HOW TO PREVENT, PROSECUTE AND COLLECT BOUNCING CHECKS
-------------------------------------------------------------------------------------------------------Best Practices Guide on the Use of BP 22, Estafa and Other Effective Collection Methods
-------------------------------------------------------------------------------------------------------Friday, 13 March 2015, 9:00am to 5:00pm * EDSA Shangri-La Hotel, Mandaluyong City, Philippines
Course Outline
THINGS YOU NEED TO KNOW ABOUT A CHECK AS INSTRUMENT OF PAYMENT AND HOW IT
IMPACTS ON YOUR COMMERCIAL TRANSACTIONS
I. DIFFERENT KINDS OF CHECK
1. Restricted or cross check
2. NOW (Negotiable Order of Withdrawal) instrument
3. Foreign account check
4. Postdated check
5. Memorandum check
6. Check, not intended for deposit
7. Guarantee check
8. Manager’s Check
9. Cashier’s Check
10. Traveller’s Check
11. Money Orders – Postal & Bank
12. Personal or Business
13. Fake Check
II. HOW TO MAKE SURE THAT THE CHECK IS GOOD: RELIABLE OR UNRELIABLE
III. MAKING, DRAWING AND ISSUANCE OF CHECK
1. Drawing and issuance
2. Making and issuance
3. Issuance
a. First delivery (actual or constructive)
b. Complete in form
c. Holder – payee, indorsee, bearer (payable to cash or bearer)
d. What payee must know about 1st, 2nd and succeeding endorsement of check/s
e. Presumed issuance
IV. TO APPLY ON ACCOUNT OR FOR VALUE
1. On account – check covers pre-existing obligation
2. For value – check involves obligation incurred simultaneously
with the issuance of the check.
3. Presumed consideration
4. Illegal consideration
5. Accessory contract
6. Magno case (Utilitarian theory)
V. NATURE OF THE CRIME UNDER BP BLG. 22
1. Mala in se and mala prohibita
2. Differences between estafa and crime under BP Blg. 22
3. Purpose of the criminalization
4. Utilitarian or protective principle
5. Voluntariness and knowledge as elements of a crime
HOW TO SUCCESFULLY PROSECUTE OR DEFEND CASES INVOLVING BP 22
I. FIRST OFFENSE UNDER FIRST PARAGRAPH OF SECTION 1
FIRST ELEMENT
1. Making, drawing or issuing check
2. Apply on account or for value
SECOND ELEMENT
1. Insufficiency of the funds or credit at the time of issuance
2. Knowledge of such insufficiency
Disputable presumption
Presentment within 90 days
Expiration of grace period from notice of dishonor
Complete defense and incomplete defense
Actual knowledge
Rebutting the presumption
THIRD ELEMENT
1. Presentment for payment
Presumed presentment
2. Dishonor due to insufficiency of funds or credit
a. Presumed dishonor
b. Closed Account
Exercise of right
c. DAUD - drawn against uncollected deposit
d. Non-presentation of bank representative
e. Other reasons for dishonor
II. SECOND OFFENSE UNDER FIRST PARAGRAPH OF SECTION 1
FIRST ELEMENT
1. Makes, draws or issues check
2. Apply on account or for value
SECOND ELEMENT
1. Insufficiency of the funds or credit at the time of issuance
2. Knowledge of such insufficiency
THIRD ELEMENT
Dishonor due to stop payment order
FOURTH ELEMENT
Insufficiency of funds or credit
FIFTH ELEMENT
Without valid reason
III. OFFENSE UNDER THE SECOND PARAGRAPH OF SECTION 1
FIRST ELEMENT
1. Makes, draws or issues check
2. Apply on account or for value
SECOND ELEMENT
1. Sufficiency of the funds or credit at the time of issuance
2. Failure to maintain the sufficiency of funds for 90 days
THIRD ELEMENT
Dishonor due to failure to maintain such sufficiency of funds
DAIF/Close account
Difference between the crime under 1st and 2nd paragraph
Improperly charging the accused under the 1st paragraph
IV. COMPLAINANT AND ACCUSED
1. Director of the corporation
2. Liability of corporate officer
3. Conspiracy and endorser
4. Borrower
V. OTHER MATTERS INVOLVING BP BLG. 22
1. Prescription of crime
2. Venue of criminal action
3. Intervention of offended party
4. Civil liability
5. Penalty
SUREFIRE WAYS TO SECURE CONVICTION FOR BOUNCING CHECKS VS. HOW TO AVERT
CRIMINAL ACTION
I. RULE ON NOTICE OF DISHONOR AS A SOURCE OF CONVICTION OR ACQUITTAL
