Towne & City Development Corp. v.

Court of Appeals and Guillermo Voluntad

G.R. No. 135043, July 14, 2004

FACTS: Respondent Guillermo Voluntad and petitioner Towne & City were both engaged in the construction
business. From 1984 to 1985, they entered into a contract for the (a) construction of several housing units belonging
to or reserved for different individuals; (b) repair of several existing housing units belonging to different individuals;
and (c) repair of facilities, all located at the Virginia Valley Subdivision, owned and developed by the petitioner. The
total contract cost amounted to P1,041,359.00.

The parties agreed that Guillermo should be paid in full by petitioner the agreed cost upon completion of the project.
In 1985, pending completion of the project, Guillermo was allowed by petitioner to occupy, free of charge, one of its
houses at the Virginia Valley Subdivision. After completing the construction and repair works, Guillermo demanded
payment for his services.

When petitioner failed to satisfy his claim in full, Guillermo filed a Complaint for collection against petitioner before
the RTC, alleging that petitioner paid him only the amount of P69,400.00, leaving a balance of P971,959.00 under the
terms of their contract. Petitioner averred that it had already paid Guillermo the amount of P1,022,793.46 for his
services and that there was even an overpayment of P58,189.46. Petitioner further claimed that Guillermo is liable for
unpaid rentals amounting to P66,000.00 for his occupancy of one of the houses in Virginia Valley Subdivision since
1985.

While the case was pending, Guillermo passed away. Guillermo did not adduce evidence in view of the admissions
made by petitioner that indeed it entered into a contract with him and that it was obliged to pay him for his services.
Petitioner presented its Corporate Secretary to prove that it paid Guillermo for his services under the contract. She
testified that she personally handed or delivered the cash or check payments to Guillermo, adding that Guillermo
acknowledged payments with his signatures on the vouchers. The RTC rendered a decision in favor of the Guillermo.
The CA affirmed.

ISSUE: Are vouchers considered proofs of payment?

HELD: NO. In PNB v. CA, while a receipt of payment is the best evidence of the fact of payment, it is, however, not
conclusive but merely presumptive; neither it is exclusive evidence as the fact of payment may be established also by
parole evidence. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the contents of the receipt
it issued to respondent. The subject receipt remains to be the primary or best evidence or "that which affords the
greatest certainty of the fact in question."

Here, petitioner has relied on vouchers to prove its defense of payment. However, vouchers are not receipts, it is
merely a way or method of recording or keeping track of payments made. A receipt is a written and signed
acknowledgment that money has been or goods have been delivered, while a voucher is documentary record of a
business transaction.

The references to alleged check payments in the vouchers presented by the petitioner do not vest them with the
character of receipts. Under Article 1249 of the Civil Code, payment of debts in money has to be made in legal tender
and the delivery of mercantile documents, including 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." Petitioner failed to produce the
originals of the checks after their supposed encashment and even the bank statements although the supposed payments
by check were effected only about 5 years before the filing of the collection suit.
 Benjamin Evangelista v. Screenex
G.R. No. 211564, November 20, 2017

FACTS: In 1991, Petitioner Evangelista obtained a loan from respondent Screenex which issued 2 checks to
Evangelista. One from UCPB for ₱l,000,000 and the other one is China Banking ₱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, he gave 2 open-dated checks both pay to the order of Screenex. From the time
the checks were issued, 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. Before the checks were
deposited, there was a personal demand from the family for Evangelista to settle the loan.

In 2005, petitioner was charged with violation of BP 22 for said 2 open-dated checks. He was then acquitted by the
MTC but was ordered to pay ₱1,500,000.00 plus 12% interest per annum as his civil obligation to the respondent. In
the RTC, petitioner filed for reconsideration arguing that any civil liability attributable to him had been extinguished
and/or was barred by prescription.

The RTC 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. With respect to the defense of
prescription, the 10-year prescriptive period under Art. 1144 of the Civil Code is computed from the time the right of
action accrues. However, it was not 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.

On appeal to CA, it affirmed the decision on the lower courts holding that, among others, the reckoning time for the
prescriptive period began when the instrument was issued and the corresponding check returned by the bank to its
depositor and the loan obligation was never denied by petitioner, who claimed that it was settled in 1992, but failed
to show any proof of payment. Hence, the case.

