Philippine Supreme Court Resolutions > Year 2010 > June 2010 Resolutions > [G.R. No. 170741 : June 16, 2010] DR. GLORIA E. PUNZALAN, PETITIONER, V. HON. RAUL GONZALES, IN HIS CAPACITY AS SECRETARY OF JUSTICE, AND YOSHITSUGU MATSUURA, :

Please take notice that the Court, Second Division, issued a Resolution dated 16 June 2010, which reads as follows:

G.R. No. 170741 - DR. GLORIA E. PUNZALAN, petitioner, v. HON. RAUL GONZALES, in his capacity as SECRETARY OF JUSTICE, and YOSHITSUGU MATSUURA, respondents.

G.R. No. 170741 is a petition for review^[1] assailing the Decision^[2] promulgated on 29 March 2005 of the Court of Appeals (appellate court) as well as the Resolution^[3] promulgated on 2 December 2005 in CA-G.R. SP No. 70062. The appellate court dismissed the petition filed by Gloria E. Punzalan (Punzalan) and affirmed the resolution of the Department of Justice (DOJ) which, in turn, affirmed the resolution of the Investigating Prosecutor. The Investigating Prosecutor found probable cause only as against Antonio Tan, Jr. (Tan), and none against Tan's co-signor, Yoshitsugu Matsuura (Matsuura).

On 11 December 1990, Punzalan and T.F. Ventures (TFV) entered into a Contract to Sell involving six condominium units in Makati Sunrise Towers. Punzalan agreed to purchase the units for PI2,294,600. TFV failed to deliver the units to Punzalan within the stipulated period. The contract's rescission clause, which stated that TFV shall return to Punzalan liquidated damages in an amount equivalent to the purchase price plus 1% per month of the total purchase price, took effect. As of November 1996, TFV owed P15,569,174 to Punzalan, inclusive of interest. On 12 December 1996, TFV, through its President, Manuel L. Morato, entered into a Compromise Agreement^[4] with Punzalan. Punzalan agreed to reduce TFV's liability to P15,100,000. Upon signing of the Compromise Agreement, TFV issued 13 postdated checks to Punzalan:

Date	Amount
15 December 1996	P 600,000
30 December 1996	750,000
30 March 1997	1,250,000
30 April 1997	1,250,000
30 May 1997	1,250,000
30 June 1997	1,250,000
30 July 1997	1,250,000
30 August 1997	1,250,000
30 September 1997	1,250,000
30 October 1997	1,250,000
30 November 1997	1,250,000
30 December 1997	1,250,000
30 January 1998	1,250,000
	P 15,100,000

The drawee bank honored only the first two of the thirteen checks. When the next five checks bounced, Punzalan filed Criminal Case Nos. 228459-63 before the Metropolitan Trial Court of Makati. Matsuura filed a Motion for Reinvestigation of the said cases. On 20 May 1998, Investigation Prosecutor Andres S. Pio (Prosecutor Pio) of the City Prosecution Office of Makati City made the following recommendation in I.S. Nos. 97-34774-78:

In the instant cases, Matsuura signed the checks in blank and he have [sic] no knowledge as to the sufficiency or insufficiency of the funds when the five (5) checks were paid or released to complainant. Antonio Tan, Jr. being the treasurer of TF Ventures is the proper person who should account for this matter. Further, the compromise agreement was not ratified by the Board of Directors of TF Ventures. Matsuura being its Chairman could not be held accountable to the obligation to complainant.

