CARAM RESOURCES CORP. AND RAYMUND B. TEJADA, COMPLAINANTS, VS. JUDGE MAXIMO C. CONTRERAS, METC, BRANCH 61, MAKATI, METRO MANILA, RESPONDENT.

In a verified complaint filed on 2 June 1993 by Caram Resources Corporation
(hereinafter CARAM) and Raymund B. Tejada, respondent
Judge Maximo C. Contreras, Presiding Judge of Branch 61 of the Metropolitan
Trial Court (MeTC) of Makati, was charged with gross ignorance of the law and
gross misconduct allegedly committed in relation to Criminal Cases Nos.
142359-142362, which involved the violation of Batas Pambansa Blg. 22, also
known as the Bouncing Checks Law.

The complainants allege that on 4 February 1991, the accused in
the aforesaid cases, Teresita J. Dizon, applied for and obtained a personal
loan from CARAM payable in installments. She issued a promissory note and postdated
Bank of the Philippine Islands (BPI) checks for the installments due and payable
on specified dates. Four of these
checks, dated 31 July 1991, 31 August 1991, 30 September 1991, and 31 October
1991, each for P1,259.00, were dishonored when presented to the bank because
the account against which they were drawn had been closed.

CARAM then charged Dizon with the violation of B.P. Blg. 22 and
in due course the aforesaid criminal cases were filed against her. After joint trial, the MeTC, per the
respondent Judge, handed down a decision^[1]
acquitting Dizon on the ground of reasonable doubt. The court made the following ratiocinations in support of its judgment, which are
quoted in full due to their importance to the resolution of this complaint:

“These cases are classic examples of the principal reason why
there is at present a proliferation of criminal cases for violation of BP
22. It appears that lending and
financing institutions are now imposing as a condition precedent to the
approval and grant of loan applications the issuance of postdated checks by
their borrowers to cover the installment payments due on the loans. While the issue of whether or not BP 22
covers checks dishonored by reason of ‘Account Closed’ or ‘Without Funds’ had
been resolved in the case of Miller vs. CA, et al. 189 SCRA XI and that what
the law sought to penalize is the mere issuance of rubber checks irrespective
of the nature of the obligation to be paid by them and that such act
constitutes malum prohibitum, the factual circumstances of these
four (4) cases cast serious doubts on the applicability of the doctrine in the
Miller case. In fact, its application
to these cases would violate the cardinal rule under our Constitution that no
person shall be imprisoned for failure to pay his debt. Consider the following facts duly
established.

1.      Accused
Teresita J. Dizon is a borrower of the private complainant Caram Resources
Corporation which is a corporation engaged, among others, in the lending
business;

2.      The
accused applied for a loan of P10,000.00 payable within one year (Exhibit
“B”) and she was required to execute a promissory note with two (2)
co-makers for P15,548.00 payable within one year at P1,259.00 a month starting
April 4, 1991;

3.      Under
the promissory note, the monthly installments of P1,259.00 for twelve months
obviously included already interests and charges to the principal otherwise
there would be no reason or explanation
why a loan of P10,000.00 would become more than P15,000.00 upon the execution
of the promissory note;

4.      Before
the approval of this loan, the accused was required as a condition precedent to
open a checking account and to issue at one time in favor of the financing
company all the twelve postdated checks at a face value of P1,259.00 each to
correspond to the twelve months installments under the promissory note;

5.      The
accused opened the account with the BPI Family Bank but because the account was
made without any deposit, the same was closed by the bank also in the same
month it was opened and before the due date of the first postdated check;

6.      When
the first postdated check bounced for the reason ‘Account Closed,’ the accused
verbally informed the financing company that her account was already closed and
consequently, all the twelve postdated checks she had issued would certainly
bounced [sic] upon presentment;

7.      The
first four (4) postdated checks having been dishonored for reason of ‘Account
Closed,’ she replaced them with cash (Exhibits “1”, “2”,
“3” and “4”);

8.     
When she failed to settle the face value of the
succeeding four (4) postdated checks namely: BPI Check No. 55155 dated July 31, 1991, Check No. 55156 dated August
31, 1991, Check No. 55157 dated September 30, 1991 and Check No. 55158 dated
October 31, 1991 (Exhibits “A”, “A-1”, “B”,
“B-1”, “C”, “C-1”, “D”, and “D-1”)
which were dishonored for the same reason of ‘Account Closed’, the instant criminal
charges for violation of BP 22 were instituted;

9.     
During the pendency of these cases the accused paid
P5,000.00 in replacement of the four postdated checks subject matter of the
present charges against her; but the private complainant Caram Resources
Corporation contends that this payment was credited only to interests and
insufficient to settle her account under her promissory note;

10.  The record is
bereft of any showing that the accused was advised orally or in writing by the Caram Resources Corporation that
her payment of P5,000.00 (Exhibit “5”) was only to settle the
interests and insufficient to cover the face value of the four (4) checks in
question;

11.  That only the
first postdated check was returned to the accused by the private complainant
which retained the other postdated checks notwithstanding the payments in
replacement thereof already made by the accused.

