This case clarifies the burden of proof in prosecuting violations of Batas Pambansa Blg. 22 (B.P. Blg. 22), also known as the Bouncing Checks Law, particularly when a person acts as a co-maker for a loan secured by checks. The Supreme Court affirmed the conviction of Ivy Lim, a co-maker who issued checks that were later dishonored, emphasizing that the prosecution successfully established all elements of the crime beyond reasonable doubt. The decision underscores the importance of due diligence in issuing checks and the legal consequences of failing to honor financial obligations, providing a clear precedent for similar cases.

Dishonored Promises: When Does a Co-Maker Face Liability for Bounced Checks?

The case of Ivy Lim v. People of the Philippines and Blue Pacific Holdings, Inc. revolves around a loan obtained by Rochelle Benito from Blue Pacific Holdings, Inc. (BPHI). Ivy Lim, Benito’s sister, acted as a co-maker for the loan, signing a promissory note and issuing eleven Equitable PCI Bank checks to secure the payment. When ten of these checks were dishonored due to a closed account, BPHI filed charges against Lim for violating B.P. Blg. 22. The central legal question is whether Lim, as a co-maker, could be held criminally liable for the dishonored checks, despite her defenses of being abroad during the issuance of the checks and lack of valuable consideration.

The Metropolitan Trial Court (MeTC) found Lim guilty beyond reasonable doubt on ten counts of violating B.P. Blg. 22, and the Regional Trial Court (RTC) and Court of Appeals (CA) affirmed this decision. Lim then appealed to the Supreme Court, arguing that the prosecution failed to prove her receipt of the notice of dishonor, the checks were unauthenticated, and the promissory note was improperly admitted as evidence. The Supreme Court, however, found these arguments unpersuasive, holding that the prosecution adequately proved all the elements of B.P. Blg. 22 violation.

One of Lim’s main contentions was that the registry return card, which served as proof of her receipt of the notice of dishonor, was not properly authenticated. The Supreme Court clarified that the prosecution presented not only the registry return card but also the registry receipt and the testimony of BPHI Finance Officer Enriquez, who mailed the demand letter. The Court cited Resterio v. People, emphasizing that if service is by registered mail, proof of service includes both the registry return receipt and the registry receipt, along with an authenticating affidavit, or the mailer’s personal testimony.

The Court noted that Enriquez testified to sending the notice by registered mail and identified the relevant documents. Furthermore, Enriquez identified Lim’s signature on the registry return card, stating he had witnessed her signing the subject checks. Lim also contested the authenticity of the checks, claiming she was out of the country on July 29, 2003, the date Enriquez claimed she signed the checks. However, the Court pointed out that Lim stipulated to the existence and due execution of the checks during the preliminary conference. This stipulation significantly weakened her claim that the checks were not properly authenticated.

Furthermore, the Court highlighted that the crucial element in B.P. Blg. 22 cases is the date of issuance of the checks, not the specific date of delivery or signing. This distinction is important because the law specifies that offenses are not committed if the check is presented for payment more than ninety days after the issue date. Thus, even if Lim was indeed abroad on the date Enriquez mentioned, it did not negate the fact that she issued the checks that were subsequently dishonored.

Lim also argued that the promissory note, which formed the basis of her obligation, was never properly presented or authenticated. The Supreme Court rejected this argument, stating that because the promissory note was attached to the complaint-affidavit, and Lim failed to specifically deny its genuineness and due execution under oath, its authenticity was deemed admitted. Moreover, the Court emphasized that Lim had stipulated to the existence of the promissory note and her signature during the preliminary conference, further undermining her challenge.

Regarding the civil aspect of the case, Lim argued a lack of consideration for the checks. However, the Court found this argument unpersuasive, citing the disputable presumptions that sufficient consideration existed for the contract and the negotiable instruments. As a co-maker who agreed to be jointly and severally liable on the promissory note, Lim could not validly claim a lack of consideration, especially since the loan was granted to her sister, Benito. The granting of the loan to Benito constituted sufficient consideration for Lim’s obligation as a co-maker.

