First DIVISION

November 20, 2017

G.R. No. 211564

BENJAMIN EVANGELISTA, Petitioner
vs.
SCREENEX,1 INC., represented by ALEXANDER G, YU,
Respondent

DECISION

SERENO, CJ.:

This is a Petition2 for Review on Certiorari seeking to set aside the

Decision3 and Resolution4 rendered by the Court of Appeals (CA)
Manila, Fifth Division, in CA-G.R. SP No. 110680.

ANTECEDENT FACTS

The facts as summarized by the CA are as follows:

Sometime in 1991, [Evangelista] obtained a loan from respondent

Screenex, Inc. which issued two (2) checks to [Evangelista]. The first
check was UCPB Check No. 275345 for ₱l,000,000 and the other
one is China Banking Corporation Check No. BDO 8159110 for
₱500,000. There were also vouchers of Screenex that were signed by
the accused evidencing that he received the 2 checks in acceptance
of the loan granted to him.

As security for the payment of the loan, [Evangelista] gave two (2)
open-dated checks: UCPB Check Nos. 616656 and 616657, both
pay to the order of Screenex, Inc. From the time the checks were
issued by [Evangelista], they were held in safe keeping together with
the other documents and papers of the company by Philip Gotuaco,
Sr., father-in-law of respondent Alexander Yu, until the former's
death on 19 November 2004.

Before the checks were deposited, there was a personal demand

from the family for [Evangelista] to settle the loan and likewise a
demand letter sent by the family lawyer.5

On 25 August 2005, petitioner was charged with violation of Batas

Pambansa (BP) Blg. 22 in Criminal Case Nos. 343615-16 filed with
the Metropolitan Trial Court (MeTC) of Makati City, Branch 61. 6 The
Information reads:

That sometime in 1991, in the City of Makati, Metro Manila,

Philippines, a place within the jurisdiction of this Honorable Court,
the above-named accused, did then and there, willfully, unlawfully
and feloniously make out, draw, and issue to SCREENEX INC.,
herein represented by ALEXANDER G. YU, to apply on account or
for value the checks described below:

  Check No. Date Amount

United
AGR 616656 12-22-04 ₱l ,000,000.00
Coconut
Planters Bank AGR 616657 12-22-04 500,000.00

said accused well knowing that at the time of issue thereof, said
accused did not have sufficient funds in or credit with the drawee
bank for the payment in full of the face amount of such check upon
its presentment which check when presented for payment within
ninety (90) days from the date thereof, was subsequently
dishonored by the drawee bank for the reason "ACCOUNT CLOSED"
and despite receipt of notice of such dishonor, the said accused
failed to pay said payee the face amount of said checks or to make
arrangement for full payment thereof within five (5) banking days
after receiving notice.

CONTRARY TO LAW.7

Petitioner pleaded not guilty when arraigned, and trial proceeded. 8

THE RULING OF THE METC

The MeTC found that the prosecution had indeed proved the first
two elements of cases involving violation of BP 22: i.e. the accused
makes, draws or issues any check to apply to account or for value,
and the check is subsequently dishonored by the drawee bank for
insufficiency of funds or credit; or the check would have been
dishonored for the same reason had not the drawer, without any
valid reason, ordered the bank to stop payment. The trial court
pointed out, though, that the prosecution failed to prove the third
element; i.e. at the time of the issuance of the check to the payee,
the latter did not have sufficient funds in, or credit with, the drawee
bank for payment of the check in full upon its presentment. 9 In the
instant case, the court held that while prosecution witness
Alexander G. Yu declared that the lawyer had sent a demand letter
to Evangelista, Yu failed to prove that the letter had actually been
received by addressee. Because there was no way to determine
when the five-day period should start to toll, there was a failure to
establish prima facie evidence of knowledge of the insufficiency of
funds on the part of Evangelista.10 Hence, the court acquitted him
of the criminal charges.
Ruling on the civil aspect of the cases, the court held that while
Evangelista admitted to having issued and delivered the checks to
Gotuaco and to having fully paid the amounts indicated therein, no
evidence of payment was presented.11 It further held that the
creditor's possession of the instrument of credit was sufficient
evidence that the debt claimed had not yet been paid. 12 In the end,
Evangelista was declared liable for the corresponding civil
obligation.13

The dispositive portion of the Decision 14 reads:

WHEREFORE, judgment is rendered acquitting the accused

BENJAMIN EVANGELISTA for failure of the prosecution to establish
all the elements constituting the offense of Violation of B.P. 22 for
two (2) counts. However, accused is hereby ordered to pay his civil
obligation to the private complainant in the total amount of ONE
MILLION FIVE HUNDRED THOUSAND PESOS (₱l,500,000) plus
twelve (12%) percent interest per annum from the date of the filing
of the two sets of Information until fully paid and to pay the costs of
suit.

