Introduction
The issuance of checks is a fundamental part of commercial transactions in the Philippines. A check serves as a written order by a drawer directing a bank to pay a specific amount of money to a payee. However, the integrity of the banking system and commercial transactions is compromised when a check is issued without sufficient funds to back it. To address this, the Philippine government enacted Batas Pambansa Blg. 22 (B.P. 22), also known as the Bouncing Checks Law, which penalizes the act of issuing worthless checks.
This article explores the legal framework, elements, penalties, defenses, and civil implications of issuing a check without sufficient funds under Philippine law.
Legal Basis: Batas Pambansa Blg. 22
Enacted in 1979, B.P. 22 aims to safeguard the credibility of checks as substitutes for cash and to maintain confidence in commercial transactions. It penalizes the mere issuance of a check that bounces due to insufficient funds or closed accounts, regardless of intent to defraud.
Section 1 – The Offense
“Any person who makes or draws and issues any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds... shall be punished by imprisonment or by fine…”
Purpose
The law is not intended to punish debtors per se, but to preserve public confidence in the banking system by penalizing the issuance of worthless checks that circulate as money substitutes.
Elements of the Offense
To secure a conviction under B.P. 22, the prosecution must establish the following essential elements:
Issuance of a check. The accused must have made, drawn, and issued a check.
Knowledge of insufficient funds. The drawer knew, at the time of issuance, that he did not have sufficient funds or credit in the bank to cover the check.
Dishonor of the check. The check was subsequently dishonored by the bank for insufficient funds, or because the account was closed.
Notice of dishonor. The drawer received notice of dishonor and failed to make payment within five (5) banking days thereafter.
Presumption of Knowledge
B.P. 22 establishes a prima facie presumption of knowledge of insufficient funds when:
- The check is dishonored upon presentment, and
- The drawer fails to pay the amount or make arrangements with the bank within five banking days after receiving notice of dishonor.
This means that the prosecution does not have to prove actual knowledge; it is presumed by law unless rebutted.
Penalties and Criminal Liability
Under Section 1 of B.P. 22
The penalties are:
- Imprisonment: up to one (1) year, or
- Fine: not less than but not more than double the amount of the check, not exceeding ₱200,000, or
- Both imprisonment and fine, at the court’s discretion.
The law allows for alternative penalties, meaning the court can impose either imprisonment or fine, or both, depending on the circumstances.
Jurisprudential Guidelines
The Supreme Court, in cases such as Vaca v. Court of Appeals (G.R. No. 131714, November 16, 1998), clarified that imprisonment is not mandatory. Courts are encouraged to impose fines instead of imprisonment when the circumstances warrant leniency, especially where restitution is made.
Distinction Between B.P. 22 and Estafa (Article 315, par. 2(d), Revised Penal Code)
While both laws involve checks, they differ fundamentally in intent and nature:
| Aspect | B.P. 22 | Estafa (RPC Art. 315(2)(d)) |
|---|---|---|
| Nature | Malum prohibitum (prohibited act regardless of intent) | Malum in se (requires deceit or fraud) |
| Intent | Not necessary | Fraudulent intent required |
| Purpose | To maintain confidence in checks | To punish deceit or defrauding of another |
| Payment before filing | May mitigate penalty | Extinguishes criminal liability if made before prosecution |
Hence, a single act of issuing a worthless check can give rise to both criminal liability under B.P. 22 and estafa, if deceit and damage are present.
Defenses Available
The accused may raise several defenses under B.P. 22, such as:
- Absence of Notice of Dishonor – Without written notice, criminal liability does not attach.
- Payment within Five Banking Days – If the drawer pays the payee within this period, liability is avoided.
- Lack of Knowledge of Insufficient Funds – If the drawer had reason to believe sufficient funds existed (e.g., deposit expected).
- No Consideration – If the check was issued for a void or non-existent obligation (e.g., gift check not for value).
- Post-Dated or Guarantee Checks – If the check was issued merely as a guarantee, not for payment, courts may consider mitigating circumstances.
Civil Liability
Apart from criminal liability, the drawer of a bouncing check remains civilly liable for the value of the check.
Basis of Civil Liability
Under Article 1159 of the Civil Code, obligations arising from contracts have the force of law between the parties. Hence, a check issued in payment of a valid debt still represents a civil obligation to pay the amount due.
Even if acquitted under B.P. 22 (e.g., due to lack of notice), the drawer may still be civilly liable under Article 100 of the Revised Penal Code, or via separate civil action for collection.
Jurisdiction and Procedure
Cases involving B.P. 22 are typically filed before the Municipal Trial Courts (MTCs), Metropolitan Trial Courts (MeTCs), or Municipal Circuit Trial Courts (MCTCs), depending on the location and amount involved.
They are summary in nature, and the rules allow for expeditious trial due to the volume of cases.
Corporate Liability
When the offender is a corporation or partnership, the officers or employees who actually signed or issued the check are held personally liable under Section 1 of B.P. 22.
Thus, corporate veil cannot be used to shield an individual from criminal prosecution when he personally issued the check.
Effect of Payment and Compromise
Payment or settlement after the check bounces does not extinguish criminal liability, though it may influence the penalty. However, compromise agreements that include full payment are often considered by courts as a basis for leniency or dismissal upon the prosecution’s motion.
Practical Implications and Policy Considerations
B.P. 22 has been criticized as criminalizing private debt, but its intent remains to uphold financial credibility in commercial dealings. The Supreme Court and Department of Justice (DOJ) have issued circulars encouraging conciliation and settlement in minor B.P. 22 cases to reduce court congestion.
Businesses and individuals are advised to:
- Ensure sufficient funds before issuing checks.
- Refrain from issuing postdated checks as guarantees.
- Maintain proper accounting to avoid inadvertent violations.
Conclusion
Issuing a check without sufficient funds in the Philippines is a serious offense that can result in criminal prosecution under B.P. 22 and civil liability for the value of the check. While the law does not require fraudulent intent, it imposes accountability to protect public trust in the financial system. Understanding the interplay between criminal and civil consequences is essential for both individuals and corporations engaged in commercial transactions.
In essence, the act of issuing a check carries with it not only financial but also legal and ethical obligations—reminding every drawer that a check is more than paper; it is a promise of payment backed by the law.