Batasang Pambansa (BP) 22 or Bouncing Checks Law penalizes the making and issuance of insufficiently funded checks. The law provides that any person who makes/draws and issues an insufficiently funded check or orders the bank to stop payment without any valid reason shall be punished with imprisonment of 30 days to 1 year, or by a fine not less than but also not double the amount of the check, or both.

To be liable, the following elements must be present:

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.

Under the law, there is prima facie evidence of insufficiency of funds will arise if the bank refuses to pay or honor the check within ninety (90) days from the date of the check, unless the one who signs the check pays the holder of amount due, or makes arrangement for payment in full by the bank within five (5) days from the date he receives a Notice of Dishonor.

Since the law specifically imposes the penalty on the person who draws the check, it is the corporate officer, not the business itself, who shall be personally liable for violating a penal statute. He cannot shield himself from criminal liability on the ground that the check was drawn by the corporation and not his. He may also be civilly liable (e.g. payment of fines) only if he is convicted (Jorge Navarra vs. People, Hongkong and Shanghai Banking Corporation, GR No. 203750 dated 06 June 2016)

The corporation cannot be criminally liable for BP 22 as the law specifically imposes this over persons who actually signed the check in behalf of the corporation. Moreover, corporations (consequently, businesses) cannot be incarcerated since corporeal punishment cannot be inflicted. However, these may be liable through a civil suit for damages or fines.

One would be a claim for moral damages on the ground of willful issuance of bounced and unsigned checks in case of breach of contract under Article 2220.

In the case of Arco Pulp and Paper vs. Lim, GR No. 206806 dated June 25, 2014, the Petitioner issued a check drawn against a closed account to which the respondent deposited it to constitute his acceptance of the petitioner’s option to pay. The petitioner then refused to deliver its products to the respondent and gave it to another person.   The court held that the petitioner presumably had knowledge that it would be drawing against a closed account when it issued its check. This, along with giving the goods to another person, without the respondent’s consent, show a dishonest purpose or conscious wrongdoing which partakes the nature of fraud.

In addition, exemplary damages may also be awarded under Article 2208. Business owners cannot be allowed to renege on their obligations, considering that these obligations they freely entered. They must always be forthright in their dealings.