SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW

Atty. J.A. De Castro

PD 115: TRUST RECEIPTS LAW

Question 1: A buys goods from a foreign supplier using his credit line with a bank to pay
for the goods. Upon arrival of the goods at the pier, the bank requires A to sign a trust
receipt before A is allowed to take delivery of the goods. A disposes of the goods and
receives payment but does not pay the bank. Is A criminally liable?
a. No, Trust receipt is only to secure his debt and that a criminal action cannot lie
against him because that would be violative of his constitutional right against
imprisonment for non payment of a debt.
b. Yes, He is criminally liable under Estafa.
c. No, only civilly liable for non payment.
d. No, he is liable only for delay.
Basis: Violation of a trust receipt is criminal as it is punished as estafa under Article 315 of
the Revised Penal Code. There is a public policy involved which is to assure the entruster
with the reimbursement of the amount advanced or the balance thereof for the goods
subject of the trust receipt. The execution of the trust receipt or the use thereof promotes
the smooth flow of commerce as it helps the importer or buyer of the goods covered
thereby. (Lee v. Hon. Rodil, G.R. No. 80544 July 5, 1989)
Question 2: C contracted D to build his commercial building. D ordered construction
materials from E and received delivery thereof. The following day, C went to F Bank to
apply for a loan to pay the construction materials. As security for the loan, C was made to
execute a trust receipt. One year later, after C failed to pay the balance on the loan. Is Cs
liability under the Trust Receipt Law? Estafa? or both?
a. He is liable under the Trust Receipts Law.
b. He is liable for estafa only.
c. No liability. The transaction was a simple loan under the Trust Receipts Law does not
seek to enforce payment of loan.
d. Only civilly liable.
Basis: It is not covered by the Trust Receipts Law. Where the debtor received goods subject
of trust receipt before trust receipt itself was entered into, it was held that the transaction in
question was a simple loan. (Consolidated Bank v. Court of Appeals, G.R. No. 114286 April
19, 2001) Trust Receipts Law does not seek to enforce payment of loan, rather it punishes
dishonesty and abuse of confidence in handling of money or goods to the prejudice of
another regardless of whether the latter is the owner. (Colinares v. Court of Appeals, G.R.
No. 90828 September 5, 2000)
Question 3: A president of X Corp. executed two trust receipts acknowledging receipt from
the Solid Bank of goods valued at P2.5 Million and P2 Million. When the trust receipts
became due and demandable, X Corp. failed to pay or deliver the goods to the Bank despite
several demand letters. What are the liabilities of X Corp.

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-1-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
a. Yes, he is guilty for failure by the entrustee to account for the goods received in trust
constitutes estafa.
b. Not liable since mere failure of the entrustee to account for the goods received in
trust does not constitute estafa.
c. Not liable since intent to commit fraud should be proved.
d. Yes, liable only for non-payment of debts, but there is no criminal liability.
Basis: The Trust Receipts Law is violated whenever the entrustee fails to: (1) turn over the
proceeds of the sale of goods, or (2) return the goods covered by the trust receipts if the
good are not sold. The mere failure to account or return gives rise to the crime which is
malum prohibitum. There is no requirement to prove intent to defraud. It is well-settled
doctrine long before the enactment of the Trust Receipts Law, that the failure to account,
upon demand, for funds or property held in trust is evidence of conversion or
misappropriation. Under the law, mere failure by the entrustee to account for the goods
received in trust constitutes estafa. The Trust Receipts Law punishes dishonesty and abuse
of confidence in the handling of money or goods to prejudice the public order. The mere
failure to deliver proceeds of the sale or the goods if not sold constitutes a criminal offense
that causes prejudice not only to the creditor, but also to the public interest. Evidently, the
Bank suffered prejudice for neither money nor the goods were turned over the Bank. (Ong
v. Court of Appeals, G.R. No. 119858 April 29, 2003)
Question 4: A loaned from Sam Bank P500,000 to finance his purchase of laptops for his
business. He executed a trust receipt in favor of Sam Bank over the laptops. However,
when A was transferring the laptops from the shop to his office in Makati, armed robbers
took the laptops. What is the liability of A if any?
a. A is not liable. His obligation to pay the loan to Sam Bank is extinguished because
the loss was not due to his fault.
b. A is liable under the Trust Receipts Law. Since pending disposition loss of the object
of the trust agreement is borne by the entrustee.
c. A is not liable since the robbery is due to a fortuitous event.
d. Since the the loss was not due to his fault or negligence, it relieves him of the
obligation to pay the same. The goods merely serve as an "accessory" obligation to
secure the principal obligation of the loan in the form of the Trust receipt.
Basis: In is clear from the language of Trust Receipts Law that the risk of loss shall be
borne by the entrustee (Section 15, PD 115). To be sure, the law provides to the effect that
the entrustees obligation under the trust receipt agreement shall not be extinguished in
case of the loss of goods, which are subject of trust receipt, irrespective of whether or not
such loss is due to the fault or negligence of the entrustee.
Question 5: Violence of Trust Receipts Law is a violence against:
a.
b.
c.
d.

