Bouncing Christmas

LAW OF THE WEEK

It’s the most wonderful time of the year”, so it has been said, sung, and shouted. Christmas is around the corner and the streets are starting to fill with people brimming with festive spirits. Reunions, gift shopping, proposals, and celebrations are happening here and there. Wonderful time, indeed!

In light of the festivities, I would like to gently remind the readers to be extra–careful. As you know, festivities are not only a joyous event, but also an economic explosion. People are spending money a little more than usual. Fireworks are not the only one exploding this season, so does economic transactions! (May be deleted)

With all these economic transactions happening, it’s best to protect yourself from financial losses. One aspect which you can adequately prepare protection from are bouncing checks. Nowadays, people don’t carry large amounts of cash as they used to before, instead they pay electronically or thru checks. Since these checks represents large amounts of money, prepare yourself by looking at this checklist.

If you are the drawer or the maker of the check, ensure that:

  1. You have enough funds in your bank account to cover the amount you issued in your check;
  2. In case you have overdrawn your account, or your account was closed for reasons beyond your control, and your check bounced or was dishonored, make sure that within five (5) days, you pay the amount of the check or make arrangement for its payment. (Del Rosiario v. Cedillo, A.M. No. MTJ-04-1557. October 21, 2004)

In the event that a complaint against you have already been filed, endeavor to ask for the provisional dismissal of such cases and belabor yourself to pay the amount of the check. Remember, a bouncing check is a violation of Batas Pambansa Blg. 22 (BP 22) and is punishable civilly or criminally. Note that good faith is not a defense in case you check bounced because BP 22 is a special law, and as such, there is no need to ascertain your intentions, a violation of such law is all that it takes!

For your protection, know that to commit a violation of BP 22, the three elements have to be present: (1) you made, drew, or issued a check for value; 2) You know that at the time of issue there are no sufficient funds in or credit in your bank to pay the check upon presentment; and 3) Your check bounced because of insufficient funds or you ordered a stop payment. [Rephrased] Since the second element involves a state of mind which is difficult to verify, Section 2 of BP 22 creates a presumption that in case your check bounced, you know that your bank had insufficient funds, which is why it is important to pay the amount of the check that bounced within 5 days to rebut such presumption. As the Supreme Court aptly said, “Thus, the presumption that the issuer had knowledge of the insufficiency of funds is brought into existence only after it is proved that the issuer had received a notice of dishonor and that, within five days from receipt thereof, he failed to pay the amount of the check or to make arrangement for its payment.” (Del Rosario v. Cedillo, Id.) So think twice, and check twice, before you draw or issue any check this Christmas.

If you are the recipient of a bouncing check, ensure that:

  1. You have notified the drawer or maker of the check of the dishonor. Make sure that you can prove that the drawer or maker actually received the notice of dishonor. For example, send the notice via registered mail;
  2. Keep all the original copies of the checks as you will need them to prove you case later on;
  3. Wait for 5 days before filing any complaint before the prosecutor;
  4. You have three (3) alternative options should you decide to sue: 1) You may file a collection suit against the debtor. This will open up all the properties of the debtor to attachment and execution, even the mortgaged property itself. 2) You may opt to foreclose on the mortgaged property. In case the debt is not fully satisfied, you may further sue for deficiency judgment (not a collection case for the whole indebtedness), in which case, all the properties of the debtor, other than the mortgaged property, are again opened up for the satisfaction of the deficiency; and 3) You may opt to sue the debtor for violation of BP 22 if the checks securing the obligation bounced. (First e-Bank Corporation, G.R. No. 169889, September 29, 2009)

Note that if the check was issued to answer for a loan, ensure to always secure it with a mortgage, in order that you will have the option to foreclose upon the mortgaged property just in case you don’t want to sue for violation of BP 22.

Remember, your primary goal is to get paid. As much as possible, don’t make it your goal to put the maker or drawer into prison, unless in your unbiased judgement, that person deserves to go to jail. So, you can choose from the three options above and consult your lawyer as to which action is best and fastest for you depending on your factual situation.

So to avoid a Bouncing Christmas, whether you are the drawer/maker or the recipient of a check, make sure that you have adequately prepared yourself for the possible consequences of such transaction. If in doubt, ask for cash, or pay with cash. You can never go wrong with cash.

May you all have a wonderful and meaningful Christmas and a prosperous New Year!