Republic of the Philippines date thereof were subsequently dishonored by the drawee bank for the reason "Account

SUPREME COURT Closed" and despite receipt of notice of such dishonor the accused failed to pay the face
Manila amount thereof or make arrangement for the full payment thereof within five (5) working days
THIRD DIVISION after receiving notice. 7
When arraigned, petitioner, assisted by counsel, pleaded not guilty. After the prosecution
G.R. No. 131540 December 2, 1999 presented its evidence and rested its case, petitioner filed a Demurrer to Evidence without
BETTY KING, petitioner, leave of court, on the ground that the prosecution failed to prove her guilt beyond reasonable
vs. doubt. The trial court denied the Demurrer in its assailed Decision, the dispositive portion of
PEOPLE OF THE PHILIPPINES, respondent. which reads:
WHEREFORE, premises considered, the demurrer to evidence without prior leave of court is
PANGANIBAN, J.: DENIED for lack of merit.
Under Batas Pambansa Blg. 22 (BP 22), the prosecution must prove not only that the accused Since accused has waived her right to present evidence, judgment is hereby rendered finding
issued a check that was subsequently dishonored. It must also established that the accused was accused guilty beyond reasonable doubt of Violation of Batas Pambansa Bilang 22 in the eleven
actually notified that the check was dishonored, and that he or she failed, within five banking (11) above-entitled cases and is ordered to:
days from receipt of the notice, to pay the holder of the check the amount due thereon or to 1. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P50,000.00, and to
make arrangement for its payment. Absent proof that the accused received such notice, a pay complainant Eileen Fernandez the amount of P50,000.00 as actual damages in Criminal
prosecution for violation of the Bouncing Check Law cannot prosper. Case No. 93-3335;
The Case 2. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P50,000.00, and to
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court pay complainant Eileen Fernandez the amount of P50,000.00 as actual damages in Criminal
assailing the January 30, 1997 Decision 1 of the Court of Appeals 2 (CA) in CA-GR CR No. 18226 Case No. 93-3336;
and its November 5, 1997 3. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P50,000.00, and to
3 4
Resolution denying reconsideration. The CA affirmed the June 14, 1994 Decision of the pay complainant Eileen Fernandez the amount of P50,000.00 as actual damages in Criminal
Regional Trial Court (RTC) of Makati, Metro Manila 5 in Criminal Case Nos. 93-3335 to 93-3345 Case No. 93-3337;
which convicted petitioner of 11 counts of violation of BP 22, otherwise known as the Bouncing 4. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P64,200.00, and to
Check Law. pay complainant Eileen Fernandez the amount of P64,200.00 as actual damages in Criminal
On April 28, 1993, Second Assistant Provincial Prosecutor Jaime A. Adoc filed against petitioner Case No. 93-3338;
eleven separate Informations, 6 which are identically worded, except for the check number, the 5. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P66,000.00, and to
amount and the date, as follows: pay complainant Eileen Fernandez the amount of P66,000.00 as actual damages in Criminal
That in or about the month of January, 1992 in the Municipality of Las Pias, Metro Manila, Case No. 93-3339;
Philippines and within the jurisdiction of this Honorable Court, the above-named accused, did, 6. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P100,000.00, and to
then and there willfully, unlawfully and feloniously make or draw and issue to EILEEN pay complainant Eileen Fernandez the amount of P100,000.00 as actual damages in Criminal
FERNANDEZ herein represented by ________ to apply on account or for value the check Case No. 93-3340;
described below: 7. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P150,000.00, and to
EQUITABLE BANK pay complainant Eileen Fernandez the amount of P150,000.00 as actual damages in Criminal
Check No. 021711 Case No. 93-3341;
In the amount of P50,000.00 8. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P150,000.00, and to
Postdated July 24, 1992 pay complainant Eileen Fernandez the amount of P150,000.00 as actual damages in Criminal
said accused well knowing that at the time of issue she/he did not have sufficient funds in or Case No. 93-3342;
credit with the drawee bank for the payment in full of the face amount of such check upon
their presentment, which check when presented for payment within ninety (90) days from the
9. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P130,000.00, and to
pay complainant Eileen Fernandez the amount of P130,000.00 as actual damages in Criminal
Case No. 93-3343;
10. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P130,000.00, and to
pay complainant Eileen Fernandez the amount of P130,000.00 as actual damages in Criminal
Case No. 93-3344; and,
11. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of P130,000.00, and to
pay complainant Eileen Fernandez the amount of P130,000.00 as actual damages in Criminal
Case No. 93-3345. 8
As already stated, the Court of Appeals affirmed the RTC in this wise: 9
WHEREFORE, the appealed decision is hereby affirmed [I]N TOTO. Costs against appellant.
Hence, this Petition. 10
The Facts
Evidence for the Prosecution
The Office of the Solicitor General 11 summarized the facts, as viewed by the prosecution, in
this wise:
On several occasions in January, 1992, at Las Pias, Metro Manila, petitioner discounted with
complainant Ellen Fernandez several Equitable Bank checks postdated from July 23 to 29, 1992
in the total amount of P1,070,000.00 in exchange for cash in the amount of P1,000,000.00.
When the checks were deposited for payment, they were dishonored by the drawee bank
because they were drawn against an account without sufficient funds. Petitioner failed to make
good the checks despite demand. (Memorandum dated April 7, 1993 of Assistant Provincial
Prosecutor to the Rizal Provincial Prosecutor)
During the hearing on the merits of this case on September 17, 1998, the prosecution offered
in evidence its documentary evidence. Petitioner admitted the genuineness and due execution
of the documents presented.12
Evidence for the Defense
As noted earlier, petitioner filed a Demurrer to Evidence without leave of court. In doing so,
she waived her right to present evidence and submitted the case for judgment on the basis of
the documentary exhibits adduced by the
prosecution. 13
Ruling of the Court of Appeals
In affirming the trial court, the Court of Appeals explained that the prosecution proved all the
elements of the crime. The CA also pointed out that the failure of petitioner to sign the pretrial
order was not fatal to the prosecution, because her conviction was based on the evidence
presented during the trial.
The Issues
Petitioner submits the following issues for the Court's consideration:
I 1993:
Whether or not the trial court and the Court of Appeals gravely erred in admitting in evidence
all the documentary evidence of the prosecution though their due execution and genuineness
were not duly established in evidence pursuant to the provisions of the Rules of Court and
prevailing jurisprudence;
II
Whether or not the trial court and the Court of Appeals gravely erred in declaring that Rule
118, Section 4 of the Rules of Court, as applied in the case of Fule vs. Court of Appeals, 162
SCRA 446, which states that no agreement or admission made or entered during the pre-trial
conference shall be used in evidence against the accused unless reduced to writing and signed
by him and his counsel, is inapplicable in the case at bar;
III
Whether or not the trial court and the Court of Appeals gravely erred in ruling that the burden
of evidence has already been shifted from the prosecution to the defense despite the definite
factual issues in the pre-trial order; and
IV
Whether or not the trial court and the Court of Appeals erred in ruling that the prosecution has
proven the guilt of the accused beyond reasonable doubt albeit the prosecution did not
produce any evidence. 14
In the main, the resolution of the Petition hinges on (1) the admissibility and (2) the sufficiency
of the prosecution evidence.
This Court's Ruling
The Petition has merit insofar as it contends that the elements of the crime charged have not
all been proven beyond reasonable doubt.
First Issue:
Admissibility of Documentary Evidence
Because the first, the second and the third issues raised by petitioner all refer to the same
matter, they will be discussed together. She contends that the pieces of documentary evidence
presented by the prosecution during pretrial are inadmissible, because she did not sign the
pretrial agreement as required under Section 4 of Rule 118 of the Rules of Court. 15 Hence, she
argues that there is no basis for her conviction.
True, a pretrial agreement not signed by a party is inadmissible. However, the conviction of
petitioner was based not on that agreement but on the documents submitted during the trial,
all of which were admitted without any objection from her counsel. During the hearing on
September 17, 1993, the prosecution offered as evidence the dishonored checks, the return
check tickets addressed to private complainant, the notice from complainant addressed to
petitioner that the checks had been dishonored, and the postmaster's letter that the notice
had been returned to sender. Petitioner's counsel did not object to their admissibility. This is
shown by the transcript of stenographic notes taken during the hearing on September 17,
COURT:
You have no objection to the admissibility, not that the Court will believe it.
ATTY. MANGERA
No, Your Honor.
COURT:
Exhibits "A" to "A" to "K" are admitted.
ATTY. MAKALINTAL:
We offer Exhibit "L", the return-check ticket dated July 27, 1992, relative to checks No. 021745
and 021746 indicating that these checks were returned DAIF, drawn against insufficient funds;
Exh. M, returned check ticket dated July 28, 1992, relative to Check No. 021727, 021711 and
021720 likewise indicating the said checks to have been drawn against insufficient funds, Your
Honor. Exhibit N, returned check ticket dated July 29, 1992, relative to Check Nos. 021749 and
021748, having the same indications;
Exhibits O, returned check ticket dated July 29, 1992 relative to Check Nos. 021750 and
021753, with the same indications;
Exhibits P, returned check ticket dated August 4, 1992 relative to Check No. 021752, having the
same indication as being drawn against insufficient funds;
Exhibit Q, the demand letter sent to the accused by Atty. Horacio Makalintal dated August 3,
1992;
Exhibit R, the letter-request for certification addressed to the Postmaster General sent by the
same law office dated 17 September 1992, showing that the said letter was dispatched
properly by the Central Post Office of Makati;
Exhibit S, 1st Indorsement of the Makati Central Post Office dated 21 September 1992;
Exhibit T, the Philippine Postal Corporation Central Post Office letter dated 24 September 1992,
addressed to this representation showing that there were 3 notices sent to the herein accused
who received the said letter.
COURT:
Let's go to the third check slip; any objection to the third slip?
ATTY. MANGERA:
We have no objection as to the due execution and authenticity.
COURT:
Admitted.
ATTY. MAKALINTAL:
We are offering Exhibits Q, R, S and T, for the purpose of showing that there was demand duly
made on the accused and that the same had been appropriately served by the Central Post
Office Services of Manila.
ATTY. MANGERA:
We admit as to the due execution and authenticity only as to that portion, Your Honor.
COURT:
We are talking of admissibility now, so admitted. In other words, at this point, he makes an
offer and the Court will either grant admission, [admit] it in evidence or deny it. It can deny
admission if it is not properly identified etcetera.
ATTY. MANGERA:
I think it is already provided.
COURT:
So, admitted.
ATTY. MAKALINTAL:
With the admission of our offer, Your Honor, the prosecution
rests. 16
From the foregoing, it is clear that the prosecution evidence consisted of documents offered
and admitted during the trial. In view of this, the CA correctly ruled that Fule v. Court of
Appeals 17 would not apply to the present controversy. In that case, a hearing was conducted
during which the prosecution presented three exhibits. However, Fule's conviction was "based
solely on the stipulation of facts made during rile pre-trial on August 8, 1985, which was not
signed by the petitioner, nor by his counsel." Because the stipulation was inadmissible in
evidence under Section 4 of Rule 118, the Court held that there was no proof of his guilt.
In the present case, petitioner's conviction was based on the evidence presented during trial,
and not on the stipulations made during the pretrial. Hence, petitioner's admissions during the
trial are governed not by the Fule ruling or by Section 4 of Rule 118, but by Section 4 of Rule
129 which reads:
Sec. 4. Judicial Admissions. An admission, verbal or written, made by a party in the course of
the proceedings in the same case, does not require proof. The admission may be contradicted
only by showing that it was made through palpable mistake or that no such admission was
made.
Hence, the trial court and the Court of Appeals did not err in taking cognizance of the said
documentary evidence.
Second Issue:
Sufficiency of Prosecution Evidence
Petitioner argues that the prosecution failed to prove beyond reasonable doubt the elements
of the offense. After a careful consideration of the records of this case, we believe and so rule
that the totality of the evidence presented does not support petitioner's conviction for
violation of BP 22.
Sec. 1 of BP 22 defines the offense as follows:
Sec. 1. Checks without sufficient funds. Any person who makes or draws and issues any
check to apply on account or for value, knowing at the time of issue that he does not have
sufficient funds in or credit with the drawee bank for the payment of such check in full upon its
presentment, which check is subsequently dishonored by the drawee bank for insufficiency of
funds or credit or would have been dishonored for the same reason had not the drawer,
without any valid reason, ordered the bank to stop payment, shall be punished by
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 exceed Two
hundred thousand pesos, or both such fine and imprisonment at the discretion of the court.
The same penalty shall be imposed upon any person who having sufficient funds in or credit
with the drawee bank when he makes or draws and issues a check, shall fail to keep sufficient
funds or to maintain a credit to cover the full amount of the check if presented within a period
of ninety (90) days from the date appearing thereon, for which reason it is dishonored by the
drawee bank.
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.
Accordingly, this Court has held that the elements of the crime are as follows: 18
1. The accused makes, draws or issues any check to apply to account or for value.
2. The checks subsequently dishonored by the drawee bank for insufficiency of funds or credit;
or it would have been dishonored for the same reason had not the drawer, without any valid
reason, ordered the bank to stop payment.
3. The accused knows at the time of the issuance that he or she does not have sufficient funds
in, or credit with, drawee bank for the payment of the check in full upon its presentment.
We shall analyze the evidence, purportedly establishing each of the aforementioned elements
which the trial and the appellate courts relied upon.
Issuance of the Questioned Checks
Contending that the prosecution failed to prove the first element, petitioner maintains that she
merely signed the questioned checks without indicating therein the date and the amount
involved. She adds that they were improperly filled up by Eileen Fernandez. Thus, she
concludes, she did not "issue" the dishonored checks in the context of the Negotiable
Instruments Law, which defines "issue" as the "first delivery of the instrument complete in
form to a person who takes it as a holder." 19
Petitioner's contentions are not meritorious. The questioned checks, marked as Exhibits "A" to
"K," contained the date of issue and the amount involved. In fact, petitioner even admitted that
she signed those checks. On the other hand, no proof was adduced to show that petitioner
merely signed them in blank, or that complainant filled them up in violation of the former's
instructions or their previous agreement. The evidence on record is clear that petitioner issued
eleven checks, all of which were duly filled up and signed by her.
Checks Dishonored
Neither are we persuaded by petitioner's argument that "there appears no evidence on record
that the subject checks were unpaid and dishonored." 20 Under Section 3 of BP 22, "the
introduction in evidence of any unpaid and dishonored check, having the drawee's refusal to
pay stamped or written thereon, or attached thereto, with the reason therefor as aforesaid,
shall be prima facie evidence of the making or issuance of said check, and the due presentment
to the drawee for payment and the dishonor thereof, and that the same was properly
dishonored for the reason written, stamped, or attached by the drawee on such dishonored
check."
In the present case, the fact that the checks were dishonored was sufficiently shown by the
checks themselves, which were stamped with the words "ACCOUNT CLOSED." This was further
supported by the returned check tickets issued by PCI Bank, the depository bank, stating that
the checks had been dishonored.
Clearly, these documents constitute prima facie evidence that the drawee bank dishonored the
checks. Again, no evidence was presented to rebut the prosecution's claim.
Knowledge of Insufficiency of Funds
To hold a person liable under BP 22, it is not enough to establish that a check issued was
subsequently dishonored. It must be shown further that the person who issued the check knew
"at the time of issue that he does not have sufficient funds in or credit with the drawee bank
for the payment of such check in full upon its presentment." Because this element involves a
state of mind which is difficult to establish, Section 2 of the law creates a prima
facie presumption of such knowledge, as follows: 21
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 other words, the prima facie presumption arises when a check is issued. But the law also
provides that the presumption does not arise when the issuer pays the amount of the check or
makes arrangement for its payment "within five banking days after receiving notice that such
check has not been paid by the drawee." Verily, BP 22 gives the accused an opportunity to
satisfy the amount indicated in the check and thus avert prosecution. As the Court held
in Lozano v. Martinez, the aforecited provision serves to "mitigate the harshness of the law in
its application." 22 This opportunity, however, can be used only upon receipt by the accused of
a notice of dishonor. This point was underscored by the Court in Lina Lim Lao v. Court of
Appeals: 23
It has been observed that the State, under this statute, actually offers the violator a
"compromise by allowing him to perform some act which operates to preempt the criminal
action, and if he opts to perform it the action is abated." This was also compared "to certain
laws allowing illegal possessors of firearms a certain period of time to surrender the illegally
possessed firearms to the Government, without incurring any criminal liability." In this light,
the full payment of the amount appearing in the check within five banking days from notice of
dishonor is a "complete defense." The absence of a notice of dishonor necessarily deprives an
accused an opportunity to preclude a criminal prosecution. Accordingly, procedural due
process clearly enjoins that a notice of dishonor be actually served on petitioner. Petitioner has
a right to demand and the basic postulates of fairness require that the notice of dishonor
be actually sent to and received by her to afford her the opportunity to avert prosecution
under BP 22.
Thus, in order to create the prima facie presumption that the issuer knew of the insufficiency of
funds, it must be shown that he or she received a notice of dishonor and, within five banking
days thereafter, failed to satisfy the amount of the check or make arrangement for its payment.
To prove that petitioner knew of the insufficiency of her funds, the prosecution presented
Exhibits "Q" to "T." Based on these documents, the Court of Appeals concluded that "[p]rivate
complainant sent a demand letter to appellant to make good said checks . . .. Appellant failed
to pay the face value of the eleven checks or make arrangement for the full payment thereof
within 90 days after receiving the notice." 24
Upon closer examination of these documents, we find no evidentiary basis for the holding of
the trial court and the Court of Appeals that petitioner received a notice that the checks had
been dishonored.
True, complainant sent petitioner a registered mail, as shown in Exhibit "Q" informing the latter
that the checks had been dishonored. But the records show that petitioner did not receive it. In
fact, Postmaster Wilfredo Ulibarri's letter addressed to complainant's counsel certified that the
"subject registered mail was returned to sender on September 22, 1992 . . .. " 25
Notwithstanding the clear import of the postmaster's certification, the prosecution failed to
adduce any other proof that petitioner received the post office notice but unjustifiably refused
to claim the registered mail. It is possible that the drawee bank sent petitioner a notice of
dishonor, but the prosecution did not present evidence that the bank did send it, or that
petitioner actually received it. It was also possible that she was trying to flee from complainant
by staying in different address. Speculations and possibilities, however, cannot take the place
of proof. Conviction must rest on proof beyond reasonable doubt. Clearly, the evidence on
hand demonstrates the indelible fact that petitioner did not receive notice that the checks had
been dishonored. Necessarily, the presumption that she knew of the insufficiency of funds
cannot arise.
Be that as it may, the Court must point out that it cannot rule on petitioner's civil liability, for
the issue was not raised in the pleadings submitted before us.
We must stress that BP 22, like all penal statutes, is construed strictly against the State and
liberally in favor of the accused. 26 Likewise, the prosecution has the burden to prove beyond
reasonable doubt each element of the crime. Hence, the prosecution's case must rise or fall on
the strength of its own evidence, never on the weakness or even absence of that of the
defense.
WHEREFORE, the assailed Decision of the Court of Appeals is hereby REVERSED and SET ASIDE.
Petitioner Betty King is ACQUITTED for failure of the prosecution to prove all the elements of
the crimes charged. No pronouncement as to costs.
SO ORDERED.
 Savings Bank, Mayon Branch, it was dishonored for insufficiency of funds. A subsequent
