G.R. No. 131540 December 2, 1999 BETTY KING, Petitioner, People of The Philippines, Respondent. Panganiban, J.

G.R. No.
131540 December 2, 1999

BETTY KING, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.
PANGANIBAN, J.:
Under Batas Pambansa Blg. 22 (BP 22), the prosecution must prove not only that
the accused issued a check that was subsequently dishonored. It must also
established that the accused was actually notified that the check was
dishonored, and that he or she failed, within five banking days from receipt of
the notice, to pay the holder of the check the amount due thereon or to make
arrangement for its payment. Absent proof that the accused received such notice,
a prosecution for violation of the Bouncing Check Law cannot prosper.
The Case
Before this Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court assailing the January 30, 1997 Decision 1 of the Court of
Appeals 2 (CA) in CA-GR CR No. 18226 and its November 5, 1997
Resolution 3 denying reconsideration. The CA affirmed the June 14, 1994
Decision 4 of the Regional Trial Court (RTC) of Makati, Metro Manila 5 in
Criminal Case Nos. 93-3335 to 93-3345 which convicted petitioner of 11 counts
of violation of BP 22, otherwise known as the Bouncing Check Law.
On April 28, 1993, Second Assistant Provincial Prosecutor Jaime A. Adoc filed
against petitioner eleven separate Informations, 6 which are identically worded,
except for the check number, the amount and the date, as follows:
That in or about the month of January, 1992 in the Municipality of Las Pias,
Metro Manila, Philippines and within the jurisdiction of this Honorable Court,
the above-named accused, did, then and there willfully, unlawfully and
feloniously make or draw and issue to EILEEN FERNANDEZ herein represented by
________ to apply on account or for value the check described below:
EQUITABLE BANK
Check No. 021711
In the amount of P50,000.00
Postdated July 24, 1992
said accused well knowing that at the time of issue she/he did not have
sufficient funds in or 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 date thereof were subsequently
dishonored by the drawee bank for the reason "Account Closed" and despite
receipt of notice of such dishonor the accused failed to pay the face amount
thereof or make arrangement for the full payment thereof within five (5) working
days after receiving notice. 7
When arraigned, petitioner, assisted by counsel, pleaded not guilty. After the
prosecution presented its evidence and rested its case, petitioner filed a
Demurrer to Evidence without leave of court, on the ground that the prosecution
failed to prove her guilt beyond reasonable doubt. The trial court denied the
Demurrer in its assailed Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the demurrer to evidence without prior leave of
court is DENIED for lack of merit.
Since accused has waived her right to present evidence, judgment is hereby
rendered finding accused guilty beyond reasonable doubt of Violation of Batas
Pambansa Bilang 22 in the eleven (11) above-entitled cases and is ordered to:
1. Suffer imprisonment for thirty (30) days, to pay a fine in the amount of
P50,000.00, and to pay complainant Eileen Fernandez the amount of P50,000.00 as
actual damages in Criminal Case No. 93-3335;
P100,000.00, and to pay complainant Eileen Fernandez the amount of P100,000.00
as actual damages in Criminal Case No. 93-3340;
as actual damages in Criminal Case No. 93-3344; and,
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
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, 1993:
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.
G.R. No. 80599 September 15, 1989
ERNESTINA CRISOLOGO-JOSE, petitioner,
vs.
COURT OF APPEALS and RICARDO S. SANTOS, JR. in his own behalf and as Vice-
President for Sales of Mover Enterprises, Inc., respondents.
Melquiades P. de Leon for petitioner.
Rogelio A. Ajes for private respondent.
REGALADO, J.:
Petitioner seeks the annulment of the decision 1 of respondent Court of Appeals,
promulgated on September 8, 1987, which reversed the decision of the trial
Court 2 dismissing the complaint for consignation filed by therein plaintiff
Ricardo S. Santos, Jr.
The parties are substantially agreed on the following facts as found by both
lower courts:
In 1980, plaintiff Ricardo S. Santos, Jr. was the vice-president of Mover
Enterprises, Inc. in-charge of marketing and sales; and the president of the
said corporation was Atty. Oscar Z. Benares. On April 30, 1980, Atty. Benares,
in accommodation of his clients, the spouses Jaime and Clarita Ong, issued Check
No. 093553 drawn against Traders Royal Bank, dated June 14, 1980, in the amount
of P45,000.00 (Exh- 'I') payable to defendant Ernestina Crisologo-Jose. Since
the check was under the account of Mover Enterprises, Inc., the same was to be
signed by its president, Atty. Oscar Z. Benares, and the treasurer of the said
corporation. However, since at that time, the treasurer of Mover Enterprises
was not available, Atty. Benares prevailed upon the plaintiff, Ricardo S.
Santos, Jr., to sign the aforesaid chEck as an alternate story. Plaintiff
Ricardo S. Santos, Jr. did sign the check.
It appears that the check (Exh. '1') was issued to defendant Ernestina
Crisologo-Jose in consideration of the waiver or quitclaim by said defendant
over a certain property which the Government Service Insurance System (GSIS)
agreed to sell to the clients of Atty. Oscar Benares, the spouses Jaime and
Clarita Ong, with the understanding that upon approval by the GSIS of the
compromise agreement with the spouses Ong, the check will be encashed
accordingly. However, since the compromise agreement was not approved within
