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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

117857 February 2, 2001

LUIS S. WONG, petitioner, vs. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents. QUISUMBING, J.: For review on certiorari is the decision dated October 28, 1994 of the Court of Appeals in C.A. G.R. CR 118561which affirmed the decision of the Regional Trial Court of Cebu City, Branch 17, convicting petitioner on three (3) counts of Batas Pambansa Blg. 22 (the Bouncing Checks Law) violations, and sentencing him to imprisonment of four (4) months for each count, and to pay private respondent the amounts of P5,500.00, P6,410.00 and P3,375.00, respectively, corresponding to the value of the checks involved, with the legal rate of interest from the time of filing of the criminal charges, as well as to pay the costs.1wphi1.nt The factual antecedents of the case are as follows: Petitioner Wong was an agent of Limtong Press. Inc. (LPI), a manufacturer of calendars. LPI would print sample calendars, then give them to agents to present to customers. The agents would get the purchase orders of customers and forward them to LPI. After printing the calendars, LPI would ship the calendars directly to the customers. Thereafter, the agents would come around to collect the payments. Petitioner, however, had a history of unremitted collections, which he duly acknowledged in a confirmation receipt he co-signed with his wife.2 Hence, petitioners customers were required to issue postdated checks before LPI would accept their purchase orders. In early December 1985, Wong issued six (6) postdated checks totaling P18,025.00, all dated December 30, 1985 and drawn payable to the order of LPI, as follows: (1) Allied Banking Corporation (ABC) Check No. 660143464-C for P6,410.00 (Exh. "B");

(2) ABC Check No. 660143460-C for P540.00 (Exh. "C"); (3) ABC Check No. PA660143451-C for P5,500.00 (Exh. "D"); (4) ABC Check No. PA660143465-C for P1,100.00 (Exh. "E"); (5) ABC Check No. PA660143463-C for P3,375.00 (Exh. "F"); (6) ABC Check No. PA660143452-C for P1,100.00 (Exh. "G"). These checks were initially intended to guarantee the calendar orders of customers who failed to issue post-dated checks. However, following company policy, LPI refused to accept the checks as guarantees. Instead, the parties agreed to apply the checks to the payment of petitioners unremitted collections for 1984 amounting to P18,077.07.3 LPI waived the P52.07 difference. Before the maturity of the checks, petitioner prevailed upon LPI not to deposit the checks and promised to replace them within 30 days. However, petitioner reneged on his promise. Hence, on June 5, 1986, LPI deposited the checks with Rizal Commercial Banking Corporation (RCBC). The checks were returned for the reason "account closed." The dishonor of the checks was evidenced by the RCBC return slip. On June 20, 1986, complainant through counsel notified the petitioner of the dishonor. Petitioner failed to make arrangements for payment within five (5) banking days. On November 6, 1987, petitioner was charged with three (3) counts of violation of B.P. Blg. 224 under three separate Informations for the three checks amounting to P5,500.00, P3,375.00, and P6,410.00.5 The Information in Criminal Case No. CBU-12055 reads as follows:6 That on or about the 30th day of December, 1985 and for sometime subsequent thereto, in the City of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the said accused, knowing at the time of issue of the check she/he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment, with deliberate intent, with intent of gain and of causing damage, did then and there issue, make or draw Allied Banking Corporation Check No. 660143451 dated 12-30-85 in the amount of P5,500.00 payable to Manuel T.

Limtong which check was issued in payment of an obligation of said accused, but when the said check was presented with said bank, the same was dishonored for reason ACCOUNT CLOSED and despite notice and demands made to redeem or make good said check, said accused failed and refused, and up to the present time still fails and refuses to do so, to the damage and prejudice of said Manuel T. Limtong in the amount of P5,500.00 Philippine Currency. Contrary to law. Petitioner was similarly charged in Criminal Case No. 12057 for ABC Check No. 660143463 in the amount of P3,375.00, and in Criminal Case No. 12058 for ABC Check No. 660143464 for P6,410.00. Both cases were raffled to the same trial court. Upon arraignment, Wong pleaded not guilty. Trial ensued. Manuel T. Limtong, general manager of LPI, testified on behalf of the company, Limtong averred that he refused to accept the personal checks of petitioner since it was against company policy to accept personal checks from agents. Hence, he and petitioner simply agreed to use the checks to pay petitioners unremitted collections to LPI. According to Limtong, a few days before maturity of the checks, Wong requested him to defer the deposit of said checks for lack of funds. Wong promised to replace them within thirty days, but failed to do so. Hence, upon advice of counsel, he deposited the checks which were subsequently returned on the ground of "account closed." The version of the defense is that petitioner issued the six (6) checks to guarantee the 1985 calendar bookings of his customers. According to petitioner, he issued the checks not as payment for any obligation, but to guarantee the orders of his customers. In fact, the face value of the six (6) postdated checks tallied with the total amount of the calendar orders of the six (6) customers of the accused, namely, Golden Friendship Supermarket, Inc. (P6,410.00), New Society Rice and Corn Mill (P5,500.00), Cuesta Enterprises (P540.00), Pelrico Marketing (P1,100.00), New Asia Restaurant P3,375.00), and New China Restaurant (P1,100.00). Although these customers had already paid their respective orders, petitioner claimed LPI did not return the said checks to him. On August 30, 1990, the trial court issued its decision, disposing as follows:7

