Sps. Carolina and Reynaldo Jose vs. Sps. Laureano and Purita Suarez

A civil action challenging the validity of the interest that allegedly occasioned the issuance of checks does not pose a prejudicial question to a B.P. Blg. 22 prosecution, because the offense is malum prohibitum and the cause or reason for issuing the check is inconsequential; the only valid query is whether a worthless check was issued. A party that, after failing to obtain suspension of criminal proceedings in the court where they are pending, seeks the same relief through a preliminary injunction in another court is guilty of forum shopping.

Petitioners Carolina and Reynaldo Jose were lenders who extended money to respondents Laureano and Purita Suarez at daily interest rates, initially 1% to 2% and later 5% per day. The Suarezes issued checks in favor of the Joses to pay amounts borrowed with the agreed interest. The controversy implicated Batas Pambansa Bilang 22, which penalizes the issuance of worthless checks, and the rule on prejudicial questions, which permits suspension of a criminal action when a civil action raises an issue determinative of guilt or innocence. The civil suit also invoked Civil Code provisions on void contracts and interest.

Respondents, spouses Laureano and Purita Suarez, availed of petitioner Carolina Jose’s offer to lend money at a daily interest rate of 1% to 2%. Carolina and her husband, petitioner Reynaldo Jose, later increased the interest to 5% per day, which respondents accepted because they allegedly had no other option left. It then became a practice that petitioners would give the loaned money to Purita, who would deposit the same in her and her husband’s account to cover the maturing postdated checks they had previously issued in payment of their other loans. Purita would then issue checks in favor of petitioners in payment of the amount borrowed from them with the agreed 5% daily interest.

On 7 May 2004, respondents filed a Complaint against petitioners seeking the declaration of “nullity of interest of 5% per day, fixing of interest, recovery of interest payments” and the issuance of a writ of preliminary injunction. They alleged that the 5% daily interest was iniquitous, contrary to morals, done under vitiated consent, and imposed using undue influence by taking improper advantage of their financial distress. They claimed that due to serious liquidity problems, they were forced to rely on borrowings from banks and individual lenders, including petitioners, and that they had to scramble for funds to cover the maturing postdated checks they issued to cover their other borrowings. In their prayer, respondents asked that a writ of preliminary injunction or at least a temporary restraining order issue to restrain petitioners from enforcing the checks listed in Annex “E,” including the filing of criminal cases for violation of B.P. Blg. 22, and from entering respondents’ store and premises to get cash sales and other items against respondents’ will under such terms and conditions as the court may affix.

Thereafter, at the instance of Carolina, several cases for violation of B.P. Blg. 22 were filed against Purita before the MTCC of Cebu City, Branches 2 and 5. Purita filed motions to suspend the criminal proceedings on the ground of prejudicial question, on the theory that the checks subject of the B.P. Blg. 22 cases were void for being contra bonos mores or for having been issued in payment of the iniquitous and unconscionable interest imposed by petitioners. The motions were denied.

Respondents then filed before the RTC a “Motion for Writ of Preliminary Injunction with Temporary Restraining Order” seeking to restrain the MTCCs from further proceeding with the B.P. Blg. 22 cases on the ground of prejudicial question. Petitioners opposed the motion. Nevertheless, the RTC, through its 20 December 2004 Order, issued a writ of preliminary injunction enjoining the MTCCs from proceeding with the cases against Purita. Petitioners sought reconsideration, but their motion was denied due course in the RTC’s 3 February 2005 Order.

• Jurisdiction over Prejudicial Question: Petitioners argued that under Section 6, Rule 111 of the Rules on Criminal Procedure, a petition to suspend proceedings on the ground of prejudicial question should be filed in the same criminal action; therefore, the RTC had no jurisdiction to issue the writ of preliminary injunction because it was not the court where the B.P. Blg. 22 cases were filed.
• Forum Shopping: Petitioners maintained that respondents were guilty of forum shopping because, after the denial of their motions to suspend before Branches 2 and 5 of the MTCC, they filed a motion for preliminary injunction before the RTC on the same ground of prejudicial question, thereby obtaining in one forum the relief they had failed to obtain in another.
• No Prejudicial Question: Petitioners claimed that the Court of Appeals erred in holding that the civil case posed a prejudicial question to the B.P. Blg. 22 cases, resulting in the erroneous suspension of the criminal proceedings.
• No Clear Right to Injunction: Petitioners posited that the RTC erred in issuing the preliminary injunction because respondents had no clear and unmistakable right to its issuance.