SO ORDERED.15

THE RULING OF THE RTC

Evangelista filed a timely Notice of Appeal 16 and raised two errors of

the MeTC before the Regional Trial Court (RTC) of Makati City,
Branch 147. Docketed therein as Criminal Case Nos. 08-1723 and
08-1724, the appeal posed the following issues: (1) the lower court
erred in not appreciating the fact that the prosecution failed to
prove the civil liability of Evangelista to private complainant; and (2)
any civil liability attributable to Evangelista had been extinguished
and/or was barred by prescription.17

After the parties submitted their respective Memoranda, 18 the R TC

ruled that the checks should be taken as evidence of Evangelista's
indebtedness to Gotuaco, such that even if the criminal aspect of
the charge had not been established, the obligation
subsisted.19 Also, the alleged payment by Evangelista was an
affirmative defense that he had the burden of proving, but that he
failed to discharge.20 With respect to the defense of prescription, the
RTC ruled in this wise:

As to the defense of prescription, the same cannot be successfully

invoked in this appeal. The 10-year prescriptive period of the action
under Art. 1144 of the New Civil Code is computed from the time
the right of action accrues. The terms and conditions of the loan
obligation have not been shown, as only the checks evidence the
same. It has not been shown when the loan obligation was to
mature such that there is no basis to show or from which to infer,
when the cause of action (non-payment of the loan) which would
give the obligee the right to seek redress for the non-payment of the
obligation, accrued. In other words, the reckoning point of
prescription has not been established.

Prosecution witness Alexander G. Yu was not competent to state

that the loan was contracted in 1991 as in fact, Yu admitted that it
was a few months before his father-in-law (Philip Gotuaco) died
when the latter told him about accused's failure to pay his
obligation. That was a few months before November 19, 2004, date
of death of his father-in-law.

At any rate, the right of action in this case is not upon a written
contract, for which reason, Art. 1144, New Civil Code, on
prescription does not apply.21

In a Decision22 dated 18 December 2008, the R TC dismissed the

appeal and affirmed the MeTC decision in toto.23 The Motion for
Reconsideration24 was likewise denied in an Order25 dated 19
August 2009.

THE RULING OF THE CA

Evangelista filed a petition for review 26 before the CA insisting that

the lower court erred in finding him liable to pay the sum with
interest at 12% per annum from the date of filing until full payment.
He further alleged that witness Yu was not competent to testify on
the loan transaction; that the insertion of the date on the checks
without the knowledge of the accused was an alteration that
avoided the checks; and that the obligation had been extinguished
by prescription.27

Screenex, Inc., represented by Yu, filed its Comment. 28 Yu claimed

that he had testified on the basis of his personal dealings with his
father-in-law, whom Evangelista dealt with in obtaining the loan.
He further claimed that during the trial, petitioner never raised the
competence of the witness as an issue. 29 Moreover, Yu argued that
prescription set in from the accrual of the obligation; hence, while
the loan was transacted in 1991, the demand was made in
February 2005, which was within the 10-year prescriptive
period.30 Yu also argued that while Evangelista claimed under oath
that the loan had been paid in 1992, he was not able to present any
proof of payment.31 Meanwhile, Yu insisted that the material
alteration invoked by Evangelista was unavailing, since the checks
were undated; hence, nothing had been altered. 32 Finally, Yu argued
that Evangelista should not be allowed to invoke prescription,
which he was raising for the first time on appeal, and for which no
evidence was adduced in the court of origin. 33
The CA denied the petition.34 It held that (1) the reckoning time for
the prescriptive period began when the instrument was issued and
the corresponding check returned by the bank to its depositor; 35 (2)
the issue of prescription was raised for the first time on appeal with
the RTC;36 (3) the writing of the date on the check cannot be
considered as an alteration, as the checks were undated, so there
was nothing to change to begin with;37 (4) the loan obligation was
never denied by petitioner, who claimed that it was settled in 1992,
but failed to show any proof of payment. 38 Quoting the MeTC
Decision, the CA declared:

[t]he mere possession of a document evidencing an obligation by the

person in whose favor it was executed, merely raises a presumption
of nonpayment which may be overcome by proof of payment, or by
satisfactory explanation of the fact that the instrument is found in
the hands of the original creditor not inconsistent with the fact of
payment.39

The dispositive portion reads:

WHEREFORE, premises considered, the petition is DENIED. The

assailed August 19, 2009 Order of the Regional Trial Court, Branch
147, Makati City, denying petitioner's Motion for Reconsideration of
the Court's December 18, 2008 Decision in Crim. Case Nos. 08-
1723 and 08- 1724 are AFFIRMED.

