Bouncing Checks and the Limits of Criminal Liability Under BP 22

The Supreme Court's 2003 decision in Abarquez v. Court of Appeals (G.R. No. 148557) clarifies important limits on criminal liability under Batas Pambansa Bilang 22, the Bouncing Checks Law. The case addresses when a drawer can escape liability by paying the check before receiving formal notice of dishonor, whether a check dishonored for "drawn against uncollected deposit" is punishable, and the proper computation of fines. The ruling is a useful guide for anyone who issues checks in commercial transactions.

The Facts of the Case

Felicito Abarquez issued five checks to Fertiphil Corporation totaling P844,500.00 as payment for fertilizer. All five checks were dishonored by the drawee bank. Fertiphil filed criminal complaints, and Abarquez was charged with five counts of violating BP 22.

Abarquez raised several defenses. First, he argued that for two checks, he had already paid the face value before receiving any formal demand letter from Fertiphil. Second, he claimed that one check was dishonored for being drawn against uncollected deposit (DAUD), not insufficient funds. Third, he argued that two checks were issued merely as security for a debt, not for value.

The Elements of BP 22 Violation

Citing Meriz v. People, the Court reiterated the three essential elements of the offense: (1) the making, drawing, and issuance of any check to apply to account or for value; (2) the knowledge of the maker that at the time of issue he does not have sufficient funds or credit with the drawee bank; and (3) the subsequent dishonor of the check for insufficiency of funds or credit.

The Court emphasized that the law requires not only that a check was dishonored, but that the drawer was actually notified in writing of the dishonor. This notice is crucial because it gives the drawer the opportunity to pay within five banking days and thereby rebut the presumption of knowledge of insufficient funds.

Payment Before Notice of Dishonor

The Court acquitted Abarquez on two counts because he paid the checks before receiving any formal demand. In one case, he paid on July 28, 1986, but Fertiphil's demand letter was dated September 27, 1986—two months later. In another, he paid on the same day the check was presented for payment, again before the demand letter was sent.

The Court held that payment of the check's value, whether by the drawer or the drawee bank, within five banking days from notice of dishonor is a complete defense. The presumption of knowledge of insufficient funds is rebutted by such payment. Since Abarquez paid before receiving any notice at all, he could not be held liable.

Drawn Against Uncollected Deposit

Abarquez claimed that one check was dishonored for being drawn against uncollected deposit (DAUD), not insufficient funds. The Court found this claim unsupported by the records, which showed the dishonor was for insufficient funds.

Nevertheless, the Court clarified the law on this point, citing Tan v. People: even with uncollected deposits, a bank may honor a check at its discretion. If the bank dishonors a check drawn against uncollected deposits, the drawer can still be held liable under BP 22.

Purpose of Issuance Is Irrelevant

Abarquez argued that two checks were issued merely as security for future payment after reconciliation of accounts, not for value. The Court rejected this defense, citing Ong v. People: what the law punishes is the issuance of a bouncing check, not the purpose for which it was issued. The mere act of issuing a worthless check is malum prohibitum—the criminal intent of the issuer is not relevant.

Limits on Fines

The Court also corrected the Court of Appeals' computation of fines. Section 1 of BP 22 provides that the fine shall not be less than but not more than double the amount of the check, but shall in no case exceed P200,000.00. The appellate court had imposed a fine of P1,700,600.00, which was double the total amount of all five checks. The Supreme Court modified this: P104,400.00 for one check and P200,000.00 each for the two larger checks, with subsidiary imprisonment in case of insolvency.

Practical Takeaways

• Pay promptly after dishonor. A drawer who pays the check's value within five banking days from receiving notice of dishonor can defeat a BP 22 prosecution.
• Payment before notice is even stronger. If the drawer pays before receiving any written demand, criminal liability is extinguished.
• Check the dishonor reason. A check dishonored for drawn against uncollected deposit can still be punishable under BP 22.
• The purpose of issuance does not matter. Even checks issued as security or guarantee fall within BP 22's coverage.
• Fines have a ceiling. The fine for a BP 22 violation cannot exceed P200,000.00, regardless of the check's amount.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.