• Prejudicial Question: Respondents stated that the possibility of a ruling in the civil case that the subject checks are contra bonos mores and hence null and void constitutes a prejudicial question in the B.P. Blg. 22 cases, and that proceeding with the criminal trial without awaiting the civil case’s outcome is fraught with mischievous consequences.
• Medel and Interest: Respondents cited Medel vs. Court of Appeals, where the Court nullified a 5.5% monthly interest rate for being contra bonos mores under Article 1306 of the Civil Code and recomputed the interest at 1% per month; they argued that if their loans were computed at 1% per month, the checks subject of the B.P. Blg. 22 cases would be not only fully paid but overpaid.
• Danao and Payment: Respondents invoked Danao vs. Court of Appeals, which they claimed ruled that there is no violation of B.P. Blg. 22 if the dishonored checks have been paid.
• Article 1956: Respondents claimed that since the 5% interest per day was not contained in any written agreement, Article 1956 of the Civil Code bound petitioners to return the total interest they collected.
• Procedural Posture and Injunction: Respondents pointed out that they incorporated in their complaint an application for preliminary injunction and temporary restraining order to restrain Carolina from enforcing the interest and from filing criminal cases for violation of B.P. Blg. 22; they quoted the RTC’s explanation that the application was not initially acted upon for lack of proof of damages, but that when the MTCCs refused to suspend the criminal proceedings despite knowledge of the pending civil case, the RTC had to act accordingly.
• No Forum Shopping: Respondents maintained that they were not guilty of forum shopping because, after the MTCCs denied their motion to suspend, their only available remedy was the filing of an application for preliminary injunction in the existing civil case, which had been filed earlier than the B.P. Blg. 22 cases; they argued that the rule on forum shopping is not intended to deprive a party of a legitimate remedy.
• Exception to Injunction: Respondents claimed that the case falls under the exceptions to the rule that the prosecution of criminal cases may not be enjoined by a writ of injunction, considering that there is a prejudicial question sub judice and that there is persecution rather than prosecution.

• Prejudicial Question: Whether there exists a prejudicial question that necessitates the suspension of the proceedings in the MTCCs.
• Forum Shopping: Whether respondents are guilty of forum shopping.
• Propriety of the Preliminary Injunction: Whether the RTC and the Court of Appeals erred in allowing the suspension of the B.P. Blg. 22 cases through a preliminary injunction.

• Prejudicial Question: No. The validity or invalidity of the 5% daily interest is not determinative of guilt under B.P. Blg. 22, because the offense is malum prohibitum and punishes the mere issuance of a bouncing check regardless of the reason or terms of its issuance.
• Forum Shopping: Yes. Respondents sought suspension of the criminal proceedings in the MTCCs, were denied, and then sought the same relief through a preliminary injunction in the RTC, obtaining a favorable order after an unfavorable one.
• Propriety of the Preliminary Injunction: No. Because no prejudicial question existed and respondents engaged in forum shopping, the RTC and the Court of Appeals erred in allowing the suspension of the B.P. Blg. 22 cases; the injunction was lifted and set aside.

