BP 22 Bouncing Checks Law

BP 22 Bouncing Checks Law *Checks – a written request or order by a depositor called the “drawer” to a bank, called the “drawee,” to pay on encashment a person called a “payee,” a certain sum of money. *Bouncing check – check that has no funds or credit to cover its amount i.e. DAIF (drawn against insufficient fund check) or NSF (no-sufficient fund check). *Post dated check – one that is dated after it is issued and delivered *Reason for enactment – Art. 315, Par 2 d of the RPC does not include in the crime of estafa the act of issuing a bounced check in payment of pre-existing obligation. *Purpose of BP 22 – to put a stop to the harmful practice of circulating worthless check which when multiplied a thousand fold, can very well pollute the channels of trade and hurt the welfare of society and public interest. (Pp. vs. Lozano) *Constitutionality – BP 22 is a fundamental exercise by the state of its police power or to pass laws that will promote health, morals and general welfare of the people. What BP 22 punishes is the issuance of a worthless check and not the non-payment of debt. - it does not violates the non – impairment clause because checks are not merely contract but are substitute for money. They form part of the banking system and not entirely free from the regulatory power of the state. *Checks covered - present-dated or post- dated, issued to apply on account (to pay a preexisting obligation), or for value (given in mutual or simultaneous exchange for something of value), guarantee, accommodation or deposit checks, memorandum and a foreign checks 

Acts Punished

1. Issuing any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds with the d bank for payment of such checks upon presentment, which check is subsequently dishonored by the bank for insufficiency of funds or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment.  1. 2. 3.

Elements A person issues any check. Check is made to apply on account or for value. The person knows at the time of issuance that he does not have sufficient funds with the bank. 4. The check is subsequently dishonored, or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment. 2. Having sufficient funds with the bank when he issues a check, but failed to keep sufficient funds 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 bank.  Elements 1. The person has sufficient funds in the bank when he issues a check. 2. He fails to keep sufficient funds to cover the full amount of the check if presented within 90 days from the date thereon. 3. The check is dishonored. Page 1 of 4

*Imposable Penalties 1. Imprisonment of not less than 30 days but not exceeding 1 year. 2. Fine of not less than but not more than double the amount of the check, which shall not to exceed Php 200,000 3. Both imprisonment and fine. *Circular # 12-2000 - if there is good faith or a clear mistake on the part of the accused and he is a first time offender or the issuance of the check was the offshoot of a legitimate business transaction, imposition of fine alone should be considered as the more appropriate penalty. *Circular #13-2001 - It clarifies that circular # 12-2000 does not remove imprisonment as an alternative penalty for violations of BP22. It also stated that circular #12-2000 does not remove imprisonment as an alternative penalty but merely lays down a rule of preference in the application of the penalties. *Persons Liable Personal checks – the signatory or the signatories Corporate checks – the person or persons who actually signed the bounced check. 

Lina Lim Lao vs. Court of Appeals – the SC underscored the point that being a signatory to the dishonored corporate checks nearly engenders the prima facie presumption that as officer of the corporation, the accused who co-signed the check knew of the insufficiency of funds. It does not, however, make the accused automatically guilty under BP22. *Rule on Notice of Dishonor

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Corporate checks – Responsibilities under BP22 is personal to the accused so that the latter’s own knowledge of the dishonor is necessary. Constructive notice to the corporation, as when the demand was sent to the main and not to its extension office where the accused was on field duty is not enough to satisfy due process. Notice to the corporation which has a personality distinct and separate from the officer who issued the check is not tantamount to notice to the latter. (Lina Lim Lao vs. CA) The insufficiency of funds shall be explicitly stated in the dishonor, hence, a mere oral notice or demand to pay is sufficient for conviction under BP22 (Domagsang vs. CA) A signatory to the check who was not informed of the dishonored is not liable. *OTHER NOTES

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BP 22 complaints are filed before the MTC and McTC and do not need preliminary investigations. (SC AM No. 00-11-01-sc; Sec 1, par. B(4), Revised Rule on Summary Procedure) The court shall not order the arrest of the accused except for failure to appear whenever required. (Sec. 16, Revised Rule on Summary Procedure) Hold-departure orders shall be only issued within the exclusive jurisdiction of the RTC. (OCA Circular No. 39-97) Doctrine of continuous transaction – if there is a previous transaction between the accused and the complainant prior to the issuance of the bounced check, deceit is negated and there can be no estafa, only violations of BP 22. Page 2 of 4

