Lao vs. Court of Appeals

The Court held that an employee who signs blank corporate checks without actual knowledge of the insufficiency of funds, and who does not receive personal notice of dishonor, cannot be held criminally liable under B.P. 22. Although the dishonor of a check engenders a prima facie presumption of knowledge of insufficiency of funds, this presumption is rebuttable; when the accused's duties do not encompass funding the account and she signs in blank, the element of knowledge is absent. Furthermore, because liability under B.P. 22 is personal, notice of dishonor must be actually received by the accused to afford them the opportunity to avert prosecution, and constructive notice to the corporation is insufficient.

Lina Lim Lao was a junior officer at Premiere Investment House (Premiere), assigned to its Binondo branch. As part of her regular duties, she was authorized to co-sign corporate checks with Teodulo Asprec, the head of operations. Because she was frequently out in the field, Lao signed checks in blank—without the name of the payee, the amount, or the date—to facilitate transactions; Asprec would later complete and issue the checks. Funding of the corporate account was the sole responsibility of the Treasury Department at Premiere's main office in Cubao, Quezon City, and bank statements were sent exclusively to that main office. Complainant Fr. Artelijo Palijo invested funds with Premiere through a trader and was issued three postdated checks signed by Lao and Asprec to cover the investment. When Palijo presented the checks, they were dishonored for insufficiency of funds. Palijo sent a formal demand letter and notice of dishonor to Premiere's main office in Cubao, but the notice was never transmitted to Lao or the Binondo branch.

• Nature of the Action: Criminal prosecution for violation of Batas Pambansa Blg. 22 (Bouncing Checks Law) arising from the dishonor of three corporate checks.
• The Corporate Checks: Premiere Investment House issued three Traders Royal Bank checks to Fr. Artelijo Palijo as payment for his investments. The checks were co-signed by Lina Lim Lao and Teodulo Asprec. Upon presentment, the checks were dishonored for being drawn against insufficient funds (DAIF).
• Petitioner's Role and Knowledge: Lao was a junior officer assigned to the Binondo branch's marketing department. She signed the subject checks in blank as a routine procedural requirement to facilitate transactions while she was out in the field. She had no knowledge of the payee, the amount, the transaction prompting the issuance, or the sufficiency of funds in the corporate account. The Treasury Department at the main office exclusively handled account balances and funding.
• Notice of Dishonor: After the checks bounced, Palijo sent a formal letter of demand and notice of dishonor to Premiere's main office in Cubao, Quezon City. The main office never forwarded the notice to the Binondo branch or to Lao personally, citing corporate financial distress and confusion following the Aquino assassination. Palijo never contacted, informed, or dealt with Lao at any time before or after the checks were issued and dishonored.

• Petitioner argued that lack of actual knowledge of the insufficiency of funds is a valid defense in a prosecution under B.P. 22. Because her duties did not involve monitoring account balances and she signed the checks in blank, she could not have known whether the checks were funded.
• Petitioner maintained that the notice of dishonor sent to the corporation's main office did not constitute the valid notice mandated by Section 2 of B.P. 22, as she held office in a separate branch and never actually received the notice. Without personal notice, the prima facie presumption of knowledge of insufficiency of funds could not arise.

• Respondent Court of Appeals ruled that the maker's knowledge of insufficiency of funds is legally presumed from the fact of dishonor, citing People v. Laggui and Nierras v. Dacuycuy.
• Respondent argued that lack of knowledge or intent to issue a worthless check does not exculpate the accused because the act of making and issuing a worthless check is a malum prohibitum.
• Respondent contended that demand on the corporation constitutes demand on the appellant, making the notice sent to the main office sufficient.

• Procedural Issues: Whether a notice of dishonor sent to a corporation's main office constitutes valid notice to an employee-signatory who holds office in a separate branch and who had no actual knowledge thereof.
• Substantive Issues: Whether an employee who, as part of her regular duties, signs blank corporate checks without actual knowledge of whether such checks are funded can be held criminally liable under B.P. 22 when the checks are dishonored for insufficiency of funds.

