Bognot v RRI Lending Corp.
FACTS:
In September 1996, Leonardo Bognot and his younger brother, Rolando Bognot applied for
and obtained a loan ofP500,000.00from RRI Lending, payable on November 30, 1996.The loan was
evidenced by a promissory note and was secured by a post dated check dated November 30,
1996.Evidence on record shows that Leonardo renewed the loan several times on a monthly
basis. He paid a renewal fee ofP54,600.00 for each renewal, issued a new post-dated check as
security, and executed and/or renewed the promissory note previously issued. RRI Lending on the
other hand, cancelled and returned to Leonardo the post-dated checks issued prior to their renewal.
Leonardo paid the renewal fees and issued a post-dated check dated June 30, 1997 as security.
As had been done in the past, RRI Lending superimposed the date "June 30, 1997"on the
promissory note to make it appear that it would mature on the said date.
Several days before the loan’s maturity, Rolando’s wife, Julieta, went to the respondent’s office
and applied for another renewal of the loan. She issued in favor of RRI Lending a promissory note
and a check dated July 30, 1997, in the amount ofP54,600.00 as renewal fee.
On the excuse that she needs to bring home the loan documents for the Bognot siblings’ signatures and
replacement, Julieta asked the RRI Lending clerk to release to her the promissory note, the
disclosure statement, and the check dated July 30, 1997. Julieta, however, never returned these
documents nor issued a new post-dated check. Consequently, RRI Lending sent Leonardo follow-
up letters demanding payment of the loan, plus interest and penalty charges. These demands
went unheeded.
In his Answer, Leonardo, claimed, among other things, that the complaint states no cause of
action because RRI Lending’s claim had been paid, waived, abandoned or otherwise extinguished,
and that the one (1) month loan contracted by Rolando and his wife in November 1996 which was
lastly renewed in March 1997 had already been fully paid and extinguished in April 1997.
ISSUES:
1. Whether the obligation was extinguished through payment
RULING:
No. Leonardo failed to satisfactorily prove that his obligation had already been extinguished by
payment. As the CA correctly noted, the petitioner failed to present any evidence that RRI Lending
had in fact encashed his check and applied the proceeds to the payment of the loan. Neither did
he present official receipts evidencing payment, nor any proof that the check had been
dishonored.Leonardomerely relied on the respondent’s cancellation and return to him of the check
dated April 1, 1997. The evidence shows that this check was issued to secure the indebtedness. The
acts imputed on the respondent, standing alone, do not constitute sufficient evidence of
payment.
Settled is the rule that payment must be made 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.
Although Article 1271 of the Civil Code provides fora legal presumption of renunciation of action (in
cases where a private document evidencing a credit was voluntarily returned by the creditor
to the debtor), this presumption is merely prima facie and is not conclusive; the presumption loses
efficacy when faced with evidence to the contrary.
Moreover, the cited provision merely raises a presumption, not of payment, but of the
renunciation of the credit where more convincing evidence would be required than what normally
would be called for to prove payment.
Thus, reliance by the petitioner on the legal presumption to prove payment is misplaced.
To reiterate, no cash payment was proven by the petitioner. The cancellation and return of the check
dated April 1, 1997, simply established his renewal of the loan –not the fact of payment.
Furthermore, it has been established during trial, through repeated acts, that the respondent
cancelled and surrendered the post-dated check previously issued whenever the loan is renewed
