Bouncing Checks Law

Bouncing Checks Law The Bouncing Checks Law, or Batas Pambansa (BP) Blg. 22, is a law that governs the criminal liability arising from the issuance of bounced checks. What the law punishes is the issuance of a bouncingcheck and not the purpose for which the check was issued, nor the terms and conditions of its issuance. To determine the reasons for which checks are issued, or the terms and conditions for their issuance, will greatly erode the faith the public reposes in the stability and commercial value of checks as currency substitutes, and bring about havoc in trade and in banking communities. Contents [hide]

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1 Constitutional challenge

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1.1 Non-imprisonment for debt

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1.2 Impairment of freedom of contract

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1.3 Equal protection of the laws

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1.4 Improper delegation of legislative powers

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1.5 Defect in the enactment of BP 22

2 Elements of the offense

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2.1 Distinct offenses under Section 1

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2.2 Elements: General

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2.2.1 Element 1: Issuance of check

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2.2.2 Element 2: Knowledge of insufficiency of funds

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2.2.3 Element 3: Dishonor of check

3 Jurisdiction

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3.1 What court filed

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3.2 Where filed

4 Other Issues

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4.1 Separate from estafa

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4.2 The issuer is not automatically liable simply because the check “bounced”

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4.3 Check as guarantee

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4.4 Filing fees are generally not required for criminal cases

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4.5 Issuance of warrant of arrest

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4.6 Hold Departure Order (HDO)

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4.7 Applicable penalties

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4.8 Effect of dismissal on civil aspect

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5 See Also

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6 References

Constitutional challenge The attacks on the constitutionality of BP 22, as discussed in Lozano vs. Martinez,

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are the following: (1)

it offends the constitutional provision forbidding imprisonment for debt; (2) it impairs freedom of contract; (3) it contravenes the equal protection clause; (4) it unduly delegates legislative and executive powers; and (5) its enactment is flawed in that during its passage the Interim Batasan violated the constitutional provision prohibiting amendments to a bill on Third Reading. Unless otherwise indicated, the succeeding discussions are lifted from Lozano.

Non-imprisonment for debt It had been argued that BP 22 runs counter to the inhibition in the Bill of Rights which states, "No person shall be imprisoned for debt or non-payment of a poll tax." Since the offense under BP 22 is consummated only upon the dishonor or non-payment of the check when it is presented to the drawee bank, the statute is really a "bad debt law" rather than a "bad check law." What it punishes is the nonpayment of the check, not the act of issuing it. The statute, it is claimed, is nothing more than a veiled device to coerce payment of a debt under the threat of penal sanction. The gravamen of the offense punished by BP 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 non-payment of an obligation which the law punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust of the law is to prohibit, under pain of penal sanctions, the making of worthless checks and putting them in circulation. Because of its deleterious effects on the public interest, the practice is proscribed by the law. The law punishes the act not as an offense against property, but an offense against public order. It may be constitutionally impermissible for the legislature to penalize a person for non-payment of a debt ex contractu But certainly it is within the prerogative of the lawmaking body to proscribe certain acts deemed pernicious and inimical to public welfare. Acts mala in se are not the only acts which the law can punish. An act may not be considered by society as inherently wrong, hence, not malum in se but because of the harm that it inflicts on the community, it can be outlawed and criminally punished as malum prohibitum. The state can do this in the exercise of its police power. The enactment of BP 22 is a declaration by the legislature that, as a matter of public policy, the making and issuance of a worthless check is deemed public nuisance to be abated by the imposition of penal sanctions. It had been reported that the approximate value of bouncing checks per day was close to 200 million pesos.

It is not for the court to question the wisdom or policy of the statute. It is sufficient that a reasonable nexus exists between means and end. Considering the factual and legal antecedents that led to the adoption of the statute, it is not difficult to understand the public concern which prompted its enactment.

Impairment of freedom of contract Article III, Section 10 of the Constitution provides that: "No law impairing the obligation of contracts shall be passed." However, the freedom of contract which is constitutionally protected is freedom to enter into "lawful" contracts. Contracts which contravene public policy are not lawful. Checks can not be categorized as mere contracts. It is a commercial instrument which, in this modem day and age, has become a convenient substitute for money; it forms part of the banking system and therefore not entirely free from the regulatory power of the state.

Equal protection of the laws The challenge is to the effect that BP 22 is discriminatory or is violative of the equal protection of the laws since it penalizes the drawer of the check, but not the payee. It had been argued that the payee is just as responsible for the crime as the drawer of the check, since without the indispensable participation of the payee by his acceptance of the check there would be no crime. It is settled, however, that the clause "equal protection of the laws" does not preclude classification of individuals, who may be accorded different treatment under the law as long as the classification is no unreasonable or arbitrary. The argument premised on the equal protection of the law is tantamount to saying that, to give equal protection, the law should punish both the swindler and the swindled.