WHEREFORE, premises considered, it is respectfully recommended that respondent Yoshitsugu Matsuura be absolved from his liability on the cases at bar and only Antonio Tan, Jr. be held liable for the dishonor and issuance of the five (5) checks in question, that Criminal Cases Nos. 228549-63 pending in the Metropolitan Trial Court in Makati, Branch AJ-65 be amended to charge only Antonio Tan, Jr. as accused and Yoshitsugu Matsuura's name be dropped and the Amended Information be approved together with the Motion to Admit Amended Information to be filed in Court.^[5]

Punzalan appealed Prosecutor Pio's Resolution before the DOJ. Undersecretary Regis V. Puno (Usec. Puno) found merit in Punzalan's appeal. In a Resolution promulgated on 26 July 2000, Usec. Puno directed the inclusion of Matsuura in the informations for violation of B.P. 22. Matsuura filed a motion for reconsideration. In a Resolution promulgated on 11 October 2000, Usec. Puno found that Matsuura's arguments raise questions of fact which are evidentiary in nature, which are better left to the judgment of the trial court.^[6]

Meanwhile, the drawee bank also dishonored the last six checks. Punzalan filed I.S. Nos. 98-K-49220-25 against Matsuura and Tan.

On 5 April 1999, City Prosecutor George V. De Joya (Prosecutor De Joya) of Makati City submitted his Resolution in I.S. Nos. 98-K-49220-25. Prosecutor De Joya found a prima facie case for violation of B.P. 22 and recommended that only Tan be charged with the violation. We reproduce portions of Prosecutor De Joya's Resolution below:

Respondent Matsuura initially filed a Motion for Production and Inspection of Evidence alleging, inter alia, lack of consideration for the rubber checks issued for and in behalf of the company TF Ventures Inc. Complainant [Punzalan] opposed the Motion for being dilatory. Without further going into the factual arguments raised by both parties, respondent Matsuura filed his Counter Affidavit pointing out the absence of essential elements in the violation of Batas Pambansa Blg. 22. Specifically, he alleged that the checks were pre-signed, and were used by his cosignatory, herein respondent Tan, without his knowledge and without valuable consideration. He presented the sworn statements of two witnesses, Lani Camba, former secretary of respondent Tan and Nestor Pangan, company accountant.

Witness Lani Camba admitted having typewritten the subject checks upon the instruction of respondent Tan and that at the time, the subject checks were already signed by Matsuura as it was customary practice of the company. During the investigation, complainant admitted not having seen Matsuura signed [sic] the subject checks. The company accountant, Nestor Pangan, swore under oath that in the course of his examination of the company records, he did not find evidence of payment in support of the Contract to Sell executed by TF Ventures Inc., in favor of complainant. He further stated that he was not aware of a board resolution authorizing Manuel Morato to sign the Compromise Agreement. Said Contract to Sell and Compromise Agreement served as basis of complainant's claim against the corporation.

For clarity, both respondents in this case are either officers or directors in the company TF Ventures, Inc., owner of the checks. The subject checks were issued to complainant pursuant to its Compromise Agreement signed by one Manuel Morato. While the signature of both respondents appear in the checks, none of them signed the agreement. A question is raised as to the existence of valuable consideration for the issuance of the subject checks. Assuming, however, that the transaction was indeed authorized by the corporation, it appears that only respondent Tan was fully aware of the amounts indicated in the checks, having actually issued the said checks. Consequently, he is presumed to have knowledge of the insufficiency of funds at the time the checks were presented for payment. The same cannot be deduced from respondent Matsuura who merely pre-signed the checks in blank.

To constitute a violation of the Bouncing Check Law, it must be sufficiently established that the maker or drawer of the check issues the check to apply for account or for value, knowing at the time of issued [sic] that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment which check is subsequently dishonored by the drawee bank for insufficiency of funds (Sec. 1, BP 22). Evidence of knowledge of insufficient [sic] of funds is presumed upon the return of the check by drawee bank due to insufficiency of funds, if presented within ninety (90) days from the date of the check, unless such maker or drawer of the check pays the holder thereof, or makes arrangements for payment in full within five (5) banking days after receiving notice that such check has not been paid by drawee (Sec. 2, BP 22). This presumption cannot apply where the checks were shown to have been pre-signed by a corporate officer or director and delivered back to the company in blank, for the latter's future use.

From the evidence presented by both parties, the liability appears to point to respondent Antonio Tan, who have [sic] knowledge of the checking account balance when he issued the checks as he failed to controvert the charge against him.

