Homework #1 Bouncing Checks Law

1. Explain the main purpose of Batas Pambansa Bilang 22. Why was this law enacted in
the Philippines?
● The main purpose of Batas Pambansa Bilang 22 is to prevent the circulation of worthless
checks that can harm the welfare of public interest. This law was enacted to uphold
confidence and trust in the use of checks, which are commonly used in business and
other financial transactions.

2. What are the elements required to establish a violation of Batas Pambansa Bilang 22?
Discuss each element briefly.
● Making, Drawing, or issuance of any check applied for account or for value - the
mere act of issuing a worthless check – whether as a deposit, as a guarantee or even as
evidence of pre-existing debt is malum prohibitum.
● The knowledge of of the maker, drawer, or issuer at the time of the issuance,
he/she does not have sufficient funds with the drawee bank for the payment of
check in full upon its presentment - The prosecution must prove that the accused
was actually notified that the check had been dishonored and that he or she failed to pay
the bearer of the check the amount owing within five banking days of receiving the notice
or make arrangements for its payment.
● Subsequent dishonor of the check by the drawee bank for insufficient funds or
dishonor for the same reason had not the drawer, without valid cause, ordered the
bank to stop the payment. - If a check is unpaid and dishonored with the drawee's refusal
to pay stamped or written on it, along with the reason provided by the drawee, it is
considered as evidence of the issuance of the check, its due presentation for payment, and
its proper dishonor

3. A person issues a check with insufficient funds, but the payee does not deposit it until
six months later. Is the issuer still liable under B.P. 22? Justify your answer with
reference to the provisions of the law.
● No, because the check was already stale. When you present the stale check for
payment, it is automatically dishonored with or without funds. He will be liable if the
payee was able to present the check within ninety (90) days. As stated in the section 2 of
B.P 22, if the check is presented within ninety (90) days from the date of the check,
presumption of knowledge of such insufficiency of funds or credit will arise 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. Since the
check was not deposited six months after the issuance, thus the issuer is not liable
under B.P. 22.

4. Describe the penalties that can be imposed for violating Batas Pambansa Bilang 22.
Include both the criminal and civil aspects.
● Imprisonment for not less than 30 days but not more than 1 year.
 ● Paying a fine of not less than but not more than double the amount of the check. It shall
not exceed the amount of 200,000 or it can be both fine and imprisonment at the
discretion of the court.
● Prescriptive period of 4 years from the commission of the offense or discovery.

5. How does Batas Pambansa Bilang 22 balance the need to protect the banking system
with the rights of the issuer? Discuss with examples.
● Batas Pambansa Bilang 22 balances the need to protect the banking system by
preventing deliberate fraud and maintaining trust in the use of checks while with the
rights of the issuer, it ensures that people are not unfairly punished and that they have
the option to solve the concerns of insufficient cash. For example, A issues a check to B,
knowing he has insufficient funds, to pay for the services that B rendered. However, the
check bounces due to insufficient funds when B tries to deposit it into his account. In this
scenario, if A receives a notice of dishonor, he has the opportunity to settle the payment
to B in reasonable time. As for the bank, since B.P 22 imposes penalties to the persons
who issued worthless checks, they help to uphold confidence and trust in the use of
checks and maintain the stability of the bank.

6. Consider a scenario where a check was issued as a post-dated check, and at the time
of issuance, the account had sufficient funds, but on the date of the check, the funds
were insufficient. Is the issuer liable under B.P. 22? Explain your reasoning.
● Yes. The fact that the issuer failed to maintain sufficient funds in the bank makes the
issuer liable for the violation of B.P. 22. It is stated in the section 1 of B.P 22 that the law
imposes the same penalty on anyone who fails to maintain sufficient funds to cover it,
causing it to be dishonored by the bank within 90 days.

7. Discuss the defenses available to an accused person in a case filed under Batas
Pambansa Bilang 22. What are the potential outcomes if these defenses are proven?
● Payment - if proven, the maker or the drawer will not be liable if he pays the holder the
amount due or makes arrangements for payment in full within 5 banking days after
receiving the notice of dishonor.
● Lack of notice of dishonor - if proven that it failed to notify the accused of dishonored
checks, the presumption of knowledge of insufficiency funds will be refuted.

