Sunday, February 05, 2012

Papa v. AU Valencia (284 SCRA 643)

Facts: Myron Papa, acting as attorney-in-fact of Angela Butte, allegedly sold a parcel of land in La Loma, Quezon City to Felix Penarroyo. However, prior to the alleged sale, the land was mortgaged by Butte to Associated Banking Corporation along with other properties and after the alleged sale but prior to the property’s release by delivery, Butte died. The Bank refused to release the property despite Penarroyo’s unless and until the other mortgaged properties by Butte have been redeemed and because of this Penarroyo settled to having the title of the property annotated.

It was later discovered that the mortgage rights of the Bank were transferred to one Tomas Parpana, administrator of the estate of Ramon Papa Jr. and his since then been collecting rents. Despite repeated demands of Penarroyo and Valencia, Papa refused to deliver the property which led to a suit for specific performance. The trial court ruled in favor of Penarroyo and Valencia.

On appeal to the CA, and ultimately in relation to negotiable instruments, Papa averred that the sale of the property was not consummated since the PCIB check issued by Penarroyo for payment worth 40000 pesos was not encashed by him. However, the CA saw the contrary and that Papa in fact encashed the check by means of a receipt.

Finally on appeal to the SC, Papa cited that according to Art 1249 of the Civil Code, payment of checks only produce effect once they have been encashed and he insists that he never encashed the check. He further alleged that if check was encashed, it should have been stamped as such or at least a microfilm copy. It must be noted that the check was in possession of Papa for ten (10) years from the time payment was made to him.

Issue: Whether or not the check was encashed and can be considered effective as payment

Held: YES. The Court held that 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 is given. In this case, granting that check was never encashed, Papa’s failure to do so for more than ten (10) years undoubtedly resulted in the impairment of the check through his unreasonable and unexplained delay.

After more than ten (10) years from the payment in part by cash and in part by check, the presumption is that the check had been encashed.

Digg Google Bookmarks reddit Mixx StumbleUpon Technorati Yahoo! Buzz DesignFloat Delicious BlinkList Furl

0 comments: on "Papa v. AU Valencia (284 SCRA 643)"

Post a Comment