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

Case Summary (G.R. No. 129764)

Applicable Law and Constitutional Framework

The criminal charge was for violation of Section 1 of Batas Pambansa Blg. 22 (Bouncing Checks Law). Because the Supreme Court decision under review was rendered after 1990, the Court applied principles of the 1987 Philippine Constitution, including judicial restraint in deciding constitutional questions only when essential to resolution of the case.

Chronology and Procedural Posture

1985: Phelps Dodge leased premises to Lincoln Gerard. April–May 1986: Two checks were issued by Griffith. May–June 1986: Labor strike, presentation and dishonor of the checks, demand notice, and notarial foreclosure and auction (June 20, 1986). Nov. 6, 1987: Lincoln Gerard filed a civil complaint for damages (Pasig RTC Branch 69). May 10, 1988: Informations for BP 22 filed against Griffith. July 19, 1991: Pasig RTC ruled foreclosure and auction invalid and ordered return/excess computations. July 25, 1995: MeTC convicted Griffith on two counts; RTC affirmed. March 14, 1997: Court of Appeals denied his petition. July 8, 1997: CA denied reconsideration. The petition for review to the Supreme Court was granted for resolution of whether the convictions should stand given the earlier collection of the checks’ value by Phelps Dodge.

Underlying Facts Relevant to Criminal Liability

Lincoln Gerard allegedly incurred rental arrears; Griffith, as president, signed two corporate checks: Check No. 06B-C-075065 (P100,000.00, dated April 15, 1986) and Check No. 06B-C-075066 (P115,442.65, dated May 1, 1986). Each check was accompanied by a voucher containing a condition that the checks not be presented without Lincoln Gerard’s prior approval — with a note (written by a Phelps Dodge officer) that, if no written approval was received before May 30, 1986, Phelps Dodge would present the checks for payment and that decision was “final and irrevocable.” Lincoln Gerard informed Phelps Dodge on May 29, 1986 that the checks could not be funded due to a four-week labor strike. The checks were presented June 2, 1986, dishonored for insufficiency of funds, and Phelps Dodge later proceeded with foreclosure and auction to satisfy the alleged arrears.

Civil Litigation Outcome Bearing on Criminal Proceedings

Lincoln Gerard’s civil action (Pasig RTC, Branch 69) found the notarial foreclosure and auction invalid (July 19, 1991), yet applied the proceeds of the auction against Lincoln Gerard’s arrearages and ordered Phelps Dodge to return P1,072,586.88 as excess. The trial court accounted for amounts already collected and calculated that Lincoln Gerard’s true rental arrearage balance was only P47,953.12 after applying Phelps Dodge’s receipts. The civil judgment was affirmed on appeal and became final and executory.

Criminal Proceedings and Convictions Below

Criminal cases for violation of B.P. 22 were filed in 1988. After various procedural rulings denying motions to quash and reconsider, the cases were tried; on July 25, 1995 the MeTC convicted Griffith on both counts, sentencing him to six months’ imprisonment per count to be served consecutively. The RTC affirmed the MeTC decision. The Court of Appeals denied Griffith’s petition for review on March 14, 1997, and denied reconsideration on July 8, 1997.

Issues Presented to the Supreme Court

The principal issue before the Supreme Court was whether Griffith’s conviction for violation of B.P. 22 should stand in view of the fact that Phelps Dodge had already collected (through the disputed foreclosure and auction) the monetary value of the checks — and, indeed, had collected an amount exceeding the obligations — prior to the filing of the criminal informations. Secondary issues raised (which the Court treated as unnecessary to decide) included (a) whether issuance of a postdated check without present knowledge of insufficiency could support a BP 22 conviction, (b) whether the elements of BP 22 were incorrectly applied contrary to Magno v. Court of Appeals and related jurisprudence, (c) whether criminal liability was barred by subsequent payment, and (d) venue/contentions concerning the number of offenses.

