Papa vs AU Valencia (284 SCRA 643, 23 Jan 1998)

Papa vs AU Valencia (284 SCRA 643, 23 Jan 1998)

Facts:
Myron C. Papa, acting as attorney-in-fact of Angela M. Butte, sold to Peñarroyo through Valencia, a parcel of land, which was mortgaged to the Associated Banking Corporation, together with several other parcels of land. The bank refused to release it unless and until all the mortgaged properties were also redeemed. Respondents discovered that petitioner had been collecting monthly rentals from the tenants of the property, knowing that said property had already been sold to Peñarroyo.On appeal, the petitioner argued that alleged sale of the subject property had not been consummated because he did not encash the check (in the amount of P40,000.00), which did not produce the effect of payment as in Art. 1249 of the Civil Code.

Issue:
Whether the sale was not consummated due to alleged non encashment of check for over ten years.

​Held:
No, Valencia and Peñarroyo had given petitioner Myron C. Papa the amounts of Five Thousand Pesos (P5,000.00) in cash on 24 May 1973, and Forty Thousand Pesos (P40,000.00) in check on 15 June 1973, in payment of the purchase price of the subject lot. Petitioner himself admits having received said amounts, and having issued receipts therefor. Petitioner's assertion that he never encashed the aforesaid check is not substantiated and is at odds with his statement in his answer that "he can no longer recall the transaction which is supposed to have happened 10 years ago." After more than ten (10) years from the payment in party by cash and in part by check, the presumption is that the check had been encashed. As already stated, he even waived the presentation of oral evidence. Granting that petitioner had never encashed the check, his failure to do so for more than ten (10) years undoubtedly resulted in the impairment of the check through his unreasonable and unexplained delay.

While it is true that the delivery of a check produces the effect of payment only when it is cashed, pursuant to Art. 1249 of the Civil Code, the rule is otherwise if the debtor is prejudiced by the creditor's unreasonable delay in presentment. Art. 1249 of the Civil Code provides, in part, that payment by checks shall produce the effect of payment only when they have been cashed or when through the fault of the creditor they have been impaired. In this case, the acceptance of a check implies an undertaking of due diligence in presenting it for payment, and if he from whom it is received sustains loss by want of such diligence, it will be held to operate as actual payment of the debt or obligation for which it was given. It has, likewise, been held that if no presentment is made at all, the drawer cannot be held liable irrespective of loss or injury unless presentment is otherwise excused.