Case Summary (G.R. No. 217787)
Facts and Background
Sugiyama invested P2,200,000.00 in New Rhia Car Services, Inc. under a Contract Agreement dated April 6, 2001, entitling him to monthly dividends of P90,675.00 for five years. The petitioners issued six checks to cover these dividends; the first three were honored, but the last three bounced due to insufficient funds. Additionally, Socorro obtained a loan of P500,000.00 from Sugiyama under a Memorandum of Agreement dated October 2001, issuing a check for P525,000.00 as a guarantee, which was also dishonored. A formal demand letter for payment was served but went unheeded, prompting Sugiyama to file separate criminal cases for four counts of violation of B.P. 22.
Charges and Trial Court Decisions
The Metropolitan Trial Court (MeTC) convicted both petitioners for four counts of violating B.P. 22, imposing fines totaling P500,000.00 and ordering them to jointly and severally pay Sugiyama the face value of the dishonored checks amounting to P797,025.00, plus 12% interest per annum from April 11, 2002, until full payment. The claim was affirmed by the Regional Trial Court (RTC) and later by the Court of Appeals (CA).
Essential Elements of B.P. 22 Violation
To sustain a conviction under B.P. 22, the prosecution must prove beyond reasonable doubt:
- The making, drawing, or issuance of a check to apply on account or for value.
- Knowledge by the issuer at the time of issuance of insufficient funds or credit in the drawee bank to pay the check in full.
- Subsequent dishonor of the check due to insufficient funds or credit.
Prosecution's Evidence and Findings
The MeTC and CA found that the petitioners issued the four checks as a guarantee and consideration for the loan and dividends owed to Sugiyama. The checks were dishonored upon presentment for insufficient funds ("Drawn Against Insufficient Funds"). The prosecution presented evidence that the demand letter notifying the dishonor was received by Socorro's secretary with Socorro’s implied permission, fulfilling the notice requirement under Section 2 of B.P. 22. Petitioners failed to dispute these facts with credible evidence or evidence of payment or arrangement within five banking days after receipt of the dishonor notice.
On Notice of Dishonor and Knowledge Element
The Court emphasized that receipt of notice of dishonor is crucial in establishing the issuer’s knowledge of insufficient funds. The secretary of Socorro acknowledged receipt of the demand letter with Socorro’s permission, constituting valid notice. Socorro’s mere denial without presenting contradictory evidence, such as testimony of the secretary, was insufficient to rebut the presumption of receipt. Conversely, the prosecution failed to prove notice of dishonor to Marie Paz, as there was no evidence that notice was served upon her or that her secretary received it on her behalf with authorization.
Authority to File Informations and Procedural Issues
A dissenting opinion argued that the Informations were defective for having been filed without prior written authority from the city prosecutor, citing Section 4, Rule 112 of the Revised Rules of Criminal Procedure, which requires such approval to confer jurisdiction. The dissent relied on precedents where lack of authorization constituted a jurisdictional defect requiring dismissal. The majority ruled this objection was waived due to petitioners’ failure to raise it earlier via motion to quash and attributed laches for the delay in asserting this procedural defect. It also found that the 1st Assistant City Prosecutor approved the filing "for the City Prosecutor," and presumption of authority applied. The Court held that procedural defects relating to signature or delegation in filing may be cured by amendment or approval, especially if not timely objected.
Corporate Liability and Personal Liability of Officers
Under B.P. 22, corporate officers who sign and issue dishonored corporate checks are personally liable for criminal and civil liability. Socorro bound herself personally to the payment of dividends and loan obligations via agreements and was found personally liable. The Court stressed that corporate officers can only be civilly liable if convicted criminally for such violations. Moreover, since Marie Paz was acquitted for lack of proof that she received notice of dishonor, she could not be held civilly liable for the dishonored checks. The Court also noted that Socorro was not shown to have been authorized by corporate board resolution or secretary’s certificate to fix dividends, obtain loans, or adopt payment schedules, making her acts arg
...continue reading
Case Syllabus (G.R. No. 217787)
Facts of the Case
- Respondent Kazuhiro Sugiyama entered into a Contract Agreement with New Rhia Car Services, Inc., where petitioners Socorro F. Ongkingco and Marie Paz B. Ongkingco hold officer and director positions.
- Under the agreement, Sugiyama invested P2,200,000.00 in New Rhia Car Services, Inc. and was to receive monthly dividends of P90,675.00 for five years.
- Petitioners issued six checks to cover the monthly dividends: the first three were honored, but the last three bounced due to insufficient funds.
- Petitioners also borrowed P500,000.00 from Sugiyama, agreeing to pay five percent interest for one month under a Memorandum of Agreement; to secure this loan, petitioner Socorro issued a P525,000.00 check which was also dishonored.
- A formal demand letter was sent to petitioner Socorro on March 5, 2002, with no payment made.
- Sugiyama filed criminal charges for four counts of violation of Batas Pambansa Bilang 22 (B.P. 22) for the dishonored checks.
- The accusatory information detailed that petitioners, as officers and authorized signatories of New Rhia Car Services, Inc., issued checks without sufficient funds and failed to pay or make arrangements after notice of dishonor.
- Petitioners pleaded not guilty and later executed an Addendum to Contract Agreement on February 4, 2003, setting a new payment schedule, but the obligation remained unpaid.
Proceedings and Decisions in Lower Courts
- Metropolitan Trial Court (MeTC) found petitioners guilty of four counts of B.P. 22 violations, ordering fines and payment of the face amount of the dishonored checks totaling P797,025.00 plus interest and costs.
- MeTC established elements of the offense: making/issuing checks, dishonor due to insufficient funds, and knowledge of insufficiency through receipt of notice of dishonor.
- MeTC found petitioners admitted issuance of the checks and receipt of demand letter.
- Regional Trial Court (RTC) affirmed the MeTC decision in toto.
- Court of Appeals (CA) denied petitioners' petition for review, affirming the RTC judgment.
- CA held issuance of corporate checks with insufficient funds is punishable under B.P. 22, and corporate officers who signed the checks are liable.
- CA rejected petitioners’ defenses on lack of consideration and non-signatory claims.
- Petitioners raised issues on appeal about the prosecution’s failure to prove receipt of notice of dishonor by Socorro and Marie Paz and defects in the informations due to alleged lack of prior written authority by prosecuting officers.
Issues Presented
- Whether the petitioners were properly held criminally liable for violation of B.P. 22.
- Whether the prosecution proved beyond reasonable doubt that petitioner Socorro received the notice of dishonor.
- Whether petitioner Marie Paz received such notice, hence incurring liability.
- Whether the Informations filed were valid given the alleged lack of prior written authority or approval from the city prosecutor.
- Whether the Addendum to Contract Agreement extinguished petitioners’ obligations arising from the dishonored checks.
Rules and Legal Principles Applied
- Violation of B.P. 22 requires: (1) issuance of a check to apply on account or for value; (2) knowledge by the issuer of insufficient funds at the time of issuance; and (3) dishonor of the check for insufficient funds.
- Section 2 of B.P. 22 creates a prima facie presumption of knowledge upon presentation of dishonored check and receipt of notice of dishonor, unless payment or arrangement is made within five banking days after notice.
- Corporate officers who sign and issue checks on behalf of the corporation may be held criminally and civilly liable.
- Receipt of written notice of dishonor is indispensable for the presumption of knowledge and for due process.
- Under Rules of Criminal Procedure, a complaint or information must be filed only with the prior written authority or approval of the city or provincial prosecutor; failure to do so constitutes a jurisdictional defect.
- The absence of such prior ap