Property.
Person.
Public Order.
Customs.

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-2-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
Basis: The Trust Receipts Law punishes the dishonesty and abuse of confidence in the
handling of money or goods - it does not seek to enforce payment of the loan. Thus, there
can be no violation of a right against imprisonment for non-payment of a debt. PD 115, like
BP 22, punishes the act "not as an offense against property, but as an offense against public
order. Thus the law states that a breach of a trust receipt agreement makes one liable for
estafa. (People v. Nitafan, 207 SCRA 725)
Question 6: BMC Corp., through its president, respondent Ong, was granted domestic
commercial letter credit with Pinoy Bank to finance his purchase of cement for his business.
To secure payment of the amount Ong, executed two trust receipts providing that it shall
turn over the proceeds of the goods to the bank, if sold, or return the goods, if unsold, upon
maturity on Jan. 30, 2010 and August 30, 2010. On due dates, BMC failed to comply with
the trust receipt agreement. On November 30, 2010, it filed with SEC a Petition for
Rehabilitation and for a Declaration in a State of Suspension of Payments which was
granted by SEC. On Feb. 13, 2011, BMC and a consortium of 14 of its creditor banks
entered into a Memorandum of Agreement (MOA) rescheduling the payment of BMCs
existing debts. However, BMC and respondent Ong defaulted in the payment of the
obligations under the rescheduled payment scheme provided in the MOA. Is BMC and Ong
liable?
a. They are criminally liable under the Trust Receipts Law and estafa. For breach of a
trust receipt agreement makes one liable for estafa.
b. They are only civilly liable with interest for non-payment of debts.
c. The MOA is invalid for it was used to defraud the creditors thus still liable under the
trust receipts law.
d. They are only liable civilly since there was a novation from the trust receipt
agreement to the MOA.
Basis: A Memorandum of Agreement entered into between the bank entruster and
entrustee extinguished the obligation under the existing trust receipt because the
agreement did not only reschedule the debts of the entrustee but it provided principal
conditions which are incompatible with the trust agreement. Hence, the liability for breach
of the Memorandum of Agreement would be purely civil in nature and no criminal liability
under the Trust Receipt Law can be imposed. (Pilipinas Bank v. Ong, G.R. No.
133176 August 8, 20022)
Question 7: U Bank granted a loan by Espn Corp. to finance the purchase new equipments
for their expansion for commercial letters of credit. The letters of credit were in favor Espn
Corporations suppliers, X Manufacturing Incorporated and Y Corporation. Simultaneous
with the issuance of the letters of credit, petitioners signed trust receipts in favor of
respondent bank. Later petitioner Jose signed, in his personal capacity, a trust receipt
corresponding to Letters of Credit. Jose bound himself to sell the goods covered by the
letter of credit and to remit the proceeds to respondent bank, if sold, or to return the goods,
if not sold, on or before December 30, 2010. After X and Y Corporation delivered the
equipments to Espn, U bank paid the former P500,000 and P200,000, respectively. Espn
and Jose failed to comply with their undertaking under the trust receipts. U bank filed a
case for estafa and Trust Receipts Law. During the trial, U bank presented evidence on the