Parties’ Contentions

Petitioner argued good faith (notations on the voucher indicating checks were unfunded), lack of knowledge regarding the postdated check, that criminal punishment would amount to imprisonment for debt, and that the later collection by Phelps Dodge extinguished criminal liability. Phelps Dodge (private respondent) maintained that all elements of BP 22 were present and that collection was voluntary or irrelevant to criminal liability, asserting the payment occurred beyond the statutory five-day cure period. The Office of the Solicitor General argued the vouchers contained an assurance (deemed “final and irrevocable”) that funds would be provided by a certain date, and that BP 22 applies to postdated and non-postdated checks alike where the drawer knew of insufficiency; it further contended that payment or collection after the dishonor does not negate the offense.

Legal Reasoning of the Supreme Court

The Court emphasized the remedial purpose and spirit of BP 22 — to protect banking integrity and legitimate checking-account users — and cautioned against mechanical or purely literal application of penal statutes that would subvert justice. It noted the policy preference expressed in Administrative Circular No. 12-2000 favoring fines over imprisonment in BP 22 cases where appropriate. Critically, the Court observed that Phelps Dodge, by foreclosing and auctioning Lincoln Gerard’s impounded property, had already collected cash amounting to P1,120,540.00 (the auction proceeds), which exceeded the rental claim and the face value of the two checks. The Pasig RTC later declared the foreclosure and sale invalid and ordered that excess funds be returned to Lincoln Gerard, and that ci

Case Syllabus (G.R. No. 129764)

Case Caption, Decision Reference and Vote

Case reported at 428 Phil. 878, Second Division, G.R. No. 129764, decided March 12, 2002.
Petition for review under Rule invoking reversal of the Court of Appeals decision dated March 14, 1997 in CA‑G.R. SP No. 19621 and the Court of Appeals resolution dated July 8, 1997 denying reconsideration.
Final disposition: Petition granted; Court of Appeals decision and resolution reversed and set aside; petitioner Geoffrey F. Griffith acquitted of charges of violation of B.P. 22 in Criminal Cases Nos. 41678 and 41679; costs de officio.
Members of the Court concurring in the judgment as reported: Bellosillo (Chairman), Mendoza, Buena, and De Leon, Jr., JJ.

Factual Background — Lease, Arrears and Issuance of Checks

In 1985 Phelps Dodge Philippines, Inc. leased its lot and factory building to Lincoln Gerard, Inc. for two years at a monthly rental of P75,000.
Lincoln Gerard incurred rental arrearages.
As president of Lincoln Gerard, Geoffrey F. Griffith issued two corporate checks to Phelps Dodge:
- Far East Bank and Trust Co. Check No. 06B‑C‑075065, dated April 15, 1986, for P100,000.00 payable to Phelps Dodge Phils. Inc.
- Far East Bank and Trust Co. Check No. 06B‑C‑075066, dated May 1, 1986, for P115,442.65 payable to Phelps Dodge Phils. Inc.
Vouchers for the checks contained a written condition: the checks were not to be presented without prior approval from Lincoln Gerard to be given not later than May 30, 1986; an additional voucher note (written by a Phelps Dodge officer) stated that if written approval was not given before May 30, 1986, Phelps Dodge would present the checks for payment and “This is final and irrevocable.”
Lincoln Gerard experienced a four‑week labor strike that paralyzed its operations and rendered it unable to fund the checks; on May 29, 1986 Griffith wrote Phelps Dodge requesting that the checks not be presented for payment on May 30, 1986 because they could not be funded.