"Wherefore, premises considered, this Court finds the accused Luis S. Wong GUILTY beyond reasonable doubt of the offense of Violations of Section 1 of Batas Pambansa Bilang 22 in THREE (3) Counts and is hereby sentenced to serve an imprisonment of FOUR (4) MONTHS for each count; to pay Private Complainant Manuel T. Limtong the sums of Five Thousand Five Hundred (P5,500.00) Pesos, Six Thousand Four Hundred Ten (P6,410.00) Pesos and Three Thousand Three Hundred Seventy-Five (P3,375.00) Pesos corresponding to the amounts indicated in Allied Banking Checks Nos. 660143451, 66[0]143464 and 660143463 all issued on December 30, 1985 together with the legal rate of interest from the time of the filing of the criminal charges in Court and pay the costs."8 Petitioner appealed his conviction to the Court of Appeals. On October 28, 1994, it affirmed the trial courts decision in toto.9 Hence, the present petition.10 Petitioner raises the following questions of law -11 May a complainant successfully prosecute a case under BP 22 --- if there is no more consideration or price or value ever the binding tie that it is in contracts in general and in negotiable instruments in particular behind the checks? if even before he deposits the checks, he has ceased to be a holder for value because the purchase orders (POs) guaranteed by the checks were already paid? Given the fact that the checks lost their reason for being, as above stated, is it not then the duty of complainant knowing he is no longer a holder for value to return the checks and not to deposit them ever? Upon what legal basis then may such a holder deposit them and get paid twice? Is petitioner, as the drawer of the guarantee checks which lost their reason for being, still bound under BP 22 to maintain his account long after 90 days from maturity of the checks? May the prosecution apply the prima facie presumption of "knowledge of lack of funds" against the drawer if the checks were belatedly deposited by the complainant 157 days after maturity, or will it be then necessary for the prosecution to show actual proof of "lack of funds" during the 90-day term? Petitioner insists that the checks were issued as guarantees for the 1985 purchase orders (POs) of his customers. He contends that private respondent is not a "holder for value" considering that the checks were deposited by private

respondent after the customers already paid their orders. Instead of depositing the checks, private respondent should have returned the checks to him. Petitioner further assails the credibility of complainant considering that his answers to crossexamination questions included: "I cannot recall, anymore" and "We have no more record." In his Comment,12 the Solicitor General concedes that the checks might have been initially intended by petitioner to guarantee payments due from customers, but upon the refusal of LPI to accept said personal checks per company policy, the parties had agreed that the checks would be used to pay off petitioners unremitted collections. Petitioners contention that he did not demand the return of the checks because he trusted LPIs good faith is contrary to human nature and sound business practice, according to the Solicitor General. The issue as to whether the checks were issued merely as guarantee or for payment of petitioners unremitted collections is a factual issue involving as it does the credibility of witnesses. Said factual issue has been settled by the trial court and Court of Appeals. Although initially intended to be used as guarantee for the purchase orders of customers, they found the checks were eventually used to settle the remaining obligations of petitioner with LPI. Although Manuel Limtong was the sole witness for the prosecution, his testimony was found sufficient to prove all the elements of the offense charged.13 We find no cogent reason to depart from findings of both the trial and appellate courts. In cases elevated from the Court of Appeals, our review is confined to allege errors of law. Its findings of fact are generally conclusive. Absent any showing that the findings by the respondent court are entirely devoid of any substantiation on record, the same must stand.14 The lack of accounting between the parties is not the issue in this case. As repeatedly held, this Court is not a trier of facts.15 Moreover, in Llamado v. Court of Appeals,16 we held that "[t]o determine the reason for which checks are issued, or the terms and conditions for their issuance, will greatly erode the faith the public reposes in the stability and commercial value of checks as currency substitutes, and bring about havoc in trade and in banking communities. So what the law punishes is the issuance of a bouncing check and not the purpose for which it was issued nor the terms and conditions relating to its issuance. The mere act of issuing a worthless check is malum prohibitum." Nothing herein persuades us to hold otherwise. The only issue for our resolution now is whether or not the prosecution was able to establish beyond reasonable doubt all the elements of the offense penalized under B.P. Blg. 22.

