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G.R. No. 175381. February 26, 2008.*

JAMES SVENDSEN, petitioner, vs. PEOPLE OF THE

PHILIPPINES, respondent.

Criminal Law; Bouncing Checks Law (B.P. Blg. 22);

Elements.—For petitioner to be validly convicted of the crime
under B.P. Blg. 22, the following requisites must thus concur: (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.
Same; Same; Postal Service; Registry Receipts; Receipts for
registered letters including return receipts do not themselves prove
receipt—they must be properly authenticated to serve as proof of
receipt of the letters.—The evidence for the prosecution failed to
prove the second element. While the registry receipt, which is said
to cover the letter­notice of dishonor and of demand sent to
petitioner, was presented, there is no proof that he or a duly
authorized agent received the same. Receipts for registered letters
including return receipts do not themselves prove receipt; they
must be properly authenticated to serve as proof of receipt of the
letters. Thus in Ting v. Court of Appeals, 344 SCRA 551 (2000),
this Court observed: x x x All that we have on record is an
illegible signature on the registry receipt as evidence that
someone received the letter. As to whether this signature is that
of one of the petitioners or of their authorized agent remains a
mystery. From the registry receipt alone, it is possible that
petitioners or their authorized agent did receive the demand
letter. Possibilities, however, cannot replace proof beyond
reasonable doubt.
Same; Same; Loans; Interests; Usury; An obligation to pay
10% interest per month on the loan is unconscionable and against
public

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* SECOND DIVISION.

660

policy—while the Usury Law ceiling on interest rates was lifted by

Central Bank Circular No. 905, nothing therein grants lenders
carte blanche to raise interest rates to levels which will either
enslave their borrowers or lead to a hemorrhaging of their assets,
and stipulations authorizing such interest are contra bonos mores,
if not against the law.—The decision of the MeTC, which was
affirmed on appeal by the RTC and the appellate court, ordering
petitioner “to pay private complainant Cristina C. Reyes civil
indemnity in the total amount of ONE HUNDRED SIXTY
THOUSAND PESOS (P160,000) representing his civil obligation
covered by subject check,” deserves circumspect examination,
however, given that the obligation of petitioner to pay 10%
interest per month on the loan is unconscionable and against
public policy. The P160,000 check petitioner issued to Cristina
admittedly represented unpaid interest. By Cristina’s
information, the interest was computed at a fixed rate of 10% per
month. While the Usury Law ceiling on interest rates was lifted
by Central Bank Circular No. 905, nothing therein grants lenders
carte blanche to raise interest rates to levels which will either
enslave their borrowers or lead to a hemorrhaging of their assets.
Stipulations authorizing such interest are contra bonos mores, if
not against the law. They are, under Article 1409 of the New Civil
Code, inexistent and void from the beginning.
Same; Same; Same; Evidence; The presentation of the promissory
note may be dispensed with in a prosecution for violation of B.P.
Blg. 22 as the purpose for the issuance of such check is irrelevant
in the determination of the accused’s criminal liability.—
Respecting petitioner’s claim that since the promissory note
incorporating the stipulated 10% interest per month was not
presented, there is no written proof thereof, hence, his obligation
to pay the same must be void, the same fails. As reflected above,
Cristina admitted such stipulation. In any event, the presentation
of the promissory note may be dispensed with in a prosecution for
violation of B.P. Blg. 22 as the purpose for the issuance of such
check is irrelevant in the determination of the accused’s criminal
liability. It is for the purpose of determining his civil liability that
the document bears significance. Notably, however, Section 24 of
the Negotiable Instruments Law provides that “Every negotiable
instrument is deemed prima facie to have been issued for a
valuable consideration, and every person whose signature appears

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thereon to have become a party thereto for value.” It was

incumbent then on petitioner to prove that

661

the check was not for a valuable consideration. This he failed to

discharge. 

PETITION for review on certiorari of a decision of the

Court of Appeals.
  The facts are stated in the opinion of the Court.
Florosco P. Fronda for petitioner.
The Solicitor General for respondent.

