Rivera v.
Chua
GR 184458 | January 14, 2015
Petitioner: Rodrigo Rivera
Respondent: Sps. Salvador and Violeta Chua
Nature: consolidated petitions for review on certiorari under Rule 45, ROC
- Case for a collection of a sum of money due a promissory note
Ponente: Perez, J.
Topic: Introduction – 7. Applicability of NIL
FACTS
 All 3 lower courts upheld validity and authenticity of promissory note as
duly signed by obligor Rodrigo Rivera (Rodrigo)1
 Rodrigo persists: no valid promissory note and questions lower courts
 Sps. Chua take exception to appellate court’s reduction of stipulated
interest rate (footnote) from 60% to 12% per annum
- - -
 Parties were friends since 1973, Rodrigo and Salvador are kumpadres
o Rodrigo is the former godfather of Sps. Chua’s son
 (Feb 24, 95) Loan from Sps. Chua to Rodrigo:
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
(P120,000.00) on December 31, 1995.
It is agreed and understood that failure on my part to pay
the amount of (P120,000.00) 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.
1
appellate court modified the trial courts’ consistent awards: (1) the stipulated
interest rate of sixty percent (60%) reduced to twelve percent (12%) per annum
computed from the date of judicial or extrajudicial demand, and (2) reinstatement
2
of the award of attorney’s fees also in a reduced amount of P50,000.00.
Should this note be referred to a lawyer for collection, I
agree to pay the further sum equivalent to twenty percent
(20%) of the total amount due and payable as and for
attorney’s fees which in no case shall be less than
P5,000.00 and to pay in addition the cost of suit and other
incidental litigation expense.
Any action which may arise in connection with this note
shall be brought in the proper Court of the City of Manila.
Manila, February 24, 1995[.]
(SGD.) RODRIGO RIVERA
 (Oct 98)2 Payee Rodrigo issued and delivered partial payment via check
number 012467 dated Dec 30, 1998 drawn against current account with
PCIB for Php 25k
o Checks were dishonored because “account closed”
 As of May 31, 99 amount due was Php 366k covering principal + 5%
monthly interest from Jan 96’ to May 99’
 Sps Chua alleged that they have repeatedly demanded payment to no avail
o (June 11, 99) Filed suit – Manila MeTC
 Rodrigo’s Answer with Compulsory Counterclaim:
1) He never executed promissory note
2) Loans obtained from Chua’s were always covered by a security
3) When complaint was filed, he had an existing indebtedness to Chua’s
secured by a real estate mortgage (not yet in default)
4) He signed PCIB Check 132224 and delivered to Chua’s on Dec 21, 1998
– should have been issued Php 1,300 only for amount received from
Chua’s saleslady
5) Contrary to agreement, Chua’s presented check for payment of Php
133, 454
6) No demand for payment of Php 120k prior to encashment of PCIB
Check 0132224
o Claimed forgery of promissory note and denied indebtedness
 MeTC: in favor of Spouses Chua and found promissory note as authentic
and validly signed by Rivera
almost 3 yrs from date of stipulated payment
 o Chua’s presented documentary and oral evidence (their
testimonies and NBI Document Examiner Magbojos)
 By order of MeTC, Magbojos examined signatures in
promissory note and compared it to several documents –
concluded it was by one and the same Rodrigo and
prepared Question Document Report (Jan 8, 2001)
o Rivera testified:
 He and Salvador are “kumpadres”
 Obtained loan in May 1998 and executed a real estate
mortgage over parcel of land in Salvador’s favor as
collateral
 Aside from this loan, he borrowed Php 25k and issued
PCIB Check 126407 on Dec 30, 98
 Expressly denied execution of promissory note dated Feb
24, 95 and that signature was not his
 Salvador’s claim that PCIB Check 0132224 was partial
payment for promissory note is not true
 Delivered check to him with blank space for
amount as they agreed that it would be for Php
1,300 which he owed
 (Dec 29, 98) Chua called him and said he wrote
Php 133, 454 instead of 1,300
 Rebut Magbojos that signature in promissory note was
not his and he didn’t execute it
 RTC: affirmed MeTC but deleted award for attorney’s fees to Spouses Chua
 CA: affirmed Rivera’s liability under promissory note
o Reduced interest from 60% to 12% per annum
o Reinstated attorney’s fees in favor of Chua’s
 Petition for Review on Certiorari
ISSUE/s and RATIO
1) W/N CA erred in upholding RTC and MeTC that promissory note was
valid. No, Court cannot give credence to such naked claim of forgery over
testimony of NBI handwriting expert on integrity of promissory note.
