PINEDA VS DELA RAMA

FACTS OF THE CASE:

Dela Rama is a practising lawyer whose services were retained by Pineda for the
purpose of making representations with the chairman and general manager of the
National Rice and Corn Administration (NARIC) to stop or delay the institution of
criminal charges against Pineda who allegedly misappropriated 11,000 cavans of palay
deposited at his ricemill in Concepcion, Tarlac. Subsequently, Dela Rama filed a suit to
collect a P9,300.00 pesos loan, as evidenced by the matured promissory note signed by
Pineda. Dela Rama alleged that Pineda borrowed the said amount from him.

However, Pineda denied the allegation of Dela Rama that he borrowed the said
amount. Pineda alleged that he signed the promissory note because Dela Rama made
him to believe that the amount of 9,300 was given to the General Manager of NARIC
and other officials to “grease their palms” and delay the criminal charges against him.
Pineda basically don’t want to pay the amount since he found out that nothing from the
9,300 pesos that Dela Rama was collecting reached the hands of the General Manager
and that, no criminal case was contemplated nor filed against him.

The RTC ruled that the promisory note stating that the purpose for which the
amount was intended was illegal and ruled in favour of Pineda. On appeal, the CA
reversed the ruling of RTC citing Sec 24 of the Negotiable Instruments Law.

ISSUE:

WON the promissory note was valid

RULING:

NO. The promissory note was invalid. The Court agreed with the RTC that the
allegations of Pineda were more reliable and logical. It agreed that the amount of
9,300.00 was not borrowed by Pineda instead; it is supposed to be used to grease the
hands of the NARIC officials. Hence, the promissory note was executed for an illegal
consideration.
Articles 1409 and 1412 of the Civil Code in part, provide:
Art. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good
customs, public order and policy;
 Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may
recover what he has given by virtue of the contract, or demand the performance
of the other's undertaking.
Whether or not the supposed cash advances reached their destination is no
longer material. The consideration for the promissory note to influence public officers in
the performance of their duties is contrary to law and public policy. The promissory note
is void ab initio and no cause of action for the collection cases can arise from it.