Llamado vs. Court of Appeals

The mere act of issuing a bouncing check is malum prohibitum, and the law punishes the issuance itself, not the purpose for which it was issued nor the terms and conditions relating to its issuance. A check issued for an actual valuable consideration falls within the contemplation of Batas Pambansa Blg. 22, and the person who actually signed the check in behalf of a corporation is personally liable under the Act.

Petitioner Ricardo A. Llamado was the Treasurer, and his co-accused Jacinto Pascual was the President, of Pan Asia Finance Corporation. Private complainant Leon Gaw delivered P180,000.00 to the corporation as an investment, with the assurance of Aida Tan, the corporation's secretary, that it would be repaid on 4 November 1983 plus interest at 12% and a share in the corporation's profits, if any. The case arose under Batas Pambansa Blg. 22, the Bouncing Checks Law, which penalizes the issuance of checks that are dishonored for insufficiency of funds or because payment was stopped.

Petitioner Ricardo A. Llamado was the Treasurer, and his co-accused Jacinto Pascual was the President, of Pan Asia Finance Corporation. Private complainant Leon Gaw delivered P180,000.00 to the accused, with the assurance of Aida Tan, the corporation's secretary, that it would be repaid on 4 November 1983, plus interest at 12% and a share in the corporation's profits, if any. Upon delivery of the money, petitioner took it and placed it inside a deposit box. Jacinto Pascual and petitioner signed Philippine Trust Company Check No. 047809, postdated 4 November 1983, in the amount of P186,500.00, in the presence of private complainant. The check was issued in payment of the cash money delivered, plus interest for sixty (60) days in the amount of P6,500.00.

On 4 November 1983, private complainant deposited the check in his current account with the Equitable Banking Corporation, which later informed him that the check was dishonored by the drawee bank because payment was stopped and because the check was drawn against insufficient funds. Private complainant's current account was debited for P186,500.00 because of the dishonor. Private complainant returned to Aida Tan, who received the check with the assurance that she would have it changed with cash; however, upon his return, she informed him that she had nothing to do with the check.

On 11 November 1983, private complainant went to petitioner to inform him of the dishonor. Petitioner offered in writing to pay private complainant a portion of the amount equivalent to 10% thereof on 14 or 15 November 1983, with the balance to be rolled over for a period of ninety (90) days. This offer was accepted by private complainant, but petitioner failed to remit the 10% on or before 15 November 1983 and failed to roll over the balance. Private complainant then demanded payment of P186,500.00, but petitioner failed to pay and instead offered to return only 30% of the money, which private complainant refused. Thus, the complaint for violation of Batas Pambansa Blg. 22 was filed.

Petitioner's version of the facts was that it was the practice in the corporation for him to sign blank checks and leave them with Pascual so that Pascual could make disbursements and enter into transactions even in petitioner's absence. One of the checks petitioner signed in blank and gave to Pascual was the check in question. The check was later issued to private complainant, filled up with the amount P186,500.00 and dated November 4, 1983. The check was dishonored on November 7, 1983, when presented for payment because payment had been stopped, although there were also no sufficient funds in the account. Private complainant returned the check to Aida Tan, who gave him a receipt and promised to return the cash money, but instead returned the check to him. On November 11, 1983, private complainant entered into an agreement with petitioner whereby Pan Asia Finance Corporation would pay private complainant 10% of the P186,500.00 by November 14 or 15, with the balance to be rolled over for 90 days; private complainant was not paid as agreed.

• Contingent Payment: Petitioner argued that the Court of Appeals erred in convicting him because the check was only a contingent payment for an investment that had not been proven to be successful, and thus the check was not issued "to apply on account or for value" within the contemplation of Batas Pambansa Blg. 22.
• Mere Signatory: Petitioner argued that the Court of Appeals erred in convicting him for merely signing the check without being actually involved in the transaction for which it was issued, in disregard of the pronouncement in Dingle vs. IAC.
• Novation Theory: Petitioner argued that the Court of Appeals erred in refusing to apply the "novation theory" recognized in Ong vs. Court of Appeals and Guingona, Jr. vs. City Fiscal of Manila, despite private complainant's admission that he had entered into a new agreement with petitioner supplanting the check in question.
• Corporate Liability: Petitioner argued that the Court of Appeals erred in holding him personally liable for the amount of the check because it was a check of Pan Asia Finance Corporation and he signed it in his capacity as Treasurer of the corporation.