Republic of the Philippines redepositing of the said check was likewise dishonored by the bank for the same reason.
SUPREME COURT Hence, defendant through counsel was constrained to file a criminal complaint for violation of
Manila Batas Pambansa Blg. 22 with the Quezon City Fiscal's Office against Atty. Oscar Z. Benares and
SECOND DIVISION plaintiff Ricardo S. Santos, Jr. The investigating Assistant City Fiscal, Alfonso Llamas, accordingly
filed an amended information with the court charging both Oscar Benares and Ricardo S.
G.R. No. 80599 September 15, 1989 Santos, Jr., for violation of Batas Pambansa Blg. 22 docketed as Criminal Case No. Q-14867 of
ERNESTINA CRISOLOGO-JOSE, petitioner, then Court of First Instance of Rizal, Quezon City.
vs. Meanwhile, during the preliminary investigation of the criminal charge against Benares and the
COURT OF APPEALS and RICARDO S. SANTOS, JR. in his own behalf and as Vice-President for plaintiff herein, before Assistant City Fiscal Alfonso T. Llamas, plaintiff Ricardo S. Santos, Jr.
Sales of Mover Enterprises, Inc., respondents. tendered cashier's check No. CC 160152 for P45,000.00 dated April 10, 1981 to the defendant
Melquiades P. de Leon for petitioner. Ernestina Crisologo-Jose, the complainant in that criminal case. The defendant refused to
Rogelio A. Ajes for private respondent. receive the cashier's check in payment of the dishonored check in the amount of P45,000.00.
Hence, plaintiff encashed the aforesaid cashier's check and subsequently deposited said
REGALADO, J.: amount of P45,000.00 with the Clerk of Court on August 14, 1981 (Exhs. 'D' and 'E').
Petitioner seeks the annulment of the decision 1 of respondent Court of Appeals, promulgated Incidentally, the cashier's check adverted to above was purchased by Atty. Oscar Z. Benares
on September 8, 1987, which reversed the decision of the trial Court 2 dismissing the complaint and given to the plaintiff herein to be applied in payment of the dishonored check. 3
for consignation filed by therein plaintiff Ricardo S. Santos, Jr. After trial, the court a quo, holding that it was "not persuaded to believe that consignation
The parties are substantially agreed on the following facts as found by both lower courts: referred to in Article 1256 of the Civil Code is applicable to this case," rendered judgment
In 1980, plaintiff Ricardo S. Santos, Jr. was the vice-president of Mover Enterprises, Inc. in- dismissing plaintiff s complaint and defendant's counterclaim. 4
charge of marketing and sales; and the president of the said corporation was Atty. Oscar Z. As earlier stated, respondent court reversed and set aside said judgment of dismissal and
Benares. On April 30, 1980, Atty. Benares, in accommodation of his clients, the spouses Jaime revived the complaint for consignation, directing the trial court to give due course thereto.
and Clarita Ong, issued Check No. 093553 drawn against Traders Royal Bank, dated June 14, Hence, the instant petition, the assignment of errors wherein are prefatorily stated and
1980, in the amount of P45,000.00 (Exh- 'I') payable to defendant Ernestina Crisologo-Jose. discussed seriatim.
Since the check was under the account of Mover Enterprises, Inc., the same was to be signed 1. Petitioner contends that respondent Court of Appeals erred in holding that private
by its president, Atty. Oscar Z. Benares, and the treasurer of the said corporation. However, respondent, one of the signatories of the check issued under the account of Mover Enterprises,
since at that time, the treasurer of Mover Enterprises was not available, Atty. Benares Inc., is an accommodation party under the Negotiable Instruments Law and a debtor of
prevailed upon the plaintiff, Ricardo S. Santos, Jr., to sign the aforesaid chEck as an alternate petitioner to the extent of the amount of said check.
story. Plaintiff Ricardo S. Santos, Jr. did sign the check. Petitioner avers that the accommodation party in this case is Mover Enterprises, Inc. and not
It appears that the check (Exh. '1') was issued to defendant Ernestina Crisologo-Jose in private respondent who merely signed the check in question in a representative capacity, that
consideration of the waiver or quitclaim by said defendant over a certain property which the is, as vice-president of said corporation, hence he is not liable thereon under the Negotiable
Government Service Insurance System (GSIS) agreed to sell to the clients of Atty. Oscar Instruments Law.
Benares, the spouses Jaime and Clarita Ong, with the understanding that upon approval by the The pertinent provision of said law referred to provides:
GSIS of the compromise agreement with the spouses Ong, the check will be encashed Sec. 29. Liability of accommodation party an accommodation party is one who has signed the
accordingly. However, since the compromise agreement was not approved within the expected instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for
period of time, the aforesaid check for P45,000.00 (Exh. '1') was replaced by Atty. Benares with the purpose of lending his name to some other person. Such a person is liable on the
another Traders Royal Bank cheek bearing No. 379299 dated August 10, 1980, in the same instrument to a holder for value, notwithstanding such holder, at the time of taking the
amount of P45,000.00 (Exhs. 'A' and '2'), also payable to the defendant Jose. This replacement instrument, knew him to be only an accommodation party.
check was also signed by Atty. Oscar Z. Benares and by the plaintiff Ricardo S. Santos, Jr. When
defendant deposited this replacement check (Exhs. 'A' and '2') with her account at Family
Consequently, to be considered an accommodation party, a person must (1) be a party to the
instrument, signing as maker, drawer, acceptor, or indorser, (2) not receive value therefor, and
(3) sign for the purpose of lending his name for the credit of some other person.
Based on the foregoing requisites, it is not a valid defense that the accommodation party did
not receive any valuable consideration when he executed the instrument. From the standpoint
of contract law, he differs from the ordinary concept of a debtor therein in the sense that he
has not received any valuable consideration for the instrument he signs. Nevertheless, he is
liable to a holder for value as if the contract was not for accommodation 5 in whatever capacity
such accommodation party signed the instrument, whether primarily or secondarily. Thus, it
has been held that in lending his name to the accommodated party, the accommodation party
is in effect a surety for the latter. 6
Assuming arguendo that Mover Enterprises, Inc. is the accommodation party in this case, as
petitioner suggests, the inevitable question is whether or not it may be held liable on the
accommodation instrument, that is, the check issued in favor of herein petitioner.
We hold in the negative.
The aforequoted provision of the Negotiable Instruments Law which holds an accommodation
party liable on the instrument to a holder for value, although such holder at the time of taking
the instrument knew him to be only an accommodation party, does not include nor apply to
corporations which are accommodation parties. 7 This is because the issue or indorsement of
negotiable paper by a corporation without consideration and for the accommodation of
another is ultra vires. 8 Hence, one who has taken the instrument with knowledge of the
accommodation nature thereof cannot recover against a corporation where it is only an
accommodation party. If the form of the instrument, or the nature of the transaction, is such as
to charge the indorsee with knowledge that the issue or indorsement of the instrument by the
corporation is for the accommodation of another, he cannot recover against the corporation
thereon. 9
By way of exception, an officer or agent of a corporation shall have the power to execute or
indorse a negotiable paper in the name of the corporation for the accommodation of a third
person only if specifically authorized to do so. 10 Corollarily, corporate officers, such as the
president and vice-president, have no power to execute for mere accommodation a negotiable
instrument of the corporation for their individual debts or transactions arising from or in
relation to matters in which the corporation has no legitimate concern. Since such
accommodation paper cannot thus be enforced against the corporation, especially since it is
not involved in any aspect of the corporate business or operations, the inescapable conclusion
in law and in logic is that the signatories thereof shall be personally liable therefor, as well as
the consequences arising from their acts in connection therewith.
The instant case falls squarely within the purview of the aforesaid decisional rules. If we indulge
petitioner in her aforesaid postulation, then she is effectively barred from recovering from
Mover Enterprises, Inc. the value of the check. Be that as it may, petitioner is not without
recourse.
The fact that for lack of capacity the corporation is not bound by an accommodation paper
does not thereby absolve, but should render personally liable, the signatories of said
instrument where the facts show that the accommodation involved was for their personal
account, undertaking or purpose and the creditor was aware thereof.
Petitioner, as hereinbefore explained, was evidently charged with the knowledge that the
cheek was issued at the instance and for the personal account of Atty. Benares who merely
prevailed upon respondent Santos to act as co-signatory in accordance with the arrangement
of the corporation with its depository bank. That it was a personal undertaking of said
corporate officers was apparent to petitioner by reason of her personal involvement in the
financial arrangement and the fact that, while it was the corporation's check which was issued
to her for the amount involved, she actually had no transaction directly with said corporation.
There should be no legal obstacle, therefore, to petitioner's claims being directed personally
against Atty. Oscar Z. Benares and respondent Ricardo S. Santos, Jr., president and vice-
president, respectively, of Mover Enterprises, Inc.
2. On her second assignment of error, petitioner argues that the Court of Appeals erred in
holding that the consignation of the sum of P45,000.00, made by private respondent after his
tender of payment was refused by petitioner, was proper under Article 1256 of the Civil Code.
Petitioner's submission is that no creditor-debtor relationship exists between the parties,
hence consignation is not proper. Concomitantly, this argument was premised on the
assumption that private respondent Santos is not an accommodation party.
As previously discussed, however, respondent Santos is an accommodation party and is,
therefore, liable for the value of the check. The fact that he was only a co-signatory does not
detract from his personal liability. A co-maker or co-drawer under the circumstances in this
case is as much an accommodation party as the other co-signatory or, for that matter, as a lone
signatory in an accommodation instrument. Under the doctrine in Philippine Bank of Commerce
vs. Aruego, supra, he is in effect a co-surety for the accommodated party with whom he and his
co-signatory, as the other co-surety, assume solidary liability ex lege for the debt involved.
With the dishonor of the check, there was created a debtor-creditor relationship, as between
Atty. Benares and respondent Santos, on the one hand, and petitioner, on the other. This
circumstance enables respondent Santos to resort to an action of consignation where his
tender of payment had been refused by petitioner.
We interpose the caveat, however, that by holding that the remedy of consignation is proper
under the given circumstances, we do not thereby rule that all the operative facts for
consignation which would produce the effect of payment are present in this case. Those are
factual issues that are not clear in the records before us and which are for the Regional Trial
Court of Quezon City to ascertain in Civil Case No. Q-33160, for which reason it has advisedly
been directed by respondent court to give due course to the complaint for consignation, and
which would be subject to such issues or claims as may be raised by defendant and the
counterclaim filed therein which is hereby ordered similarly revived.
3. That respondent court virtually prejudged Criminal Case No. Q-14687 of the Regional Trial knowledge of insufficiency of funds in or credit with the drawee bank; that payment of civil
Court of Quezon City filed against private respondent for violation of Batas Pambansa Blg. 22, liability is not a mode for extinguishment of criminal liability; and that the requisite quantum of
by holding that no criminal liability had yet attached to private respondent when he deposited evidence in the two types of cases are not the same.
with the court the amount of P45,000.00 is the final plaint of petitioner. To repeat, the foregoing matters are properly addressed to the trial court in Criminal Case No.
We sustain petitioner on this score. Q-14867, the resolution of which should not be interfered with by respondent Court of Appeals
Indeed, respondent court went beyond the ratiocination called for in the appeal to it in CA-G.R. at the present posture of said case, much less preempted by the inappropriate and
CV. No. 05464. In its own decision therein, it declared that "(t)he lone issue dwells in the unnecessary holdings in the aforequoted portion of the decision of said respondent court.
question of whether an accommodation party can validly consign the amount of the debt due Consequently, we modify the decision of respondent court in CA-G.R. CV No. 05464 by setting
with the court after his tender of payment was refused by the creditor." Yet, from the aside and declaring without force and effect its pronouncements and findings insofar as the
commercial and civil law aspects determinative of said issue, it digressed into the merits of the merits of Criminal Case No. Q-14867 and the liability of the accused therein are concerned.
aforesaid Criminal Case No. Q-14867, thus: WHEREFORE, subject to the aforesaid modifications, the judgment of respondent Court of
Section 2 of B.P. 22 establishes the prima facie evidence of knowledge of such insufficiency of Appeals is AFFIRMED.
funds or credit. Thus, the making, drawing and issuance of a check, payment of which is SO ORDERED.
refused by the drawee because of insufficient funds in or credit with such bank is prima facie
evidence of knowledge of insufficiency of funds or credit, when the check is presented within
90 days from the date of the check.
It will be noted that the last part of Section 2 of B.P. 22 provides that the element of knowledge
of insufficiency of funds or credit is not present and, therefore, the crime does not exist, when
the drawer pays the holder the amount due 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.
Based on the foregoing consideration, this Court finds that the plaintiff-appellant acted within
Ms legal rights when he consigned the amount of P45,000.00 on August 14, 1981, between
August 7, 1981, the date when plaintiff-appellant receive (sic) the notice of non-payment, and
August 14, 1981, the date when the debt due was deposited with the Clerk of Court (a Saturday
and a Sunday which are not banking days) intervened. The fifth banking day fell on August 14,
1981. Hence, no criminal liability has yet attached to plaintiff-appellant when he deposited the
amount of P45,000.00 with the Court a quo on August 14, 1981. 11
That said observations made in the civil case at bar and the intrusion into the merits of the Republic of the Philippines
criminal case pending in another court are improper do not have to be belabored. In the latter SUPREME COURT
case, the criminal trial court has to grapple with such factual issues as, for instance, whether or Manila
not the period of five banking days had expired, in the process determining whether notice of THIRD DIVISION
dishonor should be reckoned from any prior notice if any has been given or from receipt by
private respondents of the subpoena therein with supporting affidavits, if any, or from the first G.R. No. L-56169 June 26, 1992
day of actual preliminary investigation; and whether there was a justification for not making TRAVEL-ON, INC., petitioner,
the requisite arrangements for payment in full of such check by the drawee bank within the vs.
said period. These are matters alien to the present controversy on tender and consignation of COURT OF APPEALS and ARTURO S. MIRANDA, respondents.
payment, where no such period and its legal effects are involved. RESOLUTION
These are aside from the considerations that the disputed period involved in the criminal case
is only a presumptive rule, juris tantum at that, to determine whether or not there was FELICIANO, J.:
Petitioner Travel-On. Inc. ("Travel-On") is a travel agency selling airline tickets on commission
basis for and in behalf of different airline companies. Private respondent Arturo S. Miranda had
a revolving credit line with petitioner. He procured tickets from petitioner on behalf of airline
passengers and derived commissions therefrom.
On 14 June 1972, Travel-On filed suit before the Court of First Instance ("CFI") of Manila to
collect on six (6) checks issued by private respondent with a total face amount of P115,000.00.
The complaint, with a prayer for the issuance of a writ of preliminary attachment and
attorney's fees, averred that from 5 August 1969 to 16 January 1970, petitioner sold and
delivered various airline tickets to respondent at a total price of P278,201.57; that to settle said
account, private respondent paid various amounts in cash and in kind, and thereafter issued six
(6) postdated checks amounting to P115,000.00 which were all dishonored by the drawee
banks. Travel-On further alleged that in March 1972, private respondent made another
payment of P10,000.00 reducing his indebtedness to P105,000.00. The writ of attachment was
granted by the court a quo.
In his answer, private respondent admitted having had transactions with Travel-On during the
period stipulated in the complaint. Private respondent, however, claimed that he had already
fully paid and even overpaid his obligations and that refunds were in fact due to him. He
argued that he had issued the postdated checks for purposes of accommodation, as he had in
the past accorded similar favors to petitioner. During the proceedings, private respondent
contested several tickets alleged to have been erroneously debited to his account. He claimed
reimbursement of his alleged over payments, plus litigation expenses, and exemplary and
moral damages by reason of the allegedly improper attachment of his properties.
In support of his theory that the checks were issued for accommodation, private respondent
testified that he bad issued the checks in the name of Travel-On in order that its General
Manager, Elita Montilla, could show to Travel-On's Board of Directors that the accounts
receivable of the company were still good. He further stated that Elita Montilla tried to encash
the same, but that these were dishonored and were subsequently returned to him after the
accommodation purpose had been attained.
Travel-On's witness, Elita Montilla, on the other hand explained that the "accommodation"
extended to Travel-On by private respondent related to situations where one or more of its
passengers needed money in Hongkong, and upon request of Travel-On respondent would
contact his friends in Hongkong to advance Hongkong money to the passenger. The passenger
then paid Travel-On upon his return to Manila and which payment would be credited by Travel-
On to respondent's running account with it.
In its decision dated 31 January 1975, the court a quo ordered Travel-On to pay private
respondent the amount of P8,894.91 representing net overpayments by private respondent,
moral damages of P10,000.00 for the wrongful issuance of the writ of attachment and for the
filing of this case, P5,000.00 for attorney's fees and the costs of the suit.
The trial court ruled that private respondent's indebtedness to petitioner was not satisfactorily
established and that the postdated checks were issued not for the purpose of encashment to
pay his indebtedness but to accommodate the General Manager of Travel-On to enable her to
show to the Board of Directors that Travel-On was financially stable.
Petitioner filed a motion for reconsideration that was, however, denied by the trial court,
which in fact then increased the award of moral damages to P50,000.00.
On appeal, the Court of Appeals affirmed the decision of the trial court, but reduced the award
of moral damages to P20,000.00, with interest at the legal rate from the date of the filing of the
Answer on 28 August 1972.
Petitioner moved for reconsideration of the Court of Appeal's' decision, without success.
In the instant Petition for Review, it is urged that the postdated checks are per se evidence of
liability on the part of private respondent. Petitioner further argues that even assuming that
the checks were for accommodation, private respondent is still liable thereunder considering
that petitioner is a holder for value.
Both the trial and appellate courts had rejected the checks as evidence of indebtedness on the
ground that the various statements of account prepared by petitioner did not show that
Private respondent had an outstanding balance of P115,000.00 which is the total amount of
the checks he issued. It was pointed out that while the various exhibits of petitioner showed
various accountabilities of private respondent, they did not satisfactorily establish the amount
of the outstanding indebtedness of private respondent. The appellate court made much of the
fact that the figures representing private respondent's unpaid accounts found in the "Schedule
of Outstanding Account" dated 31 January 1970 did not tally with the figures found in the
statement which showed private respondent's transactions with petitioner for the years 1969
and 1970; that there was no satisfactory explanation as to why the total outstanding amount
of P278,432.74 was still used as basis in the accounting of 7 April 1972 considering that
according to the table of transactions for the year 1969 and 1970, the total unpaid account of
private respondent amounted to P239,794.57.
We have, however, examined the record and it shows that the 7 April 1972 Statement of
Account had simply not been updated; that if we use as basis the figure as of 31 January 1970
which is P278,432.74 and from it deduct P38,638.17 which represents some of the payments
subsequently made by private respondent, the figure P239,794.57 will be obtained.
Also, the fact alone that the various statements of account had variances in figures, simply did
not mean that private respondent had no more financial obligations to petitioner. It must be
stressed that private respondent's account with petitioner was a running or open one, which
explains the varying figures in each of the statements rendered as of a given date.
The appellate court erred in considering only the statements of account in determining
whether private respondent was indebted to petitioner under the checks. By doing so, it failed
