Lawful exercise of a right

This case answers the oft-asked questions of purchasers of real property on installment basis covered by postdated checks. Because of possible violation of the Bouncing Checks Law, they are at a quandary on suspending payments if the property they bought turns out to be defective.

This is the case of Gerry who bought a townhouse from FRC Realty payable in 48 monthly installments of P9,304. As required by the contract to sell, Gerry issued 48 postdated checks for the said installments and moved in to his unit.

But after moving in, Gerry noticed the defects in the unit and the incomplete features of the townhouse project. So he complained to FRC about them. But FRC ignored his complaint. Thus Gerry was constrained to send two notarial notices to the effect that he was suspending his installment payments on the unit pending compliance with the project plans and specifications as approved by the Housing Land Use and Regulatory Board (HLURB) pursuant to the provisions of Art. 23 of PD 957 on installment purchases of Real Property, subsequently, he filed a complaint with the HLURB joined by 14 other unit buyers.

The HLURB indeed found the incomplete features in the construction and ordered FRC to finish them. But while the case was still pending on the other issue regarding the defects of the unit, and despite the notarial notices, FRC continued to present for encashment Gerry’s postdated checks. So Gerry sent stop payment orders to his bank. When FRC persisted in presenting the other post dated checks as the due date fell, the bank advised Gerry to close his checking account to avoid paying charges every time he made a stop-payment order on the forthcoming checks. At that time Gerry’s account had a balance of P150,000.Due to the closure of Gerry’s checking account, the bank dishonored six postdated checks. Thus FRC filed a complaint against Gerry for violation of Bouncing Checks Law involving said dishonored checks.

After due hearing the lower court convicted Gerry and sentenced him to suffer imprisonment of 30 days for each case of the bouncing checks. The Court of Appeals (CA) sustained this ruling. The CA said that Gerry had no basis to rely on the provision of PD 957, the closure of his checking account and the notices sent by him to FRC that he will stop paying his monthly amortization to justify non-payment of the obligation.

Was the CA correct?

No.

The offense against the Bouncing Checks Law (BP 22) has the following elements: (1) issuance of a check for value; (2) knowledge of the issuer that at the time of issue he does not have sufficient funds in his bank for the payment of his check in full upon its presentation; and (3) subsequent dishonor of the check for insufficient funds or for the same reason had not the drawer ordered the bank to stop payment.

In this case, the second and third elements are not present. As to the second element, there is indeed a presumption that the issuer has knowledge of insufficiency of funds by the mere fact that he issued a check and it was subsequently dishonored. But that presumption cannot hold if there is evidence to the contrary. Here Gerry had shown that he had P150,000 on deposit with the bank at the time of the presentation of the checks by FRC.

Given the findings of the HLURB on the incomplete features in the construction of Gerry’s and other townhouse units bought on installment from FRC, Gerry had a valid cause to order his bank to stop payment. The third element of the violation of the Bouncing Checks Law, the subsequent dishonor of the check without valid cause, has not been established. To rely on the prima facie presumption of knowledge of insufficiency of funds on the part of Gerry would be to misconstrue the import of requirements for conviction under the law. That presumption is unavailing in this case in the presence of a valid cause to stop payment, thereby negating the third element of the crime.

Offenses punished by a special law, like BP22, are not subject to Revised Penal Code, but the Code (RPC) is supplementary to such a law. There is nothing in the text of BP 22 which would prevent the RPC from supplementing it. Following Article 11(5) of RPC which provides that any person who acts in the lawful exercise of a right shall not incur any criminal liability, Gerry’s exercise of a right of the buyer under Article 23 of PD 957 is a valid defense to the charges against him. So Gerry is acquitted (SyCip, Jr. vs. Court of Appeals 328 SCRA 447).

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