Legal Defenses for a “Bouncing” Check Issued as Security (Philippine Law)

Overview

In the Philippines, two distinct regimes can be triggered when a check bounces:

B.P. Blg. 22 (the “Bouncing Checks Law”) — a special criminal statute meant to protect banking stability and commercial transactions. It is generally mala prohibita: intent to defraud is not required.
Article 315(2)(d) of the Revised Penal Code (estafa by post-dating or issuing a bad check) — a felony that requires deceit and damage (or prejudice) to the offended party.

Whether the check was “issued as security” matters very differently under these two regimes. This article maps out every commonly raised defense, how to deploy it, and the evidence you’ll need.

A. Threshold Concepts

1) “Issued as security”

Parties sometimes hand over a post-dated check (PDC) not to be immediately encashed but merely to guarantee payment or performance (e.g., to assure compliance with a loan, installment plan, or supply contract). Lawyers often call this a security check.

2) Distinguish the two cases

B.P. 22: The law punishes the act of issuing a worthless check. Whether the check was a “mere guarantee” is, as a rule, not a complete defense.
Estafa: The check must have induced the offended party to part with money or property (deceit), and there must be damage. If the check was only a guarantee for an already-existing debt, deceit may be absent — often a complete defense to estafa.

B. B.P. 22 — Elements, Presumptions, and Defenses

Elements the prosecution must prove

The accused made/drew/issued a check;
The check was issued to apply on account or for value;
The accused knew at the time of issuance of insufficient funds or credit with the drawee bank; and
The check was subsequently dishonored by the bank for insufficiency of funds, or account closed (or a similar reason covered by the statute).

Statutory presumption: If the maker fails to pay or make arrangements within five (5) banking days after receiving written notice of dishonor, the law presumes knowledge of insufficiency.

Core defenses in B.P. 22 cases

No written notice of dishonor actually received
- The 5-day window that triggers the presumption starts only upon actual receipt of written notice by the maker/drawer.
- If the prosecution cannot prove receipt (e.g., registry return card, personal service proof, signed courier acknowledgment, or credible testimony identifying the recipient and contents), the presumption of knowledge does not arise.
- Without the presumption, the State must affirmatively prove knowledge of insufficiency at the time of issuance — often difficult.
Payment or arrangement within five (5) banking days from written notice
- Timely full payment or a bona fide arrangement (e.g., bank manager’s check, executed restructuring agreement acknowledged by the payee) rebuts the presumption of knowledge.
- Later payment (after 5 days) does not extinguish the offense, but it can mitigate penalties and civil liability.
The instrument was not a “check” or was not “issued” within the meaning of the law
- No signature, materially altered, or incomplete instrument not intended to operate as a check;
- A document that is not a demand draft on a bank (e.g., a voucher or non-negotiable acknowledgment);
- No delivery (e.g., it remained with the maker; proof may include control of the checkbook, absence of payee possession, or credible testimony).
Dishonor was not for insufficiency/account closure
- If the bank refusal was due to reasons outside B.P. 22’s ambit (e.g., stop-payment despite sufficient funds, bank error, signature mis-match with sufficient funds), argue non-coverage.
- Caveat: If the stop-payment was used to evade a known insufficiency, courts may still find liability.
“Issued as security” (nuanced, limited defense)
- General rule: Even if the check was a mere guarantee, B.P. 22 still applies.
- Narrow angles that sometimes work: a. No consideration/no value flowed at any point (e.g., check given solely as collateral without any loan granted or obligation novated, and the underlying transaction never materialized). b. Clear, contemporaneous agreement not to deposit under any circumstance, and subsequent presentation was unauthorized (you must prove this convincingly — written terms or unequivocal communications; mere self-serving claims usually fail). c. Conditional delivery where the condition precedent failed, so the check never became operative (again, this is fact-intensive and documentary proof is critical).
No knowledge of insufficiency at time of issuance
- Without the statutory presumption, you can show reasonable belief of adequate funds or credit:
  - Recent deposits (passbooks, deposit slips);
  - Approved overdraft line or agreed float;
  - Bank error or unnotified account restrictions.
Corporate or agency defenses
- Signatory without personal undertaking (e.g., clearly signing in a representative capacity for a corporation) may contest personal criminal liability, though this is fact-sensitive.
- The maker/drawer is the liable party; accommodation parties may raise lack of issuance or of value from the payee.
Procedural defenses
- Defective Information (missing essential elements, wrong dates, wrong bank, no allegation of notice);
- Improper venue/jurisdiction (usually where the check was drawn, issued, delivered, or dishonored — confirm the controlling rules at the time of filing);
- Prescription (B.P. 22 generally prescribes in four (4) years from commission).

Evidence checklist for the defense (B.P. 22)

Proof of non-receipt of written notice (or receipt by someone else without authority);
Payment/arrangement documents made within 5 banking days of actual notice;
Bank records showing sufficient funds or bank error;
Written terms proving conditional delivery or no-deposit agreement;
Documents showing no value was ever given;
Corporate documents evidencing representative capacity;
Copies of the Information, registry receipts, return cards, and bank’s reason for dishonor.

