Act, not intention

If a check is drawn against uncollected deposit, not against insufficient funds, is the drawer liable for violation of B.P. 22 or the Bouncing Checks Law? Is the penalty of imprisonment no longer imposable in each and every case of violation of said law? If imprisonment is not imposed how much should be the fine imposed? These are the questions raised in this case of Franco.

Franco issued five checks in favor of a fertilizer company in the amount of P58,500, P27,000, P52,200.00, P340,000 and P 372,000. Of the five checks he issued he was only able to replace the P58,500.00 and P27,000 checks with cash before it was presented for payment. But he was still charged with violation of the Bouncing Checks Law for all the five checks including the two checks already paid because the company nevertheless presented all the checks for encashment and all of them were dishonored.

So, as his defense, Franco contended that he cannot be held liable for the two checks which he already paid. With respect to the check in the amount of P52,200, Franco said he could not be liable for violation of the bouncing checks law because it was dishonored for being drawn against uncollected deposit and not for being drawn against insufficient funds. As to the checks in the amount of P372,000 and P 340,000, Franco also contended that he is not liable even if they were dishonored for being drawn against insufficient funds because he issued them only as advance payment to the company after reconciliation of their books of account. So, Franco argued that the company had no right to encash said checks as they were not issued for account or for value.

The lower court however still convicted him of having violated the Bouncing Checks Law and sentenced him to imprisonment of one year for each case and to indemnify the Company, the total amount of P844,500. The Court of Appeals (CA), on appeal, however modified the judgment of the lower court by deleting the penalty of imprisonment and instead imposed on Franco a fine of P1,700,600 which is double the value of the five checks.

Was the lower court and the CA correct?

They are partly correct. With respect to the two checks in the amount of P58,500 and P27,000 which Franco had already paid, he cannot be held liable any more because he had already paid them. While the gravamen of violation of B.P. 22 is the issuance of worthless checks that are dishonored upon their presentment for payment, this penal law should not be applied mechanically. When the reason for the law ceases the law ceases. It is not the letter alone but the spirit of the law also that gives it life. Holding Franco liable for a criminal offense under B.P. 22 after he has paid the two checks in question is no longer tenable nor justified by law or equitable considerations. It would not serve the ends of justice but in fact subvert it.

With respect to the check in the amount of P52,200 Franco is liable even if it is dishonored for being drawn against uncollected deposit because even with uncollected deposits, the bank may either honor the check at its discretion in favor of clients in which case there would be no violation of the Bouncing Checks law; or dishonor it in which case the drawer could be held liable for violation of said law.

As to the two checks for P 340,000 and P 372,000, Franco is also liable. What the law punishes is the issuance of the bouncing check not the purpose for which it was issued nor the terms and conditions relating to its issuance. The mere act of issuing a worthless check knowing the inadequacy of his funds in the bank makes him liable under B.P. 22.

In imposing only a fine instead of the penalty of imprisonment, the CA failed to explain its basis. Administrative Circular 12-2000 does not authorize the non-imposition of imprisonment in every case of B.P. 22. The clear tenor of said circular is not to remove imprisonment as an alternative penalty, but to lay down a rule of preference in the application of the penalties provided for in B.P. 22 such that where the circumstances of both the offense and the offender clearly indicate good faith or a clear mistake of fact without taint of negligence, the imposition of fine alone should be considered as the more appropriate penalty. And the determination of these circumstances rests solely with the judge (Adm. Circular 13-2001).

Nevertheless the CA is justified in only relying on Ad. Circ. 12-2000 and imposing a fine instead of imprisonment because it rendered the decision at the time when Adm. Circ.13-2001 was not yet issued. But the CA erred in fixing the amount of fine. While B.P. 22 explicitly provides that its violation shall be punished by a fine of not less than but not more than the amount of the check, such fine shall in no case exceed P200,000.00. Hence Franco should be sentenced to pay a fine of P104,400 for the bouncing check of P52,200 and P200,000 each for the bouncing checks of P340,000.00 and P372,000, with subsidiary imprisonment in case of insolvency in accordance with Article 39 of the Revised Penal Code (Abarquez vs. Court of Appeals G.R. 148557 Aug. 7, 2003).

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