REVIEWER IN REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS

CHAPTER 1
BOUNCING CHECKS LAW
(BATAS PAMBANSA BILANG 22)
DOES B.P. 22 COVER ACCOMMODATION
o Bouncing Checks Law (Batas Pambansa
OR GUARANTEE CHECK?
Bilang 22) – it is an act penalizing the making or
drawing and issuance of a check without It is covered by B.P. 22 because the issuance of the
sufficient funds or credit and for other purposes. check to cover the account and its subsequent
dishonor are the only facts required for prosecution
under the law.
WHAT IS CHECK?
CASES:
o Check – it is a bill of exchange drawn on a bank
In People vs. Que, it was held that B.P. 22 does not
payable on demand.
make any distinction as to whether the bad check is
» It is a negotiable instrument that serves as a issued in payment of an obligation or to guarantee an
substitute for money and as a convenient form obligation.
of payment in financial transactions and
obligations.
WHAT ARE THE REQUISITES TO BE LIABLE
UNDER B.P. 22?
WHAT IS THE USE OF CHECK?
In cases for violation of B.P. 22, the following essential
It allows commercial and banking transactions to elements must be established:
proceed without the actual handling of money, thus,
doing away with the need to physically count bills and 1. The making, drawing, and issuance of any check
coins whenever payment is made. to apply for account or for value.
2. The knowledge of the maker, drawer, or issuer
that at the time of issue there were no sufficient
WHAT ARE THE DIFFERENT TYPES OF CHECK? funds in or credit with the drawee bank for the
1. Accommodation Check – it is a check drawn for payment of such check in full upon its
the purpose of lending a person’s name to presentment.
another. 3. The dishonor of the check by the drawee bank
2. Guarantee check – it may either be an for insufficiency of funds or credit or the
accommodation, or any other kind of check dishonor for the same reason had not the
drawn and delivered to guarantee the drawer, without any valid cause, ordered the
performance of a principal obligation. drawee bank to stop payment.

3. Crossed Check – it has the following effects:

A. The check may not be encashed but only
SECTION 1. CHECKS WITHOUT SUFFICIENT FUNDS
deposited in the bank.
B. The check may be negotiated only once to one Any person who makes or draws and issues any check
who has an account with a bank. to apply on account or for value, knowing at the time
of issue that he does not have sufficient funds in or
C. It serves as a warning to the holder that the
credit with the drawee bank for the payment of such
check has been issued for a definite purpose so
check in full upon its presentment, which check is
that he must inquire if he has secured the check
subsequently dishonored by the drawee bank for
pursuant to that purpose.
insufficiency of funds or credit or would have been
dishonored for the same reason had not the drawer, SECTION 3. DUTY OF DRAWEE;
without any valid reason, ordered the bank to stop RULES OF EVIDENCE
payment, shall be punished by imprisonment of not
It shall be the duty of the drawee of any check, when
less than thirty days (30) but not more than one (1) refusing to pay the same to the holder thereof upon
year or by a fine of not less than but not more than presentment, to cause to be written, printed, or
double the amount of the check which fine shall in no stamped in plain language thereon, or attached
case exceed two hundred thousand pesos thereto, the reason for drawee's dishonor or refusal to
(₱200,000), or both such fine and imprisonment at pay the same.
the discretion of the court.
» Provided, that where there are no sufficient funds
The same penalty shall be imposed upon any person in or credit with such drawee bank, such fact shall
who, having sufficient funds in or credit with the always be explicitly stated in the notice of
drawee bank when he makes or draws and issues a dishonor or refusal. In all prosecutions under this
check, shall fail to keep sufficient funds or to maintain act, the introduction in evidence of any unpaid
a credit to cover the full amount of the check if and dishonored check, having the drawee's
presented within a period of ninety (90) days from refusal to pay stamped or written thereon or
attached thereto, with the reason therefor as
the date appearing thereon, for which reason it is
aforesaid, shall be prima facie evidence of the
dishonored by the drawee bank.
making or issuance of said check, and the due
Where the check is drawn by a corporation, company presentment to the drawee for payment and the
or entity, the person or persons who actually signed dishonor thereof, and that the same was properly
the check in behalf of such drawer shall be liable under dishonored for the reason written, stamped or
this act. attached by the drawee on such dishonored
check.
Notwithstanding receipt of an order to stop payment,
WHAT IS DAIF AND DAUD? the drawee shall state in the notice that there were no
sufficient funds in or credit with such bank for the
o Drawn Against Insufficient Fund (DAIF) – it is payment in full of such check, if such be the fact.
liable for B.P. 22.
o Drawn Against Uncleared Deposits (DAUD) –
it is not liable for B.P. 22.
SECTION 4. CREDIT CONSTRUED
The word “credit” as used herein shall be construed
SECTION 2. EVIDENCE OF KNOWLEDGE OF to mean an arrangement or understanding with the
INSUFFICIENT FUNDS bank for the payment of such check.