to give due importance to the most telling piece of evidence of private respondent's
indebtedness the checks themselves which he had issued.
Contrary to the view held by the Court of Appeals, this Court finds that the checks are the all
important evidence of petitioner's case; that these checks clearly established private
respondent's indebtedness to petitioner; that private respondent was liable thereunder.
It is important to stress that a check which is regular on its face is deemed prima facie to have
been issued for a valuable consideration and every person whose signature appears thereon is
deemed to have become a party thereto for value. 1 Thus, the mere introduction of the
instrument sued on in evidence prima facie entitles the plaintiff to recovery. Further, the rule is
quite settled that a negotiable instrument is presumed to have been given or indorsed for a
sufficient consideration unless otherwise contradicted and overcome by other competent
evidence. 2
In the case at bar, the Court of Appeals, contrary to these established rules, placed the burden
of proving the existence of valuable consideration upon petitioner. This cannot be
countenanced; it was up to private respondent to show that he had indeed issued the checks
without sufficient consideration. The Court considers that Private respondent was unable to
rebut satisfactorily this legal presumption. It must also be noted that those checks were issued
immediately after a letter demanding payment had been sent to private respondent by
petitioner Travel-On.
The fact that all the checks issued by private respondent to petitioner were presented for
payment by the latter would lead to no other conclusion than that these checks were intended
for encashment. There is nothing in the checks themselves (or in any other document for that
matter) that states otherwise.
We are unable to accept the Court of Appeals' conclusion that the checks here involved were
issued for "accommodation" and that accordingly private respondent maker of those checks
was not liable thereon to petitioner payee of those checks.
In the first place, while the Negotiable Instruments Law does refer to accommodation
transactions, no such transaction was here shown. Section 29 of the Negotiable Instruments
Law provides as follows:
Sec. 29. Liability of accommodation party. An accommodation party is one who has signed
the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and
for the purpose of lending his name to some other person. Such a person is liable on the
instrument to a holder for value, notwithstanding such holder, at the time of taking the
instrument, knew him to be only an accommodation party.
In accommodation transactions recognized by the Negotiable Instruments Law, an
accommodating party lends his credit to the accommodated party, by issuing or indorsing a
check which is held by a payee or indorsee as a holder in due course, who gave full value
therefor to the accommodated party. The latter, in other words, receives or realizes full value
which the accommodated party then must repay to the accommodating party, unless of course
the accommodating party intended to make a donation to the accommodated party. But the
accommodating party is bound on the check to the holder in due course who is necessarily a
third party and is not the accommodated party. Having issued or indorsed the check, the
accommodating party has warranted to the holder in due course that he will pay the same
according to its tenor. 3
In the case at bar, Travel-On was payee of all six (6) checks, it presented these checks for
payment at the drawee bank but the checks bounced. Travel-On obviously was not an
accommodated party; it realized no value on the checks which bounced.
Travel-On was entitled to the benefit of the statutory presumption that it was a holder in due
course, 4 that the checks were supported by valuable consideration. 5 Private respondent
maker of the checks did not successfully rebut these presumptions. The only
evidence aliunde that private respondent offered was his own self-serving uncorroborated
testimony. He claimed that he had issued the checks to Travel-On as payee to "accommodate"
its General Manager who allegedly wished to show those checks to the Board of Directors of
Travel-On to "prove" that Travel-On's account receivables were somehow "still good." It will be
seen that this claim was in fact a claim that the checks were merely simulated, that private
respondent did not intend to bind himself thereon. Only evidence of the clearest and most
convincing kind will suffice for that purpose; 6 no such evidence was submitted by private
respondent. The latter's explanation was denied by Travel-On's General Manager; that
explanation, in any case, appears merely contrived and quite hollow to us. Upon the other
hand, the "accommodation" or assistance extended to Travel-On's passengers abroad as
testified by petitioner's General Manager involved, not the accommodation transactions
recognized by the NIL, but rather the circumvention of then existing foreign exchange
regulations by passengers booked by Travel-On, which incidentally involved receipt of full
consideration by private respondent.
Thus, we believe and so hold that private respondent must be held liable on the six (6) checks
here involved. Those checks in themselves constituted evidence of indebtedness of private
respondent, evidence not successfully overturned or rebutted by private respondent.
Since the checks constitute the best evidence of private respondent's liability to petitioner
Travel-On, the amount of such liability is the face amount of the checks, reduced only by the
P10,000.00 which Travel-On admitted in its complaint to have been paid by private respondent
sometime in March 1992.
The award of moral damages to Private respondent must be set aside, for the reason that
Petitioner's application for the writ of attachment rested on sufficient basis and no bad faith
was shown on the part of Travel-On. If anyone was in bad faith, it was private respondent who
issued bad checks and then pretended to have "accommodated" petitioner's General Manager
by assisting her in a supposed scheme to deceive petitioner's Board of Directors and to
misrepresent Travel-On's financial condition.
ACCORDINGLY, the Court Resolved to GRANT due course to the Petition for Review
on Certiorari and to REVERSE and SET ASIDE the Decision dated 22 October 1980 and the
Resolution of 23 January 1981 of the Court of Appeals, as well as the Decision dated 31 January
1975 of the trial court, and to enter a new decision requiring private respondent Arturo S.
Miranda to pay to petitioner Travel-On the amount of P105,000.00 with legal interest thereon
from 14 June 1972, plus ten percent (10%) of the total amount due as attorney's fees. Costs
against Private respondent.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 101127-31 November 18, 1993
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
CRESENCIA C. REYES, accused-appellant.
The Solicitor General for plaintiff-appellee.
Timoteo A. David for Oriental Assurance Corporation.
Rosendo C. Ramos for accused-appellant.
CRUZ, J.:
The appellant has instituted this proceeding for the reversal of the decision of the Regional
Trial Court of Manila dated March 12, 1991, convicting her of estafa and violation of BP 22
under five separate informations which had been consolidated and tried jointly on her own
motion.
From the unrebutted evidence of the prosecution, the trial court that complainant Lorie Garcia
came to know Cresencia Reyes through Manny Carbrera, a friend and business acquaintance of
Garcia, who requested her to deliver rice to Reyes because he had no more stock to sell. Garcia
initially refused but eventually agreed to sell to Reyes but only on the condition that Reyes first
make a purchase order and, upon delivery, pay 50% of the cost of the rice, the balance to be
paid with a postdated check.
The first purchase order was for 200 sacks. On April 4, 1986, Garcia delivered to Reyes 100
sacks of rice worth P 31,500.00, for which two checks were issued, each in the amount of
P15,750.00. One was dated April 4, 1986 and the other April 10, 1986. On April 9, 1986, Garcia
delivered 98 more sacks of rice to Reyes, and Reyes again issued two checks, each in the
amount of
P14,210.00, the first dated April 10, 1986, and the other April 15, 1986.
On April 9, 1986, Reyes placed another order for 200 sacks of rice, which Garcia delivered to
her on the same day. While the 200 sacks were being unloaded, Reyes asked to buy an
additional 200 sacks, and since there were 400 sacks of rice loaded on the truck, Garcia agreed
to sell the whole stock to her.
For the 400 sacks (plus 2 more sacks to complete the first purchase order for 200 sacks), Reyes
again issued two checks, each for P66,330.00, one dated April 9, 1986 and the other April 15,
1986.
All the checks were drawn against the Bank of the Philippine Islands at its Espaa Branch.
Of the six checks issued by Reyes, only three were made good, to wit, the check dated April 4,
1986 for P15,750.00, which was encashed by Garcia; the check dated April 10, 1986 for
P14,210.00, which was redeemed by Reyes; and the check dated April 9, 1986 for P66,330,
which was paid by Reyes by installments.
The other three checks were, either upon encashment or deposit, returned by the drawee bank
to Garcia due to "insufficient funds." Garcia notified Reyes of their dishonor and the latter
promised to pay their total value. Despite repeated demands on Reyes, however, she failed to
make good the checks or to replace them with cash
The five criminal cases filed against Reyes were Criminal Cases Nos. 86-51206 to 86-51208, for
violation of BP 22 in connection with the issuance of BPI Check No. 308202 for P5,750,1 BPI
Check No. 308223 for
P14,210.00, 2 BPI check No. 308226 for P66,330.00,3 and Criminal Cases Nos. 86-51209 and 86-
51210, both for estafa involving the same checks.
After the prosecution had rested its case, Reyes manifested through her counsel that she
would file a demurrer to evidence. She did not do so during the 10-day period allowed her,
whereupon the trial court, on motion of the prosecution, declared the cases submitted for
decision. Instead of filing a motion for reconsideration, Reyes, assisted by her counsel,
submitted a waiver of appearance.4 Judge Angelina S. Gutierrez thereafter rendered the
challenged decision in which she disposed as follows:
ACCORDINGLY, finding the guilt of the accused beyond reasonable doubt, she is hereby
sentenced as follows:
In Criminal Case No. 51206, to suffer imprisonment of six (6) months and to pay the fine of
P15,750.00;
In Criminal Case No. 51207, to suffer imprisonment of six (6) months and to pay the fine of
P14,210.00;
In Criminal Case No. 51208, to suffer one year imprisonment and to pay the fine of P66,330.00;
In Criminal Case No. 51209, to suffer 22 years of reclusion perpetua together with the accessory
penalties and to indemnify the complaining witness by way of actual damages in the sum of
P80,540.00 and to pay the costs; and
In Criminal Case No. 51210, there being no modifying circumstances that attended the
commission of the offense, to suffer an indeterminate penalty of six (6) years and 1 day
of prision mayor as minimum to 14 years, 8 months and 1 day of reclusion temporal as
maximum together with the accessory penalties and to indemnify the complaining witness by
way of actual damages in the sum of P15,750.00 and to pay the costs.
On May 13, 1992, the First Division referred en consulta to the Court en banc the question of
whether the appellant, having been sentenced to serve 22 years of reclusion perpetua, should
be allowed to remain on bail during the pendency of her appeal.5 On August 7, 1992, the
Court en banc ordered the surrender of Reyes by her bondsman to the Regional Trial Court of
Manila, Branch 37, for her confinement by the Bureau of Corrections.6
In the appellant's brief, it is alleged that the trial court committed grave errors:
(1) In convicting Reyes of estafa and violation of BP 22 when on the face of the evidence itself it
is clear that the issuance of the checks in question was involved in a credit transaction and that
the said checks were issued by the latter as guarantee for the payment of her civil obligation to
the complainant;
(2) In holding her guilty of estafa under Art. 315, par. 2(d) of the Revised Penal Code when
there was no deceit employed by her in the issuance of the checks in question;
(3) In holding that there was sufficient evidence her to justify her conviction for estafa under
Art. 315, par. 2(d) of the Revised Penal Code and for violation of BP 22; and
(4) In convicting her for the crime of estafa under Art. 315, par. 2(d) of the Revised Penal Code
for having issued a bad check, even if the check had been issued in payment of a pre-existing
obligation.
The Court, after deliberating on the above assignment of errors and the briefs submitted by the
parties, finds for the People.
We re-affirm at the outset the established doctrine that:
While the filing of the two sets of Information under the provisions of Batas Pambansa Bilang
22 and under the provisions of the Revised Penal Code, as amended, on estafa, may refer to
identical acts committed by the petitioner, the prosecution thereof cannot be limited to one
offense, because a single criminal act may give rise to a multiplicity of offenses and where
there is variance or differences between the elements of an offense in one law and another law
as in the case at bar there will be no double jeopardy because what the rule on double
jeopardy prohibits refers to identity of elements in the two (2) offenses. Otherwise stated,
prosecution for the same act is not prohibited. What is forbidden is prosecution for the same
offense. Hence, the mere filing of the two (2) sets of information does not itself give rise to
double jeopardy (People v. Miraflores, 115 SCRA 570).7
The gravamen of the offense punished by BP 22 is the act of making and issuing a worthless
check or a check that is dishonored upon its presentment for payment. The law has made the
mere act of issuing a bad check a malum prohibitum, an act proscribed by the legislature for
being deemed pernicious and inimical to public welfare.9
According to Chief Justice Pedro L. Yap in the landmark case of Lozano v. Martinez: 10
The effects of the issuance of a worthless check transcends the private interests of the parties
directly involved in the transaction and touches the interest of the community at large. The
mischief it creates is not only a wrong to the payee or holder, but also an injury to the public.
The harmful practice of putting valueless commercial papers in circulation, multiplied a
thousand fold, can very well pollute the channels of trade and commerce, injure the banking
system and eventually hurt the welfare of society and the public interest.
The appellant argues that the questioned checks were not intended for deposit or encashment
but merely to guarantee payment of her obligations to Garcia, who, she stresses, admitted that
for every delivery of rice the corresponding checks were given in return. She contends that in
credit transactions, a check may serve merely as a guaranty for the payment of the amount
indicated therein, to be redeemed later by the drawer "on the maturity date of the check or on
a much later date, depending on the availability of funds of the latter."
It is now settled that BP 22 applies even in cases where the dishonored checks were issued
merely in the form of a deposit or a guaranty and not as actual payment. The law does not
make any distinction. Criminal liability attaches to the drawer of the check whether it was
issued in payment of an obligation or merely to guarantee the said obligation. As we held
in Que v. People: 11
. . . Inasmuch as the law does not make any distinction in this regard, no such distinction can be
made by means of interpretation of application. Furthermore, the history of the enactment of
subject statutes evinces the definitive legislative intent to make the prohibition all embracing,
without making any exception from the operation thereof in favor of a guarantee. This intent
may be gathered from the statement of the sponsor of the bills . . . which was enacted later
into BP 22, when it was introduced before the Batasang Pambansa that the bill was introduced
to discourage the issuance of bouncig checks, to prevent checks from becoming "useless scrap
of paper" and to restore respectability to checks, all without distinction as to the purpose of
the issuance of the checks. . . .
Consequently, what are important are the facts that the accused had deliberately issued the
checks in question to cover accounts and that the checks were dishonored upon
presentment regardless of whether or not the accused merely issued the checks as a guarantee.
(Emphasis added)
Even on the assumption, then, that the subject checks were given by the appellant as a mere
guaranty and not as payment, this circumstance will not absolve Reyes from her violation of BP
22.
The appellant has also been convicted under Art. 315 (2) (d) of the Revised Penal Code, as
amended by R.A. No. 4885, which penalizes any person who shall defraud another "by
postdating a check, or issuing a check in payment of an obligation when the offender had no
funds in the bank, or his funds deposited therein were not sufficient to cover the amount of the
check."
To constitute estafa under this provision, the act of postdating or issuing a check in payment of
an obligation must be the efficient cause of the defraudation; as such, it should be either prior
to or simultaneous with the act of fraud. 12 The offender must be able to obtain money or
property from the offended party because of the issuance of the check, whether postdated or
not. 13 It must be shown that the person to whom the check was delivered would not have
parted with his money or property were it not for the issuance of the check by the other party.
Stated otherwise, the check should have been issued as an inducement for the surrender by
the party deceived of his money or property and not in payment of a pre-existing obligation.
It is recalled that Garcia was unwilling at first to deal with Reyes but was finally persuaded
when she issued the two checks in payment for the first 100 sacks of rice. One of these checks
was encashed before the second could mature and be subsequently dishonored. Believing the
Reyes' credit was good, Garcia accepted two more checks from her in payment for another 100
sacks, and Reyes redeemed one of them before the other could mature and be subsequently
dishonored. Garcia was still unaware of Reyes's deception when she entered into their last sale
of 400 sacks, for which Reyes issued another two checks in payment, one of which was also to well educated and speaks English fluently. The Court discerns that it is this unique combination
be dishonored later. In all this series of transactions, Garcia was induced to sell because of the of bizarre physical make-up and seeming trustworthiness which led others, like herein
checks issued by the appellant which the complainant believed to be funded. complainant, to repose their confidence in her. Her counsel manifested that she is also facing
The deceit practiced by Reyes on Garcia is all too palpable. Reyes was able to maintain Garcia's similar charges in other branches of this Court.
confidence by making good three of the checks she had issued and thus giving Garcia the It is indeed pathetic that the appellant should suffer the physical handicap above described,
impression that the other checks, which she could not yet present for payment, would be but what is especially tragic is she has chosen to use this handicap for the deception of Garcia,
honored. Reyes' timing was clever. She saw to it that one of her checks for the first delivery who trusted her partly out of sympathy for her abnormal appearance. By her deceitfulness,
was valid (and was subsequently encashed) before she made her second purchase, for which Reyes has forfeited all feelings of charity or kindness toward her and earned instead the
she issued two more checks. She redeemed one of these checks before she bought the final punishment of the laws she has scorned.
400 sacks, for which she issued another two checks. All this time, Garcia believed that the WHEREFORE, the challenged decision is AFFIRMED and the appeal is DENIED, with costs against
remaining postdated checks she had yet to encash were all good when they were in fact all the appellant. It is so ordered.
worthless.
The three postdated checks that were subsequently dishonored were issued at a time when
the funds in her account were insufficient and even nil. Two of these checks were dated April
10, 1986, and the third April 15, 1986. The records of the drawee bank showed that Reyes had
a zero balance at the time the checks were issued and also when they were presented for
payment.14 The dishonored checks she had issued to Garcia had a total value of P96,290.00,
and this represented the damage sustained by Garcia because of the appellant's deceit. Reyes
had issued these check upon her fraudulent assurance to Garcia that they were fully funded.
Her situation worsened when she failed to make good the checks within three days from
receipt of notice of their dishonor and the demand from the complainant for their value. Her
failure to take advantage of this grace period offered by the law raised the prima
facie inference of deceit consisting of "false pretense or a fraudulent act."15
The appellant's final contention is the, prior to the delivery of the rice, she had agreed that only
50% of the purchase price would be paid upon delivery and that the remaining 50% would be
covered by a postdated check. Hence, as the subject checks covered the balance of the
purchase price of the 600 sacks of rice, they were issued in payment of a pre-existing obligation Republic of the Philippines
and so did not violate Article 315 of the Revised Penal Code or BP 22. SUPREME COURT
The facts established by the prosecution belie this assertion. The evidence to the contrary is Manila
overwhelming. There is no doubt that the subject checks were issued by Reyes (and accepted FIRST DIVISION
by Garcia) in exchange for the three deliveries of rice as each delivery was made. We are G.R. No. 177438 September 24, 2012
satisfied that the postdated checks were issued by the appellant not as payment for a pre- AMADA RESTERIO, Petitioner,
existing obligation but as the consideration for each shipment of rice she received from the vs.
complainant. PEOPLE OF THE PHILIPPINES Respondent.
The argument that the postdated checks were promissory notes and not for negotiation is so DECISION
unsubstantial as to deserve no serious attention. BERSAMIN, J.:
The Court notes the following observations of the trial court on the personality of the The notice of dishonor required by Batas Pambansa Blg. 22 to be given to the drawer, maker or
appellant: issuer of a check should be written. If the service of the written notice of dishonor on the
Accused, past 50, is a physically handicapped lady whose height is barely two (2) feet. In fact, maker, drawer or issuer of the dishonored check is by registered mail, the proof of service
