G.R. No. 211564 - Evangelista vs. Screenex, Inc.

Case Summary (G.R. No. 211564)

Factual Background

Sometime in 1991, Evangelista obtained a loan and received two corporate checks from Screenex, Inc. in the amounts of P1,000,000 and P500,000. As security, Evangelista gave two open-dated checks: UCPB Nos. 616656 and 616657, payable to Screenex, Inc. These instruments and related documents were held in safekeeping by Philip Gotuaco, Sr., father-in-law of Alexander G. Yu, until Gotuaco’s death on November 19, 2004. The parties disputed payment and presentment; the family allegedly made demands and sent a lawyer’s demand letter before filing the criminal complaint.

Criminal Information and Arraignment

On August 25, 2005, Evangelista was charged with two counts of violating BP Blg. 22 for issuing checks dated December 22, 2004 (UCPB AGR 616656 and AGR 616657) that were subsequently dishonored with the reason “ACCOUNT CLOSED,” and for failing to pay within five banking days after notice. Evangelista pleaded not guilty and trial ensued.

Ruling of the Metropolitan Trial Court

The MeTC found that the prosecution established the acts of issuing checks and their dishonor but failed to prove the third element of a BP 22 offense — that the drawer knew of insufficient funds at issuance — because the demand letter’s receipt by Evangelista was not proven and the five-day period could not be properly fixed. Consequently, the MeTC acquitted Evangelista criminally. The MeTC nonetheless adjudicated the civil aspect and held that the creditor’s possession of the checks created a presumption of nonpayment; because Evangelista failed to prove payment, the court ordered him to pay the civil obligation of P1,500,000 with twelve percent interest per annum from filing until fully paid.

Appeal to the Regional Trial Court

Evangelista appealed to the RTC, raising errors both on the civil liability finding and on prescription. The RTC affirmed the MeTC’s view that the checks evidenced indebtedness and that an asserted payment was an affirmative defense that Evangelista failed to prove. The RTC addressed prescription by observing that the ten-year prescriptive period under Article 1144 must be computed from accrual, and that the terms of the loan and its maturity were not shown; the court therefore could not infer accrual and denied the prescription plea. The RTC dismissed the appeal and denied reconsideration.

Petition to the Court of Appeals

Evangelista petitioned the CA, arguing lack of proof of civil liability, incompetence of witness Yu, alteration of check dates, and prescription. Yu defended his testimony, asserted that the checks were undated and thus not materially altered, and maintained that demand in February 2005 fell within the ten-year prescriptive period measured from the 1991 loan. The CA denied the petition, ruling that prescription ripened from issuance or the date on the check returned by the bank, that the issue of prescription was raised belatedly on appeal but the record showed no payment, and that possession of the instrument raised a presumption of nonpayment which Evangelista did not overcome.

Issue Presented to the Supreme Court

Following denial of reconsideration by the CA, the sole issue before the Supreme Court was whether the Court of Appeals committed reversible error in sustaining civil liability of Evangelista for P1,500,000 indicated on the two checks despite his criminal acquittal, particularly in light of prescription and alleged alteration or nondelivery defenses.

Supreme Court Disposition

The Supreme Court granted the petition. The Court set aside the CA Decision dated October 1, 2013 and Resolution dated February 27, 2014, and dismissed the complaint seeking enforcement of civil liability on the two undated checks on the ground that the action had prescribed. The Supreme Court therefore dismissed the complaint against Evangelista.

Legal Basis and Reasoning on Prescription

The Court explained that a check is a negotiable instrument and that the civil action on a check is an action upon a written contract subject to the ten-year prescriptive period under Article 1144. Where the date on a check is omitted, Sec. 17 of the Negotiable Instruments Law presumes the instrument to be dated as of the time of its issuance; accordingly, the cause of action accrues from the date indicated on the check or, if undated, from issuance. The Court held that filling in the date on a blank must be done within a reasonable time and strictly in accordance with authority given under Sec. 14 of the NIL. If the date was inserted long after issuance, that change cannot cure the lapse. Here, the dates appearing on the checks were inserted more than ten years after issuance and the record contained no written extrajudicial or judicial demand within ten years to toll prescription. Therefore the Court concluded that the cause of action had become stale and time-barred.