ISSUE: Is petitioner still liable for his civil obligation?

HELD: NO. 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. 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.

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.

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.

Hence, 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.
 Noemi Coronel v. Encarnacion Capati
G.R. No. 157836, May 26, 2005

FACTS: Petitioner contracted two loans from respondent, the first amounted to P121,000.00 payable on or before
February 4, 1993 and the second amounted to P363,000.00 payable on or before March 25, 1993. In return, petitioner
issued respondent two checks dated September 4, 1992 for the first loan and October 25, 1992 for the second loan.
The two loans are embodied in two handwritten instruments. Petitioner failed to pay her loans upon maturity despite
repeated demands from respondent. The two checks she issued were dishonored when presented for payment on
February 16, 1993 and April 7, 1993. Hence, on September 14, 1993, respondent filed a complaint for sum of money
and damages with attachment against petitioner before the RTC, which ruled in favor of the respondent.

On appeal to CA, petitioner denied contracting the two loans alleging that the Metrobank checks representing the
foregoing amounts were two of several checks she issued in favor of respondent for a loan amounting to P1.101 million
which she has fully paid. She claimed that despite full payment, respondent still deposited the two checks because of
a dispute between them arising from respondent’s demand for exorbitant and additional interest on the P1.101m loan.

Petitioner alleged further that there were instances when respondent asked her to affix her signature on blank sheets
of paper¸ thereby implying that the contents of Exhibits "A-1" and "B-1," containing the loan agreements were written
by respondent on sheets of paper signed in advance by petitioner.

ISSUE: Was petitioner’s obligation under the loan extinguished?

HELD: NO. When the existence of a debt is fully established by the evidence contained in the record, the burden of
proving that it has been extinguished by payment devolves upon the debtor who offers such defense to the claim of
the creditor. Even where creditor alleges non-payment, the general rule is that the onus rests on the debtor to prove
payment, rather than on the creditor to prove non-payment. The debtor has the burden of showing with legal certainty
that the obligation has been discharged by payment. This, petitioner failed to do.

Exhibits "A-1" and "B-1" are written instruments containing the loan agreements. The signature of petitioner as debtor
appears in both instruments. Petitioner does not deny she owns these signatures. These exhibits are the best evidence
of the subject obligation. One who is of age and a businesswise is presumed to have acted with due care and to have
signed the documents in question with full knowledge of its contents and consequences. Petitioner has borrowed large
sums of money from respondent that the total loan obligation has reached over millions of pesos. Petitioner has
transacted business with respondent several times. As the lower court pointed out, petitioner knows how to take care
of her business dealings. Thus, she caused the execution of two documents entitled "Discharge of Real Estate
Mortgage" and "Discharge of Chattel Mortgage," when she paid respondent the full consideration of the promissory
notes of P2M and P1M, wherein the mortgages served as security for the payment of said notes.

Similarly, petitioner, upon payment of P1M to respondent, retrieved the Metrobank Check which she issued as security
to respondent. Interestingly, in the case of the two checks subject matter of this litigation, petitioner did not even
demand their return from respondent, notwithstanding her claim that she has paid in full her loan obligation. All she
presented was a letter ordering Metrobank to stop payment of the checks without proof that it has been received by,
nor actually sent to Metrobank.
 People's Industrial and Commercial Corp. v. Court of Appeals and Mar-ick Investment Corp.
G.R. No. 112733, October 24, 1997

FACTS: Private respondent Mar-ick Investment is the exclusive and registered owner of Mar-ick Subdivision in
Cainta, Rizal. On May 29, 1961, private respondent entered into 6 agreements with petitioner whereby it agreed to
sell to petitioner 6 subdivision lots. The agreements stipulate that the petitioner agreed to pay private respondent for
each lot, the amount of P7,333.20 with a down payment of P480.00. The balance of P6,853.20 shall be payable in 120
equal monthly installments of P57.11 every 30th of the month, for a period of ten years. In provision No. 9 of the
contract, in case of failure to pay, breach by the buyer of any of the conditions shall have the same effect as non-
payment of the installments of the purchase price.

