BP 22 demand letter (notice of dishonor) must be actually received by issuer of check

Plain Language summary: Case title: “Erlinda C. San Mateo, Petitioner v. People of the Philippines, Respondent,” G.R. NO. 200090, March 6, 2013 Ruling: Notice of dishonor must be actually received by issuer of the check. When an acquittal is based on lack of proof beyond reasonable doubt, civil damages can be awarded.

Background facts

The Metropolitan Trial Court (MeTC) of Taguig City, Branch 74 found San Mateo guilty of 10 counts of violation of B.P. 22. She was sentenced to suffer the straight penalty of imprisonment of six months for each count. As to San Mateo’s civil liability, the MeTC ordered her to pay Php 134,275.00, the total value of the 11 checks she issued to ITSP International, Incorporated.

Both the Regional Trial Court and the Court of Appeals affirmed the MeTC’s decision.

Supreme Court ruling

The Supreme Court acquitted San Mateo on the ground that her guilt has not been established beyond reasonable doubt.

But her civil liability for the dishonored checks stands. She must pay Php 134,275.00 plus 12% interest per annum from the time the sum became due and demandable until fully paid.

Reasons for the Court’s ruling

[1] To be liable for violation of B.P. 22, the following essential elements must be present:

(1) the making, drawing, and issuance of any check to apply for account or for value;

(2) the knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of the check in full upon its presentment; and

(3) the subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.

The Court found that the second element was not sufficiently established. Section 2 of B.P. 22 creates the presumption that the issuer of the check was aware of the insufficiency of funds when the check was issued and the bank dishonored it. But this presumption, however, arises only after it is proved that:

(1) the issuer had received a written notice of dishonor and

(2) within five days from receipt of the notice, the issuer failed to pay the amount of the check or to make arrangements for its payment.

[2] San Mateo may have requested in her letters that Sehwani (ITSP Vice-President for Operations) defer depositing all the checks, otherwise, her account will close. But San Mateo’s act was not an admission that, when she issued those checks, she knew that she would have no sufficient funds in the drawee bank.

Sehwani tried to serve the notice of dishonor to San Mateo two times. First, Sehwani’s counsel sent a demand letter to San Mateo’s residence at Greenhills, San Juan. When the security guard refused to accept the letter, the liaison officer told the guard to hand it to San Mateo. But the prosecution failed to show that the letter ever reached San Mateo.

Second, Sehwani’s counsel sent a demand letter to San Mateo by registered mail. It was returned with the notation “N/S Party Out 12/12/05” and that San Mateo did not claim it despite three notices to her.

[3] The notice of dishonor must be actually received by the issuer of the check. The Court has consistently ruled that receipts for registered letters, including return receipts, do not themselves prove receipt. They must be properly authenticated to serve as proof of receipt of the letters, claimed to be a notice of dishonor.

The presentation of the registry card with an unauthenticated signature, does not meet the required proof beyond reasonable doubt that the accused received the notice. It is not enough for the prosecution to prove that a notice of dishonor was sent to the accused. The prosecution must also prove actual receipt of the notice, because the fact of service provided for in the law is reckoned from receipt of the notice of dishonor by the accused.

Since there is insufficient proof that San Mateo actually received the notice of dishonor, the presumption that she knew of the insufficiency of her funds cannot arise. For this reason, the Court cannot convict her with moral certainty of violation of B.P. 22.

[4] But San Mateo’s acquittal does not extinguish her civil liability for the dishonored checks. When an acquittal is based on lack of proof beyond reasonable doubt, civil damages can be awarded. For this reason, the trial court’s directive for San Mateo to pay the civil liability in the amount of Php 134,275.00 representing the total value of the 11 checks plus 12% interest per annum from the time the said sum became due and demandable until fully paid, stands.