STEVE TAN and MARCIANO TAN, 

petitioners,
vs.
FABIAN MENDEZ, JR., respondent.

QUISUMBING, J.:

Petitioners filed this petition for review on certiorari seeking to set aside the decision1 dated January
22, 1999 of the Court of Appeals, Thirteenth Division, in CA-G.R. CR. No. 20030, which affirmed the
decision2 of the Regional Trial Court of Iriga City, Branch 37, convicting petitioners of violation of
Batas Pambansa Blg. 22, otherwise known as the Bouncing Checks Law. They were sentenced to
suffer the penalty of six months imprisonment and to indemnify private complainant the sum
of P58,237.75 with legal interest from date of judicial demand. Also assailed in this petition is the
Court of Appeals’ resolution3 dated May 13, 1999 denying petitioners’ Motion for Reconsideration.

The facts, as culled from records, are as follows:

Petitioners Steve Tan and Marciano Tan are the owners of Master Tours and Travel Corporation and
operators of Philippine Lawin Bus Co., Inc., while respondent Fabian Mendez, Jr. is the owner of
three gasoline stations in Iriga City, Ligao, Albay, and Sipocot, Camarines Sur. Petitioners opened a
credit line for their buses’ lubricants and fuel consumption with respondent. At the same time, the
latter was also designated by petitioners as the booking and ticketing agent of Philippine Lawin Bus
Co. in Iriga City.

Under such arrangement, petitioners’ drivers purchased on credit fuel and various oil products for its
buses through withdrawal slips issued by petitioners, with periodic payments to respondent through
the issuance of checks. On the other hand, respondent remitted the proceeds of ticket sales to
petitioners also through the issuance of checks. Sent together with respondent’s remittance are the
remittances of the ticket sales in the Baao Booking office, which is managed separately and
independently by another agent, Elias Bacsain.

Accordingly, petitioners issued several checks to respondent as payment for oil and fuel products.
One of these is FEBTC check no. 704227 dated June 4, 1991 in the amount of P58,237.75, as
payment for gasoline and oil products procured during the period May 2 to 15, 1991. Said check was
dishonored by the bank upon presentment for payment for being drawn against insufficient funds.

Respondent sent a demand letter dated June 21, 1991 to petitioners demanding that they make
good the check or pay the amount thereof, to no avail. Hence, an information for violation of B.P. 22
was filed against petitioners, upon the complaint of respondent, before the RTC of Iriga City, Branch
37, as follows:

That on or about the 4th day of June 1991, in Iriga City, Philippines, and within the jurisdiction
of this Honorable Court, the above-named accused having purchased from Shellhouse Iriga,
Iriga City, owned and managed by Atty. Fabian O. Mendez, Jr., fuel and other oil products in
the amount of FIFTY EIGHT THOUSAND TWO HUNDRED THIRTY SEVEN and 75/100
(P58,237.75) PESOS, Philippine currency, and that in payment thereof, the said accused
knowing fully well that they had no sufficient funds or credit with the drawee bank, conspiring
and confederating with each other, did, then and there, willfully, unlawfully and feloniously,
issue and make out Far East Bank and Trust Company-Binondo Check No. 704227, payable
to the order of Shell house Iriga, dated June 4, 1991 in the amount of P58,237.75, and
delivered to herein private complainant Atty. Fabian O. Mendez, Jr., in Iriga City and upon its
presentment for payment to the drawee bank, the same was dishonored and refused
payment for the reason "Drawn Against Insufficient Funds" and despite repeated demands,
 accused failed and refused and still fails and refuses to make the necessary deposit with
said bank sufficient money to cover the said check or to pay the said Atty. Fabian O.
Mendez, Jr., the value of the check in the amount of P58,237.75, to the latter’s damage and
prejudice in the aforesaid amount, plus other form of damages as may be proven in court. 1âwphi1.nêt

CONTRARY TO LAW.4

Petitioners pleaded not guilty during arraignment and trial ensued.

