MYRON C.

PAPA, Administrator of the Testate Estate of

Angela M. Butte, petitioner, vs. A. U. VALENCIA and CO.
INC., FELIX PEARROYO, SPS. ARSENIO B. REYES &
AMANDA SANTOS, and DELFIN JAO, respondents.
[G.R. No. 105188. January 23, 1998]

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
propertys release by delivery, Butte died. The Bank refused to
release the property despite Penarroyos 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, Papas 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.