Hi guys and welcome to another episode of Attorney Ja Vlogger, law for the everyday layman. Today we'll talk about the topic of what is the crime committed when a person makes or draws and issues a bouncing check. Okay, we'll be talking about the bouncing checks law. So if you like my videos and you want to see more, please hit the subscribe button. Also, please remember that this is only for educational purposes and is not a substitute for proper legal advice.
or for studying and understanding the law. Okay? So the crime which punishes the act of making or drawing and issuing a bouncing check falls under Batas Pambansa Bilang No. 22, or BP-22 for short, which is an act penalizing the making or drawing and issuance of a check without sufficient funds or credit and for other purposes.
It is simply known as... The Bouncing Checks Law. Now, the gravamen, or the main point of BP-22, is the issuance of a bad or bouncing check. Now, take note, the Constitution of the 1987 Constitution in Section 23 of Article 3 thereof, states that no one shall be imprisoned for a debt. Okay?
Wala pong nakukulong ng dahil sa utang. Okay? Now, BP-22, does not violate that provision in the constitution why because it does not pay punish the non-payment of an obligation or the failure to pay a debt what the bp22 punishes is the act of issuing a bouncing check or failing to keep sufficient funds for payment of the check for 90 days from the date of such check okay now bp22 is a crime malum prohibitum okay Meaning, it is punished not because it is inherently immoral, but because the law makes such acts criminal.
As such, the law does not look into the intent of the offender anymore, and as a consequence, good faith is not a defense. Okay? Now, BB-22 may be violated in two ways.
Let's talk about the first manner of violation first. Okay? First, by making or drawing and issuing any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawy bank for payment of such check in full upon its presentment, and the check is subsequently dishonored by the drawy bank for insufficiency of funds or credit, or would have been dishonored. For the same reason, had not the drawer, without any valid reason, ordered the bank to stop payment. Okay?
Now, I mentioned credit. And credit under BP-22 simply means an arrangement or understanding with the bank for the payment of the check. Okay?
So, the elements of this first manner of violating BP-22 are as follows. No? First. a person makes or draws and issues any check no he fills it out then he gives that check no he issues the check he makes draws and issues that check okay second the check is made or drawn and issued to apply on account or for value when we say on account it just means on credit okay and it can mean partial payment for an amount which is owed or it can mean purchase of merchandise or services on credit okay now bp22 punishes the making or drawing and issuing of a check that is subsequently dishonored by the drawing back even if the check was given in payment of a pre-existing obligation meaning the obligation existed and then someone made a check to pay that obligation okay maybe 22 punishes that no if the check is insufficiently funded.
I'll explain further. If however, the check is issued simultaneously with the creation of the obligation, meaning I'm creating the obligation at the same time that I'm issuing the check, or the check is the reason for incurring or creating the obligation, then that person may be liable not only for BP-22 but also for violation of the provisions on estafa. Okay, it's a different crime. Now, BP-22 does not make a distinction whether the bad check or the bouncing check is issued in payment of an obligation or...
to guarantee an obligation as long as the check is bad or it bounces okay the third element is that the person who makes or draws and issues the check knows at the time of issue that he does not have sufficient funds in or credit with the drawy bank for the payment of such check in full. Take note, in full, not partial. In full, upon its presentment to the bank.
In other words, the person who makes the check knows that at the time he made that check, his money is missing from his bank. He knows that he has insufficient funds at the time he made the check with the drawee bank to pay for the check in full. The fourth element is the check is then 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 valid reason ordered the bank to stop payment please take note that there are two alternatives here no that there is actual dishonor no the bank says no i do not want to pay this check because the drawer of that check does not have sufficient funds or he closed his account or any other reason no the bank must have dishonored the check or the second alternative is the bank would have dishonored the check okay For the same reason, except that it was not able to actually dishonor it by stamping insufficient funds, no? The bank was just not able to dishonor it. Why? Because the drawer issued a stop payment order.
The drawer contacted the bank and said, wait, wait, wait, don't pay that check yet. Okay? So now, the fact that the person had ordered the bank to stop payment, that's not a defense. Okay?