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If the complainant parted with his property to the accused not because of any other consideration but because of the check issued by the accused which later bounced, Estafa under RPC is committed. *Valid Defenses against BP 22

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Lack of notice of Dishonor – failure to notify the accused of the dishonor of the checks will defeat the presumption of knowledge of insufficiency of funds. Forgery – a check is forged when the signature appearing thereon was mode without the authority of the person whose signature appears it. In the case of PNB vs. CA, the SC decided that the dishonor of a check is a defense when the stop payment requested by the drawer was due to forgery in the endorsement of a lost check. Prescription – termination of the right or power to prosecute or punish the offender after the lapse of a definite period from the commission of the crime, or if not known, from the day of its discovery. BP22 prescribes after 4 years beginning from the lapse of 5 banking days from notice of dishonor. Duplicity of Offense – a single information charges more than one offense. Duplicity is a defense in BP 22 if there is also an information for estafa that embodies all the elements of any of the offenses punishable under BP22. Failure to bring the accused for trial within the time limit set by the Speedy Trial Act and Rules of Criminal Procedure. (Rule 119, Sec 9, Rules of Criminal Procedure) Failure to present the checks for payment within 90 days from the date of issue. Lack of the necessary Signature/s – as to corporate, association or partnership check wherein particular officers are authorized signatories, proof that not all of such authorized signatories or less that that required have signed the check is a defense. The incompleteness or unauthorized drawing of the check did not make the check a valid order to the bank to pay. As a result, the drawer is not under obligation to deposit or maintain sufficient funds for its payment. Dishonor with a mere stamp in the check “stop payment” – the bank is directed as well to state in the notice of dishonor even against a “stop payment” that there were no sufficient funds in or credit with it to pay the check. Lack, or illegal consideration in the issuance of the check – the Supreme Court held in the case of Igos vs. Court of Appeals that malice or intent is immaterial, the offense being malum prohibitum, “could not be an absolute proposition without desending to absurdity.” Also in the earlier case of Magno vs. Court of Appeals, the SC will not limit itself to determining the commission of the prohibited act. It must go one step backward by ascertaining the nature of the transaction under which the check was issued not only to find out if the same was drawn for an actual valuable consideration, but also to determine, who, between the drawer and the payee, is the actual and potential wrong-doer. Hence, if a check were issued by a kidnap victim to the kidnapper for ransom, it would be unseemly to hold the drawer liable if the check was dishonored and unpaid. CASES *Lozano vs. Martinez- the gravamen of the offense punishable by BP 22 is the act of making and issuing a worthless check. It is not the non-payment of an obligation which the law punishes. The law is not intended to coerce a debtor to pay his debt. -the freedom of contract which is constitutionally protected is freedom to enter into lawful contracts. Contract which contravenes public policy are not lawful. Checks cannot be Page 3 of 4

categorized as mere contracts. It is a commercial instrument which forms part of the banking system and therefore not entirely free from the regulatory power of the state. *Vaca vs. Court of Appeals- refer to circular # 12-2000 and circular #13-2001 *Lim vs. Court of Appeals- there are certain crime in which some acts material and essential to the crimes and requisite to the consummation occurs in one place and some in another. These are the so-called transitory or continuing crime under which the violation of BP 22 is categorized. *Vallarta vs. Court of Appeals- if the sale of jewelry, for instance, was on sale on approval, ownership posses to the buyer upon its delivery. A check issued simultaneously with the delivery of the jewelry is not deemed as payment of a pre-existing obligation but issued for value. Complainant parted with the jewelry to the accused not because she is rich but because of the check issued by the accused which later bounced. Estafa under RPC is committed.

BP 22   

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Crime against public interest Mere issuance of a bounced check Failure of the drawer to settle the amount within 5 banking days is conclusive evidence of knowledge of insufficient funds Rules on summary procedure MTC, MCTC Malum prohibitum It covers post-dated, present dated checks, check issued to apply on account (to pay a pre-existing obligation), or for value.

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Crime against property Deceit is essential, also damage Failure of the drawer to settle the account within 3 days is conclusive evidence of deceit Rules of Criminal Procedure RTC Mala in se It only covers post-dated checks and checks issued for value or given in mutual or simultaneous exchange for something of value.

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