Case Summary (G.R. No. 114823)
Relevant Dates and Procedural Posture
Criminal information filed: December 15, 1981. Trial court (Regional Trial Court, Branch 43, Bacolod City) convicted petitioner for violation of B.P. Blg. 22. The Court of Appeals affirmed the conviction but modified the dispositive portion to exclude subsidiary imprisonment in case of insolvency. The Supreme Court reviewed the CA decision and rendered the judgment now summarized.
Factual Summary
Petitioner, as sales supervisor, had authority to withdraw goods from Filipro’s warehouse, deliver to dealers/customers, receive payments, and remit collections to Filipro’s depository bank. Filipro’s accounting found questionable delivery orders bearing unusually large quantities signed by petitioner. Anacleto Palisoc investigated and discovered certain dealers (Queensland, Queendies, Cokins) denied receiving the goods. Petitioner then presented three Allied Banking Corporation (ABC) checks, purportedly in payment for those invoices: check nos. 540295881-E (P36,874.00, postdated Sept. 15, 1981), 540295880-E (P130,597.75, postdated Sept. 16, 1981) and 540295899-E (P130,647.75, postdated Oct. 3, 1981). The checks were deposited with Filipro’s depository bank (Security Bank) and, upon presentment to ABC (drawee), were dishonored: the first two for apparent signature discrepancy with bank specimen, and the third for insufficiency of funds.
Evidence at Trial and Petitioner’s Statements
Prosecution witnesses were Palisoc, the ABC cashier, and the NBI document examiner. Petitioner testified in his own defense. He initially denied issuing the first two checks (alleging signature differences), argued that checks were not issued “on account” or “for value” as required by B.P. Blg. 22, and later admitted issuing the third check, claiming it was issued to replace the second check which he insisted he did not issue. Petitioner also asserted that he practiced “credit riding” — allowing certain dealers to use other dealers’ credit lines to facilitate deliveries — and claimed the checks were part of arrangements to hold checks while awaiting payment from actual recipients.
Trial Court and Court of Appeals Findings
The trial court discounted petitioner’s conflicting assertions and found him guilty under B.P. Blg. 22. The Court of Appeals affirmed the conviction, rejecting the defenses presented at trial and the newly-asserted novation theory. The CA modified the penalty portion by removing subsidiary imprisonment for insolvency, reasoning that B.P. Blg. 22, being a special law, did not expressly provide for subsidiary imprisonment.
Issues Raised on Review
Petitioner principally advanced novation as a defense before the Supreme Court (having raised other defenses earlier in trial and on appeal). He argued the issuance of the third check and a partial payment together with a written undertaking constituted novation of the original obligation, thereby extinguishing any criminal liability under B.P. Blg. 22. He also continued to contend (as earlier) that two checks were not his due to signature differences and that the checks were not issued “on account” or “for value.”
Novation: Legal Principles and Application to the Case
The Supreme Court reiterated the settled civil-law requisites for novation: (1) an existing valid obligation; (2) agreement of all parties to the new contract; (3) extinguishment of the old obligation; and (4) validity of the new obligation. Novation cannot be presumed and must be clearly intended by the parties. Importantly, the Court reiterated that novation, when it occurs prior to filing of criminal information, may prevent the rise of criminal liability, but novation is not a mode of extinguishing criminal liability once such liability has already accrued and been filed in court. Applying these principles, the Court found that the requisite proof of extinguishment of the old obligation (the critical third requisite) was lacking: petitioner did not comply with the supposed undertaking, the alleged new agreement never took effect, and the written undertaking was not formally presented in evidence notwithstanding an admission of its existence during trial. Even if there were an attempted agreement, petitioner’s failure to perform rendered it an empty promise insufficient to effect novation. The Court cited analogous jurisprudence (e.g., Llamado) where an accepted offer to pay that proved an empty promise could not avail the accused.
Elements of B.P. Blg. 22 and Presumption of Knowledge
The gravamen of a B.P. Blg. 22 offense is the issuance of a worthless check. Here, petitioner admitted issuing the check which, upon presentment, was not sufficiently funded. Under the law and settled doctrine, the drawer is presumed to have knowledge of the insufficiency of funds in the account when he issues the check; petitioner’s failure to pay within five banking days after notice of dishonor did not rebut that presumption. The change in the mode of payment (i.e., promises or undertakings to pay later) does not alter the substantive obligation nor negate the criminal element where the check was dishonored upon presentment.
Subsidiary Imprisonment Issue and Final Dispositio
Case Syllabus (G.R. No. 114823)
Case Caption, Court and Decision Date
- Reported at 378 Phil. 1090; 97 OG No. 29, 4287 (July 16, 2001).
- Supreme Court Second Division; G.R. No. 114823, December 23, 1999 (decision penned by Mendoza, J.).
- Petition for review of the Court of Appeals decision in CA-G.R. No. 08094 which affirmed conviction for violation of B.P. Blg. 22 (the Bouncing Checks Law) by the Regional Trial Court, Branch 43, Bacolod City.
- Court of Appeals panel in the appealed decision: per Associate Justice Angelina S. Gutierrez, concurred in by Justices Jaime M. Lantin and Bernardo P. Pardo (now Associate Justice of the Supreme Court).
Parties and Roles
- Petitioner: Nilo B. Diongzon — accused and convicted drawer of the checks; former sales supervisor of Filipro, Inc. (now Nestle Philippines, Inc.).