At the trial, the prosecution presented FABIAN MENDEZ, JR., the private complainant, and MULRY
MENDEZ. They testified that FEBTC check no. 704227 and other checks in the amount
of P235,387.33 were dishonored upon presentment for payment to the bank and that they called
petitioners’ attention regarding the matter. They sent a demand letter to petitioners asking them to
make good the check or pay the value thereof, but petitioners did not heed the request. Instead,
petitioners told respondent Fabian to wait a while. After respondent initiated this case, petitioners
attempted to settle the same along with other cases pending in other courts in Iriga City. They asked
for more time to settle their obligations because they were still waiting for a tax credit certificate in
the amount of P517,998 to be issued by the Ministry of Finance, that they would use to settle the
cases.5

On the other hand, the defense presented petitioner MARCIANO TAN and ISIDRO TAN as
witnesses. In his testimony, Marciano averred that he cannot be held liable for violation of B.P. 22
because the amount subject of the check had already been extinguished by offset or compensation
against the collection from ticket sales from the booking offices. He presented a
memorandum6 dated June 10, 1991 showing the return to respondent of various unencashed checks
in the total amount of P66,839.25 representing remittance of ticket sales in the Iriga and Baao offices
that were earlier sent by respondent. After the alleged offset, there remains a balance of
P226,785.83.7 The memorandum8 states:

June 10, 1991

To Atty. Fabian Mendez:

We just would like to inform your good office that we are sending you back the following
checks to be offset to our gasoline account:

 
Returned check June 07 P 58,237.75
Of PLBC for gasoline 235,387.33 293,625.08

Your check:
Sales Iriga      May 29-31
                         June 1-5 P 17,373.00
         Baao      June 3-4 28,057.55
                         May 28-June 5,375.00
2    16,033.70  66,839.25

Balance to be paid for  

schedule  P 226,785.83
 ESTEBAN TAN

On cross-examination, Marciano admitted to have drawn the subject check to pay private
respondent’s gasoline station and that it was not covered by sufficient funds at the time of its
issuance due to uncollected receivables.9 Upon query by the court, he claimed that he did not talk to
private complainant and could not tell if the latter agreed to offset the checks with the remittances. 10

ISIDRO TAN, petitioners’ brother, corroborated Marciano’s claim of offset. He also admitted
speaking with Mulry Mendez regarding the proposed settlement of the case which, however, was not
accepted by respondent.11

On rebuttal, respondent disputed petitioners’ claim of payment through offset or compensation. He

claimed that the amount of the four unencashed checks totaling P66,839.25 could not have offset
the amount of the dishonored checks since petitioners’ total obligations at that time had already
reached P906,000.12 Moreover, even if compensation took place, it should have been applied to an
alleged earlier obligation of P235,387.33. Respondent also claimed that compensation did not take
place as there was no application of payment made by the petitioners in their memorandum dated
June 10,1991.13

After trial, the trial court convicted petitioners for violation of B.P. 22. The dispositive portion of its
decision reads:

WHEREFORE, the Court finds both accused, as drawers of the check in question, guilty of
the violation of Batas Pambansa Blg. 22, as principals thereof, without attendant mitigating or
aggravating circumstance, and hereby sentences both accused to suffer the penalty of
imprisonment of Six (6) Months, to indemnify the private complainant jointly and severally,
the sum of P58,237.75 with legal interest from date of judicial demand, and to pay the costs.

SO ORDERED.14

On appeal, the Court of Appeals affirmed the conviction of petitioners, thus:

WHEREFORE, the assailed decision being in conformity with law and the evidence, the
same is hereby AFFIRMED. Costs against appellants.

SO ORDERED.15

Hence, this petition. Petitioners raise the following errors:

THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO CONSIDER THE

FACT OF PAYMENT BY OFFSETTING PRIOR TO THE DEMAND LETTER SENT BY
RESPONDENT DESPITE THE ABUNDANCE OF EVIDENCE PROVING THE SAME.

