This Supreme Court decision clarifies the importance of proving actual receipt of a notice of dishonor in cases involving violations of Batas Pambansa Bilang 22 (B.P. Blg. 22), also known as the Bouncing Checks Law. While the accused, John Dennis G. Chua, was acquitted due to the prosecution’s failure to prove that he received the notice of dishonor, the court upheld his civil liability for the face value of the dishonored checks. This ruling underscores the necessity for creditors to provide concrete evidence of receipt, not just sending, to secure a conviction under B.P. Blg. 22.

From Loan to Litigation: Did the Notice Reach the Debtor?

The case originated from a loan agreement between Cristina Yao and John Dennis G. Chua, where Yao lent Chua a total of P6 million for his sugar mill business. As payment, Chua issued four checks that were subsequently dishonored due to a closed account. Yao claimed she sent a demand letter, received by Chua’s secretary, but Chua denied receiving it. This dispute led to four counts of B.P. Blg. 22 charges against Chua. The central legal question revolved around whether the prosecution adequately proved all elements of the crime, particularly the accused’s knowledge of insufficient funds, which hinges on the receipt of a notice of dishonor.

The procedural journey of the case involved multiple judges due to various circumstances. Initially, Judge Elvira DC Castro presided over the case, followed by Pairing Judge Marianito C. Santos, then Judge Philip Labastida, and finally, Acting Presiding Judge Mary George T. Cajandab-Caldona. Judge Santos, acting as the pairing judge, ultimately rendered the decision convicting Chua. The Regional Trial Court (RTC) affirmed this conviction, but the Supreme Court took a different view, focusing on a critical element of B.P. Blg. 22 violations: the proof of actual receipt of the notice of dishonor.

The Supreme Court emphasized that to be found liable under B.P. Blg. 22, three elements must concur. These are: the making, drawing, and issuance of a check for account or value; the maker’s knowledge at the time of issue that funds are insufficient for payment upon presentment; and the subsequent dishonor of the check due to insufficient funds or credit, or a stop payment order without valid cause. The core issue in this case centered on the second element: the knowledge of insufficient funds. Given that this element pertains to a state of mind, which is difficult to prove directly, Section 2 of B.P. Blg. 22 establishes a prima facie presumption of such knowledge under specific conditions.

This presumption arises when a check is dishonored for insufficient funds, presented within ninety days of its date, serving as prima facie evidence that the issuer knew of the insufficiency. However, this presumption is contingent on the issuer failing to pay the amount due or arrange for full payment within five banking days after receiving notice of the dishonor. The Supreme Court referenced Yu Oh v. CA to reinforce this point, stating that:

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.

Building on this principle, the Court underscored that the prima facie evidence cannot arise if the notice of non-payment is not sent to the maker or if there is no proof when such notice was received. Without proof of actual receipt, there is no way to determine the start of the crucial five-day period. The Court added that this requirement is crucial because Section 2 provides an opportunity for the drawer to pay the check amount within five banking days from notice of dishonor, thus precluding criminal prosecution.

In this case, the prosecution argued that the demand letter was delivered to Chua’s office and received by his secretary. However, the secretary was not presented as a witness to confirm that the letter was indeed handed to Chua. The Supreme Court emphasized that proving the mere sending of a notice is insufficient; the prosecution must prove actual receipt. Since there was no concrete evidence showing when Chua received the demand letter, the court found that the prosecution failed to sufficiently establish the second element of B.P. Blg. 22 beyond a reasonable doubt.

Therefore, the Supreme Court acquitted Chua of the criminal charges. Even with the acquittal, the Supreme Court addressed the issue of civil liability. The extinction of the penal action does not automatically extinguish the civil action. The Court clarified that the civil liability remains if the acquittal is based on reasonable doubt (where only preponderance of evidence is required), if the court declares that the liability is only civil, or if the civil liability is not based on the crime the accused was acquitted of.

Ultimately, the Supreme Court granted the petition, reversing the lower court’s decisions and acquitting Chua. However, the Court ordered Chua to pay Yao the face value of the checks, amounting to P6,082,000.00, plus legal interest. The interest was set at 12% per annum from the time the sum became due and demandable until June 30, 2013, and 6% per annum from July 1, 2013, until fully paid. This ruling highlights the critical need for creditors to ensure and document actual receipt of dishonor notices to successfully prosecute B.P. Blg. 22 cases, while also clarifying the distinction between criminal and civil liabilities in bouncing check scenarios.

FAQs

What was the key issue in this case?	The key issue was whether the prosecution sufficiently proved that John Dennis G. Chua received the notice of dishonor for the bounced checks, a necessary element to be convicted under B.P. Blg. 22.
What is Batas Pambansa Bilang 22 (B.P. Blg. 22)?	B.P. Blg. 22, also known as the Bouncing Checks Law, penalizes the making or drawing and issuance of a check to apply on account or for value, knowing at the time of issue that there are insufficient funds in the bank for payment.
What does “notice of dishonor” mean?	A notice of dishonor is a notification to the issuer of a check that the check has been refused payment by the bank due to insufficient funds or a closed account.
Why is proving the receipt of the notice of dishonor so important?	Proving receipt is crucial because it triggers the five-day period for the issuer to make good on the check, failing which, a presumption of knowledge of insufficient funds arises, potentially leading to criminal liability.
What evidence did the prosecution present to prove the receipt of notice?	The prosecution presented testimony that the demand letter was delivered to Chua’s office and received by his secretary, but the secretary was not presented to confirm that Chua actually received it.
Why was John Dennis G. Chua acquitted in this case?	Chua was acquitted because the prosecution failed to provide sufficient proof that he actually received the notice of dishonor, which is a critical element for conviction under B.P. Blg. 22.
Was Chua completely free from liability?	No, despite being acquitted of the criminal charges, Chua was still held civilly liable for the face value of the dishonored checks, along with legal interest.
What is the difference between criminal and civil liability in this case?	Criminal liability involves punishment by the state for violating B.P. Blg. 22, while civil liability involves compensating the payee for the amount of the dishonored checks.
What can creditors do to ensure they can prove receipt of a notice of dishonor?	Creditors can use registered mail with return receipt, personal service with acknowledgment, or any method that provides documented proof of actual receipt by the issuer.

This case serves as a reminder that in prosecuting violations of B.P. Blg. 22, proving that the issuer of the check actually received the notice of dishonor is just as critical as proving the issuance and subsequent dishonor of the check. Failure to prove actual receipt can result in acquittal, although civil liability for the debt may still be enforced.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: JOHN DENNIS G. CHUA v. PEOPLE, G.R. No. 195248, November 22, 2017