G.R. No. 10545 - Alvarez vs. Vargas

On February 5, 1914, the plaintiff’s clerk, Ti Jiaco, delivered a letter or order to the defendant at his residence in Iloilo.
The letter was addressed to "Mr. D. ANGEL VARGAS" and was signed by the plaintiff, Juan Alvarez, identifying himself as "Your nephew, V. ALVAREZ."
The letter stated that the defendant was to pay one thousand pesos in Philippine currency, with interest accruing at the rate of 12% per annum, twelve days after the letter was presented for collection.
The order provided instructions to pay on the due date and to charge the payment to the plaintiff’s account.

On February 16, 1914, upon the request of Ti Jiaco, the defendant indorsed the order with the notation “Accepted this 16th day of February, 1914. ANGEL VARGAS.”
The order was later presented for collection on March 5, 1914, but payment was not made as originally agreed.
On the same day of presentation, the defendant further indorsed the document by writing a postponement: he stated that acceptance of the mandatory letter was deferred until March 30, 1914, based on a telegram from the drawer, Mr. Vicente Alvarez, requesting such postponement.
The defendant’s postponement also included a note specifying that interest would continue to accrue during the postponement period at the rate of one peso per month for each hundred pesos.

After the defendant failed to make the payment as required, the plaintiff initiated an action for the recovery of the amount specified in the order.
The defendant’s sole defense was that:

The order was not a negotiable instrument.
There was no consideration given for the indorsement or acceptance, thus negating his legal obligation to pay.

Both parties admitted the facts regarding the delivery, acceptance, and postponement of the order.

The question of negotiability was mentioned but not extensively debated in the decision.

Whether a lack of consideration can be established as a valid defense against the plaintiff’s claim.

The defense raised was that the defendant received no valuable consideration in exchange for his promise to pay.
The issue centered on whether the defendant’s written promise to pay required a showing of valuable consideration or whether such consideration was presumed by law.