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FIRST DIVISION
- versus -
SERENO, CJ.,
Chairperson,
LEONARDO-DE CASTRO,
-versus- BERSAMIN,
PEREZ, and
PERLAS-BERNABE, JJ.
DECISION
PEREZ,J.:
Decision 2 G.R. Nos. 184458 & 184472
In G.R. No. 184458, Rivera persists in his contention that there was
no valid promissory note and questions the entire ruling of the lower courts.
On the other hand, petitioners in G.R. No. 184472, Spouses Salvador and
Violeta Chua (Spouses Chua), take exception to the appellate courts
reduction of the stipulated interest rate of sixty percent (60%) to twelve
percent (12%) per annum.
The parties were friends of long standing having known each other
since 1973: Rivera and Salvador are kumpadres, the former is the godfather
of the Spouses Chuas son.
PROMISSORY NOTE
120,000.00
1
Rollo in G.R. No. 184458, pp. 52-62; Penned by Associate Justice Ricardo R. Rosario with
Associate Justices Mariano C. Del Castillo (now a member of this Court) and Arcangelita
Romilla-Lontok concurring.
2
Id. at 152-156; Penned by Presiding Judge Eduardo B. Peralta, Jr.
3
Rollo in G.R. No. 184472, pp. 52-56; Penned by Presiding Judge Nina G. Antonio-Valenzuela.
Decision 3 G.R. Nos. 184458 & 184472
Any action which may arise in connection with this note shall be
brought in the proper Court of the City of Manila.
Upon presentment for payment, the two checks were dishonored for
the reason account closed.
As of 31 May1999, the amount due the Spouses Chua was pegged at
366,000.00 covering the principal of 120,000.00 plus five percent (5%)
interest per month from 1 January 1996 to 31 May 1999.
4
Rollo in G.R. No. 184458, p. 76.
Decision 4 G.R. Nos. 184458 & 184472
xxxx
5
Id. at 53-54.
Decision 5 G.R. Nos. 184458 & 184472
6
Rollo in G.R. No. 184472, pp. 53-54.
7
Id. at 56.
Decision 6 G.R. Nos. 184458 & 184472
Both trial courts found the Promissory Note as authentic and validly
bore the signature of Rivera.
Thus, what remains for our disposition is G.R. No. 184458, the appeal
of Rivera questioning the entire ruling of the Court of Appeals in CA-G.R.
SP No. 90609.
Rivera points out 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 [i.e., after December 31,
1995].13
On the issue of the supposed forgery of the promissory note, we are
not inclined to depart from the lower courts uniform rulings that Rivera
indeed signed it.
11
Rollo in G.R. No. 184472, p. 13
12
Id. at p. 103.
13
Rollo in G.R. No. 184458, p. 32.
Decision 8 G.R. Nos. 184458 & 184472
Rivera offers no evidence for his asseveration that his signature on the
promissory note was forged, only that the signature is not his and varies
from his usual signature. He likewise makes a confusing defense of having
previously obtained loans from the Spouses Chua who were money lenders
and who had allowed him a period of almost four (4) years before
demanding payment of the loan under the Promissory Note.
It is a basic rule in civil cases that the party having the burden of
proof must establish his case by preponderance of evidence, which simply
means evidence which is of greater weight, or more convincing than that
which is offered in opposition to it.
16
Durban Apartments Corporation v. Pioneer Insurance and Surety Corporation, G.R. No. 179419,
12 January 2011, 639 SCRA 441, 449.
17
Francisco, Evidence, (3rd Ed. 1996), p. 385.
18
Lorzano v. Tabayag, Jr., G.R. No. 189647, 6 February 2012, 665 SCRA 38, 47.
19
Rollo in G.R. No. 184458, p. 113.
Decision 10 G.R. Nos. 184458 & 184472
We disagree.
Rivera next argues that even assuming the validity of the Promissory
Note, demand was still necessary in order to charge him liable thereunder.