SO ORDERED.40

Petitioner filed a Motion for Reconsideration, 41 which was similarly

denied in a Resolution42 dated 27 February 2014.

Hence, this Petition,43 in which petitioner contends that the lower

court erred in ordering the accused to pay his alleged civil
obligation to private complainant. In particular, he argues that the
court did not consider the prosecution's failure to prove his civil
liability to respondent, and that any civil liability there might have
been was already extinguished and/or barred by prescription. 44

Meanwhile, respondent filed its Comment, 45 arguing that the date of

prescription was reckoned from the date of the check, 22 December
2004. So when the complaint was filed on 25 August 2005, it was
supposedly well within the prescriptive period of ten (10) years
under Article 1144 of the New Civil Code. 46

OUR RULING

With petitioner's acquittal of the criminal charges for violation of BP

22, the only issue to be resolved in this petition is whether the CA
committed a reversible error in holding that petitioner is still liable
for the total amount of ₱l.5 million indicated in the two checks.

We rule in favor of petitioner.

A check is discharged by any other

act which will discharge a simple
contract for the payment of money.

In BP 22 cases, the action for the corresponding civil obligation is

deemed instituted with the criminal action. 47 The criminal action for
violation of BP 22 necessarily includes the corresponding civil
action, and no reservation to file such civil action separately shall
be allowed or recognized.48

The rationale for this rule has been elucidated in this wise:
Generally, no filing fees are required for criminal cases, but because
of the inclusion of the civil action in complaints for violation of B.P.
22, the Rules require the payment of docket fees upon the filing of
the complaint. This rule was enacted to help declog court dockets
which are filled with B.P. 22 cases as creditors actually use the
courts as collectors. Because ordinarily no filing fee is charged in
criminal cases for actual damages, the payee uses the intimidating
effect of a criminal charge to collect his credit gratis and sometimes.
upon being paid, the trial court is not even informed thereof. The
inclusion of the civil action in the criminal case is expected to
significantly lower the number of cases filed before the courts for
collection based on dishonored checks. It is also expected to
expedite the disposition of these cases. Instead of instituting two
separate cases, one for criminal and another for civil, only a single
suit shall be filed and tried. It should be stressed that the policy
laid down by the Rules is to discourage the separate filing of the
civil action. The Rules even prohibit the reservation of a separate
civil action, which means that one can no longer file a separate civil
case after the criminal complaint is filed in court. The only instance
when separate proceedings are allowed is when the civil action is
filed ahead of the criminal case. Even then, the Rules encourage the
consolidation of the civil and criminal cases. We have previously
observed that a separate civil action for the purpose of recovering
the amount of the dishonored checks would only prove to be costly,
burdensome and time-consuming for both parties and would
further delay the final disposition of the case. This multiplicity of
suits must be avoided.49 (Citations omitted)

This notwithstanding, the civil action deemed instituted with the

criminal action is treated as an "independent civil liability based on
contract."50
By definition, a check is a bill of exchange drawn on a bank
'payable on demand.51 It is a negotiable instrument - written and
signed by a drawer containing an unconditional order to pay on
demand a sum certain in money.52 It is an undertaking that the
drawer will pay the amount indicated thereon. Section 119 of the
NIL, however, states that a negotiable instrument like a check may
be discharged by any other act which will discharge a simple
contract for the payment of money, to wit:

Sec. 119. Instrument; how discharged. - A negotiable instrument is

discharged:

(a) By payment in due course by or on behalf of the principal

debtor;

(b) By payment in due course by the party accommodated, where

the instrument is made or accepted for his accommodation;

(c) By the intentional cancellation thereof by the holder;

(d) By any other act which will discharge a simple contract for the
payment of money;

(e) When the principal debtor becomes the holder of the instrument
at or after maturity in his own right. (Emphasis supplied)

A check therefore is subject to prescription of actions upon a

written contract. Article 1144 of the Civil Code provides:

Article 1144. The following actions must be brought within ten

years from the time the right of action accrues:

1) Upon a written contract;

2) Upon an obligation created by law;

3) Upon a judgment. (Emphasis supplied)

Barring any extrajudicial or judicial demand that may toll the 10-
year prescription period and any evidence which may indicate any
other time when the obligation to pay is due, the cause of action
based on a check is reckoned from the date indicated on the check.

