Nil.bouncing Checks Law 2006.pdf

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BOUNCING CHECKS LAW

A. Constitutional Issues. 1. Imprisonment for Non-Payment of Debt. - Batas Pambansa Blg. 22 does not violate the constitutional prohibition against imprisonment for non-payment of debt. It is not the failure to pay contractual obligation but the circulation of a worthless check which the law punishes in the exercise of police power to maintain confidence in checks (Lozano vs. Martinez, 146 SCRA 323). 2. Double Jeopardy. - The drawer of a worthless check can be prosecuted both for estafa and for violation of Batas Pambansa Blg. 22. He will not be placed in double jeopardy, for there is no identity of offenses. While deceit and damage are necessary ingredients of estafa, they are not necessary for violation of Batas Pambansa Blg. 22 (Ada vs. Virola, 172 SCRA 336; Nierras vs. Dacuycuy, 181 SCRA 1). 3. Title of Batas Pambansa Blg. 22. - The second paragraph of Section 1 of Batas Pambansa Blg. 22 punishes the issuance of a check even if the drawer had sufficient funds or credit at the time of its issuance if he fails to maintain such funds or credit to pay for the check if it is presented within ninety (90) days from its date. The title of Batas Pambansa Blg. 22 reads as follows: “An Act Penalizing the Making or Drawing and Issuance of a Check Without Sufficient Funds or Credit and for Other Purposes.” The title indicates that Batas Pambansa Blg. 22 penalizes the issuance of checks without sufficient funds or credit. On the other hand, the second paragraph of Section 1 of Batas Pambansa Blg. 22 punishes the issuance of a check with sufficient funds or credit if the drawer fails to keep sufficient funds or credit if the drawer fails to keep sufficient funds or credit to pay for the check when it is presented within ninety (90) days from its date. This is not reflected in the title of Batas Pambansa Blg. 22. Thus, Assemblyman Arturo Tolentino opined that the second paragraph of Section 1 of Batas Pambansa Blg. 22 is unconstitutional (Record of Batasan, March 22, 1979, p. 1899). B. Scope. ➢ Batas Pambansa Blg. 22 applies to all kinds of checks, since the law makes no distinction and it was enacted to restore confidence in checks. Thus, it applies to postdated checks (Chang vs. Intermediate Appellate Court, 146 SCRA 464). ➢ The law also applies to a check drawn against an account of the drawer abroad if the check was issued in the Philippines (De Villa vs. Court of Appeals, 195 SCRA 722). ➢ Batas Pambansa Blg. 22 likewise applies to memorandum checks (People vs. Nitafan, 215 SCRA 79). ➢ The law applies to checks issued to guarantee the payment of an obligation (Que vs. People, 154 SCRA 160; People vs. Antiporda, 2 SCRA 439). It applies to a check issued as collateral for a loan (Caridad vs. People, G.R. No. 90630, September 10, 1990). This holds true even if the drawer issued the check as guarantee for the accounts of third parties (People vs. Macatangay, 1 SCRA 237).

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2 ➢ The application of Batas Pambansa Blg. 22 extends to crossed checks (Memorandum Circular No. 4). ➢ Batas Pambansa Blg. 22 applies to undated checks. Under Section 6 of the Negotiable Instruments Law, the validity of a negotiable instrument is not affected by the fact that it is undated (Dela Cruz vs. People, G.R. No. 86806, July 19, 1989). ➢ The law also applies if the name of the payee was left blank at the time of its issuance. (State vs. Donaldson, 385 P2d 151.) Under Section 14 of the Negotiable Instruments Law, it is presumed that the person in possession of the check has authority to complete it by writing the name of the payee. C. Offenses Penalized 1. Elements: First offense. The elements of the first offense penalized by Batas Pambansa Blg. 22 are the following: a. A person draws and issues a check; b. The check is applied on account or for value; c. The person issuing the check knows at the time of its issuance that he does not have sufficient funds in or credit with the bank for the full payment of the check upon its present merit; and d. The check is dishonored by the 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. Second offense. The elements of the second offense penalized by Batas Pambansa Blg. 22 are the following: a. A person draws and issues a check at a time when he had sufficient funds in or credit with the bank; b. He fails to keep sufficient funds or to maintain sufficient credit to cover the full payment of the check if presented within ninety (90) days from the date appearing in it; and c. For such reason the check is dishonored by the bank. 2. REMINDERS: ➢ Drawer. - Only the person who issued the worthless check is liable under Batas Pambansa Blg. 22. Indorsers are not liable (Record of Batasan, August 9, 1978, p. 511). ➢ Under Section 1 of Batas Pambansa Blg. 22, in the case of corporations, partnerships, companies, and entities, the person or persons who actually signed the check are the ones criminally liable. ➢ Account or value. - In defining the first offense, the law requires the check be issued on account or for value. The word “account” refers to a pre-existing obligation, while the phrase “for value” refers to an obligation incurring simultaneously with the issuance of the check (Record of Batasan, August 8, 1978, p. 494; December 4, 1978, p. 1041; and December 9, 1978, p. 1123). If the check was given as a donation and was dishonored, the drawer is not criminally liable, since the check was not issued on account or for value. ➢ Batas Pambansa Blg. 22 applies even to checks issued as payment for the obligation of a third party whom the drawer accommodated. (People vs. Mancerra, 2 SCRA 444)

