7/31/2019 Negotiable Instruments Sec 24

1/1

Negotiable Instruments CaseDigests

Judge Caldona DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES 2-D ||Ateneo Law School

Pineda v. Dela Rama (4/28/83)D: The presumption that a negotiable instrument isissued for a valuable consideration is onlyprima facie.It can be rebutted by proof to the contrary

Facts:1. Pineda retained the services of Atty. Dela Rama to

stop or delay the impending institution of criminalaction by the National Rice and Corn Administration(NARIC) against him for allegedly misappropriating11,000 cavans of palay deposited in his ricemill

2. Pineda borrowed P9,300 from Atty. Dela Rama inorder to purchase a hacienda in Mindoro3. Atty. Dele Rama sued Pinade to pay the value of the

note4. Pineda claims that he signed the P9,300 PN because

Atty. Dela Rama told him that the amount hadalready been advanced to grease the palms ofNARIC officials

5. RTC: Pineda did not receive the P9,300 proceeds ofthe note. The RTC believed that the PN was given togrease the hands of the NARIC officials. Evidence

also shows that Atty. Dela Rama received P3000 togrease the palms of the NARIC officials. Since thepurpose of the P3,000 payment was illegal, Pinedawas ordered to return the same to Atty. Dela Rama

6. CA: Pineda is liable to pay the value of theinstrument since a negotiable instrument is deemedprima facie to have been issued for a valuableconsideration, and every person whose signatureappears thereon to have become a party thereto forvalue (Sec. 24 of the NIL)

Issue:

WON the PN had a valuable considerationHeld:

With the PNs consideration being contrary to law andpublic policy, such PN is void ab initio and no cause of actionfor the collection cases can arise from it. Hence, Atty. DelaRama cannot collect on the PN

a) The presumption under Sec 24 of the NIL is onlyprima facie. It can be rebutted by proof to thecontrary

b) The PN belies Dela Ramas claim that it was aloan. The PN readsThis represents the cashadvances made by him (Pineda) in connectionwith my case for which he (Dela Rama) is myattorney-in-law

c) Atty. Dela Rama was a close friend of NARICAdministrator Rodriguez to whom the formermade proper representations to delay thecriminal prosecution of Pineda

d) It is also unusual for a lawyer to lend money tohis client whom he has known only for 3 month

without interest or securitye) With the PN executed for an illegal considerationunder Art. 1409 (1), such PN is void ab initio andAtty. Dela Rama has no cause of action underArt. 1421. (for being in pari delicto)

1 Ad astra per alia fideles