C. Estafa by Post-Dated/Bad Check — Elements and Defenses

Elements the prosecution must prove

Post-dating or issuing a check;
Deceit — the issuance induced the offended party to part with money/property (or the check was issued in payment of an obligation contracted at the time);
Lack of sufficient funds at the time of issuance (or the accused knew about the insufficiency);
Damage or prejudice resulting from the deceit (e.g., the lender released money relying on the check).

“Issued as security” — often a strong defense to estafa

If the check merely guaranteed a pre-existing obligation (the money was already lent before the check), courts often find no deceit, hence no estafa.
Conversely, if the check induced the transaction (the lender released funds because of the check), deceit may be present and the defense fails.

Additional estafa defenses

No damage (e.g., the lender remained fully secured and suffered no real loss);
Good-faith belief in sufficient funds and prompt rectification;
Novation that extinguished the criminal liability before the filing of the case (careful: novation generally affects civil, not criminal, liability — success depends on facts);
No issuance (forgery, stolen check);
Payment may mitigate but rarely erases criminal liability once the crime is consummated.

D. Civil Exposure, Penalties, and Strategic Interplay

B.P. 22 penalties can include fine, imprisonment, or both; courts frequently impose fines in lieu of jail time for first-time offenders, plus civil liability (restitution, interest).
Estafa penalties scale with amount defrauded, potentially severe (prisión correccional to prisión mayor).
Compromise/settlement does not automatically extinguish criminal liability, but:
- In B.P. 22, payment within 5 banking days after written notice is uniquely potent (rebuts presumption).
- In estafa, full restitution can reduce penalties and influence prosecutorial or judicial discretion.

E. Practical Litigation Strategies

1) Attack notice immediately (B.P. 22)

Demand production of the written notice and proof of actual receipt by the accused.
Scrutinize who actually signed the registry card; compare signatures; verify address and date-stamps; insist on bank’s written stamp-reason for dishonor.

2) Freeze the narrative on “security only” (helps estafa; limited help for B.P. 22)

Lock in admissions from the complainant (affidavits, cross-examination) that the check was not intended for immediate deposit and that the loan pre-dated the check.
Corroborate with chat messages, emails, board minutes, or contract clauses.

3) Prove arrangements/payment within 5 banking days (B.P. 22)

If you paid or restructured quickly after written notice, assemble dated receipts, bank instruments, or formal agreements. Highlight the 5-day clock.

4) Consider alternative remedies and counterclaims

Civil counterclaim for unauthorized deposit contrary to contract;
Criminal counter-charge only where warranted (e.g., falsification/estafa by the other party); exercise prudence.

5) Corporate signatories

Clarify capacity (e.g., “for and on behalf of XYZ Corp.”). If the prosecution pleads and proves personal issuance, prepare to rebut with corporate authority and lack of personal undertaking.

F. Common Pitfalls

Relying solely on “security” to beat a B.P. 22 charge — that argument rarely succeeds by itself.
Ignoring the 5-day window because you never saw a letter — the complainant may later prove valid written notice you overlooked.
Assuming stop-payment avoids liability — if funds were insufficient anyway, it won’t help.
Confusing estafa elements with B.P. 22 — they are not interchangeable.

G. Quick Decision Tree

Is the case B.P. 22, estafa, or both?
- If B.P. 22 only → focus on notice, 5-day compliance, reason for dishonor, non-issuance, bank error, non-check arguments.
- If estafa → hammer lack of deceit (security for pre-existing debt), no damage, good faith.
- If both → run parallel strategies; success in one does not guarantee success in the other.
Do you have documentary proof of “security-only” intent?
- Strong for estafa; limited for B.P. 22 unless it shows conditional delivery/no value.
Was there written notice and what did you do within 5 banking days?
- If you paid/arranged → emphasize to defeat presumption (B.P. 22).
Why did the bank dishonor the check?
- Insufficiency/account closed → core B.P. 22 scenario.
- Other reasons → explore non-coverage.

H. Model Defensive Allegations (to adapt for pleadings)

For B.P. 22:
- “Accused did not receive written notice of dishonor, hence no presumption of knowledge arose.”
- “Upon receipt of written notice on [date], accused paid/arranged within five banking days, negating the presumption.”
- “The instrument was not a check/was incomplete/not delivered; alternatively, dishonor was not for insufficiency/account closure.”
- “There was no value or the delivery was conditional and the condition failed.”
For Estafa:
- “The check was issued purely as security for a pre-existing obligation; the alleged offended party did not part with money/property because of the check.”
- “There is no deceit and no damage; in any case, accused acted in good faith.”

I. Sentencing, Probation, and Collateral Issues

Fines and probation: Courts often prefer fines in B.P. 22; probation may be available depending on the penalty imposed.
Civil liability: Expect principal, interest, penalties, and attorney’s fees debates.
Business/licensing fallout: Certain convictions can affect professional or business permits; plan for compliance and mitigation.

J. Practitioner’s Takeaways

“Issued as security” strongly helps estafa defenses but is not, by itself, a silver bullet against B.P. 22.
Written notice is the pressure point in B.P. 22 prosecutions; keep meticulous records.
Move fast within the 5-banking-day window after actual notice.
Build your case with documents, not just testimony: contracts, messages, deposit slips, bank certifications, and service proofs win these cases.

Disclaimer

This article provides general information on Philippine law and common litigation strategies. It is not legal advice. Facts control outcomes. For any specific case, consult counsel who can review your documents, timelines, and bank records.