BOUNCING

CHECKS
LAW

BP 22

WHAT IS A CHECK?
Under

Sec. 185 of the

Negotiable Instruments Law, is
a bill of exchange drawn on a
bank payable on demand.

WHAT IS A CHECK?
Mitra v. People, G.R. No. 191404, 5 July 2010, a
check is a negotiable instrument that serves as a
substitute for money and as a convenient form of
payment in financial transaction and obligations. The
use of checks allows commercial and banking
transactions to proceed without the actual handling of
money, thus, doing away with the need to physically
count bills and coins whenever payment is made. It
permits c and b transactions to be carried out quickly
and efficiently. But the convenience afforded by checks
is damaged by unfunded checks that adversely affect
confidence in our c and b activities, and ultimately
injure public interest.

In

A CHECK IS
NOT A LEGAL
TENDER.

representing deposit of
payment do not have legal
tender
power
and
their
acceptance in payment of
debts, both public and private,
is at the option of the creditor,
provided, however, that a check
which has been cleared and
credited to the account of the
creditor shall be equivalent to
a delivery to the creditor in
cash in an amount equal to the
amount credited to his account.

SECTION 63 OF THE
CENTRAL BANK ACT

Checks

ARTICLE 1249 OF THE

CIVIL CODE

The payment of debts in money shall

be made in the currency stipulated,
and if it is not possible to deliver
such currency, then in the currency
which is legal tender in the
Philippines.
The delivery of promissory notes
payable, or bills of exchange or other
mercantile documents shall produce
the effect of payment only when they
have been cashed, or when through
the fault of the creditor they have
been impaired.
In the meantime, the action derived
from the original obligation shall be
held in abeyance.

ARTICLE 1248 OF THE

CIVIL CODE

Unless
there
is
an
express
stipulation to that effect, the
creditor
cannot
be
compelled
partially to receive the presentation
in which the obligation consists.
Neither may the debtor be required
to make partial payments.
However, when the debt is in part
liquidated and in part unliquidated,
the creditor may demand and the
debtor may effect the payment of the
former without waiting for the
liquidation of the latter.

PURPOSE OF
THE
BOUNCING
CHECKS LAW

PURPOSE
To address the problem of the continued issuance
and circulation of unfunded checks by
irresponsible persons (specific purpose). It aims
to put a stop to or curbing the practice of
issuing checks that are worthless (those that
end up being rejected and dishonored in
payment). It is proscribed by the state because
of the injury it causes to public interests.
It considers the act as an offense property and
against public order.

PURPOSE
To declare the issuance of an unfunded check as
malum prohibitum is 1) to punish the offender
in order to stop him and other from
committing the offense, 2) to isolate him
from society, 3) to reform and rehabilitate
him, and 4) to maintain social order.
The thrust of the law is to prohibit under pain of
legal sanctions the making of worthless checks
and putting them in circulation and not to coerce
the debtor to pay his debt. Therefore, it is
punished as an act against public order and not
against property. Lozano vs. Martinez, G.R. No.
L-63419, 18 December 1986.

An ordinary check is not a mere

undertaking to pay an amount of
money. There is an element if
certainty or assurance that it will be
paid upon presentation that is why
it is perceived as a convenient
substitute
for
currency
in
commercial
and
financial
transactions. The basis of the
perception being confidence. Any
practice
that
destroys
that
confidence
will
impair
the
usefulness of the check as a
currency substitute and create
havoc in trade circles and the
banking community.

IN TAN V. CA, G.R. NO.

108555, 20 DECEMBER
1994

BOUNCING CHECK
Bouncing

or rubber
check
is
the
issuance of checks
without
funds.
Cruz v. IAC, G.R.
No. L-66327, 28
May 1984.

DAIF
NSF

DAUD

BOUNCING CHECK
Drawn

against a
bank account with
insufficient funds
Drawn
against
non-sufficient
funds
Drawn
against
uncollected
deposit.