After the lapse of ten years, however, petitioner still had not fully paid for the six lots. After a series of negotiations,
they agreed to enter into a new contract to sell involving 7 lots which stipulates that the previous contracts involving
the same lots "have been cancelled due to the failure of the PURCHASER to pay the stipulated installments." It states
further that the new contract was entered into "to avoid litigation, considering that the PURCHASER has already made
use of the premises since 1981 to the present without paying the stipulated installments." The parties agreed that the
contract price would be P423,250.00 with a down payment of P42,325.00 payable upon the signing of the contract
and the balance of P380,925.00 payable in 48 equal monthly amortization payments of P7,935.94.

The new contract bears the date of October 11, 1983 but neither of the parties signed it. Thereafter, Tomas Siatianum
issued the checks in the total amount of P37,642.72 to private respondent. Private respondent received but did not
encash those checks. Instead, it filed a complaint for accion publiciana de posesion against petitioner and Tomas
Siatianum in the RTC.

It rendered a decision finding that the original agreements of the parties were validly cancelled in accordance with
provision No. 9 of each agreement, rather than in accordance with Art. 1403(2) of the Civil Code as the parties did
not sign the draft contract. Receipt by private respondent of the five checks could not amount to perfection of the
contract because private respondent never encashed and benefited from those checks. Furthermore, there was no
meeting of the minds between the parties because Art. 475 of the Civil Code should be read with the Statute of Frauds
that requires the embodiment of the contract in a note or memorandum.

The lower court opined that the checks represented the deposit under the new contract because petitioner failed to
prove that those were monthly installments that private respondent refused to accept. What petitioner proved instead
was the fact that it was not able to pay the rest of the installments because of a strike, fire and storm that affected its
operations. Be that as it may, what was clearly proven was that both parties negotiated a new contract after the
termination of the first. Thus, the fact that the parties tried to negotiate a new contract indicated that they considered
the first contract as "already cancelled." On appeal, the CA affirmed in toto

ISSUE: Was there a perfected and enforceable contract of sale which modified the earlier contracts to sell which had
not been validly rescinded?

HELD: YES. Under the law, there is a binding contract between the parties whose minds have met on a certain matter
notwithstanding that they did not affix their signatures to its written form. Here, it was private respondent's company
lawyer, Atty. Manuel Villamayor, who volunteered that after the cancellation of the 1961 agreements, the parties
should negotiate and enter into "a new agreement based on the current price". However, there was a hitch in the
negotiations because after he had drafted the contract and sent it to petitioner, the latter "deposited a check for
downpayment" but its representative refused to sign the prepared contract. In the absence of proof to the contrary, this
draft contract may be deemed to embody the agreement of the parties

Moreover, private respondent's offer to sell and petitioner's acceptance are manifest in the documentary evidence
presented by the parties. Thus, when private respondent presented the 5 checks, it admitted as the down payment under
the October 1983 contract. Private respondent's intentional non-encashment of the check cannot serve to belie the fact
of its tender as down payment. For its part, petitioner presented a receipt showing that private respondent's authorized
representative received the total amount of P37,642.72 represented by said five checks as "deposit of Contract."
However, the mere sending of a letter by the vendee expressing the intention to pay, without the accompanying
payment, is not considered a valid tender of payment. Besides, a mere tender of payment is not sufficient to compel
private respondents to deliver the property and execute the deed of absolute sale. It is consignation which is essential
in order to extinguish petitioner's obligation to pay the balance of the purchase price. The rule is different in case of
an option contract or in legal redemption or in a sale with right to repurchase, wherein consignation is not necessary
because these cases involve an exercise of a right or privilege (to buy, redeem or repurchase) rather than the discharge
of an obligation, hence tender of payment would be sufficient to preserve the right or privilege. This is because the
provisions on consignation are not applicable when there is no obligation to pay. A contract to sell, as in the case
before us, involves the performance of an obligation, not merely the exercise of a privilege or a right. Consequently,
performance or payment may be effected not by tender of payment alone but by both tender and consignation.

As earlier noted, petitioner did not lift a finger towards the performance of the contract other than the tender of down
payment. There is no record that it even bothered to tender payment of the installments or to amend the contract to
reflect the true intention of the parties as regards the number of lots to be sold. Indeed, by petitioner's inaction, private
respondent may not be judicially enjoined to validate a contract that the former appeared to have taken for granted.
As in the earlier agreements, petitioner ignored opportunities to resuscitate a contract to sell that was rendered waning
and inoperative by its inaction.