How to Prevent, Prosecute & Collect BOUNCING CHECKS Judge Marlo B. Campanilla
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GENERAL PRINCIPLES Malum In Se It is wrong in nature
Malum Prohibitum It is wrong because it is prohibited by law
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ESTAFA THROUGH ISSUANCE OF BOUNCING CHECK 1. Deceit a. Knowledge of insufficiency of the funds or credit. At the time of issuance or postdating of check b. Implied or express representation of sufficiency of funds Presumption of false pretense Good faith is a defense Exerting efforts to pay Previous good transactions
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ESTAFA THROUGH ISSUANCE OF BOUNCING CHECK 2. Damage Dishonor of the check due to insufficiency of funds 3. Causal connection between deceit and damage Only motive for parting money or goods Check was not issued to cover pre-existing obligation
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ESTAFA THROUGH FALSE PRETENSE 1. Deceit Representation of authenticity of check, complete signatories, no stop-payment
2. Damage Dishonor of the check due to forgery etc.
3. Causal connection between deceit and damage
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BP BLG. 22 PURPOSE OF PUNISHING CHECK 1. To prevent the proliferation of worthless checks in the mainstream of daily business 2. To ensure the stability and commercial value of check as a virtual substitute for money
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MALUM PROHIBITUM Good faith is NOT a defense Unlike in estafa, exerting efforts to pay previous good transactions is not a defense
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FIRST OFFENSE UNDER FIRST PARAGRAPH OF SECTION 1
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I. ISSUANCE OF, DRAWING OR MAKING CHECK WITH INSUFFICIENT FUNDS OR CREDIT TO APPLY IN ACCOUNT OR FOR VALUE
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1. Is s u anc e a. Undelivered check Specify the check in the receipt b. Stolen or missing check Ching vs. Nicdao, G.R. No. 141181, April 27, 2007 Burden of proof that the check was stolen Caca vs. CA, G.R. No. 116962, July 7, 1997 c. Postdated check(constructive delivery upon maturity)
2. Mak es - Borrowed check - Ruiz vs. People, G.R. No. 160893, November 18, 2005
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3. Con s id eratio n a. Presumed valuable consideration (Section 24 NIL) Presumption cannot be overcome by bare denial Bayani vs. People, G.R. No. 154947, August 11, 2004 b. Wrong computation, not a defense There must be total lack of consideration Lunaria vs. People, G.R. No. 160127, November 11, 2008
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3. Con s ideratio n c. Exorbitant interest Validity or invalidity of interest is not determinative Jose vs. Suarez, G.R. No. 176795, June 30, 2008 d. Annulment of sale Obligation subsisting at the time of issuance of check Annulment is not determinative Umali vs. IAC , G.R. No. 63198, June 21, 1990
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4. Magno case (Utilitarian theor y)
a. The essence of the penal system is to protect the society from actual or potential wrongdoer (Magno vs. The Hon. CA, G.R. No. 96132, June 26, 1992 Unjust enrichment No consideration b. Payment of the future share in the partnership (subject to sale the goods and collection) Idos vs. CA, G.R. No. 110782, September 25, 1998 c. Payment of flour and baking materials Dico vs. CA, G.R. No. 116566, April 14, 1999
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II. KNOWLEDGE OF INSUFFICIENCY OF FUNDS OR CREDIT AT THE TIME OF ISSUANCE OF THE CHECK
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Lack of knowledge of insufficiency 1. Transacting with husband Co-signatory, pre-signed check No testimony as to the participation of wife No notice of dishonor Dingle vs. IAC , G.R. No. L-75243, March 16, 1987 2. Pre-signed corporate check Co-signatory, pre-signed check Marketing employee, duty does not include the funding Not involved in the transaction No notice of dishonor Lao vs. CA, G.R. No 119178, June 20, 1997
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3. Pre-signed check Treasurer, duty to fund check Lack of involvement in the negotiation Llamado vs. CA, G.R. No. 99032, March 26, 1997 4. Proprietor – not co-signatories Lao and Dingle not applicable Dy vs. People, G.R. No. 158312, November 14, 2008 5. Knowledge of payee - Not material in BP 22 Deceit is not an element Rigor vs. People, G.R. No. 144887, Nov.17, 2004 Estafa - Knowledge of insufficiency by payee, defense