• Prejudicial Question: A prejudicial question exists when a civil action and a criminal action are both pending and the civil action raises an issue that must be preemptively resolved before the criminal action may proceed because its resolution would be determinative juris et de jure of the guilt or innocence of the accused. It has two essential elements: (i) the civil action involves an issue similar or intimately related to the issue raised in the criminal action; and (ii) the resolution of such issue determines whether or not the criminal action may proceed. The rationale is to avoid two conflicting decisions. The prejudicial question posed by respondents was whether the 5% daily interest was void, such that the checks issued to cover it were likewise void for being contra bonos mores and the B.P. Blg. 22 cases would no longer prosper. This theory failed because the validity or invalidity of the interest rate is not determinative of guilt in the criminal cases. It has been consistently declared that the cause or reason for the issuance of a check is inconsequential in determining criminal culpability under B.P. Blg. 22; what the law punishes is the issuance of a bouncing check, not the purpose for which it was issued or the terms and conditions relating to its issuance, and the mere act of issuing a worthless check is malum prohibitum provided the other elements of the offense are properly proved. Thus, whether the interest rate is eventually declared void will not affect the outcome of the B.P. Blg. 22 cases, because the primordial question is whether the law has been breached by the issuance of a bouncing check. The MTCCs correctly denied the motions to suspend on the finding that no prejudicial question existed. Ras vs. Rasul was distinguished because it involved a civil action for nullification of a deed of sale on the ground of forgery and an estafa prosecution, where the defense against forgery in the civil case was based on the same facts determinative of guilt or innocence in the estafa case. Here, the determination whether the 5% daily interest is contra bonos mores or whether the loan has been sufficiently paid will not affect guilt or innocence, because the material question in the B.P. Blg. 22 cases is whether Purita issued a bad check, regardless of the purpose or condition of its issuance. Medel vs. Court of Appeals declared a 5.5% monthly interest rate iniquitous and reduced it, but a reduction of the interest rate or a declaration that the amount due has been fully paid would not affect the determination of whether Purita issued bouncing checks. Danao vs. Court of Appeals did not rule that payment of dishonored checks exonerates an accused; the accused there was acquitted due to insufficiency of evidence because there was no proof of receipt of notice of nonpayment, so the five-day period in Section 2 of B.P. Blg. 22 could not be determined, and the presumption of knowledge of insufficient funds did not arise.
• Forum Shopping: Forum shopping exists when a party seeks to obtain remedies in an action in one court, which had already been solicited, and in other courts and other proceedings in other tribunals. It is also the act of one party against another, when an adverse judgment has been rendered in one forum, of seeking another and possibly favorable opinion in another forum other than by appeal or by special civil action of certiorari, or the institution of two or more acts or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. Respondents filed motions to suspend proceedings in the MTCCs hearing the B.P. Blg. 22 cases, but these were denied. Failing to obtain the relief they wanted, they sought before the RTC the suspension of the criminal proceedings, which was granted. Their explanation that the application for preliminary injunction was their only remedy after the denial of their motions did not excuse the act; any way the situation is viewed, respondents’ acts constituted forum shopping because they sought a possibly favorable opinion from one court after another had issued an order unfavorable to them.
• Propriety of the Preliminary Injunction: Because there was no prejudicial question, the RTC and, consequently, the Court of Appeals gravely erred when they allowed the suspension of the proceedings in the B.P. Blg. 22 cases. The preliminary injunction issued by the RTC was therefore lifted and set aside, and the MTCCs were ordered to proceed with dispatch with the arraignment and trial in the B.P. Blg. 22 cases pending before them.

• Prejudicial Question — A prejudicial question arises when a civil action and a criminal action are both pending and the civil action contains an issue that must be preemptively resolved before the criminal action may proceed, because howsoever the civil issue is resolved would be determinative juris et de jure of the guilt or innocence of the accused. It has two essential elements: (i) the civil action involves an issue similar or intimately related to the issue raised in the criminal action; and (ii) the resolution of such issue determines whether or not the criminal action may proceed. The rationale is to avoid two conflicting decisions. In this case, no prejudicial question existed because the civil action’s challenge to the 5% daily interest would not determine guilt or innocence under B.P. Blg. 22.
• B.P. Blg. 22 as malum prohibitum — The offense under B.P. Blg. 22 is malum prohibitum. The law punishes the mere act of making or issuing a worthless check or a check that is dishonored upon presentment for payment. The cause or reason for the issuance of the check, and the terms and conditions relating to its issuance, are inconsequential in determining criminal culpability. The only valid query is whether the law has been breached by the mere act of issuing a bad check, without regard to the issuer’s criminal intent. This doctrine was applied to hold that the civil action’s challenge to the interest rate did not pose a prejudicial question to the B.P. Blg. 22 cases.
• Forum Shopping — Forum shopping exists when a party seeks to obtain remedies in an action in one court, which had already been solicited, and in other courts and other proceedings in other tribunals. It also exists when, after an adverse judgment in one forum, a party seeks another and possibly favorable opinion in another forum other than by appeal or special civil action of certiorari, or institutes two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. This doctrine was applied to respondents, who sought suspension of the criminal proceedings in the MTCCs and, after denial, obtained a preliminary injunction from the RTC on the same ground.
• Payment of Dishonored Checks Does Not Necessarily Exonerate — In clarifying Danao vs. Court of Appeals, the Court noted that while there was a finding that the accused had paid her obligations prior to receipt of the complainant’s demand letter, there was no declaration that such payment exonerated her from liability for issuing bouncing checks; the accused was acquitted due to insufficiency of evidence, not because she had paid the amount covered by the dishonored checks or because the obligation was deemed paid. This doctrine reinforces that the gravamen of B.P. Blg. 22 is the issuance of a worthless check.

