Sycip vs. Court of Appeals

The presumption of knowledge of insufficient funds under B.P. Blg. 22 is merely prima facie and may be rebutted by evidence; every element of the offense must be proved beyond reasonable doubt, never presumed. Furthermore, a buyer's exercise of the statutory right under Section 23 of P.D. No. 957 to suspend installment payments when the developer fails to complete the project according to approved plans is a valid defense against a charge of violating B.P. Blg. 22, as it constitutes a valid cause to stop payment, negating the third element of the offense.

Francisco T. Sycip, Jr. entered into a Contract to Sell with Francel Realty Corporation (FRC), a domestic corporation engaged in the real estate business, for the purchase of a townhouse unit in FRC's project at Bacoor, Cavite. The transaction was governed by P.D. No. 957, which protects subdivision and condominium buyers by allowing them to suspend installment payments when the developer fails to develop or complete the project according to approved plans and specifications. The case also involves B.P. Blg. 22, a special penal law enacted to safeguard the interest of the banking system by penalizing the issuance of worthless checks.

On August 24, 1989, Francisco T. Sycip, Jr. agreed to buy, on installment, a townhouse unit from Francel Realty Corporation (FRC) in the latter's project at Bacoor, Cavite. The total stipulated purchase price was P451,700.00, of which Sycip paid P135,000.00 as down payment, committing to pay the balance of P316,000.00 in 48 equal monthly installments of P9,304.00, effective September 30, 1989. Upon execution of the contract to sell, Sycip issued to FRC forty-eight postdated checks, each in the amount of P9,304.00, drawn against his account no. 845515 with Citibank.

After moving into his unit, Sycip complained to FRC regarding defects in the unit and incomplete features of the townhouse project, but FRC ignored the complaint. Dissatisfied, Sycip served on FRC two notarial notices stating that he was suspending his installment payments pending compliance with the project plans and specifications as approved by the Housing and Land Use Regulatory Board (HLURB). Sycip and 12 out of 14 unit buyers then filed a complaint with the HLURB. The complaint was dismissed as to the defects, but FRC was ordered by the HLURB to finish all incomplete features of its townhouse project. Sycip appealed the dismissal of the complaint as to the alleged defects.

Notwithstanding the notarial notices, FRC continued to present for encashment the postdated checks in its possession. Sycip sent "stop payment orders" to the bank. When FRC continued to present the other postdated checks as their due dates fell, the bank advised Sycip to close his checking account to avoid paying bank charges every time he made a "stop payment" order. Due to the closure of petitioner's checking account, the drawee bank dishonored six postdated checks—Check No. 813514 dated October 30, 1990; Check No. 813515 dated November 30, 1990; Check No. 813516 dated December 30, 1990; Check No. 813517 dated January 30, 1991; Check No. 813518 dated February 28, 1991; and Check No. 813519 dated March 30, 1991—for the reason "account closed." FRC filed a complaint against petitioner for violations of B.P. Blg. 22 involving said dishonored checks.

The prosecution established that the checks were presented to Citibank on their respective due dates and were returned dishonored for the reason "account closed," and that the account already had a zero balance as early as September 14, 1990. FRC, through its executive vice president and project manager and thereafter through its counsel, notified Sycip orally and in writing of the checks' dishonor and demanded payment, but Sycip did not pay or make good any of the checks. The defense, for its part, presented evidence that Sycip became aware of various construction defects after taking possession; that he mailed a verified letter dated June 6, 1990 giving notice that he would cease paying his monthly amortization unless FRC completed the construction, renovation, and/or repair of his unit; that he and the other complainants filed the HLURB case against FRC; that as of the time of presentation of the subject checks, Sycip had at least P150,000.00 cash or credit with Citibank; and that he closed his account conformably with the bank's customer service officer's advice to close the account instead of making a stop-payment order for each of his more than 30 postdated checks still in FRC's possession, to avoid the P600.00 penalty imposed by the bank for every check subject of a stop-payment order.

