Evangelista v. Screenex, Inc.
REITERATIONFacts
The Antecedents: Benjamin Evangelista obtained a loan from Screenex, Inc. in 1991, issuing two checks as security: UCPB Check Nos. 616656 and 616657, both for ₱1,000,000.00 and ₱500,000.00, respectively. These checks were held by Philip Gotuaco, Sr., Screenex's representative, until his death in 2004. Demand for settlement was made by Evangelista's family and their lawyer. Procedural History: - MeTC: Charged with violation of Batas Pambansa (BP) Blg. 22, Evangelista was acquitted of the criminal charges due to the prosecution's failure to prove the third element (knowledge of insufficiency of funds) and the lack of proof of receipt of the demand letter. However, he was ordered to pay his civil obligation of ₱1,500,000.00 plus 12% interest per annum. - RTC: Affirmed the MeTC decision in toto, holding that the checks evidenced indebtedness, the alleged payment was an unproven affirmative defense, and the defense of prescription was not established as the accrual date of the cause of action was not shown. - CA: Denied Evangelista's petition for review, affirming the RTC's decision. The CA ruled that the reckoning time for prescription began upon issuance, the issue of prescription was raised late, the dating of the checks was not an alteration, and Evangelista failed to prove payment. The Petition: Evangelista filed a Petition for Review on Certiorari with the Supreme Court, arguing that the CA erred in holding him liable for the civil obligation, citing the prosecution's failure to prove civil liability and the extinguishment of any such liability by prescription.
Issue(s)
Whether the Court of Appeals committed a reversible error in holding the petitioner liable for the total amount of ₱1.5 million indicated in the two checks, despite his acquittal of the criminal charges for violation of BP 22; and whether any civil liability attributable to the petitioner had been extinguished and/or was barred by prescription. Whether the prosecution failed to prove the petitioner's civil liability to the respondent.
Ruling
The Supreme Court granted the petition, setting aside the Decision of the Court of Appeals and dismissing the complaint against the petitioner. The Court ruled that the petitioner is no longer civilly liable for the amounts indicated on the checks due to prescription.
Ratio Decidendi
On the issue of civil liability, prescription, and the Court of Appeals' decision: The Court held that the civil action for the corresponding civil obligation is deemed instituted with the criminal action for violation of BP 22. A check is a negotiable instrument and is subject to prescription of actions upon a written contract, which is ten years under Article 1144 of the Civil Code. The cause of action on an undated check is reckoned from the date of its issuance, as it is presumed dated as of the time of its issuance under Section 17 of the Negotiable Instruments Law (NIL). In this case, the checks were issued in 1991 and were undated. The insertion of dates by the holder more than 10 years after issuance cannot be considered as done within a reasonable time, as required by Section 14 of the NIL. Therefore, the cause of action on the checks had become stale and time-barred. No written extrajudicial or judicial demand was shown to have been made within 10 years that could have tolled the period. The Court invoked Section 1 of Rule 9 of the Rules of Court, which allows dismissal of a claim if it is barred by the statute of limitations, even if the defense was belatedly raised. Furthermore, the Court reiterated the rule that the creditor's possession of the evidence of debt is proof of non-payment, and the delivery of a check does not, by itself, operate as payment. However, it clarified that payment is deemed effected and the obligation discharged if a period of 10 years or more has elapsed from the date indicated on the check until the date of encashment or presentment for payment. The failure to encash the checks within a reasonable time, or more than 10 years in this instance, not only results in the checks becoming stale but also in the obligation to pay being deemed fulfilled by operation of law, as provided in Article 1249 of the Civil Code and Section 186 of the NIL. The Court cited Papa v. Valencia where it was held that the payee's failure to encash a check for more than ten years resulted in the impairment of the check through unreasonable and unexplained delay, discharging the drawer from liability. Thus, the delivery of the checks in this case, despite the subsequent failure to encash them within a period of 10 years or more, had the effect of payment, discharging petitioner from his obligation. There was no specific ratio provided to address whether the prosecution failed to prove the petitioner's civil liability to the respondent. The court focused on the issues of prescription and the effect of the delivery of the checks. Therefore, this issue is not addressed in the provided ratio.
Main Doctrine
The failure to encash checks within a reasonable time, or more than 10 years from their issuance, not only results in the checks becoming stale but also in the obligation to pay being deemed fulfilled by operation of law, thereby discharging the drawer from liability.