Haystack: Llamado vs. Court of Appeals (GR 99032, 26 March 1997)

Llamado vs. CA
[G.R. No. 99032. March 26, 1997.]
Second Division, Torres Jr. (J): 4 concurring

Facts: Ricardo Llamado and Jacinto Pascual were the Treasurer and President, respectively, of the Pan Asia Finance Corporation. Leon Gaw delivered to Llamado the amount of P180,000.00, with the assurance of Aida Tan, the secretary of the accused in the corporation, that it will be repaid on 4 November 1983, plus interests thereon at 12% plus a share in the profits of the corporation, if any. Upon delivery of the money, Llamado took it and placed it inside a deposit box. Pascual and Llamado signed Philippine Trust Company Check 047809, postdated 4 November 1983, in the amount of P186,500.00 in the presence of Gaw. The check was issued in payment of the cash money delivered to the accused by Gaw, plus interests thereon for 60 days in the amount of P6,500. On 4 November 1983, Gaw deposited the check in his current account with the Equitable Banking Corporation which later informed the complainant that said check was dishonored by the drawee bank because payment was stopped, and that the check was drawn against insufficient funds. Gaw was also notified by the Equitable Bank that his current account was debited for the amount of P186,500 because of the dishonor of the said check. Gaw returned to Tan to inform her of the dishonor of the check. Tan received the check from Gaw with the assurance that she will have said check changed with cash. However, upon his return to Tan, the latter informed him that she had nothing to do with the check. Thereupon, Gaw went to Llamado on 11 November 1983 to inform him of the dishonor of the check. Llamado offered in writing to pay Gaw a portion of the amount equivalent to 10% thereof on 14 or 15 November 1983, and the balance to be rolled over for a period of 90 days. This offer was accepted by Gaw. Llamado, however, failed to remit to Gaw the 10% on or before 15 November 1983 and to roll over the balance of the money. Gaw then demanded from the accused the payment of P186,500.00 but Llamado failed to pay and instead, Llamado offered to return to gaw only 30% of his money which was refused by the latter.

Thus, Gaw filed a complaint against Llamado for violation of BP 22 with the RTC Manila (Criminal Case 85-38653). Llamado, together with Pascual, was charged with violation of BP 22 and pleaded 'not guilty' of the crime charged. Accused Jacinto Pascual remained at large. Thus trial on the merits was conducted against Llamado only. After trial on the merits, the trial court rendered judgment convicting Llamado of violation of BP 22, sentencing him to to suffer imprisonment for a period of 1 year of prision correccional and to pay a fine of P200,000.00, with subsidiary imprisonment in case of insolvency, and likewise condemned him to reimburse Gaw the amount of P186,500.00 plus the costs of suit.

On appeal, the Court of Appeals affirmed the trial court's decision. Hence, the petition for review.

The Supreme Court denied the petition and affirmed the decision of the appellate court in toto.

1. Dingle vs. IAC does not apply
In Dingle vs. IAC, the petitioner was acquitted because: 1.) from the testimony of the sole prosecution witness, it was established that he dealt exclusively with Paz Dingle's co-signatory; 2.) nowhere in the prosecution witness' testimony was Paz Dingle’s name ever mentioned in connection with the transaction and the issuance of the check; and, 3.) the prosecution witness therein categorically stated that it was Nestor Dingle, Paz Dingle's co-signatory who received his two letters of demand. These lent credence to the testimony of Paz Dingle that she signed the questioned checks in blank together with her husband without any knowledge of its issuance, much less of the transaction and the fact of dishonor. Moreover, while Paz Dingle and her husband Nestor Dingle owned the business, the business was managed by Nestor, Paz's co-signatory. The circumstances in Dingle vs. IAC do not obtain in the present case. Here, Gaw testified that upon delivery of the money, Llamado took it and placed it inside a deposit box; that Pascual and Llamado signed the questioned check, postdated 4 November 1983, in the amount of P186,500.00 in the presence of Gaw; notice of the fact of dishonor of the check was made on Llamado, who offered in writing to pay Gaw a portion of the amount equivalent to 10% thereof on 14 or 15 November 1983, and the balance to be rolled over for a period of 90 days.

2. Statutes creates prima facie presumption that drawer had knowledge of insufficiency of funds
Knowledge involves a state of mind difficult to establish. Thus, the statute itself creates a prima facie presumption, i.e., that the drawer had knowledge of the insufficiency of his funds in or credit with the bank at the time of the issuance and on the check's presentment for payment. In the present case, Llamado failed to rebut the presumption by paying the amount of the check within 5 banking days from notice of the dishonor. His claim that he signed the check in blank which allegedly is common business practice, is hardly a defense. If as he claims, he signed the check in blank, he made himself prone to being charged with violation of BP 22. It became incumbent upon him to prove his defenses. As Treasurer of the corporation who signed the check in his capacity as an officer of the corporation, lack of involvement in the negotiation for the transaction is not a defense.

3. Check actually issued for valuable consideration
It cannot be said that the check was only a contingent payment for investment which had not been proven to be successful, thus the check was not issued "to apply on account or for value" within the contemplation of BP22. The check was issued for an actual valuable consideration of P180,000.00, which Gaw handed to Tan, a secretary in Llamado's office. In fact, petitioner admits that private complainant made an investment in said amount with Pan-Asia Finance Corporation. Llamado contends that the money which Gaw gave the corporation was intended for investment which they agreed will be returned to Gaw with interests, only if the project became successful. But then, if this were true, the check need not have been issued because a receipt and their written agreement would have sufficed.

4. Purpose of BP 22, i.e. to prevent erosion of faith in checks as currency substitutes
It is common practice in commercial transactions to require debtors to issue checks on which creditors must rely as guarantee of payment, or as evidence of indebtedness, if not a mode of payment. But to determine the reason for which checks are issued, or the terms and conditions for their issuance, will greatly erode the faith the public reposes in the stability and commercial value of checks as currency substitutes, and bring about havoc in trade and in banking communities. So, what the law punishes is the issuance of a bouncing check and 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 is malum prohibitum.

5. Novation theory does not apply in the present case
The "novation theory," recognized by the Court in certain cases, does not apply in the present case. While Gaw agreed to Llamado's offer to pay him 10% of the amount of the check on November 14 or 15, 1983 and the balance to be rolled over for 90 days, this turned out to be only an empty promise which effectively delayed Gaw's filing of a case for violation of BP 22 against Llamado and his co-accused.

6. Llamado personally liable for drawing company check
Llamado is personally liable for the amount of the check even if the check was that of the Pan Asia Finance Corporation and that he signed the same in his capacity as Treasurer of the corporation. The third paragraph of Section 1 of BP 22 states "Where the check is drawn by a corporation, company or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under this Act."

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