Rivera argues that it was grave error on the part of the appellate court to
apply Section 70 of the Negotiable Instruments Law (NIL).22
20
Id. at 33.
21
De Leon v. Bank of the Philippine Islands, G.R. No. 184565, 20 November 2013.
22
Sec. 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.
Decision 11 G.R. Nos. 184458 & 184472
On the other hand, Section 184 of the NIL defines what negotiable
promissory note is:
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. (Emphasis supplied)
23
Rollo in G.R. No. 184472, p. 76.
Decision 13 G.R. Nos. 184458 & 184472
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 117024 of the Civil Code.
24
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for damages.
Decision 14 G.R. Nos. 184458 & 184472
25
4 Tolentino, Civil Code of the Philippines, p. 260.
26
5 Tolentino, Civil Code of the Philippines, pp. 649-650.
27
Rollo in G.R. No. 184458, pp. 59-61.
Decision 15 G.R. Nos. 184458 & 184472
The appellate court found the 5% a month or 60% per annum interest
rate, on top of the legal interest and attorneys fees, steep, tantamount to it
being illegal, iniquitous and unconscionable.
In this case, the petitions in G.R. Nos. 184458 and 184472 involve an
identity of parties and subject matter raising specifically errors in the
Decision of the Court of Appeals. Where the Court of Appeals disposition
on the propriety of the reduction of the interest rate was raised by the
Spouses Chua in G.R. No. 184472, our ruling thereon affirming the Court of
Appeals is a bar by prior judgment.
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.29 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
28
Agustin v. Sps. Delos Santos, 596 Phil. 630, 642-643 (2009).
29
See Eastern Shipping Lines v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78.
Decision 16 G.R. Nos. 184458 & 184472
As for the legal interest accruing from 11 June 1999, when judicial
demand was made, to the date when this Decision becomes final and
executory, such is likewise divided into two periods: (1) 12% per annum
from 11 June 1999, the date of judicial demand to 30 June 2013; and (2) 6%
per annum from 1 July 2013 to date when this Decision becomes final and
executor.31 We base this imposition of interest on interest due earning legal
interest on Article 2212 of the Civil Code which provides that interest due
shall earn legal interest from the time it is judicially demanded, although the
obligation may be silent on this point.
From the time of judicial demand, 11 June 1999, the actual amount
owed by Rivera to the Spouses Chua could already be determined with
reasonable certainty given the wording of the Promissory Note.32
30
G.R. No. 189871, 13 August 2013.
31
BSP Circular No. 799, Series of 2013 amending BSP Circular No. 905, Series of 1982.
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the
rate allowed in judgments, in the absence of contracts as to such rate or interest, shall be six
percent (6%) per annum.
<http://www.bsp.gov.ph/downloads/regulations/attachments/2013/c799.pdf> visited 11 May
2014.
32
Article 2213 of the Civil Code: Interest cannot be recovered upon unliquidated claims or damages
except when the demand can be established with reasonable certainty.
33
Supra note 30.
Decision 17 G.R. Nos. 184458 & 184472
The total amount owing to the Spouses Chua set forth in this Decision
shall further earn legal interest at the rate of 6% per annum computed from
34
Article 2208 of the Civil Code: In the absence of stipulation, attorneys fees, and expenses of
litigation, other than judicial costs, cannot be recovered, except:
xxxx
(2) when the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
xxxx
35
Based on Article 2212 of the Civil Code: Interest due shall earn legal interest from the time it is
judicially demanded, although the obligation may be silent upon this point.
Decision 19 G.R. Nos. 184458 & 184472
its finality until full payment thereof, the interim period being deemed to be
a forbearance of credit.
SO ORDERED.
WE CONCUR:
~~k~
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
"a~ l.J/
ESTELA M. PERLAS-BERNABE
Associate Justice
Decision 21 G.R. Nos. 184458 & 184472
CERTIFICATION