Legal Implications of Issuing Bounced Checks in the Philippines

Query: What are the legal consequences of issuing a bounced check in the Philippines?

Issuing a bounced check, also known as a dishonored check, is a serious offense in the Philippines, governed primarily by Batas Pambansa Blg. 22, commonly referred to as the Bouncing Checks Law. This law outlines the penalties and liabilities for individuals who issue checks that are later dishonored by the bank due to insufficient funds or because the account is closed.

Legal Definition and Scope

Under Batas Pambansa Blg. 22, a check is considered "bounced" if it is presented for payment within 90 days from the date of the check and is subsequently dishonored due to:

1. Insufficient funds.
2. The account being closed.

The law applies to all types of checks, including personal, company, and third-party checks, as long as they are used for payment of an obligation or debt.

Criminal Liability

Issuing a bounced check is a criminal act that can lead to both fines and imprisonment. The penalties under Batas Pambansa Blg. 22 are as follows:

1. Imprisonment: The issuer can face imprisonment ranging from 30 days to one year.
2. Fines: The issuer may also be subjected to fines that can amount up to double the amount of the check, but not exceeding PHP 200,000.

The court has the discretion to impose either or both penalties depending on the circumstances surrounding the case.

Civil Liability

In addition to criminal penalties, the issuer of a bounced check may also face civil liability. The payee has the right to demand the amount of the check plus any damages incurred due to the dishonor of the check. This can be pursued through a separate civil case for collection of sum of money.

Presumption of Knowledge

The law presumes that the issuer of the check knew that it would be dishonored if the following conditions are met:

1. The issuer did not maintain sufficient funds in the account at the time of issuance.
2. The issuer was notified by the bank that the check has been dishonored and still failed to make arrangements for its payment within five banking days.

This presumption can be rebutted if the issuer can prove that they had no intention to defraud the payee and took steps to rectify the situation upon being notified.

Defenses Against Batas Pambansa Blg. 22

An issuer can raise several defenses to avoid liability under Batas Pambansa Blg. 22:

1. Lack of Notice: The issuer was not notified by the bank of the check's dishonor.
2. Payment or Arrangement: The issuer made arrangements to cover the check within five banking days of notice.
3. Forgery or Fraud: The check was forged or issued fraudulently without the issuer’s consent.

Preventive Measures

To avoid the legal consequences of issuing a bounced check, individuals and businesses should:

1. Maintain Sufficient Funds: Ensure that there are enough funds in the account when issuing a check.
2. Regularly Monitor Accounts: Keep track of the account balance and any pending transactions that could affect it.
3. Promptly Address Notices: Act immediately upon receiving a notice of dishonor from the bank.

Conclusion

Issuing a bounced check in the Philippines carries significant legal risks, including both criminal and civil penalties. It is essential for individuals and businesses to be aware of their financial obligations and to take proactive steps to prevent the issuance of checks that may be dishonored. Understanding and complying with Batas Pambansa Blg. 22 can help mitigate these risks and ensure smooth financial transactions.