Improper delegation of legislative powers It had been argued that the law violates the Constitutional prohibition against the delegation of legislative power, on the theory that the offense is not completed by the sole act of the maker or drawer but is made to depend on the will of the payee -- if the payee does not present the check to the bank for payment but instead keeps it, there would be no crime. This argument, however, stretches to absurdity the meaning of "delegation of legislative power." What cannot be delegated is the power to legislate, or the power to make laws. which means, as applied to the present case, the power to define the offense sought to be punished and to prescribe the penalty. By no stretch of logic or imagination can it be said that the power to define the crime and prescribe the penalty therefor has been in any manner delegated to the payee. Neither is there any provision in the statute that can be construed, no matter how remotely, as undue delegation of executive power.

Defect in the enactment of BP 22 It is argued that Section 9 (2) of Article VII of the 1973 Constitution was violated by the legislative body when it enacted BP 22 into law. This constitutional provision prohibits the introduction of amendments to a bill during the Third Reading. It is claimed that during its Third Reading, the bill which eventually

became BP 22 was amended in that the text of the second paragraph of Section 1 of the bill as adopted on Second Reading was altered or changed in the printed text of the bill submitted for approval on Third Reading. However, it is clear from the records that the text of the second paragraph of Section 1 of BP 22 is the text which was actually approved by the body on Second Reading.

Elements of the offense Distinct offenses under Section 1 [3]

Section 1 of the Bouncing Checks Law penalizes two distinct acts: 

(1) Making or drawing and issuing any check to apply on account or for value, knowing at the time of issue that the drawer does not have sufficient funds in or credit with the drawee bank.

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(2) Having sufficient funds in or credit with the drawee bank 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 90 days from the date appearing thereon, for which reason it is dishonored by the drawee bank. In the first paragraph, the drawer knows that he does not have sufficient funds to cover the check at the time of its issuance, while in the second paragraph, the drawer has sufficient funds at the time of issuance but fails to keep sufficient funds or maintain credit within ninety (90) days from the date appearing on the check. In both instances, the offense is consummated by the dishonor of the check for insufficiency of funds or credit. The check involved in the first offense is worthless at the time of issuance since the drawer had neither sufficient funds in nor credit with the drawee bank at the time, while that involved in the second offense is good when issued as drawer had sufficient funds in or credit with the drawee bank when issued. Under the first offense, the 90-day presentment period is not expressly provided, while such period is an express element of the second offense.

Elements: General The elements of the offense under Section 1 of B.P. Blg. 22 are: 

(1) drawing and issuance of any check to apply on account or for value;

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(2) knowledge by the maker, drawer, or issuer that at the time of issue he did not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon presentment; and

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(3) said 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 [4]

valid reason, ordered the bank to stop payment.

Element 1: Issuance of check The gravamen of the offense punished by B.P. Blg. 22 is the act of making or issuing a worthless check or a check that is dishonored upon its presentation for payment. The mere act of issuing a worthless check – whether as a deposit, as a guarantee or even as [5]

evidence of pre-existing debt – is malum prohibitum.

Element 2: Knowledge of insufficiency of funds It must be shown beyond reasonable doubt that the accused knew of the insufficiency of funds at the time the check was issued. BP 22 provides that the accused must be notified of the dishonor, thus: SEC. 2. Evidence of knowledge of insufficient funds. – The making, drawing and issuance of a check payment of which is refused by the drawee bank 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 within five (5) banking days after receiving notice that such check has not been paid by the drawee. The prosecution must establish that the accused was actually notified that the check was dishonored, and that he or she failed, within five banking days from receipt of the notice, to pay the holder of the check the amount due thereon or to make arrangement for its payment. The notice of dishonor of a check to the maker must be in writing. A mere oral notice to the drawer or maker of the dishonor of his check is not enough. It's true that Section 2 does not state that the notice of dishonor be in writing. This, however, should be taken in conjunction with Section 3, which provides “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.”This is consistent with the rule that penal statutes have to be construed strictly against the State and liberally in favor of the accused. Without a written notice of dishonor of the checks, there is no way of determining when the 5-day period prescribed in Section 2 would start and end.

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In other words, the prima facie presumption arises when a check is issued. But the law also provides that the presumption does not arise when the issuer pays the amount of the check or makes arrangement for its payment "within five banking days after receiving notice that such check has not been paid by the drawee." Verily, BP 22 gives the accused an opportunity to satisfy the amount indicated in the check and thus avert prosecution.

