FIRST DIVISION

[G.R. No. 202658. June 17, 2019.]

ALEJANDRO DE LEON , petitioner, vs. CARMENCITA L. RODRIGUEZ ,

respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated June
17, 2019 which reads as follows:
"G.R. No. 202658 (Alejandro De Leon v. Carmencita L. Rodriguez) . — We
reiterate that a valuable consideration in a contract is not limited to money, but refers
to any obligation to give, to do, or not to do in favor of the party who makes the
contract. 1
Respondent Carmencita L. Rodriguez led a complaint 2 for sum of money with
damages against petitioner Alejandro De Leon before Branch 208 of the Regional Trial
Court (RTC) of Mandaluyong City. Respondent alleged that petitioner executed a
promissory note dated November 25, 1998 in her favor, which reads:
For value received, I promise to pay Ms. CARMENCITA L. RODRIGUEZ
the sum of One Million Pesos (P1,000,000.00) payable at Quezon City
within a period of twenty (20) months by installment of not less than Fifty
Thousand Pesos (P50,000.00) to be due on or before January 30, 1999 and
every calendar month thereafter, until fully paid, subject to interest at the rate of
12% per annum on the balance outstanding.
IN WITNESS WHEREOF, I hereunto set my hand this 25th day of
November, 1998 at Mandaluyong City. 3 (Emphasis in the original.)
Petitioner, however, failed to pay his obligation despite repeated demands by
respondent. 4
In his answer with counterclaim, 5 petitioner claimed that he purchased a house
and lot from Citibank, 6 through its real estate arm, the Integrated Credit & Corporate
Services. 7 A year after he completed the construction of a building, petitioner was
informed that the property was actually owned by respondent. 8 Negotiations then
ensued among the parties and Citibank, but they did not reach any agreement.
Subsequently, respondent led an ejectment case against petitioner, but prior to its
resolution, petitioner allegedly vacated the property. 9 The property was eventually sold
to a certain Atadero 1 0 with the help of petitioner. 1 1
Petitioner admitted the existence of the promissory note, but denied receiving
any value for it. He explained that the promissory note was executed to represent
respondent's share in the damages that may be awarded to him in a case he led
against Citibank. 1 2
Respondent testi ed that petitioner offered to buy the property after their
meeting with Citibank fell through. Respondent initially hesitated, but later agreed to
CD Technologies Asia, Inc. © 2020 cdasiaonline.com
 sell petitioner the property, but in addition, he must pay P1 Million for the disturbance
and anxiety respondent suffered. This agreement allegedly brought about the execution
of the promissory note. 1 3
Before the RTC could decide on the case, respondent died on September 26,
2006. She is now represented by her daughter Joelle R. Goudsmit (Goudsmit). 1 4
The RTC ruled in favor of petitioner and dismissed the complaint in its Decision
15 dated September 6, 2007. The RTC noted the testimonies of both parties that
respondent did not give any consideration to petitioner, and thus concluded that on this
fact alone, the promissory note was unenforceable. 1 6 The RTC held further that the
promissory note was actually a contract between the parties which was not, however,
perfected because its enforceability was dependent on a suspensive condition that
petitioner will receive damages from Citibank, which did not happen. Consequently,
there was no obligation to speak of. 1 7
The RTC denied the prayer for damages of both parties on the ground of
damnum absque injuria. 1 8
Respondent appealed to the Court of Appeals (CA) which ruled in her favor. The
fallo of the CA Decision 1 9 dated March 13, 2012 reads:
WHEREFORE , in view of the foregoing premises, the appeal led in this
case is hereby GRANTED . The assailed Decision dated September 6, 2007 of
Branch 208 of the Regional Trial Court of the National Capital Judicial Region in
Mandaluyong City in Civil Case No. MC00-1068 is hereby REVERSED AND
SET ASIDE . Defendant-appellee is ordered to pay to the plaintiff-appellant the
sum of One Million Peso[s][ ](P1,000,000.00) plus the legal rate of six percent
(6%) interest per annum from January 30, 1999 until the amount is fully paid.
SO ORDERED. 20

