Palana vs. People of the Philippines

Jurisdiction over a criminal case is determined by the law in force at the time of the institution of the action, and a check issued as a guaranty for a loan is considered issued for value under B.P. 22, making the purpose or agreement surrounding its issuance irrelevant to liability.

Petitioner Isidro Pablito M. Palana and private complainant Alex B. Carlos were business associates who entered into a financial transaction involving a sum of money secured by a postdated check. The dispute centers on whether the check was issued to guarantee a loan or as part of an investment in a partnership, and whether the Regional Trial Court retained jurisdiction over the case after the enactment of R.A. 7691 expanding the jurisdiction of inferior courts.

Sometime in September 1987, petitioner Isidro Pablito M. Palana and his wife borrowed ₱590,000.00 from private complainant Alex B. Carlos. To secure payment of the loan, petitioner issued a postdated check (Check No. 326317PR) drawn against Asian Savings Bank, dated February 15, 1988, payable to Carlos. When the check was presented for payment, it was dishonored by the bank for insufficiency of funds. Despite subsequent demand letters from the private complainant, petitioner failed to make good the dishonored check.

Petitioner claimed that the money given to him by Carlos was an investment by the latter in their alleged partnership, Palana’s General Merchandising, and that he was tricked into issuing the check to show a textile supplier who would provide raw materials. He also noted that his checking account was opened only on December 1, 1987, arguing the check could not have been issued in September 1987 as alleged in the Information. The lower courts rejected this "investment theory," noting the business was registered solely in petitioner's name and that the act of lending money does not necessarily amount to an investment of capital.

On August 19, 1991, petitioner was charged with violation of B.P. 22. The case was archived in January 1992 due to his non-apprehension but was recalled in June 1995 after he posted bail. He was arraigned in July 1995 and pleaded not guilty. After trial, the RTC convicted him, a decision affirmed by the CA. The RTC found the check was issued as a guaranty for a loan, and the CA agreed, deferring to the trial court's assessment of witness credibility.

• Consideration or Value: Petitioner argued that the check was not issued for consideration or value, claiming he was tricked by the private complainant into issuing it to bind him to return an investment in a partnership suffering business reversals.
• Jurisdiction: Petitioner contended that the Metropolitan Trial Court, not the Regional Trial Court, had jurisdiction over the case because R.A. 7691, which expanded the jurisdiction of inferior courts, was already in effect at the time of his arraignment on July 25, 1995.

• B.P. 22 Violation: Whether petitioner is guilty of violation of B.P. 22.
• Jurisdiction: Whether the Regional Trial Court has jurisdiction over the case despite the effectivity of R.A. 7691 at the time of arraignment.

• B.P. 22 Violation: Yes. All elements of B.P. 22 were duly proven, and the check was issued for value as a guaranty for a loan.
• Jurisdiction: Yes. The RTC properly acquired jurisdiction because jurisdiction is determined by the law in force at the time of the institution of the action, not during arraignment.

• B.P. 22 Violation: The elements of B.P. 22 are: (1) making, drawing, or issuing a check to apply on account or for value; (2) knowledge of insufficient funds at the time of issue; and (3) subsequent dishonor by the bank. Petitioner admitted knowing he lacked sufficient funds when he issued the check, which was later dishonored. The lower courts correctly rejected the "investment theory" as it involved a factual question of credibility. A check is presumed issued for valuable consideration, and issuing it to be shown to suppliers is not a valid defense because the gravamen of B.P. 22 is the act of issuing a worthless check, making it malum prohibitum. The variance in the date of issuance was not prejudicial since petitioner knew of the insufficiency of funds at the time of issuance.
• Jurisdiction: Jurisdiction is determined by the law in force at the time of the institution of the action. The Information was filed on August 19, 1991, when B.P. 129 was in effect. Under B.P. 129, the RTC had jurisdiction because the imposable fine for the check amount could exceed ₱4,000.00. The subsequent enactment of R.A. 7691 on June 15, 1994, cannot divest the RTC of jurisdiction over a pending case, as R.A. 7691 applies prospectively to criminal cases.

• Time of Institution Determines Jurisdiction — Jurisdiction to try a criminal action is determined by the law in force at the time of the institution of the action, not during arraignment. Once a court acquires jurisdiction, it is not ousted by subsequent legislation reapportioning jurisdiction unless the statute expressly provides for retroactive application.
• Gravamen of B.P. 22 — The gravamen of the offense punished under B.P. 22 is the act of making or issuing a worthless check or a check that is dishonored upon presentment. The purpose for which the check was issued is irrelevant, as the act is malum prohibitum and criminal intent is unnecessary.

• "The gravamen of the offense punished under B.P. Blg. 22 is the act of making or issuing a worthless check or a check that is dishonored upon its presentment for payment. The law has made the mere act of issuing a bad check malum prohibitum, an act proscribed by the legislature for being deemed pernicious and inimical to public welfare." — Defines the core offense under B.P. 22 and explains why intent or purpose is irrelevant.
• "It is hornbook doctrine that jurisdiction to try a criminal action is determined by the law in force at the time of the institution of the action and not during the arraignment of the accused." — States the rule on when jurisdiction over a criminal case attaches.

• Cueme vs. People, 390 Phil. 294 (2000) — Cited to support the ruling that the purpose for issuing a check is irrelevant to B.P. 22 liability, as the gravamen is the issuance of a worthless check.
• People vs. Velasco, 322 Phil. 146 (1996) — Cited to support the rule that R.A. 7691 does not have retroactive application to criminal cases pending or decided by the RTC prior to its effectivity.

• Section 1, Batas Pambansa Blg. 22 — Defines the penalty for issuing a check without sufficient funds. Applied to convict the petitioner and determine the imposable fine.
• Sections 20 and 32, Batas Pambansa Blg. 129 — Defines the jurisdiction of RTCs and MTCs/MCTCs in criminal cases. Applied to determine that the RTC had jurisdiction over the case at the time the Information was filed.
• Republic Act No. 7691 — Expanded the jurisdiction of inferior courts. Construed to have prospective application to criminal cases, thus not divesting the RTC of jurisdiction.
• Supreme Court Administrative Circular No. 12-2000, as clarified by No. 13-2001 — Allows the imposition of a fine in lieu of imprisonment for B.P. 22 violations for first-time offenders. Applied to modify the penalty to a fine of ₱200,000.

Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Antonio Eduardo B. Nachura, Ruben T. Reyes.