DOMINGO DICO, JR., PETITIONER, VS. COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, RESPONDENTS.

Domingo Dico, Junior versus Court of Appeals and People of the Philippines

The Case

This is a criminal case for violations of Batas Pambansa Bilang 22, the Bouncing Checks Law. Domingo Dico, Junior, the drawer of the dishonored checks, stands against Margie Lim Chao, the payee, and the People of the Philippines. Dico was convicted by the Regional Trial Court of Cebu and affirmed by the Court of Appeals, and he came to the Supreme Court insisting that his checks were never meant to be encashed but were issued only as a guarantee of a separate business arrangement. The case matters because it settles a recurring defense in Bouncing Checks Law prosecutions: that a check issued as a deposit or guarantee, and not in actual payment of a debt, escapes the law. The Court says it does not.

Procedural History

Margie Lim Chao filed six cases of violations of Batas Pambansa Bilang 22 against Dico, each with five counts, covering more than twenty four checks dishonored on presentment. Two of those cases, each with five counts, are the subject of this review.

Branch 14 of the Regional Trial Court of Cebu rendered judgment on April 4, 1991, finding Dico guilty beyond reasonable doubt of five counts and sentencing him to four months of imprisonment in each case, or twenty months in all. Branch 16 of the same court also convicted him of five counts, sentencing him to sixty days of imprisonment in each, and awarded no civil liability because the complainant had filed a separate civil action for the amounts of the checks.

The Court of Appeals affirmed the decision of Branch 14 on December 29, 1993, and denied his motion for reconsideration. It likewise affirmed the decision of Branch 16 on April 20, 1995. Dico then came to the Supreme Court through two petitions for review under Rule 45, which the Court consolidated.

Facts

On several occasions in 1986, Margie Lim Chao supplied Domingo Dico, Junior, who owned Paulo Bake Shop, with baking materials such as flour, sugar, salt, cooking oil, and yeast. Each time she delivered, Dico issued postdated checks in her favor as payment. In all, he issued more than twenty four checks.

Before the checks matured, Dico asked Chao to defer depositing or encashing them for about five months because he had no money. She agreed, but so that the checks would not become stale, they changed the dates of all the checks to one common date, August 3, 1987, and Dico signed beside each new date. When Chao deposited the checks about a month after maturity, all five bounced for the reason account closed. Dico refused to redeem them despite demand.

Dico's defense was that he and Chao had entered a joint business venture to supply automotive parts to the National Irrigation Administration in Zamboanga del Sur, that his share of the profits would be set off against his obligations for the flour, and that the redating was for security only. He claimed he did not know the checks would be deposited. The trial courts and the Court of Appeals found that the checks were issued in payment of the baking materials, and that no evidence of any weight showed a set-off or compensation.

Issues

• Whether or not the petitioner is liable for violations of Batas Pambansa Bilang 22 for the dishonored checks.
• Whether or not a check issued merely as a guarantee or deposit, and not in payment of an obligation, falls within the coverage of Batas Pambansa Bilang 22.
• Whether or not the petitioner's reliance on the doctrine of the Magno case exempts him from liability.
• Whether or not the Court may review the factual findings of the Court of Appeals.

Applicable Provisions

Batas Pambansa Bilang 22, as quoted in the decision, provides:

Any person who makes or draws and issues any check to apply for an account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank, which check is subsequently dishonored, shall be punished by imprisonment.

This is the very provision the Court applies, and its words "to apply for an account or for value" frame the whole dispute, because Dico claims his checks were not issued for value but only as a guarantee.

Rule 131, Section 3, paragraph q, of the Revised Rules of Court, cited by the Court, provides:

The thing once proved to exist continues as long as is usual with the nature of the thing.

The Court uses this presumption in reasoning that had the debt been paid, Dico would have redeemed or taken back the checks, yet they remained in the complainant's possession.

Ruling

On the first issue, the Court held Dico liable. As the drawer of the dishonored checks, even if they were intended merely as a guarantee deposit, he is liable under Batas Pambansa Bilang 22. A check issued as evidence of debt, though not intended for encashment, has the same effect as any other check, and when presented for payment the drawee bank normally honors it whether issued in payment of an obligation or as a guaranty. What the law penalizes is the issuance of a bouncing check, and the mere act of issuing an unfunded check is a malum prohibitum, an act wrong in itself regardless of intent.

On the second issue, the Court held that the law makes no distinction. Quoting the Que case:

It is now settled that Batas Pambansa Bilang 22 applies even in cases where dishonored checks are issued merely in the form of a deposit or a guarantee. The enactment in question does not make any distinction as to whether the checks within its contemplation are issued in payment of an obligation or merely to guarantee the said obligation.

And quoting the Nitafan case:

To require that the agreement surrounding the issuance of checks be first looked into and thereafter exempt such issuance from the punitive provisions of Batas Pambansa Bilang 22 on the basis of such agreement or understanding would frustrate the very purpose for which the law was enacted, to stem the proliferation of unfunded checks.

On the third issue, the Court found Dico's reliance on the Magno case misplaced. There, the accused never received the amount involved, and to charge him for the refund of a warranty deposit he did not withdraw would make him pay an unjust debt. Here, Dico issued the checks to cover an actual account or for value, namely the flour and baking materials he purchased.

On the fourth issue, the Court held that the questions raised are primarily factual, and its jurisdiction over cases elevated from the Court of Appeals is confined to errors of law, the factual findings of that court being conclusive absent a showing that they are entirely devoid of substantiation on record.

Doctrine

A Bar candidate should retain these rules. First, Batas Pambansa Bilang 22 applies even where the dishonored check was issued merely as a deposit or a guarantee, because the law makes no distinction between a check issued in payment of an obligation and one issued to guarantee it. Second, the mere act of issuing an unfunded check is a malum prohibitum, and the private understanding surrounding its issuance cannot exempt the drawer from the penal sanction. Third, a check issued as evidence of debt, though not intended for encashment, has the same effect as any other check. Fourth, the factual findings of the Court of Appeals are conclusive on the Supreme Court absent a showing that they are devoid of substantiation.

Disposition

The petition was dismissed and the decision of the Court of Appeals finding the petitioner guilty of violations of Batas Pambansa Bilang 22 was affirmed, with no pronouncement as to costs.

Remember This

Memorize this line: the law penalizes the mere issuance of a bouncing check, and it does not distinguish whether the check was issued in payment of an obligation or merely as a guarantee. Examiners use this case to test the guarantee defense and the malum prohibitum character of Batas Pambansa Bilang 22.