The CA ruled that based on Section 8, Rule 8 of the Rules of Procedure, as well as
our ruling in Permanent Savings and Loan Bank v. Velarde , 2 1 petitioner's claim that the
promissory note lacked consideration was not an effective denial, but rather an
admission of the existence of the promissory note. 2 2 The CA also ruled that petitioner
failed to overcome the presumption, by preponderance of evidence, that the
promissory note was not supported by any consideration. 2 3
The CA, however, denied respondent's prayer for moral and exemplary damages
on the ground of her failure to prove her entitlement to it. 2 4
Petitioner led a motion for reconsideration but the same was denied. 2 5 Hence,
this petition before us which raises the principal issue of whether petitioner is liable to
respondent under the promissory note.
We deny the petition.
Preliminarily, we rule against the argument that petitioner's deliberate failure to
state that respondent is already deceased and is now represented by her daughter is a
ground for the outright dismissal of his petition.
One of the requirements under Section 4, Rule 45 of the Rules of Court on the
contents of the petition is that the full name of the appealing party as the petitioner and
the adverse party as respondent must be stated. 2 6 Section 5 of the same Rule
provides that failure to comply with the requirements on the contents of the petition
shall be a su cient ground to dismiss the petition. While petitioner, indeed, should have
disclosed the fact of death of respondent and her substitution, we nd that he can
CD Technologies Asia, Inc. © 2020 cdasiaonline.com
 hardly be faulted for failing to name Goudsmit as respondent in this case. We note that
neither the RTC nor the CA ordered the modi cation of the title of the case to include
Goudsmit. 2 7
By analogy, the rationale of our rulings on substantial substitution of legal
representatives or heirs of deceased defendants in cases that survive nds application
here. The underlying reason in making sure that a proper substitution is effected in
those cases is to prevent a denial of due process to the representatives or heirs who
will be bound by the judgment. The formal aspect of such substitution consists of
making the proper changes in the caption of the case. It also includes the substantive
process of letting the substitutes know that they shall be bound by any judgment in the
case and that they should therefore actively participate in the defense of the deceased.
Being the heart of the procedural rule, compliance with the substantive aspect despite
failure to comply with the formal aspect may be considered substantial compliance. 2 8
Here, we nd that there was substantial compliance with the substantive aspect
of the procedural rule by Goudsmit herself. Despite the absence of an order by the trial
court to modify the title of the case, Goudsmit voluntarily appeared before the RTC,
participated in the proceedings, and consequently bound herself to its judgment.
Obviously, as well, she received a copy of the same petition before us through her
counsel. Hence, a dismissal of this case on the sole ground of petitioner's omission to
observe the formal aspect of substitution is unwarranted.
Proceeding now to the crux of the case, we nd petitioner liable under the
promissory note.
A promissory note is an unconditional promise in writing made by one person to
another, signed by the maker, engaging to pay on demand, or at a xed or determinable
future time, a sum certain in money to order or bearer. 2 9 Under Act No. 2031, or the
Negotiable Instruments Law, a promissory note is deemed prima facie to have been
issued for a valuable consideration, and every person whose signature appears thereon
to have become a party thereto for value. 3 0 If there is absence or failure of
consideration, it may be raised as a defense against any person who is not a holder in
due course. 3 1
Petitioner argues that he did not receive any value for the promissory note,
banking on respondent's admission that she did not give him any money. Respondent
mistakenly assumes that value or consideration only pertains to money.
Value refers to any consideration su cient to support a simple contract such as
an antecedent or pre-existing debt. 3 2 We have previously clari ed that based on Article
1350 of the Civil Code, consideration need not be monetary. 3 3 Article 1350 de nes
cause as follows:
Art. 1350. In onerous contracts, the cause is understood to be, for
each contracting party, the prestation or promise of a thing or service by the
other; in remuneratory ones, the service or bene t which is remunerated; and in
contracts of pure beneficence, the mere liberality of the benefactor.
Valuable consideration or value, in general terms, may be some right, interest,
pro t or bene t to the party who makes the contract or some forbearance, detriment,
loss or some responsibility to act, or labor, or service given, suffered or undertaken by
the other side. 3 4 Even a bene t conferred upon a third person, or, to reiterate, a
detriment suffered by the promisee at the instance of the promissor quali es as
