Bouncing Checks: Even Guarantees Can Lead to Criminal Charges Under BP 22

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Issuing a check that bounces, even if intended merely as a guarantee and not for immediate payment, can still land you in legal hot water in the Philippines. This case underscores the strict liability nature of Batas Pambansa Blg. 22 (BP 22), the Bouncing Checks Law, and how good intentions or offsetting agreements are not valid defenses against its penalties. Ignorance of this law can have severe consequences for businesses and individuals alike, highlighting the need for careful check management and a clear understanding of financial obligations.

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[G.R. No. 120149, April 14, 1999] DOMINGO DICO, JR., PETITIONER, VS. COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, RESPONDENTS.

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INTRODUCTION

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Imagine running a small bakery and relying on postdated checks to manage payments for your supplies. Now, imagine those checks bouncing, not because you intended to defraud your supplier, but because of a misunderstanding about how and when they would be deposited. This is the predicament Domingo Dico, Jr. found himself in, a situation that led him to the Supreme Court of the Philippines to contest his conviction under the Bouncing Checks Law. Dico’s case highlights a critical lesson for businesses and individuals: in the Philippines, issuing a bad check, even as a ‘guarantee,’ is a serious offense.

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Domingo Dico, Jr., owner of Paulo Bake Shop, was convicted of ten counts of violating BP 22 for issuing several checks to his supplier, Margie Lim Chao, which were dishonored due to “Account Closed.” Dico argued that these checks were not meant for immediate encashment but were merely guarantees related to a separate business venture and that his debts were to be offset by profits from this venture. The central legal question before the Supreme Court was: Can Dico be held criminally liable under BP 22, despite claiming the checks were guarantees and there was an agreement for debt offsetting?

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LEGAL CONTEXT: BATAS PAMBANSA BLG. 22 AND MALA PROHIBITA

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Batas Pambansa Blg. 22, commonly known as the Bouncing Checks Law, was enacted to address the growing problem of worthless checks circulating in commerce. The law aims to maintain confidence in the banking system and deter the issuance of checks without sufficient funds. It’s crucial to understand that BP 22 is a mala prohibita offense. This Latin term signifies that the act is wrong because it is prohibited by law, regardless of intent or moral culpability. In mala prohibita crimes, the mere commission of the prohibited act, in this case, issuing a bouncing check, is sufficient for conviction, regardless of whether the issuer intended to defraud anyone.

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The core provision of BP 22, as it applies to this case, states:

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“Any person who makes or draws and issues any check to apply for an account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank… which check is subsequently dishonored… shall be punished by imprisonment…”

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Dico attempted to rely on the precedent set in Magno vs. Court of Appeals, where the Supreme Court acquitted an accused in a BP 22 case, arguing that the checks were issued as a warranty deposit and not for value received by the accused personally. However, the Supreme Court in Dico’s case distinguished Magno, emphasizing that in Magno, the accused did not actually receive the cash represented by the check, whereas Dico issued checks for bakery supplies he did receive. The court reiterated established jurisprudence from cases like Que vs. People and People vs. Nitafan, which explicitly state that BP 22 applies even to checks issued as guarantees. These cases clarified that the law makes no distinction between checks issued for payment and those issued as guarantees. The intent behind issuing the check is irrelevant; the act of issuing an unfunded check is the crime itself.

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CASE BREAKDOWN: DICO’S DISHONORED CHECKS AND COURT PROCEEDINGS

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The narrative of Domingo Dico, Jr.’s legal ordeal began with a straightforward business transaction. Margie Lim Chao supplied bakery materials to Dico’s Paulo Bake Shop throughout 1986. For each delivery, Dico issued postdated checks to Chao as payment. In total, over twenty-four checks were issued, a common practice in business transactions to manage cash flow and ensure payment.

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However, Dico ran into financial difficulties. Before the checks were due, he asked Chao to delay depositing them, explaining he lacked funds. Chao agreed, and to prevent the checks from becoming stale, they agreed to re-date all the checks to a common date: August 3, 1987. Dico signed beside the new dates on each check. When Chao finally deposited the checks about a month later, all five checks involved in this particular case bounced with the reason