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3 ➢ There must be a valid consideration for the issuance of a check for it to be covered by Batas Pambansa Blg. 22. Thus, a drawer who issued a worthless check in payment of a gambling debt is not criminally liable, since it was issued in consideration of an illicit obligation (People vs. Pareja, 1 SCRA 205). ➢ Where the drawer of a postdated check leased equipment from a financing company, a third person, unknown to him, put up the warranty deposit for the lease being required by the financing company, the lease was terminated for non-payment of the rent, and the drawer of the postdated check issued it to reimburse the third party for the warranty deposit, he cannot be held criminally liable under Batas Pambansa Blg. 22 in case the check is dishonored. He should not refund the warranty deposit, as he never cashed the warranty deposit (Magno vs. Court of Appeals, 210 SCRA 471). Funds or credit, meaning of. Even if the drawer does not have sufficient funds, if he has sufficient credit with the bank to pay for a check he issued, he does not violate the law. He might have an arrangement with the bank that the deposit in his savings account will be applied to pay for any check he issues (Record of Batasan, December 4, 1978, p. 1043). In such case, if the bank erroneously dishonored the check because it overlooked that there was such an arrangement, the drawer will not be criminally liable (Record of Batasan, August 9, 1978, p. 507). Even if the drawer had no funds in or credit with the bank at the time of the issuance of the check, if he deposited sufficient funds to cover the value of the check and the check was honored upon its presentment, he is not criminally liable (Record of Batasan, February 6, 1979, p. 1363). Batas Pambansa Blg. 22 will apply in case the drawer closed his account after issuing a check and before it was presented for payment, for the drawer failed to keep funds sufficient for the payment of the check (Miller vs. Court of Appeals,189 SCRA xi). If the check in question is a post-dated check, it is not necessary to establish that the drawer knew when he issued the check that he would not have sufficient funds to pay for it upon its presentment (People vs. Laggui, 171 SCRA 305). Knowledge, meaning of. To be liable for the offense penalized by Section 1 of Batas Pambansa Blg. 22, the drawer must know at the time of the issuance of the check that he does not have sufficient funds in or credit with the bank. Thus, where a wife co-signed with her husband a check which was dishonored for lack of funds, she could not be convicted under Batas Pambansa Blg.22 where she was not aware of the transaction of her husband which was the basis of the issuance of the check and of the dishonor of the check (Dingle vs. Intermediate Appellate Court, 148 SCRA 597). Since knowledge involves the internal state of the mind, it is difficult to prove knowledge. To facilitate the task of the prosecution, Section 2 of Batas Pambansa Blg. 22 created the presumption that the drawer knew he does not have sufficient funds in or credit with the bank if he fails to make good the check within five (5) banking days after being notified that the check had been dishonored for lack of funds. (Lozano vs. Martinez, 146 SCRA 322)