the expected period of time, the aforesaid check for P45,000.00 (Exh. '1') was
replaced by Atty. Benares with another Traders Royal Bank cheek bearing No.
379299 dated August 10, 1980, in the same amount of P45,000.00 (Exhs. 'A' and
'2'), also payable to the defendant Jose. This replacement 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 Savings Bank, Mayon Branch, it was dishonored for insufficiency of
funds. A subsequent redepositing of the said check was likewise dishonored by
the bank for the same reason. Hence, defendant through counsel was constrained
to file a criminal complaint for violation of Batas Pambansa Blg. 22 with the
Quezon City Fiscal's Office against Atty. Oscar Z. Benares and 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. Santos, Jr., for violation of Batas Pambansa Blg. 22
docketed as Criminal Case No. Q-14867 of then Court of First Instance of Rizal,
Quezon City.
Meanwhile, during the preliminary investigation of the criminal charge against
Benares and the plaintiff herein, before Assistant City Fiscal Alfonso T.
Llamas, plaintiff Ricardo S. Santos, Jr. tendered cashier's check No. CC 160152
for P45,000.00 dated April 10, 1981 to the defendant Ernestina Crisologo-Jose,
the complainant in that criminal case. The defendant refused to 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 amount of P45,000.00 with the Clerk of Court on August 14, 1981
(Exhs. 'D' and 'E'). Incidentally, the cashier's check adverted to above was
purchased by Atty. Oscar Z. Benares and given to the plaintiff herein to be
applied in payment of the dishonored check. 3
After trial, the court a quo, holding that it was "not persuaded to believe
that consignation referred to in Article 1256 of the Civil Code is applicable
to this case," rendered judgment dismissing plaintiff s complaint and
defendant's counterclaim. 4
As earlier stated, respondent court reversed and set aside said judgment of
dismissal and revived the complaint for consignation, directing the trial court
to give due course thereto.
Hence, the instant petition, the assignment of errors wherein are prefatorily
stated and discussed seriatim.
1. Petitioner contends that respondent Court of Appeals erred in holding that
private respondent, one of the signatories of the check issued under the account
of Mover Enterprises, Inc., is an accommodation party under the Negotiable
Instruments Law and a debtor of petitioner to the extent of the amount of said
check.
Petitioner avers that the accommodation party in this case is Mover Enterprises,
Inc. and not private respondent who merely signed the check in question in a
representative capacity, that is, as vice-president of said corporation, hence
he is not liable thereon under the Negotiable Instruments Law.
The pertinent provision of said law referred to provides:
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.
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 Court of Quezon City filed against private respondent for
violation of Batas Pambansa Blg. 22, by holding that no criminal liability had
yet attached to private respondent when he deposited with the court the amount
of P45,000.00 is the final plaint of petitioner.
We sustain petitioner on this score.
Indeed, respondent court went beyond the ratiocination called for in the appeal
to it in CA-G.R. CV. No. 05464. In its own decision therein, it declared that
"(t)he lone issue dwells in the question of whether an accommodation party can
validly consign the amount of the debt due with the court after his tender of
payment was refused by the creditor." Yet, from the commercial and civil law
aspects determinative of said issue, it digressed into the merits of the
aforesaid Criminal Case No. Q-14867, thus:
Section 2 of B.P. 22 establishes the prima facie evidence of knowledge of such
insufficiency of funds or credit. Thus, 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 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 criminal case pending in another court are improper do not have
to be belabored. In the latter case, the criminal trial court has to grapple
with such factual issues as, for instance, whether or not the period of five
banking days had expired, in the process determining whether notice of 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 day of actual preliminary investigation; and whether
there was a justification for not making the requisite arrangements for payment
in full of such check by the drawee bank within the said period. These are
matters alien to the present controversy on tender and consignation of payment,
where no such period and its legal effects are involved.
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 knowledge of insufficiency of funds in or credit with
the drawee bank; that payment of civil liability is not a mode for extinguishment
of criminal liability; and that the requisite quantum of evidence in the two
types of cases are not the same.
To repeat, the foregoing matters are properly addressed to the trial court in
Criminal Case No. Q-14867, the resolution of which should not be interfered
with by respondent Court of Appeals at the present posture of said case, much
less preempted by the inappropriate and unnecessary holdings in the aforequoted
portion of the decision of said respondent court. Consequently, we modify the
decision of respondent court in CA-G.R. CV No. 05464 by setting aside and
declaring without force and effect its pronouncements and findings insofar as
the merits of Criminal Case No. Q-14867 and the liability of the accused therein
are concerned.
WHEREFORE, subject to the aforesaid modifications, the judgment of respondent
Court of Appeals is AFFIRMED.
SO ORDERED.
G.R. No. L-56169 June 26, 1992