• Procedural: The Court held that notice of dishonor must be actually sent to and received by the accused. Because liability under B.P. 22 is personal to the signatory, constructive notice to the corporation is insufficient to satisfy due process. The corporation has no obligation to forward the notice to the employee, and notice to a juridical entity with a distinct personality does not constitute notice to its officer. Actual notice is required to afford the accused the opportunity to pay the amount due within five banking days and avert prosecution.
• Substantive: The Court held that knowledge of insufficiency of funds is an essential element of B.P. 22. While the dishonor of a check creates a prima facie presumption of such knowledge, the presumption is not conclusive and may be rebutted. Because petitioner's duties were limited to marketing and she signed the checks in blank without knowledge of the payee, amount, or account balance, she successfully rebutted the presumption. Penal statutes must be strictly construed against the state and liberally in favor of the accused; extending liability to an employee lacking actual knowledge would contravene the letter and spirit of B.P. 22.

• Rebuttable Presumption of Knowledge of Insufficiency of Funds — The dishonor of a check for insufficiency of funds creates a prima facie presumption that the drawer knew of the insufficiency. However, this presumption is not conclusive and may be rebutted by evidence showing the absence of actual knowledge, such as when an employee signs corporate checks in blank as a routine duty and is not responsible for funding the account.
• Personal Notice of Dishonor in B.P. 22 — To trigger the prima facie presumption of knowledge under Section 2 of B.P. 22, and to satisfy procedural due process, the notice of dishonor must be actually received by the accused. Notice sent to a corporation's main office does not constitute valid notice to an employee-signatory working in a separate branch, because B.P. 22 liability is personal and the corporation's juridical personality is distinct from that of its officers.

• "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. There is a prima facie presumption 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."
• "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."
• "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."

• Dingle v. Intermediate Appellate Court, 148 SCRA 595 (1987) — Followed. The Court held that knowledge of insufficiency of funds at the time of issuance is an essential requisite for B.P. 22. A co-signatory who signed checks in blank without knowledge of the transaction or dishonor was acquitted.
• People v. Laggui, 171 SCRA 305 (1989) — Distinguished. The Court clarified that Laggui ruled on the adequacy of an information and involved personal checks, not corporate checks where the signatory averred lack of knowledge of funds.
• Nierras v. Dacuycuy, 181 SCRA 1 (1990) — Distinguished. The Court noted this case primarily held that an accused may be charged under both B.P. 22 and Estafa, and did not involve the issue of lack of knowledge of insufficiency of funds by a corporate signatory.
• Lozano v. Martinez, 146 SCRA 323 (1986) — Followed. Cited for the proposition that knowledge on the part of the maker or drawer of the check of the insufficiency of his funds is an essential element of the offense under B.P. 22.

• Section 1, Batas Pambansa Blg. 22 — Defines the offense of making or drawing and issuing a check without sufficient funds. The Court applied this provision to emphasize that the offender must act "knowing at the time of issue that he does not have sufficient funds," an element the prosecution failed to prove given petitioner's lack of actual knowledge.
• Section 2, Batas Pambansa Blg. 22 — Establishes the prima facie evidence of knowledge of insufficient funds, arising when the drawer fails to pay or make arrangements within five banking days from receiving notice of dishonor. The Court applied this provision to show that because petitioner never received actual notice, the statutory five-day period never began, and the presumption could not attach.
• Sections 1 and 14, Article III, 1987 Constitution — Guarantees due process and the presumption of innocence. The Court applied these constitutional guarantees to outweigh the proprietary public policy behind B.P. 22, requiring strict construction of the penal statute in favor of the accused.

Narvasa, C.J., Davide, Jr., and Melo, JJ. Francisco, J., was on leave.