• Sufficiency of Evidence: The prosecution established that petitioner personally took the money and placed it in a deposit box, signed the check in the presence of private complainant, and was notified of the dishonor, after which he offered in writing to pay 10% of the amount and roll over the balance.
• Prima Facie Presumption: The statute creates a prima facie presumption that the drawer had knowledge of the insufficiency of funds at the time of issuance and on presentment for payment, which petitioner failed to rebut by paying the amount within five banking days from notice of dishonor.

• Contingent Payment: Whether the check was issued "to apply on account or for value" within the contemplation of Batas Pambansa Blg. 22 when it was allegedly only a contingent payment for an investment that had not been proven successful.
• Mere Signatory: Whether petitioner, who signed the check in blank as a common business practice, can be held liable under Batas Pambansa Blg. 22 despite his alleged lack of involvement in the transaction.
• Novation: Whether the "novation theory" applies to absolve petitioner from liability given the new agreement entered into with private complainant after the dishonor.
• Personal Liability: Whether petitioner can be held personally liable for the amount of the check when he signed it in his capacity as Treasurer of the corporation.

• Contingent Payment: No. The check was issued for an actual valuable consideration of P180,000.00, and the law punishes the issuance of a bouncing check, not the purpose for which it was issued nor the terms and conditions relating to its issuance.
• Mere Signatory: No. The circumstances in Dingle vs. IAC do not obtain in this case; petitioner personally received the money, signed the check in the presence of private complainant, and was notified of the dishonor. Signing a check in blank is hardly a defense and makes the signer prone to being charged with violation of BP 22.
• Novation: No. The alleged new agreement was only an empty promise that effectively delayed private complainant's filing of the case, and private complainant was never paid as agreed upon.
• Personal Liability: Yes. The third paragraph of Section 1 of BP Blg. 22 expressly states that where the check is drawn by a corporation, the person or persons who actually signed the check in behalf of such drawer shall be liable under the Act.

• Contingent Payment: The Court found that the check was issued for an actual valuable consideration of P180,000.00, which private complainant handed to Aida Tan. Petitioner himself admitted that private complainant made an investment in said amount with Pan Asia Finance Corporation. The Court reasoned that if the money was truly intended as a contingent investment that would only be returned if the project became successful, the check need not have been issued because a receipt and written agreement would have sufficed. The Court further held that to determine the reason for which checks are issued, or the terms and conditions for their issuance, would greatly erode the faith the public reposes in the stability and commercial value of checks as currency substitutes. What the law punishes is the issuance of a bouncing check, and the mere act of issuing a worthless check is malum prohibitum.

• Mere Signatory: The Court distinguished Dingle vs. IAC, where the petitioner was acquitted because the prosecution witness dealt exclusively with the co-signatory, the petitioner's name was never mentioned in connection with the transaction, and the witness categorically stated that the co-signatory received the demand letters. In the present case, private complainant testified that petitioner took the money and placed it in a deposit box, that petitioner and Pascual signed the check in his presence, and that notice of dishonor was made on petitioner, who offered in writing to pay 10% of the amount. The Court noted that knowledge involves a state of mind difficult to establish, and the statute itself creates a prima facie presumption that the drawer had knowledge of the insufficiency of funds. Petitioner failed to rebut the presumption by paying the amount within five banking days from notice of dishonor. His claim of signing blank checks as common business practice is hardly a defense, and as Treasurer who signed the check in his capacity as an officer of the corporation, lack of involvement in the negotiation is not a defense.