DAIF
NSF

DAUD

DRAWER
(ISSUER)

RETURN TO
ISSUER

DRAWEE BANK
DAIF
NSF
DAUD

LIABILITY OF THE
DRAWER (SEC. 61, NIL)

By drawing the instrument, the

drawer admits the existence of the
payee and the latters capacity to
indorse
As such, he engages or vouches that
upon presentment of the check, it
will be accepted or paid, or both and
that should it be dishonored (where
the necessary proceedings for
dishonor is duly taken), he will pay
the amount to the holder or the
subsequent indorser who may be
compelled to pay it.
As drawer however, he may insert a
stipulation limiting his own liability
to the holder

DUTY OF THE DRAWER

(SEC. 2, BP 22)

The maker or drawer must pay the

holder of the check of the amount
due;
Or make arrangements for payment
in full by the drawee of such check
within 5 banking days after
receiving notice that such check has
not been paid by the drawee (done
after 5 days from the notice of
dishonor or demand letter or notice
that the check issued has not been
paid by the drawee bank).
Failure to comply shall constitute
the violation of BP 22 where the
drawer shall be held liable

CHECKS COVERED BY BP 22
Checks in general
Checks issued to pay a pre-existing obligation
Crossed check
Accommodation or guarantee check
Current checks
Post-dated checks
Deposit check
Corporate check
Memorandum check
Foreign check (drawn against a foreign bank)
Except Managers check and Cashiers check

WHY A MANAGERS CHECK AND A CASHIERS

CHECK IS NOT COVERED BY BP 22

It is a well-known and accepted practice in the

business sector that a Cashiers Check is deemed
as cash. Moreover, since the said check had been
certified by the drawee bank, by the certification,
the funds represented by check are transferred
from the credit of the maker to that of the payee
or holder, and for all intents and purposes, the
latter becomes the depositor of the drawee bank,
with rights and duties of one in such situation.
Where a check is certified by the bank on
which it is drawn, the certification is
equivalent to acceptance,

WHY A MANAGERS CHECK AND A CASHIERS

CHECK IS NOT COVERED BY BP 22
said certification implies that the check is drawn
upon sufficient funds in the hands of the drawee,
that they have been set apart for its satisfaction,
and that they shall be so applied whenever the
check is presented for payment. It is an
understanding that the check is good, and this agreement
is as binding on the bank as its noted in circulation, a
certificate of deposit payable to the order of the depositor,
or any obligation it can assume. The object of certifying a
check, as regards both parties, is to enable the holder to
use it as a money. When the holder procures the check to
be certified, the check operates as an assignment of a
part of the funds to the creditors. New Pacific Timber
and Supply Company v. Seneris, G.R. No. L-41764,
December 19, 1980.

WHAT DOES BP 22 PUNISH?

The issuance of a bouncing check and not the
purpose for which it is issued.
It holds true for checks issued to support another
contract or any other consideration regardless of
the outcome of the contract or consideration.
It is not the non-payment but the mere issuance
of a check that is worthless or of a check that is
dishonored upon presentation for payment.

ACTS PUNISHABLE UNDER BP22

Under Section 1, paragraph 1

When the drawer orders the bank to stop payment

because at the time of the issuance of the said check he
was aware that he has no sufficient funds in or credit
with the drawee bank or because it would have been
dishonored had it been presented for payment.
It shall be punished with imprisonment of not less
than 30 days but not more than one year or by a fine of
not less than but not more than double the amount of
the check which shall in no case exceed P200,000.00 or
both, at the discretion of the court.

ACTS PUNISHABLE UNDER BP22

The elements of Violation under Section 1,

paragraph 1

Making , drawing and issuance of any check to apply

on account or for value;
Knowledge of the maker, drawer, or issuer that at the
time of the issue he does not have sufficient funds in or
credit with the drawee bank for the payment of the
check in full upon its presentment; and
Subsequent dishonor of the check by the drawee bank
fir insufficiency of funds or credit, or dishonor for the
same reason had not the drawer, without any valid
cause, ordered the bank to stop payment.
Ambito v. People, G.R. No. 127327, 13 February 2009

ACTS PUNISHABLE UNDER BP22

Under Section 1, paragraph 2

When the drawer fails to maintain or keep a sufficient fund

to cover the check he issued, although at the time of the
issuance of the same, he has sufficient funds in or credit
with the drawee bank, when the check has been presented
for payment within 90 days from the date appearing thereon
and for which reason, the bank dishonored the same.
It shall be punished with imprisonment of not less than 30
days but not more than one year or by a fine of not less than
but not more than double the amount of the check which
shall in no case exceed P200,000.00 or both, at the
discretion of the court.
In case of a corporation, company or entity, the person who
signed as a drawer of in behalf of the drawer, shall be liable.