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-3-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
civil aspect of the cases. If there is judgment acquitting petitioners of estafa on reasonable
doubt, are they still liable?
a. No, since U bank failed to file a separate civil action to recover payment under the
trust receipts.
b. Yes, since his acquittal did not extinguish his criminal liability.
c. Only civilly liable for the balance of their debt.
d. No, liability since because the criminal liability of estafa was extinguished.
Basis: U bank chose not to file a separate civil action to recover payment under the trust
receipts. Instead, respondent bank sought to recover payment in Criminal Cases. Although
the trial court acquitted Jose, his acquittal did NOT extinguish his civil liability. His liability
arose not from the criminal act of which he was acquitted (ex delicto) but from the trust
receipt contract (ex contractu). Petitioner Jose signed the trust receipt of 30 September
1981 in his personal capacity. Acquittal in a criminal case for estafa does not extinguish civil
liability arising from breach of trust receipt contract. (Tupaz v. Court of Appeals, G.R. No.
145578 November 18, 2005)
Question 8: X obtained a letter of credit from a local bank in order to import auto tires
from Japan. To secure payment of his letter of credit, X executed a trust receipt in favor of
the bank. Upon arrival of the tires, X sold them but did not deliver the proceeds to the
bank. X was charged with estafa. X contended that PD 115 was unconstitutional because it
violated the Bill of Rights provision against imprisonment for non-payment of debt. Should
the charge against X prosper?
a. No since the Bill of Rights must be observed by other laws.
b. Yes since what is punished is the act of dishonesty and abuse of confidence in the
handling of money or goods to the prejudice of the other.
c. Yes since the act failure of X to turn over the proceeds of the sale of the goods,
documents or instruments covered by a trust receipt is punishable as estafa as
stated in the Trust Receipts Law.
d. No since what is protected in this case is the loan, which is in the nature of a debt.
Basis: This is because the title of the bank to the security is the one sought to be protected
and not the loan which is a separate and distinct agreement. What is being penalized under
PD 115 is the misuse or misappropriation of the goods or proceeds realized from the sale of
the goods, documents or Instruments which are being held in trust for the entrustee-banks.
In other words, the law punishes the dishonesty and abuse of confidence in the handling of
money or goods to the prejudice of the other, and hence there is no violation of the right
against imprisonment for non-payment of debt. (People v. Nitafan, 207 SCRA 725)
Question 9: Is lack of intent to defraud a bar to the prosecution of these acts or
omissions?
a. Yes. Since the charge is estafa, intent to defraud is important.
b. Yes. Violation of the Trust Receipts Law is mala in se; thus, intent is important.
c. No, but proof of fraud will aggravate the offense charged.
d. No. The acts or omissions punishable by the Trust Receipts Law is mala prohibitum.
Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas
Midterm Requirement
-4-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro

