Company Closed Philippines

Legal Recourse for Investors in Case of Closed Accounts and Uncontactable Companies in the Philippines

Question: I invested in a company to fund their inventory. We have post-dated checks (PDCs) and contracts, but the checks are drawn from an account that's already closed, and I can't contact the company anymore. What are my legal recourse?

Answer: When an investor finds themselves in such a situation, there are several legal options available under Philippine law:

1. Bouncing Checks Law (Batás Pambansâ Blg. 22):

   • If you have post-dated checks that were issued as payment or security for your investment and these checks were dishonored because they were drawn against a closed account, the issuer of the check can be held criminally liable under the Bouncing Checks Law. Violators can face imprisonment, a fine, or both.

2. Civil Claim for Breach of Contract:

   • The existence of contracts between you and the company provides a basis for a civil claim. You can file a civil case for breach of contract to recover your investment or claim damages due to the company's failure to honor its obligations.

3. Estafa (Swindling):

   • Under the Revised Penal Code, issuing a bouncing check can also be a ground for estafa, a criminal offense, especially if there was deceit involved and you were defrauded of your money. Estafa is a more severe offense than a violation of the Bouncing Checks Law and can carry higher penalties.

4. Securities Regulation Code (Republic Act No. 8799):

   • If the company solicited investments from the public without the necessary permit from the Securities and Exchange Commission (SEC), they may have violated the Securities Regulation Code. You can report this to the SEC, which can initiate appropriate action.

5. Involvement of Regulatory Bodies:

   • You can lodge a complaint with the SEC, which oversees corporations and securities in the Philippines. They can investigate the matter, and if needed, revoke the company's registration or impose penalties.

6. Alternative Dispute Resolution:

   • If your contract with the company includes a provision for alternative dispute resolution (like arbitration or mediation), you might consider this route, as it can be quicker and less confrontational than court litigation.

Recommendation: In situations like these, it's crucial to gather all pertinent documents, such as the investment agreement, the post-dated checks, and any correspondence with the company. Consult with a lawyer who can guide you on the best legal strategy to pursue, considering the specifics of your situation.

Conclusion: Philippine law provides several avenues for investors to seek redress when companies fail to honor their obligations. Whether through criminal or civil actions, or with the help of regulatory bodies, investors have the legal means to protect their rights and interests.