JUANITA NEGRE, PETITIONER-APPELLANT, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT-APPELLEE.

Negre versus People of the Philippines

The Case

This is Negre versus People of the Philippines, a petition for review brought by Juanita Negre against the People of the Philippines, seeking to overturn her conviction for three counts of violating the Bouncing Checks Law, Batas Pambansa Blg. 22. The private complainant, Rafael Marigomen, Jr., was in the business of lending money and rediscounting checks, and he received three Bank of Cebu checks drawn by Negre which were dishonored for the reason "Account Closed." The case matters because it gathers in one decision the entire architecture of a Bouncing Checks Law prosecution: the three elements of the offense, the prima facie presumptions supplied by Sections 2 and 3 of the law, the doctrine of the holder in due course under the Negotiable Instruments Law, and the rule that a first-time offender may be fined rather than imprisoned.

Procedural History

Three Informations were filed against Negre before the Municipal Trial Court in Cities, which convicted her of three counts and found her civilly liable to Rafael for the total face value of the checks. Negre appealed to the Regional Trial Court, Branch 58, Cebu City, questioning her guilt and the penalty of imprisonment. The Regional Trial Court found no reversible error and affirmed the decision in toto. Her motion for reconsideration was denied, so she filed a petition for review under Rule 42 of the Rules of Court before the Supreme Court. The Supreme Court affirmed the conviction but modified the penalty.

Facts

Rafael Marigomen, Jr. lent money and rediscounted checks, and one of his clients was Cresencia Lumayag. Their transactions had gone well until Rafael received from Cresencia three Bank of Cebu checks drawn by Juanita Negre: one for 59,000 pesos dated July 25, 2003, one for 41,500 pesos dated August 8, 2003, and one for 38,000 pesos dated August 10, 2003, for a total of 138,500 pesos. Cresencia told Rafael that Negre had issued the checks for value.

When Rafael deposited the checks after maturity, they were dishonored because the account was closed. He contacted Cresencia and Negre, demanded replacement checks, and both refused. He then sent notices of dishonor, but when the notice was handed to Negre, she refused to receive it. Left without recourse, Rafael filed a complaint, and three Informations were filed against Negre.

At trial, Negre admitted issuing the checks but claimed she issued them to one Perpetua Causin for medicines she bought as stocks for her pharmacy, not to Cresencia or Rafael. She said the checks were stolen after she left them on top of a table in Causin's office, that she did not know Rafael or Cresencia, and that she never received any notice of dishonor. She presented Causin to testify on how the checks were allegedly stolen. The trial court convicted her, and the Regional Trial Court affirmed.

Issues

• Whether or not the Municipal Trial Court erred in reinstating the cases after previously dismissing them for lack of probable cause.
• Whether or not the prosecution proved beyond reasonable doubt all three elements of violation of Batas Pambansa Blg. 22, particularly that the checks were issued for value and that Negre knew of the insufficiency of funds.
• Whether or not the prosecution proved that a written notice of dishonor was actually sent to and received by Negre.
• Whether or not the penalty of imprisonment should be imposed, or whether a fine alone should be imposed instead.

Applicable Provisions

Section 2 of Batas Pambansa Blg. 22 provides:

Section 2. Evidence of knowledge of insufficient funds. The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety days from the date of the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five banking days after receiving notice that such check has not been paid by the drawee.

This provision supplies the presumption of knowledge, which is the second element of the offense, and it is why the notice of dishonor and the five banking day period became decisive in this case.

Section 52 of the Negotiable Instruments Law provides:

Section 52. What constitutes a holder in due course. A holder in due course is a holder who has taken the instrument under the following conditions: (a) That it is complete and regular upon its face; (b) That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (c) That he took it in good faith and for value; (d) That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.

This provision is the basis for treating Rafael as a holder in due course, so that the checks were conclusively presumed delivered to him for value.

Ruling

On the first issue, the Court held that the reinstatement was proper. The initial dismissal rested on the failure to attach the affidavit of Rafael's credit and collection manager, Wilson Bawiga, but that affidavit is evidentiary in nature and is not essential to a finding of probable cause. Probable cause means such facts as are sufficient to engender a well-founded belief that a crime has been committed and that the respondent is probably guilty thereof, and should be held for trial. It does not require an inquiry into whether there is sufficient evidence to procure a conviction.