whenever she came to court, she was always assisted by one or two companions. But she is consists not only in the presentation as evidence of the registry return receipt but also of the
registry receipt together with the authenticating affidavit of the person mailing the notice of
dishonor. Without the authenticating affidavit, the proof of giving the notice of dishonor is
insufficient unless the mailer personally testifies in court on the sending by registered mail.
Antecedents
The petitioner was charged with a violation of Batas Pambansa Blg. 22 in the Municipal Trial
Court in Cities (MTCC) in Mandaue City through the information that alleged as follows:
That on May, 2002, or thereabouts, in the City of Mandaue, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, with deliberate intent of gain,
did there and then willfully, unlawfully and feloniously make, draw and issue ChinaBank Check
bearing No. AO141332, dated June 3, 2002, in the amount of 50,000.00 payable to the order
of Bernardo T. Villadolid to apply on account or for value, the accused fully knowing well that at
the time of the issuance of said check that she does not have sufficient funds in or credit with
the drawee bank for the payment of such check in full upon its presentment; or the accused
having sufficient funds in or credit with the drawee bank when she make/s or draw/s and
issue/s a check but she failed to keep sufficient funds or maintain a credit to cover the full
amount of the check, which check when presented for encashment was dishonored by the
drawee bank for the reason "ACCT. CLOSED" or would have been dishonored for the same
reason had not the drawer, without any valid reason ordered the bank to stop payment, and
despite notice of dishonor and demands for payment, said accused failed and refused and still
fails and refuses to redeem the check or to make arrangement for payment in full by the
drawee of such check within five (5) banking days after receiving the notice of dishonor, to the
damage and prejudice of the aforenamed private complainant, in the aforestated amount and
other claims and charges allowed by civil law.
CONTRARY TO LAW.1
After trial, the MTCC found the petitioner guilty as charged, disposing as follows:
WHEREFORE, decision is hereby rendered finding the accused, AMADA Y. RESTERIO, GUILTY
beyond reasonable doubt for Violation of Batas Pambansa Bilang 22 and sentences her to pay a
fine of FIFTY THOUSAND PESOS ( 50,000.00) and to pay her civil liabilities to the private
complainant in the sum of FIFTY THOUSAND PESOS ( 50,000.00), TEN THOUSAND PESOS (
10,000.00) as attorneys fees and FIVE HUNDRED SEVENTY-FIVE PESOS ( 575.00) as
eimbursement of the filing fees.
SO ORDERED.2
The petitioner appealed, but the RTC affirmed the conviction.3
By petition for review, the petitioner appealed to the CA, stating that: (a) the RTC erred in
affirming the conviction and in not finding instead that the Prosecution did not establish her
guilt beyond reasonable doubt; and (b) the conviction was contrary to existing laws and
jurisprudence, particularly Yu Oh v. Court of Appeals.4
On December 4, 2006, the CA found the petition to be without merit, and denied the petition
for review.5
Issues
The petitioner assails the affirmance of her conviction by the CA based on the following
grounds, to wit:
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS AND REVERSIBLE ERROR AND
WITH GRAVE ABUSE OF DISCRETION IN IGNORING THE APPLICABILITY IN THE PRESENT CASE
THE DECISION OF THE SUPREME COURT IN THE CASE OF ELVIRA YU OH VS. COURT OF APPEALS,
G.R. NO. 125297, JUNE 26, 2003.
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS AND REVERSIBLE ERROR AND
WITH GRAVE ABUSE OF DISCRETION IN NOT FINDING THAT THE PROSECUTION FAILED TO
PROVE ALL THE ESSENTIAL ELEMENTS OF THE CRIME OF VIOLATION OF BATAS PAMBANSA
BILANG 22.
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS AND REVERSIBLE ERROR AND
WITH GRAVE ABUSE OF DISCRETION IN NOT FINDING THAT NO NOTICE OF DISHONOR WAS
ACTUALLY SENT TO THE PETITIONER.
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS AND REVERSIBLE ERROR AND
WITH GRAVE ABUSE OF DISCRETION IN NOT FINDING THAT THE PROSECUTION FAILED TO
ESTABLISH THE GUILT OF THE PETITIONER BEYOND REASONABLE DOUBT.6
The appeal hinges on whether or not all the elements of a violation of Batas Pambansa Blg. 22
were established beyond reasonable doubt.
Ruling
The petition is meritorious.
For a violation of Batas Pambansa Blg. 22, the Prosecution must prove the following essential
elements, namely:
(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 there were no
sufficient funds in or credit with the drawee bank for the payment of such check in full upon its
presentment; and
(3) The dishonor of the check by the drawee bank for insufficiency of funds or credit or the
dishonor for the same reason had not the drawer, without any valid cause, ordered the drawee
bank to stop payment.7
The existence of the first element of the violation is not disputed. According to the petitioner,
she was "required to issue a check as a collateral for the obligation," and that "she was left with
no alternative but to borrow the check of her friend xxx and used the said check as a collateral
of her loan."8 During her cross-examination, she stated that she did not own the check that she
drew and issued to complainant Bernardo Villadolid.9
Yet, to avoid criminal liability, the petitioner contends that Batas Pambansa Blg. 22 was
applicable only if the dishonored check was actually owned by her; and that she could not be
held liable because the check was issued as a mere collateral of the loan and not intended to
be deposited.
The petitioners contentions do not persuade.
What Batas Pambansa Blg. 22 punished was the mere act of issuing a worthless check. The law
did not look either at the actual ownership of the check or of the account against which it was
made, drawn, or issued, or at the intention of the drawee, maker or issuer. Also, that the check
was not intended to be deposited was really of no consequence to her incurring criminal
liability under Batas Pambansa Blg. 22. In Ruiz v. People,10 the Court debunked her contentions
and cogently observed:
In Lozano v. Martinez, this Court ruled that the gravamen of the offense is the act of making
and issuing a worthless check or any check that is dishonored upon its presentment for
payment and putting them in circulation. The law includes all checks drawn against banks. The
law was designed to prohibit and altogether eliminate the deleterious and pernicious practice
of issuing checks with insufficient or no credit or funds therefor. Such practice is deemed a
public nuisance, a crime against public order to be abated. The mere act of issuing a worthless
check, either as a deposit, as a guarantee, or even as an evidence of a pre-existing debt or as a
mode of payment is covered by B.P. 22. It is a crime classified as malum prohibitum. The law is
broad enough to include, within its coverage, the making and issuing of a check by one who has
no account with a bank, or where such account was already closed when the check was
presented for payment. As the Court in Lozano explained:
The effects of the issuance of a worthless check transcends the private interests of the parties
directly involved in the transaction and touches the interests of the community at large. The
mischief it creates is not only a wrong to the payee or holder, but also an injury to the public.
The harmful practice of putting valueless commercial papers in circulation, multiplied a
thousandfold, can very well pollute the channels of trade and commerce, injure the banking
system and eventually hurt the welfare of society and the public interest. As aptly stated
The "check flasher" does a great deal more than contract a debt; he shakes the pillars of
business; and to my mind, it is a mistaken charity of judgment to place him in the same
category with the honest man who is unable to pay his debts, and for whom the constitutional
inhibition against "imprisonment for debt, except in cases of fraud" was intended as a shield
and not a sword.
Considering that the law imposes a penal sanction on one who draws and issues a worthless
check against insufficient funds or a closed account in the drawee bank, there is, likewise, every
reason to penalize a person who indulges in the making and issuing of a check on an account
belonging to another with the latters consent, which account has been closed or has no funds
or credit with the drawee bank.11 (Bold emphases supplied)
The State likewise proved the existence of the third element. On direct examination, Villadolid
declared that the check had been dishonored upon its presentment to the drawee bank
through the Bank of the Philippine Islands (BPI) as the collecting bank. The return check
memorandum issued by BPI indicated that the account had already been closed.12 The
petitioner did not deny or contradict the fact of dishonor.
The remaining issue is whether or not the second element, that is, the knowledge of the
petitioner as the issuer of the check that at the time of issue there were no sufficient funds in
or credit with the drawee bank for the payment of such check in full upon its presentment, was
existent.
To establish the existence of the second element, the State should present the giving of a
written notice of the dishonor to the drawer, maker or issuer of the dishonored check. The
rationale for this requirement is rendered in Dico v. Court of Appeals,13 to wit:
To hold a person liable under B.P. Blg. 22, the prosecution must not only establish that a check
was issued and that the same was subsequently dishonored, it must further be shown that
accused knew at the time of the issuance of the check that he did not have sufficient funds or
credit with the drawee bank for the payment of such check in full upon its presentment.
This knowledge of insufficiency of funds or credit at the time of the issuance of the check is the
second element of the offense. Inasmuch as this element involves a state of mind of the person
making, drawing or issuing the check which is difficult to prove, Section 2 of B.P. Blg. 22 creates
a prima facie presumption of such knowledge. Said section reads:
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.
For this presumption to arise, the prosecution must prove the following: (a) the check is
presented within ninety (90) days from the date of the check; (b) the drawer or maker of the
check receives notice that such check has not been paid by the drawee; and (c) the drawer or
maker of the check fails to pay the holder of the check the amount due thereon, or make
arrangements for payment in full within five (5) banking days after receiving notice that such
check has not been paid by the drawee. In other words, the presumption is brought into
existence only after it is proved that the issuer had received a notice of dishonor and that
within five days from receipt thereof, he failed to pay the amount of the check or to make
arrangements for its payment. The presumption or prima facie evidence as provided in this
section cannot arise, if such notice of nonpayment by the drawee bank is not sent to the maker
or drawer, or if there is no proof as to when such notice was received by the drawer, since
there would simply be no way of reckoning the crucial 5-day period.
A notice of dishonor received by the maker or drawer of the check is thus indispensable before
a conviction can ensue. The notice of dishonor may be sent by the offended party or the
drawee bank. The notice must be in writing. A mere oral notice to pay a dishonored check will
not suffice. The lack of a written notice is fatal for the prosecution.14 (Bold emphases supplied)
The giving of the written notice of dishonor does not only supply the proof for the second
element arising from the presumption of knowledge the law puts up but also affords the
offender due process. The law thereby allows the offender to avoid prosecution if she pays the
holder of the check the amount due thereon, or makes arrangements for the payment in full of
the check by the drawee within five banking days from receipt of the written notice that the
check had not been paid.15 The Court cannot permit a deprivation of the offender of this
statutory right by not giving the proper notice of dishonor. The nature of this opportunity for
the accused to avoid criminal prosecution has been expounded in Lao v. Court of Appeals:16
It has been observed that the State, under this statute, actually offers the violator a
compromise by allowing him to perform some act which operates to preempt the criminal
action, and if he opts to perform it the action is abated xxx In this light, the full payment of the
amount appearing in the check within five banking days from notice of dishonor is a complete
defense. The absence of a notice of dishonor necessarily deprives an accused an opportunity
to preclude a criminal prosecution. Accordingly, procedural due process clearly enjoins that a
notice of dishonor be actually served on petitioner. Petitioner has a right to demand and the
basic postulate of fairness require that the notice of dishonor be actually sent to and received
by her to afford her the opportunity to avert prosecution under B.P. 22."17 (Bold emphases
supplied)
To prove that he had sent the written notice of dishonor to the petitioner by registered mail,
Villadolid presented the registry return receipt for the first notice of dishonor dated June 17,
2002 and the registry return receipt for the second notice of dishonor dated July 16, 2002.
However, the petitioner denied receiving the written notices of dishonor.
The mere presentment of the two registry return receipts was not sufficient to establish the
fact that written notices of dishonor had been sent to or served on the petitioner as the issuer
of the check. Considering that the sending of the written notices of dishonor had been done by
registered mail, the registry return receipts by themselves were not proof of the service on the
petitioner without being accompanied by the authenticating affidavit of the person or persons
who had actually mailed the written notices of dishonor, or without the testimony in court of
the mailer or mailers on the fact of mailing. The authentication by affidavit of the mailer or
mailers was necessary in order for the giving of the notices of dishonor by registered mail to be
regarded as clear proof of the giving of the notices of dishonor to predicate the existence of the
second element of the offense. No less would fulfill the quantum of proof beyond reasonable
doubt, for, as the Court said in Ting v. Court of Appeals:18
Aside from the above testimony, no other reference was made to the demand letter by the
prosecution. As can be noticed from the above exchange, the prosecution alleged that the
demand letter had been sent by mail. To prove mailing, it presented a copy of the demand
letter as well as the registry return receipt. However, no attempt was made to show that the
demand letter was indeed sent through registered mail nor was the signature on the registry
return receipt authenticated or identified. It cannot even be gleaned from the testimony of
private complainant as to who sent the demand letter and when the same was sent. In fact, the
prosecution seems to have presumed that the registry return receipt was proof enough that
the demand letter was sent through registered mail and that the same was actually received by
petitioners or their agents.
As adverted to earlier, it is necessary in cases for violation of Batas Pambansa Blg. 22, that the
prosecution prove that the issuer had received a notice of dishonor. It is a general rule that
when service of notice is an issue, the person alleging that the notice was served must prove
the fact of service (58 Am Jur 2d, Notice, 45). The burden of proving notice rests upon the
party asserting its existence. Now, ordinarily, preponderance of evidence is sufficient to prove
notice. In criminal cases, however, the quantum of proof required is proof beyond reasonable
doubt. Hence, for Batas Pambansa Blg. 22 cases, there should be clear proof of notice.
Moreover, it is a general rule that, when service of a notice is sought to be made by mail, it
should appear that the conditions on which the validity of such service depends had existence,
otherwise the evidence is insufficient to establish the fact of service (C.J.S., Notice, 18). In the
instant case, the prosecution did not present proof that the demand letter was sent through
registered mail, relying as it did only on the registry return receipt. In civil cases, service made
through registered mail is proved by the registry receipt issued by the mailing office and an
affidavit of the person mailing of facts showing compliance with Section 7 of Rule 13 (See
Section 13, Rule 13, 1997 Rules of Civil Procedure). If, in addition to the registry receipt, it is
required in civil cases that an affidavit of mailing as proof of service be presented, then with
more reason should we hold in criminal cases that a registry receipt alone is insufficient as
proof of mailing. In the instant case, the prosecution failed to present the testimony, or at least
the affidavit, of the person mailing that, indeed, the demand letter was sent. xxx
Moreover, petitioners, during the pre-trial, denied having received the demand letter (p. 135,
Rollo). Given petitioners denial of receipt of the demand letter, it behooved the prosecution to
present proof that the demand letter was indeed sent through registered mail and that the
same was received by petitioners. This, the prosecution miserably failed to do. Instead, it
merely presented the demand letter and registry return receipt as if mere presentation of the
same was equivalent to proof that some sort of mail matter was received by petitioners.
Receipts for registered letters and return receipts do not prove themselves; they must be
properly authenticated in order to serve as proof of receipt of the letters (Central Trust Co. v.
City of Des Moines, 218 NW 580).
Likewise, for notice by mail, it must appear that the same was served on the addressee or a
duly authorized agent of the addressee. In fact, the registry return receipt itself provides that
"[a] registered article must not be delivered to anyone but the addressee, or upon the
addressees written order, in which case the authorized agent must write the addressees name
on the proper space and then affix legibly his own signature below it." In the case at bar, no
effort was made to show that the demand letter was received by petitioners or their agent. All
that we have on record is an illegible signature on the registry receipt as evidence that
someone received the letter. As to whether this signature is that of one of the petitioners or of
their authorized agent remains a mystery. From the registry receipt alone, it is possible that
petitioners or their authorized agent did receive the demand letter. Possibilities, however,
cannot replace proof beyond reasonable doubt. There being insufficient proof that petitioners
received notice that their checks had been dishonored, the presumption that they knew of the principal sum, reckoned from the filing of the information in the trial court. That rate of
insufficiency of the funds therefor cannot arise. interest will increase to 12% per annum upon the finality of this decision.
As we stated in Savage v. Taypin (G.R. No. 134217, May 11, 2000, 311 SCRA 397), "penal WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals
statutes must be strictly construed against the State and liberally in favor of the accused." promulgated on December 4, 2006, and ACQUITS petitioner AMADA RESTERIO of the violation
Likewise, the prosecution may not rely on the weakness of the evidence for the defense to of Batas Pambansa Blg. 22 as charged for failure to establish her guilt beyond reasonable
make up for its own blunders in prosecuting an offense. Having failed to prove all the elements doubt.
of the offense, petitioners may not thus be convicted for violation of Batas Pambansa Blg. 22. The Court ORDERS the petitioner to pay to BERNARDO VILLADOLID the amount of 50,000.00,
(Bold emphases supplied)1wphi1 representing the face value of Chinabank Check No. LPU-A0141332, with legal interest of 6%
Also, that the wife of Villadolid verbally informed the petitioner that the check had bounced did per annum from the filing of the information until the finality of this decision, and thereafter
not satisfy the requirement of showing that written notices of dishonor had been made to and 12% per annum until the principal amount of 50,000.00 is paid.
received by the petitioner. The verbal notices of dishonor were not effective because it is No pronouncement on costs of suit.
already settled that a notice of dishonor must be in writing.19 The Court definitively ruled on SO ORDERED.
the specific form of the notice of dishonor in Domagsang v. Court of Appeals:20
Petitioner counters that the lack of a written notice of dishonor is fatal. The Court agrees.
While, indeed, Section 2 of B.P. Blg. 22 does not state that the notice of dishonor be in writing,
taken in conjunction, however, with Section 3 of the law, i.e., "that where there are no
sufficient funds in or credit with such drawee bank, such fact shall always be explicitly stated in
the notice of dishonor or refusal," a mere oral notice or demand to pay would appear to be
insufficient for conviction under the law. The Court is convinced that both the spirit and letter
of the Bouncing Checks Law would require for the act to be punished thereunder not only that
the accused issued a check that is dishonored, but that likewise the accused has actually been
notified in writing of the fact of dishonor. The consistent rule is that penal statutes have to be
construed strictly against the State and liberally in favor of the accused. (Bold emphases
supplied; italics in the original text)
In light of the foregoing, the proof of the guilt of the petitioner for a violation of Batas
Pambansa Blg. 22 for issuing to Villadolid the unfunded Chinabank Check No. LPU-A0141332 in
the amount of 50,000.00 did not satisfy the quantum of proof beyond reasonable doubt.
According to Section 2 of Rule 133, Rules of Court, the accused is entitled to an acquittal, unless
his guilt is shown beyond reasonable doubt, which does not mean such a degree of proof as,
excluding possibility of error, produces absolute certainty; only a moral certainty is required, or
that degree of proof that produces conviction in an unprejudiced mind. This is the required
quantum, firstly, because the accused is presumed to be innocent until the contrary is proved,
and, secondly, because of the inequality of the position in which the accused finds herself, with
the State being arrayed against her with its unlimited command of means, with counsel usually
of authority and capacity, who are regarded as public officers, "and with an attitude of tranquil
majesty often in striking contrast to that of (the accused) engaged in a perturbed and
distracting struggle for liberty if not for life."21
Nonetheless, the civil liability of the petitioner in the principal sum of 50,000.00, being
admitted, was established. She was further liable for legal interest of 6% per annum on that

