FACTS:

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.  
 

HELD:

BY MUTUAL AGREEMENT OF  THE PARTIES, THE NEGOTIABLE CHARACTER OF A CHECK MAY BE WAIVED AND THE INSTRUMENT BE SIMPLY TREATED AS PROOF OF AN OBLIGATION.  There cannot be deceit on the part of the spouses because they agreed with the lender at the time  of the issuance and  postdating  of  the  checks  that  the  same  shall  not  be  encashed  or presented  to  the  bank.    As  per  assurance  of  the  lender,  the  checks  are nothing but evidence of the loan or security thereof in lieu of and for the
same purpose as a promissory note.