Papa v.

Valencia
G.R. No. 105188 Jan. 23, 1998
Kapunan, J.Alex Ramos
Keywords: Presumption of check encashment; when creditor impairs check

Facts: The case involves a dispute over a parcel of land located in Quezon City, which was purportedly sold by
Angela M. Butte, represented by Myron C. Papa as her attorney-in-fact, to Felix Peñarroyo through A.U.
Valencia and Co., Inc. The sale occurred before the death of Angela M. Butte, but the title to the property was
not released prior to her passing. Despite efforts to obtain the title, it remained encumbered by a mortgage
held by the Associated Banking Corporation.

Upon Angela M. Butte's demise, Peñarroyo and Valencia sought to secure the title to the property, but
encountered difficulties due to the mortgage. Furthermore, Myron C. Papa continued to collect monthly rentals
from tenants on the property, even after the purported sale to Peñarroyo.

Delfine Jao intervened, claiming that he had acquired the property from Peñarroyo subsequent to the alleged
sale, adding another layer of complexity to the case.

In response to the lawsuit filed by Peñarroyo and Valencia, Myron C. Papa filed a third-party complaint against
Arsenio B. Reyes and Amanda Santos, who had acquired the property through a tax sale. Papa argued that the
sale between Angela M. Butte and Peñarroyo was not consummated, as he did not encash the check given as
payment. However, the trial court allowed redemption of the property and ordered a transfer of the deed to
Peñarroyo, as well as payment to Jao.

Papa contended that he should not be held personally liable as he acted only as Angela M. Butte's attorney-in-
fact. However, the Court of Appeals upheld his liability, stating that the action was against him in his capacity as
the administrator of Butte's estate, not personally.

Papa further argued that Angela M. Butte's estate should have been joined as a party to the action, but the
court ruled otherwise, citing procedural rules.

Ultimately, the Court of Appeals affirmed the decision of the trial court with modifications, ordering Papa to
deliver the title to Peñarroyo and to allow peaceful possession of the property, while rejecting Papa's claims of
non-consummation of the sale and lack of personal liability.

ISSUE: WON alleged sale of the subject property had been consummated

HELD: Petition denied. CA decision affirmed

RATIO: - Yes. The petitioner challenges the applicability of Article 1249 of the Civil Code, which states that
payment by check only becomes effective upon encashment or if impairment occurs due to the fault of the
creditor. He argues that mere receipt of the check does not prove payment. However, the court notes that the
petitioner himself admitted to receiving payment for the lot, undermining his claim of non-encashment.
Furthermore, his prolonged failure to encash the check led to its impairment, as evidenced by over a decade
passing without action.

The court emphasizes that while normally a check must be cashed to fulfill payment, if the creditor's undue
delay causes prejudice to the debtor, the check can be deemed as payment. In this instance, the respondents
had indeed fulfilled their end of the sale contract by delivering the payment, entitling them to demand the title
and possession of the lot.

Regarding the assignment of mortgage rights, the court finds the circumstances unclear from the evidence.
However, it's evident that the mortgage remained under Angela M. Butte's name, suggesting the estate's
continued involvement.

The court further asserts that the estates of both Angela M. Butte and Ramon Papa, Jr. are not indispensable
parties in the case. According to Rule 3, Section 3 of the Rules of Court, an executor or administrator may sue
or be sued without necessarily joining the party for whose benefit the action is pursued. Similarly, the estate of
Ramon Papa, Jr. isn't considered indispensable, as any existing mortgage rights can still be enforced regardless
of changes in ownership.