If the check is undated, however, as in the present petition, the

cause of action is reckoned from the date of the issuance of the
check. This is so because regardless of the omission of the date
indicated on the check, Section 17 53 of the Negotiable Instruments
Law instructs that an undated check is presumed dated as of the
time of its issuance.
While the space for the date on a check may also be filled, it must,
however, be filled up strictly in accordance with the authority given
and within a reasonable time.54 Assuming that Yu had authority to
insert the dates in the checks, the fact that he did so after a lapse of
more than 10 years from their issuance certainly cannot qualify as
changes made within a reasonable time.

Given the foregoing, the cause of action on the checks has become
stale, hence, time-barred. No written extrajudicial or judicial
demand was shown to have been made within 10 years which could
have tolled the period. Prescription has indeed set in.

Prescription allows the court to

dismiss the case motu proprio.

We therefore have no other recourse but to grant the instant

petition on the ground of prescription. Even if that defense was
belatedly raised before the RTC for the first time on appeal from the
ruling of the Me TC, we nonetheless dismiss the complaint, seeking
to enforce the civil liability of Evangelista based on the undated
checks, by applying Section 1 of Rule 9 of the Rules of Court, to wit:

Section 1. Defenses and objections not pleaded. - Defenses and

objections not pleaded either in a motion to dismiss or in the
answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no
jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the
court shall dismiss the claim.

While it was on appeal before the RTC that petitioner invoked the
defense of prescription, we find that the pleadings and the evidence
on record indubitably establish that the action to hold petitioner
liable for the two checks has already prescribed.

The delivery of the check produces

the effect of payment when through
the fault of the creditor they have
been impaired

It is a settled rule that the creditor's possession of the evidence of

debt is proof that the debt has not been discharged by payment. 55 It
is likewise an established tenet that a negotiable instrument is only
a substitute for money and not money, and the delivery of such an
instrument does not, by itself, operate as payment. 56 Thus, in BPI v.
Spouses Royeca,57 we ruled that despite the lapse of three years
from the time the checks were issued, the obligation still subsisted
and was merely suspended until the payment by commercial
document could actually be realized.58

However, payment is deemed effected and the obligation for which

the check was given as conditional payment is treated 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
after issue, 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.

Art. 1249 of the Civil Code specifically provides that checks should
be presented for payment within a reasonable period after their
issuance, to wit:

Art. 1249. The payment of debts in money shall be made in the

currency stipulated, and if it is not possible to deliver such
currency, then in the currency which is legal tender in the
Philippines.

The delivery of promissory notes payable to order, or bills of

exchange or other mercantile documents 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 the meantime, the action derived from the original obligation

shall be held in the abeyance. (Emphasis supplied)

This rule is similarly stated in the Negotiable Instruments Law as

follows:

Sec. 186. Within what time a check must be presented. - A check

must be presented for p:iyment within a reasonable time after its
issue or the drawer will be discharged from liability thereon to the
extent of the loss caused by the delay. (Emphasis supplied)

These provisions were the very same ones we cited when we

discharged a check by reason of the creditor's unreasonable or
unexplained delay in encashing it. In Papa v. Valencia,59 the
respondents supposedly paid the petitioner the purchase price of
the lots in cash and in check. The latter disputed this claim and
argued that he had never encashed the checks, and that he could
no longer recall the transaction that happened 10 years earlier. This
Court ruled:

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. 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. This is in harmony with Article 1249 of the Civil Code
under which payment by way of check or other negotiable
instrument is conditioned on its being cashed, except when through
the fault of the creditor, the instrument is impaired. The payee of a
check would be a creditor under this provision and if its no-
payment is caused by his negligence, payment will be deemed
effected and the obligation for which the check was given as
conditional payment will be discharged. 60 (Citations omitted and
emphasis supplied)

Similarly in this case, we find that the delivery of the checks,

despite the subsequent failure to encash them within a period of 10
years or more, had the effect of payment. Petitioner is considered
discharged from his obligation to pay and can no longer be
pronounced civilly liable for the amounts indicated thereon.

WHEREFORE, the instant Petition is GRANTED. The Decision dated

1 October 2013 and Resolution dated 27 February 2014 in CA-G.R.
SP No. 110680 are SET ASIDE. The Complaint against petitioner is
hereby DISMISSED.

SO ORDERED.

MARIA LOURDES P.A. SERENO

Chief Justice, Chairperson