• "A prejudicial question generally comes into play in a situation where a civil action and a criminal action are both pending and there exists in the former an issue which must be preemptively resolved before the latter may proceed, because howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case." — This passage states the canonical definition and rationale of a prejudicial question, which was used to test and reject respondents’ theory.
• "The gravamen of the offense under [B.P. Blg.] 22 is the act of making or issuing a worthless check or a check that is dishonored upon presentment for payment. The act effectively declares the offense to be one of malum prohibitum. The only valid query then is whether the law has been breached, i.e., by the mere act of issuing a bad check, without so much regard as to the criminal intent of the issuer." — This is the ratio decidendi for the ruling that the civil action’s challenge to the interest rate did not pose a prejudicial question to the B.P. Blg. 22 prosecution.
• "There is forum shopping when a party seeks to obtain remedies in an action in one court, which had already been solicited, and in other courts and other proceedings in other tribunals." — This passage defines forum shopping, which was applied to respondents’ successive attempts to obtain suspension of the criminal proceedings.
• "While there was a finding that the accused had already paid her obligations prior to receipt of the complainant’s demand letter, there was no declaration from the Court that such payment exonerated accused from liability for having issued bouncing checks. Instead, accused was acquitted due to insufficiency of evidence, and not because she had paid the amount covered by the dishonored checks or that the obligation was deemed paid." — This passage clarifies the ruling in Danao vs. Court of Appeals and rejects respondents’ claim that payment of dishonored checks negates B.P. Blg. 22 liability.

• Meriz vs. People, 420 Phil. 608 (2001) — Cited for the rule that B.P. Blg. 22 is malum prohibitum and that the cause or reason for issuing a check is inconsequential; its formulation of the gravamen of the offense was quoted.
• Carlos vs. Court of Appeals, 335 Phil. 490, 499 (1997), citing Tuanda vs. Sandiganbayan, 249 SCRA 342 (1995) — Cited for the two essential elements of a prejudicial question.
• Montes vs. Court of Appeals, G.R. No. 143797, 4 May 2006, 489 SCRA 432, 439 — Cited for the definition of forum shopping.
• Ras vs. Rasul, Nos. L-50441-42, 18 September 1980, 100 SCRA 125 — Distinguished; it involved a civil action for nullification of a deed of sale on the ground of forgery and an estafa prosecution, where the civil issue was determinative of guilt or innocence, unlike the present case.
• Medel vs. Court of Appeals, 359 Phil. 820 (1998) — Distinguished; although it reduced an excessive interest rate, a reduction of interest or a declaration that the obligation has been fully paid would not affect the determination of whether bouncing checks were issued under B.P. Blg. 22.
• Danao vs. Court of Appeals, 411 Phil. 63 (2001) — Clarified; the accused was acquitted due to insufficiency of evidence because there was no proof of receipt of notice of nonpayment, not because the dishonored checks had been paid.
• Abarquez vs. Court of Appeals, 455 Phil. 964, 975 (2003); Ong vs. People, G.R. No. 139006, 27 November 2000, 346 SCRA 117, 122-123; Caras vs. CA, 418 Phil. 655, 664 (2001) — Cited in support of the rule that the cause or reason for the issuance of a check is inconsequential in determining criminal culpability under B.P. Blg. 22.

• Batas Pambansa Bilang 22 — The law penalizing the issuance of worthless checks. Its gravamen is the act of making or issuing a worthless check or a check dishonored upon presentment, and it is malum prohibitum; thus, the validity of the interest rate behind the checks did not affect criminal liability.
• Section 2, Batas Pambansa Bilang 22 — Mentioned in the discussion of Danao vs. Court of Appeals, which involved the five-day period from notice of nonpayment and the presumption of knowledge of insufficient funds. This was used to explain why Danao did not support respondents’ claim that payment exonerated the accused.
• Article 1422, Civil Code — Cited by the Court of Appeals for the proposition that a contract which is the direct result of a previous illegal contract is also void and inexistent. The Supreme Court did not adopt this as creating a prejudicial question because the validity of the checks was not determinative of guilt under B.P. Blg. 22.
• Article 1306, Civil Code — Invoked by respondents through Medel vs. Court of Appeals, which declared an excessive interest rate contrary to morals. Medel was distinguished because a reduction of interest would not affect the B.P. Blg. 22 prosecution.
• Article 1956, Civil Code — Invoked by respondents for the rule that no interest is due unless expressly stipulated in writing. The Court did not rely on this provision in resolving the prejudicial question and forum shopping issues.
• Section 6, Rule 111, Rules on Criminal Procedure — Invoked by petitioners for the rule that a petition to suspend proceedings on the ground of prejudicial question should be filed in the same criminal action. The Court did not separately resolve this jurisdictional argument, disposing of the case on the absence of a prejudicial question and forum shopping.

• Leonardo A. Quisumbing (Chairperson)
• Conchita Carpio Morales
• Presbitero J. Velasco, Jr.
• Arturo D. Brion