• Novation: The Court held that the "novation theory" recognized in certain cases does not apply. While private complainant agreed to petitioner's offer to pay 10% of the amount on November 14 or 15, 1983, and the balance to be rolled over for 90 days, this turned out to be only an empty promise which effectively delayed private complainant's filing of the case. As admitted by petitioner in his Memorandum, private complainant was never paid as agreed upon.

• Personal Liability: The Court cited the third paragraph of Section 1 of BP Blg. 22, which states: "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." Since petitioner signed the check in his capacity as Treasurer of the corporation, he is personally liable under the express provision of the law.

• Malum prohibitum nature of BP 22 violations — The mere act of issuing a worthless check is malum prohibitum. The law punishes the issuance of a bouncing check and not the purpose for which it was issued nor the terms and conditions relating to its issuance. The Court applied this doctrine to reject petitioner's argument that the check was only a contingent payment for an investment.

• Prima facie presumption of knowledge of insufficiency of funds — The statute creates a prima facie presumption that the drawer had knowledge of the insufficiency of his funds in or credit with the bank at the time of the issuance and on the check's presentment for payment. The Court applied this presumption against petitioner, who failed to rebut it by paying the amount of the check within five (5) banking days from notice of the dishonor.

• Corporate officer liability under BP 22 — The third paragraph of Section 1 of BP Blg. 22 provides that where the check is drawn by a corporation, company or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under the Act. The Court applied this provision to hold petitioner personally liable despite his signing in his capacity as Treasurer of the corporation.

• Novation theory in BP 22 cases — The "novation theory" recognized in certain cases does not apply where the alleged new agreement was only an empty promise that never resulted in payment. The Court applied this doctrine to reject petitioner's argument that a new agreement supplanted the check.

• "So, what the law punishes is the issuance of a bouncing check and not the purpose for which it was issued nor the terms and conditions relating to its issuance. The mere act of issuing a worthless check is malum prohibitum." — This passage articulates the core ratio decidendi of the case: that BP 22 penalizes the mere act of issuing a bouncing check, regardless of the purpose or terms of issuance.

• "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." — This quotation from the third paragraph of Section 1 of BP Blg. 22 establishes the statutory basis for holding corporate officers personally liable for checks they sign in behalf of the corporation.

• "If as he claims, he signed the check in blank, he made himself prone to being charged with violation of BP 22. It became incumbent upon him to prove his defenses. As Treasurer of the corporation who signed the check in his capacity as an officer of the corporation, lack of involvement in the negotiation for the transaction is not a defense." — This passage rejects the defense of signing blank checks as common business practice and establishes that lack of involvement in the transaction is not a defense for a corporate officer who signs a check.

• Dingle vs. IAC, 148 SCRA 595 — Distinguished. In that case, the petitioner was acquitted because the prosecution witness dealt exclusively with the co-signatory, the petitioner's name was never mentioned in connection with the transaction, and the witness categorically stated that the co-signatory received the demand letters. These circumstances do not obtain in the present case.

• Lozano vs. Martinez, 146 SCRA 323 — Cited in support of the prima facie presumption that the drawer had knowledge of the insufficiency of funds at the time of issuance and on presentment for payment.

• People vs. Nitafan, 215 SCRA 79 — Cited in support of the proposition that the law punishes the issuance of a bouncing check and not the purpose for which it was issued.

• Cruz vs. Court of Appeals, 233 SCRA 301 — Cited in support of the doctrine that the mere act of issuing a worthless check is malum prohibitum.

• Section 1, Batas Pambansa Blg. 22 — The Bouncing Checks Law, which penalizes the issuance of checks that are dishonored for insufficiency of funds or because payment was stopped. The third paragraph of Section 1 provides that where the check is drawn by a corporation, the person or persons who actually signed the check in behalf of such drawer shall be liable under the Act. The Court applied this provision to hold petitioner personally liable as the corporate treasurer who signed the check.

Justices Regalado, Romero, Puno, and Mendoza concurred with the decision.