• Valid Cause to Stop Payment: Petitioner argued that the court a quo erred in affirming his conviction for violation of B.P. Blg. 22, considering that he had cause to stop payment of the checks issued to respondent.
• Right to Suspend Payments under P.D. No. 957: Petitioner insisted that under P.D. No. 957, the buyer of a townhouse unit has the right to suspend his amortization payments should the subdivision or condominium developer fail to develop or complete the project in accordance with duly-approved plans and specifications. Given the findings of the HLURB that certain aspects of private complainant's townhouse project were incomplete and undeveloped, the exercise of his right to suspend payments should not render him liable under B.P. Blg. 22.
• Waiver of Right to Complain: Petitioner argued that the lower court erred in finding that he must be deemed to have waived his right to complain against the development of the townhouse unit and the townhouse project.
• Sufficiency of Funds: Petitioner argued that the appellate court erred in affirming the finding that he did not have sufficient funds with the drawee bank to cover the subject checks upon presentment for payment.

• Immateriality of Intent and Circumstances: The Solicitor General argued that since what petitioner was charged with were violations of B.P. Blg. 22, the intent and circumstances surrounding the issuance of a worthless check are immaterial. The gravamen of the offense charged is the act itself of making and issuing a worthless check or one that is dishonored upon its presentment for payment. Mere issuing of a bad check is malum prohibitum, pernicious and inimical to public welfare.
• Insufficiency of P.D. No. 957 as Defense: The Solicitor General argued that P.D. No. 957 does not provide petitioner a sufficient defense against the charges against him.
• Presumption of Knowledge: The Solicitor General pointed out that knowledge of the insufficiency of petitioner's funds "is legally presumed from the dishonor of his checks for insufficiency of funds."

• Knowledge of Insufficient Funds: Whether the prosecution established beyond reasonable doubt that petitioner had knowledge of insufficient funds in or credit with the drawee bank at the time of issuance of the checks, as required by the second element of the offense under B.P. Blg. 22.
• Valid Cause to Stop Payment: Whether petitioner's exercise of his right under P.D. No. 957 to suspend installment payments constituted a valid cause to stop payment, negating the third element of the offense under B.P. Blg. 22.
• Sufficiency of Evidence for Conviction: Whether the Court of Appeals erred in affirming the conviction of petitioner and awarding damages in favor of private complainant.

• Knowledge of Insufficient Funds: No. The prosecution failed to establish the second element of the offense beyond reasonable doubt. The prima facie presumption of knowledge of insufficiency of funds was rebutted by evidence that petitioner had at least P150,000.00 cash or credit with Citibank at the time of presentation of the checks and that the closure of his account was made upon the bank's advice to avoid stop-payment charges.
• Valid Cause to Stop Payment: No. The third element of "subsequent dishonor of the check without valid cause" was not established. Petitioner's exercise of the statutory right to suspend installment payments under Section 23 of P.D. No. 957, given the HLURB's findings of incomplete features, constituted a valid cause to stop payment.
• Sufficiency of Evidence for Conviction: No. The conviction was reversed because every element of the offense must be proved beyond reasonable doubt, never presumed, and penal statutes are strictly construed against the State and liberally in favor of the accused.

• Knowledge of Insufficient Funds: The Court enumerated the three elements of the offense under B.P. Blg. 22: (1) the making, drawing and issuance of any check to apply for account or for value; (2) the knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment; and (3) the subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment. While the first element existed, the other elements were not established beyond reasonable doubt. B.P. No. 22 creates a presumption juris tantum that the second element prima facie exists when the first and third elements are present, but such evidence may be rebutted. The defense presented evidence contradicting the presumption: petitioner testified that at the time of presentation of the checks, he had P150,000.00 cash or credit with Citibank, and the closure of his account was made upon the advice of the drawee bank to avoid paying hefty bank charges each time he issued a "stop payment" order. This evidence established petitioner's state of mind at the time the checks were issued on August 24, 1989—he had no knowledge that his funds or credit would be insufficient when the checks would be presented for encashment. The prosecution's establishment of the closure of petitioner's checking account did not suffice to prove the second element, which explicitly requires "evidence of knowledge of insufficient funds" by the accused at the time the check or checks are presented for encashment. The Court stressed that every element of the offense must be proved beyond reasonable doubt, never presumed, and that penal statutes are strictly construed against the State and liberally in favor of the accused.