Independent Doctrines Applied: Payment by Delay and Dismissal Motu Proprio

The Court reiterated established doctrine that delivery of a negotiable instrument produces payment only upon its being cashed, unless the creditor’s negligence in presentment prejudices the drawer. Relying on Article 1249 of the Civil Code and Sec. 186 of the Negotiable Instruments Law, and on precedents such as BPI v. Spouses Royeca and Papa v. Valencia, the Court observed that an unreasonable and unexplained delay in presentment for ten years or more may render the instrument stale and treat the obligation as discharged. Finding that more than ten years had elapsed and that the creditor did not explain the delay, the Court held that payment was effectively deemed to have occurred by operatio

Case Syllabus (G.R. No. 211564)

Parties and Procedural Posture

BENJAMIN EVANGELISTA filed a Petition for Review on Certiorari challenging the decision of the Court of Appeals in CA-G.R. SP No. 110680 under G.R. No. 211564.
SCREENEX, INC., represented by ALEXANDER G. YU is the private complainant and respondent in the criminal and civil actions originating in the Metropolitan Trial Court of Makati.
The criminal case was prosecuted under an Information for violation of B.P. Blg. 22 filed on 25 August 2005 in the Metropolitan Trial Court, Branch 61, Makati City.
The MeTC rendered a Decision acquitting the accused of the criminal charges but adjudging civil liability, which was affirmed by the Regional Trial Court, Branch 147, Makati City, and thereafter by the Court of Appeals.
The Supreme Court First Division granted review and decided the case by setting aside the CA Decision and dismissing the complaint on grounds stated below.

Key Factual Allegations

Petitioner obtained a loan in 1991 from Screenex, Inc. which issued two checks to him in the amounts of P1,000,000 and P500,000 as reflected in company vouchers signed by petitioner.
As security for the loan, petitioner delivered two open-dated checks, UCPB Nos. 616656 and 616657, payable to Screenex, Inc., and these instruments were kept by Philip Gotuaco, Sr., the father-in-law of respondent Alexander Yu.
Philip Gotuaco, Sr. died on 19 November 2004, and before deposit of the checks the family made a personal demand and sent a demand letter to petitioner.
The Information charged Evangelista with issuing the two checks dated 12-22-04 for P1,000,000 and P500,000 that were later dishonored with the bank remark "ACCOUNT CLOSED" and alleged failure to pay within five banking days after notice.

Issues Presented

Whether the Court of Appeals committed reversible error in ordering petitioner to pay the civil obligation evidenced by the two checks in the total amount of P1,500,000.
Whether any civil liability of petitioner had been extinguished or barred by prescription.
Whether the insertion of dates on otherwise undated checks constituted material alteration that rendered the instruments void.
Whether witness Alexander G. Yu was competent and sufficient to establish the loan transaction and the accrual of the cause of action.

Contentions of the Parties

Petitioner argued that the prosecution failed to prove civil liability, that the checks were altered by the insertion of dates without his knowledge, that witness Yu lacked competence to prove the loan transaction, and that the obligation was prescribed.
Screenex, Inc., represented by ALEXANDER G. YU contended that prescription should be reckoned from the dates written on the checks (22 December 2004) and that the complaint filed on 25 August 2005 was within the ten-year period under Art. 1144, New Civil Code.
Respondent further contended that the checks were undated prior to completion and that petitioner failed to prove payment, and that the issue of prescription was raised belatedly.

Metropolitan Trial Court Ruling

The MeTC found that the prosecution proved issuance and dishonor of the checks but failed to prove the third element of B.P. Blg. 22 concerning the drawer's knowledge of insufficiency of funds, and thereby acquitted