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III. DISHONOR OF CHECK DUE TO INSUFFICIENCY OF FUNDS OR CREDIT
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SECOND OFFENSE UNDER FIRST PARAGRAPH OF SECTION 1
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1. ISSUANCE OF, DRAWING OR MAKING CHECK WITH INSUFFICIENT FUNDS OR CREDIT TO APPLY ON ACCOUNT OR FOR VALUE 2. KNOWLEDGE OF INSUFFICIENCY OF FUNDS OR CREDIT AT THE TIME OF ISSUANCE OF THE CHECK
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3. DISHONOR OF CHECK DUE TO STOPPAYMENT a. Contractual obligation to dishonor the check (Aquino) b. Duty to disclose check is funded or unfunded Closed account, Drawn Against Insufficient Funds (DAIF), Drawn Against Uncleared Deposits (DAUD) c. Credit line of P25 m Tan vs. People, G.R. No. 141466, January 19, 2001 d. Estafa - Intention to stop payment at the time of encashment Sales vs. The Hon. CA, G.R. No. L-47817 Aug.29, 1988
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4. INSUFFICIENCY OF FUNDS OR CREDIT 5. NO VALID REASON FOR THE STOPPAYMENT ORDER
Wrong payee (Reyes) Failure to deliver (Aquino) Exercise of right to suspend payment
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PRESUMPTION OF KNOWLEDGE OF INSUFFICIENCY OF FUNDS OR CREDIT
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1. PRESENTMENT OF CHECK WITHIN 90 DAYS
Presentment beyond 90 days, incomplete defense Bautista vs. CA, G.R. No. 143375, July 6, 2001 Account was closed for more than 4 years Nagrampa vs. People, G.R. No.146211, Aug. 6, 2002 Request not to encash Arceo vs. People, G.R. No. 142641, July 17, 2006
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2. SENDING OF NOTICE OF DISHONOR Lack of notice dishonor, complete defense No presumption Preventing drawer from averting criminal action 3. FAILURE TO MAKE GOOD OF THE CHECK OR HAVE ARRANGMENT FOR FULL PAYMENT BY THE DRAWEE BANK WITHIN 5 BANKING DAYS FROM RECEIPT OF NOTICE OF DISHONOR
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THIRD OFFENSE UNDER THE FIRST AND SECOND PARAGRAPHGS 1. ISSUANCE OF CHECK WITH SUFFICIENT FUNDS 2. FAILURE TO MAINTAIN THE SUFFICIENCY OF FUNDS OR CREDIT FOR 90 DAYS 3. DISHONOR OF CHECK DUE TO DAIF
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DIFFERENCES BETWEEN THE CRIMES UNDER THE FIRST AND SECOND PARAGRAPHS FIRST PA RA GRA PH
SECOND PA RA GRA PH
• ISSUANCE OF CHECK WITH INSUFFICIENT FUNDS
• ISSUANCE OF CHECK WITH SUFFICIENT FUNDS
• ISSUANCE OF BUM CHECK
• FAILURE TO MAINTAIN SUFFICIENCY OF FUNDS
• PRESENTMENT OF CHECK WITHIN 90 DAYS – NOT ELEMENT
• PRESENTMENT OF CHECK WITHIN 90 DAYS - ELEMENT
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DIFFERENCES BETWEEN ESTAFA AND VIOLATION OF BP BLG. 22 ESTAFA
VIOLATION OF B P BL G. 22
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DECEIT AND DAMAGE ELEMENTS MALUM IN SE PRESENTMENT WITHIN 90 DAYS - NOT REQUIRED KNOWLEDGE AT THE TIME OF POSTDATING OR ISSUANCE NOTICE OF DISHONOR – DISPENSABLE – ORAL OR WRITTEN – 3 DAYS
ONE CRIME INVOLVING CHECKS
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DECEIT AND DAMAGE – NOT ELEMENTS MALUM PROHIBITUM PRESENTMENT WITHIN 90 DAYS – IMPORTANT
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KNOWLEDGE AT THE TIME OF ISSUANCE NOTICE OF DISHONOR – INDISPENSABLE – WRITTEN – 5 BANKING DAYS
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MULTIPLE CRIMES INVOLVING CHECKS
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CHECKS 1. Foreign bank and dollar account issued in the Philippines De Villa vs. CA, G.R. No. 87416, April 8, 1991 2. Restricted or Cross check Cruz vs. CA, G.R. No. 08738, June 17, 1994 3. NOW (Negotiable Order of Withdrawal) instrument Non-negotiable instrument Not payable to “cash”, “bearer” or “endorsee” People vs. Reyes, G.R. No. 154159, March 31, 2005
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4. Fake check 5. Postdated check Yu Oh vs. CA, G.R. No. 125297, June 6, 2003 6. Cashier’s or manager’s check 7. Accommodation check a) Defense in estafa but not in BP Blg. 22 b) Against a holder in due course – not a defense Ruiz vs. People, G.R. No. 160893, Nov. 18, 2005 Against the accommodation party – defense Burden of proof – no consideration San Pedro vs. People, G.R. No. 133297, Aug.15, 2002