II

SINCE THE HONORABLE COURT OF APPEALS FOUND OFFSETTING CONTENTIOUS

IT SHOULD HAVE ACQUITTED PETITIONERS ON THE GROUND OF REASONABLE
DOUBT.
 III

THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT ASSUMING

THAT THERE WAS OFFSETTING THE PETITIONERS ARE NONETHELESS GUILTY
BECAUSE PAYMENT DOES NOT ABATE THE CRIME OF VIOLATION OF B.P. 22.

Briefly, the following are the issues for our resolution:

1. Whether or not petitioners can be held liable for violation of B.P. 22 or the Bouncing
Checks Law; and

2. Whether or not payment through compensation or offset can preclude prosecution for
violation of B.P. 22.

The law enumerates the elements of B.P. Blg. 22 to be (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. 16

We find all the foregoing elements present in this case. Petitioner Marciano admitted that he drew
the subject check as payment for the fuel and oil products of respondents. He knew at that time that
there were no sufficient funds to cover the check because he had uncollected receivables. 17 The
check was thus dishonored upon presentment to the bank for payment.

The law has made the mere act of issuing a bum check a malum prohibitum,18 an act proscribed by
legislature for being deemed pernicious and inimical to public welfare. 19 The gravamen of the offense
under this law is the act of issuing a worthless check or a check that is dishonored upon its
presentment for payment. Thus, even if there had been payment, through compensation or some
other means, there could still be prosecution for violation of B.P. 22. We find that no reversible error
was committed by the courts a quo in finding petitioners guilty of violation of B.P. 22.

In their defense, petitioners principally rely on the principle of compensation or offset under the civil
law to avoid criminal prosecution. Essentially, they argue that they could not be held liable for
violation of B.P. 22 because the amount covered by the subject check had already been paid by
compensation or offset through other checks issued by respondent as remittances of ticket sales for
petitioners’ bus company.

It bears stressing that the issue of whether or not the obligations covered by the subject check had
been paid by compensation or offset is a factual issue that requires evaluation and assessment of
certain facts. This is not proper in a petition for review on certiorari to the Supreme Court. We have
repeatedly held that this Court is not a trier of facts.20 The jurisdiction of this Court over cases
elevated from the Court of Appeals is confined to the review of errors of law ascribed to the Court of
Appeals, whose findings of fact are conclusive absent any showing that such findings are entirely
devoid of any substantiation on record.21

On this aspect, the Court of Appeals affirmed the findings of the trial court that the alleged
compensation is not supported by clear and positive evidence. The trial court noted that the total
amount of the two checks issued by petitioners is P293,625.08 while the total amount of the returned
checks amounted to only P66,939.75. No application of payment was made as to which check was
to be paid. These factual findings should be accorded respect and finality as the trial court is in the
best position to assess and evaluate questions of fact. These findings will not be disturbed on appeal
in the absence of any clear showing that the trial court overlooked certain facts or circumstances that
would substantially affect the disposition of the case.22

As found by the trial court, petitioners’ defense of compensation is unavailing because petitioners did
not clearly specify in the memorandum dated June 10, 1991 which dishonored check is being offset.
Applying Article 128923 in relation to Article 125424 of the Civil Code, the unencashed checks
amounting to P66,839.25 should have been applied to the earlier dishonored check amounting
to P235,387.33 which is more onerous than the subject check amounting to only P58,237.75.

We also note that no compensation can take place between petitioners and respondent as
respondent is not a debtor of petitioners insofar as the two checks representing collections from the
Baao ticket sales are concerned. 25 Article 1278 of the Civil Code26 requires, as a prerequisite for
compensation, that the parties be mutually and principally bound as creditors and debtors. 27 If they
were not mutually creditors and debtors of each other, the law on compensation would not apply. 28 In
this case, the memorandum shows that some unencashed checks returned to respondent to
allegedly offset the dishonored check were from the Baao ticket sales which are separate from the
ticket sales of respondent. Respondent only acted as an intermediary in remitting the Baao ticket
sales and, thus, is not a debtor of petitioners.
1âwphi1.nêt

Interestingly, petitioners never alleged compensation when they received the demand letter, during
the preliminary investigation, or before trial by filing a motion to dismiss. Moreover, if indeed there
was payment by compensation, petitioners should have redeemed or taken the checks back in the
ordinary course of business.29 There is no evidence on record that they did so.