It had been held that the gravamen of the offense under BP 22 is
the act of making and issuing a worthless check or a check which is dishonored
upon its presentation for payment. But
the question is, what if the issuance of the worthless checks were without
consideration and made with the consent, encouragement and instigation of the
payee who kept the worthless postdated checks for its own private reason? The court finds that the twelve postdated
checks were issued by the accused without any consideration. These checks were issued at one time and
were merely used as guarantees to insure the monthly collection of the loan
granted to the accused under the promissory note, Exhibit “B”. As a matter of fact, this court believes
that the issuance of the postdated checks did not affect public interest since
the unfunded postdated checks were merely kept on file by the payee to be used
as a Damocles sword over the head of the borrower to insure compliance and
collection of the monthly installments. Under these circumstances, has the accused committed an offense malum
prohibitum? If so, what about
the payee who encouraged, instigated and promoted the act constituting the
gravamen of the offenses? In the case
of Magno vs. Court of Appeals, et al., G.R. 96132, June 26, 1992 it was held
therein, among others:

‘This maneuvering has serious implications especially with respect
to the threat of the penal sanction of the law in issue, as in this case. And, with a willing court system to apply
the full harshness of the special law in question, using the ‘mala prohibita’
doctrine, the noble objective of the law is tainted with materialism and
opportunism in the highest degree.’

‘For all intends and purposes, the law was devised to safeguard the
interests of the banking system and the legitimate public checking account
user. It did not intend to shelter or
favor nor encourage users of the system to enrich themselves through
manipulations and circumvention of the noble purpose and objective of the
law. Least, should it be used also as a
means of jeopardizing honest-to-­goodness transactions with some color of
‘get-rich’ scheme to the prejudice of well-meaning
businessmen who are the pillars of society.’

‘x x x In the instant case, there is no doubt that petitioner’s
four (4) checks were used to collaterized an accommodation, and not to cover
the receipt of an actual ‘account or credit for value’ as this was absent, and
therefore petitioner should not be punished for mere issuance of the checks in
question. Following the aforecited
theory (that criminal law is founded upon… moral disapprobation x x x of
action which are immoral, i.e., which are detrimental (or dangerous) to those
conditions upon which depend the existence and progress of human society. x x x that morality is generally founded and
built upon a certain concurrence in the moral opinions of all x x x). In petitioner’s stead the ‘potential wrongdoer,
whose operation could be a menace to society, should not be glorified by
convicting the petitioner.’

As heretofore stated, the postdated checks issued by the accused
were without any consideration but merely employed as coercive guarantees that
the monthly installments due under the promissory note would be complied with
by the borrower. The payee Caram
Resources Corporation thru its credit and collection officer is aware of the
unfunded account by the accused even before the first postdated check fell
due. When they approved the loan of the
accused after the execution of the promissory note and the issuance of the
twelve postdated checks, Caram Resources Corporation never took any step to
verify whether or not the account opened by the accused was funded. In fact, this court is inclined to believe
that the financing company Caram Resources Corporation was not interested on
whether or not the postdated checks issued by their borrowers were funded or
not. It merely kept the checks on file
to be brought out only on its respective due dates to coerce payment under pain
of criminal charges in case of failure of the borrower to replace them with
cash. It is quite obvious that this law
BP 22 has been used by Caram Resources Corporation contrary to its purpose. It has encouraged their borrowers to commit
unwittingly criminal offenses in their urgent financial need. The financial company had taken undue
advantage of BP 22 to the extent that they had assumed an arbitrary power and
authority to apply whatever payments their borrowers had made to interests,
charges, penalties, etc. other than the principal loans of their
borrowers. As a result, accounting
problems arise between lender and borrower. This is one of the reasons the accused refused to make further payment
on her four postdated checks in question claiming excessive collection on the
part of the financing company. Borrowers, like the accused, who had complied with the issuance of
postdated checks are absolutely helpless to question the application of their
payments. Either they conform or face
criminal charges for violation of BP 22. However, this court refuses to become a tool to this highly anomalous
practice of financing companies to coerce their borrowers to pay according to
their demands under pain of imprisonment if they resist. This court entertains serious doubts that
the accused had committed a criminal offense penalized under BP 22.”