TRAVEL-ON, INC., petitioner,
vs.
COURT OF APPEALS and ARTURO S. MIRANDA, respondents.
R E S O L U T I O N
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.
G.R. No.75920 November 12, 1992
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
TERESITA S. SINGSON, defendant-appellant.
CAMPOS, JR., J.:

This case is an appeal from a decision convicting the accused of estafa, and
sentencing her to the penalty of reclusion perpetua with its accessory penalties
and ordering her to indemnify the Sucrex Marketing Corporation in the amount of
P163,000.00 with interest.
The facts of the case, as found by the trial court, can be summarized as follows.
Sucrex Marketing Corporation (Sucrex for short) is a private corporation engaged
in the trading and marketing of commodities, among which is sugar. On August 4,
1976, the accused Teresita Singson (accused for Short) was introduced to Vicente
Cenzon, trading manager of Sucrex, by Rene Antonio, who had previous business
dealings with the corporation. On that day, the accused bought 1,000 bags of
sugar from Sucrex at P7.40 per bag, and for which documents known as "delivery
orders and advice" for total amounts of P74,500.00 were issued to her. She paid
for the sugar by means of two postdated checks dated August 7 and August 11,
1976 (Exhibits 1-A and 1-B), respectively. These checks were honored by the
drawee bank.
On August 9, 1976, the accused went again to Sucrex and bought 4,000 bags of
sugar at the price of P75.00 per bag. Again, 20 sets of delivery orders and
advice were made out and delivered to her. According to the testimony of Cenzon,
in the sugar trading business, sales of sugar are made through "delivery orders
and advice" documents prepared in triplicate, the original of which is given to
the customer-buyer. The latter then presents the documents to the sugar central
or warehouse, for delivery of the sugar as specified in the documents.
In payment for the 4,000 bags of sugar, the accused issued six checks, five of
which were postdated. Of these six checks, only two were honored by the bank.
The four other checks (Exhs. E, F, G and H) in the total sum of P200,000.00,
were dishonored when they were deposited on their due dates. These checks were
deposited and dishonored three times, and on the fourth time, they were returned
on the basis of the "BAP rule", under which a check cannot be dishonored four
times and thus cannot be redeposited on the fourth time. Early in the month of
September, 1976, when the accused was advised of the dishonor of the checks,
she offered to issue seven replacement checks (Exhs. J, J-1 to J-6) in the total
amount of P200,000.00, which offer was accepted by Sucrex. However, when Sucrex
deposited three of the checks, they were dishonored with the note "Try next
clearing". The check marked Exhibit J was deposited three times, while those
marked Exhibit J-1 and J-2 were deposited twice, and they were dishonored each
time. Because of this, Sucrex did not deposit the remaining checks.
On September 14, 1976, Sucrex, through Vicente Cenzon, wrote to the accused
demanding full payment of the P200,000.00. Upon receipt of the letter, the
accused went to Cenzon's office and offered to make partial payment, explaining
that she was unable to fund her checks on time due to the sudden and unforeseen
fluctuation in the price of sugar, which resulted in her inability not only to
collect from her own buyers, but to sell all the sugar as she had expected.
Sucrex refused to accept the offer of partial payment at that time, but
eventually, on October 12, 1976, Sucrex accepted the offer of the accused to
pay P30,000.00 in cash and the return of 92 bags. In the receipt (Exh. L) issued
by Sucrex, it is indicated that:
Acceptance of this payment shall not in any way novate your obligation to Sucrex
Marketing Corporation under our sale to you of 4,000 bags (of) refined sugar
per our delivery Orders Nos. 2801-2822.
The accused was unable to pay or deposit the amount covered by any of the
dishonored checks.
On March 11, 1980, an information was filed with the then Court of First Instance
of Rizal in Pasig, entitled "People of the Philippines vs. Teresita S.
Singson", charging the accused with estafa based on the six checks originally
given by her in payment of the 4,000 bags of sugar. The information charged
that the accused "by means of deceit and false pretenses, with intent to gain
and to defraud the Sucrex Marketing Corporation, did then and there willfully,
unlawfully and feloniously induce said corporation to sell her 4,000 bags of
sugar at 75.00 per sack . . . and inpayment (sic) thereof said accused knowing
that she did not have sufficient funds in the bank, did then (and) there
willfully, unlawfully and feloniously make out and deliver to the said Sucrex
Marketing Corp. six (6) personal checks, to wit . . . representing to the said
corporation that the checks were good checks and would be honored upon
presentment for payment . . ." The information further charged that only two of
the six checks were honored and that the dishonor of the four checks in the
total amount of P200,000.00 caused damage and prejudice to Sucrex.
After trial, the lower court found the accused guilty as charged and imposed
upon her the penalty of reclusion perpetua. The Lower court based its decision
on the provisions of Article 315 of the Revised Penal Code as amended by P.D.
818, the pertinent portion of which read as follows:
