Lim vs. People

Full payment of the value of dishonored checks before the filing of Informations in court extinguishes criminal liability under B.P. Blg. 22, even if such payment was made beyond the five-day grace period, where the purpose of the law — protecting the credibility and stability of the banking system — has already been attained by the maker's restitution.

Petitioner Ariel T. Lim issued two Bank of Commerce checks to Mr. Willie Castor as a campaign donation for the latter's candidacy in the 1998 elections. Castor used the checks to pay for printing materials ordered from private complainant Magna B. Badiee. The transaction thus involved a donor-publisher relationship mediated by a political candidate, where the checks were not issued directly to the payee but were applied by Castor to satisfy his own obligation to Badiee.

Petitioner Ariel T. Lim issued Bank of Commerce Check Nos. 0013813 and 0013814, dated June 30, 1998 and July 15, 1998, respectively, each in the amount of ₱100,000.00 and payable to CASH. He gave the checks to Mr. Willie Castor as a campaign donation for the latter's candidacy in the 1998 elections. Castor, in turn, used the checks to pay for printing materials he had ordered from private complainant Magna B. Badiee. When the printing materials were delivered late, Castor instructed petitioner to issue a "Stop Payment" order for both checks. The checks were dishonored by the bank on account of the stop-payment order, and during trial the bank officer admitted that the checks were also drawn against insufficient funds (DAIF).

Private complainant sent two demand letters to petitioner, dated July 20, 1998 and July 23, 1998, and subsequently filed a complaint before the Office of the Prosecutor. After the lapse of more than one month from receipt of the demand letters, and after receiving a subpoena from the Office of the Prosecutor, petitioner issued a replacement check dated September 8, 1998 in the amount of ₱200,000.00. Private complainant was able to encash the replacement check. Nevertheless, on March 19, 1999 — six months after petitioner had paid the amount of the bounced checks — two Informations were filed against him before the Metropolitan Trial Court of Manila for violation of B.P. Blg. 22.

The MeTC convicted petitioner of two counts of violation of B.P. Blg. 22 on September 12, 2006. On appeal, the RTC vacated the conviction in one case for lack of jurisdiction but affirmed the conviction in Criminal Case No. 07-249932, imposing a fine of ₱100,000.00 plus costs. The Court of Appeals affirmed the RTC judgment in toto, finding the doctrine in Griffith inapplicable because the checks here were personal checks rather than corporate checks, and because petitioner paid only after receiving a subpoena from the prosecutor.

• Application of Griffith Doctrine: Petitioner argued that jurisprudence dictates the dismissal of the criminal case against him on the ground that he had fully paid the amount of the dishonored checks before the Informations were filed in court, relying on Griffith vs. Court of Appeals.

• Inapplicability of Griffith: The Court of Appeals found Griffith inapplicable because the checks subject of this case are personal checks, whereas the check in Griffith was a corporate check, where confusion or miscommunication could easily occur between signatories and the corporate treasurer.
• Timing and Motive for Payment: The CA took it against petitioner that he paid the amount of the checks only after receiving the subpoena from the Office of the Prosecutor, supposedly showing that he was motivated to pay not to settle his obligation but to avoid prosecution.

• Extinguishment of Criminal Liability by Payment: Whether full payment of the value of dishonored checks before the filing of Informations in court extinguishes criminal liability under B.P. Blg. 22, even if such payment was made beyond the five-day grace period prescribed by law.
• Applicability of Griffith Doctrine: Whether the doctrine in Griffith vs. Court of Appeals applies to the present case notwithstanding differences in factual circumstances.

• Extinguishment of Criminal Liability by Payment: Yes. Full payment of the value of the dishonored checks before the filing of Informations extinguishes criminal liability under B.P. Blg. 22, as the purpose of the law has already been attained and penal prosecution would no longer serve the ends of justice.
• Applicability of Griffith Doctrine: Yes. The doctrine in Griffith applies notwithstanding differences in factual circumstances, because the controlling principle — that payment before the filing of Informations precludes prosecution — does not depend on the type of check issued or the timing of payment relative to the prosecutor's subpoena.

• Extinguishment of Criminal Liability by Payment: The elements of violation of B.P. Blg. 22 are: (1) the making, drawing, or issuance of a check to apply for account or value; (2) knowledge at the time of issuance that the drawer does not have sufficient funds; and (3) subsequent dishonor by the bank for insufficiency of funds or for a stop-payment order without valid reason. The law creates a prima facie presumption of knowledge of insufficiency when the drawer is notified of dishonor and fails to pay or make arrangements within five banking days. If the check is made good within that period, the presumption is rebutted and the element of knowledge is absent. While payment beyond the five-day grace period would normally not extinguish criminal liability, the Court has recognized extraordinary cases where conviction would be abhorrent to society's sense of justice. Here, petitioner voluntarily paid the full value of the bounced checks six months before the Informations were filed. The spirit of B.P. Blg. 22 — the protection of the credibility and stability of the banking system — would not be served by penalizing a person who has made restitution before charges are filed. Penal statutes are construed strictly against the State and liberally in favor of the accused, and penal laws should not be applied mechanically. The Court distinguished this from estafa under Article 315, par. 2(d) of the Revised Penal Code, where damage and deceit are essential elements and payment of the check merely satisfies civil but not criminal liability.

