Anti – Bouncing Checks Law

BATAS PAMBANSA BLG. 22

AN ACT PENALIZING THE MAKING OR DRAWING AND ISSUANCE OF A CHECK WITHOUT SUFFICIENT FUNDS OR CREDIT AND FOR OTHER PURPOSES.
 Elements of BP 22 (First Mode)
(1) the making, drawing, and issuance of any check for value;

(2) the knowledge of the maker, drawer, or issuer that at the time of
issuance he does not have sufficient funds in or credit with the drawee
bank; and

(3) the subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit
In the first offense punishable under BP 22, it should be noted that what really
gives rise to the violation is not the making, drawing, issuance, or the dishonor if
the check, but the failure of the issuer to make good the check within five (5)
banking days from the time that he has received the Notice of Dishonor and
Demand for Payment

According to the case of Lina Lim lao vs. People, GR No. 119178, June 20, 1997, if
the issuer was able to make full payment of the amount which appears on the
check within 5 days from his receipt of notice of dishonor, he can raise such
defense, and a criminal action against him is already disallowed.
 Elements of BP 22 (Second Mode)

Having sufficient funds in or credit with the drawee bank when he

makes or draws and issues a check, shall fail to keep sufficient funds or
to maintain a credit to cover the full amount of the check if presented
within a period of ninety (90) days from the date appearing thereon, for
which reason it is dishonored by the drawee bank.

*** Where the check is drawn by a corporation, company or entity, the

person or persons who actually signed the check in behalf of such
drawer shall be liable under this Act.
 Evidence of knowledge of insufficient funds
The making, drawing and issuance of a check payment of which is
refused by the drawee because of insufficient funds in or credit with
such bank, when presented within ninety (90) days from the date of the
check, shall be prima facie evidence of knowledge of such insufficiency
of funds or credit

**unless such maker or drawer pays the holder thereof the amount
due thereon, or makes arrangements for payment in full by the drawee
of such check within (5) banking days after receiving notice that such
check has not been paid by the drawee.
 Duty of drawee; rules of evidence
It shall be the duty of the drawee of any check, when refusing to pay
the same to the holder thereof upon presentment, to cause to be
written, printed, or stamped in plain language thereon, or attached
thereto, the reason for drawee's dishonor or refusal to pay the same:
Provided, That where there are no sufficient funds in or credit with
such drawee bank, such fact shall always be explicitly stated in the
notice of dishonor or refusal.
 Presumption
In all prosecutions under this Act, the introduction in evidence of any unpaid
and dishonored check, having the drawee's refusal to pay stamped or written
thereon or attached thereto, with the reason therefor as aforesaid, shall be
prima facie evidence of the making or issuance of said check, and the due
presentment to the drawee for payment and the dishonor thereof, and that
the same was properly dishonored for the reason written, stamped or
attached by the drawee on such dishonored check.

Notwithstanding receipt of an order to stop payment, the drawee shall state

in the notice that there were no sufficient funds in or credit with such bank
for the payment in full of such check, if such be the fact.
 Liability under the Revised Penal Code

Prosecution under this Act shall be without prejudice to any liability for
violation of any provision of the Revised Penal Code.
 Penalty
Violators shall be punished by:
1. imprisonment of not less than thirty days but not more than one (1)
year; or

2. by a fine of not less than value of the check but not more than
double the amount of the check which fine shall in no case exceed
Two Hundred Thousand Pesos; or

3. or both such fine and imprisonment at the discretion of the court.

 Additional Things to Remember

• BP 22 is a mala prohibita. It is not inherently evil in nature.

• BP 22 does not punish non-payment of debt. It punishes the issuance of worthless

checks. (Constitutional)

• If the check is issued prior to or simultaneous with the receipt of goods or things, the
issuer or drawer may also be held liable for Estafa under the Revised Penal Code.

• No double jeopardy even if you are convicted for estafa and bp22.
Elements of Estafa by Postdating a Check
(1) the offender has postdated or issued a check in payment of an
obligation contracted at the time of the postdating or issuance;
(2) at the time of postdating or issuance of said check, the offender has
no funds in the bank or the funds deposited are not sufficient to cover
the amount of the check; and
(3) the payee has been defrauded.