8. What is the significance of the presumption of knowledge of insufficiency of funds in

the context of Batas Pambansa Bilang 22? How can this presumption be rebutted?
● To reduce the burden for the prosecution because this presumption is based on the
maker's or drawer's state of mind, which is difficult to prove. That’s why Section 2 of BP
22 established a prima facie assumption of knowledge of the drawer of the cheque's
insufficient funds in the drawee bank to serve as their basis to hold the issuer liable in
issuing worthless cheque. This can be rebutted if no notice of dishonor was sent to or
received by the drawee bank or petitioner or if the petitioner was able to pay within 5
banking days after receiving the notice of dishonor.
9. Explain how Batas Pambansa Bilang 22 applies to checks issued as payment for
pre-existing obligations. Does the nature of the obligation affect the liability under B.P.
22?
● It applies when the check you issued as payment for the pre-existing obligation bounced.
For example, you bought a dress in a boutique, in which the owner is your relative, and
allowed you to pay later. After a month, you issued a check for payment to the dress you
bought but the check bounced. BP 22 covers any check that bounces. Whether you
issued a worthless check as a deposit, guarantee, or even proof of an existing obligation
or as a form of payment, you will still be held liable.

10. Analyze a recent court decision related to Batas Pambansa Bilang 22. Briefly
summarize the facts, issues, ruling, and legal principles that were applied.
● Facts - On August 29, 2013, petitioner executed three Release, Waiver of Rights and
Undertaking agreements to receive casino gaming chips from respondent equivalent to
P5,000,000.00. Consequently, she issued three checks in favor of respondent as follows:

Upon presentment on November 21, 2013, the bank dishonored all three checks because
they were drawn against a closed account. Thus, the bank stamped the checks with the
words "ACCOUNT CLOSED."8 On July 17, 2014, petitioner received the Notice of Dishonor in
which respondent informed her that the checks she issued were drawn against a closed
account and demanded that she pay the amount of P4,980,000.00 within five working days
from receipt thereof. However, the petitioner failed to pay her debt within the specified
period.

● Issues - Whether the petitioner is guilty beyond a reasonable doubt of three counts violations
of B.P. 22

● Ruling - At any rate, the Court finds no cogent reason to overturn the unanimous findings and
conclusions of the MeTC, the RTC and the CA in view of petitioner's failure to show that the
lower courts had overlooked, misunderstood, or misappreciated facts or circumstances of
weight that could have altered the result of the case.

Here, the lower courts are correct that the prosecution sufficiently established all the
elements of the offense.

As to the first and third elements, there is no dispute that: (1) petitioner issued three checks
in the total amount of P5,000,000.00 to respondent for the gaming chips she received; and
 (2) upon presentment, the drawee bank dishonored all the checks for having been drawn
against a closed account.

For the second element, it was shown that petitioner personally received the Notice of
Dishonor from respondent and she failed to pay the full value of the checks within five
banking days from receipt thereof. As such, petitioner is presumed to have known that at the
time of issuance of the checks, she did not have sufficient funds or credit to pay for their
value pursuant to Section 2 of B.P. 22. Notably, this presumption has become conclusive
because of the petitioner's failure to refute it.

● Legal principles applied - The principle applied was section 1 and section 2 of B.P 22.
Section 1 states that “any person who makes or draws and issues any check to apply on
account or for value, knowing at the time of issue that he does not have sufficient funds in or
credit with the drawee bank for the payment of such check in full upon its presentment,
which check is subsequently dishonored by the drawee bank for insufficiency of funds or
credit or would have been dishonored for the same reason had not the drawer, without any
valid reason, ordered the bank to stop payment. And section 2 states that “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 (5) banking
days after receiving notice that such check has not been paid by the drawee.”In this case, the
prosecution presented sufficient proof of every element of the violation. The petitioner
initially sent three checks; however, because they were drawn on closed accounts, the
drawee bank declined to honor them when presented. Second, it was demonstrated that the
respondent issued the Notice of Dishonor to the petitioner immediately and that the
petitioner failed to settle the unpaid checks within five banking days of receiving them. As a
result, petitioner is presumed to have known, as required by Section 2 of B.P 22., that she
lacked the credit or funds to support the checks' amounts at the time they were issued.

● Soriano, N., Manuel, K., & Laco, R. (n.d.). The RFBT reviewer (2022nd ed.).

● Supreme Court of the Philippines

● Respicio, A. H. (2023, October 19). BP22 Law Philippines. RESPICIO & CO.
● Salengalaw. (2023, August 14). Understanding BP 22 – the bouncing checks law in the Philippines.
Salenga Law Firm
● Mr. Accounting. (2021, March 28). Pinnacle Actual Video Lecture (RFBT: Bouncing Checks Law)
[Video]. YouTube.