Finally, while we sustain the conviction of petitioners, we deem it appropriate to modify the penalties
imposed. We delete the penalty of imprisonment and in lieu thereof, we impose upon petitioners a
fine amounting to double the value of the subject check, with subsidiary imprisonment in case of
insolvency or non-payment.

Supreme Court Administrative Circular No. 12-2000, as clarified by Administrative Circular No. 13-
2001, established a rule of preference in imposing penalties in B.P. 22 cases. Section 1 of B.P. 22
imposes the following alternative penalties for its violation, to wit: (a) imprisonment of not less than
30 days but not more than one year; or (b) a fine of not less than but not more than double the
amount of the check which fine shall in no case exceed P200,000; or (c) both such fine and
imprisonment at the discretion of the court.

The rationale of Adm. Circular No. 12-2000 is found in our rulings in Eduardo Vaca vs. Court of
Appeals30 and Rosa Lim vs. People of the Philippines.31 We held in those cases that it would best
serve the ends of criminal justice if, in fixing the penalty to be imposed for violation of B.P. 22, the
same philosophy underlying the Indeterminate Sentence Law is observed, i.e. that of redeeming
valuable human material and preventing unnecessary deprivation of personal liberty and economic
usefulness with due regard to the protection of the social order.

To be sure, it is not our intention to decriminalize violation of B.P. 22. Neither is it our intention to
delete the alternative penalty of imprisonment. The propriety and wisdom of decriminalizing violation
of B.P. 22 is best left to the legislature and not this Court. As clarified by Administrative Circular 13-
2001, the clear tenor and intention of Administrative Circular No. 12-2000 is not to remove
imprisonment as an alternative penalty, but to lay down a rule of preference in the application of the
penalties provided for in B.P. 22. Where the circumstances of the case, for instance, clearly indicate
good faith or a clear mistake of fact without taint of negligence, the imposition of a fine alone may be
considered as the more appropriate penalty. This rule of preference does not foreclose the
possibility of imprisonment for violators of B.P. 22. Neither does it defeat the legislative intent behind
the law. Needless to say, the determination of whether the circumstances warrant the imposition of a
fine alone rests solely upon the judge. Should the judge decide that imprisonment is the more
appropriate penalty, Administrative Circular No. 12-2000 ought not to be deemed a hindrance. 32

We are not unaware of the importance of checks in commercial transactions. In commercial

parlance, they have been widely and fittingly known as the substitute of money and have effectively
facilitated the smooth flow of commercial transactions. Thus, the pernicious effects and
repercussions of circulating worthless checks are simply unimaginable. It is for this reason that B.P.
22 was enacted by the legislature, to penalize individuals who would place worthless checks in
circulation and degrade the value and importance of checks in commercial transactions.

Nevertheless, while we recognize the noble objective of B.P.22, we deem it proper to apply the
philosophy underlying the Indeterminate Sentence Law in imposing penalties for its violation. The
gist of Administrative Circular No. 12-2000 is to consider the underlying circumstances of the case
such that if the situation calls for the imposition of the alternative penalty of fine rather than
imprisonment, the courts should not hesitate to do so.

In this case, we note that petitioners had exerted efforts to settle their obligations. The fact of
returning the unencashed checks to respondent indicates good faith on the part of petitioners.
Absent any showing that petitioners acted in bad faith, the deletion of the penalty of imprisonment in
this case is proper.33

WHEREFORE, the petition is DENIED and the Decision of Court of Appeals in CA-G.R. CR No.
20030, is AFFIRMED with MODIFICATION. Petitioners are ordered to indemnify respondent in the
amount of P58,237.75 with legal interest from date of judicial demand. The sentence of
imprisonment of six months is SET ASIDE and in lieu thereof, a FINE in the amount
of P116,475.5034 is imposed upon petitioners, with subsidiary imprisonment not to exceed six months
in case of insolvency or non-payment.35

Costs against petitioners.

SO ORDERED.