Vaca vs. Court of Appeals

Under B.P. Blg. 22, the corporate officers who actually sign a check for a corporate drawer are liable, and the prima facie presumption of knowledge of insufficient funds is not rebutted by a replacement check issued beyond five banking days from notice of dishonor; damage to the payee is not an element of the offense.

Eduardo R. Vaca was the president and owner of Ervine International, Inc., a corporation engaged in the manufacture and sale of refrigeration equipment; Fernando Nieto, his son-in-law, served as the firm's purchasing manager. GARDS provided security services to Ervine. The dispute implicated B.P. Blg. 22, the Bouncing Checks Law, which penalizes the making, drawing, and issuance of a check for value when the drawer knows at the time of issue that he has insufficient funds or credit with the drawee bank and the check is subsequently dishonored.

Eduardo R. Vaca was the president and owner of Ervine International, Inc. (Ervine), a corporation engaged in the manufacture and sale of refrigeration equipment, while Fernando Nieto, his son-in-law, was the firm's purchasing manager. GARDS provided security services to Ervine. On March 10, 1988, petitioners issued a check for P10,000.00 to GARDS in partial payment of those services. The check was drawn on the China Banking Corporation. When it was deposited in the Philippine Commercial International Bank branch at Shaw Boulevard, Mandaluyong, it was dishonored for insufficiency of funds.

On March 29, 1988, GARDS wrote Ervine demanding payment in cash of the amount of the check within seven days from notice. The letter was received by Ervine on the same day, but petitioners did not pay within the time given. On April 13, 1988, petitioners issued a check for P19,860.16 to GARDS, drawn on the Associated Bank. The voucher accompanying it stated that the check was to replace the dishonored check, with the P9,860.16 balance being partial payment for Ervine's outstanding account. The check and voucher were received by a GARDS messenger, Nolan C. Pena, on April 15, 1988, but GARDS did not return the dishonored check.

On April 14, 1988, GARDS Operations Manager Jovito C. Cabusara filed a criminal complaint against petitioners for violation of B.P. Blg. 22. After preliminary investigation, an information was filed in the Regional Trial Court of Quezon City, Branch 97. The case was dismissed on May 11, 1989, upon motion of the prosecution, on the ground that Ervine had already paid the amount of the check. On September 18, 1989, GARDS, through Acting Operations Manager Eduardo B. Alindaya, filed another complaint for violation of B.P. Blg. 22. This resulted in the filing of an information against petitioners in the Regional Trial Court of Quezon City, Branch 100. After trial, petitioners were found guilty and each was sentenced to one year imprisonment and to pay a fine of P10,000.00 and the costs.

On appeal, the Court of Appeals affirmed the decision and subsequently denied petitioners' motion for reconsideration. Petitioners then filed the present petition, contending that the prosecution failed to prove their guilt beyond reasonable doubt, that the Court of Appeals based the conviction on the weakness of the defense evidence rather than the strength of the prosecution evidence, and that they should be acquitted on grounds of mistake of fact and lack of knowledge. By supplemental petition dated January 29, 1998, petitioners submitted an affidavit of desistance executed by GARDS president Dominador R. Santiago, which stated that the case arose from a mere accounting difference, that GARDS had not really suffered any damage from the issuance of the check, and that GARDS was no longer interested in prosecuting the case. On May 28, 1998, petitioners filed another supplemental petition invoking Lao vs. Court of Appeals. The Solicitor General opposed the appeal, arguing that the facts of Lao were different and that the affidavit of desistance was of no moment because it was made only after conviction.

At trial, the Court of Appeals found, based on the testimony of a GARDS accountant, that the P19,860.16 check was actually payment for two bills—one for the period January 16 to January 31, 1988 in the amount of P9,930.08, and another for the period March 16 to March 31, 1988 in the same amount—rather than a replacement of the dishonored check. Petitioner Nieto testified that after the check in question was dishonored, he instructed their company accountant to prepare a replacement check.

• Sufficiency of Evidence: Petitioners contended that the prosecution failed to prove their guilt beyond reasonable doubt.
• Weakness of Defense Evidence: Petitioners contended that the Court of Appeals gravely erred in basing conviction on the alleged weakness of the defense evidence rather than on the strength of the prosecution evidence.
• Mistake of Fact and Lack of Knowledge: Petitioners argued that they should be acquitted on grounds of mistake of fact and lack of knowledge.
• Replacement Check and Lao: Petitioners claimed that the P19,860.16 check was intended to replace the dishonored check and, invoking Lao vs. Court of Appeals, argued that they had no knowledge of the insufficiency of funds because the preparation of checks was the responsibility of the company accountant and they merely signed the checks in reliance on the accountant's assurance that funds were sufficient.
• Affidavit of Desistance: By supplemental petition, petitioners submitted the affidavit of desistance of GARDS president Dominador R. Santiago, stating that the case arose from a mere accounting difference, that GARDS suffered no damage, and that it was no longer interested in prosecuting.
• Penalty: Petitioners prayed for dismissal or, in the alternative, modification of the penalty by increasing the fine and deleting imprisonment, citing lack of prior conviction, Vaca's advanced age, their good families, and their belief that the obligation had been paid.

