Disclaimer: The following discussion is provided for general informational and educational purposes only. It is not legal advice. If you need specific guidance on any legal matter, please consult a qualified lawyer in the Philippines.

I. Introduction

In the Philippines, checks are regulated by both statutory law and jurisprudence. One important issue faced by individuals and businesses alike is stopping the payment of a check where there is fraud. Stopping payment is not a simple matter; the drawer must understand the legal implications, the requirements of banks, and the potential criminal or civil liabilities that might arise from a bounced check or a wrongful stop-payment order. This article explores the crucial aspects of stopping payment on a check due to fraud, with a focus on Philippine law.

II. Legal Foundations

A. Negotiable Instruments Law (Act No. 2031)

Definition of a Check
Under the Negotiable Instruments Law (NIL), a check is defined as a negotiable instrument drawn upon a bank and payable on demand. Once issued, a check carries with it the presumption of negotiability and validity.
Drawer’s Liability
The drawer of the check is primarily liable for its payment. If the drawer wishes to stop payment, the bank ordinarily must receive timely notice containing sufficient information to identify the check in question (i.e., check number, date, amount, payee). Failure to properly notify the bank can invalidate the stop-payment instruction.
Fraud Exception
Fraud can be an important defense or reason for issuing a stop-payment order. Common scenarios include:
- The check was obtained by the payee through deceit, misrepresentation, or other fraudulent means.
- There was an alteration or forgery of the check.

B. Batas Pambansa Blg. 22 (The Bouncing Checks Law)

Definition and Coverage
B.P. 22 was enacted to penalize the making, drawing, and issuance of checks without sufficient funds or credit. If a check is dishonored due to insufficient funds, and the drawer fails to settle within five (5) banking days from notice, a criminal charge under B.P. 22 may be initiated.
Stopping Payment vs. B.P. 22
- Stopping payment because of fraud is generally a valid defense if you can substantiate that the payee committed fraud in obtaining the check.
- However, if the drawer stops payment without valid grounds—for instance, merely to avoid payment—it may result in violations under B.P. 22 if the check bounces due to insufficient funds or if the account is closed.

C. Estafa Under the Revised Penal Code (RPC)

In certain cases, the unlawful stopping of payment might lead to estafa charges. For example, if the drawer had criminal intent from the start (e.g., issuing a check as part of a swindling scheme), the payee might file a criminal complaint under the provisions of estafa in the RPC, in addition to or independent of B.P. 22.

III. Grounds for Stopping Payment Due to Fraud

Misrepresentation or Deceit
The payee may have misled the drawer regarding the nature of the transaction, the goods delivered, or services rendered. If it is proven that no valid consideration existed (or that the payee resorted to deceit), that fraud may justify stopping payment.
Forgery or Alteration
If the check itself was forged (for example, someone else forged the drawer’s signature) or if it was materially altered without the drawer’s consent (such as changing the amount or payee name), stopping payment would be appropriate.
Breach of Trust
Sometimes, the payee misuses a check entrusted to them for a specific purpose. If the payee used that check in a manner that violates the terms of the agreement, this can also be a valid basis for stopping payment.
Other Circumstances
Courts can consider additional grounds on a case-to-case basis, particularly where equitable considerations arise.

IV. Procedure for Stopping Payment

Prompt Notification to the Bank
- Notify your bank in writing as soon as possible.
- Provide clear information: the check number, date, amount, payee name, and reason for the stop-payment order (i.e., fraud).
- Most banks also require you to fill out an official “Stop Payment Order” form.
Follow Contractual Requirements
- Many banks have deposit agreements that outline specific procedures for stop payments, including fees.
- Check your bank’s terms and conditions to ensure compliance, as improper notice or delays can render your stop-payment order ineffective.
Keep Documentary Evidence
- Gather evidence of the alleged fraud (e.g., communications, contracts, receipts).
- This will support your stop-payment request if the payee challenges it or files a complaint for B.P. 22 or civil damages.
Possible Bank Fees
- Banks typically charge a stop-payment fee, which can vary depending on the institution and your account type.