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8. Guarantee check Defense in estafa but not in BP Blg. 22 Meriz vs. People, G.R. No. 134498, November 13, 2001 Alonto vs. People, G.R. No. 140078, Dec. 9, 2004 9. Check under the account of another person 10. Memorandum check Dico vs. CA, G.R. No. 116566, April 14,1999 Defense in estafa but not in BP Blg. 22
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11. Not intended for deposit – to be shown to investor Cueme vs. People, G.R. No. 133325, June 30, 2000 Defense in estafa but not in BP Blg. 22 12. Check in payment of pre-existing obligations Defense in estafa but not in BP Blg. 22 13. Blank but signed check Practice of the lending company Prima facie authority to fill up (Section 14, NIL) Burden to show lack or excess of authority Lunaria vs. People, G.R. No. 160127, Nov. 11, 2008 Ojeda vs. Orbeta, G.R. No. 142047, July 10, 2006 P210,000.00 loan - P1,600,393.00 – check Lim vs. Basco, G.R. No. 137353, July 11, 2001 Constructive delivery upon completion of the details 14. Check without consideration
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INDORSEMENT 1. NOW instrument and cross check, cannot be endorse 2. Not allowed by banking practice 3. Indorser can be held liable for BP 22
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PRESENTMENT FOR ENCASHMENT OR DEPOSIT 1. Presentment of the check for encashment or deposit – indispensable 2. Second presentment for encashment or deposit 3. Presentment within 90 days 4. Presentment within 6 months Stale dated More than 6 month Wong vs. CA, G.R. No. 117857, February 2, 2001 On or after 6 months for clearing CHOM No. 96
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CLEARING OF CHECK 1. Presentment with the drawee bank Authenticity of signature Sufficiency of funds 2. Presentment with depositary bank Clearing house Circular No. 681 Return of the check 7:30 am next day Late funding, not feasible
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DISHONOR OF THE CHECK 1. Duty of the bank to state the reason for dishonor Bank secrecy Spurious check, unauthorized signature Post-dated, stale-dated, validity restricted No account, account closed DAIF, DAUD Stop payment, under garnishment
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DISHONOR OF THE CHECK 2. DAIF Insufficiency at the time of issuance and presentment for Automatic fund transfer Late funding, not feasible 3. Closed Account Comprehensive Yu Oh vs. CA, G.R. No. 125297, June 6, 2003 Exercise of right
Sycip Jr. vs. CA, G.R. No. 125059, March 17, 2000
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DISHONOR OF THE CHECK 4. DAUD - d r a w n a g a in s t u n c o l l ec t e d d e p o s i t BSP disallows bank to honor check DAUD General rule – (no liability for estafa or BP Blg. 22) BPI vs. Suarez, G.R. No. 167750, March 15, 2010 Should not expand the provision Liberal Construction Collected after five days Dy vs. People, G.R. No. 158312, Nov.14, 2008 Tan vs. People, G.R. No. 141466, January 19, 2001 Exception Check deposit had not been credited Abarquez vs. CA, G.R. No. 148557, August 7, 2003
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DISHONOR OF THE CHECK 5. Other reasons for dishonor Spurious, unauthorized, stop-payment Estafa
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NOTICE OF DISHONOR
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I. CONSUMATION OF CRIME Dishonor of check Bautista vs. CA, G.R. No. 143375, July 6, 2001
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II. INDISPENSABILITY OF NOTICE OF DISHONOR 1. Prevention of application of presumption Caras vs. Hon. CA , G.R. No. 129900, October 2, 2001
2. Deprivation of right to avert prosecution Violation of his right to due process Sia vs. People, G.R. No. 149695, April 28, 2004 Proof of knowledge of insufficiency (Closed account) argument Yu Oh vs. CA , G.R. No. 125297, June 6, 2003
Untenable
a. Mitigates the harshness of the law in its application Danao vs. CA, G.R. No. 122353, June 6, 2001 b. Offer of compromise Surrender of unlicensed firearm King vs. People, G.R. No. 131540, December 2, 1999 Marriage in rape case
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II. REQUISITES OF NOTICE OF DISHONOR 1.Sending notice after the dishonor 2. Notice convey information of dishonor 3. Written notice of dishonor 4. Receipt of notice of dishonor
