BOUNCING CHECKS LAW

(BP 22)

Q: What is the purpose of the bouncing checks law?

A: BP 22 or the Bouncing Checks Law was enacted for the specific purpose of
addressing the problem of the continued issuance and circulation of
unfunded checks by irresponsible persons.
Q: What is a check?
A: A check is a negotiable instrument that serves as a substitute for money
and as a convenient form of payment in financial transactions and
obligations. The use of checks as payment allows commercial and banking
transactions to proceed without the actual handling of money, thus, doing
away with the need to physically count bills and coins whenever payment is
made. It permits commercial and banking transactions to be carried out
quickly and efficiently. But the convenience afforded by checks is damaged
by unfunded checks that adversely affect confidence in our commercial and
banking activities, and ultimately injure public interest.
All kinds of checks are covered by BP 22 including postdated checks, foreign
checks issued in the Philippines but dishonored by the drawee bank in a
foreign country, Negotiable Order of Withdawal (NOW) instrument(e.g.
crossed checks or restricted checks), memorandum check1.
Q: What is a bouncing check?
A: A check is considered a bouncing check when upon its presentment for
payment, it is dishonored for insufficiency of funds or when the account of
the drawer is already closed.
Q: What are the punishable acts under BP 22?
A:
1. 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 in or credit with the drawee bank for the payment
of such check in full upon its presentment, which check is
subsequently dishonored by the drawee 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; or

1
A memorandum check carry with it the understanding that it will not be presented at the bank but will be
redeemed by the maker himself when the loan falls due.
 2. Having sufficient funds in or credit with the drawee bank when he
makes or draws and issues a check, shall fail to keep sufficient funds
or to maintain a credit to cover the full amount of the check if
presented within a period of 90 days from the date appearing thereon,
for which reason it is dishonored by the drawee bank (Sec.1).

Hence, there are two forms of violating BP 22. The first is the issuance of
unfunded check, while the second is the failure to maintain sufficiency of the
fund of the check.

Elements for violation of BP 22 under the first paragraph of Sec.1 of

BP 22
(1) The making, drawing and issuance of any check to apply for account or
for value;
(2) The knowledge of the maker, drawer, or issuer that at the time of issue
he does not have sufficient funds in or credit with the drawee bank for the
payment of such check in full upon its presentment; and
(3) The subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit or dishonor for the same reason had not the
drawer, without any valid cause, ordered the bank to stop payment.

Issuance of the check

Issuance means first delivery, physically or constructively of a check
complete in its form to the person who takes it as a holder.
The check delivered must be complete in its form. To consider a check
complete in its form, it must be immediately demandable. Thus, a postdated
check is not yet complete in its form since it is payable on or after its
maturity. If the postdated check is presented to the bank before its
maturity, the check will be dishonored for the reason that it was
“postdated”. The drawer is not liable for BP 22 since the check was not
dishonored due to insufficiency of funds. However, if the postdated check
was presented on or after its maturity and it was dishonored due to
insufficiency of funds, the drawer is criminally liable. Postdated checks are
covered by BP 22.
“For account or for value”
“For account” refers to pre-existing obligations, while “for value” means an
obligation incurred simultaneously with the issuance of the check.
Thus, to constitute as violation of BP 22, it doesn’t matter whether the check
was issued for a pre-existing obligation or not.
This must be distinguished with estafa through the issuance of bouncing
check, where it is necessary that the postdating or issuing check must be
the efficient cause of the defraudation. It must be shown that the offended
party to whom the check was delivered would not have parted with this
money or property were it not for the issuance of the check by the offender.
Thus, issuance of a check to pay a pre-existing obligation is not estafa, but
may constitute as violation of BP 22.

Knowledge of insufficiency of funds

To constitute as violation of BP 22 of the first form, the accused must know
that the funds were insufficient at the time that the check was issued. Thus,
the check must be unfunded on the date of issuance thereof and at the time
of its presentment for payment or deposit with the bank.
In case of postdated checks, the accused must have knowledge of the
insufficiency of funds on the date of issuance, which is the date of its
maturity or constructive delivery, and not the date of its postdating or
physical delivery. Conversely, in estafa through issuance of bouncing check,
the accused must have knowledge of the insufficiency of funds on the time
of its postdating or physical delivery, and not on the date of issuance,
maturity or constructive delivery.2
Note: The knowledge of the payee that the check is unfunded is not a
defense in BP 22, because deceit is not an element of BP 22. The opposite is
true for estafa through issuance of bouncing check.