There are two (2) ways of violating B.P. Blg. 22: (1) by making or drawing and issuing a check to apply on account or for value knowing at the time of issue that the check is not sufficiently funded; and (2) by having sufficient funds in or credit with the drawee bank at the time of issue but failing to keep sufficient funds therein or credit with said bank to cover the full amount of the check when presented to the drawee bank within a period of ninety (90) days.17 The elements of B.P. Blg. 22 under the first situation, pertinent to the present case, are:18 "(1) The making, drawing and issuance of any check to apply for account or for value; (2) The knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment; and (3) The subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment." Petitioner contends that the first element does not exist because the checks were not issued to apply for account or for value. He attempts to distinguish his situation from the usual "cut-and-dried" B.P. 22 case by claiming that the checks were issued as guarantee and the obligations they were supposed to guarantee were already paid. This flawed argument has no factual basis, the RTC and CA having both ruled that the checks were in payment for unremitted collections, and not as guarantee. Likewise, the argument has no legal basis, for what B.P. Blg. 22 punishes is the issuance of a bouncing check and not the purpose for which it was issued nor the terms and conditions relating to its issuance.19 As to the second element, B.P. Blg. 22 creates a presumption juris tantum that the second element prima facieexists when the first and third elements of the offense are present.20 Thus, the makers knowledge is presumed from the dishonor of the check for insufficiency of funds.21 Petitioner avers that since the complainant deposited the checks on June 5, 1986, or 157 days after the December 30, 1985 maturity date, the presumption of knowledge of lack of funds under Section 2 of B.P. Blg. 22 should not apply to him. He further claims that he should not be expected to keep his bank account active and funded beyond the ninety-day period.

Section 2 of B.P. Blg. 22 provides: Evidence of knowledge of insufficient funds. The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five (5) banking days after receiving notice that such check has not been paid by the drawee. An essential element of the offense is "knowledge" on the part of the maker or drawer of the check of the insufficiency of his funds in or credit with the bank to cover the check upon its presentment. Since this involves a state of mind difficult to establish, the statute itself creates a prima facie presumption of such knowledge where payment of the check "is refused by the drawee because of insufficient funds in or credit with such bank when presented within ninety (90) days from the date of the check." To mitigate the harshness of the law in its application, the statute provides that such presumption shall not arise if within five (5) banking days from receipt of the notice of dishonor, the maker or drawer makes arrangements for payment of the check by the bank or pays the holder the amount of the check. 22 Contrary to petitioners assertions, nowhere in said provision does the law require a maker to maintain funds in his bank account for only 90 days. Rather, the clear import of the law is to establish a prima facie presumption of knowledge of such insufficiency of funds under the following conditions (1) presentment within 90 days from date of the check, and (2) the dishonor of the check and failure of the maker to make arrangements for payment in full within 5 banking days after notice thereof. That the check must be deposited within ninety (90) days is simply one of the conditions for the prima facie presumption of knowledge of lack of funds to arise. It is not an element of the offense. Neither does it discharge petitioner from his duty to maintain sufficient funds in the account within a reasonable time thereof. Under Section 186 of the Negotiable Instruments Law, "a check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay." By current banking practice, a check becomes stale after more than six (6) months,23 or 180 days. Private respondent herein deposited the checks 157 days after the date of the check. Hence said checks cannot be considered stale. Only the presumption of knowledge of insufficiency of funds was lost, but such knowledge

could still be proven by direct or circumstantial evidence. As found by the trial court, private respondent did not deposit the checks because of the reassurance of petitioner that he would issue new checks. Upon his failure to do so, LPI was constrained to deposit the said checks. After the checks were dishonored, petitioner was duly notified of such fact but failed to make arrangements for full payment within five (5) banking days thereof. There is, on record, sufficient evidence that petitioner had knowledge of the insufficiency of his funds in or credit with the drawee bank at the time of issuance of the checks. And despite petitioners insistent plea of innocence, we find no error in the respondent courts affirmance of his conviction by the trial court for violations of the Bouncing Checks Law. However, pursuant to the policy guidelines in Administrative Circular No. 122000, which took effect on November 21, 2000, the penalty imposed on petitioner should now be modified to a fine of not less than but not more than double the amount of the checks that were dishonored. WHEREFORE, the petition is DENIED. Petitioner Luis S. Wong is found liable for violation of Batas Pambansa Blg. 22 but the penalty imposed on him is hereby MODIFIED so that the sentence of imprisonment is deleted. Petitioner is ORDERED to pay a FINE of (1) P6,750.00, equivalent to double the amount of the check involved in Criminal Case No. CBU-12057, (2) P12,820.00, equivalent to double the amount of the check involved in Criminal Case No. CBU-12058, and (3) P11,000.00, equivalent to double the amount of the check involved in Criminal Case No. CBU-12055, with subsidiary imprisonment24 in case of insolvency to pay the aforesaid fines. Finally, as civil indemnity, petitioner is also ordered to pay to LPI the face value of said checks totaling P18,025.00 with legal interest thereon from the time of filing the criminal charges in court, as well as to pay the costs.1wphi1.nt SO ORDERED. Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concur.

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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 131714 November 16, 1998 EDUARDO R. VACA and FERNANDO NIETO, petitioners, vs. COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, respondents.