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SENDING AFTER DISHONOR 1. Drawee bank, the holder of the check, or the offended party Sia vs. People, People, G.R. No. 149695, April 28, 2004 2. After dishonor Dico vs. Hon. CA, CA, G.R. No. 141669, February 28, 2005
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CONVEY INFORMATION OF DISHONOR 1. Notice of dishonor, not demand letter 2. Failure to describe the check 4 checks amounting to P188,400.00 Telegraph Settlement of the “bounced checks” for P226,000 No numbers, dates and amount of checks Reply letter Does not prescribe the contents except in writting Meriz vs. People, G.R. No. 134498, November 13, 2001 Section 96 of NIL – Sufficient identification
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3. Misdescription –Section 95 of NIL Vitiate the notice, misled Practice in the office of the city prosecutor 4. Demand to pay within 3 days Arceo vs. People, G.R. No. 142641, July 17, 2006
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WRITTEN NOTICE OF DISHONOR 1. Estafa -Written or oral notice of dishonor Section 96 of NIL – Written or oral notice of dishonor 2. BP Blg. 22 - Written notice of dishonor Section 3 -shall always be explicitly stated in the notice Letter and spirit of the law Strict interpretation Domagsang v. CA, G.R. No. 139292, December 5 2000
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3. Knowledge Filing of collection case - 3 years before information Admission that the check was returned due to DAIF Circumstances are not in accordance with the manner or form Ambito vs. People, G.R. No. 127327, February 13, 2009 Receiving a copy of complaint affidavit
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RECEIPT OF NOTICE OF DISHONOR 1. Authentication of registry receipt and registry return receipt People vs. Ojeda, G.R. No. 104238-58, June 3, 2004 a. Signatures in the check and return card or Postman b. Proof of sending and receipt Registry return card, with an unauthenticated signature Plus Denial = acquittal Suarez vs. People, G.R. No. 172573, June, 19, 2008 c.
Delivery to the addressee or agent upon written order Possibility of receipt by addressee or agent not proof Unidentified signature Chan-Azajar vs. CA, G.R. NO. 140665, November 13, 2000
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RECEIPT OF NOTICE OF DISHONOR 2. Refusal to receive notice Young vs. CA, G.R. No. 140425, March 10, 2005 Note: Most effective way to serve notice 3. Certification: Returned to sender Proof of receipt of post office notice and refusal to claim the mail Present the postman and personnel in charge of claiming mail Speculation of hiding or sending of notice by bank – not proof King vs. People, G.R. No 131540, December 2, 1999
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RECEIPT OF NOTICE OF DISHONOR 4. Reply to demand letter - “tacit admission” Meriz vs. People, G.R. No. 134498, November 13, 2001 5. Acknowledgment Munoz vs. People, G.R. No. 162772, March 14, 2008 Using left hand to sign 6. Judicial admission Accused’s admission Rigor vs. People, G.R. No. 144887, November 17, 2004 Counsel’s admission Ongson vs. People, G.R. No. 156169, August 12, 2005
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RECEIPT OF NOTICE OF DISHONOR 7. Telegraphic notice of dishonor Employee of the telegram company to prove transmittal and receipt Marigomen vs. People, G.R. No. 153451, May 26, 2005 8. Unknown address of the offender After the exercise of reasonable diligence, cannot reached the accused Notice is dispensed with (Section 112 NIL) Third person assured that accused is her best friend and a good payer Refused to give address, promise to inform accused Yulo vs. People, G.R. No. 142762, March 4, 2005
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RECEIPT OF NOTICE OF DISHONOR 9. Notice to the corporation, not notice to employee No obligation to forward the notice Personal responsibility, personal knowledge of notice of dishonor The accused is the agent of the corporation, not the other way around Lao v. CA, G.R. No. 119178, 20 June 1997 10. Proof of date of receipt No way to determine when the period would start and end Danao vs. CA, G.R. No. 122353, June 6, 2001
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FIVE BANKING DAYS GRACE PERIOD - Saturday and Sunday are not banking days Crisologo-Jose vs. CA, G.R. No. 80599, September 15, 1989 BDO doing business on a Sunday and Saturday
