In commercial transactions, checks play a significant factor in the conduct of trade and business.

Apart from
ease and convenience of doing business, checks also facilitate a highly effective and efficient system of
commerce.

Checks have long been used in business as early as 9th century. However, it was during the 20th century
where checks gained its popularity as a form of non-cash payment scheme.

With the popularity of checks, however, came also a plethora of problems that attend commercial and
trading systems. The issuance of unfunded checks by unscrupulous individuals brought serious
repercussions to the market and the economy, in general. The Revised Penal Code, at one time, had been
sufficient to address cases involving the issuance of unfunded checks. But the increasing ability of men to
get around with the law rendered the Revised Penal Code unable to cope with the exigencies of business
transactions. Thus the passage of B.P. 22 or the Bouncing Checks Law.

Everyday, we heard a lot of stories about Estafa and Bouncing Checks. For lawyers and law students,
distinguishing the two is just a walk in the park. For laymen, a measure of confusion is not unheard of.

Estafa Through Issuance of Unfunded Checks

The crime of Estafa is punished under the Revised Penal Code. One can be held guilty for Estafa by means
of issuing a bouncing check with the use of false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:

“By postdating a check, or issuing a check in payment of an obligation when the offender had no funds in
the bank, or his funds deposited therein were not sufficient to cover the amount of the check. (Article
315(2)(d) of the Revised Penal Code as amended by R.A. 4885)”

Requirements for a Person to Be Held Guilty for Estafa

1. Postdating or issuance of a check in payment of an obligation contracted at the time the check was issued

2. Insufficiency of funds to cover the check, and

3. Damage to the payee thereof.

If any of these is absent, a person cannot be held liable for Estafa.

Example:

A bought goods from B and issued an unfunded check in consideration of the goods received.

In the problem above, A can be charged for Estafa because he issued a check knowing it to be without
sufficient funds to pay the goods he bought from B. The issuance of the bounced check here was with
fraudulent intent.

Bouncing Checks Law (BP 22)

A person can be charged for violation of BP 22 when he commits the following acts:

1. Making or drawing and issuing any check to apply on account or for value, knowing at the time of issue
that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full
upon its presentment, which check is subsequently dishonored by the drawee bank for insufficiency of funds
or credit or would have been dishonored for the same reason had not the drawer, without any valid reason,
ordered the bank to stop payment;

2. 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.

Requirements for a Person to Be Held Guilty for Violation of BP 22

Violation of BP 22 can be filed against any person when the following are present:

1. Making, drawing and issuance of any check to apply for account or for value;

2. Knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or
credit with the drawee bank for the payment of such check in full upon its presentment; and

3. Subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for
the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.

Again, the presence of all these requirements is important. Otherwise, no BP 22 case can be filed. Note that
knowledge of insufficiency of funds is presumed when t is proved that the issuer received a notice of
dishonor and that within 5 days from receipt thereof, he failed to pay the amount of the check or make
arrangement for its payment. Additionally, in BP 22, it is not a defense that upon the issuance of check you
are not motivated with malice or fraudulent intent.

Adopting our example above, it would appear then that A can also be charged for Violation of BP 22, apart
from the estafa case, because BP 22 cases also cover issuances of bouncing checks for value received right
there and then.

So What is the Difference Between the Two?

It is Estafa when, among others, you issue an unfunded check with fraudulent intent in consideration of
something of value you received.

It is a case for Violation of BP 22 when you issue an unfunded check whether or not it is for an obligation
you contracted prior to the issuance of the check or not. Otherwise stated, you are liable for BP 22 whether
you issue a check for a present or a past obligation.