CARPIO­MORALES, J.:
Assailed via Petition for Review on Certiorari is the
Court of Appeals Decision1 of November 16, 2006 denying
petitioner’s appeal from the December 22, 2005 Decision2 of
the Regional Trial Court (RTC) of Manila, Branch 14 which
affirmed the December 17, 2003 Judgment3 of the
Metropolitan Trial Court (MeTC) of Manila, Branch 5,
finding James Svendsen (petitioner) guilty of violation of
Batas Pambansa Blg. (B.P. Blg.) 22 or the Bouncing
Checks Law.
In October 1997, Cristina Reyes (Cristina) extended a
loan to petitioner in the amount of P200,000, to bear
interest at 10% a month. After petitioner had partially paid
his obligation, he failed to settle the balance thereof which
had reached P380,000 inclusive of interest.4
Cristina thus filed a collection suit against petitioner,
which was eventually settled when petitioner paid her
P200,0005 and issued in her favor an International
Exchange

_______________

1  Rollo, pp. 108­116. Penned by Associate Justice Estela Perlas­

Bernabe and concurred in by Associate Justices Renato Dacudao and
Rosmari Carandang.
2 Id., at pp. 45­50. Penned by Judge Cesar M. Solis.
3  Id., at pp. 21­30. Penned by Acting Presiding Judge Ma. Theresa
Dolores Gomez­Estoesta.
4 Id., at p. 109.
5 Ibid.

662

Bank check postdated February 2, 1999 (the check) in the

amount of P160,000 representing interest.6 The check was
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co­signed by one Wilhelm Bolton.

When the check was presented for payment on February
9, 1999, it was dishonored for having been Drawn Against
Insufficient Funds (DAIF).7
Cristina, through counsel, thus sent a letter to petitioner
by registered mail informing him that the check was
dishonored by the drawee bank, and demanding that he
make it good within five (5) days from receipt thereof.8
No settlement having been made by petitioner, Cristina
filed a complaint dated March 1, 1999 against him and his
co­signatory to the check, Bolton, for violation of B.P. Blg.
22 before the City Prosecutor’s Office of Manila. No
counter­affidavit was submitted by petitioner and his co­
respondent. An Information dated April 13, 1999 for
violation of B.P. Blg. No. 22 was thus filed on April 29,
1999 before the MeTC of Manila against the two, the
accusatory portion of which reads:

“That sometime in December 1998 the said accused did then

and there willfully, unlawfully, and feloniously and jointly make
or draw and issue to CRISTINA C. REYES to apply on account or
for value INTERNATIONAL EXCHANGE BANK check no.
0000009118 dated February 2, 1999 payable to CRISTINA
REYES in the amount of P160,000.00 said accused well knowing
that at the time of issue she/he/they did not have sufficient funds
and/or credit with the drawee bank for payment of such check in
full upon its presentment, which check after having been
deposited in the City of Manila, Philippines, and upon being
presented for payment within ninety (90) days from the date
thereof was subsequently dishonored by the drawee bank for
INSUFFICIENCY OF FUNDS and despite receipt of notice of
such dishonor, said accused failed to pay said CRISTINA C.
REYES the amount of the check or to make arrangement for full

_______________

6 TSN, October 11, 1999, p. 23.

7 Rollo, p. 109.
8 Id., at pp. 109­110.

663

payment of the same within five (5) banking days after receiving
said notice.
CONTRARY TO LAW.”9

Bolton having remained at large, the trial court never

acquired jurisdiction over his person.10
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By Judgment of December 17, 2003, Branch 5 of the

Manila MeTC found petitioner guilty as charged, disposing
as follows:

“WHEREFORE, this Court finds accused James Robert

Svendson [sic] GUILTY beyond reasonable doubt of a violation of
Batas Pambansa Blg. 22 (Bouncing Checks Law) and imposes
upon him to pay a fine of ONE HUNDRED SIXTY THOUSAND
PESOS (P160,000.00), with subsidiary imprisonment in case of
insolvency.
Accused is also made liable to pay private complainant Cristina
C. Reyes civil indemnity in the total amount of ONE HUNDRED
SIXTY THOUSAND PESOS (P160,000.00) representing his
civil obligation covered by subject check.
Meantime, considering that other accused Wilhelm Bolton
remains at large, let a warrant of arrest against him ISSUE.
Pending his apprehension, let the case against him be sent to the
ARCHIVES.” (Emphasis in the original; italics supplied)