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4 The failure of the drawer to make good the check within five (5) days after being notified of its dishonor is not an element of the offense penalized by Batas Pambansa Blg.22. It is merely evidentiary. It merely creates a presumption. CARAS vs. CA 366 SCRA 371 FACTS: CARAS appealed the judgment of the RTC which was affirmed in toto by the CA finding her guilty of 15 counts of violation of BP 22. The accused admitted that she issued the 15 checks. She claimed, however, that the same were given to a certain Marivic Nakpil, alleged sister of the complainant, as “guarantee deposit”, that is, for every gift check and purchase order given to the accused, she issues a personal check to guarantee its payment. The checks are not to be encashed or deposited with any bank. Petitioner also denies having received any notice that the checks she issued had been dishonored by the drawee bank ISSUES: a. Whether or not a check issued merely to guarantee payment of an existing obligation is covered by BP 22. b. Whether or not notice of dishonor is essential for conviction. HELD: a. YES. The mere act of issuing a worthless check is malum prohibitum and is punishable under BP, provided the other elements of the offense are properly proved. What the law punishes is the issuance of a bouncing check and not the purpose for the check was issued, nor the terms and conditions for its issuance. b. After carefully going over the records of the case, the Court found out that indeed no clear evidence is shown on whether the petitioner was informed that her checks had been dishonored. The omission or neglect on the part of the prosecution to present evidence that would establish the actual receipt by the accused of the demand letter which could have served as notice to her was fatal to its cause. The absence of proof that the accused received any notice informing her of the fact that her checks had been dishonored and giving her 5 banking days within which to make arrangements for the payment of the said check prevents the application of the disputable presumption that she had knowledge of the insufficiency of her funds at the time she issued the checks. Absent such presumption, the burden shifts to the prosecution to prove that petitioner had knowledge of the insufficiency of her funds when she issued the said checks, otherwise, she cannot be held liable under the law. The absence of any notice of dishonor personally sent to and received by the accused is a violation of the accused right to due process. Failure of the prosecution to prove that the accused was given the requisite notice of dishonor is a clear ground for her acquittal. KING vs. PEOPLE 319 SCRA 654 FACTS: On several occasions in January 1992, petitioner discounted with complainant Ellen Fernandez several Equitable Bank checks postdated from July 23

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5 to 29, 1992 in the total amount of P1,070,000.00 in exchange for cash in the amount of P1,000,000.00. When the checks were deposited for payment, they were dishonored by the drawee bank because of insufficiency of funds. Petitioner failed to make good the checks despite demand. During trial, the prosecution offered in evidence the genuineness and due execution of the checks which were admitted by the petitioner. Petitioner filed a demurrer to evidence without leave of court which was denied. Consequently, she was found guilty by the trial court which was also affirmed by the CA. ISSUE: Whether or not the prosecution was able to prove receipt of dishonor by the accused? HELD:

The elements of the crime are as follows:

1. The accused makes, draws, or issues any check to apply to account or for value; 2. The check is subsequently dishonored by the drawee bank for insufficiency of funds or credit; or it would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment; 3. The accused knows at the time of the issuance that he or she does not have sufficient funds in, or credit with, drawee bank for the payment of the check in full upon its presentment. Under BP 22, the prosecution must prove not only that the accused issued a check that was subsequently dishonored. It must also establish that the accused was actually notified that the check was dishonored, and that s/he failed, within 5 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. Absent proof that the accused received such notice, a prosecution for violation of the Bouncing Checks Law cannot prosper. It is true that the complainant sent petitioner a registered mail informing the latter that the check had been dishonored. But the records show that the petitioner did not receive it. TING vs. CA 344 SCRA 551 FACTS: From 1991 to 1992, Juliet Ting obtained loans in the aggregate sum of P2,750,000.00 from private complainant Tagle for use in Juliet’s furniture business. As payment thereof, Juliet issued 11 post-dated checks which upon maturity, were dishonored for reasons of insufficiency of funds. She was then subsequently prosecuted for violation of BP 22. Due to her financial difficulties, she requested her husband Victor Ting and her sister Emily Chan (petitioners herein) to take over her furniture business, including the obligation appurtenant thereto. Agreeing to Juliet’s request, petitioners issued 19 checks in replacement of the 11 checks earlier issued by Juliet. The planned takeover, however, did not materialize. Petitioners requested Juliet to reassume her obligation to private complainant by replacing the checks they had previously issued to the latter. Juliet replaced the 19 checks issued by petitioners with 23 Far East Bank checks. Petitioners then requested complainant to return the checks they had issued to her. Instead of returning the checks, Tagle deposited 7 of