1. Full payment within the period – complete defense Lina Lim Lao v. CA, 274 SCRA 572 Regardless of the strength of prosecution’s evidence Meriz vs. People, G.R. No. 134498, November 13, 2001 Before notice of dishonor Vergara vs. CA, G.R. No. 160328, February 04, 2005; Abarquez vs. CA, G.R. No. 148557, August 7, 2003
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FIVE BANKING DAYS Dishonored checks – P1,785,855.75 Keeping in possession the four buses-trust properties surrendered by petitioner estimated value: P6.6 million Tan vs. PCI Bank, G.R. No. 152666, April 23, 2008
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2. Burden of proof - accused a. Check in the possession of complainant Accused should have redeemed the check in the ordinary course of business. Arceo vs. People, G.R. No. 142641, July 17, 2006 b. Check in the possession of the accused Payment is presumed Possession of an order on himself for the payment of money Section 3 [q] Rule 131 RRC Dico vs. CA, G.R. No. 116566, April 14, 1999
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3. Payment beyond the grace period – Can only affect the civil, but not the criminal, liability Tan vs. PCI Bank, G.R. No. 152666, April 23, 2008 Exceptions: a. Face value of two checks: P215,442.65 Notarial Foreclosure: P1,120,540 Partially invalidated: rentals in arrears - P47,953.12 Filing of case after two years Payment of rental obligations covered by check Equitable consideration Malumprohibitum vs. utilitarian theory Unjust enrichment Through circumvention of the purpose of the law BP 22 should not be applied mechanically Application must be consistent With the purpose of and reason for the law Rationecessatlex, etcessatlex Spirit and not the letter Griffith vs. Hon. CA, G.R. No. 129764, March 12, 2002
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b. Payment 11 days after receipt of dishonor File the case 6 months after payment Should not apply the law strictly or harshly Spirit and purpose must be considered Cruz vs. Cruz , G.R. No. 154128, February 8, 2007
4. Payment in estafa case, not a defense
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PAYING THE HOLDER 1. Application of payment a. Debtor’s right to apply (Article 1252 CC) b. Creditor’s right to propose application Receipt Acceptance by debtor c. Obligation with interest Applied to the interest first (Article 1253 CC) d. Most onerous obligation (Article 1254 CC) Check - P150,000; payment - P423,354;loan not fully paid Not a menace against whom society should be protected Vergara vs. CA, G.R. No. 160328, February 04, 2005
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2. Tender of payment and consignation – Tender of ordinary check - Sy vs. Eufemio, 104 Phil.1056 Tender of manager’s or cashier’s check No valid except exercise of right (redemption) Leticia Co vs. PNB, 114 SCRA 482 Tender of cashier’s check (right to avert criminal action) Encashment and consignation with the grace period Crisologo-Jose vs. CA, G.R. No. 80599, September 15, 1989
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3. Petition for suspension of paymentwith SEC or RTC Management Committee Ordering the suspension of all pending actions for claims After 3 months from notice of dishonor Suspension order Cannot enjoin criminal action for BP 22 Can enjoin award of indemnification Rosario vs. Co, G.R. No. 133608, August 26, 2008
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PAYING THE AMOUNT DUE ON THE CHECK 1. Face value Full payment of face value during the grace period Contrary interpretation will defeat the purpose of the law Safeguarding the banking system and checking account user Macalalag , G.R. No. 164358, December 20, 2006 2. Due - Blacks’ Law Dictionary defines the word “due” as justly owed; that which the law or justice requires to be paid or done. Face value of two checks: P215,442.65 Notarial Foreclosure:P1,120,540 Partially invalidated: rentals in arrears - P47,953.12 Collection of amount to cover the value of the checks for payment of rentals Griffith vs. Hon. CA, G.R. No. 129764, March 12, 2002
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PAYING THE AMOUNT DUE ON THE CHECK 1. Face value Full payment of face value during the grace period Contrary interpretation will defeat the purpose of the law Safeguarding the banking system and checking account user Macalalag , G.R. No. 164358, December 20, 2006