Basis: This is because the Trust Receipts Law is violated whenever the entrustee fails to
turn over the proceeds of the sale of the goods or return the goods covered by the trust
receipts if the goods are not sold. The mere failure to account or return gives rise to the
crime which is malum prohibitum. There is no requirement to prove intent to defraud.
(Ching v. Secretary of Justice, G.R. No. 164317 February 6, 2006; Colinares v. Court of
Appeals, G.R. No. 90828 September 5, 2000; Ong v. Court of Appeals, G.R. No. 119858
April 29, 2003)
Question 10: X received the goods subject of the trust receipt before the trust receipt itself
was entered into. Later, X failed to failed to pay. Is there a violation of the Trust Receipts
Law?
a. Yes, since one of the acts or omissions stated by law was committed by X.
b. No, since the goods are not subject to the trust receipt since they were received prior
to the trust receipt.
c. No, since there was only a simple loan was contracted in this case, and not a trust
receipt.
d. Yes since the Trust Receipts Law seeks to enforce the payment of the indebtedness.
Basis: Where the debtor received goods subject of trust receipt before trust receipt itself
was entered into, it was held that the transaction in question was a simple loan.
(Consolidated Bank v. Court of Appeals, G.R. No. 114286 April 19, 2001) The Trust Receipts
Law does not seek to enforce payment of loan, rather it punishes dishonesty and abuse of
confidence in handling of money or goods to the prejudice of another regardless of whether
the latter is the owner. (Colinares v. Court of Appeals, G.R. No. 90828 September 5, 2000)
Question 11: X, the General Manager of XYZ manufacturing, applied for a letter of credit to
import steel from China,the application being directed to HSBC bank. HSBC bank approved
the letter of credit. After release and sale of the imported goods, the proceeds from the sale
were not turned over to HSBC Bank. Neither X nor the XYZ manufacturing had made
payments. Would the Bank be justified in filing a case for estafa against X?
a. No. The trust receipts should have been issued in favor of the seller and not of the
bank.
b. No, since he acted only for the Corporation therefore he should not be liable.
c. Yes, since he was the corporate officer who acted in behalf of the Corporation thus he
can be made criminally liable.
d. No, since there was no specific provision of law mandating a corporation to act or not
do any act and no provision of law which makes the corporate officers to be
personally and criminally liable.
Basis: The bank would be justified in filing a case for estafa under PD 115 against X. The
fact that the trust receipt was issued in favor of a bank, instead of a seller, to secure the
importation of the goods did not preclude the application of the Trust Receipts Law. Under
the law, any officer or employee of a corporation responsible for the violation of a trust
receipt is subject to the penal liability thereunder. (Sia v. People, 166 SCRA 655)

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-5-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro

BP 22: BOUNCING CHECKS LAW

Question 1: There can be no prima facie evidence of knowledge of insufficiency of funds
when:
a. When the drawer failed to update his passbook, and thought there was still sufficient
fund for the check.
b. When no notice of dishonor was actually sent to or received by the maker, drawer, or
issuer by the drawee bank or aggrieved party.
c. When the notice of dishonor was sent by a messenger of the drawee bank.
d. When the check payment of which is refused by the drawee because of insufficient
funds in or credit with such bank, when presented within 90 days from the date of
the check.
Basis: The absence of personal notice of dishonor to the petitioner by the drawee bank
based on a witness testimony that she did not inform anymore the Binondo branch and
petitioner as there was no need to inform them as the corporation was in distress. The
Court of Appeals affirmed this factual finding. (Lim Lao v. Court of Appeals, G.R. No.
119178 June 20, 1997)
Question 2: Which of the following makes the drawer liable:
a. He issues a check as warranty deposit for lease of certain equipment and the said
equipment is pulled out by the lessor.
b. The check is subsequently dishonored by the drawee bank for insufficiency of funds
or would have been dishonored for the same reason had not the drawer, with a valid
reason, ordered the bank to stop payment.
c. A check issued to another person and writing across the check memorandum.
d. By issuing the check whereby the amount covered by the subject check had already
been paid by compensation or offset through other checks issued by the other party.
Basis: It is when accused issued a check as warranty deposit for lease of certain
equipment, even knowing that he has no funds or insufficient funds in the bank is not liable,
if the lessor of the equipment pulled out the loaned equipment. The drawer has no
obligation to make good the check because there is no more deposit to guaranty. (Magno v.
Court of Appeals, 210 SCRA 471)
The defense of compensation is unavailing because petitioners did not clearly specify in the
memorandum which dishonored check is being offset. No compensation can take place
between petitioners and respondent as respondent is not a debtor of petitioners insofar as
the two checks representing collections from the Baao ticket sales are concerned. Hence it