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6 the checks with MetroBank where they were dishonored for having drawn against insufficient funds. HELD: It is necessary in cases for violation of BP 22 that the prosecution prove that the issuer had received a notice of dishonor. It is a general rule that when notice of dishonor is an issue, the person alleging the notice was served must prove its existence. For BP 22 cases, there should be clear proof of notice. Moreover, it is a general rule that, when service of a notice is sought to be made by mail, it should appear that the conditions on which the validity of such service depends on their existence, otherwise the evidence is insufficient to establish the fact of service. Petitioners, during trial denied having received the demand letter. Given petitioners’ denial of the receipt of the demand letter, it behooved the prosecution to present proof that the demand letter was indeed sent through registered mail and that petitioners received the same. The prosecution failed to do this. Instead, it merely presented the demand letter and registry return receipt as if mere presentation of the same is equivalent to proof that some sort of mail matter was received by petitioners. Receipts for registered letters and return receipts do not prove themselves; they must be properly authenticated in order to serve as proof of receipt of the letters. Dishonor on other grounds. If the drawer does not have sufficient funds in or credit with the bank, he cannot evade prosecution under Batas Pambansa Blg. 22 by maneuvering to have the check dishonored on some other grounds. Section 3 of Batas Pambansa Blg. 22 requires the bank to state always in the notice of dishonor if there are no sufficient funds or credit to pay for the check, even if the check is being dishonored for some other reason. Thus, if the check would have been dishonored for lack of funds but the drawer stopped its payment, he will still be criminally liable if the check was dishonored on this ground. However, if the drawer had a valid reason to stop the payment of the check, he will not be criminally liable (Memorandum Circular No. 4). If the drawer varied his signature in signing the check and the check was dishonored for this reason, he will still be criminally liable if he actually did not have sufficient funds or credit to pay for the check (Record of Batasan, August 9, 1978, p. 507). Defenses. 1. Available defenses : a. Force. If the drawer was forced to issue the check, he incurs no criminal liability under Batas Pambansa Blg. 22, because his act was not voluntary (Record of Batasan, December 4, 1978, p. 1048). b. Force majeure. If the check was dishonored because of the occurrence of a force majeure after its issuance, the drawer is not criminally liable (Record of Batasan, December 4, 1978, p. 1038). Thus, if the check was dishonored because the current account of the drawer was garnished after its issuance, the drawer incurs no criminal liability (Record of Batasan, August 9, 1978, p. 508). The same holds true if after the issuance of the check, the drawer was declared

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7 insolvent, an assignee took charge of his assets, including his current account, and for this reason the check was dishonored. His current account is in custodia legis. Likewise, if an account of a quarrel between a married couple with a joint current account the wife withdrew all the funds from their account without the consent of the husband and as a result a check previously issued by the husband was dishonored, the husband cannot be convicted (State vs. Haremza, 515 P2d 1217). 2. Unavailable defenses : a. Informing payee. If a check was postdated and before its maturity, the drawer informed the payee he would not be able to deposit sufficient funds to cover the amount of the check, he will still be criminally liable (Record of Batasan, August 9, 1978, Op. 503). b. Partial payment. Partial payment by the drawer of the value of the dishonored check is not a defense (Resolution No. 340, Series of 1981). D. Criminal Prosecution 1. Number of offenses. Each act of drawing a worthless check constitutes a separate violation of Batas Pambansa Blg. 22. The rule that there is only one offense when the offender is actuated by one criminal intent is not applicable to special laws (Memorandum Circular No. 4). 2. Venue. The court of the place where the worthless check was issued or the court of the place where it was deposited has jurisdiction to try a criminal case for violation of Batas Pambansa Blg. 22 (Que vs. People, 154 SCRA 160; People vs. Manzanilla, 156 SCRA 279; People vs. Grospe, 157 SCRA 154; Lim vs. Rodrigo, 157 SCRA 487; Reyes vs. Court of Appeals, G.R. No. 88378, July 9, 1989). 3. Intervention of offended party. Since the payee of a worthless check is entitled to receive the payment of the money for which a dishonored check was issued, he can intervene through the appearance of a private prosecutor in a criminal prosecution for violation of Batas Pambansa Blg. 22 (Banal vs. Tadeo, 156 SCRA 325).

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