Art. 315. Swindling (estafa). Any person who shall defraud another by any of
the means mentioned hereinbelow shall be punished by:
1st. The penalty of reclusion temporal if the amount of the fraud is over 12,000
pesos but does not exceed 22,000 pesos, and if such amount exceeds the latter
sum, the penalty provided in this paragraph shall be imposed in its maximum
period, adding one year for each additional 10,000 pesos but the total penalty
which may be imposed shall in no case exceed thirty years. In such cases, and
in connection with the accessory penalties which may be imposed under the
Revised Penal Code, the penalty shall be termed reclusion perpetua;
xxx xxx xxx
2. By means of any of the following false pretenses or fraudulent acts executed
prior to or simultaneously with the commission of the fraud:
xxx xxx xxx
(d) By post-dating 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. The failure of the drawer of the
check to deposit the amount necessary to cover his check within three (3) days
from receipt of notice from the bank and/or the payee or holder that said check
has been dishonored for lack or insufficiency of funds shall be prima
facie evidence of deceit constituting false pretense or fraudulent act.
Since the amount involved is P200,000.00, applying the above provision, the
resulting penalty is thirty years, the maximum penalty that may be imposed. 1
The counsel for the accused-appellant raised five assignments of error, all of
which can be reduced to one: That the court a quo erred in not acquitting the
accused-appellant of the crime charged on the ground that her guilt was not
proven beyond a reasonable doubt.
For the crime of estafa to exist, the element of fraud or bad faith is
indispensable. And its presence must be proven beyond a reasonable doubt before
the accused can be found guilty of such crime. Although in the case of a bouncing
check under B.P. Blg. 22, failure of the drawee to deposit the amount necessary
to cover his checks within three days from notice of its dishonor shall be prima
facie evidence of fraud or deceit, under Article 315 of the Revised Penal Code,
mere failure to make such deposit cannot be the basis for conviction if the
surrounding circumstances tend to show the absence of bad faith or deceit. In
the present case, We find the evidence not sufficient to establish the existence
of fraud or deceit on the part of the accused.
The accused testified, and this was not controverted, that at the time she
issued the six checks on August 9, 1976 she had more than P100,000.00 in the
bank. In fact, the first two checks were honored by the bank. She expected to
sell the sugar in time to deposit enough money to cover the four checks which
were later dishonored. Unforseen circumstances prevented her from doing so.
Perhaps, on account of these circumstances, Sucrex, through Cenzon, finally
agreed to take replacement checks, and when these were dishonored, it finally
agreed to accept a partial payment of P30,000.00 in cash and the return of 92
bags of sugar.
These circumstances the prompt action of the accused in offering to replace
the dishonored checks and in later making partial payment and the taking of
postdated checks and subsequently of the replacement checks, and the acceptance
of partial payment show, first, that in all probability Sucrex knew that the
funds to cover the six postdated checks subject of this action were to come
from the sale of the sugar which the accused had bought from it. This kind of
a situation is not unusual in the trading of commodities like sugar and rice.
If Sucrex had such knowledge, then it follows that there was no deceit. And
where there is no proven deceit or fraud, there is no crime of estafa. On the
other hand, one who is guilty of bad faith would probably not have acted the
way the accused did. If she had fraudulent intentions at the time of the sale
and the issuance of the subject checks, her normal reaction would have been to
hide or at least avoid or delay confrontation with Sucrex. But she did neither.
On the contrary, as soon as she was notified of the dishonor, she immediately
went to Cenzon's office to offer replacement checks and later, partial payment,
both of which were accepted by Sucrex, through Cenzon. In fact, she even returned
some 92 bags of sugar which she was unable to sell. Moreover, since the accused
was perhaps not completely aware of the attendant risks, like instability in
the price of sugar.
Although the established facts may prove the civil liability of the accused to
pay the balance of the purchase price of the sugar (a liability which
incidentally she has never denied), considering the above, Our mind cannot "rest
easy on the certainty of guilt". We are not convinced that the evidence in this
case has proven beyond reasonable doubt that the accused was guilty of fraud or
deceit when she issued the checks in question. It therefore follows that she
cannot be convicted of estafa as charged. All the other issues raised by the
parties become irrelevant in the face of this reasonable doubt as to the guilt
of the accused, and need not therefore be considered by this Court.
WHEREFORE, the decision of the lower court is hereby REVERSED and SET ASIDE and
the accused is hereby ACQUITTED of the charge of estafa on the ground that her
guilt has not been proven beyond a reasonable doubt, without prejudice to any
civil liability, which may be established in a civil case against her.
SO ORDERED.
G.R. No. 177438 September 24, 2012

