Ofelia Cheah agreed to clear and encash Filipina Tuazon‘s check for a service fee of 2.5%.
Filipina Tuazon is a friend of Ofelia‘s friend.
The check is a Bank of America check drawn against Bank of America Alhambra Branch in California, USA, with a face amount of $300,000.00, payable to cash. Because Adelina does not have a dollar account in which to deposit the check, she asked Ofelia if she could accommodate Filipina‘s request since she has a joint dollar savings account with her Malaysian husband Cheah Chee Chong (Chee Chong) with PNB Buendia Branch.
Ofelia and Adelina went to PNB Buendia Branch and was informed that the process of clearing the subject check would normally takes 15 days
Ofelia deposited Filipina‘s check. PNB then sent it for clearing through its correspondent bank, Philadelphia National Bank. Five days later, PNB received a credit advice from Philadelphia National Bank that the proceeds of the subject check had been temporarily credited to PNB‘s account
The following day, PNB Buendia Branch, after deducting the bank charges, credited $299,248.37 to the account of the spouses Cheah. Acting on Adelina‘s instruction to withdraw the credited amount, Ofelia that day personally withdrew $180,000.00 Adelina was able to withdraw the
remaining amount the next day after having been authorized by Ofelia. Filipina received all the proceeds.
The Cable Division of PNB Head Office in Escolta, Manila received a SWIFT message from Philadelphia National Bank informing PNB of the return of the subject check for insufficient funds. However, the PNB Head Office could not ascertain to which branch/office it should forward the same for proper action. The message was misrouted.
PNB Buendia Branch learned about the bounced check when it received a debit advice, followed by a letter from Philadelphia National Bank to which the SWIFT message was attached. Informed about the bounced check and upon demand by PNB Buendia Branch to return the money withdrawn, Ofelia immediately contacted Filipina to get the money back. But the latter told her that all the money had already been given to several people who asked for the check‘s encashment.
In their effort to recover the money, spouses Cheah then sought the help of the National Bureau of Investigation. Said agency‘s Anti-Fraud and Action Division was later able to apprehend some of the beneficiaries of the proceeds of the check and recover from them $20,000.00. Criminal charges were then filed against these suspect beneficiaries.
PNB sent a demand letter to spouses Cheah for the return of the amount of the check, froze their peso and dollar deposits in the amounts of P275,166.80 and $893.46, and filed a complaint against them for Sum of Money
Issue:
Who should bear the loss?
Ruling:
PNB‘s act of releasing the proceeds of the check prior to the lapse of the 15-day clearing period was the proximate cause of the loss.
―Proximate cause is ‗that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and without which the result would not have occurred.‘
The payment of the amounts of checks without previously clearing them with the drawee bank especially so where the drawee bank is a foreign bank and the amounts involved were large is contrary to normal or ordinary banking practice.
Clearly, PNB‘s disregard of its preventive and protective measure against the possibility of being victimized by bad checks had brought upon itself the injury of losing a significant amount of money.
It bears stressing that ―the diligence required of banks is more than that of a Roman pater familias or a good father of a family. The highest degree of diligence is expected.‖ PNB miserably failed to do its duty of exercising extraordinary diligence and reasonable business prudence.
The spouses Cheah are guilty of contributory negligence and are bound to share the loss with the bank
Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection.
Ofelia failed to observe caution in giving her full trust in accommodating a complete stranger and this led her and her husband to be swindled. Considering that Filipina was not personally known to her and the amount of the foreign check to be encashed was $300,000.00, a higher degree of care is expected of Ofelia which she, however, failed to exercise under the circumstances. Another circumstance which should have goaded Ofelia to be more circumspect in her dealings was when a bank officer called her up to inform that the Bank of America check has already been cleared way earlier than the 15-day clearing period. The fact that the check was cleared after only eight banking days from the time it was deposited or contrary to what Garin told her that clearing takes 15 days should have already put Ofelia on guard. She should have first verified the regularity of such hasty clearance considering that if something goes wrong with the transaction, it is she and her husband who would be put at risk and not the accommodated party. However, Ofelia chose to ignore the same and instead actively participated in immediately withdrawing the proceeds of the check.
In any case, the complaint against the spouses Cheah could not be dismissed. As PNB‘s client, Ofelia was the one who dealt with PNB and negotiated the check such that its value was credited in her and her husband‘s account. Being the ones in privity with PNB, the spouses Cheah are therefore the persons who should return to PNB the money released to them.
All told, the Court concurs with the findings of the CA that PNB and the spouses Cheah are equally negligent and should therefore equally suffer the loss. The two must both bear the consequences of their mistakes.
Lozano vs Martinez
The bouncing checks law was approved on April 3, 1979. With this, several informations were filed against numerous defendants for violation of the bouncing checks law. During trial, the accused filed a motion to quash the information, arguing that the acts charged imputed against them did not constitute an offense, the statute being unconstitutional.
The trial courts in all of the cases granted the motion and dismissed the case, aside from one (People vs Nitafan) wherein the trial court declared the law unconstitutional. Several parties sought recourse from the SC.