MENDOZA, J.:

Petitioners seek a review of the decision, dated October 25, 1996, 1 and the resolution, dated Dec 1997,2 of the Court of Appeals, affirming their conviction by the Regional Trial Court of Quezon (Branch 100) for violation of B.P. Blg. 22, otherwise known as the "Bouncing Checks Law." The facts are as follows:

Petitioner Eduardo R. Vaca is the president and owner of Ervine International, Inc. (Ervine), whi engaged in the manufacture and sale of refrigeration equipment, while his son-in-law, petitioner Nieto, is the firm's purchasing manager. On March 10, 1988, petitioners issued a check for P10,0 the General Agency for Reconnaissance, Detection, and Security, Inc. (GARDS) in partial paym security services rendered by GARDS to Ervine. The check was drawn on the China Banking Co (CBC). When deposited in the Philippine Commercial International Bank (PCIBank) branch at S Boulevard, Mandaluyong, the check was dishonored for insufficiency of funds.

On March 29, 1988, GARDS wrote Ervine a letter in which it demanded payment in cash of the the check within seven days from notice. The letter was received by Ervine on the same day, but petitioners did not pay within the time given.

On April 13, 1988, petitioners issued a check for P19,860.16 to GARDS. The check was drawn o Associated Bank. The voucher accompanying it stated that the check was to replace the dishonor the P9,860.16 balance being partial payment for Ervine's outstanding account. The check and the were received by a GARDS messenger, Nolan C. Pena, on April 15, 1988, but GARDS did not r dishonored check.

On April 14, 1988, GARDS Operations Manager Jovito C. Cabusara filed a criminal complaint a petitioners for violation of B.P. Blg. 22. After preliminary investigation, an information was filed Regional Trial Court of Quezon City (Branch 97). However, the case was dismissed by the court 11, 1989, upon motion of the prosecution, on the ground that Ervine had already paid the amount check.

On September 18, 1989, GARDS, through its Acting Operations Manager Eduardo B. Alindaya, another complaint for violation of B.P. Bldg. 22 against petitioners. This resulted in the filing of information against petitioners in the Regional Trial Court of Quezon City (Branch 100). After tr petitioners were found guilty of the charge and each was sentenced to suffer one (1) year impriso and to pay a fine of P10,000.00 and the costs.

On appeal, the Court of Appeals affirmed the decision. It subsequently denied petitioners' motion reconsideration. Hence, this petition. Petitioners contend:

A. Respondent Court gravely erred in not holding that the prosec failed to prove petitioners' guilt beyond reasonable doubt.

B. Respondent Court gravely erred in basing conviction on the a weakness of the evidence of the defense rather than on the streng evidence of the prosecution.

C. Respondent Court erred in not acquitting petitioners on groun "mistake of fact" and "lack of knowledge."

Petitioners pray that the case against them be dismissed or, in the alternative, that the decision of court be modified by sentencing each to an increased fine but without imprisonment.

By supplemental petition, dated January 29, 1998, petitioners submitted an affidavit of desistance by GARDS president Dominador R. Santiago which states that the case arose from a mere "acco difference" between petitioners and GARDS, that the latter had not really suffered any damage a of the issuance of the check in question and, that GARDS was no longer interested in prosecuting

On May 28, 1998, petitioners filed another supplemental petition, this time invoking the recent d Lao v. Court of Appeals, 3 in which this Court reversed a conviction for violation of B.P. Blg. 22

showing that the accused had no knowledge of the insufficiency of funds.

The Solicitor General opposes the appeal. He contends that the facts of Lao v. Court of Appeals a different from those of the case at bar and that the affidavit of desistance of Dominador Santiago moment, such affidavit having been made only after petitioners' conviction.

After due review of the decision in this case, we find that petitioners' conviction for violation of B 22 is well founded.

First. The elements of the offense penalized under B.P. Blg. 22 are: (1) making, drawing, and iss any check to apply to account or for value; (2) knowledge of the maker, drawer, or issuer that at of issue he does not have sufficient funds in or credit with the drawee bank for the payment of th full upon its presentment; and (3) subsequent dishonor of the check by the drawee bank for insuf of funds or credit, or dishonor of the check for the same reason had not the drawer, without any v cause, ordered the bank to stop paymnent. 4 The maker's knowledge is presumed from the dishon check for insufficiency of funds. 5 Thus, 2 of B.P. Blg. 22 expressly provides:

Sec. 2. Evidence of knowledge of insufficient funds. The making, drawing issuance of a check payment of which is refused by the drawee because of ins funds in or credit with such bank, when presented within ninety (90) days fro of the check, shall be prima facie evidence of knowledge of such insufficienc or credit unless such maker or drawer pays the holder thereof the amount due or makes arrangements for payment in full by the drawee of such check withi banking days after receiving notice that such check has not been paid by the d

In this case, after being notified on March 29, 1988 of the dishonor of their previous check, petiti gave GARDS a check for P19,860.16. They claim that this check had been intended by them to r bad check they had previously issued to the GARDS. Based on the testimony of a GARDS accou however, the Court of Appeals found that the check was actually payment for two bills, one for t of January 16 to January 31, 1988 in the amount of P9,930.08 and another one for the period of M to March 31, 1988 in the same amount. But even if such check was intended to replace the bad o issuance on April 13, 1988 15 days after petitioners had been notified on March 29, 1988 of th dishonor of their previous check cannot negate the presumption that petitioners knew of the insufficiency of funds to cover the amount of their previous check. Sec. 2 of B.P. Blg. 22 require such check be given within five (5) days from the notice of dishonor to them.

