Yu Oh vs. Court of Appeals

A conviction under B.P. Blg. 22 cannot stand absent clear proof that the drawer received a notice of dishonor, as such notice is indispensable for the prima facie presumption of knowledge of insufficient funds to arise and for the accused to be afforded the opportunity to pay or make arrangements within five banking days as required by Section 2 of the law.

Petitioner Elvira Yu Oh purchased pieces of jewelry from Solid Gold International Traders, Inc., a company engaged in jewelry trading. Upon her failure to pay the purchase price, Solid Gold filed civil cases for specific performance against her before the RTC of Pasig. The parties eventually entered into a court-approved compromise agreement under which petitioner undertook to issue ninety-nine postdated checks of ₱50,000.00 each. B.P. Blg. 22, the Bouncing Checks Law, took effect on April 24, 1979, penalizing the issuance of checks without sufficient funds. R.A. No. 7691, which expanded the jurisdiction of inferior courts to cover cases punishable by imprisonment not exceeding six years, took effect on June 15, 1994.

Petitioner Elvira Yu Oh purchased pieces of jewelry from Solid Gold International Traders, Inc., a company engaged in jewelry trading. When she failed to pay the purchase price, Solid Gold filed civil cases for specific performance against her before the Regional Trial Court of Pasig. On September 17, 1990, petitioner and Solid Gold, through its general manager Joaquin Novales III, entered into a compromise agreement to settle the civil cases. As approved by the trial court, the agreement required petitioner to issue a total of ninety-nine postdated checks in the amount of ₱50,000.00 each, dated every 15th and 30th of the month starting October 1, 1990, with the balance of over ₱1 million to be paid in lump sum on November 16, 1994, which was also the due date of the 99th and last postdated check.

Pursuant to the compromise agreement, petitioner issued ten checks at ₱50,000.00 each, for a total of ₱500,000.00, drawn against her account at the Equitable Banking Corporation (EBC), Grace Park, Caloocan City Branch. Novales deposited each of the ten checks on their respective due dates with the Far East Bank and Trust Company (FEBTC). However, the checks were dishonored by EBC for the reason "Account Closed," and dishonor slips were issued for each check returned to Novales.

On October 5, 1992, Novales filed ten separate Informations before the RTC of Quezon City, charging petitioner with violation of B.P. Blg. 22. The cases were consolidated and raffled to Branch 99 of the RTC. Upon arraignment, petitioner pleaded not guilty. After trial, the RTC rendered its decision on December 22, 1993, finding petitioner guilty of ten counts of violation of B.P. Blg. 22 and sentencing her to one year imprisonment for each count, or a total of ten years, and ordering her to indemnify complainant in the amount of ₱500,000.00. The RTC predicated its finding of knowledge of insufficient funds on petitioner's admission in her Counter-Affidavit during the preliminary investigation that she had informed Solid Gold that the checks might not be able to cover the amounts stated therein, and on the presumption arising from her failure to pay within five banking days after receiving notice of dishonor.

Petitioner appealed to the Court of Appeals, which affirmed the RTC decision. The appellate court held that petitioner need not be notified of the dishonor because she had already closed her checking account and must have known the checks would bounce. The Supreme Court, however, found that the notices of dishonor presented in court — Exhibits "D-2" through "L-2" and "C-2" — were all sent to the private complainant Solid Gold and not to petitioner. The prosecution witness, Joaquin Novales III, testified that no personal demands were made on petitioner before the filing of the complaints. The trial court itself acknowledged that Novales knew of the non-availability of sufficient funds when petitioner issued the subject checks to him.

