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Tan v. Mendez, JR., G.R. No. 138669, June 6, 2002

Fabian Mendez, owner of gasoline stations, had an agreement with Steve and Marciano Tan where Mendez would supply their bus company with fuel and lubricants in exchange for payment via checks. The Tans also designated Mendez as a booking agent for ticket sales. A check for $58,237.75 issued to Mendez bounced due to insufficient funds. The Tans tried to offset this with ticket sale proceeds but the court found this was not a valid payment. While the Tans violated the bouncing checks law, the court lessened the punishment to a fine doubling the bounced check amount instead of imprisonment, since they made efforts to settle the debt.

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102 views2 pages

Tan v. Mendez, JR., G.R. No. 138669, June 6, 2002

Fabian Mendez, owner of gasoline stations, had an agreement with Steve and Marciano Tan where Mendez would supply their bus company with fuel and lubricants in exchange for payment via checks. The Tans also designated Mendez as a booking agent for ticket sales. A check for $58,237.75 issued to Mendez bounced due to insufficient funds. The Tans tried to offset this with ticket sale proceeds but the court found this was not a valid payment. While the Tans violated the bouncing checks law, the court lessened the punishment to a fine doubling the bounced check amount instead of imprisonment, since they made efforts to settle the debt.

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iyaking CPA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Facts

Fabian Mendez, respondent, owner of gasoline stations in Iriga City made business with Steve
Tan and Marciano Tan, petitioners, who are the co-owners of Master Tours and Travel
Corporation. First business agenda is that Mendez is to supply the buses of Master Tours and
Travel Corporation with lubricants and fuel, which agreed that checks will be used as their
mode of payment. Secondly, the Tans also designate Mendez as booking and ticketing agent of
their Philippine Lawin Bus Co. in Iriga City of which proceeds of ticket sales should be remitted
to them through the issuance of checks.

Check numbered 704227 amounting to Php58,237.75 dated June 4, 1991 was issued for
payment of gasoline and lubricants consumed during the 15 day period starting May 2, 1991.
However, upon presenting to the drawee bank, said check was dishonored due to insufficiency
of funds. Mendez then demanded payment from the petitioners until disregarded hence resorted
to file a complaint before the RTC of Iriga City for violation of B.P. 22 or the Bouncing Checks
Law.

On June 10, 1991, two checks from the remittance on the tickets sales from Iriga city and
another two from sales in Baao offices formed part of an issued memorandum by the
petitioners. The memo is serve to offset their liability on the Php58,237.75 dishonored checks
and other checks also dishonored due to insufficiency of funds which totaled Php235,387.33.

Trial Court rulings convicted petitioners of violation of B.P. 22 and were liable the sum of
Php58,237.75 with legal interest from the date of judicial demand with six month imprisonment.

Issue

1. Whether the petitioners have violated B.P. 22 or the Bouncing Checks Law
2. Whether the case can be considered offset through payment of compensation which will
prevent the petitioners to be held liable under B.P. 22 or the Bouncing Checks Law.

Disposition
1. Yes. The Court finds all requisites stated in B.P. 22 to be present in the case which
makes petitioners in violators of the said law. Marciano Tan admitted that they still have
uncollected receivables hence might cause insufficiency of funds when checks issued
were presented for encashment. But still they opted to give checks to Mendez as a form
of payment. This act alone, according to Court, constitutes violation of B.P. 22 and is
considered detrimental to the public welfare. Especially since checks are widely used as
part of economic trade it is therefore vital to regulate the issuance of worthless checks.
2. No. An element under Article 1278 of the Civil Code to be acknowledged as payment of
compensation is that individuals involved have a creditor- debtor-relationship. In the
case at bar, the Court point out that the two tickets stated in the memorandum issued by
the petitioners on June 10, 1991 were from ticket sales in Baao office where the
respondent is not the agent. Therefore it should not be acknowledged as payment for
compensation and should not be offset. Another basis on the ruling is that the checks
from tickets sales should have first applied to earlier dishonored checks amounting
Php235,387.33 and not on the Php58,237.75. Lastly, the Court found it interesting that
the petitioners never resorted to the compensation when they received the demand
letter, during preliminary investigation, or before trial by filing a motion to dismiss.

On the issue if whether payment of compensation should prevent the petitioners to be


held liable under B.P. 22, the Court held that even if payment had been made in
whatever form, the mere fact that the petitioners had knowledge in issuing check with no
sufficient funds to back it up established all elements to complete the act as violation of
the Bouncing Checks Law. It is therefore clear that the petitioners are held liable in
violation of the said law.

The final Court ruling on the petition is denied, causing the previous decision of Ca affirmed but
with certain modification on its punishment. The Court seemed fit for the petitioners to not be
imposed with imprisonment because of noted exerted efforts to settle their obligation. However,
a fine doubling the previous amount of Php58,237.75 instead with subsidiary imprisonment not
exceeding six months in case of insolvency or non-payment will be enforce upon petitioners.

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