Petitioners contend that, in accordance with the ruling in Lao v. Court of Appeals, 6 they should b acquitted because the preparation of checks is the responsibility of the company accountant and a is sign the checks. They claim that they rely on the word of the accountant that there are sufficien the bank to pay for the checks.

In the Lao case, the accused, as the Court found, had merely been made by her employer, Premie Investment House, to countersign checks in bank. The accused was a mere employee who did no anything to do with the issuance of checks for the company. She did not know to whom the chec be paid as the names of payees were written only later by the head of operations. Moreover, no n dishonor was given to her as required by B.P. Blg. 22 2. It could thus rightly be concluded that accused issued checks to apply to account not knowing that at the time of issuance funds were in to pay for the checks.

Petitioners in this case cannot pretend ignorance of the insufficiency of funds. While it may be tr was the company's accountant who actually prepared the rubber check, the fact remains that petit the owners and officers of the company. Sec. 1 of B.P. Blg. 22 provides that "Where the check is a corporation, company, or entity, the person or persons who actually signed the check in behalf drawer shall be liable under this Act.

In fact, petitioner Nieto testified that after the check in question was dishonored, he instructed the company accountant to prepare a replacement check. 7 This belies petitioners' claim that they had in the preparation of checks 8 and shows that petitioners were in control of the finances of the com

Second. The affidavit of desistance of the GARDS president deserves no more than passing ment claim that this case was simply the result of a misunderstanding between GARDS and petitioners the former did not really suffer any damage from the dishonor of the check is flimsy. After prose case below with tenacity, complainants going so far as to file another complaint after their first o been dismissed, it is trifling with this Court for complainants to now assert that the filing of their simply a mistake. It is for reasons such as this the affidavit of desistance, like retractions, are gen disfavored. 9 The affidavit in this case, which was made after petitioners' conviction, is nothing b minute attempt to save them from punishment. Even if the payee suffered no damage as a result o issuance of the bouncing check, the damage to the integrity of the banking system cannot be deni Damage to the payee is not an element of the crime punished in B.P. Blg. 22.

Third. Petitioners pray that, in the alternative, the penalty be modified by deleting the sentence o imprisonment and, in lieu thereof a fine in an increased amount be imposed on them. In support o plea, they allege that they do not have any record of prior conviction; that Eduardo Vaca is of adv age (late 60s); and, that they come from good families. Petitioners claim that "with their family background and social standing there is no reason why they, will refuse to pay a due and demand of only P10,000.00. It is precisely because of their founded belief that the subject obligation has that they refused to be intimidated by a criminal charge."

The Court of Appeals dismissed these allegations as irrelevant to the question of petitioners' guil think so ourselves. However, we believe that they can be considered in determining the appropria penalty to impose on petitioners.

B.P. Blg. 22, 1, par. 1 provides a penalty of "imprisonment of not less than thirty days but not m one (1) year or by a fine of not less than, but not more than double, the amount of the check whic shall in no case esceed two hundred thousand pesos, or both such fine and imprisonment at the d of the Court." Petitioners are first-time offenders. They are Filipino entrepreneurs who presumab contribute to the national economy. Apparently, they brought this appeal, believing in all good fa although mistakenly, that they had not committed a violation of B.P. Blg. 22. Otherwise, they co simply have accepted the judgment of the trial court and applied for probation to evade a prison t would best serve the ends of criminal justice if in fixing the penalty within the range of discretion by 1, par. 1, the same philosophy underlying the Indeterminate Sentence Law is observed, name redeeming valuable human material and preventing unnecessary deprivation of personal liberty a economic usefulness with due regard to the protection of the social order. 10 In this case we believ fine in an amount equal to double the amount of the check involved is an appropriate penalty to i each of the petitioners.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the modification that th sentence of imprisonment is deleted and petitioners are each ordered to pay a fine of P20,000.00 equivalent to double the amount of the check. SO ORDERED Melo and Puno, JJ., concur. Martinez, J., is on leave.

Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION

G.R. No. 131714 November 16, 1998

EDUARDO R. VACA and FERNANDO NIETO, petitioners, vs. COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, respondents.

MENDOZA, J.:

Petitioners seek a review of the decision, dated October 25, 1996, 1 and the resolution, dated December 2, 1997, 2 of the Court of Appeals, affirming their conviction by the Regional Trial Court of Quezon City (Branch 100) for violation of B.P. Blg. 22, otherwise known as the "Bouncing Checks Law."

