Legal Remedies for Bouncing Cheques in the Philippines

Who can file a case for a bouncing cheque?

In the Philippines, a bounced cheque, also known as a dishonored cheque, occurs when a bank refuses to honor the cheque due to insufficient funds, a closed account, or any other reason that renders the cheque invalid. The legal recourse for dealing with a bounced cheque involves both civil and criminal liabilities. Here's a comprehensive look at the legal aspects and processes involved:

Legal Framework

The primary law governing bouncing cheques in the Philippines is Batas Pambansa Blg. 22 (BP 22), also known as the Bouncing Checks Law. This law makes it a criminal offense to issue a cheque that is subsequently dishonored by the bank due to insufficient funds or a closed account.

Who Can File a Case?

The person or entity to whom the cheque was issued (the payee) has the legal right to file a case against the issuer of the bounced cheque. The bank itself does not file the case; instead, it provides the necessary documentation and certification of the dishonor, which the payee uses to support their legal complaint.

Steps to File a Case

1. Demand Letter: Before filing a case, the payee must send a written demand letter to the issuer, demanding payment within five banking days from receipt of the letter. This step is crucial as it provides the issuer an opportunity to settle the obligation and serves as evidence that the payee made an effort to resolve the issue amicably.

2. Filing a Complaint: If the issuer fails to settle the amount within the specified period, the payee can then file a criminal complaint for violation of BP 22. The complaint is filed with the Office of the City Prosecutor where the cheque was dishonored.

3. Submission of Evidence: The payee must submit the following documents as evidence:

   • The original bounced cheque.
   • The written demand letter and proof of receipt by the issuer.
   • The bank’s certification of dishonor.

4. Preliminary Investigation: The prosecutor will conduct a preliminary investigation to determine if there is probable cause to charge the issuer. If probable cause is found, the case is filed in court.

5. Court Proceedings: The case will proceed to trial, where the court will determine the guilt of the issuer. If found guilty, the issuer may face penalties, including imprisonment or a fine.

Civil Remedies

Apart from criminal liability, the payee can also pursue civil remedies to recover the amount of the bounced cheque. This involves filing a civil case for the collection of the debt. The payee can seek a writ of attachment to secure the assets of the issuer to ensure the satisfaction of the judgment.

Conclusion

In the Philippines, the payee of a dishonored cheque has the right to file both criminal and civil cases against the issuer. The process begins with a demand letter and can escalate to court proceedings if the issuer fails to settle the debt. The legal framework under BP 22 ensures that there are stringent penalties for those who issue bouncing cheques, thereby protecting the interests of the payees.