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The absence of a notice of dishonor necessarily deprives an accused an

opportunity to preclude a criminal prosecution. Procedural due process clearly enjoins

that a notice of dishonor be actually sent to and received by the accused. The accused has a right to demand – and the basic postulates of fairness require – that the notice of dishonor be actually sent to and received by the same to afford him/her the opportunity to avert prosecution under B.P. 22.

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The foregoing discussion abundantly shows that the notice must be in writing. A verbal and indirect notice, however, was found to be sufficient in the case of Yulo vs. [9]

People.

The pertinent finding of fact in this case is as follows:

As Myrna [the complainant] did not know petitioner’s [the accused] address, she immediately informed Josefina [the "best friend of the accused] about the dishonored checks. The latter told Myrna not to worry and repeated her assurance that petitioner is her best friend and a good payer. Myrna tried to get petitioner’s address from Josefina, but the latter refused and instead made the assurance that she will inform petitioner that the checks were dishonored. It is clear from these findings that there was no written notice given to the accused. It is also clear that no notice, even a verbal notice, was given directly to the accused. Still, the Supreme Courtconcluded that: We likewise find no reason to sustain petitioner’s contention that she was not given any notice of dishonor. Myrna had no reason to be suspicious of petitioner. It will be recalled that Josefina Dimalanta assured Myrna that petitioner is her "best friend" and "a good payer." Consequently, when the checks bounced, Myrna would naturally turn to Josefina for help. We note that Josefina refused to give Myrna petitioner’s address but promised to inform petitioner about the dishonored checks. This ruling would appear to be inconsistent with the required burden of proof and the rule of interpretation of penal laws, succinctly noted in King vs. People, thus: We must stress that BP 22, like all penal statutes, is construed strictly against the State and liberally in favor of the accused. Likewise, the prosecution has the burden to prove beyond reasonable doubt each element of the crime. Hence, the prosecution’s case must rise or fall on the strength of its own evidence, never on the weakness or even absence of that of the defense.

Element 3: Dishonor of check Under Section 3 of BP 22, "the introduction in evidence of any unpaid and dishonored check, having the drawee’s refusal to pay stamped or written thereon, or attached thereto, with the reason therefor as aforesaid, shall be prima facie evidence of the making or issuance of said check, and the due presentment to the drawee for payment and the dishonor thereof, and that the same was properly dishonored for the reason written, stamped, or attached by the drawee on such dishonored check." For instance, in

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the case of King vs. People,

, the prosecution presented the checks which were

stamped with the words “ACCOUNT CLOSED,” supported by the returned check tickets issued by the depository bank stating that the checks had been dishonored. The documents constitute prima facie evidence that the drawee bank dishonored the checks, and no no evidence was presented to rebut the claim.

Jurisdiction What court filed Violations of BP 22 are within the exclusive jurisdiction of the Municipal Trial Courts or Metropolitan Trial Courts (MTC). This means that the Information or case can only be filed with the MTC, regardless of the amount involved.

Where filed (For editing)

Other Issues Separate from estafa (For editing)

The issuer is not automatically liable simply because the check “bounced” A check generally “bounces” when dishonored upon presentment (reasons include, account closed, drawn against insufficient funds or DAIF). However, it is indispensable that the issuer must be notified in WRITING about the fact of dishonor, and he has 5 days from receipt to pay the value of the check or make arrangements for the payment thereof.

Check as guarantee As noted above, law punishes the mere issuance of a bouncing check and not the purpose for which the check was issued, nor the terms and conditions of its issuance. The mere act of issuing a worthless check is malum prohibitum, and the argument that the check is merely to guarantee payment of an obligation is not a defense.

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Filing fees are generally not required for criminal cases For B.P. 22 cases, however, the complainant is required to pay the filing fees (based on the value of the check/s and the damages claimed, just like in civil cases) upon filing of the case in court.

Issuance of warrant of arrest

One major deterrent against bouncing checks is the threat of a warrant of arrest being issued once the criminal case is filed in court. This is no longer true. No warrant of arrest is issued unless the accused fails to appear when required by the court.

Hold Departure Order (HDO) Even if a criminal case under B.P. 22 is filed, the court can’t issue a HDO. All violations of the Bouncing Checks Law, regardless of the amount involved, are filed only with the municipal/metropolitan trial courts. These courts cannot issue a HDO.

Applicable penalties Courts have the discretion of imposing: (a) imprisonment only; (b) fine only; OR (c) both. It is entirely possible that only a fine, without imprisonment, is imposed.

Effect of dismissal on civil aspect The dismissal of the criminal case for BP 22 does not automatically result to the dismissal of the civil aspect. Civil liability is not extinguished by acquittal where such acquittal is based on lack of proof beyond reasonable doubt, since only preponderance of evidence is required in civil cases.

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