AMADA RESTERIO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES Respondent.
D E C I S I O N
BERSAMIN, J.:
The notice of dishonor required by Batas Pambansa Blg. 22 to be given to the
drawer, maker or issuer of a check should be written. If the service of the
written notice of dishonor on the maker, drawer or issuer of the dishonored
check is by registered mail, the proof of service 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.
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.
WITH GRAVE ABUSE OF DISCRETION IN NOT FINDING THAT NO NOTICE OF DISHONOR WAS
ACTUALLY SENT TO THE PETITIONER.
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
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
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 insufficiency of the
funds therefor cannot arise.
As we stated in Savage v. Taypin (G.R. No. 134217, May 11, 2000, 311 SCRA 397),
"penal statutes must be strictly construed against the State and liberally in
favor of the accused." Likewise, the prosecution may not rely on the weakness
of the evidence for the defense to make up for its own blunders in prosecuting
an offense. Having failed to prove all the elements of the offense, petitioners
may not thus be convicted for violation of Batas Pambansa Blg. 22. (Bold emphases
supplied)1wphi1
Also, that the wife of Villadolid verbally informed the petitioner that the
check had bounced did not satisfy the requirement of showing that written
notices of dishonor had been made to and received by the petitioner. The verbal
notices of dishonor were not effective because it is already settled that a
notice of dishonor must be in writing.19 The Court definitively ruled on 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 principal sum, reckoned from the filing of the
information in the trial court. That rate of interest will increase to 12% per
annum upon the finality of this decision.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of
Appeals promulgated on December 4, 2006, and ACQUITS petitioner AMADA RESTERIO
of the violation of Batas Pambansa Blg. 22 as charged for failure to establish
her guilt beyond reasonable doubt.
The Court ORDERS the petitioner to pay to BERNARDO VILLADOLID the amount of
50,000.00, representing the face value of Chinabank Check No. LPU-A0141332,
with legal interest of 6% per annum from the filing of the information until
the finality of this decision, and thereafter 12% per annum until the principal
amount of 50,000.00 is paid.
No pronouncement on costs of suit.
SO ORDERED.
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 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 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 dispositive portion of the
said RTC decision affirmed by the respondent appellate court reads: 3
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 (Premiere) in its Binondo Branch. As such officer, she was
authorized to sign checks for and in 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 23, 1987, pp. 5, 9-10). Father Palijo had invested a total
of P514,484.04, as evidenced by the 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:
Check Date Amount
299961 Oct. 7, 1993 (sic) P 150,000.00 (Exh. "B")
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
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
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
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
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
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
The same penalty shall be imposed upon any person who having sufficient funds
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
under this Act.
Sec. 2. Evidence of knowledge of insufficient funds. The making, drawing and
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 Treasurer of Premiere,
testified thus:
Q Will you please tell us whose (sic) responsible for the funding of checks in
Premiere?
A The one in charge is the Treasury Division up to the Treasury Disbursement
and then they give it directly to Jose Cabacan, President of Premiere. 18
Furthermore, the Regional Trial Court itself found that, since Petitioner Lina
Lim Lao was often out in the field taking charge of the marketing department of
the Binondo branch, she signed the checks in blank as to name of the payee and