Note: the maker or issuer may likewise be liable for estafa punishable
under Article 315 of the Revised Penal Code if he issues a check for
payment of an obligation using false pretense or fraudulent act.
 BP 22 vs. Estafa
BP 22 ESTAFA
Mala prohibita Mala in se
Damage is not necessary Damage is an element
Good faith is not a defense Good faith is a defense
It may be for a pre-existing obligation or to guaranty There is no pre-existing obligation
an obligation
Given 5 days to pay or make arrangement Given 3 days to pay or make arrangement
PHILIPPINE DEPOSIT
INSURANCE
CORPORATION
Brief Background
PDIC is a government instrumentality created in 1963 by virtue of
Republic Act 3591 to insure the deposits of all banks which are
entitled to the benefits of insurance. The latest amendments to RA
3591 are contained in RA 9576 signed into law on April 29, 2009. RA
9576 increased the maximum deposit insurance coverage to
P500,000.00. The new law also includes important provisions to ensure
that the PDIC remains financially and institutionally strong to fulfill its
mandate under its Charter.

The PDIC is an attached agency of the Department of Finance.

Notable Amendments
1. The PDIC now has the authority to determine which deposit products are covered by
insurance. The PDIC is also authorized to conduct independent special examination of
banks and may inquire into or examine deposit accounts of ailing banks in the event
there is a finding of unsafe and unsound banking practices.

2. Part of the financial strengthening measures for the PDIC, on the other hand, include
exemption from taxes and the authority to issue sovereign bonds, debentures and other
debt issuances.

3. Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval
of the President of the Philippines, in case of a condition that threatens the monetary
and financial stability of the banking system that may have systemic consequences.
Overall Mandate of PDIC

PDIC exists to provide permanent and continuing deposit insurance

coverage for the depositing public to help promote public confidence
and stability in the economy. It ensures prompt payment of insured
deposits, exercises complementary supervision of banks, adopts
responsive resolution methods, and applies efficient management of
receivership and liquidation functions.
Basic Functions of PDIC

• Deposit Insurer

• Co-regulator of Banks

• Receiver and Liquidator of Closed Banks

Maximum Insurance Deposit Coverage
Effective June 1, 2009, the maximum deposit insurance coverage is
P500,000 per depositor per bank. All deposit accounts by a depositor in
a closed bank maintained in the same right and capacity shall be added
together.

Note: Deposit insurance coverage is not determined on a per-account

basis. The type of account (whether checking, savings, time or other
form of deposit) has no bearing on the amount of insurance coverage.
Who pays for the premium of insurance?

The Bank will pay an annual premium to PDIC to insure its deposit
liability.
 Example
Mr. Juan Montenegro maintains the following bank accounts in Bank of the
Philippine Island:

1.) Savings Account – Juan Montenegro (Php 800,000.00)

2.) Current Account – Juan Montenegro (Php 1,000,000.00)
3.) Joint Savings Account – Juan Montenegro and/or John Villegas (Php
500,000.00)

How much can Mr. Juan recover assuming that BPI is closed due to
insolvency?
Answer: Php 750,000

Explanation:
The Savings and Current Account of Mr. Juan Montenegro shall be treated as one
account for and insured for only a maximum amount of Five hundred thousand
pesos (Php 500,000.00).

His Joint Account with John Villegas will be separately insured and each of them
shall recover a maximum amount of Five hundred thousand pesos (Php
500,000.00). In this case, however, the amount of their joint deposits is Php
500,000. As such, they will only recover Php 250,000.00 as depositor.
Sub Question: What if the Joint of Account of Juan and John has a total
deposit in the amount of Php 2,000,000.00? How much will Mr. Juan
recover from PDIC?

Answer: Php 1,000,000.00

Note: We can now conclude that the maximum amount of money that a
person can recover from a bank is Php 1,000,000.00 if he is also
maintaining in the same bank a separate joint bank account because the
latter shall be insured separately.
Another Illustration
Mr. A maintains the following bank accounts:
1.) BPI – Php 300,000.00
2.) Eastwest – Php 400,000.00
3. ) BDO – Php 600,000.00

Assuming that all of the said banks were closed by the Monetary Board
due to insolvency, how much can Mr. A recover from PDIC?
Answer:
Mr. A can recover from PDIC the following:

1.) For his deposits in BPI – he can recover Php 300,000.00

2.) For his deposits in Eastwest – he can recover Php 400,000.00
3.) For his deposits in BDO – he can only recover Php 500,000.00
=======================
Total Php 1,200,000.00
Additional Illustrations
Bank Account Name in BPI Total Amount Share of Ana
Ana and Luis 900,000.00 300,000.00
Ana or Franco 800,000.00 400,000.00
Ana and/or John 500,000.00 250,000.00
Amount Recoverable by Ana Php 500,000.00

Bank Account Name in BPI Total Amount Share of Ana

Ana and Luis (Joint) 900,000.00 600,000.00

Ana or Franco (Joint) 800,000.00 500,000.00
Ana (Single Account) 500,000.00 500,000.00
Amount Recoverable by Ana Php 1,000,000.00
“In trust for”, “For the account of”, and “By”

ITF, FTAO, BY shall be deemed to be the account of the beneficial holder.

