PIO BARRETTO REALTY DEVELOPMENT CORPORATION VS COURT OF APPEALS

G.R. NO. L-62431-33 AUGUST 31, 1984

Petitioner: PIO BARRETTO REALTY DEVELOPMENT, INC.

Respondent: THE HON. COURT OF APPEALS (SIXTH DIVISION) and HONOR MOSLARES

FACTS:

1. Honor Moslares and Pio Barretto Realty Development Corporation are disputing over
the estate of Nicolai Drepin, represented by Atty. Tomas Trinidad.

2. 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

3. In case Moslares was able to buy the property first, he should pay P3,000,000.00 to
Barretto Realty (representing the amount of investments by Barretto Realty in the
estate).

4. Should Barretto Realty buy the property first, it should pay P1,000,000.00 to Moslares
(representing interest). The compromise agreement was approved by the Judge
Perfecto Laguio.

5. Barretto Realty was able to buy the property first hence it delivered a manager’s
check worth P1,000,000.00 to Moslares but the latter refused to accept the same.

6. Barretto Realty filed a petition before the trial court to direct Moslares to comply with
the Compromise Agreement.

7. 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.

8. 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.

ISSUE:

1. Whether the delivery of a check payment that was never encashed did not amount to
legal tender?

HELD:

1. A check is not a legal tender and while the 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.