So let's say the person makes a... check and then he gives it to a person in payment of an obligation then the check bounce okay but later on when faced with a case against BP 22 he says no no I already called the bank because I said don't pay because I don't have money that's not the defense okay why because the law regards the order to stop payment as a mere pretext or excuse to avoid criminal liability and that cannot be use as an excuse okay so if the person orders the bank to stop payment of the check without valid reason take note without valid reason he will be liable if in fact he had no sufficient funds or credit with the bank and the check would have been dishonored for that reason okay now what if there are there are was sufficient funds to pay for the check in the bank no and the person successfully ordered the bank to stop payment So the bank did not have an opportunity to dishonor the check. Is that a defense that the check was not actually dishonored?
As I mentioned earlier, no. Okay. Remember nga that there are two alternatives under the fourth element.
Okay. First, the check was actually dishonored or it would have been dishonored had not the drawer ordered the bank to stop payment. Okay. Take note, however, that if there is a valid reason to stop payment, like for For instance, there was a mistake in writing the name of the payee that is legitimate. Then that is a valid defense because there is a mistake and that will constitute a valid reason to stop payment.
And that will now be a valid defense against a prosecution for BP-22. So that's it for the first manner of committing the offense. So I'll go back to...
the knowledge in a bit later no but first i want to discuss the second manner by which a person may violate the bp22 okay there's a second way to violate bp22 the second way to violate the bp22 is committed when any person who has sufficient funds in or credit with the back those the money is enough at the time that he makes or draws and issues a check he fails no he fails to keep certain sufficient funds or to maintain a credit to cover the full amount of the check if the check is presented within a period of 90 days from the date appearing on the check for which reason it is dishonored by the drawing back okay so in short no the law just requires the person who makes or draws and issues the check to keep sufficient funds to pay for the check in full for at least 90 days but it is better if it is 180 days i'll talk about that in a bit. First let's Let's talk about the elements. The elements of this second mode would be first, a person has sufficient funds or credit with the drawy bank at the time that he makes or draws and issues a check. He has enough money at the time that he made a check. Second, he fails to keep sufficient funds or to maintain credit to cover the full amount of the check if the check is presented within a period.
of 90 days from the date appearing on the check. Okay? And third, the check is now dishonored by the drawee bank. Okay? So what the second paragraph really punishes is the failure of the drawer or maker to keep sufficient funds in the drawee bank for 90 days from the date appearing on the check to cover the full amount which is stated on the check.
Okay? Now, I want to discuss this element earlier that I mentioned, the first manner of violating BP-22. The part that says, knowing at the time of issue that he does not have sufficient funds in or credit with the drawing bank.
BP-22 requires that the person who made or drew and issued the check knew at the time of issue that he did not have sufficient funds in or credit with the drawback for the payment of such check in full upon its presentment okay take note of that no so what if that person had sufficient funds in or credit with the drawback at the time he issued the check okay but later he withdrew all his funds from or lost credit with the drawback is he liable if the check is subsequently dishonored okay under the first part of paragraph one meaning the first uh manner of uh violating BP 22 he will not be liable okay first part of paragraph one okay why because at the time because to be liable under the first manner of violating BP 22 it will require that the person must have made or drawn and issued the check knowing at the time of such making drawing or issuing that he did not have sufficient funds okay here at the time he made it he knew that he had sufficient funds and he and in fact He really did have sufficient funds. So he cannot be held liable under that paragraph. But under the second part or the second manner of violating BP22, he may be liable. Okay. Why?
He may be liable if he fails to keep sufficient funds or to maintain a credit to cover the full amount within 90 days from the date of the check. Okay. So he has to maintain an amount sufficient.
in his credit with the bank to cover the full amount of the check okay now in case uh the check will be dishonored or if the drowy bank does not want to pay the drowy bank has corresponding duties okay so if the check is presented to the drowy bank and the bank refuses to pay because the check is drawn against insufficient funds or the drawer has closed his account or whatever other reason Section 3 of BP22 requires the drawee bank who refuses to pay the check to cause to be written, printed, or stamped in plain language the reason for the dishonor or refusal to pay on the check or attach that reason to the check. In common practice, in usual practice, you will see the letters D-A-I-F stamped. Okay, stamped on the check.
