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Subject: Liberal construction

Nari K. Gidwani v. People


G.R. no. 195064
January 15, 2014

Facts:
G.G. Sportswear Manufacturing Corporation (GSMC) secured the embroidery services of
El Grande Industrial Corporation (El Grande) and issued on various dates from June 1997 to
December 1997 a total of 10 Banco De Oro (BDO) checks as payments aggregating to a total of
P1, 626, 707.62. However, the checks were dishonoured by drawee bank for having been drawn
against a closed account. On August 29, 1997, GSMC had filed a petition with the Securities and
Exchange Commission (SEC) wherein it was a Petition for Declaration of a State of Suspension
of Payments for the Approval of a Rehabilitation Plan and Appointment of a Management
Committee, thus the non-payment of GSMC to El Grande.

Issue:
Is GSMC liable of eight counts of violation of BP 22?

Ruling:
No. It is considered that there was a prior notice of a lawful order from the SEC
suspending all payments of claims before the presentment for payment. It was incumbent upon
GSMC to follow the SEC order and that it was established that the accounts were closed
pursuant to the Order, without a different set of circumstances might have dictated his liability
for those checks. From these premises, the contract is deemed suspended and there was yet no
obligation due from petitioner.
The Court applied the basic principle in criminal law that any ambiguity in the
interpretation or application of law must be made in favour 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 a law with the jurisdiction to order. Therefore, GSMC is
not liable of violations of BP 22.