• Retroactive Application of R.A. No. 7691: Petitioner argued that the Court of Appeals erred in not giving retroactive effect to R.A. No. 7691 pursuant to Article 22 of the Revised Penal Code, which provides that penal laws shall have retroactive effect insofar as they favor the accused. She contended that R.A. 7691 is a penal law in that it affects jurisdiction, and that each of the ten Informations falls within the exclusive original jurisdiction of the Municipal Trial Court under Section 2 of R.A. 7691.
• Absence of Notice of Dishonor: Petitioner maintained that no notice of dishonor had been given to her as drawer of the dishonored checks, as expressly required under B.P. Blg. 22.
• Strict Construction of Penal Statutes: Petitioner insisted that penal statutes must be strictly construed in favor of the accused, and that the Court of Appeals erred in construing B.P. Blg. 22 to embrace cases of "no funds" or "closed accounts" when the express language penalizes only dishonor for "insufficiency" of funds, which amounts to judicial legislation.
• Postdated Checks as Bills of Exchange: Petitioner argued that a postdated check, not being drawn payable on demand, is technically not a check but an ordinary bill of exchange payable at a fixed date, rendering the obligation civil and not criminal in nature.
• Obiter Dictum in Lozano vs. Martinez: Petitioner claimed that the trial court erroneously cited a portion of Lozano vs. Martinez regarding the broad coverage of B.P. Blg. 22, as the same was mere obiter dictum.

• R.A. No. 7691 is Not a Penal Law: The Solicitor General countered that penal laws are those which define crimes and provide for their punishment, and that R.A. No. 7691, being a law defining the jurisdiction of courts, is substantive in nature and not a penal law. Article 22 of the RPC therefore finds no application.
• Jurisdiction Determined at Filing: The Solicitor General argued that jurisdiction is determined by the law in force at the time of the filing of the complaint, and once acquired, is not affected by subsequent legislative enactments. The RTC was vested with jurisdiction when the cases were filed in October 1992, at which time R.A. No. 7691 was not yet effective.
• Postdated Checks Are Checks: The Solicitor General maintained that a postdated check is still a check and does not become a bill of exchange "payable at a fixed or determinable future time," since it is still paid on demand on the date indicated therein or thereafter.
• Lozano vs. Martinez Doctrine Reiterated: The Solicitor General pointed out that the doctrine in Lozano vs. Martinez was reiterated in People vs. Nitafan, and can no longer be dismissed as mere obiter dictum.
• Notice of Dishonor Dispensable: The Solicitor General contended that notice of dishonor is dispensable because the cause of dishonor was "Account Closed," and petitioner already knew the checks would bounce.

• Retroactive Application of R.A. No. 7691: Whether the Court of Appeals erred in not giving retroactive effect to R.A. No. 7691 in view of Article 22 of the Revised Penal Code.
• Construction of B.P. Blg. 22: Whether the Court of Appeals erred in construing B.P. Blg. 22 to cover postdated checks and "closed accounts."
• Notice of Dishonor: Whether notice of dishonor is dispensable in this case.

• Retroactive Application of R.A. No. 7691: No. R.A. No. 7691 is not a penal law but a substantive law vesting jurisdiction on courts, and Article 22 of the RPC does not apply. Jurisdiction is determined by the law in force at the time of the commencement of the action.
• Construction of B.P. Blg. 22: No. The Court of Appeals did not err. The language of B.P. Blg. 22 is broad enough to cover all kinds of checks, and "closed accounts" fall within the meaning of "does not have sufficient funds in or credit with the drawee bank."
• Notice of Dishonor: No, notice of dishonor is not dispensable. The prosecution failed to prove that petitioner received a notice of dishonor, which is indispensable for the prima facie presumption of knowledge to arise and for the accused to be afforded the opportunity to pay or make arrangements within five banking days.