Dishonor of the check

To constitute as violation of BP 22, the check must be dishonored by
the drawee bank for the reason that it was DAIF or drawn against
insufficient funds.

2
Campanilla, Criminal Law Reviewer II
 Dishonor of the check by reason of closed account is also covered by
BP 22. The term “closed accounts” is within the meaning of the phrase “does
not have sufficient funds in or credit with the drawee bank” in BP 22.
If the check was dishonored for the reason that there was a “stop-
payment order”, there will be a violation of BP 22 if the check would have
been dishonored for the reason of insufficiency of funds or credit had not the
drawer ordered the bank to stop payment. In other words, there must be
combination of stop-payment order and DAIF. If the check was funded at the
time there was stop-payment, there can be no prosecution under BP 22.

If the check is dishonored for DAUD(drawn against uncollected

deposits), there can be no violation of BP 22 since it only speaks of
insufficiency of funds but does not treat of uncollected deposits.

Presumption in BP 22
The making, drawing and issuance of a check payment of which is refused
by the drawee because of insufficient funds in or credit with such bank,
when presented within ninety (90) days from the date of the check,
shall be prima facie evidence of knowledge of such insufficiency of funds
or credit unless such maker or drawer pays the holder thereof the amount
due thereon, or makes arrangements for payment in full by the drawee of
such check within (5) banking days after receiving notice that such check
has not been paid by the drawee.(Sec.2)
Thus for the presumption of knowledge of insufficient funds to arise, there
are three requisites:
1. The check was presented within 90 days from the date of the check
2. The accused receives a written notice of dishonor
3. The accused fails to pay or make arrangements for payment in full by
the drawee of such check within 5 banking days after receiving the
notice of dishonor.
Note that the grace period of 5 days must be banking days. Payment
within this period will preclude prosecution for BP 22. Full payment of
the check after the expiration of the grace period but before filing of
the Information is also a complete defense.
Note: This presumption is rebuttable. Proof of lack of knowledge is a defense
in BP 22.
If the check is presented beyond 90 days, there can be no presumption of
knowledge of insufficiency of funds but evidence may still be presented that
the accused knew at the time of the issuance of the check that it was
unfunded.
Note: A check becomes stale if not presented within six months from its
issuance. Thus, if the check is presented after six months, it will be
dishonored for being stale. Hence, the accused is not liable for estafa nor for
BP 22, because the reason for the dishonor was not due to insufficiency of
funds.

In estafa, the failure of the drawer of the check to deposit the amount
necessary to cover his check within three days from receipt of notice from
the bank and/or the payee or holder that said check has been dishonored for
lack of insufficiency of funds shall be prima facie evidence of deceit
constituting false pretense or fraudulent act.
Note that the grace period of three days may either be banking or non-
banking days.

Notice of Dishonor
- In BP 22, the notice of dishonor of the check must be in writing. A
mere oral notice to the drawer or maker of the dishonor of the
check is not enough. In estafa, verbal notice is sufficient to give rise
to the prima facie evidence of deceit.
Note: It must be a notice of dishonor not a demand letter.
- There must be proof that the accused received the notice of
dishonor nd not merely that the complainant(payee) sent the notice
to him.
Q: What will happen if there was no notice of dishonor?
A: The case for violation of BP 22 will be dismissed due to deprivation of due
process of law.
In estafa, the accused can still be convicted even if there was no notice since
the prosecution can still prove the existence of deceit.
Elements for violation of BP 22 under the second paragraph of Sec.1
of BP 22
1. That a person has sufficient funds in or credit with the drawee bank
when he makes or draws and issues a check;
2. That he fails to keep sufficient funds or to maintain a credit to cover
the full amount of the check if presented within a period of 90 days
from the date appearing thereon; and
3. That the check is dishonored by the drawee bank.
Note that here the drawer has sufficient funds at the time of issuance, in
contrast to the first paragraph of Sec. 1 of BP 22 where the drawer knows
the insufficiency of funds at the time of the issuance. In sum, in the first
paragraph, the check is unfunded, while in second paragraph, the check is
funded.
What is being punished in the second paragraph is the failure to maintain
the sufficiency of the check for 90 days. The presentment of the check within
90 days is an element under the second paragraph of Section 1 of BP 22.
Thus, presentation of the check beyond the period is a defense.