• Lao Inapplicable: The Solicitor General contended that the facts of Lao vs. Court of Appeals are different from those of the case at bar.
• Affidavit of Desistance: The Solicitor General argued that the affidavit of desistance of Dominador Santiago is of no moment because it was made only after petitioners' conviction.

• Sufficiency of Prosecution Evidence: Whether the prosecution proved beyond reasonable doubt the elements of violation of B.P. Blg. 22.
• Knowledge and Lao: Whether petitioners should be acquitted on grounds of mistake of fact and lack of knowledge under Lao vs. Court of Appeals because the company accountant prepared the checks and petitioners merely signed them.
• Affidavit of Desistance: Whether the affidavit of desistance executed by GARDS president after conviction warrants dismissal of the case.
• Penalty: Whether the sentence of imprisonment should be deleted and an increased fine imposed instead.

• Sufficiency of Prosecution Evidence: Yes. The elements of B.P. Blg. 22 were established, and knowledge of insufficient funds is presumed from the dishonor under Section 2.
• Knowledge and Lao: No. Lao is inapplicable; petitioners, as owners and officers who actually signed the check, cannot pretend ignorance, and the replacement check was issued beyond the five-banking-day period.
• Affidavit of Desistance: No. An affidavit of desistance made after conviction does not warrant dismissal; damage to the payee is not an element of the offense.
• Penalty: Yes, in part. The conviction was affirmed, but the sentence of imprisonment was deleted and each petitioner was ordered to pay a fine of P20,000.00, double the amount of the check, within the range allowed by Section 1, paragraph 1 of B.P. Blg. 22.

• Sufficiency of Prosecution Evidence: The offense under B.P. Blg. 22 has three elements: (1) making, drawing, and issuance of any check to apply to account or for value; (2) 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 payment of the check in full upon presentment; and (3) 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 valid cause, ordered the bank to stop payment. The maker's knowledge is presumed from the dishonor of the check for insufficiency of funds. Section 2 of B.P. Blg. 22 provides that the making, drawing, and issuance of a check refused by the drawee because of insufficient funds, when presented within ninety days from the date of the check, is prima facie evidence of knowledge of such insufficiency unless the maker or drawer pays the holder the amount due or makes arrangements for payment in full by the drawee within five banking days after receiving notice that the check has not been paid. Here, after being notified on March 29, 1988 of the dishonor of their previous check, petitioners gave GARDS a check for P19,860.16 on April 13, 1988. Even if that check was intended to replace the bad check, its issuance fifteen days after notice could not negate the presumption that petitioners knew of the insufficiency of funds. The Court of Appeals also found, based on a GARDS accountant's testimony, that the check was actually payment for two bills, but that finding did not alter the conclusion. Thus, the prosecution established the offense.
• Knowledge and Lao: Petitioners relied on Lao vs. Court of Appeals, where the accused was a mere employee made by her employer to countersign checks; she did not have anything to do with the issuance of checks, did not know to whom the checks would be paid, and no notice of dishonor was given to her. Those facts are absent here. Although the company accountant prepared the rubber check, petitioners were the owners and officers of Ervine. Section 1 of B.P. 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. Petitioner Nieto himself testified that after the check in question was dishonored, he instructed their company accountant to prepare a replacement check. This belied their claim that they had no hand in the preparation of checks and showed that they were in control of the company's finances. They could not pretend ignorance of the insufficiency of funds.
• Affidavit of Desistance: The affidavit of desistance of the GARDS president deserved no more than passing mention. The claim that the case was simply the result of a misunderstanding and that GARDS did not really suffer damage was flimsy. After prosecuting the case with tenacity, even filing another complaint after the first was dismissed, it was trifling for complainants to assert that the filing of the case was simply a mistake. For reasons such as this, affidavits of desistance, like retractions, are generally disfavored. The affidavit was made after petitioners' conviction and was a last-minute attempt to save them from punishment. Even if the payee suffered no damage, the damage to the integrity of the banking system could not be denied. Damage to the payee is not an element of the crime under B.P. Blg. 22.
• Penalty: The Court of Appeals dismissed petitioners' allegations concerning lack of prior conviction, Vaca's advanced age, and their family background as irrelevant to the question of guilt. The Supreme Court agreed that these were irrelevant to guilt but held that they could be considered in determining the appropriate penalty. Section 1, paragraph 1 of B.P. Blg. 22 provides a penalty of imprisonment of not less than thirty days but not more than one year or a fine of not less than, but not more than double, the amount of the check, which fine shall in no case exceed P200,000.00, or both such fine and imprisonment at the discretion of the Court. Petitioners were first-time offenders and Filipino entrepreneurs who presumably contribute to the national economy. They apparently brought the appeal believing in good faith, although mistakenly, that they had not violated B.P. Blg. 22; otherwise, they could have accepted the trial court's judgment and applied for probation to evade a prison term. The Court held that it would best serve the ends of criminal justice if, in fixing the penalty within the range allowed by Section 1, paragraph 1, the same philosophy underlying the Indeterminate Sentence Law were observed: redeeming valuable human material and preventing unnecessary deprivation of personal liberty and economic usefulness with due regard to the protection of the social order. A fine equal to double the amount of the check involved was an appropriate penalty for each petitioner.