- Private offended party / complainant: Filipro, Inc., represented by Area Sales Manager Anacleto Palisoc.
- Respondents: Court of Appeals and People of the Philippines.
- Trial court: Regional Trial Court, Branch 43, Bacolod City.
Information / Charge (Substantive Allegation)
- Information alleged: Sometime in August 1981 in Bacolod City, with intent to gain and by means of false pretenses or fraudulent acts executed prior to or simultaneously with the fraud, and knowing at time of issue that he did not have deposit or credit with Allied Banking Corporation (ABC), Bacolod Branch, or after such issue failed to keep sufficient funds or maintain credit to cover checks, the accused willfully, unlawfully and feloniously made out, drew, issued and delivered to Filipro, Inc. through its Area Sales Manager Anacleto Palisoc the following three checks in payment of his accountabilities:
- ABC Check No. 540295881-E postdated September 15, 1981 — P 36,874.00 (Exh. A).
- ABC Check No. 540295880-E postdated September 16, 1981 — P130,597.75 (Exh. B).
- ABC Check No. 540295899-E postdated October 3, 1981 — P130,647.75 (Exh. C).
- Total amount charged: P298,119.75.
- Upon presentment within ninety (90) days, checks were dishonored by the drawee bank for reasons that the drawer’s signature differed from specimen on file and/or he had insufficient funds with Allied Banking Corporation, Bacolod Branch.
- Despite notice of dishonor and repeated demands within five (5) banking days after receipt of such notice, the accused refused and failed to redeem or pay the checks, to the damage and prejudice of Filipro, Inc. in amount of P298,119.75.
- Information filed in Bacolod City on 15 December 1981. Act contrary to law.
Facts as Found and Summarized by the Court of Appeals (Trial Facts)
- Petitioner’s employment and duties:
- Sales supervisor of Filipro, authorized to allow withdrawal of Filipro products from its warehouse for delivery to dealers/customers, to receive payment, and to remit payments through Filipro’s depository bank in Bacolod.
- Trigger for investigation:
- Filipro’s accounting department found certain delivery orders signed by the accused questionable due to unusually large and abnormal quantities.
- Anacleto Palisoc, area sales manager, authorized to investigate accused’s withdrawals and remittances; Palisoc traveled to Bacolod and contacted dealers listed in delivery orders.
- Dealers’ responses:
- Dealers named Queensland, Queendies, and Cokins denied receiving the goods listed in the delivery orders signed by petitioner.
- Subsequent events:
- Petitioner approached Rene Garibay (sales representative) and offered to assist collection for outstanding delivery orders.
- Petitioner presented three checks (Exhs. A, B, C) to Garibay the next day in payment of invoices allegedly issued to Queensland, Queendies and Cokins.
- The three checks were deposited with Security Bank and Trust Company (Bacolod Branch), Filipro’s depository bank.
- Upon presentment to the drawee bank, Allied Banking Corporation (Bacolod Branch), the checks were dishonored: first two for apparent signature differences with bank records; the third for insufficiency of funds.
- Confrontation and admissions:
- After dishonor, Palisoc and Garibay conferred with the dealers; Queensland and Queendies denied issuing checks or receiving goods under delivery orders.
- When confronted, petitioner acknowledged responsibility and promised to settle. He admitted issuing the three checks under his account No. 006873 with Allied Banking Corporation.
- Petitioner’s explanation and claimed practice:
- Petitioner explained practice of “credit riding” whereby other dealers were allowed to use existing credit lines of authorized dealers to avail Filipro goods without cash payment.
- He claimed credit riding was unofficially allowed by the company to meet sales targets.
- He claimed goods under Delivery Order No. 793192 with Invoice No. 756445 amounting to P125,971.40 intended for Reboton store were actually delivered to UN Merchandising.
- He claimed he issued his checks for payment of accounts of dealers who received the goods, with the understanding he would hold those checks while awaiting payment by the dealers, to accommodate them.
Trial Evidence and Witnesses
- Prosecution witnesses:
- Anacleto B. Palisoc — Area Sales Manager of Filipro, Inc.
- Linda Nicolas — Cashier of Allied Banking Corporation (ABC).
- Rogelio Azures — Supervising document examiner, National Bureau of Investigation (NBI).
- Defense evidence:
- Petitioner Nilo B. Diongzon testified in his own behalf.
- Documentary evidence and exhibits referenced:
- The three ABC checks bearing numbers and amounts (Exh. A, B, C).
- Alleged written undertaking (existence admitted by prosecution at trial according to the record) — not formally offered in evidence by the prosecution (trial transcript TSN p.47, Sept. 8, 1982).
Petitioner’s Trial Defenses and Trial Court Findings
- Defenses asserted at trial:
- Initially denied issuing the first two checks, arguing the signatures differed from his specimen signature.
- Claimed the three checks were not issued “on account” or “for value” as required under B.P. Blg. 22.
- Later admitted issuing the third check as replacement for the second check (while still denying issuance of the second).
- Trial court assessment:
- Trial court found petitioner’s claims conflicting and evasive, saw through his defenses, and convicted him of violating B.P. Blg. 22.
- Trial court concluded the transaction became a personal undertaking of petitioner when he received goods for delivery but made no delivery either to the credited dealer or the cred