G.R. No. 50173 September 21, 1993
HANIEL R. CASTRO and PIO C. CASTRO, petitioners, vs. HON. RAFAEL T. MENDOZA, Judge of the Court of First Instance of Cebu, Branch VI, and THE PEOPLE OF THE PHILIPPINES, respondents.

FACTS

Petitioners Pio Castro and his son Haniel Castro were convicted of estafa under Article 315, paragraph 2(d) of the Revised Penal Code for issuing a “bad check.” The information alleged that on or about April 21, 1975, in Cebu City, the accused, conniving together and with intent to defraud Victor Elipe, issued Insular Bank of Asia and America Check No. TAG 1600-702 for P18,200.00 in payment of construction materials, knowing they had no sufficient funds. The check was dishonored upon presentment, and despite demands, they failed to make it good.
The facts arose prior to the enactment of Batas Pambansa Blg. 22. Pio Castro met Victor Elipe in October 1974 and proposed to buy construction materials from Elipe’s hardware store on a cash basis. Deliveries were made between October 9, 1974, and November 25, 1974, but no payments were made, accumulating an unpaid account of P18,081.15. After repeated demands, Haniel Castro issued the subject check on April 21, 1975, for the entire amount. The check was dishonored as the account was already closed. The trial court found both accused guilty and sentenced them to imprisonment, indemnification, and costs.

ISSUE

Whether the issuance of a check in payment of a pre-existing obligation constitutes estafa under Article 315, paragraph 2(d) of the Revised Penal Code, as amended.

RULING

No. The Supreme Court reversed the trial court’s decision and acquitted the petitioners. The Court held that for estafa under Article 315, paragraph 2(d), the false pretense or fraudulent act must be executed prior to or simultaneously with the commission of the fraud. The essential elements are: (1) a check is drawn or postdated in payment of an obligation contracted at the time the check was issued; (2) there are no sufficient funds to cover the check; and (3) the payee sustains damage. In this case, the check was issued to pay a pre-existing obligation for materials delivered earlier. The drawer derived no material benefit or contemporary gain from issuing the check, as the obligation was already incurred. The deceit was not the efficient cause of the defraudation. The Court cited precedents (People vs. Sabio, et al.; Tan Tao Liap vs. Court of Appeals; Lagua vs. Cusi) establishing that issuing a bouncing check in payment of a pre-existing obligation does not constitute estafa. The transactions had effectively become sales on credit, creating simple money obligations. Batas Pambansa Blg. 22, which penalizes the mere issuance of a dishonored check, could not apply retroactively. The Solicitor General concurred with the recommendation for acquittal.