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ARRANGEMENTS FOR PAYMENT 2. Novation a. Compromise agreement = arrangement for payment Idos vs. CA, G.R. No. 110782, September 25, 1998 b. Unfulfilled promise – agreement to pay dishonor Novation theory does not apply where agreement to pay turns out to be merely an empty promise Diongzon vs. CA, G.R. No. 114823, December 23, 1999
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3. Replacement check a. Good replacement check – Arrangement for payment Vergara vs. People, G.R. No. 160328, February 04, 2005 Made 15 days after notice of dishonor – not a defense Vaca vs. CA, G.R. No. 131714, November 16, 1998 b. Dishonored replacement check Replaced check New undertaking turned out to be an empty promise Magdayao vs. People, G.R. No. 152881, August 17, 2004 Replacement check Like guarantee check, it is within the ambit of BP Blg. 22 Lagman vs. People, G.R. No. 146238, December 7, 2001
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REMEDIES 1. Criminal actions for estafa and BP Blg. 22 2. Administrative case against public officer or lawyer 3. Disqualification to run for public office
4. Collection case Disadvantage: Cannot intervene in the criminal case
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PERSON LIABLE 1. Signatories a. Personal check b. Corporate check Officer Marketing employee Treasurer 2. Conspiracy Applicable to BP 22 Presence is not conspiracy Actual debtor and guarantor-drawer 3. Borrower of checks
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COMPLAINANT 1. Payee, holder, indorsee 2. Representative of corporation a. Board Resolution or Secretary Certificate b. Director of corporation Compromise agreement with corporation Lack of personality Tak vs. Makasiar, G.R. No. 122452, Jan. 29, 2001
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PERIOD TO FILE CRIMINAL ACTION 1. Six year period of prescription 2. Commencement of the running of prescriptive period Expiration of grace period from receipt of notice of dishonor 3. Interruption of the running of prescriptive period Filing complaint with the fiscal or court
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VENUE 1. Place of issuance Not place where the check was signed 2. Place of dishonor Drawee bank Depository bank
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PRELIMINARY INVESTIGATION 1. Details of defraudment 2. Attachments – retain the original copies 3. Comparison of the original and machine copies 4. Prima facie evidence vs. probable cause
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INFORMATION 1. Unlike in estafa, there is warrant of arrest in BP 22 except bench warrant 2. Check allegations in the information (a) Check number and other description of the check (b) Date of issuance (c) Notice of dishonor – sent by drawee bank (d) Stop-payment
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TRIAL 1. Intervention through counsel 2. Suspension of proceeding Pre-judicial question Petition for review Motion for reconsideration 3. Best evidence rule Lost checks Check in possession of accused
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TRIAL 4. Non-presentation of bank representatives
Magdayao vs. People, G.R. No. 152881, August 17, 2004 Recuerdo vs. People, G.R. No. 133036, January 22, 2003 5. Presentation of the check with statement of dishonor Presumption: (1) consideration; (2) issuance ( 3) presentment (4 ) dishonor 6. Proof of bad faith Element of estafa Important to justify the imposition of imprisonment penalty
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TRIAL 7. Demurrer to evidence Can still present evidence on the civil aspect 9. Improper charge a. Estafa vs. violation of BP 22 b. Check with sufficient funds at the time of issuance No double jeopardy 10. Affidavit of desistance
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PENALTY 1. One year of imprisonment 2. Fine – Not less than face value Not more than 2x of face value a. Preference of penalty Fine Substantial payment Health condition Exert effort to pay Imprisonment Bad faith or failure to prove good faith Multiple checks At large
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PENALTY b. An addition to award of damage plus interest c. Convertible into imprisonment d. Preference of payment Civil obligation first before fine Article 38 of the RPC 3. Probationable offense a. Depreciate the seriousness of the offense b. Schedule of payment c. No previous conviction