the amount to be drawn, and without knowledge of the transaction for which they
were issued. 19 As a matter of company practice, her signature was required in
addition to that of Teodulo Asprec, who alone placed the name of the payee and
the amount to be drawn thereon. This is clear from her testimony:
q . . . Will you please or will you be able to tell us the condition of this
check when you signed this or when you first saw this check?
Witness
a I signed the check in blank. There were no payee. No amount, no date, sir.
q Why did you sign this check in blank when there was no payee, no amount and
no date?
a It is in order to facilitate the transaction, sir.
x x x x x x x x x
COURT
(to witness)
q Is that your practice?
Witness
a Procedure, Your Honor.
COURT
That is quiet (sic) unusual. That is why I am asking that last question if that
is a practice of your office.
a As a co-signer, I sign first, sir.
q So the check cannot be encashed without your signature, co-signature?
a Yes, sir.
Atty. Gonzales
(to witness)
q Now, you said that you sign first, after you sign, who signs the check?
a Mr. Teodoro Asprec, sir.
q Is this Teodoro Asprec the same Teodoro Asprec, one of the accused in all
these cases?
a Yes, sir.
q Now, in the distribution or issuance of checks which according to you, as a
co-signee, you sign. Who determines to whom to issue or to whom to pay the check
after Teodoro Asprec signs the check?
Witness
a He is the one.
Atty. Gonzales
q Mr. Asprec is the one in-charge in . . . are you telling the Honorable Court
that it was Teodoro Asprec who determines to whom to issue the check? Does he
do that all the time?
Court
q Does he all the time?
(to witness)
a Yes, Your Honor.
q So the check can be negotiated? So, the check can be good only upon his
signing? Without his signing or signature the check cannot be good?
a Yes, Your Honor.
Atty. Gonzales
(to witness)
q You made reference to a transaction which according to you, you signed this
check in order to facilitate the transaction . . . I withdraw that question. I
will reform.
COURT
(for clarification to witness)
Witness may answer.
q Only to facilitate your business transaction, so you signed the other checks?
Witness
a Yes, Your Honor.
q So that when ever there is a transaction all is needed . . . all that is
needed is for the other co-signee to sign?
a Yes, Your Honor.
COURT
(To counsel)
Proceed.
Atty. Gonzales
(to witness)
q Why is it necessary for you to sign?
a Because most of the time I am out in the field in the afternoon, so, in order
to facilitate the transaction I sign so if I am not around they can issue the
check. 20
Petitioner did not have any knowledge either of the identity of the payee or
the transaction which gave rise to the issuance of the checks. It was her co-
signatory, Teodulo Asprec, who alone filled in the blanks, completed and issued
the checks. That Petitioner Lina Lim Lao did not have any knowledge or connection
with the checks' payee, Artelijo Palijo, is clearly evident even from the
latter's testimony, viz.:
ATTY. GONZALES:
Q When did you come to know the accused Lina Lim Lao?
A I cannot remember the exact date because in their office Binondo,
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.
x x x x x x x x x
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.
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 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 other hand, the senior official Teodulo Asprec who
appears responsible for the issuance, funding and delivery of the worthless
checks has escaped criminal prosecution simply because he could not be located
by the authorities. The case against him has been archived while the awesome
prosecutory might of the government and the knuckled ire of the private
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 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 Justice and
the Secretary of Interior and Local Government to see that essential justice is
done and the real culprit(s) duly-prosecuted and punished.
WHEREFORE, the questioned Decision of the Court of Appeals affirming that of
the Regional Trial Court, is hereby REVERSED and SET ASIDE. Petitioner Lina Lim
Lao is ACQUITTED. The Clerk of Court is hereby ORDERED to furnish the Secretary
of Justice and the Secretary of Interior and Local Government with copies of
this Decision. No costs.
SO ORDERED
G.R. No. 139292 December 5, 2000

