Dealing with a bounced cheque can be a frustrating and stressful ordeal. In the Philippines, the law provides two primary paths for recovery: civil action (via Small Claims) and criminal prosecution (via BP 22). Understanding which route to take—or how to use both—is essential for any creditor.
1. Initial Step: The Notice of Dishonor
Before filing any case, you must establish that the debtor acted with knowledge of the insufficiency of funds. This is done through a Notice of Dishonor.
- Requirement: It must be a written notice sent to the issuer.
- Content: Inform them that the cheque was dishonored and demand payment of the full amount within five (5) banking days from receipt.
- Purpose: This creates a "prima facie" presumption of knowledge of insufficient funds, which is a key element in a criminal case.
2. Criminal Prosecution: B.P. Blg. 22
Batas Pambansa Bilang 22 (The Bouncing Checks Law) penalizes the act of making or drawing and issuing any cheque knowing that at the time of issue there are no sufficient funds.
Key Elements:
- The making, drawing, and issuance of any cheque to apply on account or for value.
- The knowledge of the maker, drawer, or issuer that at the time of issue they do not have sufficient funds.
- The subsequent dishonor of the cheque by the drawee bank (e.g., "DAIF" - Drawn Against Insufficient Funds or "Account Closed").
The "Single Filing" Rule
Under Philippine law (Supreme Court Circular 57-97), when you file a criminal case for BP 22, the civil action for recovery of the money is deemed impliedly instituted. You cannot file a separate civil case for the same debt once the BP 22 case is in motion.
Note: BP 22 is a criminal offense. The penalty may include a fine (double the amount of the cheque) or imprisonment, at the discretion of the court.
3. Civil Recovery: The Small Claims Route
If the total amount you are collecting (excluding interests and costs) does not exceed PHP 1,000,000.00 (as per current OCA Circulars for Metropolitan Trial Courts), you can utilize the Rule on Expedited Procedures for Small Claims.
Advantages of Small Claims:
- No Lawyers: You are not allowed to be represented by a lawyer in the hearing. This levels the playing field and reduces costs.
- Speed: Cases are usually resolved in a single hearing, and a decision must be rendered within 24 hours of the hearing's conclusion.
- Simplicity: You only need to fill out standardized forms (Statement of Claim) and attach your evidence (the bounced cheque and the Notice of Dishonor).
Limitations:
- You can only recover the money. Small Claims cannot "jail" the debtor; it only issues a Writ of Execution to seize assets or garnish bank accounts to satisfy the debt.
4. Comparison: Which Path to Choose?
| Feature | BP 22 (Criminal) | Small Claims (Civil) |
|---|---|---|
| Primary Goal | Punishment and Recovery | Fast Money Recovery |
| Standard of Proof | Proof Beyond Reasonable Doubt | Preponderance of Evidence |
| Legal Counsel | Required (Prosecutor/Private Lawyer) | Prohibited (Self-representation) |
| Penalty | Fine or Imprisonment | Payment of Debt + Interests |
5. Estafa (Article 315 of the Revised Penal Code)
Sometimes, a bounced cheque is more than just a lack of funds; it is a tool for fraud. You may file for Estafa if:
- The cheque was issued in payment of an obligation contracted at the time the cheque was issued.
- The issuance of the cheque was the "efficient cause" or the means used to defraud the creditor.
Unlike BP 22, which punishes the act of issuing a bad cheque regardless of intent, Estafa requires proving deceit.
Procedural Summary
- Wait for Dishonor: Ensure the bank has stamped the cheque "DAIF" or "Account Closed."
- Send Demand Letter: Formally serve the Notice of Dishonor via registered mail or personal service. Keep the registry receipt.
- Wait 5 Days: Give the debtor a chance to settle.
- File the Complaint: * If seeking imprisonment/fines: File a BP 22 complaint with the Office of the Prosecutor.
- If seeking fast money recovery: File a Statement of Claim with the Small Claims Court.
Next Step
Would you like me to draft a Notice of Dishonor/Demand Letter template that you can use to formally notify the debtor?