Instruments of guarantee, not of fraud

The issuance of a check, whether post dated or not may constitute estafa under Article 315 Section 2(d) of the Revised Penal Code if it is the efficient cause for a person to part with his money or property in favor of the issuer of the check. In other words, a person would not have given his money or property to another were it not for the issuance of the check by the latter. This is illustrated in this case of Mila.

Mila is a businesswoman engaged in selling office supplies, construction materials and signal and communication spare parts to the Armed Forces of the Philippines. In the course of her business she encountered some financial difficulties that compelled her to borrow money to buy supplies for the AFP. For this purpose, she approached Nita the cousin of her husband who used to lend her money previously. Because of her good credit standing, Nita and her spouse Rudy agreed to lend her money.

So on May 12,18, and 25 1994, the spouses Nita and Rudy delivered to Mila the sums of P150,000.00, P309,000.00 and P396,000.00 respectively, or a total amount of P 855,000.00 . The spouses asked Mila to issue checks as guarantees to cover the value and eventual payment of the money given to her. Mila thus gave them five checks postdated thirty or sixty days later.

When the checks were presented for payment on their due dates however, they were all dishonored either for being drawn against insufficient funds or closure of account. Rudy and Nita forthwith sent demand letters to Mila to make good the dishonored checks. Mila tried but was able to pay the spouses only a total of P425,000.00 which she deposited in the spouses bank account.

Nevertheless the spouses still sued Mila for estafa under Art. 315 Sec 2(d) alleging that Mila defrauded and deceived them to part with their money by wilfully, unlawfully and feloniously making and issuing those five checks well knowing that her account with the bank was already closed or had insufficient funds.

Were they correct?

No.

The transaction between Mila and the spouses Rudy and Nita is a loan of money to be used by Mila in her business. Mila issued the checks merely to guarantee payment of the loan. Mila’s obligation is to make good the payment of the money borrowed by her. It is civil in character. No criminal liability under the Revised Penal Code arises from the mere issuance of postdated checks as guarantees of repayment because the element of fraud is absent. The allegation of the spouses regarding the fraud committed by Mila has not been clearly and conclusively established.

To constitute estafa as defined by Article 315 Section 2(d) of the Revised Penal Code, the act of postdating or issuing a check in payment of the obligation must be the efficient cause of the defraudation, and as such it should be either prior to, or simultaneously with the act of fraud. The offender must be able to obtain money or property from the offended party because of the issuance of the check whether postdated or not. In this case, the checks issued by Mila are mere guarantees for the eventual payment of the money given by the spouses. They were not efficient cause why she obtained the money from the spouses.

So Mila is not guilty of estafa. But she must pay the remaining balance of her obligation in the amount of P430,000.00 with 12% interest from the time of demand in accordance with Art. 1169 of the Civil Code. (People vs. Cuyugan, G.R. Nos.146641-43, November 18, 2002)

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