Ben Rico vs People of the Philippines

G. R. No. 137191 – 392 SCRA 61 – Mercantile Law – Negotiable Instruments Law – Notice of Dishonor – Bouncing Checks Law – Knowledge of Insufficiency of Funds

Ben Rico is a contractor who purchases construction materials from Ever Lucky Commercial. Through the course of his business with Ever Lucky, he issued 5 post-dated checks. The checks were dishonored due to insufficiency of funds as well as due to “closed account”. Ever Lucky immediately made demands for Rico to pay up. No formal letter of demand was sent to Rico. Ever Lucky eventually sued Rico for violation of Batas Pambansa 22.

ISSUE: Whether or not Rico is guilty of violating BP 22.

HELD: No. The law enumerates the elements of violation of B.P. 22, namely (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 prosecution only proved elements one and two in the case at bar. But it failed to prove that Rico has knowledge of the insufficiency of funds in the drawee bank when the checks were presented for payment.

Under the law, there shall be a prima facie evidence of knowledge of insufficiency on the part of the accused by making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds or credit with such bank, when presented within ninety (90) days from the date of the check. However, this prima facie presumption shall not arise if within 5 days from receiving the notice of dishonor, the accused shall have paid or made arrangement to pay in full.

In the case at bar, no notice of dishonor was sent to Rico hence the presumption did not arise. And so since the presumption did not arise, it was up to the prosecution to prove Rico’s knowledge of insufficiency which it failed to do.

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