On the second issue, the Court held that all three elements were proven beyond reasonable doubt. On the first element, Negre's claim that the checks were stolen failed. Rafael was a holder in due course under Section 52 of the Negotiable Instruments Law, so valid delivery to him was conclusively presumed, and any defect in Cresencia's title did not matter because Rafael had no notice of it. The claim of theft was also not sufficiently proven: Causin's testimony was hearsay because she had no personal knowledge of the relevant facts, and Negre presented no evidence that she reported the stolen checks to the bank. On the third element, there was no dispute that the checks were dishonored, and Negre herself admitted causing the closure of her account.

On the third issue, the Court held that the notice of dishonor was actually sent and received. The trial court was satisfied with the candor and integrity of Wilson Bawiga, who testified that he went to Negre on different dates to serve the notices but she refused to acknowledge receipt. The absence of her signature on the exhibits did not defeat the prosecution, because that absence only confirmed his testimony that she refused to receive and sign. Since she failed to make good the checks within five banking days, the presumption of knowledge was established, and her admission that she closed the account confirmed that she knew of the insufficiency of funds.

On the fourth issue, the Court modified the penalty. Pursuant to Supreme Court Administrative Circular No. 12-2000, as clarified by Administrative Circular No. 13-2001, and considering the absence of proof or allegation that Negre was not a first-time offender, the Court held that the interests of justice would be best served if she were simply fined, double the amount of the subject check but not more than 200,000 pesos, instead of being imprisoned, to enable her to settle her civil obligations.

Doctrine

A Bar candidate should retain these rules. First, liability for violation of Batas Pambansa Blg. 22 attaches when the prosecution proves beyond reasonable doubt that the accused made, drew, or issued a check to apply to account or for value; that the accused knew at the time of issuance that there were insufficient funds or credit with the drawee bank for payment in full upon presentment; and that the check was subsequently dishonored for insufficiency of funds or credit, or would have been dishonored for that reason had not the drawer, without any valid reason, ordered the bank to stop payment.

Second, under Section 2 of the law, the making, drawing, and issuance of a check refused by the drawee for insufficient funds, when presented within ninety days from its date, is prima facie evidence of knowledge of the insufficiency, unless the maker or drawer pays the holder the amount due or arranges for payment in full within five banking days after receiving notice that the check has not been paid. Knowledge is a state of mind difficult to prove, so the notice of dishonor and the five banking day period are essential to raise the presumption.

Third, under Section 3 of the law, the introduction in evidence of the unpaid or dishonored check, with the drawee's refusal to pay stamped or written on it or attached to it, is prima facie evidence of the making or issuing of the check, of its due presentment, and of its dishonor for the reason written.

Fourth, under Section 52 of the Negotiable Instruments Law, a holder in due course takes the instrument complete and regular on its face, before it was overdue, without notice of prior dishonor, in good faith and for value, and without notice of any infirmity in the instrument or defect in the title of the person negotiating it. A drawer cannot escape liability by claiming the checks were stolen where the holder is a holder in due course and the claim of theft rests on hearsay.

Fifth, a refusal to receive a notice of dishonor does not defeat the notice; the absence of the accused's signature on the notice confirms the refusal rather than negating service.

Sixth, under Administrative Circular No. 12-2000, as clarified by Administrative Circular No. 13-2001, where the accused is a first-time offender and no proof or allegation shows otherwise, the court may impose a fine alone, double the amount of the check but not more than 200,000 pesos, instead of imprisonment.

Disposition

The Supreme Court affirmed the conviction but modified the penalty: in lieu of imprisonment, Negre was ordered to pay a fine of 200,000 pesos, with subsidiary imprisonment in case of insolvency, and to indemnify Rafael 138,500 pesos, with six percent interest from the filing of the Information until finality, and six percent interest on the total until fully paid.

Remember This

Memorize this line: a drawer who closes her account and refuses the notice of dishonor cannot escape the presumption of knowledge under Section 2 of the Bouncing Checks Law, and a first-time offender may be fined rather than imprisoned. Examiners like to use this case on the elements of Batas Pambansa Blg. 22, the holder in due course rule, the effect of a refused notice of dishonor, and the proper penalty under the administrative circulars.