WHEREFORE, finding prima facie case for violation of Batas Pambansa Blg. 22, it is respectfully recommended that only respondent Antonio Tan, Jr. be charged with violation of said law. Bail recommended for each check is P30,000.00.^[7]

Punzalan filed an appeal of Prosecutor De Joya's Resolution before the DOJ.

On 23 October 2000, the DOJ, through Usec. Puno, issued its Resolution in I.S. No. 98-K-49220-25 denying Punzalan's appeal. Portions of the Resolution read:

Complainant seeks to indict respondent Matsuura for violation of B.P. Blg. 22 on account of the dishonor of the checks subject of this case.

Sec. 1 of B.P. Blg. 22 punishes, among others, the drawer, maker or issuer of any check issued to apply on account or for value, who knows that at the time of issue, the check is not funded and which check was subsequently dishonored for insufficiency of funds.

Respondent Matsuura who merely pre-signed the dishonored checks, and delivered them back in blank, could not have known if the subject checks were funded or not. It was his co-respondent Tan, treasurer/co-signatory, who is aware of the checking account balance when the checks were actually issued. Besides, the checks were issued without his knowledge nor approval of the compromise agreement entered into between Morato and herein complainant. It does not appear also that he received the demand letter sent by complainant. Likewise, there is no showing that the compromise agreement, on the basis of which the dishonored checks were issued, was ever ratified by the Board of Directors of TF Ventures.

WHEREFORE, the appeal is hereby DENIED.^[8]

The DOJ denied Punzalan's motion for reconsideration in a Resolution dated 5 February 2002. Punzalan filed a Petition for Certiorari before the appellate court.

The appellate court dismissed Punzalan's petition for lack of merit and ruled that the DOJ, through Usec. Puno, did not commit grave abuse of discretion in affirming the Resolution of the City Prosecutor because the determination of probable cause during a preliminary investigation belongs to the prosecutor, to the exclusion of the courts.

The appellate court likewise resolved to deny Punzalan's Motion for Reconsideration for lack of merit.^[9]

Punzalan raised only one ground for the grant of her petition:

The Honorable Court of Appeals seriously erred when it affirmed the Resolution of the Department of Justice dropping the case against respondent Matsuura for violation of Batas Pambansa Blg. 22.^[10]

The petition has merit. Petitioners were able to show that the appellate court erred in affirming the Resolution of the DOJ.

There is the rule that the determination of probable cause during a preliminary investigation is a function that belongs to the public prosecutor. It is an executive function, the correctness of the exercise of which is a matter that the trial court itself does not and may not be compelled to pass upon.^[11] Prosecuting officers under the power vested in them by the law, not only have the authority but also the duty of prosecuting persons who, according to the evidence received from the complainant, are shown to be guilty of a crime committed within the jurisdiction of their office. They have equally the duty not to prosecute when the evidence adduced is not sufficient to establish a prima facie case.^[12] The reviewing court, however, can overturn such findings upon proof that the prosecutor, or the judge as the case may be, disregarded the facts before him or ran counter to the clear dictates of reason.^[13]

The appellate court's ruling affirmed the rulings of the public prosecutor and the DOJ, and stated that Matsuura could not have known whether the checks were sufficiently funded by Tan:

In the case at bench, the non-filing of the Information for the second complaint docketed as I.S. No. 98-K-49220-25 was, as explained by the Solicitor General, due to the improved condition of private respondent [MATSUURA's] evidence that clearly showed co-accused TAN as the only maker and the only issuer of the checks sued upon, and that MATSUURA was neither maker or issuer but a mere drawer thereof, and that MATSUURA could not have known whether the checks were sufficiently funded or not when they were issued by company treasurer TAN. As such, this explains the diametrically opposed conclusion ultimately reached by the two different Investigating Prosecutors in separate preliminary investigations I.S. No. 97-K-34774-78 and I.S. No. 98-K-49220-25 which the Secretary of Justice both affirmed.^[14]

