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BENJAMIN EVANGELISTA v. SCREENEX

FACTS:

Benjamin Evangelista obtained a loan from Screenex, Inc. and issued two open-dated checks as security, which were held by Philip Gotuaco, Sr. until his death. Prior to depositing the checks, personal demands and a demand letter were made by the family for Evangelista to settle the loan. Evangelista was charged with violation of BP Blg. 22 but was acquitted by the MeTC. He was held liable for the civil obligation to pay the loan. Evangelista appealed to the RTC, arguing that his civil liability was not proven and that it was barred by prescription. The RTC ruled that the checks were evidence of Evangelista's indebtedness and that his alleged payment was not proven. The defense of prescription was also ruled as not valid.

Alexander Yu filed a complaint against Dennis Evangelista for the collection of a sum of money, claiming that Evangelista borrowed money from him in 1991 and failed to repay the loan. Evangelista argued that the obligation had already prescribed. The respondent testified that the loan was contracted a few months before his father-in-law's death in November 2004. Evangelista argued that the respondent was not a competent witness to testify on the loan transaction. The trial court dismissed the appeal and affirmed the lower court's decision. Evangelista filed a petition for review before the CA, insisting that he was not liable and that the obligation had prescribed. The CA denied the petition, stating that the prescriptive period started when the instrument was issued and the check was returned by the bank. The issue of prescription was raised for the first time on appeal, and the CA also noted that the writing of the date on the check was not considered an alteration. Evangelista failed to present proof of payment for the loan.

ISSUES:

  1. Whether the petitioner is still liable for the total amount indicated in the two checks despite being acquitted of the criminal charges for violation of BP 22.

  2. Whether or not the action to hold the petitioner liable for the undated checks has prescribed.

  3. Whether the delivery of the checks, despite their subsequent failure to be encashed within a period of 10 years or more, had the effect of payment.

  4. Whether the petitioner can still be held civilly liable for the amounts indicated on the checks.

RULING:

  1. The Court ruled in favor of the petitioner. The civil action for the corresponding obligation is deemed instituted with the criminal action for violation of BP 22. The inclusion of the civil action in the criminal case aims to streamline court proceedings and discourage the separate filing of civil actions. The civil action deemed instituted with the criminal action is treated as an "independent civil liability based on contract." A check is discharged by any act that would discharge a simple contract for the payment of money. In this case, there was no proof of payment or discharge of the check. Thus, the petitioner cannot be held liable for the civil obligation.

  2. Yes, the action has prescribed. The cause of action based on a check is reckoned from the date indicated on the check. If the check is undated, the cause of action is reckoned from the date of issuance of the check. In this case, since the checks were undated, the cause of action was reckoned from the date of their issuance. The checks were issued more than 10 years prior to the filing of the complaint, and no written extrajudicial or judicial demand was made within the 10-year period. Thus, the cause of action on the checks has become stale and is time-barred. The complaint is dismissed based on prescription.

  3. Yes, the delivery of the checks had the effect of payment. The acceptance of a check implies an undertaking of due diligence in presenting it for payment. If the payee sustains loss by lack of such diligence or if no presentment is made at all, the drawer cannot be held liable unless presentment is otherwise excused. In this case, since the checks were not encashed within a period of 10 years or more, the petitioner is considered discharged from his obligation to pay and can no longer be held liable for the amounts indicated on the checks.

  4. No, the petitioner cannot be held civilly liable for the amounts indicated on the checks. Since the checks were considered as payment due to the failure to encash them within a reasonable time, the petitioner's obligation to pay has been discharged.

PRINCIPLES:

  • Actions upon a written contract must be brought within ten years from the time the right of action accrues. (Article 1144, Civil Code)

  • The cause of action based on a check is reckoned from the date indicated on the check. If the check is undated, the cause of action is reckoned from the date of its issuance. (Section 17, Negotiable Instruments Law)

  • Checks should be presented for payment within a reasonable time after their issuance. Failure to do so may discharge the drawer from liability to the extent of the loss caused by the delay. (Article 1249, Civil Code; Section 186, Negotiable Instruments Law)

  • The acceptance of a check implies an undertaking of due diligence in presenting it for payment. Lack of presentment or failure to encash the check within a reasonable time could discharge the drawer's obligation to pay.

  • Payment by way of check or other negotiable instrument is conditioned on its being cashed, unless the instrument is impaired through the fault of the creditor.