sufficient consideration. 3 5
CD Technologies Asia, Inc. © 2020 cdasiaonline.com
 Thus, respondent's admission that she did not give any money to petitioner is not
tantamount to an admission that there was no valuable consideration for the
promissory note. In fact, respondent never asserted that the promissory note was
issued because she gave petitioner a sum of money. What she did assert was that the
promissory note was given as consideration for her willingness to sell the property and
more importantly, for the damages she suffered because of petitioner's unauthorized
occupation of her property. This falls as a valuable consideration under Article 1350
since the promissory note was executed to compensate respondent for the loss or
detriment she suffered because of petitioner.
Furthermore, the presumption both under the Negotiable Instruments Law and
Section 3 (s), 3 6 Rule 131 of the Rules of Court that a promissory note is issued for a
valuable consideration shall stand unless convincing evidence is presented to show the
contrary. 3 7
The determination as to whether petitioner presented convincing evidence is a
question of fact which, as a general rule, we will not entertain. Nevertheless, given the
con icting ndings of fact of the RTC and the CA on this issue, we must review the
same. 3 8
To prove that he did not receive any consideration for the promissory note,
petitioner testi ed that it was only executed to represent respondent's share in the
damages which he may receive from Citibank. He also pointed out her admission that
she did not give him any money. Aside from the parties' testimonies, however,
petitioner did not submit any other evidence to prove his contention. We nd this
damaging to his case.
Petitioner consistently claims that the payment of the amount in the promissory
note was subject to the ful llment of a suspensive condition that damages be awarded
to him in a case he led against Citibank. This alleged condition, however, is not evident
on the face of the promissory note. On the contrary, the promissory note categorically
sets a deadline for its payment. This deadline alone negates petitioner's claim that
payment of the promissory note was conditional.
It is also telling that petitioner's willingness to give respondent a share in the
damages which he may receive from Citibank is in effect, an admission that she is
entitled to remuneration for her troubles.
Petitioner also argues that he was informed that the promissory note was just a
formality; hence, although he was reluctant to do so, he signed it. Petitioner
nonetheless protested the imposition of an interest rate and he was successful in
having it removed. 3 9 This only proves that he was in a position to negotiate the terms
of the promissory note and that he fully understood its implications. It also becomes
strange then that petitioner objected to the interest rate but not to the patent absence
of any provision on the supposed condition for payment. This leads us to no other
conclusion but that this alleged condition was a mere ruse of petitioner to avoid his
obligation to respondent.
Finally, we reiterate that absence or failure of consideration may only be raised as
a defense against a person who is not a holder in due course. Section 52 of the
Negotiable Instruments Law defines who is a holder in due course:
Sec. 52. What constitutes a holder in due course. — A holder in due
course is a holder who has taken the instrument under the following conditions:
a) That it is complete and regular upon its face;
CD Technologies Asia, Inc. © 2020 cdasiaonline.com
 b) That he became the holder of it before it was overdue, and without
notice that it had been previously dishonored, if such was the fact;
c) That he took it in good faith and for value;
d) That at the time it was negotiated to him, he had no notice of any
in rmity in the instrument or defect in the title of the person
negotiating it.
There is a prima facie presumption that every holder is a holder in due course and
he who claims otherwise has the burden of proving the same. 4 0 In this case, petitioner
did not contest the genuineness and due execution of the promissory note. There is
also no question that respondent obtained it before it was overdue and without notice
that it had been previously dishonored. She also had no notice of any in rmity in the
instrument or defect in the title of the petitioner who was negotiating it. As already
established, respondent took the promissory note in good faith and for value. Petitioner
failed to rebut this fact or the presumption in favor of respondent. All told, respondent
is a holder in due course and consequently, petitioner cannot invoke the supposed
absence of consideration against her.
WHEREFORE , the petition is DENIED . The March 13, 2012 Decision and July 10,
2012 Resolution of the Court of Appeals in CA-G.R. CV No. 90439 are AFFIRMED .
The notice of change of address of Atty. Jose Raulito E. Paras, counsel for
respondent, to Unit 8A 8th Floor Sagittarius O ce Building, 111 H.V. Dela Costa Street,
Salcedo Village, 1209 Makati City, is NOTED .
SO ORDERED."