WON BP 22 is constitutional.
(1.) Yes, the BP 22 is constitutional. BP 22 punishes a person who
a. Makes or draws and issues any check on account or for value,
b. The drawer knows at the time of issue that he does not have sufficient funds or credit with the drawee bank for the payment of said check in full upon presentment,
c. The check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment,.
It also punishes ―
a. Any person who, having sufficient funds in or credit with the drawee bank when he draws a check,
b. Shall fail to keep sufficient funds or to maintain a credit to cover the full amount of the check if presented within a period of ninety (90) days from the date appearing thereon,
c. For which reason it is dishonored by the drawee bank.
On of the essential elements that must be proven as a fact for a successful prosecution is that the drawer has knowledge that he does not have sufficient funds in his account with the drawee when he drew the check. The law also creates a presumption of such knowledge if the check is dishonored due to insufficient funds when the check is presented within (90) days form its issuance.
The law is constitutional because it prohibits the issuance of worthless checks which is damaging to the integrity of negotiable instruments as substitute for legal tender. What it punishes is not the non payment of debt of the accused, but the issuance of a bum check.
It partakes the nature of a penal law which does not pertain to crimes against property, but crimes against public order.
Flooding the system with worthless checks is like pouring garbage into the bloodstream of the nation's economy.
The issuance of such checks causes deleterious effects to businesses. By injecting valueless commercial papers in circulation, it can pollute the channels of trade and commerce, injure the banking system and eventually hurt the welfare of society and the public interest.
Recuerdo vs People
Yolanda Floro is engaged in the jewelry business. The latter sold a 3-karat loose diamond stone valued at P420,000 to the petitioner.
To settle the balance, the petitioner issued 9 postdated checks, all drawn against her account at the Prudential Bank.
When Yolanda deposited the checks to the collecting bank, Liberty Savings and Loan Association, only 3 out of the 9 checks were cleared. The remaining 5 were dishonored due to ―closed account‖ of the petitioner.
With this, the complainant sent a demand letter to the petitioner, but was unheeded. She then filed an information against the petitioner for violation of PB 22.
It is argued by the prosecution that the petitioner had knowledge of such insufficiency of funds on account that the check was dishonored when it was presented within (90) days from its issuance (presumption), and that the petitioner, upon receipt of notice of dishonor, failed to settle the amount within (5) banking days after receipt of such notice.
The trial court convicted the petitioner, hence the recourse of the latter with the SC, arguing that the statute is unconstitutional on account that it violates the constitutional prohibition for non imprisonment for debt and is a bill of attainder; the legislature preemptively determined the guilt of the accused.
The latter also argued that the checks that were dishonored were not intended to be presented for encashment on account of her agreement with Yolanda; that she may have the jewelry appraised, and whatever the appraisal is will be the purchase price. Consequently, appraisal was only for P160,000, hence the purchase price was already paid by the checks that were cleared.
WON BP 22 is unconstitutional.
(1.) The law is constitutional. The contention of the petitioners that the parties intended that the checks were not meant to be encashed does not hold water. Though the said checks were not meant for
encashment, the same has the same effect like any other check. BP 22 does not take into consideration the intention of the contracting parties as to the purpose of the check.
(2.) The law will automatically apply when the drawer issues a check, with total disregard to the intention of the latter in the issuance of such, and that the check is subsequently dishonored for insufficient funds.
(3.) In the matter of evidence, the testimony of the employees of the bank to prove that the check was truly dishonored is not necessary. The complainant is a competent witness to prove the essential elements of the crime. Futhermore, the stamp ―dishonored due to insufficient fund/closed account‖ by the bank on the face of the check operates a conclusive proof of such dishonor by the drawee bank.
(4.) It is not a bill of attainder on account that the elements of the crime must still be proved first by the prosecution through evidence. The presumptions under BP 22 are prima facie only and may be proven otherwise by competent evidence.
People vs Nitafan
The accused Lim was charged with the crime under BP 22 for issuing a ―memorandum check on Philippine Trust bank in favor of the complainant Cortez, which was subsequently dishonored by the drawee bank for insufficient funds. The accused failed to settle the obligation within (5) banking days from the receipt of the notice of dishonor.
The accused filed a motion to quash on the ground that what was issued is a ―memorandum check‖ which partakes the nature of a promissory not, not a check; hence such is beyond the ambit of BP 22.
The trial court granted the motion and dismissed the case. The OSG filed the present appeal on certiorari with the SC, arguing in favor of the constitutionality of the statute.
The accused – appealee argued that a ―memorandum check‖ is not a check but a promissory note, but a memorandum of indebtedness or ―a mere promise to pay‖, and such must be sued not in a criminal action, but in a civil action.
WON memorandum checks are covered under BP 22.
(1.) Yes, memorandum checks are covered. A memorandum check is an ordinary check on its face, where the word‖ memorandum‖ or ―memo‖ is written on its face.
A memorandum check, upon presentment, is generally accepted by the bank. Hence it does not matter whether the check issued is in the nature of a memorandum as evidence of indebtedness. What the law punishes is the issuance of a bouncing check with total disregard as to the nature or usage of such.