The Supreme Court ultimately affirmed Lim’s conviction but modified the penalty imposed. While the MeTC imposed a lump sum fine of P676,176.50, the Court clarified that the fine should be P67,617.65 for each of the ten counts of B.P. Blg. 22 violation, with subsidiary imprisonment in case of insolvency. This adjustment aligns with Section 1 of B.P. Blg. 22, which sets a maximum fine of double the amount of the check, not exceeding P200,000.00. Additionally, the Court modified the interest on the actual damages, setting it at 12% per annum from the filing of the information until the finality of the decision, and 6% per annum thereafter until fully paid, consistent with prevailing jurisprudence.

The elements of B.P. Blg. 22 violation are clearly defined: (1) the accused makes, draws, or issues a check for account or value; (2) the check is subsequently dishonored for insufficient funds or credit; and (3) the accused knows at the time of issuance that there are insufficient funds to cover the check. In Lim’s case, the prosecution successfully demonstrated each of these elements. She issued the checks as a co-maker to secure the loan; the checks were dishonored due to a closed account; and she was notified of the dishonor, yet failed to make arrangements to cover the amounts.

FAQs

What was the key issue in this case?	The key issue was whether Ivy Lim, as a co-maker of a loan secured by checks, could be held criminally liable for violation of B.P. Blg. 22 when those checks were dishonored. The court examined if the prosecution proved all elements of the crime beyond reasonable doubt.
What is Batas Pambansa Blg. 22?	Batas Pambansa Blg. 22, also known as the Bouncing Checks Law, penalizes the act of issuing checks without sufficient funds or credit to cover the amount, with the knowledge of such insufficiency at the time of issuance. It aims to maintain confidence in the banking system and commercial transactions.
What does it mean to be a co-maker of a promissory note?	A co-maker is a person who binds themselves jointly and severally with the principal debtor to fulfill the obligation stated in the promissory note. This means the creditor can demand the entire debt from either the principal debtor or the co-maker.
What is the significance of the notice of dishonor?	The notice of dishonor informs the issuer of a check that the check has been dishonored by the bank. Receipt of this notice is crucial for establishing the issuer’s knowledge of insufficient funds, a key element for prosecuting B.P. Blg. 22 violations.
What evidence is needed to prove receipt of the notice of dishonor?	To prove receipt, the prosecution typically presents the registry receipt, registry return card, and testimony from the person who mailed the notice. The authenticating affidavit of the mailer or their personal testimony in court is also essential.
What is the role of a preliminary conference in this type of case?	A preliminary conference is a pre-trial stage where parties stipulate certain facts to expedite the proceedings. In this case, Lim’s stipulation to the existence and due execution of the checks significantly weakened her defense against their authenticity.
How did the Supreme Court modify the lower court’s decision?	The Supreme Court modified the penalty, clarifying that the fine should be imposed per count of violation, not as a lump sum. Additionally, it adjusted the interest rate on the awarded damages to align with current legal standards.
What is the importance of consideration in a contract?	Consideration is the cause or reason that moves the contracting parties to enter into the agreement. It is an essential element for the validity of a contract. Without sufficient consideration, a contract may be deemed unenforceable.

This case underscores the responsibilities and potential liabilities assumed when acting as a co-maker for a loan. It reiterates the importance of diligently managing financial obligations and ensuring sufficient funds are available to cover issued checks. Furthermore, this decision reinforces the legal framework surrounding B.P. Blg. 22, providing guidance for future cases involving bouncing checks and co-makers.

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: IVY LIM, PETITIONER, V. PEOPLE OF THE PHILIPPINES AND BLUE PACIFIC HOLDINGS, INC., RESPONDENTS., G.R. No. 224979, December 13, 2017