Factual Background — Actions of Phelps Dodge, Dishonor, Demand and Foreclosure

Prior to presentment, on May 20, 1986 Phelps Dodge, through its treasurer Ricardo R. Manarang, advised Lincoln Gerard that it was transferring the contents of Lincoln Gerard’s warehouse because a new tenant was moving in and that those properties would be placed in Phelps Dodge’s compound and custody.
On June 2, 1986, Phelps Dodge presented the two checks for payment; they were dishonored by the bank for insufficiency of funds.
Three days after dishonor Phelps Dodge sent a demand letter to Lincoln Gerard, apprising Griffith of the dishonor and asking him to fund the checks within the time prescribed by law.
Lincoln Gerard did not fund the checks; Griffith replied explaining Lincoln’s inability to fund them due to the strike.
On June 19, 1986 Phelps Dodge notified Lincoln Gerard that its properties would be foreclosed; Phelps Dodge proceeded with the notarial foreclosure and auction sale on June 20, 1986 despite Lincoln Gerard’s protest.

Civil Case Arising from Foreclosure and Auction; Court Findings as to Proceeds and Balances

Lincoln Gerard filed Civil Case No. 55276 before the RTC of Pasig, Branch 69, on November 6, 1987, seeking damages against Phelps Dodge and the notary who conducted the auction.
On July 19, 1991 the trial court ruled the foreclosure and auction sale invalid but applied the proceeds of the auction toward Lincoln Gerard’s arrearages; it ordered Phelps Dodge to return P1,072,586.88 as excess.
The trial court’s computation: Phelps Dodge had already received P254,600 from the invalid auction sale; that amount was to be applied to rental arrears (total arrears P301,953.12), leaving a balance of rental arrears of P47,953.12. From the total auction value P1,120,540.00 the balance of rental arrears was deducted to yield P1,072,586.88 due to Lincoln Gerard.
The Court of Appeals affirmed the RTC decision in the civil case; that judgment became final and executory.

Criminal Prosecution — Filing, Preliminary Proceedings and Lower Court Convictions

Two informations for violation of B.P. 22 were filed against Griffith on May 10, 1988, docketed as Criminal Cases Nos. 73260 and 73261.
Griffith’s motion for reconsideration was dismissed; his petition for review to the Department of Justice and his motion to quash before the RTC were dismissed; he then filed a petition for certiorari before the Court of Appeals which was denied.
Due to Republic Act No. 7691 expanding Metropolitan Trial Court (MeTC) jurisdiction, the criminal cases were remanded to the MeTC on August 25, 1994.
On July 25, 1995 the MeTC (Criminal Cases Nos. 41678 and 41679) found Griffith guilty on both counts of B.P. 22 and sentenced him to imprisonment for six months on each count, to be served consecutively.
The MeTC explicitly stated the civil aspects had been decided by the RTC Branch 69, Pasig, and that it would not resolve the civil aspect as it was either res judicata or pendente lite.
The RTC affirmed the MeTC decision in its entirety; Griffith appealed to the Court of Appeals.

Court of Appeals Ruling and Denial of Reconsideration

In a consolidated decision dated March 14, 1997 the Court of Appeals denied Griffith’s petition for review and affirmed the convictions (CA‑G.R. SP No. 19621).
Petitioner’s motion for reconsideration before the Court of Appeals was denied in a resolution dated July 8, 1997.

Grounds Advanced in the Petition to the Supreme Court

Petitioner raised multiple grounds for reversal of the Court of Appeals decisions, including:
- Alleged conflict with the doctrine in Magno v. Court of Appeals regarding the element of knowledge under B.P. 22 and the prohibition of convicting by inverse application of that element.
- Alleged unconstitutional application of B.P. 22 provisions (including the argument that conviction would amount to imprisonment for failure to pay a debt).
- Assertion that payment made through the notarial foreclosure and auction extinguished criminal liability.
- Claim that the Court of Appeals’ finding that payment through pre‑criminal notarial foreclosure does not abate criminal liability was erroneous.
- Alleged inconsistency between the Court of Appeals’ decision in this case and its findings in a related certiorari case (CA‑G.R. No. 20980) involving the same parties and transactions.
- Challenge to reliance on Lim v. Court of Appeals on venue to justify finding of two counts of B.P. 22 violations.

Petitioner’s Core Factual and Legal Contentions

Petitioner contended he had written on the voucher that the checks were unfunded at the time of issuance and that this communi