• Valid Cause to Stop Payment: The Court held that the petitioner had a valid cause to order his bank to stop payment. The Court noted that it had previously upheld a buyer's reliance on Section 23 of P.D. 957 to suspend payments until such time as the owner or developer had fulfilled its obligations to the buyer. Given the findings of the HLURB as to incomplete features in the construction of petitioner's and other units, the exercise of the statutory right to suspend installment payments was a valid defense against the purported violations of B.P. Blg. 22. The Court reasoned that a statute must be construed in relation to other laws so as to carry out the legitimate ends and purposes intended by the legislature, and that courts will not strictly follow the letter of one statute when it leads away from the true intent of the legislature and when ends are inconsistent with the general purpose of the act, more so when it will mean the contravention of another valid statute. Both laws have to be reconciled and given due effect. The Court further applied Article 11(5) of the Revised Penal Code, which provides that any person who acts in the fulfillment of a duty or in the lawful exercise of a right or office does not incur criminal liability. Since the Revised Penal Code is supplementary to special laws like B.P. Blg. 22, and nothing in B.P. Blg. 22 prevents the Revised Penal Code from supplementing it, petitioner's exercise of a right of the buyer under Article 23 of P.D. No. 957 was a valid defense to the charges.

• Elements of the offense under B.P. Blg. 22 — The offense is committed when the following elements are present: (1) the making, drawing and issuance of any check to apply for account or for value; (2) the knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment; and (3) the subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment. In this case, although the first element existed, the prosecution failed to establish the second and third elements beyond reasonable doubt.

• Rebuttable presumption of knowledge of insufficient funds — B.P. No. 22 creates a presumption juris tantum that the second element prima facie exists when the first and third elements of the offense are present. However, such evidence may be rebutted; if contradicted, the prosecution is duty bound to prove every element of the offense charged and not merely rely on a rebuttable presumption. In this case, the defense's evidence that petitioner had P150,000.00 cash or credit with Citibank and that the account closure was made upon the bank's advice rebutted the presumption.

• Statutory construction — reconciliation of statutes — A statute must be construed in relation to other laws so as to carry out the legitimate ends and purposes intended by the legislature. Courts will not strictly follow the letter of one statute when it leads away from the true intent of the legislature and when ends are inconsistent with the general purpose of the act, more so when it will mean the contravention of another valid statute. Both laws have to be reconciled and given due effect. In this case, B.P. Blg. 22 and P.D. No. 957 were reconciled, with the buyer's right to suspend payments under P.D. No. 957 serving as a valid defense to a B.P. Blg. 22 charge.

• Supplementary application of the Revised Penal Code to special laws — Offenses punishable under special laws are not subject to the provisions of the Revised Penal Code, but the Code is supplementary to such laws unless the latter should specially provide the contrary. Under Article 11(5) of the Revised Penal Code, any person who acts in the fulfillment of a duty or in the lawful exercise of a right or office does not incur criminal liability. In this case, petitioner's exercise of a right of the buyer under Article 23 of P.D. No. 957 was a valid defense to the charges under B.P. Blg. 22.

• "To rely on the presumption created by B.P. No. 22 as the prosecution did in this case, would be to misconstrue the import of requirements for conviction under the law. It must be stressed that every element of the offense must be proved beyond reasonable doubt, never presumed. Furthermore, penal statutes are strictly construed against the State and liberally in favor of the accused." — This passage articulates the Court's core reasoning that the prosecution cannot rely solely on the statutory presumption of knowledge of insufficient funds, and that the State must prove every element of the offense beyond reasonable doubt.

