RODRIGO RIVERA vs. SPS.

SALVADOR AND VIOLETA CHUA

G.R. No. 184458 | Jan. 14, 2015 | Perez, J.

Facts:

Petitioner Rivera obtained a loan from Respondent Spouses Chua in the amount of P120,000, and the
same was evidenced by a promissory note to be paid on the December 31, 1995, with 5% monthly interest
from the date of default until the entire obligation is fully paid for. Three years after the date of payment
stipulated in the promissory note, Rivera, in partial payment of the loan, issued two checks drawn against
his current account with the Philippine Commercial International Bank (PCIB). The first check stipulated the
Spouses Chua as payee, but the second check was payable to cash. Upon presentment of the checks,
however, both were dishonored for the reason account closed. The Spouses Chua then demanded
payment from Rivera, but because of the latters unjustified refusal to comply, a complaint for the collection
of a sum of money was filed before the MeTC.

In Riveras Answer, he claimed that he did not execute the subject promissory notes and claims forgery of
the same, denying his indebtness thereunder. The MeTC, upon further examination and comparison of the
signature of Rivera on the promissory note and other several documents, ruled in favor of the Spouses
Chua, ordering Rivera to pay respondents. The RTC, likewise ruled in favor of the Spouses Chua but
deleting the award of attorneys fees. It was noted that both trial courts found the promissory notes as
authentic and bore genuine signatures of Rivera.

Peitioner Rivera now comes before the Court Appeals which affirmed Riveras liability under the promissory
note, but reducing the interest on the loan. Hence, this petition. Rivera argues that the promissory notes
were not signed by him and was forged, hence, he could not be held liable as the said promissory note
became wholly inoperative against him. He further argues that even assuming the validity of the promissory
note, demand was still necessary for him to be in delay, hence, his liability. Rivera also argues that the CA
erred in applying Sec. 70 if the Negotiable Instruments Law (NIL) which states that presentment for payment
is not necessary for one to be liable under the instrument.

Issue/s:

(1) Whether or not Sec. 70 of the NIL is applicable

(2) Whether or not demand is necessary for Rivera to be held liable

Ruling/s:

(1) No. The subject promissory note is not a negotiable instrument under Sec. 1 of the NIL. The said
promissory note was made out to the Spouses Chua, and not to order or to bearer, or to the order
of the Spouses Chua as payees. Sec. 1 (d) specifically provides that for one to be considered a
negotiable instrument, the said instrument must be payable to order or to bearer. Since there was
no compliance to the requirements of the NIL, Sec. 70 cannot be applied to the present case.
(2) No. Demand is still not necessary as the subject promissory note specifically states when the debtor
shall be considered in delay. This renders the note due and demandable at the time the debtor fails
to comply with what was incumbent upon him, in this case, Riveras failure to pay the amount due
to the Spouses Chua.