The
dispositive portion of the decision reads as follows:

“WHEREFORE, on ground of reasonable doubt, the court hereby
acquits Teresita J. Dizon in these four (4) criminal cases without prejudice on
the part of the private complainant to institute the proper civil action
regarding the civil liability of the said accused. The cash bond posted for the provisional liberty of said accused
is accordingly cancelled. Without cost.

SO ORDERED.”

The complainants argue
that in view of the respondent’s findings that Dizon had obtained a loan
payable in one year, that as security therefor she had executed a promissory note,
and that her payment of P5,000.00 was in replacement of the subject four
dishonored checks, then there was no basis at all for the respondent’s
conclusion that “the postdated checks issued by the accused were without
any consideration but merely employed as coercive guarantees.” They
further assail the respondent’s declaration that “the factual
circumstances of [the] four (4) cases cast serious doubts on the applicability
of the doctrine in the Miller case,”^[2] and that its application to these cases would
even “violate the cardinal rule under the Constitution that no person
shall be imprisoned for failure to pay his debt.” According to the
complainants, it has long been settled that B.P. Blg. 22 is constitutional; accordingly, if its
constitutionality is still doubtful to the respondent then he has failed to
keep abreast with the rulings of this Court, thus showing his incompetence and
gross ignorance of law.

As further proof of such
incompetence and ignorance of law, the complainants cite the following portions
from the respondent’s decision wherein he indulged in baseless and
general conclusions: (a) “before
the approval of her loan the accused was required as a condition precedent to
open a checking account”; (b) “the accused opened the account with the
BPI Family Bank but because the account was made without any deposit, the same
was closed by the bank also in the same month it was opened but before the due
date of the first postdated check”; (c) there was no showing that
“the accused was advised orally in writing by the Caram Resources
Corporation that the payment of P5,000.00 (Exhibit
“5”) was only to settle the interests and insufficient to
cover the face value of the four (4) checks in question”; (d) “the
issuance of the postdated checks did not affect public interest since the
unfunded postdated checks were merely kept on file by the payee to be used as a
Damocles sword over the head of the borrower to insure compliance and
collection of the monthly installments”; (e) “the Caram Resources
Corporation never took any step to verify whether or not the account opened by
the accused was funded”; and (f) “the court was even inclined to
believe that the financing company Caram Resources Corporation was not
interested on whether or not the postdated checks issued by their borrower were
funded or not.”

The complainants assert that there is no evidence that CARAM
required Dizon to open a checking account with the BPI. No bank would allow the opening of a checking account without any
deposit. They aver that the payment of
P5,000.00 was made during the pendency of the cases in his sala and any
compromise or payment for settlement is tantamount to an admission of
guilt. The subject checks were never
kept on file and were never used as a damocles sword because the demand letter
was in fact sent to the accused requiring her to make good her dishonored
checks and despite her receipt of the letter, she did not avail of the 5-day
period granted her by B.P. Blg. 22 to make good the checks, and it was not the
duty of CARAM to verify whether or not Dizon opened the account or funded it as
such inquiry is even prohibited under R.A. No. 1405, the Secrecy of Bank
Deposits Law.

In his Comment, the respondent defends his decision by contending
that the postdated checks in question were issued without consideration
“for the reason that the loan was covered by the promissory note which
also served as the receipt of consideration”; hence, the “promissory
note is a complete and perfected contract” and since “it constitutes
the law between the parties,” nothing else outside it “may bind the
borrower.” Accordingly, “to require Dizon to issue the postdated
checks to cover the installment payments under the promissory note was highly
anomalous, superfluous and unnecessary,” and the only reason for requiring
the issuance thereof was “to coerce Dizon to pay the amount the Caram
Resources was demanding.” He further avers that he is not biased when he
held that the four criminal cases against the accused are the principal reasons
for the proliferation of criminal cases for the violation of B.P. Blg. 22, for
he took judicial notice of the fact that for the period from January to
September 1993, the MeTC of Makati received 662 criminal cases for violation of
B.P. Blg. 22.

The respondent does not question the constitutionality of B.P.
Blg. 22; in fact, he states, it is “a sound and good law.” What he
detests is the manner employed by CARAM which
took undue advantage of the law contrary to its intention to protect the public
interest.