As priorly stated, the RTC affirmed the MeTC judgment

and the Court of Appeals denied petitioner’s appeal.
Hence, the present petition for review.
Petitioner argues that the appellate court erred in
finding that the first element of violation of B.P. Blg. 22—
the making, drawing, and issuance of any check “to apply
on account or for value”—was present, as the obligation to
pay interest is void, the same not being in writing and the
10% monthly interest is unconscionable; in holding him
civilly liable in the amount of P160,000 to private
complainant, notwithstanding the inva­

_______________

9 MeTC Records, p. 2.
10 Rollo, pp. 110­111.

664

lidity of the interest stipulation; and in violating his right

to due process when it convicted him, notwithstanding the
absence of proof of receipt by him of a written notice of
dishonor.
The petition is impressed with merit.
Section 1 of B.P. Blg. 22 or the Bouncing Checks Law
reads:

“SECTION 1. Checks without sufficient funds.—Any person

who makes or draws and issues any check to apply on account or
for value, knowing at the time of issue that he does not have

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sufficient funds in or credit with the drawee bank for the payment
of such check in full upon its presentment, which check is
subsequently dishonored by the drawee bank for insufficiency of
funds or credit or would have been dishonored for the same
reason had not the drawer, without any valid reason, ordered the
bank to stop payment, shall be punished by imprisonment of not
less than thirty days but not more than one (1) year or by fine of
not less than but not more than double the amount of the check
which fine shall in no case exceed Two Hundred Thousand pesos,
or both such fine and imprisonment at the discretion of the court.
The same penalty shall be imposed upon any person who,
having sufficient funds in or credit with the drawee bank when he
makes or draws and issues a check, shall fail to keep sufficient
funds or to maintain a credit to cover the full amount of the check
if presented within a period of ninety (90) days from the date
appearing thereon, for which reason it is dishonored by the
drawee bank. Where the check is drawn by a corporation,
company or entity, the person or persons who actually signed the
check in behalf of such drawer shall be liable under this Act.”

For petitioner to be validly convicted of the crime under

B.P. Blg. 22, the following requisites must thus concur: (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
665

drawer, without any valid cause, ordered the bank to stop

payment.11
Petitioner admits having issued the postdated check to
Cristina. The check, however, was dishonored when
deposited for payment in Banco de Oro due to DAIF.
Hence, the first and the third elements obtain in the case.
As for the second element, Section 2 of B.P. Blg. 22
provides that

“[t]he making, drawing and issuance of a check payment of which

is refused by the drawee because of insufficient funds in or credit
with such bank, when presented within ninety (90) days from the
date of the check, shall be prima facie evidence of knowledge of
such insufficiency of funds or credit unless such maker or drawer
pays the holder thereof the amount due thereon, or makes
arrangements for payment in full by the drawee of such check
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within five (5) banking days after receiving notice that such check
has not been paid by the drawee.”

In Rico v. People of the Philippines,12 this Court held:

“x x x [I]f x x x notice of non­payment by the drawee bank is

not sent to the maker or drawer of the bum check, or if there is no
proof as to when such notice was received by the drawer, then the
presumption of knowledge as provided in Section 2 of B.P. 22
cannot arise, since there would simply be no way of reckoning the
crucial five­day period.
x x x In recent cases, we had the occasion to emphasize that
not only must there be a written notice of dishonor or demand
letters actually received by the drawer of a dishonored check, but
there must also be proof of receipt thereof that is properly
authenticated, and not mere registered receipt and/or return
receipt.

_______________

11 Arceo, Jr. v. People, G.R. No. 142641, July 17, 2006, 495 SCRA 204, 211;
Josef v. People, G.R. No. 146424, November 18, 2005, 475 SCRA 417, 420;
Domagsang v. Court of Appeals, 400 Phil. 847, 853; 347 SCRA 75, 80­81 (2000);
Lim v. People, 394 Phil. 844, 851­852; 340 SCRA 497, 502 (2000).
12 440 Phil. 540; 392 SCRA 61 (2002).