• Elements of Violation of B.P. Blg. 22 — The offense has three elements: (1) making, drawing, and issuance of any check to apply to account or for value; (2) 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 payment of the check in full upon presentment; and (3) 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 valid cause, ordered the bank to stop payment. The Court applied this test and found all elements established.
• Prima Facie Presumption of Knowledge of Insufficient Funds — Under Section 2 of B.P. Blg. 22, the making, drawing, and issuance of a check refused by the drawee because of insufficient funds, when presented within ninety days from the date of the check, is prima facie evidence of knowledge of such insufficiency unless the maker or drawer pays the holder the amount due or makes arrangements for payment in full by the drawee within five banking days after receiving notice that the check has not been paid. The Court held that the replacement check issued fifteen days after notice did not rebut this presumption.
• Liability of Corporate Signer — Under Section 1 of B.P. Blg. 22, 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 petitioners, who were owners and officers of Ervine and who actually signed the check, notwithstanding that the company accountant prepared it.
• Affidavit of Desistance / Retraction — Affidavits of desistance, like retractions, are generally disfavored, especially when made after conviction; they do not erase the offense. Damage to the payee is not an element of B.P. Blg. 22, and damage to the integrity of the banking system suffices. The Court rejected the post-conviction affidavit of desistance as a last-minute attempt to avoid punishment.
• Penalty and Indeterminate Sentence Law Philosophy — In fixing the penalty within the range allowed by Section 1, paragraph 1 of B.P. Blg. 22, the Court may observe the philosophy underlying the Indeterminate Sentence Law: redeeming valuable human material and preventing unnecessary deprivation of personal liberty and economic usefulness with due regard to the protection of the social order. The Court applied this philosophy to first-time offenders and imposed a fine equal to double the amount of the check.

• "The elements of the offense penalized under B.P. Blg. 22 are: (1) making, drawing, and issuance of any check to apply to account or for value; (2) 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 the check in full upon its presentment; and (3) subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit, or dishonor of the check for the same reason had not the drawer, without any valid cause, ordered the bank to stop paymnent." — This passage states the controlling elements of the offense under B.P. Blg. 22, which the Court applied to affirm the conviction.
• "Sec. 2. Evidence of knowledge of insufficient funds. — The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five (5) banking days after receiving notice that such check has not been paid by the drawee." — This is the statutory presumption of knowledge that the Court found was not rebutted by the replacement check issued fifteen days after notice.
• "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 provision supplied the basis for holding petitioners liable despite their claim that the company accountant prepared the check.
• "It is for reasons such as this the affidavit of desistance, like retractions, are generally disfavored." — This passage explains why the Court rejected the post-conviction affidavit of desistance as a ground for dismissal.

• Lao vs. Court of Appeals, 274 SCRA 572 (1997) — Distinguished. In Lao, the accused was a mere employee who countersigned checks, had no involvement in their issuance, did not know the payees, and received no notice of dishonor; here, petitioners were owners and officers who actually signed the check and had notice of dishonor.
• Navarro vs. Court of Appeals, 234 SCRA 639, 643, 644 (1994) — Cited for the elements of the offense under B.P. Blg. 22.
• People vs. Laggui, 171 SCRA 305, 311 (1989) — Cited for the rule that the maker's knowledge is presumed from the dishonor of the check for insufficiency of funds.
• People vs. Ballabare, 264 SCRA 350 (1996); Molina vs. People, 259 SCRA 138 (1996); People vs. Romero, 224 SCRA 749 (1993) — Cited for the rule that affidavits of desistance and retractions are generally disfavored.
• People vs. Ducosin, 59 Phil. 109, 117 (1933) — Cited for the philosophy underlying the Indeterminate Sentence Law in fixing the penalty.

• B.P. Blg. 22, Section 1, paragraph 1 — Provides the penalty of imprisonment of not less than thirty days but not more than one year or a fine of not less than, but not more than double, the amount of the check, which fine shall in no case exceed P200,000.00, or both such fine and imprisonment at the discretion of the Court. The Court applied this provision by deleting imprisonment and imposing a fine of P20,000.00 on each petitioner, double the P10,000.00 check.
• B.P. Blg. 22, Section 1 — 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 petitioners as the corporate officers who signed the check.
• B.P. Blg. 22, Section 2 — Provides that the making, drawing, and issuance of a check refused by the drawee because of insufficient funds, when presented within ninety days from the date of the check, is prima facie evidence of knowledge of such insufficiency unless the maker or drawer pays the holder the amount due or makes arrangements for payment in full by the drawee within five banking days after receiving notice that the check has not been paid. The Court applied this provision in holding that the replacement check issued fifteen days after notice did not rebut the presumption.

Justices Melo and Puno concurred. Justice Martinez was on leave.