B.P. 22 Liability: Severing Accommodation Deals Does Not Erase Knowledge of Insufficient Funds

The Supreme Court’s 2005 decision in Benjamin Lee v. Court of Appeals (G.R. No. 145498) clarifies a critical point for anyone who signs checks for another person’s benefit: merely ending a private accommodation arrangement does not automatically erase criminal liability under Batas Pambansa Blg. 22 (the Bouncing Checks Law). The case shows how courts treat the presumption of knowledge of insufficient funds and why personal check signatories face greater risk than corporate employees.

The Facts of the Case

Dr. Benjamin Lee and Cesar Bautista maintained a joint bank account. Lee signed several checks in blank to accommodate Bautista’s lending business, Unlad Commercial Enterprises, in exchange for a share of the interest income. Lee claimed he severed this arrangement in July 1989 and asked for his pre-signed checks back, but Bautista refused.

Years later, in July 1993, Bautista issued one of these pre-signed checks—bearing both signatures—to Rogelio Bergado for P980,000.00. The check was dishonored for “account closed.” Despite demand, neither Bautista nor Lee paid. Lee was charged with violating B.P. 22.

The Legal Issue

The central question was whether Lee, who claimed he had already cut ties with Bautista and had no knowledge of the account’s status, could still be held criminally liable for the bouncing check.

The Court’s Ruling

The Supreme Court affirmed Lee’s conviction, with modifications to the penalty. The Court rejected Lee’s defense that his severed accommodation arrangement negated his knowledge of insufficient funds.

The presumption of knowledge stood. Under Section 2 of B.P. 22, when a check is dishonored for insufficient funds and the drawer fails to pay within five banking days after notice, the law presumes the drawer knew of the insufficiency at the time of issuance. Lee received the demand letter and did not pay, so the presumption arose.

The affidavits did not help. Lee presented affidavits from Bautista stating that Lee was no longer connected with the business. The Court ruled these were inadmissible hearsay because Bautista never testified in court to affirm their contents.

Continued investments undermined the defense. Lee admitted he kept investing in Unlad until April 1994—years after he claimed to have severed ties. This contradicted his assertion of complete disengagement.

Personal checks are different from corporate checks. Lee invoked Lao v. Court of Appeals, where a corporate employee who merely signed checks was acquitted. The Court distinguished that case: the Lao doctrine applies only to corporate checks, not personal checks. Here, the check was drawn on a personal joint account.

The check was issued for value. Lee himself testified he signed blank checks in exchange for interest on loan proceeds—a valuable consideration. The Court reiterated that B.P. 22 punishes the mere act of issuing a worthless check, regardless of the purpose behind its issuance.

The payee’s knowledge was immaterial. Even if Bergado knew the account was closed, deceit is not an element of the offense. The gravamen is the issuance of a bad check itself.

Jurisdiction and Penalty

The Court also resolved a jurisdictional question. Lee argued the Regional Trial Court lacked jurisdiction because B.P. 22 offenses should fall under the Metropolitan Trial Court. The Court ruled that since the Information was filed before Republic Act No. 7691 took effect, the old rules applied—and because the imposable fine exceeded P4,000.00, the RTC properly had jurisdiction.

On penalty, the Court deleted the imprisonment term and imposed only a fine of P200,000.00, following the policy in Vaca v. Court of Appeals and Lim v. People favoring fines over incarceration for non-habitual offenders. Lee was also ordered to pay the complainant P980,000.00 with 12% legal interest from finality of judgment.

Practical Takeaways

• Signing blank checks is inherently risky. An accommodation arrangement does not shield a signatory from B.P. 22 liability, especially for personal checks.
• Severing ties is not enough. To avoid liability, formally close the account, notify the bank, and retrieve or cancel all outstanding pre-signed checks.
• Affidavits are weak evidence. A co-accused’s affidavit exonerating a defendant carries little weight unless the affiant testifies in court.
• The presumption of knowledge is hard to rebut. Non-payment within five banking days after notice triggers the presumption; rebutting it requires credible, admissible evidence.
• Personal check signatories face stricter rules. The leniency for mere employees applies only to corporate checks, not personal accounts.

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