V. Potential Liabilities of the Drawer

Civil Liability
- If the payee can show that the drawer stopped payment arbitrarily or without valid cause, the drawer may be held liable for actual damages, costs, and possibly moral or exemplary damages if fraud or bad faith is proven.
Criminal Liability (B.P. 22)
- If a valid check is dishonored due to insufficient funds or if payment is stopped improperly—and the account lacks sufficient funds or is closed—the drawer could face charges under B.P. 22.
- A conviction under B.P. 22 can result in penalties that may include a fine and imprisonment (though imprisonment is often replaced by fines and other penalties, depending on the circumstances).
Estafa Charges
- The payee may also pursue charges under estafa if they believe the drawer acted deceitfully, issuing the check with no intention to pay from the start.

VI. Remedies for the Payee

Civil Action for Sum of Money
- If the payee disputes the validity of the stop-payment order, they may file a civil action for collection of the amount due on the check.
Criminal Complaint
- If the payee believes the drawer stopped payment in bad faith and the check was dishonored, they can initiate:
  - A complaint for B.P. 22, provided the elements are met (lack of sufficient funds, no valid reason for non-payment, failure to settle within five banking days).
  - A complaint for estafa under the RPC, if there was deceit in issuing the check.
Negotiation or Settlement
- In many instances, parties prefer an amicable settlement. Settlement might involve partial payments, a restructuring of debt, or cancellation of the original transaction if fraud is proven.

VII. Relevant Jurisprudence

While there is extensive jurisprudence on checks and stop-payment orders, some common threads across Supreme Court decisions in the Philippines include:

Good Faith Matters
- Courts often look into the factual circumstances to determine whether the drawer acted in good faith when stopping payment.
Proof of Fraud
- The burden is on the drawer to show sufficient proof of the fraud that motivated the stop-payment order.
- Mere allegations are not enough; compelling evidence (e.g., false representations, forged documents) strengthens the defense.
Substantial Compliance with Bank Requirements
- Properly informing the bank with all necessary details is crucial. If the bank fails to honor a check due to a defective or delayed stop-payment notice, the drawer may be liable.
No Automatic Exemption from B.P. 22
- A claim of fraud must be substantiated. Simply alleging fraud to avoid liability under B.P. 22 may not be sufficient unless proven with evidence.

VIII. Practical Tips and Considerations

Act Immediately
- If you discover fraud, contact your bank and, if necessary, legal counsel. Delays can weaken your position.
Document Everything
- Keep all records, including emails, text messages, contracts, or other evidence related to the fraudulent transaction.
Consult a Lawyer
- Given the criminal implications of B.P. 22 and possible civil liabilities, seeking professional legal advice is highly recommended.
Attempt to Resolve Amicably
- Where feasible, consider discussing the matter with the payee before or soon after stopping payment. A mutual settlement can avoid litigation.
Check Your Bank’s Policies
- Different banks may have varying timelines and processes for honoring stop-payment orders. Ensure compliance with those rules.

IX. Conclusion

Stopping payment on a check in the Philippines due to fraud involves navigating multiple legal considerations—from the Negotiable Instruments Law to B.P. 22 and potential estafa charges. While fraud is a recognized ground to justify a stop-payment order, one must proceed carefully and in good faith. Adequate documentary evidence, prompt notification to the bank, and strict compliance with legal requirements are critical to defending such an action.

If you believe you have been a victim of fraud, it is always best to consult with a Philippine-licensed attorney to assess your specific circumstances and chart the most appropriate legal and practical course of action.

Disclaimer Reiterated: This article is intended for informational purposes only and does not constitute legal advice. For any specific concerns regarding stopping payment on a check due to fraud in the Philippines, you should consult a licensed attorney who can provide tailored guidance based on your particular situation.