Query: What are the legal actions available in the Philippines for dealing with bounced checks issued from closed accounts?

In the Philippines, issuing a check that is dishonored due to a closed account can constitute a criminal offense under the Batas Pambansa Bilang 22 (B.P. 22), also known as the Bouncing Checks Law. This law was enacted to deter individuals from issuing checks without sufficient funds, or in this case, checks drawn from a non-existent account.

Understanding B.P. 22 and Its Implications

Violation of B.P. 22: The mere act of issuing a check that is dishonored due to insufficient funds or a closed account is considered a violation of B.P. 22. The law presumes that the issuer knew of the insufficiency of funds or the account closure at the time of issue, unless proven otherwise.
Legal Procedure: The payee may file a complaint for violation of B.P. 22 against the issuer. This involves submitting the dishonored check and the bank's notice of dishonor as primary evidence. The legal process may lead to criminal prosecution, where the issuer can face penalties including fines and imprisonment.
Civil Liabilities: Apart from the criminal aspect, the issuer of a dishonored check may also face civil liabilities. The payee can file a separate civil action to recover the amount of the check plus damages and interest.

Steps to Take When a Check is Dishonored

Immediate Notification: The payee should inform the issuer of the dishonor promptly. Under B.P. 22, the issuer has five (5) banking days from receipt of the notice of dishonor to settle the check amount.
Documentation: Keep all relevant documents, including the dishonored check, bank notices, and any correspondence with the issuer.
Legal Consultation: It is advisable to consult with a lawyer to discuss the best course of action and to ensure that legal rights are properly exercised.

Preventative Measures for Payees

Verification of Account Status: Before accepting checks, especially for significant amounts, consider verifying whether the issuer’s account is active and has sufficient funds.
Clear Agreements: When accepting checks, make clear agreements about the handling of potential issues like dishonor due to insufficient funds or closed accounts.

Conclusion

Dealing with bounced checks from closed accounts can be a frustrating experience in the Philippines. However, the legal framework provides mechanisms to address such issues effectively. Understanding and utilizing these legal tools can help mitigate the financial risks associated with accepting checks and ensure that violators are held accountable.