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 119178 June 20, 1997
LINA LIM LAO, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
PANGANIBAN, J.:
May an employee who, as part of her regular duties, signs blank corporate checks with the
name of the payee and the amount drawn to be filled later by another signatory and,
therefore, does so without actual knowledge of whether such checks are funded, be held
criminally liable for violation of Batas Pambansa Bilang 22 (B.P. 22), when checks so signed are (Premiere) in its Binondo Branch. As such officer, she was authorized to sign checks for and in
dishonored due to insufficiency of funds? Does a notice of dishonor sent to the main office of
the corporation constitute a valid notice to the said employee who holds office in a separate
branch and who had no actual knowledge thereof? In other words, is constructive knowledge
of the corporation, but not of the signatory-employee, sufficient?
These are the questions raised in the petition filed on March 21, 1995 assailing the Decision 1 of 23, 1987, pp. 5, 9-10). Father Palijo had invested a total of P514,484.04, as evidenced by the
Respondent Court of Appeals 2 promulgated on December 9, 1994 in CA-G.R. CR No. 14240
dismissing the appeal of petitioner and affirming the decision dated September 26, 1990 in
Criminal Case Nos. 84-26967 to 84-26969 of the Regional Trial Court of Manila, Branch 33. The Check Date Amount
dispositive portion of the said RTC decision affirmed by the respondent appellate court reads: 3 299961 Oct. 7, 1993 (sic) P 150,000.00 (Exh. "B")
WHEREFORE, after a careful consideration of the evidence presented by the prosecution and
that of the defense, the Court renders judgment as follows:
In Criminal Case No. 84-26969 where no evidence was presented by the prosecution
notwithstanding the fact that there was an agreement that the cases be tried jointly and also
the fact that the accused Lina Lim Lao was already arraigned, for failure of the prosecution to
adduce evidence against the accused, the Court hereby declares her innocent of the crime
charged and she is hereby acquitted with cost de oficio.
For Criminal Case No. 84-26967, the Court finds the accused Lina Lim Lao guilty beyond
reasonable doubt of the crime charged and is hereby sentenced to suffer the penalty of ONE
(1) YEAR imprisonment and to pay a fine of P150,000.00 without subsidiary imprisonment in
case of insolvency.
For Criminal Case No. 84-26968, the Court finds the accused Lina Lim Lao guilty beyond
reasonable doubt of the crime charged and is hereby sentenced to suffer the penalty of ONE
(1) YEAR imprisonment and to pay a fine of P150,000.00 without subsidiary imprisonment in
case of of (sic) insolvency.
For the two cases the accused is ordered to pay the cost of suit.
The cash bond put up by the accused for her provisional liberty in Criminal Case No. 84-26969
where she is declared acquitted is hereby ordered cancelled (sic).
With reference to the accused Teodulo Asprec who has remained at large, in order that the
cases as against him may not remain pending in the docket for an indefinite period, let the
same be archived without prejudice to its subsequent prosecution as soon as said accused is
finally apprehended.
Let a warrant issue for the arrest of the accused Teodulo Asprec which warrant need not be
returned to this Court until the accused is finally arrested.
SO ORDERED.
The Facts
Version of the Prosecution
The facts are not disputed. We thus lift them from the assailed Decision, as follows:
Appellant (and now Petitioner Lina Lim Lao) was a junior officer of Premiere Investment House
behalf of the corporation (TSN, August 16, 1990, p. 6). In the course of the business, she met
complainant Father Artelijo Pelijo, the provincial treasurer of the Society of the Divine Word
through Mrs. Rosemarie Lachenal, a trader for Premiere. Father Palijo was authorized to invest
donations to the society and had been investing the society's money with Premiere (TSN, June
Confirmation of Sale No. 82-6994 (Exh "A") dated July 8, 1993. Father Palijo was also issued
Traders Royal Bank (TRB) checks in payment of interest, as follows:
299962 Oct. 7, 1983 P 150,000.00 (Exh. "C")
323835 Oct. 7, 1983 P 26,010.73
All the checks were issued in favor of Artelijo A. Palijo and signed by appellant (herein
petitioner) and Teodulo Asprec, who was the head of operations. Further evidence of the
transaction was the acknowledgment of postdated checks dated July 8, 1983 (Exh. "D") and the
cash disbursement voucher (Exh. "F", TSN, supra, at pp. 11-16).
When Father Palijo presented the checks for encashment, the same were dishonored for the
reason "Drawn Against Insufficient Funds" (DAIF). Father Palijo immediately made demands on
premiere to pay him the necessary amounts. He first went to the Binondo Branch but was
referred to the Cubao Main Branch where he was able to talk with the President, Mr. Cario.
For his efforts, he was paid P5,000.00. Since no other payments followed, Father Palijo wrote
Premiere a formal letter of demand Subsequently, Premiere was placed under receivership
(TSN, supra, at pp. 16-19). 4
Thereafter, on January 24, 1984, Private Complainant Palijo filed an affidavit-complaint against
Petitioner Lina Lim Lao and Teodulo Asprec for violation of B.P. 22. After preliminary
investigation, 5 three Informations charging Lao and Asprec with the offense defined in the first
paragraph of Section 1, B.P. 22 were filed by Assistant Fiscal Felix S. Caballes before the trial
court on May 11, 1984, 6 worded as follows:
1. In Criminal Case No. 84-26967:
That on or about October 7, 1983 in the City of Manila, Philippines, the said accused did then
and there wilfully and unlawfully draw and issue to Artelijo A. Palijo to apply on account or for
value a Traders Royal Bank Check No. 299962 for P150,000.00 payable to Fr. Artelijo A. Palijo
dated October 7, 1983 well knowing that at the time of issue he/she did not have sufficient
funds in or credit with the drawee bank for full payment of the said check upon its
presentment as in fact the said check, when presented within ninety (90) days from the date
thereof, was dishonored by the drawee bank for the reason: "Insufficient Funds"; that despite
notice of such dishonor, said accused failed to pay said Artelijo A. Palijo the amount of the said
check or to make arrangement for full payment of the same within five (5) banking days from
receipt of said notice.
CONTRARY TO LAW.
2. In Criminal Case No. 84-26968:
That on or about October 7, 1983 in the City of Manila, Philippines, the said accused did then
and there wilfully and unlawfully draw and issue to Artelijo A. Palijo to apply on account or for
value a Traders Royal Bank Check No. 299961 for P150,000.00 payable to Fr. Artelijo A. Palijo
dated October 7, '83 well knowing that at the time of issue he/she did not have sufficient funds
in or credit with the drawee bank for full payment of the said check upon its presentment as in
fact the said check, when presented within ninety (90) days from the date thereof, was
dishonored by the drawee bank for the reason: "Insufficient Funds"; that despite notice of such
dishonor, said accused failed to pay said Artelijo A. Palijo the amount of the said check or to
make arrangement for full payment of the same within five (5) banking days from receipt of
said notice.
CONTRARY TO LAW.
3. And finally in Criminal Case No. 84-26969:
That on or about July 8, 1983 in the City of Manila, Philippines, the said accused did then and
there wilfully and unlawfully draw and issue to Artelijo A. Palijo to apply on account for value a
Traders Royal Bank Check No. 323835 for P26,010.03 payable to Fr. Artelijo A. Palijo dated
October 7, 1983 well knowing that at the time of issue he/she did not have sufficient funds in
or credit with the drawee bank for full payment of the said check upon its presentment as in
fact the said check, when presented within ninety (90) days from the date thereof, was
dishonored by the drawee bank for the reason: "Insufficient Funds"; that despite notice of such
dishonor, said accused failed to pay said Artelijo A. Palijo the amount of the said check or to
make arrangement for full payment of the same within five (5) banking days from receipt of
said notice.
CONTRARY TO LAW.
Upon being arraigned, petitioner assisted by counsel pleaded "not guilty." Asprec was not
arrested; he has remained at large since the trial, and even now on appeal.
After due trial, the Regional Trial Court convicted Petitioner Lina Lim Lao in Criminal Case Nos.
84-26967 and 84-26968 but acquitted her in Criminal Case No. 84-26969. 7 On appeal, the
Court of Appeals affirmed the decision of the trial court.
Version of the Defense
Petitioner aptly summarized her version of the facts of the case thus:
Petitioner Lina Lim Lao was, in 1983, an employee of Premiere Financing Corporation
(hereinafter referred to as the "Corporation"), a corporation engaged in investment
management, with principal business office at Miami, Cubao, Quezon City. She was a junior
officer at the corporation who was, however, assigned not at its main branch but at the
corporation's extension office in (Binondo) Manila. (Ocampo, T . S. N ., 16 August 1990, p. 14)
In the regular course of her duties as a junior officer, she was required to co-sign checks drawn
against the account of the corporation. The other co-signor was her head of office, Mr. Teodulo
Asprec. Since part of her duties required her to be mostly in the field and out of the office, it
was normal procedure for her to sign the checks in blank, that is, without the names of the
payees, the amounts and the dates of maturity. It was likewise Mr. Asprec, as head of office,
who alone decided to whom the checks were to be ultimately issued and delivered. (Lao,
T . S. N., 28 September 1989, pp. 9-11, 17, 19.)
In signing the checks as part of her duties as junior officer of the corporation, petitioner had no
knowledge of the actual funds available in the corporate account. (Lao, T . S. N., 28 September
1989, p. 21) The power, duty and responsibility of monitoring and assessing the balances
against the checks issued, and funding the checks thus issued, devolved on the corporation's
Treasury Department in its main office in Cubao, Quezon City, headed then by the Treasurer,
Ms. Veronilyn Ocampo. (Ocampo, T . S. N., 19 July 1990, p. 4; Lao, T . S. N., 28 September 1989,
pp. 21-23) All bank statements regarding the corporate checking account were likewise sent to
the main branch in Cubao, Quezon City, and notin Binondo, Manila, where petitioner was
holding office. (Ocampo, T . S. N., 19 July 1990, p. 24;Marqueses, T . S. N., 22 November 1988,
p. 8)
The foregoing circumstances attended the issuance of the checks subject of the instant
prosecution.
The checks were issued to guarantee payment of investments placed by private complainant
Palijo with Premiere Financing Corporation. In his transactions with the corporation, private
complainant dealt exclusively with one Rosemarie Lachenal, a trader connected with the
corporation, and he never knew nor in any way dealt with petitioner Lina Lim Lao at any time
before or during the issuance of the delivery of the checks. (Palijo, T . S. N., 23 June 1987,
pp. 28-29, 32-34; Lao, T . S. N., 15 May 1990, p. 6; Ocampo, T . S. N., p. 5) Petitioner Lina Lim
Lao was not in any way involved in the transaction which led to the issuance of the checks.
When the checks were co-signed by petitioner, they were signed in advance and in blank,
delivered to the Head of Operations, Mr. Teodulo Asprec, who subsequently filled in the names
of the payee, the amounts and the corresponding dates of maturity. After Mr. Asprec signed
the checks, they were delivered to private complainant Palijo. (Lao, T . S. N ., 28 September
1989, pp. 8-11, 17, 19; note also that the trial court in its decision fully accepted the testimony
of petitioner [Decision of the Regional Trial Court, p. 12], and that the Court of Appeals affirmed
said decision in toto)
Petitioner Lina Lim Lao was not in any way involved in the completion, and the subsequent
delivery of the check to private complainant Palijo.
At the time petitioner signed the checks, she had no knowledge of the sufficiency or
insufficiency of the funds of the corporate account. (Lao, T . S. N ., 28 September 1989, p. 21) It
was not within her powers, duties or responsibilities to monitor and assess the balances against
the issuance; much less was it within her (duties and responsibilities) to make sure that the
checks were funded. Premiere Financing Corporation had a Treasury Department headed by a
Treasurer, Ms. Veronilyn Ocampo, which alone had access to information as to account
balances and which alone was responsible for funding the issued checks. (Ocampo, T . S. N ., 19
July 1990, p. 4; Lao, T . S. N ., 28 September 1990, p. 23) All statements of account were sent to
the Treasury Department located at the main office in Cubao, Quezon City. Petitioner was
holding office at the extension in Binondo Manila. (Lao, T . S. N., 28 September 1989, p. 24-25)
Petitioner Lina Lim Lao did not have knowledge of the insufficiency of the funds in the
corporate account against which the checks were drawn.
When the checks were subsequently dishonored, private complainant sent a notice of said
dishonor to Premier Financing Corporation at its head office in Cubao, Quezon City. (Please
refer to Exh. "E";Palijo, T . S. N., 23 June 1987, p. 51) Private complainant did not send notice of
dishonor to petitioner. (Palijo, T . S. N., 24 July 1987, p. 10) He did not follow up his investment
with petitioner. (Id.) Private complainant never contacted, never informed, and never talked
with, petitioner after the checks had bounced. (Id., at p. 29) Petitioner never had notice of the
dishonor of the checks subject of the instant prosecution.
The Treasurer of Premiere Financing Corporation, Ms. Veronilyn Ocampo testified that it was
the head office in Cubao, Quezon City, which received notice of dishonor of the bounced
checks. (Ocampo, T . S. N ., 19 July 1990 pp. 7-8) The dishonor of the check came in the wake of
the assassination of the late Sen. Benigno Aquino, as a consequence of which event a majority
of the corporation's clients pre-terminated their investments. A period of extreme illiquidity
and financial distress followed, which ultimately led to the corporation's being placed under
receivership by the Securities and Exchange Commission. (Ocampo, T . S. N ., 16 August 1990,
p. 8, 19; Lao, T . S. N ., 28 September 1989, pp. 25-26; Please refer also to Exhibit "1", the order
of receivership issued by the Securities and Exchange Commission) Despite the Treasury
Department's and (Ms. Ocampo's) knowledge of the dishonor of the checks, however, the main
office in Cubao, Quezon City never informed petitioner Lina Lim Lao or anybody in the Binondo
office for that matter. (Ocampo, T .S. N ., 16 August 1990, pp. 9-10) In her testimony, she
justified her omission by saying that the checks were actually the responsibility of the main
office (Ocampo, T . S. N ., 19 July 1990, p. 6) and that, at that time of panic withdrawals and
massive pre-termination of clients' investments, it was futile to inform the Binondo office since
the main office was strapped for cash and in deep financial distress. (Id., at pp. 7-9) Moreover,
the confusion which came in the wake of the Aquino assassination and the consequent panic
withdrawals caused them to lose direct communication with the Binondo office. (Ocampo,
T . S. N ., 16 August 1990, p. 9-10)
As a result of the financial crisis and distress, the Securities and Exchange Commission placed
Premier Financing Corporation under receivership, appointing a rehabilitation receiver for the
purpose of settling claims against the corporation. (Exh. "1") As he himself admits, private
complainant filed a claim for the payment of the bounced check before and even after the
corporation had been placed under receivership. (Palijo, T . S. N ., 24 July 1987, p. 10-17) A
check was prepared by the receiver in favor of the private complainant but the same was not
claimed by him. (Lao, T . S. N ., 15 May 1990, p. 18)
Private complainant then filed the instant criminal action. On 26 September 1990, the Regional
Trial Court of Manila, Branch 33, rendered a decision convicting petitioner, and sentencing the
latter to suffer the aggregate penalty of two (2) years and to pay a fine in the total amount of
P300,000.00. On appeal, the Court of Appeals affirmed said decision. Hence, this petition for
review. 8
The Issue
In the main, petitioner contends that the public respondent committed a reversible error in
concluding that lack of actual knowledge of insufficiency of funds was not a defense in a
prosecution for violation of B.P. 22. Additionally, the petitioner argues that the notice of
dishonor sent to the main office of the corporation, and not to petitioner herself who holds
office in that corporation's branch office, does not constitute the notice mandated in Section 2
of BP 22; thus, there can be no prima facie presumption that she had knowledge of the
insufficiency of funds.
The Court's Ruling
The petition is meritorious.
Strict Interpretation of Penal Statutes
It is well-settled in this jurisdiction that penal statutes are strictly construed against the state
and liberally for the accused, so much so that the scope of a penal statute cannot be extended
by good intention, implication, or even equity consideration. Thus, for Petitioner Lina Lim Lao's
acts to be penalized under the Bouncing Checks Law or B.P. 22, "they must come clearly within
both the spirit and the letter of the statute." 9
The salient portions of B.P. 22 read:
Sec. 1. Checks without sufficient funds. Any person who makes or draws and issues any
check to apply on account or for value, knowing at the time of issue that he does not have
sufficient funds in or credit with the drawee bank for the payment of such check in full upon its
presentment, which check is subsequently dishonored by the drawee bank for insufficiency of
funds or credit or would have been dishonored for the same reason had not the drawer,
without any valid reason, ordered the bank to stop payment, shall be punished by
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 exceed Two
hundred thousand pesos, or both such fine and imprisonment at the discretion of the court.