666

Thus, as held in Domagsang vs. Court of Appeals, while Section

2 of B.P. 22 indeed does not state that the notice of dishonor be in
writing, this must be taken in conjunction with Section 3 of the
law, i.e., “that where there are no sufficient funds in or credit with
such drawee bank, such fact shall always be explicitly stated in
the notice of dishonor or refusal.” A mere oral notice or demand to
pay would appear to be insufficient for conviction under the law.
In our view, both the spirit and letter of the Bouncing Checks Law
require for the act to be punished thereunder not only that the
accused issued a check that is dishonored, but also that the
accused has actually been notified in writing of the fact of
dishonor. This is consistent with the rule that penal statues must
be construed strictly against the state and liberally in favor of the
accused. x x x
In fine, the failure of the prosecution to prove the existence and
receipt by petitioner of the requisite written notice of dishonor
and that he was given at least five banking days within which to
settle his account constitutes sufficient ground for his acquittal.”13
(Italics in the original; emphasis and italics supplied)

The evidence for the prosecution failed to prove the

second element. While the registry receipt,14 which is said
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to cover the letter­notice of dishonor and of demand sent to

petitioner, was presented, there is no proof that he or a
duly authorized agent received the same. Receipts for
registered letters including return receipts do not
themselves prove receipt; they must be properly
authenticated to serve as proof of receipt of the letters.15
Thus in Ting v. Court of Appeals,16 this Court observed:

“x x x All that we have on record is an illegible signature on the

registry receipt as evidence that someone received the letter. As to
whether this signature is that of one of the petitioners or of their
authorized agent remains a mystery. From the registry receipt
alone, it is possible that petitioners or their authorized agent did

_______________

13 Id., at pp. 554­555; pp. 73­74.

14 MeTC Records, p. 49.
15 Supra note 12 at pp. 540­555.
16 398 Phil. 481; 344 SCRA 551 (2000).

667

receive the demand letter. Possibilities, however, cannot replace

proof beyond reasonable doubt.”17

For failure then to prove all the elements of violation of

B.P. Blg. 22, petitioner’s acquittal is in order.
Petitioner is civilly liable, however. For in a criminal
case, the social injury is sought to be repaired through the
imposition of the corresponding penalty, whereas with
respect to the personal injury of the victim, it is sought to
be compensated through indemnity, which is civil in
nature.18
The decision of the MeTC, which was affirmed on appeal
by the RTC and the appellate court, ordering petitioner “to
pay private complainant Cristina C. Reyes civil indemnity
in the total amount of ONE HUNDRED SIXTY
THOUSAND PESOS (P160,000) representing his civil
obligation covered by subject check,” deserves circumspect
examination, however, given that the obligation of
petitioner to pay 10% interest per month on the loan is
unconscionable and against public policy.
The P160,000 check petitioner issued to Cristina
admittedly represented unpaid interest. By Cristina’s
information, the interest was computed at a fixed rate of
10% per month.19
While the Usury Law ceiling on interest rates was lifted
by Central Bank Circular No. 905, nothing therein grants

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lenders carte blanche to raise interest rates to levels which

will either enslave their borrowers or lead to a
hemorrhaging of their assets.20 Stipulations authorizing
such interest are contra bonos mores, if not against the law.
They are, under Arti­

_______________

17 Id., at p. 494; p. 562.

18 1 Reyes, The Revised Penal Code, 15th ed., 2001, p. 875; vide also
Ramos v. Gonong, 164 Phil. 557, 563; 72 SCRA 559, 566 (1976).
19 TSN, October 11, 1999, p. 20.
20 Solangon v. Salazar, 412 Phil. 816, 822; 360 SCRA 379, 384 (2001);
Ruiz v. Court of Appeals, G.R. No. 146942, April 22, 2002, 401 SCRA 410,
421.

