FACTS:

The petitioner, Ben Rico, was a "pakyaw" contractor who bought construction materials on credit from Ever Lucky Commercial (ELC). He made payments using cash or postdated checks. Some of the checks issued by the petitioner were dishonored by the bank due to insufficient funds or a closed account. The dishonored checks amounted to P178,434.00. The petitioner was charged with five counts of violation of Batas Pambansa Blg. 22. After trial, the lower court found the petitioner guilty and sentenced him to imprisonment and payment of indemnities. The petitioner claimed to have already paid the amounts covered by the dishonored checks, presenting official receipts totaling P284,340.50 issued by ELC. However, no official receipts for the materials purchased were presented in court.

ISSUES:

1. Whether the burden of proof should be on the petitioner to prove his own innocence or on the prosecution to prove his guilt beyond reasonable doubt.

2. Whether the defense of payment by the petitioner overthrows the prima facie evidence of knowledge of insufficient funds and whether demands for payment served as notices of dishonor.

3. Whether the payments made by the petitioner to Ever Lucky Commercial referred to other transactions or to the dishonored checks.

4. Whether the trial court and the appellate court were correct in their analysis debunking the petitioner's defense of payments.

5. Whether or not the accused received a notice of dishonor as required by the Bouncing Checks Law (B.P. 22).

6. Whether or not the lack of notice of dishonor is a ground for acquittal.

7. Whether the petitioner can be acquitted of the charge for violation of B.P. 22.

8. Whether the petitioner should be ordered to pay the face value of the checks to the private complainant.

RULING:

1. The principal issue in this case is whether the petitioner's guilt has been established beyond reasonable doubt. The Court finds that the petitioner's burden of proving his own innocence instead of laying the burden upon the prosecution to prove his guilt beyond reasonable doubt is incorrect. The Court also finds merit in the petitioner's argument that he should be acquitted because he already paid his obligations to Ever Lucky Commercial. The Court further holds that the second element of the offense, which requires knowledge of the insufficiency of funds at the time of issuing the checks, was not sufficiently established. The notices of dishonor were not proven to have been sent to the petitioner and no formal and written demand letters or notices of dishonor were shown in the records. Therefore, the presumption of knowledge of insufficiency of funds did not arise, and the petitioner should not be held liable for the offense under B.P. 22.

2. The accused must receive a notice of dishonor in order to be held liable under B.P. 22. The absence of a notice of dishonor deprives the accused of the opportunity to preclude a criminal prosecution. Procedural due process requires that a notice of dishonor be actually sent to and received by the accused in order to afford them the opportunity to avert prosecution.

3. The failure of the prosecution to prove the existence and receipt of the requisite written notice of dishonor, as well as the failure to give the accused at least five banking days to settle their account, constitutes sufficient ground for acquittal.

4. The petitioner is acquitted of the charge for violation of B.P. 22 on the ground of reasonable doubt.

5. The petitioner is ordered to pay the private complainant the face value of the checks in the total amount of P178,434.00, with 12 percent interest per annum, from the filing of the informations until the amount due is fully paid.

PRINCIPLES:

• The burden of proof in a criminal case rests on the prosecution to prove the guilt of the accused beyond reasonable doubt.

• In violation of B.P. 22, the elements of the offense include (1) making, drawing, and issuing a check; (2) knowledge of insufficiency of funds or credit at the time of issuance; and (3) subsequent dishonor of the check by the drawee bank.

• Knowledge of insufficiency of funds is an essential element of the offense, and the burden is on the prosecution to prove this element.

• The prima facie presumption of knowledge of insufficient funds is created under B.P. 22 but does not arise when the issuer pays the amount of the check or makes arrangement for its payment within five banking days after receiving notice of dishonor.

• To hold a person liable under B.P. 22, it must be shown that the person knew at the time of issuing the check that there were insufficient funds in the drawee bank.

• Formal and written demand letters or notices of dishonor must be sent to the issuer for the presumption of knowledge of insufficiency of funds to arise.

• Notice of dishonor is necessary for the accused to be held liable under B.P. 22.

• Written notice of dishonor or demand letters must be received by the accused and properly authenticated to serve as proof of receipt.

• A mere oral notice or demand to pay is insufficient for conviction under B.P. 22.

• Penal statutes must be construed strictly against the State and liberally in favor of the accused.

• Acquittal based on reasonable doubt does not preclude the award of civil damages.

• The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the facts from which the civil liability might arise did not exist.

• A separate civil action is not necessary when the facts to be proved in the civil case have already been established in the criminal proceedings where the accused was acquitted.

• Prior payment, if alleged by the accused, must be logical and supported by evidence.

• The accused must be acquitted if there is reasonable doubt as to his guilt.

• The face value of dishonored checks must be paid by the drawer.