Issuing a Bouncing Check is a Crime: Ignorance is No Excuse

TLDR: Issuing a check that bounces due to insufficient funds or a closed account is a crime in the Philippines, regardless of your intent or the reason for issuing the check. You can be held liable even if you didn’t directly transact with the payee or if the check was meant as a guarantee. Focus on preventing bounced checks by ensuring sufficient funds and proper account management, as penalties can include fines and even imprisonment.

G.R. No. 130038, September 18, 2000

Introduction

Imagine running a small business and accepting a check as payment, only to find out later that it bounced. This scenario is all too common and can have devastating consequences. In the Philippines, the Bouncing Checks Law (Batas Pambansa Bilang 22, or B.P. 22) addresses this issue, imposing serious penalties on those who issue checks without sufficient funds. This case, Rosa Lim v. People of the Philippines, highlights the strict liability imposed by B.P. 22, emphasizing that ignorance of insufficient funds is no excuse.

Rosa Lim was found guilty of violating B.P. 22 for issuing two checks that were dishonored due to a closed account. She argued that the checks were given as a guarantee and not directly to the payee. However, the Supreme Court upheld her conviction, underscoring the importance of understanding and complying with the Bouncing Checks Law.

Legal Context: The Bouncing Checks Law (B.P. 22)

B.P. 22, also known as the Bouncing Checks Law, aims to maintain confidence in the banking system by penalizing the issuance of checks without sufficient funds. This law is crucial for ensuring smooth commercial transactions and protecting businesses from fraudulent practices.

The key elements of a B.P. 22 violation are:

• Making, drawing, and issuing a check for account or value.
• Knowledge by the maker, drawer, or issuer that at the time of issue, they do not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment.
• Subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit, or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.

Section 2 of B.P. 22 provides a crucial presumption:

“Sec. 2 Evidence of knowledge of insufficient funds – The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the check, shall be prima facie evidence of Knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five (5) banking days after receiving notice that such check has not been paid by the drawee.”

This means that if a check bounces, the issuer is presumed to know they had insufficient funds, unless they can prove otherwise. This presumption places a significant burden on the issuer to demonstrate their lack of knowledge.

Case Breakdown: Rosa Lim’s Bouncing Checks

The case of Rosa Lim illustrates the application of B.P. 22 in a real-world scenario. Here’s a breakdown of the events:

1. Transactions: Rosa Lim purchased jewelry from Maria Antonia Seguan, issuing two Metrobank checks payable to “cash” as payment.
2. Dishonor: When Seguan deposited the checks, they were returned due to Lim’s account being closed.
3. Legal Action: Seguan filed criminal charges against Lim for violating B.P. 22.
4. Trial Court: The Regional Trial Court found Lim guilty on both counts, sentencing her to imprisonment and fines.
5. Court of Appeals: The Court of Appeals affirmed the trial court’s decision.
6. Supreme Court: Lim appealed to the Supreme Court, arguing that she issued the checks to Aurelia Nadera as a guarantee, not to Seguan directly.

Despite Lim’s defense, the Supreme Court emphasized that the reason for issuing the check and to whom it was issued is irrelevant. The crucial factor is whether the check was dishonored due to insufficient funds or a closed account.

The Supreme Court quoted previous jurisprudence stating:

“The gravamen of B.P. No. 22 is the act of making and issuing a worthless check or one that is dishonored upon its presentment for payment… The act is malum prohibitum, pernicious and inimical to public welfare.”

The Court also noted:

“Unlike in estafa, under B. P. No. 22, one need not prove that the check was issued in payment of an obligation, or that there was damage. The damage done is to the banking system.”

Ultimately, the Supreme Court affirmed Lim’s conviction but modified the penalty, deleting the prison sentence and imposing only a fine. This modification was based on the principle of redeeming valuable human material and preventing unnecessary deprivation of personal liberty.

Practical Implications: Avoiding Bouncing Check Penalties

This case underscores the importance of exercising caution when issuing checks. Here are some practical tips to avoid violating B.P. 22:

• Maintain Sufficient Funds: Always ensure that your bank account has sufficient funds to cover the amount of the check.
• Monitor Your Account: Regularly monitor your account balance and transactions to avoid overdrafts.
• Inform Payees of Potential Issues: If you anticipate any issues with your account, inform the payee before issuing the check.
• Avoid Post-Dated Checks: Post-dated checks can lead to unintentional violations if funds are not available on the specified date.
• Understand Bank Procedures: Familiarize yourself with your bank’s policies regarding check clearing and account management.

Key Lessons

• Issuing a bouncing check is a crime, regardless of intent.
• Lack of knowledge of insufficient funds is not a valid defense.
• The focus is on protecting the banking system and ensuring financial stability.
• Penalties can include fines and imprisonment.

Frequently Asked Questions (FAQs)

Q: What does “malum prohibitum” mean?

A: “Malum prohibitum” refers to acts that are wrong because they are prohibited by law, even if they are not inherently immoral. Violating B.P. 22 falls under this category.

Q: Can I be imprisoned for issuing a bouncing check?

A: Yes, B.P. 22 provides for imprisonment as a possible penalty. However, courts often impose fines instead, especially for first-time offenders.

Q: What should I do if I receive a notice of dishonor for a check I issued?

A: Immediately contact the payee and make arrangements to pay the amount of the check within five (5) banking days to avoid criminal charges.

Q: Is it a valid defense to say I issued the check as a guarantee?

A: No, the Supreme Court has consistently ruled that the reason for issuing the check is irrelevant under B.P. 22.

Q: What if the bank made a mistake and wrongfully dishonored my check?

A: You may have a cause of action against the bank for damages, but this does not excuse you from liability under B.P. 22. You should still try to settle with the payee and pursue your claim against the bank separately.

Q: Does B.P. 22 apply to checks issued by corporations?

A: Yes, B.P. 22 applies to checks issued by corporations, and the officers responsible for issuing the check can be held criminally liable.

Q: What is the difference between B.P. 22 and Estafa in relation to bouncing checks?

A: B.P. 22 focuses on the act of issuing a worthless check, regardless of intent or damage. Estafa, on the other hand, requires proof of deceit and damage.

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