JOSEPHINE DOMAGSANG, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
D E C I S I O N
VITUG, J.:
Petitioner was convicted by the Regional Trial Court of Makati, Branch 63, of
having 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 [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.
It would appear that petitioner approached complainant Ignacio Garcia, an
Assistant Vice President of METROBANK, to ask for financial assistance. Garcia
accommodated petitioner and gave the latter a loan in the sum of P573,800.00.
In exchange, petitioner issued and delivered 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: "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 referred the matter to his lawyer who supposedly wrote
petitioner a letter of demand but that the latter ignored the demand.
On 08 May 1992, Criminal Case No. 92-4465 was lodged against petitioner before
the Regional Trial Court ("RTC") of Makati. The Information read:
"That on or about the 24th day of June, 1991, in the Municipality of Makati,
Metro Manila, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, did then and there willfully, unlawfully and
feloniously make out, draw and issue to complainant Ignacio H. Garcia, Jr., to
apply on account or for value the dated check/described below:
"Check No. : 149900
Drawn Against : Traders Royal Bank
In the Amount of : P50,000.00

Dated/Postdated : June 24, 1991
Payable to : Ignacio H. Garcia, Jr.

"said accused well knowing that at the time of issue thereof, she did not have
sufficient funds in or credit with the drawee bank for the payment in full of
the face amount of such check upon its presentment, which check when presented
for payment within ninety (90) days from the date thereof was subsequently
dishonored by the drawee bank for the reason `ACCOUNT CLOSED' and despite
receipt of notice of such dishonor, the accused failed to pay said payee the
face amount of said check or to make arrangement for full payment thereof within
five (5) banking days after receiving notice.
"CONTRARY TO LAW."2
Subsequent Informations, docketed Criminal Cases No. 92-4466 to No. 92-4482,
inclusive, similarly worded as in Criminal Case No. 92-4465 except as to the
dates, the number, and the amounts of the checks hereunder itemized -
"Check Number Dated/Postdated Amount
TRB No. 161181 July 18, 1991 P6,000.00
TRB No. 149906 July 24, 1991 3,000.00
No. 182074 July 30, 1991 29,700.00
No. 182084 August 30, 1991 9,300.00
No. 182078 September 15, 1991 6,000.00
No. 161183 September 18, 1991 6,000.00
No. 161177 September 18, 1991 100,000.00
No. 182085 September 30, 1991 9,000.00
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
No. 182081 December 15, 1991 6,000.00
No. 182082 December 15, 1991 100,000.00
No. 182088 December 30, 1991 12,000.00
No. 182089 December 30, 1991 100,000.00
No. 182090 December 30, 1991 100,000.00" 3
were also filed against petitioner. The cases were later consolidated and
jointly tried following the "not guilty" plea of petitioner when arraigned on
02 November 1992.
On 07 September 1993, petitioner filed a demurrer to the evidence, with leave
of court, premised on the absence of a demand letter and that the checks were
not issued as payment but as evidence of indebtedness of petitioner or as
collaterals of the loans obtained by petitioner. Opposed by the prosecution,
the demurrer was denied by the trial court.1wphi1 In the hearing of 17 February
1994, petitioner, through counsel, waived her right to present evidence in her
defense. Relying solely then on the evidence submitted by the prosecution, the
lower court rendered judgment convicting petitioner. The decision, as heretofore
stated, was affirmed by the Court of Appeals in its decision of 15 February
1999. Reconsideration was also denied in the resolution, dated 09 July 1999, of
the appellate court.
Hence, the instant petition where petitioner raised the following issues for
resolution by the Court -
"1. Whether or not an alleged verbal demand to pay sufficient to convict herein
petitioner for the crime of violation of B.P. Blg. 22;
"2. Whether or not the Honorable Court of Appeals committed reversible error
when it affirmed the judgment of conviction rendered by the trial court, on the
ground that a written notice of dishonor is not necessary in a prosecution for
violation of B.P. Blg. 22, contrary to the pronouncement of the Supreme Court
in the case of Lao vs. Court of Appeals, 274 SCRA 572; (and)
"3. Whether or not the Honorable Court of Appeals erred in considering the
alleged written demand letter, despite failure of the prosecution to formally
offer the same."4
The pertinent provisions of B.P. Blg. 22 "Bouncing Checks Law," provide:
"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 sufficient funds in or credit with the drawee bank
for the payment of such check in full upon its presentment, which check is
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
"The same penalty shall be imposed upon any person who having sufficient funds
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
under this Act.
"SEC. 2. Evidence of knowledge of insufficient funds. The making, drawing and
"SEC. 3. Duty of drawee; rules of evidence. It shall be the duty of the drawee
of any check, when refusing to pay the same to the holder thereof upon
presentment, to cause to be written, printed or stamped in plain language
thereon, or attached thereto, the reason for drawee's dishonor or refusal to
pay the same: Provided, 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. In all prosecutions under this Act, 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.
"Notwithstanding receipt of an order to stop payment, the drawee shall state in
the notice that there were no sufficient funds in or credit with such bank for
the payment in full of such check, if such be the fact." 5 (Underscoring
supplied.)
The law enumerates the elements of the crime to be (1) the making, drawing and
issuance of any check to apply for account or for value; (2) the knowledge of
the maker, drawer, or issuer that at the time of issue he does not have
sufficient funds in or credit with the drawee bank for the payment of 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 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
TRB No. 149900 June 24, 1991 P50,000.00
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
No. 182081 December 15, 1991 6,000.00
No. 182082 December 15, 1991 100,000.00
No. 182088 December 30, 1991 12,000.00
No. 182089 December 30, 1991 100,000.00
No. 182090 December 30, 1991 100,000.00" 17
or the sum of P563,800, has yet to be made good by petitioner. This amount,
with 12% legal interest per annum from the filing of the information until the
finality of this decision, must be forthwith settled.
WHEREFORE, the decision of the Court of Appeals is MODIFIED. Petitioner
Josephine Domagsang is acquitted of the crime charged on reasonable doubt. She
is ordered, however, to pay to the offended party the face value of the checks
in the total amount of P563,800.00 with 12% legal interest, per annum, from the
filing of the informations until the finality of this 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.
SO ORDERED.
G.R. No. 89802 May 7, 1992

