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ORIEL MAGNO v. CA

FACTS:

The accused petitioner, Magno, was in the process of putting up a car repair shop but did not have complete equipment. He approached Corazon Teng, Vice President of Mancor Industries, for his needed car repair service equipment. Teng referred Magno to LS Finance and Management Corporation (LS Finance), advising its Vice-President, Joey Gomez, that Mancor was willing to supply the equipment if LS Finance could provide credit facilities. The arrangement required Magno to put up a warranty deposit of P29,790.00, which he did not have. Teng advanced the deposit, on the condition that it be paid as a short-term loan at 3% interest. Magno and LS Finance entered into a leasing agreement, and Magno issued postdated checks as payment. When the checks matured, Magno requested not to deposit them as he was no longer banking with Pacific Bank. He issued replacement checks, but four of them were not covered with sufficient funds. When Magno could not pay the monthly rentals, LS Finance pulled out the equipment, and Magno learned that Teng had advanced the warranty deposit. The four checks were returned for "account closed." Magno was convicted of violating BP Blg. 22 and sentenced to imprisonment in each of the four cases.

ISSUES:

  1. Whether the petitioner should be held liable for violation of B.P. Blg. 22 (Bouncing Checks Law) for issuing four checks that were used to collateralize an accommodation transaction.

  2. Whether the petitioner should be held liable for the refund of the warranty deposit.

  3. Whether there was satisfactory proof of the extinguishment of the obligation for which the checks were issued.

  4. Whether the court erred in convicting the accused without proof of criminal intent.

RULING:

  1. The petitioner should not be held liable for violation of B.P. Blg. 22. The checks were actually issued on account or for value, as they were collateralized for an accommodation transaction. In order for there to be a conviction under B.P. Blg. 22, it is sufficient that the check was drawn and issued in payment of an obligation.

  2. The petitioner should not be held liable for the refund of the warranty deposit. Despite the termination of the lease agreement, the warranty deposit was not cashed out by the petitioner. The purpose of B.P. Blg. 22 is to safeguard the interests of the banking system and legitimate checking account users, not to shelter or favor transactions designed to enrich the participants.

  3. The Supreme Court reversed the decision of the lower court and acquitted the accused. The court held that there was no satisfactory proof of the extinguishment of the obligation. Furthermore, the court found that the lower court erred in convicting the accused without proof of criminal intent.

PRINCIPLES:

  • The primary function of punishment in criminal law is the protection of society against actual and potential wrongdoers.

  • Criminal law is founded upon moral disapprobation of actions that are detrimental or dangerous to the conditions upon which the existence and progress of human society depend.

  • The punishment imposed in criminal cases should be directed against actual and potential wrongdoers.

  • In case of doubt, the case should be resolved in favor of the accused.

  • The accused is presumed innocent until proven guilty beyond reasonable doubt.

  • The drawing of postdated checks must be for value or to apply on account in order for a violation of BP Blg. 22 to be present.

  • A warranty is a promise that a proposition of fact is true, while a deposit is money lodged as earnest or security for the performance of a contract.

  • The element of knowing insufficient funds in a drawee bank is inversely applied if the lack of funds was openly communicated to all parties involved in the transaction.