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    Bank of The Philippine Islands V Spouses Royeca

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    BAROPS
    The spouses Royeca executed a promissory note and chattel mortgage in favor of Toyota Shaw for a vehicle loan. Toyota assigned the interest to FEBTC, which later merged with BPI. The spouses claimed to have paid by issuing postdated checks, but BPI claimed non-payment. The Court held that checks do not constitute valid payment until cashed, so the obligation remained. Tender of a negotiable instrument alone does not discharge the obligation, which remains suspended until payment is actually realized. The spouses failed to prove the checks were encashed to establish the defense of payment.

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    Bank of The Philippine Islands V Spouses Royeca

    Uploaded by

    BAROPS
    430 views1 page
    The spouses Royeca executed a promissory note and chattel mortgage in favor of Toyota Shaw for a vehicle loan. Toyota assigned the interest to FEBTC, which later merged with BPI. The spouses claimed to have paid by issuing postdated checks, but BPI claimed non-payment. The Court held that checks do not constitute valid payment until cashed, so the obligation remained. Tender of a negotiable instrument alone does not discharge the obligation, which remains suspended until payment is actually realized. The spouses failed to prove the checks were encashed to establish the defense of payment.

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    Bank of the Philippine Islands v Spouses Royeca

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    The spouses Royeca executed a promissory note and chattel mortgage in favor of Toyota Shaw for a vehicle loan. Toyota assigned the interest to FEBTC, which later merged with BPI. The spouses claimed to have paid by issuing postdated checks, but BPI claimed non-payment. The Court held that checks do not constitute valid payment until cashed, so the obligation remained. Tender of a negotiable instrument alone does not discharge the obligation, which remains suspended until payment is actually realized. The spouses failed to prove the checks were encashed to establish the defense of payment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    430 views1 page

    Bank of The Philippine Islands V Spouses Royeca

    Uploaded by

    BAROPS
    The spouses Royeca executed a promissory note and chattel mortgage in favor of Toyota Shaw for a vehicle loan. Toyota assigned the interest to FEBTC, which later merged with BPI. The spouses claimed to have paid by issuing postdated checks, but BPI claimed non-payment. The Court held that checks do not constitute valid payment until cashed, so the obligation remained. Tender of a negotiable instrument alone does not discharge the obligation, which remains suspended until payment is actually realized. The spouses failed to prove the checks were encashed to establish the defense of payment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 1

    Bank of the Philippine Islands v.

    Spouses Royeca

    (July 21, 2008)

    Subject: Obligations and Contracts

    Facts : In 1993, spouses Royeca executed and delivered to Toyota Shaw, Inc. a
    promissory note for P577,008 payable in 48 equal monthly installments. It provides
    for a penalty of 3% for every month or fraction of a month that an installment
    remains unpaid. To secure the payment of said promissory note, the spouses
    executed a Chattel Mortgage in favor of Toyota over a certain motor vehicle. Toyota
    assigned the interest over the Chattel with Far East Bank and Trust Company
    (FEBTC) which eventually merged with BPI. The bank claimed that the spouses
    failed to pay 4 monthly amortizations and made formal demands. The respondents
    refused to pay on the ground that they have paid their obligation by issuing 8
    postdated checks in different amounts. FEBTC then filed a complaint for replevin
    and damages. The spouses filed a counterclaim for damages. They averred that
    they were in good faith since they did not receive any notice from the drawee banks
    or from FEBTC that these checks were dishonored. MeTC ruled for the spouses. On
    appeal the RTC reversed, holding for the BPI. The CA ruled for the spouses and
    reinstated the MeTC decision.

    Issues: WON tender of checks constitutes payment

    Held: No. Settled is the rule that payment must be in legal tender. A check is
    not legal tender and, therefore, cannot constitute a valid tender of payment. Since a
    negotiable instrument is only a substitute for money and not money, the delivery of
    such an instrument does not, by itself, operate as payment. Mere delivery of
    checks does not discharge the obligation under a judgment. The obligation
    is not extinguished and remains suspended until the payment by
    commercial document is actually realized.

    To establish their defense, the respondents therefore had to present proof, not only
    that they delivered the checks to the petitioner, but also that the checks were
    encashed. The respondents failed to do so. As a general rule, one who pleads
    payment has the burden of proving it. Even where the plaintiff must allege non-
    payment, the general rule is that the burden rests on the defendant to prove
    payment, rather than on the plaintiff to prove non-payment. The debtor has the
    burden of showing with legal certainty that the obligation has been discharged by
    payment.

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