That's what I usually see when I handle BP22 cases. It can be DAIF, which means drawn against insufficient funds, or it can be account closed, or similar words. As long as the bank has to perform its duty to put the reason why it refused to pay the check upon the check or attach the reason to the check, okay?
So, DAIF, drawn against insufficient funds or account closed. Now, if the drawee bank received an order to stop payment from the drawer, if the drawee bank received an order to stop payment from the drawer, the bank should also state in the notice that there were no sufficient funds in or credit with it for the payment of the check in full if that is the case. So, let's say, Yeah. There's a person who is going to the bank to have the check deposited or in cash because he's the payee.
And then before the payee arrives at the bank, the drawer calls the bank. Please stop payment on all my checks. Okay?
So the payee arrives at the bank and asks for it to be in cash or deposit. The bank will no longer stamp this owner, no? But it still has a duty. It must state that the fact of insufficient funds, or whatever, even if it does not dishonor the check anymore. Okay?
Now, when the dishonored check is introduced in the evidence, this is the purpose of all those duties that I mentioned earlier. When the dishonored check is introduced in evidence with a drawee's refusal stamped or written on the check, it will now serve to be prima facie evidence of the following. First, evidence of the making or issuance of the check. Second, the due presentment to the drawee bank for payment and of the dishonor by the drawee bank.
And third, the fact that the same was properly dishonored for the reason which is written, stamped, or attached by the drawee bank. the drawee on such check okay so in other words no if the prosecution presents the dishonored check which contains the stamp or written refusal of the drawee bank to pay then the prosecution does not have to prove the making or issuance of the check does not have to prove the presentment or the dishonor of the check and it does not have to prove the reason anymore for the on the dishonor because all those things on the check already serve as prima facie evidence of those things i have mentioned okay now let's talk about the presumption of the drawer's knowledge of insufficient funds okay bp22 requires that the person who makes or draws and issues a check must have knowledge at the time of issue that he does not have sufficient funds in or credit with the drowy bank okay section 20 section 2 of bp22 creates a prima facie presumption prima facie presumption or evidence of knowledge no or a presumption of knowledge of insufficiency of funds in or credit with the drawback in other words the making drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with the bank is prima facie evidence of knowledge or insufficient insufficiency of funds or credit when the check is presented within 90 days from the date of the check and provided that notice of dishonor is given to the drawer or maker of the check okay so uh the drawer's knowledge of insufficiency of funds is legally presumed from the dishonor office check no for insufficiency of funds and from the notice except okay take Except in the following instances. First, when the check is presented after 90 days from the date of the check.
Second, when the maker or drawer pays the holder of that check, the amount which is due on the check within 5 banking days after receiving notice that the check has not been paid by the drawing bank. He actually pays within 5 days after he receives the notice. receives notice that the cheque was dishonored. And this is a complete defense. And third, when the maker or drawer makes arrangements for payment in full with the drawee bank of such cheque within five banking days after receiving notice that the cheque has not been paid by the drawee.
He calls his bank, he says, hey, hey, please pay this guy. In that case, the payee will now be paid. So this is. is also a complete defense. In the first case, when the check is presented after 90 days, the drawer is not liable because the law requires that the payee should have presented the check to the bank within 90 days from the date of the check, which however may have been modified by Wong v. Court of Appeals, which I'll discuss immediately after this.
In the latter two cases, where the maker or drawer actually pays or makes arrangement to pay within five days, then he is not liable why because the element of knowledge of insufficiency of funds or credit is not present okay because he actually makes payment so he's not liable for violation of BP 22 now take note of this case of Wong versus Court of Appeals a 2001 case no so what if the drawer issues the check on let's say July 1 2020 and at the time he issued the check he had sufficient funds funds. Then I knocked over the October 1, 2020, or more than 90 days after, he withdrew all of his funds. Then on October 2, the day after the drawer withdrew all his funds, the payee now tried to encash the check with the... back.
Is the drawer now liable for violation of BP-22? If we follow Wong v. Court of Appeals, that case says that the 90-day period under the second manner of committing the offence offense of BP-22 is not an element of the crime. In other words, the maker or the drawer has a duty to maintain a sufficient balance in his account for a reasonable time even beyond 90 days.