And will be added in his/her separate account.

Illustration:
1.) BDO Account Name 1 – Julian Felipe (Php 300,000.00)
2.) BDO Account Name 2– James in trust for Julian Felipe (Php 400,000.00)
3.) BDO Account Name 3 – Alvin For the account of Julian Felipe (Php
300,000.00)
Total Amount Recoverable is Php 500,000.00
If I have deposits in different banks, what is my PDIC deposit
insurance coverage?

It will be up to P500,000 per bank. Deposits in different banking

institutions are insured separately. However, if a bank has one or more
branches, the main office and all branch offices are considered as one
bank.

Thus, if you have deposits at the main office and at one or more branch
offices of the same bank, the deposits are added together when
determining deposit insurance coverage, the total of which shall not
exceed P500,000.
Meaning of Insured Deposit

The term ‘insured deposit’ means the amount due to any bona fide depositor for
legitimate deposits in an insured bank net of any obligation of the depositor to the
insured bank as of date of closure, but not to exceed P500,000.00.

A joint account shall be insured separately from any individually-owned deposit

account.
Accounts and transactions outside the
insurance coverage
• Investment products such as bonds, securities and trust accounts;

• Deposit accounts which are unfunded, fictitious or fraudulent;

• Deposit products constituting or emanating from unsafe and unsound banking

practices;

• Deposits that are determined to be proceeds of an unlawful activity as defined

under the Anti-Money Laundering Law.
 Mandatory Membership

Membership of banks to PDIC is mandatory; hence, all operating banks

are members of PDIC. So this includes commercial banks, savings
banks, mortgage banks, development banks, rural banks, and
cooperative banks. In addition, stock savings and loan associations are
also included; as well as domestic branches of foreign banks.
Deposits Insured
Except for the exclusions stipulated in RA 9576, deposits of all commercial
banks, savings and mortgage banks, rural banks, private development
banks, cooperative banks, savings and loan associations, as well as
branches and agencies in the Philippines of foreign banks and all other
corporations authorized to perform banking functions in the Philippines,
are insured with PDIC.

As for Philippine banks with branches outside the country, RA 9576

stipulates that subject to the approval of the Board of Directors, any
insured bank with branch outside the Philippines may elect to include for
insurance its deposit obligations payable at such branch.
Are foreign currency deposits also insured?

Foreign currency deposits are also insured by PDIC pursuant to RA

6426 (“An act instituting a foreign currency deposit system in the
Philippines, and for other purposes”) and Central Bank (CB) Circular No.
1389. Depositors may receive payment in the same currency in which
the insured deposit is denominated.
 Risk covered by PDIC

PDIC covers only the risk of a bank closure ordered by the Monetary
Board. Thus, bank losses due to theft, fire, closure by reason of strike or
existence of public disorder, revolution or civil war, are not covered by
PDIC.
How to file claims?
• Depositors will be advised through media and posters at the premises
of the closed bank on the schedule of distribution of claim forms by
PDIC, receiving of claim forms by PDIC, and the prescriptive date of
filing claims by the depositors.

• The depositor must then file his deposit insurance claim within 24
months from date of bank takeover. Failing to do so will forfeit their
right to get the insured amount from the PDIC. However, they may
still make a claim against the assets of the closed bank.
What will happen to the deposit in excess
of Php 500,000?
If the closed bank is not rehabilitated or taken over by another bank,
amount in excess of the P500,000 coverage can still be claimed upon
the final liquidation of the remaining assets of the closed bank.

The claim may be filed with the Liquidator of the closed bank but
payment of the said claim will depend on the bank's available assets to
settle its preferred claims (Government taxes, labor claims, secured
credits and trust funds) and approval of the Liquidation Court. The
schedule of payment beyond the P500,000.00 maximum insurance
shall be based on priorities set by law.
QUIZ NO. 7 (B.P. 22 & PDIC)

JUNE 24, 2021

4:00PM TO 11:59PM