GSIS v.

Court of Appeals,
GR No. L-40824 February 23, 1989
REGALADO , J.:
 

ISSUE:

            Whether or not the “promissory note” executed by Mr. and Mrs. Isabelo R. Racho,
together with the spouses Mr. and Mrs Flaviano Lagasca is negotiable instrument.

RULING:

            No. The promissory note hereinbefore quoted, as well as the mortgage deeds
subject of this case, are clearly not negotiable instruments. These documents do not
comply with the fourth requisite to be considered as such under Section 1 of Act No.
2031 because they are neither payable to order nor to bearer. The note is
payable to a specified party, the GSIS. Absent the aforesaid requisite, the
provisions of Act No. 2031 would not apply; governance shall be afforded,
instead, by the provisions of the Civil Code and special laws on mortgages.
            As earlier indicated, the factual findings of respondent court are that private
respondents signed the documents "only to give their consent to the mortgage as
required by GSIS", with the latter having full knowledge that the loans secured thereby
were solely for the benefit of the Lagasca spouses.  This appears to be duly supported by
sufficient evidence on record. Indeed, it would be unusual for the GSIS to arrange for
and deduct the monthly amortizations on the loans from the salary as an army officer of
Flaviano Lagasca without likewise affecting deductions from the salary of Isabelo Racho
who was also an army sergeant. Then there is also the undisputed fact, as already stated,
that the Lagasca spouses executed a so-called "Assumption of Mortgage" promising to
exclude private respondents and their share of the mortgaged property from liability to
the mortgagee. There is no intimation that the former executed such instrument for a
consideration, thus confirming that they did so pursuant to their original agreement.

FACTS:

            Private respondents, Mr. and Mrs. Isabelo R. Racho, together with the spouses
Mr. and Mrs Flaviano Lagasca, executed a deed of mortgage, in favor of petitioner GSIS
and another deed of mortgage, in connection with two loans granted by the latter in the
sums of P 11,500.00 and P 3,000.00, respectively.  A parcel of land co-owned by said
mortgagor spouses, was given as security under the aforesaid two deeds. They also
executed a 'promissory note" which states in part:

... for value received, we the undersigned ... JOINTLY, SEVERALLY and SOLIDARILY,
promise to pay the GOVERNMENT SERVICE INSURANCE SYSTEM the sum of . . . (P
11,500.00) Philippine Currency, with interest at the rate of six (6%) per centum
compounded monthly payable in . . . (120)equal monthly installments of . . . (P 127.65)
each.
The Lagasca spouses executed an instrument denominated "Assumption of
Mortgage" under which they obligated themselves to assume the aforesaid obligation to
the GSIS. This undertaking was not fulfilled.
Upon failure of the mortgagors to comply with the conditions of the mortgage,
particularly the payment of the amortizations due, GSIS extrajudicially foreclosed the
mortgage and caused the mortgaged property to be sold at public auction.
More than two years thereafter, herein private respondents filed a complaint
against the petitioner and the Lagasca spouses in the CFI Quezon City, praying that the
extrajudicial foreclosure "made on, their property and all other documents executed in
relation thereto in favor of the GSIS" be declared null and void. It was further prayed
that they be allowed to recover said property, and/or the GSIS be ordered to pay them
the value thereof, and/or they be allowed to repurchase the land. Private respondents
alleged that they signed the mortgage contracts not as sureties or guarantors for the
Lagasca spouses but they merely gave their common property to the said co-owners who
were solely benefited by the loans from the GSIS.
 CFI dismissed the complaint for failure to establish a cause of action. CA reversed
the decision of CFI, and held that "foreclosure of the mortgage void insofar as it affects
the share of the appellants."
MANUEL C. UBAS, SR.
v. WILSON CHAN
GR No. 215910 February 6, 2017
PERLAS-BERNABE , J.:

ISSUE:

Whether or not the CA erred in dismissing petitioner's complaint for lack of cause of
action.

RULING:

The petition is meritorious.

Jurisprudence holds that “in a suit for a recovery of sum of money, as here, the plaintiff-
creditor [(petitioner in this case)] has the burden of proof to show that defendant
[(respondent in this case)] had not paid [him] the amount of the contracted loan.
However, it has also been long established that where the plaintiff-creditor possesses
and submits in evidence an instrument showing the indebtedness, a presumption that
the credit has not been satisfied arises in [his] favor.

This presumption stems from Section 24 of the NIL, which provides that:

Section 24. Presumption of Consideration. – Every negotiable instrument 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.

As mentioned, petitioner had presented in evidence the three dishonored checks which
were undeniably signed by respondent.

Besides, Section 16 of the NIL provides that when an instrument is no longer

in the possession of the person who signed it and it is complete in its terms,
“a valid and intentional delivery by him is presumed until the contrary is
proved,” as in this case.

Although the checks were under the account name of Unimasters, it should be
emphasized that the manner or mode of payment does not alter the nature of the
obligation.

Respondent was not able to overcome the presumption of consideration under Section
24 of the NIL and establish any of his affirmative defenses. On the other hand, as the
holder of the subject checks which are presumed to have been issued for a valuable
consideration, and having established his privity of contract with respondent, petitioner
has substantiated his cause of action by a preponderance of evidence. ” Consequently,
petitioner’s Complaint should be granted.

FACTS:

Petitioner filed a Complaint against respondent, alleging that respondent, “doing

business under the name and style of UNIMASTER,” was indebted to him in the amount
of P1,500,000.00, representing the price of construction materials allegedly purchased
by respondent from him for the construction of the Macagtas Dam project.

He averred that respondent had issued three checks, payable to “CASH”, but when
petitioner presented the subject checks for encashment, the same were dishonored due
to a stop payment order. Petitioner demanded from respondent the value of the
dishonored checks, but to no avail.

For his part, respondent admitted to having issued the subject checks. However, he
claimed that they were not issued to petitioner, but to the project engineer, who,
however, lost the same.

The RTC ruled in favor of petitioner and ordered respondent to pay petitioner the
amount of P1,500,000.00 representing the principal obligation plus legal interests.

On appeal, the CA reversed and set aside the RTC’s ruling, dismissing petitioner’s
complaint.