In San Miguel Corporation v. Bartolome Puzon, Jr., the Supreme Court ruled that taking a postdated check does not constitute theft if the check was issued merely as security for a debt and not as payment. This means that ownership of the check remains with the issuer until it is actually used to settle the obligation. The decision underscores the importance of establishing ownership as an essential element in theft cases and clarifies the limited role of postdated checks as security rather than a direct form of payment.

Security or Payment? Unpacking the Case of the Purloined Postdated Check

The case revolves around Bartolome Puzon, Jr., a beer dealer for San Miguel Corporation (SMC). Puzon purchased SMC products on credit and, as a standard business practice, issued postdated checks to SMC as security. On December 31, 2000, Puzon acquired products worth P11,820,327 and issued two Bank of the Philippine Islands (BPI) checks to cover the transaction. Later, during a reconciliation meeting, Puzon allegedly took BPI Check No. 27903, leading SMC to file a theft complaint against him when he ignored their demand for its return. The central question is whether the postdated check was payment, transferring ownership to SMC, or merely security, leaving ownership with Puzon.

The investigating prosecutor and the Department of Justice (DOJ) both dismissed the theft complaint, concluding that the relationship between SMC and Puzon was that of a creditor and debtor, and the issue revolved around reconciliation of accounts and unpaid beer empties, not theft. The Court of Appeals (CA) affirmed this decision, emphasizing that the checks were issued as security and SMC was obligated to return them once the transactions were settled. SMC then elevated the case to the Supreme Court, arguing that Puzon had stolen the checks and that these checks were issued as payment, not merely as security. The High Court ultimately sided with Puzon, clarifying the nuanced distinction between a check issued as payment versus one provided as security.

The Supreme Court began by addressing the procedural issues raised by SMC, noting that many of the arguments presented involved questions of fact, which are generally beyond the scope of a petition for certiorari. This type of petition is typically limited to questions of law, not factual disputes. The Court emphasized that determining whether Puzon stole the check or whether the checks were issued as payment are factual questions best resolved in a trial court. The Court also noted that the central legal issue here concerns grave abuse of discretion and the existence of probable cause for theft, which can be resolved without delving into unnecessary constitutional matters.

The Court then turned to the critical element of probable cause in theft cases. According to established jurisprudence, probable cause is defined as:

such facts and circumstances that will 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.

The Court cited Reyes v. Pearlbank Securities, Inc., which comprehensively elaborates on the determination of probable cause, emphasizing the discretion of prosecuting officers. The determination of whether probable cause exists rests primarily with the prosecuting officers, whose decisions are typically not subject to judicial review unless there is a clear showing of grave abuse of discretion. The Supreme Court reiterated its policy of non-interference in preliminary investigations, granting the Department of Justice (DOJ) considerable latitude in determining whether sufficient evidence exists to establish probable cause.

To properly evaluate the theft charge, the Supreme Court revisited the essential elements of theft as defined in the Revised Penal Code, which states:

Art. 308. Who are liable for theft. – Theft is committed by any person who, with intent to gain but without violence against, or intimidation of persons nor force upon things, shall take personal property of another without the latter’s consent.

The key elements of theft include (1) taking personal property, (2) the property belonging to another, (3) taking with intent to gain, (4) taking without the owner’s consent, and (5) accomplishing the taking without violence or intimidation. Given these elements, the critical question in this case was whether the subject check truly belonged to SMC. This hinges on whether ownership of the check had been transferred.

The Court then turned to the Negotiable Instruments Law, which addresses the issue of postdated instruments:

Sec. 12. Antedated and postdated – The instrument is not invalid for the reason only that it is antedated or postdated, provided this is not done for an illegal or fraudulent purpose. The person to whom an instrument so dated is delivered acquires the title thereto as of the date of delivery.

However, the Court clarified that delivery, as used in this provision, means that the party delivering the instrument does so with the intention of giving effect to it. Without this intent, there is no effective delivery, and ownership does not transfer. If Puzon gave the check to SMC as payment, title would have transferred upon delivery. But if the check was not intended as payment, SMC never acquired ownership. Evidence presented by SMC failed to conclusively establish that the check was given in payment. SMC issued a “POSTDATED CHECK SLIP,” not a provisional or official receipt, suggesting that the check was held as security rather than immediate payment.

Crucially, SMC’s demand letter referred to the check as “covering” the issuance, rather than as payment, aligning with the company’s policy of requiring postdated checks. Gregorio L. Joven III, SMC’s witness, stated the check was given in payment, his affidavit also indicated that the check was meant to “cover” beer purchases on credit, with payment expected through other means like the return of beer empties. This contrasts with Puzon’s claim that SMC would return the checks as liquid beer contents were paid for, reinforcing the understanding that the check was not intended for immediate payment.

Based on this evidence, the Court concluded that both parties intended the check to serve as security, not as a direct form of payment for the beer products. Therefore, title to the check remained with Puzon. The second element of theft – that the property belongs to another – was not established. Thus, both the prosecutor and the DOJ were correct in finding no probable cause for theft. Consequently, the Court found no error in the CA’s decision affirming the dismissal of the case.

FAQs

What was the key issue in this case?	The key issue was whether a postdated check issued as security for a debt, and later taken back by the issuer, could be considered stolen property.
What is the significance of a postdated check in this case?	The postdated check was central because it was the alleged stolen item. The court had to determine if the check was given as payment (transferring ownership) or as security (retaining ownership with the issuer).
What does it mean for a check to be issued as “security”?	When a check is issued as security, it means it is held as a guarantee for a debt but is not intended for immediate payment. The issuer retains ownership until the check is actually used to settle the debt.
What are the elements of theft according to the Revised Penal Code?	The elements of theft are: (1) taking personal property, (2) the property belongs to another, (3) taking with intent to gain, (4) taking without the owner’s consent, and (5) accomplishing the taking without violence or intimidation.
Why did the Supreme Court rule in favor of Bartolome Puzon, Jr.?	The Court ruled in favor of Puzon because SMC failed to prove that the check was issued as payment. Since the check was intended as security, ownership remained with Puzon, and thus the element of “property belonging to another” was not satisfied.
What is “probable cause” in the context of this case?	Probable cause refers to facts and circumstances that would lead a reasonable person to believe that a crime has been committed and that the accused is likely guilty. It is the standard required for filing a criminal complaint.
How does the Negotiable Instruments Law apply in this case?	The Negotiable Instruments Law stipulates that delivery of an instrument transfers title, but only if the delivery is made with the intention of giving effect to the instrument. In this case, since the check was not meant for immediate payment, there was no effective delivery to transfer ownership.
What was the role of the Department of Justice (DOJ) in this case?	The DOJ reviewed the prosecutor’s finding of no probable cause and affirmed the dismissal of the theft complaint. The Supreme Court upheld the DOJ’s decision, finding no grave abuse of discretion.
What evidence supported the claim that the check was for security, not payment?	Evidence included the “POSTDATED CHECK SLIP” issued instead of a receipt for payment, SMC’s demand letter using the term “cover” instead of “payment,” and Puzon’s practice of replacing postdated checks with unpaid balances.

This case clarifies that the intent behind issuing a postdated check is crucial in determining ownership and potential theft. The ruling reinforces the principle that unless a clear transfer of ownership occurs, taking back a check issued merely as security does not constitute theft.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: San Miguel Corporation vs. Bartolome Puzon, Jr., G.R. No. 167567, September 22, 2010