G.R. No. 152666 - Tan vs. Philippine Commercial International Bank

Marciano Tan, as the executive vice-president of Master Tours and Travel Corporation (MTT), is the petitioner, while Philippine Commercial International Bank (PCIB) is the respondent.
The dispute arises out of a transaction for the importation of four DAEWOO tourist buses and subsequent criminal charges for violation of Batas Pambansa Blg. 22 (the Bouncing Checks Law).
The controversy involves both criminal liability (for issuing bouncing checks) and issues concerning the fulfillment of contractual payment obligations.

On July 16, 1990, MTT applied for a 360-day Usance Letter of Credit with PCIB valued at US$430,000 (originally computed as “closed to P10 Million Pesos”) for the importation of four tourist buses from Daewoo Corporation.
As a condition for the LC, PCIB and MTT executed a Memorandum of Agreement:

The initial supplier drawing of US$5,700 was to be paid by PCI Leasing and Finance Inc. (PCILF) from MTT’s loan proceeds.
Any subsequent drawings exceeding the initial amount were to be funded through the proceeds from Treasury Bills purchased with post-dated checks issued by MTT.

MTT issued six post-dated checks (five for amounts totaling P3,583,333.33 and one for P716,666.70) corresponding to installments that would cover the LC draws.

The tourist buses arrived in October 1990 and were delivered under Trust Receipt arrangements: PCIB acted as entruster while MTT was the entrustee.
Of the six checks, the first five cleared while the January 1991 check (P716,666.70) was dishonored.
Additionally, PCIB demanded an exchange differential based on a change in the peso-dollar rate (from P23.7884 to US$1 in July 1990 to P28.56 to US$1 in January 1991), amounting to P2,061,331.20.
In response, MTT issued 14 post-dated checks for P198,428.42 each, of which only five were honored (totaling P992,142.10) and nine were later dishonored, giving rise to the nine counts charged.

Following financial difficulties, MTT availed the cancellation clause in the Trust Receipt and surrendered the four buses to PCIB (accepted in mid‑1991 and March 1992).
PCIB, claiming that the obligations remained unsettled, issued a letter on July 9, 1992 demanding payment totaling over P10 million, inclusive of interests and penalty charges.
Petitioner’s counsel replied on July 22, 1992 that the buses had been voluntarily delivered, thereby allegedly extinguishing any financial or contractual liability regarding the subject matter.

In October 1992, PCIB filed a criminal complaint against petitioner before the Makati City Prosecutor’s Office, which culminated in the filing (on April 1, 1993) of nine informations charging petitioner with violation of BP Blg. 22.
The first information (Criminal Case No. 93-2365) alleged that petitioner, as the authorized signatory of MTT, knowingly issued a check without sufficient funds, with subsequent dishonor confirming noncompliance even after notice. Similar allegations were made in the remaining informations.
The Makati Regional Trial Court convicted petitioner on all nine counts, sentencing him to thirty days imprisonment for each count, while dismissing personal civil liability on the ground that the payment obligations related to MTT.
The Court of Appeals subsequently affirmed the RTC’s decision in its March 19, 2002 ruling.

His criminal liability had been effectively extinguished by overpayment and remedial measures (including the surrender of the buses as payment).
There was no contractual basis obligating MTT to pay a foreign exchange rate differential; such an obligation was alleged to have been a “mistake.”
The evidentiary basis for the presumption of “knowledge” under the bouncing checks law was insufficient when remedial actions (partial full payment) had already been taken.

The petition questioned the application of the penal law, arguing that it conflicted with principles of fairness and the strict construction of penal statutes in favor of the accused.

The Supreme Court granted the petition.
It reversed and set aside the Court of Appeals’ decision, acquitting petitioner on all nine counts.
The ruling emphasized that full payment—here effected by the surrender of the buses and various payment arrangements—obliterated the criminal liability under BP Blg. 22, aligning the decision with equitable principles and the strict construction of penal laws.

Whether the prosecution established all the necessary elements under B.P. Blg. 22, namely:

That petitioner, as the drawer of the check, knowingly issued it despite insufficient funds or credit with the drawee bank.
That the check was dishonored due to insufficiency, and petitioner failed to make full payment or adequate arrangements within the prescribed five banking days upon notice of dishonor.

Whether the remedial actions (i.e., the surrender of the buses and subsequent payment arrangements) constituted a full payment that rebutted the prima facie presumption of knowledge of insufficiency, thereby extinguishing criminal liability.

Whether the contractual documents and associated agreements imposed any obligation on MTT to pay an exchange differential due to foreign exchange fluctuations.

Whether demanding the exchange differential and pursuing criminal prosecution after full satisfaction of the check obligations was consistent with principles of fairness and the intended remedial purpose of the law.