The same penalty shall be imposed upon any person who having sufficient funds in or credit
with the drawee bank when he makes or draws and issues a check, shall fail to keep sufficient
funds or to maintain a credit or to cover the full amount of the check if presented within a
period of ninety (90) days from the date appearing thereon, for which reason it is dishonored
by the drawee bank.
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.
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.
This Court listed the elements of the offense penalized under B.P. 22, as follows: "(1) the
making, drawing and issuance of any check to apply to 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) 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." 10
Justice Luis B. Reyes, an eminent authority in criminal law, also enumerated the elements of
the offense defined in the first paragraph of Section 1 of B.P. 22, thus:
1. That a person makes or draws and issues any check.
2. That the check is made or drawn and issued to apply on account or for value.
3. That the person who makes or draws and issues the check knows at the time of issue that he
does not have sufficient funds in or credit with the drawee bank for the payment of such check
in full upon its presentment.
4. That the check is subsequently dishonored by the drawee bank for insufficiency of funds or
credit, or would have been dishonored for the same reason had not the drawer, without any
valid reason, ordered the bank to stop payment. 11
Crux of the Petition
Petitioner raised as defense before the Court of Appeals her lack of actual knowledge of the
insufficiency of funds at the time of the issuance of the checks, and lack of personal notice of
dishonor to her. The respondent appellate court, however, affirmed the RTC decision,
reasoning that "the maker's knowledge of the insufficiency of funds is legally presumed from
the dishonor of his checks for insufficiency of funds. (People vs. Laggui, 171 SCRA 305; Nieras
vs. Hon. Auxencio C. Dacuycuy, 181 SCRA 1)" 12 The Court of Appeals also stated that "her
alleged lack of knowledge or intent to issue a bum check would not exculpate her from any
responsibility under B.P. Blg. 22, since the act of making and issuing a worthless check is
a malum prohibitum." 13 In the words of the Solicitor General, "(s)uch alleged lack of knowledge
is not material for petitioner's liability under B.P. Blg. 22." 14
Lack of Actual Knowledge of Insufficiency of Funds
Knowledge of insufficiency of funds or credit in the drawee bank for
the payment of a check upon its presentment is an essential element of the offense. 15 There is
a prima faciepresumption of the existence of this element from the fact of drawing, issuing or
making a check, the payment of which was subsequently refused for insufficiency of funds. It is
important to stress, however, that this is not a conclusive presumption that forecloses or
precludes the presentation of evidence to the contrary.
In the present case, the fact alone that petitioner was a signatory to the checks that were
subsequently dishonored merely engenders the prima facie presumption that she knew of the
insufficiency of funds, but it does not render her automatically guilty under B.P. 22. The
prosecution has a duty to prove all the elements of the crime, including the acts that give rise
to the prima facie presumption; petitioner, on the other hand, has a right to rebut the prima
faciepresumption. 16 Therefore, if such knowledge of insufficiency of funds is proven to
be actually absent or non-existent, the accused should not be held liable for the offense
defined under the first paragraph of Section 1 of B.P. 22. Although the offense charged is
a malum prohibitum, the prosecution is not thereby excused from its responsibility of proving
beyond reasonable doubt all the elements of the offense, one of which is knowledge of the
insufficiency of funds.
After a thorough review of the case at bar, the Court finds that Petitioner Lina Lim Lao did not
have actual knowledge of the insufficiency of funds in the corporate accounts at the time she
affixed her signature to the checks involved in this case, at the time the same were issued, and
even at the time the checks were subsequently dishonored by the drawee bank.
The scope of petitioner's duties and responsibilities did not encompass the funding of the
corporation's checks; her duties were limited to the marketing department of the Binondo
branch. 17 Under the organizational structure of Premiere Financing Corporation, funding of
checks was the sole responsibility of the Treasury Department. Veronilyn Ocampo, former Atty. Gonzales
Treasurer of Premiere, testified thus: q Mr. Asprec is the one in-charge in . . . are you telling the Honorable Court that it was Teodoro
Q Will you please tell us whose (sic) responsible for the funding of checks in Premiere? Asprec who determines to whom to issue the check? Does he do that all the time?
A The one in charge is the Treasury Division up to the Treasury Disbursement and then they Court
give it directly to Jose Cabacan, President of Premiere. 18 q Does he all the time?
Furthermore, the Regional Trial Court itself found that, since Petitioner Lina Lim Lao was often (to witness)
out in the field taking charge of the marketing department of the Binondo branch, she signed a Yes, Your Honor.
the checks in blank as to name of the payee and the amount to be drawn, and without q So the check can be negotiated? So, the check can be good only upon his signing? Without his
knowledge of the transaction for which they were issued. 19 As a matter of company practice, signing or signature the check cannot be good?
her signature was required in addition to that of Teodulo Asprec, who alone placed the name a Yes, Your Honor.
of the payee and the amount to be drawn thereon. This is clear from her testimony: Atty. Gonzales
q . . . Will you please or will you be able to tell us the condition of this check when you signed (to witness)
this or when you first saw this check? q You made reference to a transaction which according to you, you signed this check in order
Witness to facilitate the transaction . . . I withdraw that question. I will reform.
a I signed the check in blank. There were no payee. No amount, no date, sir. COURT
q Why did you sign this check in blank when there was no payee, no amount and no date? (for clarification to witness)
a It is in order to facilitate the transaction, sir. Witness may answer.
xxx xxx xxx q Only to facilitate your business transaction, so you signed the other checks?
COURT Witness
(to witness) a Yes, Your Honor.
q Is that your practice? q So that when ever there is a transaction all is needed . . . all that is needed is for the other co-
Witness signee to sign?
a Procedure, Your Honor. a Yes, Your Honor.
COURT COURT
That is quiet (sic) unusual. That is why I am asking that last question if that is a practice of your (To counsel)
office. Proceed.
a As a co-signer, I sign first, sir. Atty. Gonzales
q So the check cannot be encashed without your signature, co-signature? (to witness)
a Yes, sir. q Why is it necessary for you to sign?
Atty. Gonzales a Because most of the time I am out in the field in the afternoon, so, in order to facilitate the
(to witness) transaction I sign so if I am not around they can issue the check. 20
q Now, you said that you sign first, after you sign, who signs the check? Petitioner did not have any knowledge either of the identity of the payee or the transaction
a Mr. Teodoro Asprec, sir. which gave rise to the issuance of the checks. It was her co-signatory, Teodulo Asprec, who
q Is this Teodoro Asprec the same Teodoro Asprec, one of the accused in all these cases? alone filled in the blanks, completed and issued the checks. That Petitioner Lina Lim Lao did not
a Yes, sir. have any knowledge or connection with the checks' payee, Artelijo Palijo, is clearly evident
q Now, in the distribution or issuance of checks which according to you, as a co-signee, you even from the latter's testimony, viz.:
sign. Who determines to whom to issue or to whom to pay the check after Teodoro Asprec ATTY. GONZALES:
signs the check? Q When did you come to know the accused Lina Lim Lao?
Witness A I cannot remember the exact date because in their office Binondo,
a He is the one. COURT: (before witness could finish)
Q More or less?
A It must have been late 1983.
ATTY. GONZALES:
Q And that must or that was after the transactions involving alleged checks marked in evidence
as Exhibits B and C?
A After the transactions.
Q And that was also before the transaction involving that confirmation of sale marked in
evidence as Exhibit A?
A It was also.
Q And so you came to know the accused Lina Lim Lao when all those transactions were already
consummated?
A Yes, sir.
Q And there has never been any occasion where you transacted with accused Lina Lim Lao, is
that correct?
A None, sir, there was no occasion.
Q And your coming to know Lina Lim Lao the accused in these cases was by chance when you
happened to drop by in the office at Binondo of the Premier Finance Corporation, is that what
you mean?
A Yes, sir.
Q You indicated to the Court that you were introduced to the accused Lina Lim Lao, is that
correct?
A I was introduced.
xxx xxx xxx
Q After that plain introduction there was nothing which transpired between you and the
accused Lina Lim Lao?
A There was none. 21
Since Petitioner Lina Lim Lao signed the checks without knowledge of the insufficiency of funds,
knowledge she was not expected or obliged to possess under the organizational structure of
the corporation, she may not be held liable under B.P. 22. For in the final analysis, penal
statutes such as B.P. 22 "must be construed with such strictness as to carefully safeguard the
rights of the defendant . . ." 22 The element of knowledge of insufficiency of funds having been
proven to be absent, petitioner is therefore entitled to an acquittal.
This position finds support in Dingle vs. Intermediate Appellate Court 23 where we stressed that
knowledge of insufficiency of funds at the time of the issuance of the check was an essential
requisite for the offense penalized under B.P. 22. In that case, the spouses Paz and Nestor
Dingle owned a family business known as "PMD Enterprises." Nestor transacted the sale of 400
tons of silica sand to the buyer Ernesto Ang who paid for the same. Nestor failed to deliver.
Thus, he issued to Ernesto two checks, signed by him and his wife as authorized signatories for
PMD Enterprises, to represent the value of the undelivered silica sand. These checks were
dishonored for having been "drawn against insufficient funds." Nestor thereafter issued to
Ernesto another check, signed by him and his wife Paz, which was likewise subsequently
dishonored. No payment was ever made; hence, the spouses were charged with a violation of
B.P. 22 before the trial court which found them both guilty. Paz appealed the judgment to the
then Intermediate Appellate Court which modified the same by reducing the penalty of
imprisonment to thirty days. Not satisfied, Paz filed an appeal to this Court "insisting on her
innocence" and "contending that she did not incur any criminal liability under B.P. 22 because
she had no knowledge of the dishonor of the checks issued by her husband and, for that
matter, even the transaction of her husband with Ang." The Court ruled in Dingle as follows:
The Solicitor General in his Memorandum recommended that petitioner be acquitted of the
instant charge because from the testimony of the sole prosecution witness Ernesto Ang, it was
established that he dealt exclusively with Nestor Dingle. Nowhere in his testimony is the name
of Paz Dingle ever mentioned in connection with the transaction and with the issuance of the
check. In fact, Ang categorically stated that it was Nestor Dingle who received his two (2)
letters of demand. This lends credence to the testimony of Paz Dingle that she signed the
questioned checks in blank together with her husband without any knowledge of its issuance,
much less of the transaction and the fact of dishonor.
In the case of Florentino Lozano vs. Hon. Martinez, promulgated December 18, 1986, it was
held that 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.
WHEREFORE, on reasonable doubt, the assailed decision of the Intermediate Appellate Court
(now the Court of Appeals) is hereby SET ASIDE and a new one is hereby rendered ACQUITTING
petitioner on reasonable doubt. 24
In rejecting the defense of herein petitioner and ruling that knowledge of the insufficiency of
funds is legally presumed from the dishonor of the checks for insufficiency of funds,
Respondent Court of Appeals cited People vs.Laggui 25 and Nierras vs. Dacuycuy. 26 These,
however, are inapplicable here. The accused in both cases issued personal not corporate
checks and did not aver lack of knowledge of insufficiency of funds or absence of personal
notice of the check's dishonor. Furthermore, in People vs. Laggui 27 the Court ruled mainly on
the adequacy of an information which alleged lack of knowledge of insufficiency of funds at the
time the check was issued and not at the time of its presentment. On the other hand, the Court
in Nierras vs. Dacuycuy 28 held mainly that an accused may be charged under B.P. 22 and Article
315 of the Revised Penal Code for the same act of issuing a bouncing check.
The statement in the two cases that mere issuance of a dishonored check gives rise to the
presumption of knowledge on the part of the drawer that he issued the same without funds
does not support the CA Decision. As observed earlier, there is here only a prima
facie presumption which does not preclude the presentation of contrary evidence. On the
contrary, People vs. Laggui clearly spells out as an element of the offense the fact that the
drawer must have knowledge of the insufficiency of funds in, or of credit with, the drawee
bank for the payment of the same in full on presentment; hence, it even supports the
petitioner's position.
Lack of Adequate Notice of Dishonor
There is another equally cogent reason for the acquittal of the accused. There can be no prima
facie evidence of knowledge of insufficiency of funds in the instant case because no notice of
dishonor was actually sent to or received by the petitioner.
The notice of dishonor may be sent by the offended party or the drawee bank. The trial court
itself found absent a personal notice of dishonor to Petitioner Lina Lim Lao by the drawee bank
based on the unrebutted testimony of Ocampo "(t)hat the checks bounced when presented
with the drawee bank but she did not inform anymore the Binondo branch and Lina Lim Lao as
there was no need to inform them as the corporation was in distress." 29 The Court of Appeals
affirmed this factual finding. Pursuant to prevailing jurisprudence, this finding is binding on this
Court. 30
Indeed, this factual matter is borne by the records. The records show that the notice of
dishonor was addressed to Premiere Financing Corporation and sent to its main office in
Cubao, Quezon City. Furthermore, the same had not been transmitted to Premiere's Binondo
Office where petitioner had been holding office.
Likewise no notice of dishonor from the offended party was actually sent to or received by
Petitioner Lao. Her testimony on this point is as follows:
Atty. Gonzales
q Will you please tell us if Father Artelejo Palejo (sic) ever notified you of the bouncing of the
check or the two (2) checks marked as Exhibit "B" or "C" for the prosecution?
Witness
a No, sir.
q What do you mean no, sir?
a I was never given a notice. I was never given notice from Father Palejo (sic).
COURT
(to witness)
q Notice of what?
a Of the bouncing check, Your Honor. 31
Because no notice of dishonor was actually sent to and received by the petitioner, the prima
facie presumption that she knew about the insufficiency of funds cannot apply. Section 2 of
B.P. 22 clearly provides that this presumption arises not from the mere fact of drawing, making
and issuing a bum check; there must also be a showing that, within five banking days from
receipt of the notice of dishonor, such maker or drawer failed to pay the holder of the check the
amount due thereon or to make arrangement for its payment in full by the drawee of such
check.
It has been observed that the State, under this statute, actually offers the violator "a
compromise by allowing him to perform some act which operates to preempt the criminal
action, and if he opts to perform it the action is abated." This was also compared "to certain
laws 32 allowing illegal possessors of firearms a certain period of time to surrender the illegally
possessed firearms to the Government, without incurring any criminal liability." 33 In this light,
the full payment of the amount appearing in the check within five banking days from notice of
dishonor is a "complete defense." 34 The absence of a notice of dishonor necessarily deprives
an accused an opportunity to preclude a criminal prosecution. Accordingly, procedural due
process clearly enjoins that a notice of dishonor be actually served on petitioner. Petitioner has
a right to demand and the basic postulates of fairness require that the notice of dishonor
be actually sent to and received by her to afford her the opportunity to avert prosecution
under B.P. 22.
In this light, the postulate of Respondent Court of Appeals that "(d)emand on the Corporation
constitutes demand on appellant (herein petitioner)," 35 is erroneous. Premiere has no
obligation to forward the notice addressed to it to the employee concerned, especially because
the corporation itself incurs no criminal liability under B.P. 22 for the issuance of a bouncing
check. Responsibility under B.P. 22 is personal to the accused; hence, personal knowledge of
the notice of dishonor is necessary. Consequently, constructive notice to the corporation is not
enough to satisfy due process. Moreover, it is petitioner, as an officer of the corporation, who
is the latter's agent for purposes of receiving notices and other documents, and not the other
way around. It is but axiomatic that notice to the corporation, which has a personality distinct
and separate from the petitioner, does not constitute notice to the latter.
Epilogue
In granting this appeal, the Court is not unaware of B.P. 22's intent to inculcate public respect
