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ENGR. JOSE E. CAYANAN v. NORTH STAR INTERNATIONAL TRAVEL

FACTS:

North Star International Travel Incorporated (North Star) is a travel agency while petitioner is the owner/general manager of a recruitment agency. On March 17, 1994, the General Manager of North Star sent the amount of US$60,000 to View Sea Ventures Ltd., in Nigeria upon the instruction of petitioner. On various dates, North Star extended credit to petitioner for airplane tickets, and the total amount of indebtedness reached P510,035.47. To cover the obligations, petitioner issued five checks to North Star. However, when presented for payment, two of the checks were dishonored for insufficiency of funds, and the other three were dishonored due to a stop payment order. North Star demanded payment but petitioner failed to settle. Subsequently, North Star filed criminal charges against petitioner for violation of Batas Pambansa Blg. 22. The Metropolitan Trial Court (MeTC) found petitioner guilty and ordered him to pay North Star. On appeal, the Regional Trial Court (RTC) acquitted petitioner of the criminal charges and held that there is no basis for civil liability. The CA reversed the RTC decision and held petitioner civilly liable for the value of the subject checks.

ISSUES:

  1. Whether or not petitioner is civilly liable for the value of the five checks which were dishonored for insufficiency of funds.

RULING:

  1. Yes, petitioner is civilly liable for the value of the dishonored checks. The Court of Appeals held that the petitioner's issuance of the checks without sufficient funds was a violation of Batas Pambansa Blg. 22, or the Bouncing Checks Law. The court found that petitioner knew at the time of issuance that he did not have sufficient funds to cover the checks and failed to make arrangements for full payment within five banking days after receiving notice of dishonor. As a result, the court ruled that petitioner must indemnify North Star International Travel, Inc. for the total value of the checks plus interest.

PRINCIPLES:

  • Violation of Batas Pambansa Blg. 22, or the Bouncing Checks Law, occurs when a person issues a check without sufficient funds or credit, with knowledge of its insufficiency.

  • The issuer of a dishonored check is civilly liable for the value of the check and any interest or damages incurred.