• Retroactive Application of R.A. No. 7691: A penal law is an act of the legislature that prohibits certain acts and establishes penalties for violations, defining crime, treating of its nature, and providing for its punishment. R.A. No. 7691 does not prohibit certain acts or provide penalties; it merely vests jurisdiction on courts. It is therefore substantive, not penal, and Article 22 of the RPC finds no application. Jurisdiction being a matter of substantive law, the statute in force at the time of the commencement of the action determines the jurisdiction of the court. R.A. No. 7691 was not yet in force when the cases were filed in October 1992; it took effect only during the pendency of the appeal before the Court of Appeals. The retroactive provisions of R.A. No. 7691 apply only to civil cases that have not yet reached the pre-trial stage, as held in People vs. Yolanda Velasco. A law vesting additional jurisdiction in a court cannot be given retroactive effect.
• Construction of B.P. Blg. 22: The gravamen of the offense under B.P. Blg. 22 is the act of making and issuing a worthless check or a check dishonored upon presentment. The law punishes the act as an offense against public order, not against property, because the harmful practice of putting valueless commercial papers in circulation can pollute the channels of trade and commerce, injure the banking system, and hurt the welfare of society. The language of B.P. Blg. 22 is broad enough to cover all kinds of checks, whether present dated or postdated, as held in Lozano vs. Martinez and reiterated in People vs. Nitafan. The principle of ubi lex non distinguit nec nos distinguere debemus applies, as the law does not distinguish but merely provides that any person who makes or draws and issues any check knowing at the time of issue that he does not have sufficient funds shall be punished. The term "closed accounts" is within the meaning of the phrase "does not have sufficient funds in or credit with the drawee bank."
• Notice of Dishonor: Section 2 of B.P. Blg. 22 creates a prima facie presumption of knowledge of insufficient funds, but this presumption arises only after it is proved that the issuer received a notice of dishonor and failed to pay the amount or make arrangements for payment within five banking days from receipt thereof. Without notice of dishonor, there is no way of reckoning the crucial five-day period, and the presumption cannot arise. The notices of dishonor presented in court — Exhibits "D-2" through "L-2" and "C-2" — were all sent to the private complainant Solid Gold, not to petitioner. The prosecution witness, Joaquin Novales III, testified that no personal demands were made on petitioner before the filing of the complaints. Procedural due process demands that a notice of dishonor be actually served on the accused to afford the opportunity to avert prosecution under B.P. Blg. 22. The argument that notice is dispensable because the account was closed has no merit, as the Court has consistently held in cases involving "Account Closed" dishonors that notice of dishonor is essential and omission to prove receipt thereof is fatal to the prosecution. Moreover, the trial court itself acknowledged that Novales knew of the non-availability of sufficient funds when petitioner issued the checks, and the Court has held that there is no violation of B.P. Blg. 22 if the complainant was told by the drawer that he has no sufficient funds.

• Notice of Dishonor as Indispensable for Prima Facie Presumption — Under Section 2 of B.P. Blg. 22, the prima facie presumption of knowledge of insufficient funds arises only after it is proved that the issuer received a notice of dishonor and failed to pay the amount or make arrangements for payment within five banking days from receipt thereof. Absent proof of receipt of such notice, the presumption cannot arise, and the accused is deprived of the opportunity to preclude criminal prosecution. The Court applied this doctrine to acquit petitioner, as all notices of dishonor were sent to the private complainant, not to petitioner, and no personal demands were made on her before the filing of the complaints.

• Jurisdiction Determined by Law in Force at Commencement of Action — Jurisdiction is a matter of substantive law, and the statute in force at the time of the commencement of the action determines the jurisdiction of the court. Once jurisdiction is acquired, it is not affected by subsequent legislative enactments. The Court applied this rule to hold that the RTC properly exercised jurisdiction over the cases, as R.A. No. 7691 was not yet effective when the Informations were filed in October 1992.

• B.P. Blg. 22 Covers All Kinds of Checks and "Closed Accounts" — The language of B.P. Blg. 22 is broad enough to cover all kinds of checks, whether present dated or postdated, and whether issued in payment of pre-existing obligations or given in mutual or simultaneous exchange for value. The term "closed accounts" falls within the meaning of "does not have sufficient funds in or credit with the drawee bank." The gravamen of the offense is the act of making and issuing a worthless check, punished as an offense against public order.

• R.A. No. 7691 is Not a Penal Law — A penal law is one that prohibits certain acts and establishes penalties for violations, defining crime, treating of its nature, and providing for its punishment. R.A. No. 7691, which merely expands the jurisdiction of inferior courts, does not define crimes or provide penalties, and is therefore not a penal law. Article 22 of the RPC, which provides for retroactive effect of penal laws favorable to the accused, does not apply.

• "The presumption or prima facie evidence as provided in this section cannot arise, if such notice of non-payment by the drawee bank is not sent to the maker or drawer, or if there is no proof as to when such notice was received by the drawer, since there would simply be no way of reckoning the crucial 5-day period." — This passage explains why notice of dishonor is indispensable for the prima facie presumption under Section 2 of B.P. Blg. 22, forming the core of the Court's rationale for acquittal.