ASSOCIATED BANK and CONRADO CRUZ, petitioners,
vs.
HON. COURT OF APPEALS, and MERLE V. REYES, doing business under the name and
style "Melissa's RTW," respondents.
Soluta, Leonidas, Marifosque, Javier, Liboon & aguila Law Offices for
petitioners.
Roberto B. Lugue for private respondent.
CRUZ, J.:
The sole issue raised in this case is whether or not the private respondent has
a cause of action against the petitioners for their encashment and payment to
another person of certain crossed 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 warranty of
the endorser.
The weight of authority is to the effect that "the possession of check on a
forged or unauthorized indorsement is wrongful, and when the money is collected
on the check, the bank can be held 'for moneys had and received." 6 The proceeds
are held for the rightful owner of the payment and may be recovered by him. The
position of the bank taking the check on the forged or unauthorized indorsement
is the same as if it had taken the check and collected without indorsement at
all. The act of the bank amounts to conversion of the check. 7
It is not disputed that the proceeds of the subject checks belonged to the
private respondent. As she had not at any time authorized Rafael Sayson to
endorse or encash them, there was conversion of the funds by the Bank.
When the Bank paid the checks so endorsed notwithstanding that title had not
passed to the endorser, it did so at its peril and became liable to the payee
for the value of the checks. This liability attached whether or not the Bank
was aware of the unauthorized endorsement. 8
The petitioners were negligent when they permitted the encashment of the checks
by Sayson. The Bank should have first verified his right to endorse the crossed
checks, of which he was not the payee, and to deposit the proceeds of the checks
to his own account. The Bank was by 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.
There being no evidence that the crossed checks were actually received by the
private respondent, she would have a right of action against the drawer
companies, which in turn could go against their respective drawee banks, which
in turn could sue the herein petitioner as collecting bank. In a similar
situation, it was held that, to simplify proceedings, the payee of the illegally
encashed checks should be allowed to recover directly from the bank responsible
for such encashment regardless of whether or not the checks were actually
delivered to the payee. 11We approve such direct action in the case at bar.
It is worth repeating that before presenting the checks for clearing and for
payment, the Bank had stamped on the back thereof the words: "All prior
endorsements and/or lack of endorsements guaranteed," and thus made the
assurance that it had ascertained the genuineness of all prior endorsements.
We find that the respondent court committed no reversible error in holding that
the private respondent had a valid cause of action against the petitioners and
that the latter are indeed liable to her for their unauthorized encashment of
the subject checks. We also agree with the reduction of the award of the
exemplary damages for lack of sufficient evidence to support them.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so
ordered.

G.R. No. 131540 December 2, 1999 BETTY KING, Petitioner, People of The Philippines, Respondent. Panganiban, J.

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

G.R. No. 131540 December 2, 1999 BETTY KING, Petitioner, People of The Philippines, Respondent. Panganiban, J.

Transféré par

Droits d'auteur :

Formats disponibles

G.R. No.

131540 December 2, 1999

G.R. No. L-56169 June 26, 1992

CAMPOS, JR., J.:

G.R. No. 177438 September 24, 2012

G.R. No. 139292 December 5, 2000

Drawn Against : Traders Royal Bank

In the Amount of : P50,000.00

Payable to : Ignacio H. Garcia, Jr.

TRB No. 161181 July 18, 1991 P6,000.00

TRB No. 149906 July 24, 1991 3,000.00

No. 182074 July 30, 1991 29,700.00

No. 182084 August 30, 1991 9,300.00

No. 182078 September 15, 1991 6,000.00

No. 161183 September 18, 1991 6,000.00

No. 161177 September 18, 1991 100,000.00

No. 182085 September 30, 1991 9,000.00

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

No. 182081 December 15, 1991 6,000.00

No. 182082 December 15, 1991 100,000.00

No. 182088 December 30, 1991 12,000.00

No. 182089 December 30, 1991 100,000.00

No. 182090 December 30, 1991 100,000.00" 3

TRB No. 149900 June 24, 1991 P50,000.00

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. 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

No. 182081 December 15, 1991 6,000.00

No. 182082 December 15, 1991 100,000.00

No. 182088 December 30, 1991 12,000.00

No. 182089 December 30, 1991 100,000.00

No. 182090 December 30, 1991 100,000.00" 17

G.R. No. 89802 May 7, 1992

Vous aimerez peut-être aussi