The making, drawing and issuance of a check payment

of which is refused by the drawee because of
COMPARE BOUNCING CHECKS WITH ESTAFA
insufficient funds in or credit with such bank, when
presented within ninety (90) days from the date of Elements of Estafa under paragraph 2(D), Article 315
the check, shall be prima facie evidence of of the RPC are:
knowledge of such insufficiency of funds or credit
1. The postdating or issuance of a check in
unless such maker or drawer pays the holder thereof
payment of an obligation contracted at the time
the amount due thereon, or makes arrangements for
the check was issued.
payment in full by the drawee of such check within (5)
banking days after receiving notice that such check 2. Lack of sufficiency of funds to cover the check.
has not been paid by the drawee. 3. Damage to the payee.
CASES:
People vs. Villanueva
 B.P. 22 ESTAFA HOW TO GET AWAY WITH B.P. 22?
No such requirement. Deceit and damage.
A drawer of a The element of knowledge of insufficiency of funds or
dishonored check may While under Article 315 credit is not present and therefore, the crime does not
be convicted under B.P. 2 (D) of the RPC, such exist, when the drawer either:
22 even if he had issued circumstance negates
1. Pays the holder of the check the amount due
the same for a pre- criminal liability.
existing obligation. thereon within five (5) banking days after
Specific and different penalties are imposed in receiving the notice that such check has not been
each of the two offenses. paid by the drawee.
Violation of B.P. 22 is 2. Makes arrangements for payment in full by the
Estafa is essentially a
principally a crime drawee of such check within five (5) banking
crime against property.
against public interest. days after notice of non-payment.
Violations of Article
Violations of B.P. 22 are » If notice of non-payment by the drawee bank is
315 of the RPC are
mala prohibita. not sent to the maker or drawer of the bum
mala in se.
check, or if there is no proof as to when such
notice was received by the drawer, then the
presumption of prima facie evidence as
CONVICTION FOR BOTH CRIME AND OFFENSE provided in Section 2 of B.P. 22 cannot arise,
since there would simply be no way of
SECTION 5. LIABILITY UNDER THE reckoning the crucial 5-day period.
REVISED PENAL CODE.
o Prescription - 4 years from the lapse of 5
Prosecution under this act shall be without prejudice banking days within which to make a payment
to any liability for violation of any provision of the or arrangement for payment.
Revised Penal Code. o Forgery
CASES:
SECTION 6. SEPARABILITY CLAUSE In Marigumen vs. People, G.R. No. 153451, May 26,
If any separable provision of this act be declared 2005, if the drawer or maker is an officer of the
unconstitutional, the remaining provisions shall corporation, the notice of dishonor to the said
continue to be in force. corporation is not notice to employee or officer who
drew or issued the check for and it is behalf. The
Essentially, while a B.P. 22 case and an Estafa case responsibility under B.P. 22 is personal to the
may be rooted from an identical set of facts, they accused. Hence, personal knowledge of the notice of
nevertheless present different causes of action, which, dishonor is necessary. Consequently, constructive
under the law, are considered “separate, distinct, notice to the corporation is not enough to satisfy due
and independent” from each other. Therefore, both process.
cases can proceed to their final adjudication – both as
to their criminal and civil aspects – subject to the
prohibition on double recovery.
CASES:
People vs. Julie Grace Villanueva