• "The absence of said notice therefore deprives an accused of an opportunity to preclude criminal prosecution. In other words, procedural due process demands that a notice of dishonor be actually served on petitioner." — This articulates the due process rationale for requiring actual notice of dishonor, establishing that the five-day window to pay or make arrangements is a matter of procedural fairness, not mere formality.

• "The gravamen of the offense punished by B.P. Blg. 22 is the act of making and issuing a worthless check or a check that is dishonored upon its presentation for payment." — This is the canonical formulation of the offense under B.P. Blg. 22, originally from Lozano vs. Martinez and frequently cited in subsequent jurisprudence to define the nature of the violation as an offense against public order.

• "The term 'closed accounts' is within the meaning of the phrase 'does not have sufficient funds in or credit with the drawee bank'." — This defines the scope of B.P. Blg. 22 to include dishonor for "Account Closed," resolving the statutory construction issue and confirming that the law covers all forms of fund insufficiency.

• Lozano vs. Martinez, 146 SCRA 323 (1986) — Controlling precedent establishing that B.P. Blg. 22 covers all kinds of checks, whether present dated or postdated, and that the gravamen of the offense is the issuance of a worthless check as an offense against public order. Followed and applied.
• People vs. Nitafan, 215 SCRA 79 (1992) — Reiterated the doctrine in Lozano vs. Martinez that B.P. Blg. 22 does not distinguish between types of checks, applying the principle of ubi lex non distinguit nec nos distinguere debemus. Followed.
• People vs. Yolanda Velasco, 252 SCRA 135 (1996) — Held that the retroactive provisions of R.A. No. 7691 apply only to civil cases that have not yet reached the pre-trial stage, not to criminal cases pending or decided by the RTC. Followed.
• Cang vs. Court of Appeals, 296 SCRA 128 (1998) — Held that jurisdiction being a matter of substantive law, the statute in force at the time of commencement of the action determines jurisdiction. Followed.
• Danao vs. Court of Appeals, 358 SCRA 450 (2001) — Cited for the elements of violation of B.P. Blg. 22 and the requirement that notice of dishonor must be proved. Followed.
• Ting vs. Court of Appeals, 344 SCRA 551 (2000) — Cited for the proposition that clear proof of notice of dishonor is required and that absence thereof is fatal to the prosecution's cause. Followed.
• Eastern Assurance and Surety Corporation vs. Court of Appeals, 322 SCRA 73 (2000) — Held that there is no violation of B.P. Blg. 22 if the complainant was told by the drawer that he has no sufficient funds. Applied.
• Cueme vs. People, 334 SCRA 795 (2000) — Reiterated that B.P. Blg. 22 was enacted to prevent the proliferation of worthless checks and that offenses thereunder are against public interest. Followed.

• Article 22, Revised Penal Code — Provides that penal laws shall have retroactive effect insofar as they favor the person guilty of a felony. The Court held this provision inapplicable because R.A. No. 7691 is not a penal law, as it does not define crimes or provide penalties.
• Section 1, Batas Pambansa Bilang 22 — Defines the offense of issuing checks without sufficient funds. The Court applied this provision to confirm that "closed accounts" fall within its coverage and that the law applies to all kinds of checks.
• Section 2, Batas Pambansa Bilang 22 — Creates a prima facie presumption of knowledge of insufficient funds upon dishonor, provided the drawer receives notice and fails to pay or make arrangements within five banking days. The Court applied this provision to hold that without proof of receipt of notice of dishonor, the presumption cannot arise, warranting acquittal.
• Section 2, Republic Act No. 7691 — Vests jurisdiction on Metropolitan, Municipal, and Municipal Circuit Trial Courts to try cases punishable by imprisonment of not more than six years. The Court held that this provision is substantive, not penal, and does not apply retroactively to criminal cases pending before the RTC.
• Section 7, Republic Act No. 7691 — Limits the retroactive application of R.A. No. 7691 to pending civil cases that have not reached the pre-trial stage. The Court cited this provision to confirm that the law's retroactive effect does not extend to criminal cases.

Bellosillo, Quisumbing, and Callejo, Sr., JJ., concurred.