Which under current practice, the reasonable time is 180 days or 6 months. After that 180 days or 6 months, then the check now becomes a stale check. And a stale check. is valueless and cannot be encashed or deposited okay so where a check is presented beyond the 90 day period but within 180 days the check is not yet stale okay because the 180 days has not yet lapsed no so uh in case the check is dishonored for failing to maintain a sufficient uh to maintain sufficient funds for full payment of the check uh and the check is not yet stale as i said no you then the maker, drawer, or issuer will be liable now for violation of BP22.
If, however, the check is deposited or in cash after the 90-day period, but before it becomes stale or before the 180-day or 6-month period has passed, then only the presumption of knowledge or insufficiency of funds is lost. But such knowledge anyway can be used. can still be proven by the prosecution by direct or circumstantial evidence. Okay? Now, let's go to a very, very important topic, the notice of dishonor.
The notice of dishonor must be given to the drawer. Okay? In order for the presumption of knowledge of insufficiency of funds to arise, the law requires that the notice of dishonor of the check must be sent to the drawer.
Okay? So when the bank starts... stamps DAIF, drawn against insufficient funds, or account closed, or similar words, the payee, or the holder of the check, must now send a written notice of dishonor or a demand for payment of the value of the check.
And now take note that lack of a written notice of dishonor is fatal. Meaning that, fatal to the case. Meaning that the offense... will no longer be held guilty. A mere oral notice or a mere oral demand to pay will not lead to the conviction of that person who issued the bouncing check.
It has to be a written notice which must be personally served upon the accused. So what are the purposes of this notice of dishonor? First, while it is not an element of BP-22, notice of dishonor must be given to the drawer to give the accused an opportunity to prevent criminal prosecution. How? Remember, he's given five days to actually pay or make arrangements to pay.
So this is part of the due process. Informing him of his fault and giving him an opportunity to avoid prosecution by actually paying the amount of the check. The second purpose is to create the presumption that the drawer had knowledge of their insufficiency.
insufficiency of funds to cover the full amount of the check in the bank. I talked about the presumption of knowledge earlier. So the prosecution must prove, must absolutely prove that a notice of dishonor was sent to the drawer of the bouncing check and that he had personally received such notice.
However, the rule varies because in common practice, sometimes the... or drawer does not want to personally receive the notice of dishonor. He hides from the person who is filing a case against him. And that sometimes defeats prosecution for B22.
So in some instances, courts have allowed sticking the notice on the gate and taking a picture because the person doesn't want to actually... receive it no you stick it on The gate of the residence of that person okay but it will now be hard if that person has actually moved out from that residence because the law requires that you must give the personal notice of this owner to the accused okay now the absence of the presumption of knowledge you know that the drawer had knowledge of the insufficiency of funds it does not mean that the offender will not be held guilty all it just means is that now the burden will shift to the prosecution to prove that the drawer had knowledge of insufficiency of funds at the time they issued the check and if they cannot prove it then that is the only time that the drawer will be liable for violating BP 22 now the in recent cases know the courts and the courts have established a rule of preference in the imposition of penalties in BP 22. BP 22 really has the penalties of imprisonment or fine okay paying of a fine but courts are encouraged to impose a penalty of fine only and not imprisonment if the offense and the offender clearly indicate first good faith okay or second clear mistake of fact without negligence okay this is in line with the redemption of human human life, especially if the offenders or the accused are entrepreneurs who actually contribute to society and they issued the check in good faith, just so happened that it bounced. So take note that this preference for imposition of a fine does not remove imprisonment as a penalty.
Discretion is still up to the court. The court has solely discretion. on whether to impose only a fine or to impose imprisonment in a fine.
And in case only a fine is imposed, it may be in an amount double the value of the check. Without prejudice, of course, to subsidiary imprisonment in case the accused is unable to pay that amount. Now finally, please just take note that a person may be liable for both violation of a beep of BP 22 and for violation of the provisions on Estafa why because the elements of both offenses no are different Estafa requires the elements of deceit and damage while BP 22 punishes the mere act of issuing a bouncing check or feel failing to keep sufficient funds for the full payment of the check within 90 days from presentment case on that Damage is not required. Okay? So that's it for a briefer on the bouncing checks law.
Okay? I hope you may have picked up a thing or two. And I hope to see you next time.
Okay? See you soon. Bye.