The facts are as follows:

Petitioner Eduardo R. Vaca is the president and owner of Ervine International, Inc. (Ervine), which is engaged in the manufacture and sale of refrigeration equipment, while his son-in-law, petitioner Fernando Nieto, is the firm's purchasing manager. On March 10, 1988, petitioners issued a check for P10,000.00 to the General Agency for Reconnaissance, Detection, and Security, Inc. (GARDS) in partial payment of the security services rendered by GARDS to Ervine. The check was drawn on the China Banking Corporation (CBC). When deposited in the Philippine Commercial International Bank (PCIBank) branch at Shaw Boulevard, Mandaluyong, the check was dishonored for insufficiency of funds.

On March 29, 1988, GARDS wrote Ervine a letter in which it demanded payment in cash of the amount of the check within seven days from notice. The letter was received by Ervine on the same day, but petitioners did not pay within the time given.

On April 13, 1988, petitioners issued a check for P19,860.16 to GARDS. The check was drawn on the Associated Bank. The voucher accompanying it stated that the check was to replace the dishonored check, the P9,860.16 balance being partial payment for Ervine's outstanding account. The check and the voucher were received by a GARDS messenger, Nolan C. Pena, on April 15, 1988, but GARDS did not return the dishonored check.

On April 14, 1988, GARDS Operations Manager Jovito C. Cabusara filed a criminal complaint against petitioners for violation of B.P. Blg. 22. After preliminary investigation, an information was filed in the Regional Trial Court of Quezon City (Branch 97). However, the case was dismissed by the court on May

11, 1989, upon motion of the prosecution, on the ground that Ervine had already paid the amount of the check.

On September 18, 1989, GARDS, through its Acting Operations Manager Eduardo B. Alindaya, filed another complaint for violation of B.P. Bldg. 22 against petitioners. This resulted in the filing of an information against petitioners in the Regional Trial Court of Quezon City (Branch 100). After trial, petitioners were found guilty of the charge and each was sentenced to suffer one (1) year imprisonment and to pay a fine of P10,000.00 and the costs.

On appeal, the Court of Appeals affirmed the decision. It subsequently denied petitioners' motion for reconsideration. Hence, this petition. Petitioners contend:

A. Respondent Court gravely erred in not holding that the prosecution failed to prove petitioners' guilt beyond reasonable doubt.

B. Respondent Court gravely erred in basing conviction on the alleged weakness of the evidence of the defense rather than on the strength of the evidence of the prosecution.

C. Respondent Court erred in not acquitting petitioners on grounds of "mistake of fact" and "lack of knowledge."

Petitioners pray that the case against them be dismissed or, in the alternative, that the decision of the trial court be modified by sentencing each to an increased fine but without imprisonment.

By supplemental petition, dated January 29, 1998, petitioners submitted an affidavit of desistance executed by GARDS president Dominador R. Santiago which states that the case arose from a mere "accounting difference" between petitioners and GARDS, that the latter had not really suffered any damage as a result of the issuance of the check in question and, that GARDS was no longer interested in prosecuting the case.

On May 28, 1998, petitioners filed another supplemental petition, this time invoking the recent decision in Lao v. Court of Appeals, 3 in which this Court reversed a conviction for violation of B.P. Blg. 22 upon a showing that the accused had no knowledge of the insufficiency of funds.

The Solicitor General opposes the appeal. He contends that the facts of Lao v. Court of Appeals are different from those of the case at bar and that the affidavit of desistance of Dominador Santiago is of no moment, such affidavit having been made only after petitioners' conviction.

After due review of the decision in this case, we find that petitioners' conviction for violation of B.P. Blg. 22 is well founded.

First. The elements of the offense penalized under B.P. Blg. 22 are: (1) making, drawing, and issuance of any check to apply to account or for value; (2) knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of the check in full upon its presentment; and (3) subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit, or dishonor of the check for the same reason had not the drawer, without any valid cause, ordered the bank to stop paymnent. 4 The maker's knowledge is presumed from the dishonor of the check for insufficiency of funds. 5 Thus, 2 of B.P. Blg. 22 expressly provides:

Sec. 2. Evidence of knowledge of insufficient funds. The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five (5) banking days after receiving notice that such check has not been paid by the drawee.

In this case, after being notified on March 29, 1988 of the dishonor of their previous check, petitioners gave GARDS a check for P19,860.16. They claim that this check had been intended by them to replace the bad check they had previously issued to the GARDS. Based on the testimony of a GARDS accountant, however, the Court of Appeals found that the check was actually payment for two bills, one for the period of January 16 to January 31, 1988 in the amount of P9,930.08 and another one for the period of March 16 to March 31, 1988 in the same amount. But even if such check was intended to replace the bad one, its issuance on April 13, 1988 15 days after petitioners had been notified on March 29, 1988 of the dishonor of their previous check cannot negate the presumption that petitioners knew of the insufficiency of funds to cover the amount of their previous check. Sec. 2 of B.P. Blg. 22 requires that such check be given within five (5) days from the notice of dishonor to them.