668

cle 140921 of the New Civil Code, inexistent and void from
the beginning.22
The interest rate of 10% per month agreed upon by the
parties in this case being clearly excessive, iniquitous and
unconscionable cannot thus be sustained. In Macalalag v.
People,23 Diño v. Jardines,24 and in Cuaton v. Salud,25 this
Court, finding the 10% per month interest rate to be
unconscionable, reduced it to 12% per annum. And in other
cases26 where the

_______________

21  ART. 1409. The following contracts are inexistent and void from
the beginning:
(1) Those whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the
transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the
principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set
up the defense of illegality be waived.
22  Cuaton v. Salud, 465 Phil. 999, 1005; 421 SCRA 278, 282­283
(2004).
23 G.R. No. 164358, December 20, 2006, 511 SCRA 400.
24 G.R. No. 145871, January 31, 2006, 481 SCRA 226.

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25 G.R. No. 158382, January 27, 2004, 421 SCRA 278.

26 In Arrofo v. Quiño (G.R. No. 145794, January 26, 2005, 449 SCRA
284), this Court reduced the 7% interest per month to 18% per annum. In
Medel v. Court of Appeals (359 Phil. 820; 299 SCRA 481 [1998]), the
interest stipulated at 5.5% per month was found unconscionable and was
reduced to 12% per annum. In Ruiz v. Court of Appeals (G.R. No. 146942,
April 22, 2003, 401 SCRA 410), the interest rate of 3% per month was
reduced to 1% per month. In Solangon v. Salazar (412 Phil. 816; 360
SCRA 379 [2001]), the stipulated interest rate of 6% per month was
reduced to 12% per annum.

668

interest rates stipulated were even less than that involved

herein, the Court equitably reduced them.
This Court deems it fair and reasonable then, consistent
with existing jurisprudence, to adjust the civil indemnity to
P16,000, the equivalent of petitioner’s unpaid interest on
the P200,000 loan at 12% percent per annum as of
February 2, 1999, the date of the check, plus 12% per
annum interest to be computed from April 29, 1999, the
date of judicial demand (date of the filing of the
Information) up to the finality of this judgment. After the
judgment becomes final and executory until the obligation
is satisfied, the total amount due shall bear interest at 12%
per annum.27
Respecting petitioner’s claim that since the promissory
note incorporating the stipulated 10% interest per month
was not presented, there is no written proof thereof, hence,
his obligation to pay the same must be void, the same fails.
As reflected above, Cristina admitted such stipulation.
In any event, the presentation of the promissory note
may be dispensed with in a prosecution for violation of B.P.
Blg. 22 as the purpose for the issuance of such check is
irrelevant in the determination of the accused’s criminal
liability. It is for the purpose of determining his civil
liability that the document bears significance. Notably,
however, Section 24 of the Negotiable Instruments Law
provides that “Every negotiable instrument is deemed
prima facie to have been issued for a valuable
consideration, and every person whose signature appears
thereon to have become a party thereto for value.” It was
incumbent then on petitioner to prove that the check was
not for a valuable consideration. This he failed to
discharge.
WHEREFORE, the Court of Appeals Decision of
November 16, 2006 is REVERSED and SET ASIDE.

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27  Cuaton v. Salud, 465 Phil. 999, 1006­1007; 421 SCRA 278, 284
(2004) citing Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No.
97412, July 13, 1994, 234 SCRA 78, 95­97.

670

Petitioner, James Svendsen, is acquitted of the crime

charged for failure of the prosecution to prove his guilt
beyond reasonable doubt.
He is, however, ordered to pay private complainant,
Cristina C. Reyes, the amount of SIXTEEN THOUSAND
PESOS (P16,000) representing civil indemnity, plus 12%
interest per annum computed from April 29, 1999 up to the
finality of this judgment. After the judgment becomes final
and executory until the obligation is satisfied, the total
amount due shall earn interest at 12% per annum.
SO ORDERED.

Quisumbing (Chairperson), Carpio, Tinga and Velasco,

Jr., JJ., concur.

Judgment reversed and set aside.

Notes.—The gravamen of the offense punished by B.P.

22 is the act of making and issuing a worthless check or a
check that is dishonored upon its presentation for payment
—it is not the nonpayment of an obligation which the law
punishes. (Recuerdo vs. People, 395 SCRA 638 [2003])
The act of a court employee in issuing a bouncing check
constitutes misconduct which is a ground for disciplinary
action. (Mamaclay vs. Francisco, 399 SCRA 251 [2003])
——o0o——

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