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It is a basic principle in criminal law that any ambiguity in the interpretation or application of the law must be made in favor of the accused.

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Nari is the president of G.G. Sportswear Manufacturing Corporation, a company engaged in the export of ready to wear clothes. From June 1997 to December, 1997, Nari as signatory issued 10 company checks to El Grande as payment for services. Eight of the checks when presented for payment were dishonored, hence El Grande thru counsel sent a demand letter to Nari. Nari in turn informed El Grande that on August 8, 1997, the corporation had filed a Petition with the Securities and Exchange Commission (SEC). It was a Petition for the Declaration of a State of Suspension of Payments, for the Approval of a Rehabilitation Plan and Appointment of a Management Committee.[Acting on the Petition, the SEC issued an Order[8] on 3 September 1997 ordering the suspension of all actions, claims, and proceedings against GSMC until further order from the SEC Hearing Panel. Petitioner attached this SEC Order to the 15 October 1997 letter. In short, GSMC did not pay El Grande. Despite receipt of this letter, El Grande still presented for payment the two other checks, and when dishonored, filed a case for violation of BP 22 against Nari. After trial, Nari was convicted by the MTC, and affirmed by the Regional Trial Court. The Court of Appeals however acquitted her on the eight counts but affirmed her conviction for BP 22.

In her appeal to the Supreme Court, Nari pleaded that she cannot be held liable for violation of BP 22 because SEC Order suspending the order of payments was a valid reason for her to dishonour the checks.

The Supreme Court:

The Court of Appeals erred in applying the ruling in Tiong vs. Co (G.R. No. 133608, 26 August 2008, 563 SCRA 239, 249-251), citing that the facts of this case are not on all fours with the said ruling:

“However, what the CA failed to consider was that the facts of Tiong were not on all fours with those of the present case and must be put in the proper context.  In Tiong, the presentment for payment and the dishonor of the checks took place before the Petition for Suspension of Payments for Rehabilitation Purposes was filed with the SEC. There was already an obligation to pay the amount covered by the checks. The criminal action for the violations of B.P. 22 was filed for failure to meet this obligation. The criminal proceedings were already underway when the SEC issued an Omnibus Order creating a Management Committee and consequently suspending all actions for claims against the debtor therein. Thus, in Tiong, this Court took pains to differentiate the criminal action, the civil liability and the administrative proceedings involved.

In contrast, it is clear that prior to the presentment for payment and the subsequent demand letters to petitioner, there was already a lawful Order from the SEC suspending all payments of claims. It was incumbent on him to follow that SEC Order.  He was able to sufficiently establish that the accounts were closed pursuant to the Order, without which a different set of circumstances might have dictated his liability for those checks.

Considering that there was a lawful Order from the SEC, the contract is deemed suspended. When a contract is suspended, it temporarily ceases to be operative; and it again becomes operative when a condition occurs – or a situation arises – warranting the termination of the suspension of the contract.

In other words, the SEC Order also created a suspensive condition. When a contract is subject to a suspensive condition, its birth takes place or its effectivity commences only if and when the event that constitutes the condition happens or is fulfilled. Thus, at the time private respondent presented the September and October 1997 checks for encashment, it had no right to do so, as there was yet no obligation due from petitioner.

Moreover, it is a basic principle in criminal law that any ambiguity in the interpretation or application of the law must be made in favor of the accused. Surely, our laws should not be interpreted in such a way that the interpretation would result in the disobedience of a lawful order of an authority vested by law with the jurisdiction to issue the order.

Consequently, because there was a suspension of GSMC’s obligations, petitioner may not be held liable for the civil obligations of the corporation covered by the bank checks at the time this case arose. However, it must be emphasized that her non-liability should not prejudice the right of El Grande to pursue its claim through remedies available to it, subject to the SEC proceedings regarding the application for corporate rehabilitation.

G.R. No. 195064, January 15, 2014 ]NARI K. GIDWANI, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.



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