Petitioners contend that, in accordance with the ruling in Lao v. Court of Appeals, 6 they should be acquitted because the preparation of checks is the responsibility of the company accountant and all they do is sign the checks. They claim that they rely on the word of the accountant that there are sufficient funds in the bank to pay for the checks.

In the Lao case, the accused, as the Court found, had merely been made by her employer, Premiere Investment House, to countersign checks in bank. The accused

was a mere employee who did not have anything to do with the issuance of checks for the company. She did not know to whom the checks would be paid as the names of payees were written only later by the head of operations. Moreover, no notice of dishonor was given to her as required by B.P. Blg. 22 2. It could thus rightly be concluded that the accused issued checks to apply to account not knowing that at the time of issuance funds were insufficient to pay for the checks.

Petitioners in this case cannot pretend ignorance of the insufficiency of funds. While it may be true that it was the company's accountant who actually prepared the rubber check, the fact remains that petitioners are the owners and officers of the company. Sec. 1 of B.P. Blg. 22 provides that "Where the check is drawn by a corporation, company, or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under this Act.

In fact, petitioner Nieto testified that after the check in question was dishonored, he instructed their company accountant to prepare a replacement check. 7 This belies petitioners' claim that they had no hand in the preparation of checks 8 and shows that petitioners were in control of the finances of the company.

Second. The affidavit of desistance of the GARDS president deserves no more than passing mention. The claim that this case was simply the result of a misunderstanding between GARDS and petitioners and that the former did not really suffer any damage from the dishonor of the check is flimsy. After prosecuting the case below with tenacity, complainants going so far as to file another complaint after their first one had been dismissed, it is trifling with this Court for complainants to now assert that the filing of their case was simply a mistake. It is for reasons such as this the affidavit of desistance, like retractions, are generally disfavored. 9 The affidavit in this case, which was made after petitioners' conviction, is nothing but a last-minute attempt to save them from punishment. Even if the payee suffered no damage as a result of the issuance of the bouncing

check, the damage to the integrity of the banking system cannot be denied. Damage to the payee is not an element of the crime punished in B.P. Blg. 22.

Third. Petitioners pray that, in the alternative, the penalty be modified by deleting the sentence of imprisonment and, in lieu thereof a fine in an increased amount be imposed on them. In support of their plea, they allege that they do not have any record of prior conviction; that Eduardo Vaca is of advanced age (late 60s); and, that they come from good families. Petitioners claim that "with their family background and social standing there is no reason why they, will refuse to pay a due and demandable debt of only P10,000.00. It is precisely because of their founded belief that the subject obligation has been paid that they refused to be intimidated by a criminal charge."

The Court of Appeals dismissed these allegations as irrelevant to the question of petitioners' guilt. We think so ourselves. However, we believe that they can be considered in determining the appropriate penalty to impose on petitioners.

B.P. Blg. 22, 1, par. 1 provides a penalty of "imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less than, but not more than double, the amount of the check which fine shall in no case esceed two hundred thousand pesos, or both such fine and imprisonment at the discretion of the Court." Petitioners are first-time offenders. They are Filipino entrepreneurs who presumably contribute to the national economy. Apparently, they brought this appeal, believing in all good faith, although mistakenly, that they had not committed a violation of B.P. Blg. 22. Otherwise, they could simply have accepted the judgment of the trial court and applied for probation to evade a prison term. It would best serve the ends of criminal justice if in fixing the penalty within the range of discretion allowed by 1, par. 1, the same philosophy underlying the Indeterminate Sentence Law is observed, namely, that of redeeming valuable human material and preventing unnecessary deprivation of personal liberty and economic usefulness with due regard to the protection of the social order. 10 In this

case we believe that a fine in an amount equal to double the amount of the check involved is an appropriate penalty to impose on each of the petitioners.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the modification that the sentence of imprisonment is deleted and petitioners are each ordered to pay a fine of P20,000.00 equivalent to double the amount of the check.

SO ORDERED

Melo and Puno, JJ., concur.

Martinez, J., is on leave.