for and trust in checks which, although not legal tender, are deemed convenient substitutes for
currency. B.P. 22 was intended by the legislature to enhance commercial and financial
transactions in the Philippines by penalizing makers and issuers of worthless checks. The public
interest behind B.P. 22 is thus clearly palpable from its intended purpose. 36
At the same time, this Court deeply cherishes and is in fact bound by duty to protect our
people's constitutional rights to due process and to be presumed innocent until the contrary is
proven. 37 These rights must be read into any interpretation and application of B.P. 22. Verily,
the public policy to uphold civil liberties embodied in the Bill of Rights necessarily outweighs
the public policy to build confidence in the issuance of checks. The first is a basic human right
while the second is only proprietary in nature. 38 Important to remember also is B.P. 22's
requirements that the check issuer must know "at the time of issue that he does not have
sufficient funds in or credit with the drawee bank" and that he must receive "notice that such
check has not been paid by the drawee." Hence, B.P. 22 must not be applied in a manner which
contravenes an accused's constitutional and statutory rights.
There is also a social justice dimension in this case. Lina Lim Lao is only a minor employee who
had nothing to do with the issuance, funding and delivery of checks. Why she was required by
her employer to countersign checks escapes us. Her signature is completely unnecessary for it
serves no fathomable purpose at all in protecting the employer from unauthorized
disbursements. Because of the pendency of this case, Lina Lim Lao stood in jeopardy for over
a decade of losing her liberty and suffering the wrenching pain and loneliness of
imprisonment, not to mention the stigma of prosecution on her career and family life as a
young mother, as well as the expenses, effort and aches in defending her innocence. Upon the "That on or about the 24th day of June, 1991, in the Municipality of Makati, Metro Manila,
other hand, the senior official Teodulo Asprec who appears responsible for the issuance, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, did
funding and delivery of the worthless checks has escaped criminal prosecution simply because then and there willfully, unlawfully and feloniously make out, draw and issue to complainant
he could not be located by the authorities. The case against him has been archived while the Ignacio H. Garcia, Jr., to apply on account or for value the dated check/described below:
awesome prosecutory might of the government and the knuckled ire of the private "Check No. : 149900
complainant were all focused on poor petitioner. Thus, this Court exhorts the prosecutors and
the police authorities concerned to exert their best to arrest and prosecute Asprec so that Drawn Against : Traders Royal Bank
justice in its pristine essence can be achieved in all fairness to the complainant, Fr. Artelijo
Palijo, and the People of the Philippines. By this Decision, the Court enjoins the Secretary of In the Amount of : P50,000.00
Justice and the Secretary of Interior and Local Government to see that essential justice is done Dated/Postdated : June 24, 1991
and the real culprit(s) duly-prosecuted and punished.
WHEREFORE, the questioned Decision of the Court of Appeals affirming that of the Regional Payable to : Ignacio H. Garcia, Jr.
Trial Court, is hereby REVERSED and SET ASIDE. Petitioner Lina Lim Lao is ACQUITTED. The Clerk
"said accused well knowing that at the time of issue thereof, she did not have sufficient funds
of Court is hereby ORDERED to furnish the Secretary of Justice and the Secretary of Interior and
in or credit with the drawee bank for the payment in full of the face amount of such check
Local Government with copies of this Decision. No costs.
upon its presentment, which check when presented for payment within ninety (90) days from
THIRD DIVISION
the date thereof was subsequently dishonored by the drawee bank for the reason `ACCOUNT
G.R. No. 139292 December 5, 2000
CLOSED' and despite receipt of notice of such dishonor, the accused failed to pay said payee
JOSEPHINE DOMAGSANG, petitioner,
the face amount of said check or to make arrangement for full payment thereof within five (5)
vs.
banking days after receiving notice.
THE HONORABLE COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
"CONTRARY TO LAW."2
DECISION
Subsequent Informations, docketed Criminal Cases No. 92-4466 to No. 92-4482, inclusive,
VITUG, J.:
similarly worded as in Criminal Case No. 92-4465 except as to the dates, the number, and the
Petitioner was convicted by the Regional Trial Court of Makati, Branch 63, of having
amounts of the checks hereunder itemized -
violated Batas Pambansa ("B.P.") Blg. 22 (Anti-Bouncing Check Law), on eighteen (18) counts,
and sentenced to "suffer the penalty of One (1) Year imprisonment for each count (eighteen "Check Number Dated/Postdated Amount
[18] counts)." Petitioner was likewise "ordered to pay the private complainant the amount of
P573,800.00."1 The judgment, when appealed to the Court of Appeals (CA-G.R. CR No. 18497),
was affirmed in toto by the appellate court. TRB No. 161181 July 18, 1991 P6,000.00
It would appear that petitioner approached complainant Ignacio Garcia, an Assistant Vice
President of METROBANK, to ask for financial assistance. Garcia accommodated petitioner and TRB No. 149906 July 24, 1991 3,000.00
gave the latter a loan in the sum of P573,800.00. In exchange, petitioner issued and delivered
No. 182074 July 30, 1991 29,700.00
to the complainant 18 postdated checks for the repayment of the loan. When the checks were,
in time, deposited, the instruments were all dishonored by the drawee bank for this reason: No. 182084 August 30, 1991 9,300.00
"Account closed." The complainant demanded payment allegedly by calling up petitioner at her
office. Failing to receive any payment for the value of the dishonored checks, the complainant No. 182078 September 15, 1991 6,000.00
referred the matter to his lawyer who supposedly wrote petitioner a letter of demand but that
No. 161183 September 18, 1991 6,000.00
the latter ignored the demand.
On 08 May 1992, Criminal Case No. 92-4465 was lodged against petitioner before the Regional No. 161177 September 18, 1991 100,000.00
Trial Court ("RTC") of Makati. The Information read:
 No. 182085 September 30, 1991 9,000.00 "SECTION 1. Checks without sufficient funds. Any person who makes or draws and issues any
check to apply on account or for value, knowing at the time of issue that he does not have
No. 182079 October 15, 1991 6,000.00 sufficient funds in or credit with the drawee bank for the payment of such check in full upon its
presentment, which check is subsequently dishonored by the drawee bank for insufficiency of
No. 182086 October 30, 1991 10,500.00 funds or credit or would have been dishonored for the same reason had not the drawer,
No. 182080 November 15, 1991 6,000.00 without any valid reason, ordered the bank to stop payment, shall be punished by
imprisonment of not less than thirty days but not more than one (1) year or by fine of not less
No. 182087 November 30, 1991 11,400.00 than but not more than double the amount of the check which fine shall in no case exceed Two
Hundred Thousand pesos, or both such fine and imprisonment at the discretion of the court.
No. 182081 December 15, 1991 6,000.00 "The same penalty shall be imposed upon any person who having sufficient funds in or credit
No. 182082 December 15, 1991 100,000.00 with the drawee bank when he makes or draws and issues a check, shall fail to keep sufficient
funds or to maintain a credit to cover the full amount of the check if presented within a period
No. 182088 December 30, 1991 12,000.00 of ninety (90) days from the date appearing thereon, for which reason it is dishonored by the
drawee bank.
No. 182089 December 30, 1991 100,000.00 "Where the check is drawn by a corporation, company or entity, the person or persons who
No. 182090 December 30, 1991 100,000.00" 3 actually signed the check in behalf of such drawer shall be liable under this Act.
"SEC. 2. Evidence of knowledge of insufficient funds. The making, drawing and issuance of a
were also filed against petitioner. The cases were later consolidated and jointly tried following check payment of which is refused by the drawee because of insufficient funds in or credit with
the "not guilty" plea of petitioner when arraigned on 02 November 1992. such bank, when presented within ninety (90) days from the date of the check, shall be prima
On 07 September 1993, petitioner filed a demurrer to the evidence, with leave of court, facie evidence of knowledge of such insufficiency of funds or credit unless such maker or
premised on the absence of a demand letter and that the checks were not issued as payment drawer pays the holder thereof the amount due thereon, or makes arrangements for payment
but as evidence of indebtedness of petitioner or as collaterals of the loans obtained by in full by the drawee of such check within five (5) banking days after receiving notice that such
petitioner. Opposed by the prosecution, the demurrer was denied by the trial court.1wphi1 In check has not been paid by the drawee.
the hearing of 17 February 1994, petitioner, through counsel, waived her right to present "SEC. 3. Duty of drawee; rules of evidence. It shall be the duty of the drawee of any check,
evidence in her defense. Relying solely then on the evidence submitted by the prosecution, the when refusing to pay the same to the holder thereof upon presentment, to cause to be written,
lower court rendered judgment convicting petitioner. The decision, as heretofore stated, was printed or stamped in plain language thereon, or attached thereto, the reason for drawee's
affirmed by the Court of Appeals in its decision of 15 February 1999. Reconsideration was also dishonor or refusal to pay the same: Provided, That where there are no sufficient funds in or
denied in the resolution, dated 09 July 1999, of the appellate court. credit with such drawee bank, such fact shall always be explicitly stated in the notice of
Hence, the instant petition where petitioner raised the following issues for resolution by the dishonor or refusal. In all prosecutions under this Act, the introduction in evidence of any
Court - unpaid and dishonored check, having the drawee's refusal to pay stamped or written thereon,
"1. Whether or not an alleged verbal demand to pay sufficient to convict herein petitioner for or attached thereto, with the reason therefor as aforesaid, shall be prima facie evidence of the
the crime of violation of B.P. Blg. 22; making or issuance of said check, and the due presentment to the drawee for payment and the
"2. Whether or not the Honorable Court of Appeals committed reversible error when it dishonor thereof, and that the same was properly dishonored for the reason written, stamped
affirmed the judgment of conviction rendered by the trial court, on the ground that a written or attached by the drawee on such dishonored check.
notice of dishonor is not necessary in a prosecution for violation of B.P. Blg. 22, contrary to the "Notwithstanding receipt of an order to stop payment, the drawee shall state in the notice that
pronouncement of the Supreme Court in the case of Lao vs. Court of Appeals, 274 SCRA 572; there were no sufficient funds in or credit with such bank for the payment in full of such check,
(and) if such be the fact."5 (Underscoring supplied.)
"3. Whether or not the Honorable Court of Appeals erred in considering the alleged written The law enumerates the elements of the crime to be (1) the making, drawing and issuance of
demand letter, despite failure of the prosecution to formally offer the same."4 any check to apply for account or for value; (2) the knowledge of the maker, drawer, or issuer
The pertinent provisions of B.P. Blg. 22 "Bouncing Checks Law," provide: 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) 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.6
There is deemed to be a prima facie evidence of knowledge on the part of the maker, drawer
or issuer of insufficiency of funds in or credit with the drawee bank of the check issued if the
dishonored check is presented within 90 days from the date of the check and the maker or
drawer fails to pay thereon or to make arrangement with the drawee bank for that purpose.
The statute has created the prima facie presumption evidently because "knowledge" which
involves a state of mind would be difficult to establish.7 The presumption does not hold,
however, when the maker, drawer or issuer of the check pays the holder thereof the amount
due thereon or makes arrangement for payment in full by the drawee bank of such
check within 5 banking days after receiving notice that such check has not been paid by the
drawee bank.
In Lao vs. Court of Appeals,8 this Court explained:
"x x x. Section 2 of B.P. Blg. 22 clearly provides that this presumption arises not from the mere
fact of drawing, making and issuing a bum check; there must also be a showing that, within five
banking days from receipt of the notice of dishonor, such maker or drawer failed to pay the
holder of the check the amount due thereon or to make arrangement for its payment in full by
the drawee of such check.
"It has been observed that the State, under this statute, actually offers the violator `a
compromise by allowing him to perform some act which operates to preempt the criminal
action, and if he opts to perform it the action is abated. This was also compared `to certain
laws allowing illegal possessors of firearms a certain period of time to surrender the illegally
possessed firearms to the Government, without incurring any criminal liability. In this light, the
full payment of the amount appearing in the check within five banking days from notice of
dishonor is a `complete defense. The absence of a notice of dishonor necessarily deprives an
accused an opportunity to preclude a criminal prosecution. Accordingly, procedural due
process clearly enjoins that a notice of dishonor be actually served on petitioner. Petitioner has
a right to demand and the basic postulates of fairness require that the notice of dishonor be
actually sent to and received by her to afford her the opportunity to avert prosecution under
B.P. Blg. 22."9
In the assailed decision, the Court of Appeals predicated the conviction of petitioner on the
supposed fact that petitioner was informed of the dishonor of the checks through verbal notice
when the complainant had called her up by telephone informing her of the dishonor of the
checks and demanding payment therefor. The appellate court said:
"The maker's knowledge of the insufficiency of his funds is legally presumed from the dishonor
of his check (People vs. Laggui, 171 Phil. 305). The law does not require a written notice of the
dishonor of such check.
"In the instant case, appellant had knowledge that her checks were dishonored by the bank
when complainant Garcia made several oral demands upon her to pay the value of the checks
in the amount of P573,800.00. Despite said demands, appellant failed and refused to pay the
same. Moreover, complaining witness further testified that his lawyer made a written demand
upon appellant but the latter ignored said demand (tsn., May 27, 1993, pp. 13-14). In this
connection, appellant waived her right to present evidence or rebut complainant's testimony
that he made oral demands upon appellant to make good the dishonored checks and his
lawyer wrote her a demand letter.
"Likewise, appellant did not object to the admission of the complainant's testimony with regard
to the written demand by moving that it be stricken off the record for being hearsay, hence,
the same is admissible evidence. In the case of People vs. Garcia, 89 SCRA 440, the Supreme
court ruled:
"`x x x (It) must be noted that neither the defendant nor his counsel below objected to the
admission of the testimonies which are now being assailed as hearsay. This is fatal to
defendant-appellant's present posture since the failure to object to hearsay evidence
constitutes a waiver of the x x right to cross-examine the actual witness to the occurrence,
rendering the evidence admissible.'"10
Petitioner counters that the lack of a written notice of dishonor is fatal.1wphi1 The Court
agrees.
While, indeed, Section 2 of B.P. Blg. 22 does not state that the notice of dishonor be in writing,
taken in conjunction, however, with Section 3 of the law, i.e., "that where there are no
sufficient funds in or credit with such drawee bank, such fact shall always be explicitly stated
in the notice of dishonor or refusal,"11 a mere oral notice or demand to pay would appear to
be insufficient for conviction under the law. The Court is convinced that both the spirit and
letter of the Bouncing Checks Law would require for the act to be punished thereunder not
only that the accused issued a check that is dishonored, but that likewise the accused has
actually been notified in writing of the fact of dishonor.12 The consistent rule is that penal
statutes have to be construed strictly against the State and liberally in favor of the accused.13
Evidently, the appellate court did not give weight and credence to the assertion that a demand
letter was sent by a counsel of the complainant because of the failure of the prosecution to
formally offer it in evidence. Courts are bound to consider as part of the evidence only those
which are formally offered14 for judges must base their findings strictly on the evidence
submitted by the parties at the trial.15 Without the written notice of dishonor, there can be no
basis, considering what has heretofore been said, for establishing the presence of "actual
knowledge of insufficiency of funds."16
The prosecution may have failed to sufficiently establish a case to warrant conviction, however,
it has clearly proved petitioner's failure to pay a just debt owing to the private complainant.
The total face value of the dishonored checks, to wit-
1wphi1
"Check Number Dated/Postdated Amount
 decision, the sum of which, inclusive of the interest, shall be subject thereafter to
12%, perannum, interest until the due amount is paid. Costs against petitioner.
TRB No. 149900 June 24, 1991 P50,000.00 SO ORDERED.

