Pio Barretto Realty Development Corporation vs Court of Appeals

written by Howard

G.R. No. L-62431-33 – 360 SCRA 127 – Mercantile Law – Negotiable Instruments Law – Check Payments – Due Diligence in Presenting Checks for Payment 

Honor Moslares and Pio Barretto Realty Development Corporation are disputing over the estate of Nicolai Drepin, represented by Atty. Tomas Trinidad. To settle the dispute, and while the case was in court, they entered into a Compromise Agreement by which they agreed to have the estate in dispute be sold; that in case Moslares was able to buy the property first, he should pay P3,000, to Barretto Realty (representing the amount of investments by Barretto Realty in the estate); that should Barretto Realty buy the property first, it should pay P1,000, to Moslares (representing interest). The compromise agreement was approved by the judge (Judge Perfecto Laguio).

Barretto Realty was able to buy the property first hence it delivered a manager’s check worth P1,000, to Moslares but the latter refused to accept the same. Barretto Realty filed a petition before the trial court to direct Moslares to comply with the Compromise Agreement. Barretto Realty also consigned the check payment with the court. The judge issued a writ of execution against Moslares and the sheriff also delivered the check to Moslares which the latter accepted. However, three years later, Moslares filed a motion for reconsideration alleging that the check payment did not amount to legal tender and that he never even encashed the check. The judge agreed with Moslares.

ISSUE: Whether or not the judge was correct.

HELD: No. There was already a final and executory order issued by the same judge three years prior. The same may no longer be amended regardless of any claim or error or incorrectness (save for clerical errors only). It is true that a check is not a legal tender and while delivery of a check produces the effect of payment only when it is encashed, the rule is otherwise if the debtor (Barretto Realty) was prejudiced by the creditor’s (Moslares’) unreasonable delay in presentment. Acceptance of a check implies an undertaking of due diligence in presenting it for payment. If no such presentment was made, the drawer cannot be held liable irrespective of loss or injury sustained by the payee. Payment will be deemed effected and the obligation for which the check was given as conditional payment will be discharged.

Read full text