The Bouncing Check Law and valid cause for a "stop payment"

What may constitute valid cause or good reason to legally justify “stop payment” of a check under Batas Pambansa (BP) Blg. 22?

The law enumerates the elements of BP Blg. 22 to be (1) the making, drawing, and issuance of any check to apply for account or for value; (2) the 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 the check in full upon its presentment; and (3) the 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.

In a case decided by the Supreme Court (Daleon vs. Tan [2010]), it held that placing a check on a “stop payment” may be justified provided that there is a good reason to do so.

These are the facts:

Pursuant to the terms of their agreement on the purchase of the Daleons’ undivided land, the Tans gave the Daleons a down payment of P10.861 million and issued in their favor 12 postdated checks in the amount of P658,750.00 per check to cover the remaining balance of P7.905 million.

Eight days after the parties executed their agreement, one Bartolome Sy caused to be annotated on the title to the property an adverse claim on the undivided share of one of the Daleons.  For this reason, the Tans placed a stop payment order on their first postdated check and repeatedly wrote the Daleons that, until the adverse claim on the property was canceled, they were stopping payment on their checks.

The Daleons deposited the first three checks in their bank but these were returned for the reason “SPO/DAIF” or “stop payment order/drawn against insufficient funds.”  Meanwhile, the Daleons succeeded in getting a court order that directed the cancellation of Bartolome Sy’s adverse claim on their title to the property.  They then deposited the other checks that the Tans gave them but these, too, were returned for the reason “SPO/DAIF.”

Subsequently, the Tans wrote the Daleons, informing them that they were ready to make good on their checks provided the Daleons presented to them a clean title to the property.  In addition, they requested the Daleons to submit to them the documents specified in the contract to sell as a prerequisite to the payment of the last two checks.  Meanwhile, the Tans’ stop payment order on their checks remained in force.

While the issue in this case does not refer to the matter of violation of BP 22 itself, the Supreme Court has declared that, “the Tans had to place that stop payment for a valid reason.  They agreed to buy the property believing that the seller’s title was unblemished by any lien or unfavorable claim.  Bartolome Sy’s adverse claim, which came shortly after the execution of the contract and the initial payment to the Daleons of P10.861 million, was certainly distressing.  Its annotation on the title served as warning to third parties like the Tans that someone claimed an interest or a better right to the property than the registered owner. Certainly, the Tans were justified in placing a stop payment order on their checks to avoid greater loss since it may be assumed that they did not want to buy such an expensive property that had a cloud on its title.”

Notice of dishonor not an element for committing estafa by issuing a rubber check

Article 315, paragraph 2(d), of the Revised Penal Code, as amended by R.A. 4885 penalizes estafa when committed as follows:

2. By means of the following false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the fraud:

xxx

d) 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. The failure of the drawer of the check to deposit the amount necessary to cover his check within three (3) days from receipt of notice from the bank and/or payee or holder that said check has been dishonored for lack or insufficiency of funds shall be prima facie evidence of deceit constituting false pretense or fraudulent act.

By settled jurisprudence, the elements of the crime of estafa, as defined in the above quoted provision of law, are as follows: (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. Damage and deceit are essential elements of the offense and must be established with satisfactory proof to warrant conviction, while the false pretense or fraudulent act must be committed prior to, or simultaneous with, the issuance of the bad check. The drawer of the dishonored check is given three days from receipt of the notice of dishonor to cover the amount of the check, otherwise, a prima facie presumption of deceit arises.

Further it is settled that it is criminal fraud or deceit in the issuance of a check which is made punishable under the Revised Penal Code, and not the nonpayment of a debt. Deceit is the false representation of a matter of fact whether by words or conduct by false or misleading allegations or by concealment of that which should have been disclosed which deceives or is intended to deceive another so that he shall act upon it to his legal injury. Concealment which the law denotes as fraudulent implies a purpose or design to hide facts which the other party ought to have. The postdating or issuing of a check in payment of an obligation when the offender had no funds in the bank or his funds deposited therein are not sufficient to cover the amount of the check is a false pretense or a fraudulent act.

The receipt by the drawer of the notice of dishonor is not an element of the offense. The presumption only dispenses with the presentation of evidence of deceit if such notification is received and the drawer of the check failed to deposit the amount necessary to cover his check within three (3) days from receipt of the notice of dishonor of the check. The presumption indulged in by law does not preclude the presentation of other evidence to prove deceit.

The absence of proof as to receipt of the written notice of dishonor notwithstanding, the evidence shows that petitioner had actual notice of the dishonor of the check because he was verbally notified by the respondent and notice whether written or verbal was a surplusage and totally unnecessary considering that almost two (2) months before the issuance of the check, petitioners current account was already closed. Under these circumstances, the notice of dishonor would have served no useful purpose as no deposit could be made in a closed bank account. (Lopez vs. People, GR No. 166810, 26 June 2008)