BP 22 Defanged

AUTHOR:  ATTY. JOHN PHILIP C. SIAO 

Originally published in The Philippine Star (Point of Law column)

Batas Pambansa Blg. 22, otherwise known as the Bouncing Checks Law (BP 22), is the law that punishes the making or the drawing of a check to apply on account or for value when the maker or drawer knew at the time of issue that the account against which the check was drawn had no sufficient funds in, or enough credit with, the drawee bank for the payment of such check or when the maker or drawer of the check issues a stop payment order on such a check without any valid reason. In both cases, the check is dishonored by reason of insufficient funds. It is also a violation of BP 22 when the maker or drawer of such a check fails to maintain sufficient funds in, or enough credit with, the drawee bank to cover the full amount of the check for a period of ninety (90) days from the date appearing on the check and the check is dishonored for such reason. The penalty for violation of BP 22 is imprisonment for 30 days to one year or a fine, or both (Section 1, BP 22).

BP 22 was enacted to discourage the issuance of bouncing checks, to prevent checks from becoming “useless scraps of paper,” and to restore respectability to checks. The law was enacted at a time when the stability and commercial value of checks, which are recognized as being virtual substitutes for currency, were being threatened by the rampant issuance of checks that were subsequently dishonored by drawee banks. Because BP 22 imposes imprisonment among its penalties, it is now a common practice for creditors to require their debtors to issue post-dated checks to cover amortizations of their loan. Accordingly, BP 22, to a certain degree, has achieved the purpose for which it was enacted.

In the past years, however, there have been two important developments regarding BP 22. The first is the shift in policy as announced by the Supreme Court in its Administrative Circular Nos. 12-2000 and 13-01 towards the imposition of a fine only, and not imprisonment, for violations of BP 22. The second are decisions of the courts holding that the prosecution in BP 22 must establish that a written notice of dishonor was actually received by the maker or drawer of the dishonored check.

The Supreme Court in its Administrative Circular No. 12-2000 declared that, in imposing the penalty for violations of BP 22, courts should follow the policy of “redeeming valuable human material and preventing unnecessary deprivation of personal liberty and economic usefulness with due regard to the protection of the social order.” In that regard, in lieu of imprisonment, a fine in an amount equal to double the amount of the check involved has been deemed an appropriate penalty for a violation of BP 22. Subsequently, through Administrative Circular No. 13-01, the Supreme Court clarified that it did not intend to remove the penalty of imprisonment but that courts should reserve imposing imprisonment as a penalty for serious cases when the violation of BP 22 was committed in such a way as would negatively affect the social order.

With regard to the second development, failure to establish that a written notice of dishonor was actually received by the maker or drawer of the check is a ground for an acquittal (Rico v. People of the Philippines, G.R. No. 137191, 18 November 2002). This second development is a very real problem faced by lawyers, either as private or public prosecutors, in BP 22 cases. Oftentimes, the only, if not strongest, defense raised by an accused in a BP 22 case is that he/ she never received any notice of dishonor. Numerous BP 22 cases have been dismissed and/ or have resulted in the acquittal of the accused on the ground that the prosecution failed to establish that the accused had actually received a notice of dishonor. In order to appreciate the impact of this development, we must realize how difficult it really is to prove actual receipt of the notice of dishonor.

First, the prosecution in a BP 22 case must establish that (a) notice of dishonor was sent to the issuer of the dishonored check and (b) that the same was actually received (Yu Oh v. Court of Appeals, et al. G.R. No. 125297, 6 June 2003). A notice of dishonor may be sent to the maker or drawer of the dishonored check by (1) by personal service upon the issuer or (2) by registered mail. If the notice of dishonor is sent by registered mail, the fact of sending the notice of dishonor is established by the registry receipt, the registry return card, and an affidavit executed by the person who mailed the notice of dishonor detailing the circumstances of the mailing (Victor Ting “Teng See”, et al. v. Court of Appeals, et al., G.R. No. 140665, 13 November 2000).

As to establishing actual receipt, the prosecution must also prove that the signature appearing on the registry return card or notice of dishonor, in case of personal service, belongs to that of the issuer of the dishonored check or, at the very least, to his duly authorized agent. In the latter case, the prosecution must establish the capacity and authority of such person as agent. An illegible signature, such as when a recipient merely signs his/ her initials on the registry return card or notice of dishonor, as the case may be, does not prove that the issuer actually received the notice of dishonor (Victor Ting “Teng See”, et al. v. Court of Appeals, et al., G.R. No. 140665, 13 November 2000). It is also crucial that the registry return card or the notice of dishonor indicate the date it was received in order to fix the start of the five (5) day period within which the maker or drawer of the check must pay or make arrangements for the payment of the amount of the check (Section 1, BP 22)(Danao v. Court of Appeals, G.R. No. 122353, 6 June 2001).

The notice of dishonor may be sent to the office of the maker or drawer of the dishonored check but he must receive the notice personally or through his authorized agent. A corporation or an officer of a corporation that receives a notice of dishonor addressed to one of its employees has no obligation to forward the notice to the employee concerned. Thus, such receipt is not the receipt contemplated by BP 22 (Lao v. Court of Appeals, G.R. No. 119178, 20 June 1997). A notice of dishonor may also be sent to the residence of the maker or drawer of the dishonored check and received by him/her, the housemaids or houseboys who are deemed to have a special power-of-attorney to receive mail in behalf of the addressee, or any member of the family of sufficient age or discretion (Petilla v. Court of Appeals, G.R. No. 150792, 3 March 2004). Notably, the notice of dishonor may be sent to, and received by, the maker or drawer of the dishonored check wherever he may be found as long as the fact and date of receipt are established.

Based on the foregoing, it is easy to see how, as a practical matter, it is very difficult to establish actual receipt of the notice of dishonor. Save for physically forcing the issuer of the check to receive the notice of dishonor, obtaining proof of personal receipt may prove to be a daunting task, if not an outright impracticable one. Needless to say, most intended recipients of the notice of dishonor may even refuse to receive the notice. With respect to receipt of the notice of dishonor by a supposed authorized agent, it is the usual defense to deny knowing the alleged agent. On the other hand, in the event that it was the househelp who received the notice of dishonor, the maker or drawer may conceivably even resort to sending the househelp home to the province or to another employer, then deny that the said househelp was ever in his/ her employ. There are, for the most part, no employment records for househelp. Finally, it may not be realistic to expect that the registry return card for the notice of dishonor could clearly state the name and signature of the recipient, since, in practice, the postman will accept a simple initial from the recipient, which in no way gives any clue as to the identity of the said recipient. In any event, the postman is not to blame since he/ she cannot compel anybody to sign the registry return card against their will. The question now is, how do you prove that the maker or drawer of the dishonored check actually received the notice of dishonor under any of the above hypothetical circumstances?