to 6% per annum.
Pursuant to our ruling in Nacar v.
Gallery Frames, BSP Circular No. 799
is prospectively applied from 1 July 2013.
In short, the applicable rate of legal interest from 1 January 1996, the
date when Rivera defaulted, to date when this Decision becomes final and
executor is divided into two periods reflecting two rates of legal interest:
(1) 12% per annum from 1 January 1996 to 30 June 2013; and (2) 6% per annum
FROM 1 July 2013 to date when this Decision becomes final and executory.