• "This exercise of a statutory right to suspend installment payments, is to our mind, a valid defense against the purported violations of B.P. Blg. 22 that petitioner is charged with." — This is the ratio decidendi on the third element, holding that the buyer's exercise of the statutory right under P.D. No. 957 constitutes a valid cause to stop payment, negating the third element of the offense.

• "Given the findings of the HLURB as to incomplete features in the construction of petitioner's and other units of the subject condominium bought on installment from FRC, we are of the view that petitioner had a valid cause to order his bank to stop payment. To say the least, the third element of 'subsequent dishonor of the check. . . without valid cause' appears to us not established by the prosecution." — This passage applies the HLURB findings to the facts and concludes that the valid cause to stop payment negates the third element of the offense under B.P. Blg. 22.

• Vaca vs. Court of Appeals, 298 SCRA 656 (1998) — Cited as authority for the enumeration of the elements of the offense under B.P. Blg. 22.
• Magno vs. Court of Appeals, 210 SCRA 471 (1992) — Cited for the proposition that B.P. No. 22 creates a presumption juris tantum that the second element prima facie exists when the first and third elements are present, and that B.P. Blg. 22 was enacted to safeguard the interest of the banking system.
• People vs. Nuque, 58 O.G. 8442 — Cited for the proposition that a prima facie presumption, if not rebutted or contradicted, will suffice to sustain a judgment in favor of the issue which it supports.
• People vs. Tongko, 290 SCRA 595 (1998) — Cited for the proposition that postdating simply means that on the date indicated on its face, the check would be properly funded, not that the checks should be deemed as issued only then.
• Idos vs. Court of Appeals, 296 SCRA 194 (1998) — Cited for the proposition that penal statutes are strictly construed against the State and liberally in favor of the accused, and that the punishable act must come clearly within both the spirit and letter of the statute.
• Antipolo Realty Corp. vs. National Housing Authority, 153 SCRA 399 (1987) — Cited as the case where the Court upheld a buyer's reliance on Section 23 of P.D. 957 to suspend payments until such time as the owner or developer had fulfilled its obligations to the buyer.
• King vs. Hernaez, 114 Phil. 730 (1962) — Cited for the proposition that a statute must be construed in relation to other laws so as to carry out the legitimate ends and purposes intended by the legislature.
• Lazaro vs. Court of Appeals, 227 SCRA 723 (1993) — Cited in the Solicitor General's argument that the intent and circumstances surrounding the issuance of a worthless check are immaterial.

• Section 1, B.P. Blg. 22 — Defines the offense of issuing checks without sufficient funds, requiring that the maker or drawer knows at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment, and that the check is subsequently dishonored for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment. The Court applied this provision by finding that the second and third elements were not established beyond reasonable doubt.
• Section 2, B.P. Blg. 22 — Provides that the making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds, when presented within ninety (90) days from the date of the check, shall be prima facie evidence of knowledge of such insufficiency of funds unless the maker or drawer pays the holder the amount due or makes arrangements for payment in full within five (5) banking days after receiving notice of dishonor. The Court held that this presumption was rebutted by the defense's evidence.
• Section 23, P.D. No. 957 — Provides that no installment payment made by a buyer in a subdivision or condominium project shall be forfeited in favor of the owner or developer when the buyer, after due notice, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for completing the same. The Court held that the petitioner's exercise of this statutory right was a valid defense to the charges under B.P. Blg. 22.
• Article 10, Revised Penal Code — Provides that offenses punishable under special laws are not subject to the provisions of the Code, but the Code is supplementary to such laws unless the latter should specially provide the contrary. The Court applied this provision to allow the supplementary application of Article 11(5) of the Revised Penal Code to B.P. Blg. 22.
• Article 11(5), Revised Penal Code — Provides that any person who acts in the fulfillment of a duty or in the lawful exercise of a right or office does not incur criminal liability. The Court applied this provision to hold that petitioner's exercise of a right of the buyer under Article 23 of P.D. No. 957 was a valid defense to the charges.

Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concurred.