To hold a person liable under Section 2 of B.P. 22,^[15] it is not enough to establish that a check issued was subsequently dishonored. It must be shown further that the person who issued the check knew "at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment."^[16] In order to create the prima facie assumption that the issuer knew of the insufficiency of funds, it must be shown that he or she received a notice of dishonor and, within five banking days thereafter, failed to satisfy the amount of the check or make arrangement for its payment.^[17] Procedural due process demands that a notice of dishonor be actually served on Matsuura. The absence of a notice of dishonor necessarily deprives an accused the opportunity to preclude a criminal prosecution.^[18] Contrary to the pronouncements made by Matsuura^[19] and the DOJ,^[20] the records show that a written notice of dishonor was personally served upon Matsuura yet Matsuura refused to acknowledge the same.^[21] Therefore, the presumption that Matsuura knew of the insufficiency of funds is present.

Under these circumstances, Matsuura cannot take refuge in Lina Lim Lao v. Court of Appeals, where we ruled that an employee who signs corporate checks as part of her regular duties cannot be held criminally liable under B.P. 22 because of said employee's lack of actual knowledge of insuffiency of funds. Lao was a mere employee, while Matsuura, on the other hand, was a corporate officer. Matsuura alleged that even though he is the Chairman of the Board of TFV, he merely presigns the checks for payment to company suppliers and day-to-day expenses for operations during the construction stage of TFV's project.^[22] Matsuura also presented other defenses, which, to our mind should best be threshed out during trial. In overturning the appellate court, we keep in mind our pronouncements in Llamado v. Court of Appeals:^[23]

xxx His claim that he signed the check in blank which allegedly is common business practice, is hardly a defense. If as he claims, he signed the check in blank, he made himself prone to being charged with violation of BP 22. It became incumbent upon him to prove his defenses. As Treasurer of the corporation who signed the check in his capacity as an officer of the corporation, lack of involvement in the negotiation for the transaction is not a defense.

Where the check is drawn by a corporation, company or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under this Act.

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision of the Court of Appeals promulgated on 29 March 2005 as well as the Resolution promulgated on 2 December 2005 in CA-G.R. SP No. 70062.

SO ORDERED. (Mendoza, J., on leave; Nachura, J., no part; Del Castillo, J., designated additional member per Raffle dated 2 June 2010; Perez, J., designated additional member per Special Order No. 842)

Endnotes:

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[1] Under Rule 45 of the 1997 Rules of Civil Procedure.

[2] Rollo, pp. 37-43. Penned by Associate Justice Vicente Q. Roxas, with Associate Justices Portia Ali�o-Hormachuelos and Juan Q. Enriquez, Jr., concurring.

[3] Id. at 56-57. Penned by Associate Justice Vicente Q. Roxas, with Associate Justices Portia Ali�o-Hormachuelos and Juan Q. Enriquez, Jr., concurring.

[4] CA rollo, pp. 32-33.

[5] Id. 34-35.

[6] Id. at 39-40.

[7] Id. at 30-31.

[8] Id. at 26-27.

[9] Rollo, pp. 56-57.

[10] Id. at 27. [11] People of the Philippines v. Court of Appeals, 361 Phil. 401, 410 (1999).

[12] Crespo v. Mogul, 235 Phil. 465, 472 (1987).

[13] La Chemise Lacoste, S.A. v. Hon. Fernandez, 214 Phil. 332 (1984).

[14] Rollo, p. 43.

[15] SEC. 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 (90) 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 (5) banking days after receiving notice that such check has not been paid by the drawee.

[16] King v. People, G.R. No. 131540, 2 December 1999, 319 SCRA 654.

[17] Id.

[18] Lao v. Court of Appeals, G.R. No. 119178, 20 June 1997, 274 SCRA 572.

[19] CA rollo, p. 61.

[20] Id. at 27.

[21] Id. at 47.

[22] Id. at 60.

[23] 337 Phil. 153, 158-160 (1997).