As to his assailed conclusion that the accused was asked to open
a checking account, he asserts that this was due to the “vagueness of the
testimonial evidence.” And refuting the complainants’ assertion that the
payment by Dizon of P5,000.00 during the pendency of the cases was an admission
of guilt, he asseverates that since the loan was covered by a promissory note,
and the postdated checks were issued without consideration, the partial
settlement of the obligation was not an admission of guilt.

Further, the respondent contends that while the facts in Magno vs. Court of Appeals^[3]
are different, the doctrine it laid down “is relevant and applicable to
the cases in question.”

By way of special defense, the respondent expresses his suspicion
that this administrative complaint “was filed by Caram Resources
Corporation and its credit manager obviously to harass, if not to control, the
undersigned and the other judges of this court who are handling several
criminal cases being filed by complainant Caram Resources for violation of the
bouncing checks against their delinquent borrowers”; and that nothing
supports the claim of Tejada that he was or is the duly authorized
representative of CARAM to institute the four criminal cases and this
complaint.

On 17 January 1994, the complainants filed their Reply to the
Comment.

In the Resolution of 31 January 1994, the parties were required
to inform this Court if they would submit this case for decision on the basis of the pleadings already filed. In their respective manifestations filed on
18 February 1994 and 4 March 1994, the parties informed the Court that they
were submitting this case for decision on the basis of the pleadings already
filed.

It has long been settled that B.P. Blg. 22 is not
unconstitutional or, more specifically, that it does not transgress the
constitutional inhibition against imprisonment for non-payment of debt.

In the Decision of 18 December 1986 in Lozano vs. Martinez and
seven other companion cases,^[4] this
Court explicitly ruled:

“The gravamen of the offense punished by BP 22 is the act of
making and issuing a worthless check or a check that is dishonored upon its
presentation for payment. It is not the
non-payment of an obligation which the law punishes. The law is not intended or designed to coerce a debtor to pay his
debt. The thrust of the law is to
prohibit, under pain of penal sanctions, the making of worthless checks and
putting them in circulation. Because of
its deleterious effects on the public interest, the practice is proscribed by
the law. The law punishes the act not
as an offense against property, but an offense against public order.

Admittedly, the distinction may seem at first blush to appear
elusive and difficult to conceptualize. But precisely in the failure to perceive the vital distinction lies the
error of those who challenge the validity of BP 22.

It may be constitutionally impermissible for the legislature to
penalize a person for non-payment of a debt ex contractu. But certainly it is within the prerogative of
the lawmaking body to proscribe certain acts deemed pernicious and inimical to
public welfare. Acts mala in se are not the only acts which the law can punish. An act may not be considered by society as
inherently wrong, hence, not malum in se, but because of the harm
that it inflicts on the community, it can be outlawed and criminally punished
as malum prohibitum. The
state can do this in the exercise of its police power.

The police power of the state has been described as the ‘most
essential, insistent and illimitable of powers’ which enables it to prohibit
all things hurtful to the comfort, safety and welfare of society. It is a power not emanating from or
conferred by the constitution, but inherent in the state, plenary, ‘suitably
vague and far from precisely defined, rooted in the conception that man in
organizing the state and imposing upon the government limitations to safeguard
constitutional rights did not intend thereby to enable individual citizens or
group of citizens to obstruct unreasonably the enactment of such salutary
measures to ensure communal peace, safety, good order and welfare.’

The enactment of BP 22 is a declaration by the legislature that, as
a matter of public policy, the making and issuance of a worthless check is
deemed a public nuisance to be abated by the imposition of penal
sanctions.”^[5]

This Court further stated that the clear
intent of the legislature was to make the offense malum prohibitum.^[6]
Malice and intent in issuing a worthless check are thus immaterial.^[7]
It is committed by the very fact of its performance,^[8] i.e.,
the mere act of issuing a worthless check.^[9]

In the four criminal cases before him, the prosecution proved and
the accused Dizon admitted that a loan was granted to her and in connection
therewith she executed a promissory note wherein she bound herself to pay the
loan in twelve installments. She then
issued postdated checks to cover the installments as they fall due. The checks were drawn against her current
account with the BPI. She closed her
account in the same month when she obtained the loan so that when the four
checks were presented for payment they were dishonored. The respondent even found that:

“On cross-examination, she testified that… she issued the
four checks in question in payment of this promissory note; that she closed her
checking account also in February because the bookkeeper of the bank to whom
she entrusted the money failed to deposit it on the same date.”^[10]

Clearly, the facts irretrievably brought the accused within the
purview of Section 1 of B.P. Blg. 22, and the respondent was bound by his oath
to apply the law. He was not at liberty
to ignore it.

