G.R. No. 129764 - Griffith vs. Court of Appeals

Phelps Dodge Philippines, Inc. leased its lot and factory building to Lincoln Gerard, Inc. for a two‐year term at a monthly rental of P75,000.
Lincoln Gerard, Inc. incurred rental arrearages, prompting action from its president, Geoffrey F. Griffith, in his capacity as the corporation’s chief officer.

Far East Bank and Trust Co. Check No. 06B-C-075065, dated April 15, 1986 for P100,000.00.
Far East Bank and Trust Co. Check No. 06B-C-075066, dated May 1, 1986 for P115,442.65.

Each check was accompanied by a voucher containing specific instructions: namely, the checks were not to be presented for payment without written clearance from Lincoln Gerard, Inc. (to be given not later than May 30, 1986), with a note stating that failure to secure clearance would result in the immediate and irrevocable presentation of the check for payment.

On May 29, 1986, Griffith communicated to Phelps Dodge that the checks should not be presented on May 30 because of insufficient funds, attributed to a four-week labor strike that paralyzed Lincoln Gerard’s business operations.
Prior to this, on May 20, 1986, Phelps Dodge, through its treasurer, had advised Lincoln Gerard of its intention to transfer the contents of the leased warehouse due to an incoming new tenant.
On June 2, 1986, with no further clearance from Lincoln Gerard, Phelps Dodge presented the checks, which were dishonored by the bank for insufficient funds.

On June 19, 1986, following the dishonor and subsequent demand letter sent by Phelps Dodge, Lincoln Gerard’s properties were foreclosed and auctioned on June 20, 1986, despite protests from Lincoln Gerard.
A related civil case was subsequently filed by Lincoln Gerard for damages against Phelps Dodge and the notary public overseeing the auction.
The Regional Trial Court ruled the foreclosure and auction as invalid but allowed the proceeds to be set off against Lincoln Gerard’s rental arrearages, ordering Phelps Dodge to return any excess amount.

On May 10, 1988, two criminal informations for violation of the Bouncing Checks Law (Batas Pambansa Blg. 22) were filed against Griffith before the RTC.
Griffith’s motions—including a motion for reconsideration, a petition for review with the Department of Justice, and a motion to quash—were all dismissed at various stages.
Subsequently, the Metropolitan Trial Court (MeTC), in Criminal Cases Nos. 41678 and 41679, found Griffith guilty on two counts and sentenced him to six months imprisonment on each count (to be served consecutively).
The RTC affirmed the convictions in their entirety, and the Court of Appeals subsequently affirmed these decisions on March 14, 1997, with a resolution denying Griffith’s motion for reconsideration on July 8, 1997.

His conditional communication on the voucher negated any intent to issue checks knowing they would be worthless.
The postdated nature of the second check precluded him from having the requisite knowledge of insufficient funds at the time of its issuance.
Criminalizing his conduct would violate the constitutional prohibition against imprisonment for failure to pay a debt.
The subsequent payment realized from the notarial foreclosure and auction sale of Lincoln Gerard’s properties extinguished his criminal liability.

Respondents and the Solicitor General, however, argued that all elements of a B.P. 22 violation were present, emphasizing that the law does not distinguish between postdated and regular checks if issued with knowledge of insufficiency and later dishonored.

Whether the conditional issuance of checks, accompanied by a communication that they were unfunded at the time of issuance, satisfies the element of intent under B.P. 22.
Whether the postdating of a check negates the required element of knowledge regarding the insufficiency of funds.

Whether the foreclosure and auction sale of Lincoln Gerard’s properties—which resulted in collecting an amount exceeding the check’s face value—bars the imposition of criminal liability for issuing a bouncing check.
Whether collecting the payment prior to the filing of criminal informations undermines the punitive purpose of the Bouncing Checks Law.

Whether the Court of Appeals erred in its interpretation of the provisions of B.P. 22 by not considering that the payment collected later neutralizes the offense.
Whether a conviction can be sustained when the debtor has effectively settled the monetary obligation through alternative means.