1. Complete defense
a. Prevention of application of presumption
b. Deprivation of right to avert prosecution - violation of his right to due process
Notice of dishonor, not an element of the crime
II. HOW TO INSURE COMPLIANCE WITH THE RULE ON NOTICE OF DISHONOR
1. Sending notice after dishonor of the check
2. Convey information of dishonor of the check
Notice of dishonor, not demand letter
Failure to describe the check in the notice of dishonor
Misdescription of check in the notice of dishonor
Demand to pay within 3 days will not invalidate the notice of dishonor
3. Written notice of dishonor
Estafa
BP Blg. 22
Knowledge of fact of dishonor of check, not enough
4. Receipt of notice of dishonor
a. Authentication of registry receipt and registry return receipt (return card)
Signatures in the check and return card or Postman
Proof of sending and receipt
Delivery to the addressee or agent upon written order
b. Refusal to receive notice
c. Certification: Returned to sender
d. Reply to demand letter - “tacit admission”
e. Acknowledgment
f. Judicial admission
g. Telegraphic notice of dishonor
h. Unknown address of the offender
i. Notice to the corporation, not notice to employee
j. Proof of date of receipt
k. TIPS ON HOW TO SERVE NOTICE OF DISHONOR TO DRAWER
III. MODES OF SETTLING OBLIGATION COVERED BY A DISHONORED CHECK
1. Payment
a. Application of payment
b. Tender of payment and consignation
c. Petition for suspension of payment
d. Face value vs. the amount due on the check
e. Full payment within the grace period
Effect if the check is in the possession of complainant or accused
Payment beyond the grace period
2. Arrangement for payment
a. Depositing money in the checking account
b. Novation
Compromise agreement
Unfulfilled promise
Subrogation
Replacement check
Good replacement check – Arrangement for payment
Dishonored replacement check
Desistance
OTHER WAYS TO EFFECTIVELY COLLECT DEBT INVOLVING BOUNCING CHECK
I. HOW CAN A BUM CHECK BE A SOURCE OF CRIMINAL CASE OF ESTAFA IN ADDITION TO BP BLG. 22
1. Elements
Damage
Fraud
Notice of dishonor
Memorandum check
Guarantee check
Check in payment of pre-existing obligation
Postdated check
2. Penalty
II. EXECUTION OF DECISIONS
1.
2.
Attachment, Levy and Garnishment
How to deal with sheriffs
III. TURNING PAPER INTO MONEY: Street-smart Collection Strategies and Other Out-Of-the-Box Solutions
VALUABLE TIPS IN CRAFTING CONTRACTS IN BUSINESS TRANSACTIONS INVOLVING CHECK
1. Trusted employee, who will transact business with the drawer
2. Name of the signatories to the check
3. Ensure that the signature of the drawer is authentic
4. Completion of the details of the check
5. Representation that that the check is funded at the time of delivery (or will be funded at the time of maturity) and the checking
account involving the check is not yet closed
6. Representation that the signatories are aware of the transaction involving the check
7. Commitment that drawer will not order stop payment and representation that there no valid reason to make such order of stop
payment
8. In case of guarantee check, require the borrower to endorse the check and to make a commitment that he will fund the check
9. Address of the drawer at which the notice shall be served
10. Persons, who are authorized to receive notice of dishonour of check
11. Statement that the goods were delivered or money was handed to the drawer after or simultaneous with the issuance of the
check
12. Date of receipt of goods and money and issuance of checks
13. Place of issuance or delivery of the check
VALUABLE INSIGHTS AND LESSONS IN ACCEPTING PROMISSORY NOTES
Seminar Contact Person:
Lara Magnait – Program Leader
Center for Global Best Practices
905 Richville Corporate Tower
1107 Alabang Zapote Road,
Madrigal Business Park
Muntinlupa City, Philippines
Telefax: (+63 2) 842-7148 or 59
Email: lara@cgbp.org
Pls cc: mgma@cgbp.org
Website: www.cgbp.org