When the respondent stated in effect that to hold her liable
thereunder “would violate the cardinal rule under the Constitution that no
person shall be imprisoned for failure to pay his debt” and that the
postdated checks were without consideration and were in the nature of
“guarantees to ensure the monthly collection” despite Dizon’s
admission that they were payments for the loan and that she herself closed her
account resulting in the dishonor of the checks upon presentment, the
respondent either exposed his ignorance of the law and the jurisprudence built
thereon or simply ignored or disregarded the above pronouncements of this Court
and chose to make his own.

Canon 18 of the Canons of Judicial Ethics provides that:

“A judge should be
mindful that his duty is the application of the general law to particular
instances, that ours is a government of laws and not of men, and that he violates
his duty as a minister of justice under such a system if he seeks to do what he
may personally consider substantial justice in a particular case and disregards
the general law as he knows it to be binding on him. Such action may have detrimental consequences beyond the
immediate controversy. He should
administer his office with a due regard to the integrity of the system of law
itself, remembering that he is not a depository of arbitrary power, but a judge
under the sanction of law.”

And
considering that by tradition and in our system of judicial administration this
Court has the last word on what the law is, and that its decisions applying or
interpreting the laws or the Constitution form part of the legal system of the
country,^[11] all other courts should take their bearings
from the decisions of this Court,^[12] ever mindful of what this Court said
fifty-seven years ago in People
vs. Vera^[13] that
“[a] becoming modesty of inferior courts demands conscious realization of
the position that they occupy in the interrelation and operation of the
integrated judicial system of the nation.”

In Vivo vs. Cloribel,^[14] this
Court stressed what it said in the 1958 case of People vs. Santos^[15] thus:

“Now, if a Judge of a lower Court feels, in the fulfillment of
his mission of deciding cases, that the application of a doctrine promulgated
by this Superiority is against his way of reasoning, or against his conscience,
he may state his opinion on the matter, but rather than disposing of the case
in accordance with his personal views he must first think that it is his duty
to apply the law as interpreted by the Highest Court of the Land, and that any
deviation from the principle laid down by the latter would unavoidably cause,
as a sequel, unnecessary inconveniences, delays and expenses to the
litigants. And if despite of what is
here said, a Judge, still believes that he cannot follow Our rulings, than he
has no other alternative than to place himself in the position that he could
properly avoid the duty of having to render judgment on the case concerned
(Art. 9, C.C.), and he has only one legal way to do that.”

The case of Magno
v. Court of Appeals^[16] which the respondent cited is inapplicable to
the four cases before him. It was established
in that case that the postdated checks were not in fact drawn or issued
“to apply on account or for value” but to cover a warranty deposit
which the accused therein did not withdraw.

As shown in his
ratiocinations earlier quoted, the respondent could not hide his bias against CARAM, whose business practice he loathes. The expression of his sentiments was uncalled for in the cases against
Teresita Dizon and prejudged CARAM’s
other transactions regardless of
their legality and morality. Such expression
deviates from that norm of conduct which is essential in the fair and impartial
administration of justice.

WHEREFORE, for ignorance of the law
and misconduct, respondent JUDGE MAXIMO C. CONTRERAS is
hereby ordered to pay a fine of
Ten Thousand Pesos (P10,000.00) with
a warning that a repetition of
the same or similar acts will be dealt with more severely by this Court.

SO ORDERED.

Padilla, (Chairman), Bellosillo, Quiason, and Kapunan, JJ., concur.

^[1]
Annex “A” of Complaint; Rollo 26-38.

^[2]
Miller vs. Court of Appeals, G.R. No. 90562 (Resolution), 9 July 1990,
189 SCRA xi.

^[3]
210 SCRA 471 [1992].

^[4]
146 SCRA 323 [1986].

^[5]
Id. at 338-339 (citations omitted).

^[6]
Citing Record of Batasan, vol. 3, P.B. No. 70. See also Que vs. People, 154 SCRA 160 [1987].

^[7]
People vs. Grospe, 157 SCRA 154 [1988].

^[8]
People vs. Manzanilla, 156 SCRA 279 [1987].

^[9]
People vs. Laggui, 171 SCRA 305 [1989].

^[10]
Decision, 5-6.

^[11]
Article 8, Civil Code.

^[12]
Albert vs. Court of First Instance, 23 SCRA 948 [1968].

^[13]
65 Phil. 56, 82 [1937].

^[14]
18 SCRA 713 [1966].

^[15]
56 O.G. 3546; 104 Phil. 551 [1958].

^[16]
Supra at note 3.