Query: What legal actions can be taken when a check bounces in the Philippines?

Understanding Bouncing Checks

In the Philippines, a bounced check, also known as a "dishonored check," occurs when a check cannot be processed because the account it is drawn from lacks sufficient funds, is closed, or for other reasons that render the check invalid. This situation is governed by several laws and regulations aimed at protecting the interests of parties involved in financial transactions.

Legal Framework

Batas Pambansa Blg. 22 (B.P. 22) or the "Anti-Bouncing Check Law"

B.P. 22, enacted in 1979, specifically addresses the issue of bouncing checks. The key provisions of B.P. 22 include:

Criminal Liability: Issuing a check that bounces can lead to criminal charges. Under B.P. 22, the issuer of a bounced check may face imprisonment ranging from 30 days to one year or a fine that can be double the amount of the check, or both, at the court's discretion.
Notice Requirement: The law requires that the drawer (issuer) of the check be notified in writing by the drawee bank or the holder of the check that the check has been dishonored. The drawer then has five days from receipt of the notice to make arrangements for payment of the amount due.
Presumption of Knowledge: It is presumed that the drawer knew at the time of issuance that there were insufficient funds if the check is dishonored. This presumption can be rebutted by presenting evidence to the contrary.

Steps to Take When a Check Bounces

Immediate Action: Contact the drawer immediately after discovering that the check has bounced. Sometimes, the issue can be resolved quickly if it was a genuine error.
Send a Demand Letter: If initial contact fails, send a formal demand letter to the drawer. This letter should outline the amount due and include a warning about the potential legal consequences under B.P. 22 if payment is not made.
File a Complaint: If the drawer does not settle the amount due within the specified period (typically five days), the holder of the check can file a complaint with the Office of the City Prosecutor or the Municipal Trial Court. The complaint should include copies of the bounced check, the demand letter, and proof of receipt of the notice by the drawer.
Civil Remedies: Apart from criminal prosecution, the holder of the bounced check may also pursue civil remedies. This includes filing a civil case for the recovery of the amount due, plus damages, if applicable.

Importance of Documentation

To succeed in a legal action for a bounced check, thorough documentation is crucial. This includes:

Copies of the bounced check.
A written notice of dishonor from the bank.
Proof of delivery of the demand letter to the drawer.
Any correspondence between the parties regarding the check.

Conclusion

The issuance of bouncing checks is a serious matter in the Philippines, punishable under B.P. 22. Affected parties have both criminal and civil remedies at their disposal. It is essential to act promptly, maintain thorough documentation, and seek legal advice when necessary to address the situation effectively.