De Leon v.

Rodriguez o Ruled that the promissory note was unenforceable as

respondent did not give any consideration to
Summary: petitioner.
o RTC further held that promissory note was a contract
dependent on a suspensive condition (damages
Doctrine: awarded in Citibank case) that never happened,
leaving no obligation.
● CA reversed.
Facts: Issue: W/N petitioner is liable to respondent under the promissory note. – Yes
1. Respondent Carmencita L. Rodriguez filed a complaint for sum of money Held: Petition is denied. Petitioner is liable under the promissory note.
with damages against petitioner Alejandro De Leon. Respondent alleged
that petitioner executed a promissory note wherein: Promissory Note
● he promised to pay respondent P1M
● within a period of 20 months 1. Definition: A promissory not is an unconditional promise in writing made
● by installments of not less than P50,000 by one person to another, signed by the maker, engaging to pay on
● due on or before January 30, 1999 and every calendar month demand, or at a fixed or determinable future time, a sum certain in money
thereafter until fully paid to order or bearer.
2. Petitioner failed to pay his obligation, despite repeated demands. 2. Presumptions: Under the Negotiable Instruments Law a promissory note is
3. Petitioner’s Counterclaim: deemed prima facie to have been:
● claimed he purchased a house and lot from Citibank. A year ● issued for valuable consideration;
after he completed construction of a building, petitioner was ● Every person whose signature appears thereon to have become a
informed that the property was actually owned by respondent. party thereto for value
Negotiations ensued among the parties and Citibank, but no ● If there is absence or failure of consideration, it may be raised as
agreement was reached. Respondent filed ejectment suit against a defense against any person who is not a holder in due course.
petitioner but petitioner vacated the property while it was 3. ITC: Petitioner argues that he did not receive any value for the promissory
pending. as respondent did not give him any money, but this is on the mistaken
● Petitioner also admitted the existence of the promissory note, assumption that value only pertains to money.
but denied receiving any value for it. Valuable Consideration
● His claim was that the promissory note was executed to
represent respondent’s share in the damages that may be 1. Art 1350, CC: “In onerous contracts, the cause is understood to be, for
awarded to him in a case he filed against Citibank. each contracting party, the prestation or promise of a thing or service by
4. Respondent Testimony: the other; in remuneratory ones, the service or benefit which is
● Respondent testified that petitioner offered to buy the property remunerated; and in contracts of pure beneficence, the mere liberality of
the meeting with Citibank fell through. The P1M was added for the benefactor.”
the disturbance and anxiety respondent suffered. Such 2. A valuable consideration may be some right, interest, profit, or benefit
agreement allegedly brought execution of the promissory note. to the party who makes the contract or some forbearance, detriment, loss
5. Procedural: or some responsibility to act, or labor or service given suffered or
● RTC ruled in favor of petitioner and dismissed the complaint. undertaken by the other side. Even a benefit conferred upon a third
person or a detriment suffered by a promise at the instance of the
promissor qualifies as a sufficient consideration.
ITC: a holder in due course and petitioner cannot invoke the absence of
condition against her.
1. The promissory note was given as consideration for respondent’s
willingness to sell the property and for damages she suffered because of Other Issue: Substitution of deceased as party.
petitioner’s unauthorized occupation of her property. This falls as a
valuable consideration under Art. 1350 since the promissory note was 1. Sometime during the pendency of the case, respondent died and was
executed to compensate respondent for the loss or detriment she substituted by her daughter Joelle Goudsmith.
suffered because of petitioner. 2. Petitioner’s failure to state that respondent is already deceased and is now
2. Presumption that a promissory note is issued for a valuable consideration represented by her daughter is not a ground for the outright dismissal of
shall stand unless convincing evidence is presented to show contrary. his petition.
Petitioner has failed to show convincing evidence. 3. There was substantial compliance with the substantive aspect of the
3. (Discussion on no convincing evidence) Petitioner’s claim that promissory procedural rule by Goudsmith herself. She appeared before the RTC,
note is dependent on suspensive condition is not reflected in the note as it participated in proceedingts, and consequently bound herself to its
specifically sets a deadline for payment. Also petitioner’s willingness to judgement. Hence dismissal on ground stated above is unwarranted.
give respondent a share in the damages is an admission that she is entitled
to remuneration for her troubles.
4. Petitioner’s claim that he thought promissory not was a mere formality
cannot stand as well as he negotiated the removal of interest rates which
proves he understood and was in a position to negotiate the terms of the
note.

Holder in Due Course

1. Absence or failure of consideration may only be raised as a defense

against a person who is not a holder in due course.
2. Sec 52, Negotiable Instruments Law:
● What constitutes a holder in due course – A holder in due course
is a holder who has taken the instrument under the following
conditions:
i. That it is complete and regular upon its face;
ii. 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;
iii. That he took it in good faith and for value;
iv. That at the time it was negotiated to him, he had no
notice of any infirmity in the instrument or defect in
the title of the person negotiating it.
3. 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. ITC: Respondent took the promissory note in good faith and for value.
Petitioner failed to rebut the presumption in favor of respondent thus she is