• Applicability of Griffith Doctrine: The CA erred in distinguishing this case from Griffith on the basis that the checks here were personal rather than corporate. The same kind of confusion giving rise to petitioner's mistake existed: petitioner issued the checks merely as a campaign contribution, and it was Castor who instructed him to stop payment because the campaign materials were not delivered on time. Petitioner relied on Castor's word, as Castor was the one supposed to take delivery. Moreover, the CA's reasoning that payment was motivated by a desire to avoid prosecution was tenuous; in Griffith, the accused did not even voluntarily pay — the complainant was paid from the proceeds of an invalid foreclosure. The Court in Griffith did not differentiate whether payment was made before or after the complaint was filed with the prosecutor; it only mattered that the amount had been paid before the Information was filed in court. Here, petitioner voluntarily paid, which is an even stronger case for acquittal. The principle was reaffirmed in Tan vs. Philippine Commercial International Bank, where the Court held that payment of dishonored checks prior to receipt of the demand letter obliterated criminal liability.

• Griffith Doctrine (Payment Before Filing of Information) — Full payment of the value of dishonored checks before the filing of Informations in court extinguishes criminal liability under B.P. Blg. 22, even if payment was made beyond the five-day grace period. The rationale is that the purpose of B.P. Blg. 22 — protecting the credibility and stability of the banking system — has already been satisfied by the maker's restitution, and penal prosecution would no longer serve the ends of justice. The maxim ratione cessat lex, et cessat lex (when the reason for the law ceases, the law ceases) applies. The Court emphasized that this doctrine does not apply where payment is made after the Information has been filed in court, nor does it apply to estafa under Article 315, par. 2(d) of the Revised Penal Code, where damage and deceit are essential elements and the check is merely the tool of fraud.

• Elements of B.P. Blg. 22 Violation — The three elements are: (1) the making, drawing, or issuance of a check to apply for account or value; (2) knowledge at the time of issuance that the drawer does not have sufficient funds in or credit with the drawee bank; and (3) subsequent dishonor by the bank for insufficiency of funds or credit, or dishonor for the same reason had the drawer not, without valid reason, ordered the bank to stop payment. A prima facie presumption of knowledge of insufficiency arises when the drawer is notified of dishonor and fails to pay or make arrangements within five banking days; payment within that period rebuts the presumption and constitutes a complete defense.

• Strict Construction of Penal Statutes — Penal statutes are construed strictly against the State and liberally in favor of the accused. Penal laws should not be applied mechanically; courts must determine whether the application of the penal law is consistent with the purpose and reason of the law.

• "While we agree with the private respondent that the gravamen of violation of B.P. 22 is the issuance of worthless checks that are dishonored upon their presentment for payment, we should not apply penal laws mechanically. We must find if the application of the law is consistent with the purpose of and reason for the law. Ratione cessat lex, et cessat lex. (When the reason for the law ceases, the law ceases.)" — This passage, quoted from Griffith, articulates the ratio decidendi for the equitable exception to B.P. Blg. 22 prosecution and is the canonical formulation of the doctrine that penal laws must not be applied mechanically.

• "The fact that the issuer of the check had already paid the value of the dishonored check after having received the subpoena from the Office of the Prosecutor should have forestalled the filing of the Information in court. The spirit of the law which, for B.P. Blg. 22, is the protection of the credibility and stability of the banking system, would not be served by penalizing people who have evidently made amends for their mistakes and made restitution for damages even before charges have been filed against them." — This passage defines the outer boundary of the equitable exception: payment before the filing of Informations satisfies the law's purpose, whereas payment after filing would not exonerate the accused.

• "It should be emphasized as well that payment of the value of the bounced check after the information has been filed in court would no longer have the effect of exonerating the accused from possible conviction for violation of B.P. Blg. 22." — This passage establishes the critical temporal distinction: pre-filing payment may extinguish criminal liability, but post-filing payment does not, as there is no equitable reason to preclude prosecution once criminal proceedings have commenced.

• Griffith vs. Court of Appeals, 428 Phil. 878 (2002) — Controlling precedent. The Court held that where the creditor had collected more than a sufficient amount to cover the value of the checks before the filing of Informations, holding the accused to answer criminally under B.P. Blg. 22 is no longer tenable nor justified. Applied directly to acquit petitioner, notwithstanding factual differences, because the controlling principle — payment before filing of Informations — was satisfied.
• Tan vs. Philippine Commercial International Bank, 575 Phil. 485 (2008) — Followed. Reaffirmed the Griffith doctrine, holding that payment of dishonored checks prior to receipt of the demand letter obliterated criminal liability. Cited to show that the equitable exception has been consistently applied in more recent jurisprudence.

• Section 1, Batas Pambansa Blg. 22 — Defines the offense of issuing checks without sufficient funds. The Court applied the provision's three elements and the five-day grace period mechanism, but held that the equitable exception recognized in Griffith and Tan overrides the strict letter of the law where payment was made before the filing of Informations.
• Article 315, par. 2(d), Revised Penal Code — Defines estafa by postdating a check or issuing a check in payment of an obligation when the offender has no funds. The Court distinguished this from B.P. Blg. 22, noting that in estafa, damage and deceit are essential elements and the check is merely the tool of fraud; payment of the check satisfies only civil, not criminal, liability.

Velasco, Jr., P.J. (Chairperson), Villarama, Jr., J., Reyes, B.L., J., and Jardeleza, J., concurred.