Case no.

4
ERNESTO T. PACHECO & VIRGINIA O PACHECO vs. Hon. Court of Appeals &
People of the Philippines
(G.R. No. 126670, Dec. 2, 1999)

FACTS:
Petitioner spouses are engaged in the construction business. Due to dire financial needs of
petitioner spouses who were engaged in the construction business, they secured loans from
Vicencio.    At every loan secured, the lender compelled the spouses to issue an undated check
despite the admission of spouses that their bank account has insufficient funds or as on a later
date, already closed.  Lender assured them that the issuance of the check was only evidence of
indebtedness, that it would not be presented to the bank, and it would be for formalities only. 
On the date wherein there was an unpaid balance to the loans secured by the spouses, the
lender had them place a date on two of the later checks issued.  Surprised
later on, the spouses were charged with estafa as the checks were presented for encashment
and was dishonored.

ISSUE:
Whether or not the checks were issued as negotiable instruments.

HELD:
No. the High Court held that although a check has the character of negotiability, and that it
constitutes an evidence of indebtedness, the parties may, by mutual agreement, waive the
negotiable character of the check, it may be treated simply as proof of an obligation. When in
mutual agreement with the creditor, checks may become nothing but an evidence of the loan or
security thereof, or a mere evidence of indebtedness.

From the facts provided, Mrs. Vicencio could not have been defrauded because they were
firsthand informed that petitioner debtor-spouses had no funds in their RCBC account, as was
done multiple times. There was the absence of deceit, there is no estafa. Moreover, as a former
judge, Mr. Vicencio need not ask the petitioners to place a date on the check. As holder of the
check, the Negotiable Instruments Law sanctions his signing/inserting a date on the instrument.

As the person in possession of the check, he has the prima facie authority to complete it by
filling up the blanks therein. Moreover, the negotiability of said checks would have still survived
considering that sec. 12 of Act. No. 2031 stated that the instrument is not rendered invalid by
reason only that it is antedated or post-dated. Persons are presumed to have taken care of their
business.

Moreover, the High Court held that a check must be presented within a reasonable time from
issue. Otherwise, it would be considered a stale check after more than 6 months of non-
presentment.