Published 22 April 2019, The Daily Tribune

A check often serves as a substitute for money. It allows transactions to proceed without money actually switching hands. However, the convenience afforded by checks need to be balanced with the threat which unfunded or “bum” checks pose on commercial transactions. These checks are deemed to have pernicious effects on the integrity of banking and other financial transactions and therefore, injurious to public interest.

To curb the practice of issuing worthless checks, Batas Pambansa (BP) 22 was enacted. The following essential elements must be present in order to be liable under BP 22:

(1) the person accused of violating the law makes, draws or issues any check for account or for value;

(2) he has knowledge at the time he issued the check that he does not have sufficient funds in or credit with the drawee bank for the payment of the check when presented for payment; and,

(3) the drawee bank dishonors the check because of insufficiency of funds, or it would have dishonored the check for the same reason if the issuer did not order the bank to stop payment for no valid reason.

The law presumes that the issuer knew of the insufficiency of his funds if the check is dishonored within 90 days from the date of the check. This presumption is overcome only if the issuer pays or makes arrangements for payment of the full amount of the check within five banking days after receiving a notice of its dishonor. Further, there must be proof that that the issuer was notified of the fact of dishonor, and proof that the issuer had received such notice of dishonor.

Who are liable
Even an “accommodation party” is liable under BP 22. An accommodation party is one who has signed the check without receiving value in exchange, and who issues the check for the purpose of lending his name to some other person. He is still liable even though the holder of the check knew him to be only an accommodation party.

In case a check is issued in behalf of a corporation or other legal entity, the person who actually signed the bounced check is liable.

Filing a criminal complaint; after the verdict
Any alleged violation of BP 22 pursued through the filing of a criminal complaint must be filed within four years from the dishonor of the check, before the office of the public prosecutor. If the public prosecutor finds probable cause (i.e., determines that a check without sufficient funds was indeed issued, and it was the respondent who had issued it), an Information will be filed before the proper Metropolitan Trial Court or Municipal Trial Court. Trial will follow.

If the accused is found guilty, BP 22 provides that the penalty for its violation is imprisonment for at least 30 days but not more than one year, or a fine of at least double the amount of the check but not to exceed P200,000.

However, in 2001, the Supreme Court (SC) issued Administrative Circular (AC) 12-2000 recommending that fines be imposed instead of a prison sentence for verdicts involving BP 22. In its later issuance, AC 13-2001, the SC clarified that imprisonment under BP 22 is still possible. A fine is only preferred over an imprisonment sentence if it would better serve the interests of justice — such as if the accused is a first time offender, or there is good faith involved. Even if only a fine is imposed, the accused may still suffer subsidiary imprisonment if he is unable to pay.

In case the accused is acquitted and the reason for the acquittal is insufficiency of evidence, the accused may still be held civilly liable and ordered to pay the value of the bounced check. This is because the civil liability of the accused is not automatically extinguished upon dismissal of the criminal case on ground of failure to establish guilt beyond reasonable doubt.

It must also be noted that a person liable for BP 22 may at the same time be liable for estafa under Article 315 (2-d) of the Revised Penal Code. The essential elements of the latter are: (a) a check is postdated or issued in payment of an obligation contracted at the time the check is issued; (b) lack or insufficiency of funds to cover the check; and (c) damage to the payee thereof. It is the deceit or fraud attendant to the issuance of the check which is punished. Prima facie evidence of deceit exists by law upon proof that the drawer of the check failed to deposit the amount necessary to cover his check within three days from receipt of the notice of dishonor. The key issue is whether the complainant would have parted with his money, property or any other object of the transaction were it not for the issuance of the check, which turns out to be unfunded.

Thus, you must be cautious in issuing checks and be mindful about funding schedules. A bounced check is not merely a cause of inconvenience and embarrassment; it can cause legal problems leading to the payment of fines, or in proper cases, possible imprisonment.

And if under certain circumstances you have issued a bum check, settle the issue with your creditor. Settlement is a way better option than litigation.
Happy Easter!

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