ACTS PUNISHABLE UNDER BP22

Under Section 1, paragraph 2

Any person who, who makes or draws and issues a

check;
The drawer had sufficient funds or credit with the
drawee bank to cover the full amount of the check;
Failure 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; and
For which reason it is dishonored by the drawee bank.

PRIMA FACIE EVIDENCE OF

VIOLATION OF BP22

Under Section 3

Evidence of knowledge of insufficient funds the

making, drawing and issuance of a check of which, it
is refused by the drawee bank for insufficiency of
funds, when presented within 90 days from the date of
the check (prima facie evidence of insufficiency of
funds)
Cured by the payment to the holder of the amount due
thereon by the maker or drawer or by making
arrangements for payment in full by the drawee of
such bank within 5 days after receiving notice that
such check has been paid by the drawee.

PERSONS LIABLE FOR VIOLATION

OF BP22

Natural person

The signatory or signatories of the bounced checks

(e.g. personal checks)

The person or persons who actually signed the

check in behalf of such drawer which is a
corporation, company or entity

e.g. corporate checks.

LIABILITY AS PRESCRIBED IN
SECTION 5OF BP22

The prosecution of the Act shall be without prejudice to any

liability for violation of any provision under the Revised Penal
Code (Par. 2(d), Art. 315 of the RPC) which provides:
Art. 315. Swindling (estafa) any person who shall defraud
another by any of the means mentioned hereinbelow x x x
2. By means of any of the following false pretenses or fraudulent acts
executed prior to or simultaneously with the commission of the
fraud:
xxx
(d) By postdating a check, or issuing a check in payment of an
obligation when the offender had no funds in the bank, or his
funds deposited therein were not sufficient to cover the amount of
the check. The failure of the drawer of the check to deposit the
amount necessary to cover his check within three days from receipt
of notice from the bank and/or insufficiency of funds shall be
prima facie evidence of deceit constituting false pretense or
fraudulent act.

THE INSTITUTION OF A CIVIL

ACTION UNDER BP22

The well-established rule is that a civil action is instituted

upon the filing of the criminal action subject to certain
exception under Section 1, Rule 111 of the Rules of Court:
SECTION 1. Institution of criminal and civil actions.
(a) when the criminal action is instituted, the civil action
for the recovery of civil liability arising from the offense
charged shall be deemed instituted with the criminal
action unless the offended party waives the civil action,
reserved the right to institute it separately or institutes
the civil action prior to the criminal action.
xxx
(b) The criminal action for violation of BP Blg. 22
shall be deemed to include the corresponding civil
action. No reservation to file such civil action
separately shall be allowed.

DEFENSES IN BP 22 CASES

Forgery

No notice of Dishonor

Under Rule 119, Section 9, Revised Rules on Criminal Procedure, and action against
the accused may be dismissed if not brought to trial within the time limit required
under Sec. 1 (g), Rule 116 and Section 1 as extended by Section 6 thereof. Failure of
the accused to move for dismissal shall be a waiver of such right to dismiss.

Prescription

The right of every person to suspend payments for valid cause (e.g., dissatisfaction)
shall not render him liable for BP 22. (Sycip v. CA)

Speedy trial act

Without notice giving him the chance to make payment arrangements within 5
working days, one cannot raise the issue that he had knowledge of the insufficiency of
funds

Stop payment order with valid cause

A forged signature renders the check inoperative

Prescribes in 4 years from the commission of the offense, or if not known, from the
time of the discovery of such

Full payment

It is a general rule that only a full payment at the time of its presentment or
during the five-day grace period shall could exonerate one from criminal
liability.