TRB No. 161181 July 18, 1991 6,000.00

TRB No. 149906 July 24, 1991 3,000.00

No. 182074 July 30, 1991 29,700.00

No. 182084 August 30, 1991 1,300.00

No. 182078 September 15, 1991 6,000.00

No. 161183 September 18, 1991 6,000.00

No. 161171 September 18, 1991 100,000.00

No. 182085 September 30, 1991 9,900.00

No. 182079 October 15, 1991 6,000.00

No. 182086 October 30, 1991 10,500.00

No. 182080 November 15, 1991 6,000.00

No. 182087 November 30, 1991 11,400.00 Republic of the Philippines

SUPREME COURT
No. 182081 December 15, 1991 6,000.00 Manila
No. 182082 December 15, 1991 100,000.00 FIRST DIVISION

No. 182088 December 30, 1991 12,000.00 G.R. No. 89802 May 7, 1992
ASSOCIATED BANK and CONRADO CRUZ, petitioners,
No. 182089 December 30, 1991 100,000.00 vs.
No. 182090 December 30, 1991 100,000.00" 17 HON. COURT OF APPEALS, and MERLE V. REYES, doing business under the name and style
"Melissa's RTW," respondents.
or the sum of P563,800, has yet to be made good by petitioner. This amount, with 12% legal Soluta, Leonidas, Marifosque, Javier, Liboon & aguila Law Offices for petitioners.
interest per annum from the filing of the information until the finality of this decision, must be Roberto B. Lugue for private respondent.
forthwith settled.
WHEREFORE, the decision of the Court of Appeals is MODIFIED. Petitioner Josephine CRUZ, J.:
Domagsang is acquitted of the crime charged on reasonable doubt. She is ordered, however, to The sole issue raised in this case is whether or not the private respondent has a cause of action
pay to the offended party the face value of the checks in the total amount of P563,800.00 with against the petitioners for their encashment and payment to another person of certain crossed
12% legal interest, per annum, from the filing of the informations until the finality of this checks issued in her favor.
The private respondent is engaged in the business of ready-to-wear garments under the firm
name "Melissa's RTW." She deals with, among other customers, Robinson's Department Store,
Payless Department Store, Rempson Department Store, and the Corona Bazaar.
These companies issued in payment of their respective accounts crossed checks payable to
Melissa's RTW in the amounts and on the dates indicated below:
PAYOR BANK AMOUNT DATE
Payless Solid Bank P3,960.00 January 19, 1982
Robinson's FEBTC 4,140.00 December 18, 1981
Robinson's FEBTC 1,650.00 December 24, 1981
Robinson's FEBTC 1,980.00 January 12, 1982
Rempson TRB 1,575.00 January 9, 1982
Corona RCBC 2,500.00 December 22, 1981
When she went to these companies to collect on what she thought were still unpaid accounts,
she was informed of the issuance of the above-listed crossed checks. Further inquiry revealed
that the said checks had been deposited with the Associated Bank (hereinafter, "the Bank") and
subsequently paid by it to one Rafael Sayson, one of its "trusted depositors," in the words of its
branch manager and co-petitioner, Conrado Cruz, Sayson had not been authorized by the
private respondent to deposit and encash the said checks.
The private respondent sued the petitioners in the Regional Trial Court of Quezon City for
recovery of the total value of the checks plus damages. After trial, judgment was rendered
requiring them to pay the private respondent the total value of the subject checks in the
amount of P15,805.00 plus 12% interest, P50,000.00 actual damages, P25,000.00 exemplary
damages, P5,000.00 attorney's fees, and the costs of the suit. 1
The petitioners appealed to the respondent court, reiterating their argument that the private
respondent had no cause of action against them and should have proceeded instead against
the companies that issued the checks. In disposing of this contention, the Court of
Appeals 2 said:
The cause of action of the appellee in the case at bar arose from the illegal, anomalous and
irregular acts of the appellants in violating common banking practices to the damage and
prejudice of the appellees, in allowing to be deposited and encashed as well as paying to
improper parties without the knowledge, consent, authority or endorsement of the appellee
which totalled P15,805.00, the six (6) checks in dispute which were "crossed checks" or "for
payee's account only," the appellee being the payee.
The three (3) elements of a cause of action are present in the case at bar, namely: (1) a right in
favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such right; and (3)
an act or omission on the part of such defendant violative of the right of the plaintiff or
constituting a breach thereof. (Republic Planters Bank vs. Intermediate Appellate Court, 131
SCRA 631).
And such cause of action has been proved by evidence of great weight. The contents of the said
checks issued by the customers of the appellee had not been questioned. There is no dispute
that the same are crossed checks or for payee's account only, which is Melissa's RTW. The
appellee had clearly shown that she had never authorized anyone to deposit the said checks
nor to encash the same; that the appellants had allowed all said checks to be deposited,
cleared and paid to one Rafael Sayson in violation of the instructions in the said crossed checks
that the same were for payee's account only; and that the appellee maintained a savings
account with the Prudential Bank, Cubao Branch, Quezon City which never cleared the said
checks and the appellee had been damaged by such encashment of the same.
We affirm.
Under accepted banking practice, crossing a check is done by writing two parallel lines
diagonally on the left top portion of the checks. The crossing is special where the name of a
bank or a business institution is written between the two parallel lines, which means that the
drawee should pay only with the intervention of that company. 3 The crossing is general where
the words written between the two parallel lines are "and Co." or "for payee's account only,"
as in the case at bar. This means that the drawee bank should not encash the check but merely
accept it for deposit. 4
In State Investment House vs. IAC, 5 this Court declared that "the effects of crossing a check are:
(1) that the check may not be encashed but only deposited in the bank; (2) that the check may
be negotiated only once to one who has an account with a bank; and (3) that the act of
crossing the check serves as a warning to the holder that the check has been issued for a
definite purpose so that he must inquire if he has received the check pursuant to that
purpose."
The effects therefore of crossing a check relate to the mode of its presentment for payment.
Under Sec. 72 of the Negotiable Instruments Law, presentment for payment, to be sufficient,
must be made by the holder or by some person authorized to receive payment on his behalf.
Who the holder or authorized person is depends on the instruction stated on the face of the
check.
The six checks in the case at bar had been crossed and issued "for payee's account only." This
could only signify that the drawers had intended the same for deposit only by the person
indicated, to wit, Melissa's RTW.
The petitioners argue that the cause of action for violation of the common instruction found on
the face of the checks exclusively belongs to the issuers thereof and not to the payee.
Moreover, having acted in good faith as they merely facilitated the encashment of the checks,
they cannot be made liable to the private respondent.
The subject checks were accepted for deposit by the Bank for the account of Rafael Sayson
although they were crossed checks and the payee was not Sayson but Melissa's RTW. The Bank
stamped thereon its guarantee that "all prior endorsements and/or lack of endorsements
(were) guaranteed." By such deliberate and positive act, the Bank had for all legal intents and
purposes treated the said checks as negotiable instruments and, accordingly, assumed the There being no evidence that the crossed checks were actually received by the private
warranty of the endorser. respondent, she would have a right of action against the drawer companies, which in turn
The weight of authority is to the effect that "the possession of check on a forged or could go against their respective drawee banks, which in turn could sue the herein petitioner as
unauthorized indorsement is wrongful, and when the money is collected on the check, the collecting bank. In a similar situation, it was held that, to simplify proceedings, the payee of the
bank can be held 'for moneys had and received." 6 The proceeds are held for the rightful owner illegally encashed checks should be allowed to recover directly from the bank responsible for
of the payment and may be recovered by him. The position of the bank taking the check on the such encashment regardless of whether or not the checks were actually delivered to the
forged or unauthorized indorsement is the same as if it had taken the check and collected payee. 11We approve such direct action in the case at bar.
without indorsement at all. The act of the bank amounts to conversion of the check. 7 It is worth repeating that before presenting the checks for clearing and for payment, the Bank
It is not disputed that the proceeds of the subject checks belonged to the private respondent. had stamped on the back thereof the words: "All prior endorsements and/or lack of
As she had not at any time authorized Rafael Sayson to endorse or encash them, there was endorsements guaranteed," and thus made the assurance that it had ascertained the
conversion of the funds by the Bank. genuineness of all prior endorsements.
When the Bank paid the checks so endorsed notwithstanding that title had not passed to the We find that the respondent court committed no reversible error in holding that the private
endorser, it did so at its peril and became liable to the payee for the value of the checks. This respondent had a valid cause of action against the petitioners and that the latter are indeed
liability attached whether or not the Bank was aware of the unauthorized endorsement. 8 liable to her for their unauthorized encashment of the subject checks. We also agree with the
The petitioners were negligent when they permitted the encashment of the checks by Sayson. reduction of the award of the exemplary damages for lack of sufficient evidence to support
The Bank should have first verified his right to endorse the crossed checks, of which he was not them.
the payee, and to deposit the proceeds of the checks to his own account. The Bank was by WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.
reason of the nature of the checks put upon notice that they were issued for deposit only to
the private respondent's account. Its failure to inquire into Sayson's authority was a breach of a
duty it owed to the private respondent.
As the Court stressed in Banco de Oro Savings and Mortgage Bank vs. Equitable Banking
Corp., 9 "the law imposes a duty of diligence on the collecting bank to scrutinize checks
deposited with it, for the purpose of determining their genuineness and regularity. The
collecting bank, being primarily engaged in banking, holds itself out to the public as the expert
on this field, and the law thus holds it to a high standard of conduct."
The petitioners insist that the private respondent has no cause of action against them because
they have no privity of contract with her. They also argue that it was Eddie Reyes, the private
respondent's own husband, who endorsed the checks.
Assuming that Eddie Reyes did endorse the crossed checks, we hold that the Bank would still
be liable to the private respondent because he was not authorized to make the endorsements.
And even if the endorsements were forged, as alleged, the Bank would still be liable to the
private respondent for not verifying the endorser's authority. There is no substantial difference
between an actual forging of a name to a check as an endorsement by a person not authorized
to make the signature and the affixing of a name to a check as an endorsement by a person not
authorized to endorse it. 10
The Bank does not deny collecting the money on the endorsement. It was its responsibility to
inquire as to the authority of Rafael Sayson to deposit crossed checks payable to Melissa's RTW
upon a prior endorsement by Eddie Reyes. The failure of the Bank to make this inquiry was a
breach of duty that made it liable to the private respondent for the amount of the checks.