ADMINISTRATIVE CIRCULAR NO. 12-2000 February 21, 2001 RE : PENALTY FOR VIOLATION OF B.P. BLG. 22 Section 1 of B.P. Blg. 22 (An Act Penalizing the Making or Drawing and Issuance of a Check Without Sufficient Funds for Credit and for Other Purposes) imposes the penalty of imprisonment of not less than thirty (30) days but not more than one (1) year or a fine of not less than but not more than double the amount of the check, which fine shall in no case exceed P200,000, or both such fine and imprisonment at the discretion of the court. In its decision in Eduardo Vaca, v. Court of Appeals (G.R. No. 131714, 16 November 1998; 298 SCRA 656, 664) the Supreme Court (Second Division) per Mr. Justice V. Mendoza, modified the sentence imposed for violation of B.P. Blg. 22 by deleting the penalty of imprisonment and imposing only the penalty of fine in an amount double the amount of the check. In justification thereof, the Court said: Petitioners are first-time offenders. They are Filipino entrepreneurs who presumably contribute to the national economy. Apparently, they brought this appeal, believing in all good faith, although mistakenly that they had not committed a violation of B.P. Blg. 22. Otherwise, they could simply have accepted the judgment of the trial court and applied for probation to evade a prison term. It would best serve the ends of criminal justice if in fixing the penalty within the range of discretion allowed by Section 1, par. 1, the same philosophy underlying the Indeterminate Sentence Law is observed, namely, that of redeeming valuable human material and preventing unnecessary deprivation f personal liberty and economic usefulness with due regard to the protection of the social order. In this case, we believe that a fine in an amount equal to double the amount of the check involved is an appropriate penalty to impose on each of the petitioners In the recent case of Rosa Lim v. People of the Philippines (G. R. No. 130038, 18 September 2000), the Supreme Court en banc, applying Vaca also deleted the penalty of imprisonment and sentenced the drawer of the bounced check to the maximum of the fine allowed by B.P. Blg. 22, i.e., P200,000, and concluded that such would best serve the ends of criminal justice. All courts and judges concerned should henceforth take note of the foregoing policy of the Supreme Court on the matter of the imposition of penalties for

violations of B.P. Blg. 22. The Court Administrator shall cause the immediate dissemination of this Administrative Circular to all courts and judges concerned. This Administrative Circular, referred to and approved by the Supreme Court en banc, shall take effect upon its issuance. Issued this 21st day of February, 2001.

[Sgd.] HILARIO G. DAVIDE, JR. Chief Justice

ADMINISTRATIVE CIRCULAR NO. 13-2001 February 14, 2001 TO : ALL JUDGES SUBJECT : CLARIFICATION OF ADMINISTRATIVE CIRCULAR NO. 12-2000 ON THE PENALTY FOR VIOLATION OF BATAS PAMBANSA BLG. 22, OTHERWISE KNOWN AS THE BOUNCING CHECK LAW. Clarification has been sought by concerned Judges and other parties regarding the operation of Administrative Circular 12-2000 issued on 21 November 2000. In particular, queries have been made regarding the authority of Judges to: 1. Impose the penalty of imprisonment for violations of Batas Pambansa Blg. 22; and 2. Impose subsidiary imprisonment in the event that the accused who is found guilty of violating the provisions of B.P. Blg. 22, is unable to pay the fine which he is sentenced to pay considering that Administrative Circular No. 12-2000 adopted the rulings in Eduardo Vaca v. Court of Appeals (G.R. No. 131714, 16 November 1998, 298 SCRA 656) and Rosa Lim v. People of the Philippines (G.R. No. 130038, 18 September 2000) as a policy of the Supreme Court on the matter of the imposition of penalties for violations of B.P. Blg. 22, without mentioning whether subsidiary imprisonment could be resorted to in case of the accused's inability to pay the fine. The clear tenor and intention of Administrative Circular No. 12-2000 is not to remove imprisonment as an alternative penalty, but to lay down a rule of preference in the application of the penalties provided for in B.P. Blg. 22. The pursuit of this purpose clearly does not foreclose the possibility of imprisonment for violations of B.P. Blg. 22. Neither does it defeat the legislative intent behind the law. Thus, Administrative Circular No. 12-2000 establishes a rule of preference in the application of the penal provisions of B.P. Blg. 22 such that where the circumstances of both the offense and the offender clearly indicate good faith or a clear mistake of fact without taint of negligence, the imposition of a fine alone should be considered as the more appropriate penalty. Needless to say, the determination of whether the circumstances warrant the imposition of a fine alone rests solely upon the Judge. Should the Judge decide that imprisonment is the more

appropriate penalty, Administrative Circular No. 12-2000 ought not be deemed a hindrance. It is, therefore, understood that: 1. Administrative Circular 12-2000 does not remove imprisonment as an alternative penalty for violations of B.P. Blg. 22; 2. The Judges concerned may, in the exercise of sound discretion, and taking into consideration the peculiar circumstances of each case, determine whether the imposition of a fine alone would best serve the interests of justice or whether forbearing to impose imprisonment would depreciate the seriousness of the offense, work violence on the social order, or otherwise be contrary to the imperatives of justice; 3. Should only a fine be imposed and the accused be unable to pay the fine, there is no legal obstacle to the application of the Revised Penal Code provisions on subsidiary imprisonment. The issuance of this Administrative Circular was authorized by the Court En Banc in A.M. No. 00-11-01-SC at its session of 13 February 2001. The Clerk of Court of the Supreme Court and the Court Administrator shall immediately cause the implementation of this Administrative Circular. This Administrative Circular shall be published in a newspaper of general circulation not later than 20 February 2001. Issued this 14th day of February, 2001.

[Sgd.] HILARIO G. DAVIDE, JR. Chief Justice