Very truly yours,

(SGD.) LIBRADA C. BUENA

Division Clerk of Court

Footnotes

1. Ty v. People, G.R. No. 149275, September 27, 2004, 439 SCRA 220, 234, citing Agbayani,
Aguedo, Commentaries and Jurisprudence on the Commercial Laws of the Philippines,
1992 Edition, p. 235.
2. Rollo, pp. 44-49.
3. Id. at 50.

4. Id. at 29.
5. Id. at 52-57.

6. Id. at 53.
7. Id. at 84.

8. Id. at 64.
9. Id. at 53.
10. Id. at 86.
CD Technologies Asia, Inc. © 2020 cdasiaonline.com
 11. Id. at 53.

12. Id. at 31.

13. Id. at 120.
14. Id. at 138.

15. Id. at 84-88.

16. Id. at 87.

17. Id. at 88.

18. Id. Damage without injury or injury inflicted without injustice, or loss or damage without
violation of legal right or a wrong done to a man for which the law provides no remedy.
19. Rollo, pp. 28-40.
20. Id. at 39.
21. G.R. No. 140608, September 23, 2004, 439 SCRA 1.

22. Rollo, pp. 34-35.

23. Id. at 36.
24. Id. at 38.
25. Id. at 42-43.

26. Sec. 4. Contents of petition. — The petition shall be filed in eighteen (18) copies, with the
original copy intended for the court being indicated as such by the petitioner, and shall
(a) state the full name of the appealing party as the petitioner and the adverse party as
respondent, without impleading the lower courts or judges thereof either as petitioners or
respondents; x x x

27. Records, p. 415.

28. Vda. De Salazar v. Court of Appeals, G.R. No. 121510, November 23, 1995, 250 SCRA 305,
309-310.
29. Act No. 2031 (1911), Title III, Chapter XVI, Sec. 184.
30. Act No. 2031 (1911), Title I, Chapter II, Sec. 24.
31. Act No. 2031 (1911), Title I, Chapter II, Sec. 28.
32. Act No. 2031 (1911), Title I, Chapter II, Sec. 25.

33. Cojuangco, Jr. v. Republic, G.R. No. 180705, November 27, 2012, 686 SCRA 472, 522;
Gabriel v. Monte De Piedad y Caja de Ahorros, 71 Phil. 497, 501 (1941).
34. Ty v. People, G.R. No. 149275, September 27, 2004, 439 SCRA 220, 234; Walker Rubber
Corporation v. Nederlandsch Indische & Handelsbank, N.V., 105 Phil. 934 (1959). See
also Gabriel v. Monte De Piedad y Caja de Ahorros, supra.
35. Ty v. People, supra at 234-235.
36. Sec. 3. Disputable presumptions. — The following presumptions are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence:
CD Technologies Asia, Inc. © 2020 cdasiaonline.com
 xxx xxx xxx

  (s) That a negotiable instrument was given or indorsed for a sufficient consideration;
xxx xxx xxx
37. Cayanan v. North Star International Travel, Inc. , G.R. No. 172954, October 5, 2011, 658
SCRA 644, 650.
38. See Prudential Bank (now Bank of the Philippine Islands) v. Rapanot , G.R. No. 191636,
January 16, 2017, 814 SCRA 334.
39. Records, p. 314.
40. Bank of the Philippine Islands v. Roxas , G.R. No. 157833, October 15, 2007, 536 SCRA
168, 173.

CD Technologies Asia, Inc. © 2020 cdasiaonline.com