 Rivera offers no clear and convincing evidence that signature was forged
o only said that it varies from his usual signature
o he makes a confusing defense that he obtained loans from Chua’s
and that they allowed him almost 4 years before demanding
loan’s payment under promissory note
 Fact of forgery cannot be presumed but must be proved by clear, positive
and convincing evidence
o Bare denial will not suffice to overcome positive value of
promissory note and NBI witness
o Basic rule in civil cases: party having burden of proof must
establish his case by preponderance of evidence - “evidence
which is of greater weight, or more convincing than that which is
offered in opposition to it.”
o Chua’s have establish prima facie case in their favor, shifting
burden to Rivera to prove allegation of forgery
 (Court disagrees) Rivera: if promissory note exists, it’s beyond logic for
money lender to extend another loan to May 4, 1998 secured by a real
estate mortgage when he was already in default and hadn’t been paying
interest for loan incurred in Feb 1995
o Because they were “kumpadres”, he was allowed another loan
and nothing inconsistent with successive loan accommodations
(one secured by real estate mortgage and other by promissory
note)
 Friendship also explains why he was allowed a substantial
amount of time before demand of obligation was made
for promissory note
2) [TOPIC] W/N CA erred in holding that demand was no longer necessary
and in applying NIL. Yes, (1) demand not necessary for delay to exist since
contract expressly declares and (2) promissory note is not a negotiable
instrument and NIL Provisions don’t apply but Rivera’s still liable.
 Rivera: demand not necessary to charge him liable and court erred in
applying Section 70, NIL3
 (Sec 1, NIL) requires concurrence of the ff 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
3
SECTION 70. Effect of Want of Demand on Principal Debtor. — Presentment for
payment is not necessary in order to charge the person primarily liable on the
instrument; but if the instrument is, by its terms, payable at a special place, and he
is able and willing to pay it there at maturity, such ability and willingness are
equivalent to a tender of payment upon his part. But, except as herein otherwise
provided, presentment for payment is necessary in order to charge the drawer and
indorsers.
 (e) Where the instrument is addressed to a drawee, he
must be named or otherwise indicated therein with
reasonable certainty
 (Sec 184) Defines Negotiable Promissory Note:
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.
 ITC, promissory note is made out specifically to Sps. Chua and not to
order or bearer or order of Chua’s as payees
 Rivera’s still liable for his issuance of promissory note even if it’s not a
negotiable instrument covered under Sec. 70 which provides that
presentment for payment is not necessary to charge person liable on
instrument
o Unequivocal on date of when obligation becomes due and
demandable (Dec 31, 95)
 Incurred delay as of Jan 1, 1996 when he failed to pay
Php 120k due Dec 31, 1995 under promissory note
o (Art 1169, NCC) 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
 4 instances when demand not necessary to constitute debtor in default:
1) when there is an express stipulation to that effect;
2) law so provides;
3) period is the controlling motive or the principal inducement for the
creation of the obligation; and
4) where demand would be useless
 Promissory note contained stipulation that expressly required Rivera to
pay 5% monthly from default date until entire obligation is fully paid
o Agreed maturity date of obligation which gives rise to interest is
Dec 31, 1995
o Date of default: Jan 1, 1996 = became liable for interest
o Demand was not necessary until Dec 31 to be liable for Php 120k
 (Art 2209, NCC) If the obligation consists in the payment of a sum of
money, and the debtor incurs in delay, the indemnity for damages 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
o Rivera incurred delay when he failed to pay on Dec 31 and
promissory note provided for indemnity for damages upon default
of 5% monthly interest from default
 Stipulation is not a penal clause under Art 1226, NCC since it’s designed as
payment of interest provided by law in default of stipulation
 Court: interest rate is of 5% / month of 60% per annum on top of legal
interest and attorney’s fees is tantamount to being illegal, iniquitous and
unreasonable
o Rates are illegal if they are unconscionable and Court is allowed to
temper rates
o Also, issue on interest is res judicata
 Prevailing rate of legal interest on date of default was
12% per annum under CB 416 in cases involving
forebearance of money
1. 12% per annum from June 11, 1999 (date of demand) to June
30, 2013
2. 6 % per annum from July 1, 2013 to final decision
o Based on (Art 2212, NCC)
3) W/N CA erred in awarding attorney’s fees despite it not having basis in
fact and law and Chua’s didn’t appeal from RTC decision deleting
attorney’s fees award. Court agrees with reduction but not rationication of
appellate court that attorney’s fees are in the nature of liquidated damages
or penalty.
HELD: Petition DENIED. CA modified. Rivera ordered to pay Sps. Chua
(1) principal amount of Php 120k
(2) legal interest of 12% per annum of principal amount reckoned from 1
January 1996 until 30 June 2013
(3) legal interest of 6% per annum of the principal amount form 1 July 2013 to
date when Decision becomes final and executory
(4) 12% per annum applied to the total of pars 2 and 3 from 11 June 1999,
date of judicial demand, to 30 June 2013, as interest due earning legal
interest
(5) 6% per annum applied to total amount of pars 2 and 3 from 1 July 2013 to
date when Decision becomes final and executor, as interest due earning
legal interest
(6) Attorney’s fees in the amount of P50k; and
(7) 6% per annum interest on total monetary awards from finality of Decision
until full payment
[to be continued]