Immaterial element

To be liable for violation of the Bouncing Checks Law (B.P. 22), the prosecution must prove that the maker, drawer or issuer of the bad check has knowledge that he does not have sufficient funds in or credit with the drawee bank at the time he issued the check. But if the drawer or issuer of a check tells the payee from the very beginning that he does not have sufficient funds in the drawee bank, must the prosecution still prove such knowledge? And is the drawer or issuer still liable for violation of the Bouncing Checks Law? These are among the questions answered in this case of Gilbert.

Gilbert, a businessman from Tarlac applied for a loan of P500,000 from a rural bank in San Juan (RBS). Since the president of RBS was his kumpare and most of its directors were from Tarlac, his loan was approved and released on the same day he applied for it on November 16, 1989 by the RBS manager and comptroller. Right after he received the proceeds of the loan, he issued an undated Associated Bank Tarlac Branch (AB) Check in the amount of P500,000 payable to RBS. At the time he gave is undated check, he already told the officers of RBS that he did not have sufficient funds in his bank (AB).

When the loan fell due on December 16, 1989, Gilbert personally asked the manager of RBS for a two month extension or up to February 16, 1990 and advised RBS to date his check on said date. His undated AB check was thus dated February 16, 1990. But come February 16, 1990 he again asked for another two months extension or up to April 16, 1990. Yet after the last extension, Gilbert still failed to pay, thus forcing RBS to collect and sent him a formal demand letter on April 25, 1990. Without any action on the demand, RBS finally deposited Gilbert’s AB check for P500,000 on May 25, 1990. Said check was however dishonored by AB with the words "closed account". It turned out that his account in AB was closed on February 2, 1990 yet and his biggest deposit was only P40,000 when he issued the check in November 1989.

After he was duly notified of the dishonor of his check and advised to take the necessary step to settle his obligation, Gilbert still refused to pay. Thus RBS sued him for violation of B.P. 22. Gilbert however contended that he did not violate B.P. 22 because he told the officer of RBS from the very beginning that he did not have sufficient funds in his bank (AB). He said that he was merely enticed by RBS’ comptroller himself to obtain the loan where he received only P200,000 while the Comptroller took P300,000; his check was partly used to collateralized said accommodation in favor of the comptroller. Was Gilbert correct?

No. All the elements of the offense are present: (1) he issued the check to apply for value which is for the loan of P500,000; (2) he knew of the insufficiency of his funds in the drawee bank (AB) when he issued the check as he himself admitted so there was no more need for the prosecution to prove the same. In fact, when he authorized RBS to date his check on February 16, 1990, his checking account was already closed two weeks earlier on February 2, 1990; (3) when the check was deposited for encashment, it was dishonored by AB for reason of "account closed". Despite receipt of notice of dishonor from RBS, he failed to pay his obligation.

Assuming that the payee (RBS) had knowledge that he had insufficient funds at the time he issued the check, such knowledge by the payee is immaterial as deceit is not an essential element of the offense under B.P. 22. The gravamen of the offense is the act of making and issuing a worthless check or a check that is dishonored upon its presentation for payment. It is not the non-payment of the obligation which the law punishes. The law is not intended to coerce the debtor to pay his debt. The law punishes the act not as an offense against property, but an offense against public order because the making of worthless checks and putting them in circulation have deleterious effects on the public interest. Whether Gilbert agreed to give a portion of the proceeds of his loan to the RBS comptroller, such agreement is immaterial to his liability under B.P. 22. To require that the agreement surrounding the issuance of the check be first looked into and thereafter exempt such issuance from B.P. 22 on the basis of such agreement would frustrate the very purpose for which the law was enacted (Rigor vs. People G.R. 144887, November 17, 2004).

Note: In yesterday’s column, a tiny three letter word spelled "not" was inadvertently omitted thus making the title inconsistent with the gist of the article.

The highlighted sentence should have read: "So passing or topping the bar does not serve as an accurate yardstick for measuring how good a lawyer is, or how knowledgeable and skilled he is in law." Please excuse the omission. It’s my fault.

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