The mere act of issuing a worthless check whether as a deposit, guarantee, or even as an evidence of a pre-existing debt, is malum prohibitum.
(2.) BP 22 does not take into consideration the intention of the parties as to the purpose, nature or usage of a check. As long as it is dishonored due to insufficient funds and that the drawer knew of such insufficiency during issuance will suffice for the law to apply.
It would frustrate the purpose of BP 22 in limiting the issuance of bum checks if the intention of the parties would be used to escape criminal liability.
People vs Chua
The complainant Tian alleged that sometime in 1988 his sister-in-law, Lim, introduced to him the accused Chua. Chua wanted to borrow money in the amount of P200,000.
The complainant agreed to Chua‘s request and gave her the amount of P230,000 in cash, in consideration of which the accused issued to him six (6) checks .
When the six (6) checks became due, Chua told him not to deposit the same on account that they were not funded. The accused instead replaced them with (4) checks, and endorsed to him (2) checks owned by one Rosario and de Guzman.
Upon presentment, the checks were dishonored by their respective banks for insufficient funds. Tian then sent two letters of demand by registered mail to Chua but both mails were returned by the Post Office as unclaimed. On the other hand, Chua denied knowing Tian and issuing checks to him.
The accused Chua was convicted for the crime of estafa and four counts of violation of BP 22. The accused Chua sough an appeal with the SC.
WON Chua may be convicted of estafa and BP 22.
(1.) The accused must be acquitted for Estafa (315 (2d)) which punishes the drawing of worthless checks issued for the purpose of inducing another to extend a loan to the drawer.
The issuance of the checks by Chua was not the inducing factor which impelled Tian to extend a loan to Chua. The inducement came from the complainant‘s sister, Lim who encouraged the former to extend the loan to Chua. Lim was financially interested in the interest earning loan.
The checks that bounced were replacement checks issued in payment for a pre – existing obligation;
hence such checks could not be considered the means employed by Chua to impel Tian to extend a loan.
(2.) However, Chua is liable under BP 22 for issuing four replacement checks. The law makes the mere act of issuing a worthless check punishable as a special offense. The gravamen of the offense under this law is the act of issuing a worthless check or a check that is dishonored upon its presentment for payment
People vs Cuyugan
The accused Cuyugan was charged with the crime under BP 22 and estafa under art 315 (2d). The complainant Norma Abagat is engaged in the business of supplying construction materials to the Philippine Air Force. He alleged that the accused Cuyugan sought for an extension of a loan for to be used for the purchase of some materials for the Air Force. Worthy to note that Cuyugan is the wife of the cousin of Norma Abagat.
The loan was given by the complainant, and in consideration of which, the accused issued several checks to guarantee the payment of such loan. Upon due presentment of the checks, the drawee bank dishonored such due to insufficient funds.
Despite the receipt of the demand letter by the complainants, the accused failed to settle. The
complainants charged Cuyugan with the aforesaid violations. However, the BP 22 cases were dismissed earlier. After trial, the trial court convicted the accused for the crime of estafa (315 (2d)).
The accused sought recourse from the SC.
WON the accused may be convicted of estafa and BP 22.
(1.) No, the accused may not be convicted of estafa. Estafa under 315 (2d) of the RPC is committed by issuing checks (post dated or not) to serve as an inducement for the extension of a loan. The offender must be able to obtain money or property from the offended party because of the issuance of a check whether postdated or not.
It must be that the accused could not have parted with the money or property of the complainant without the issuance of the said checks.
In the present case, the complainant Abagat extended the loan due to mere liberality towards the accused who is the wife of her cousin, as well as for the purpose of collecting interest. It was not proven beyond reasonable doubt that the loan was extended because of the fraudulent issuance of the said checks.
(2.) The accused however must be convicted under BP 22 for the issuance of worthless checks. In the case at bar however, the she was not accordingly charged with BP 22 on account that the same were earlier dismissed.
It cannot be said that violations under BP 22 is necessarily included in the crime of estafa. The said offenses are distinct and different from each other; estafa is malum in se in which malice must be proven;
BP 22 is malum prohibitum, in which malice need not be proven.
The crimes admit different elements, hence must be prosecuted separately. In the case at bar, what was charged was merely estafa and not BP 22. Hence it is proper that the accused be acquitted and be ordered for release.
Cueme vs People
The accused Cueme was the general manager of Agro Corporation and AMF trading. The complainant was Simolde, a bank teller of BPI. The two harbored a close relationship on account that both of them are from Davao.
Simolde extended several loans in favor of the accused, to which the accused Cueme issued several postdated crossed checks in favor of the latter.
Upon presentment of the said checks, the drawee bank (BPI) dishonored the same due to insufficiency of funds. The demands of the complainant were left unheeded, hence the accused was charged with
Upon presentment of the said checks, the drawee bank (BPI) dishonored the same due to insufficiency of funds. The demands of the complainant were left unheeded, hence the accused was charged with