Persons liable for violation of BP 22.

1. A person who makes or draws and issues a bouncing check

Q: How about the endorser of the check?

A: An endorser of the check can only be held liable for violation of BP

22 if he is aware that check is unfunded at the time of issuance or he
conspires with the drawer in violating this law.

Example: On March 24, 2021 Jungkook issued to Jimin a postdated

check payable on April 15, 2021. Jungkook asked Jimin not to present
the check until April 30, 2021 by which time the check would be fully
funded. On April 10, 2021, Jimin purchased goods from Jin and
endorsed the check to the latter as payment and assured him that the
check is good and may be encashed on April 15, 2021. Jin presented
the check on April 15, 2021, but it was dishonored by the bank for lack
of funds. Notice of dishonor was sent to Jungkook and Jimin.
 In this case, Jungkook may be held liable for violation of BP 22
regardless of the agreement with Jimin not to present the check until
April 15, 2021. Jimin, as endorser of the check, may also be held liable
for violation of BP 22 because he was aware at the time that he
endorsed the check to Jin that the check was unfunded on the date of
maturity.
In addition, Jimin may also be held liable for estafa since he used an
unfunded check to defraud Jin.
2. An “accommodation party” is liable under BP 22. An accommodation
party is one who has signed the check without receiving value in
exchange, and who issues the check for the purpose of lending his
name to some other person. He is still liable even though the holder of
the check knew him to be only an accommodation party.

3. In case a check is issued in behalf of a corporation or other legal

entity, the person who actually signed the bounced check is liable.
Duty of drawer
It shall be the duty of the drawee of any check, when refusing to pay the
same to the holder thereof upon presentment, to cause to be written,
printed, or stamped in plain language thereon, or attached thereto, the
reason for drawee's dishonor or refusal to pay the same: Provided, That
where there are no sufficient funds in or credit with such drawee bank, such
fact shall always be explicitly stated in the notice of dishonor or
refusal. In all prosecutions under this Act, the introduction in evidence of
any unpaid and dishonored check, having the drawee's refusal to pay
stamped or written thereon or attached thereto, with the reason therefor as
aforesaid, shall be prima facie evidence of the making or issuance of said
check, and the due presentment to the drawee for payment and the
dishonor thereof, and that the same was properly dishonored for the reason
written, stamped or attached by the drawee on such dishonored check.
Notwithstanding receipt of an order to stop payment, the drawee shall state
in the notice that there were no sufficient funds in or credit with such bank
for the payment in full of such check, if such be the fact.
The word "credit" as used herein shall be construed to mean an arrangement
or understanding with the bank for the payment of such check.
BP 22 vs. Estafa
BP 22 Estafa
Malum prohibitum.
Crime against public interest.
Deceit not required.
Punishes the making or drawing of any
check that is subsequently dishonoured,
whether issued in payment of an act
constituting the offense is postdating or
issuing a check in payment of an
obligation or to merely guarantee an
obligation.
Issuance of a check not the non-payment
of obligation is punished.
Violated if check is issued in payment of a
pre-existing obligation.
Damage not required.
Drawer is given 5 banking days to make
arrangements of payment after receipt of
notice of dishonour.
Malum in se.
Crime against property.
Deceit is an element.
The act constituting the offense is
postdating or issuing a check in payment
of an obligation when the offender has no
funds in the bank or his funds deposited
therein were not sufficient to cover the
amount of the check.
Not violated if check is issued in payment
of a pre-existing obligation.
There must be damage.
Drawer is given 3 days to make
arrangements of payment after receipt of
notice of dishonour.