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-6-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
can be drawn from the case that, compensation may set in if the accused is able to set it up
properly. (Tan v. Mendez, G.R. No. 138669 June 6, 2002)
A memorandum check is in the form of an ordinary check, with the word "memorandum",
"memo" or "mem" written across its face, signifying that the maker or drawer engages to
pay the bona fide holder absolutely, without any condition concerning its presentment. Such
a check is an evidence of debt against the drawer, and although may not be intended to be
presented, has the same effect as an ordinary check, and if passed to the third person, will
be valid in his hands like any other check. (People v. Nitafan, G.R. No. 75954 October 22,
1992)
In providing for a difference between estafa and BP 22 the case provides for the elements of
violation of BP 22, it is required that the 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 a valid reason, ordered the bank to stop payment. (Uy v.
Court of Appeals, G.R. No. 119000 July 28, 1997)

Question 3: Determine the best statement with respect to the violation of BP 22 by a

corporation.
a. The complaint may only be lodged against the persons who signed the check on
behalf of the corporation.
b. A separate civil action against the corporation for the amount of indebtedness
represented by the check is not barred by the Rules of Criminal Procedure.
c. Damage suffered by the payee is a condition sine qua non for the case to prosper.
d. Owners and officers of the company who signed dishonored checks may be absolved
on account of good faith in relying on the company accountants appraisal of the
companys financial status.
Basis: Nothing in the amended Rules of Criminal Procedure barred the institution of a
separate civil action against the corporation for the amount of indebtedness represented by
the check, even if a BP 22 complaint was already filed (or subsequently filed) against the
person who signed the check in behalf of the corporation. (Gosiaco v. Ching, G.R. No.
173807 April 16, 2009)

Question 4: What is the implication of a Supreme Court decision upholding the deletion of
the penalty of imprisonment for a BP 22 violation and the imposition of a fine double the
amount of the check?
a. Such remains consistent with the penalties that may be imposed by the court under
Section 2 of the law because the law makes use of the word OR thereby leaving it
unto court discretion whether to impose a fine, imprisonment or both

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-7-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
b. This dispenses with the alternative penalty of imprisonment, coinciding with the
principle of redeeming valuable human material and preventing unnecessary
deprivation of personal liberty.
c. The penalties under Section 2 of the law remain unaffected, but a rule of preference
is established such that a penalty of fine should be prioritized.
d. The accused remains subject to deprivation of liberty as the courts may still impose
subsidiary imprisonment in the event of inability to pay the fine.
Basis: Administrative Circular No. 12-2000 establishes a rule of preference in the
application of the penal provisions of BP 22 such that where the circumstances of both the
offense and the offender clearly indicate good faith or a clear mistake of fact without taint of
negligence, the imposition of a fine alone should be considered as the more appropriate
penalty. Needless to say, the determination of whether the circumstances warrant the
imposition of a fine alone rests solely upon the Judge. (Clarified by Administrative Circular
No. 13-2001, February 14, 2001.)

Question 5: Sharon filed a complaint against Gabby for the violation of BP 22, pursuant to
the latters issuance of dishonored checks amounting to 2 million pesos. Notwithstanding
the issuance of a warrant of arrest against Gabby, Sharon wants to pursue a hold-departure
order against him upon hearing in The Buzz that he plans to vacation in Europe soon. Will
the action for the hold-departure order stand?
a. Yes, the validity of the complaint that justified the issuance of the warrant of arrest
necessarily implies that Gabbys freedom of action and liberty to travel may be
validly restricted considering the case against him.
b. No, absent a specific statutory provision under BP 22 in regard to the issuance of a
hold-departure order against the accused, the law must be strictly construed against
the state so as not to infringe on ones right and libery to travel, which is
constitutionally protected.
c. No, a holddeparture order may only be sought under exceptional circumstances, for
offenses prescribing sentences for periods greater than that provided by law for
violations of BP 22.
d. No, one can not avail of a hold-departure order in connection with cases covered by
BP 22.
Basis: SC Administrative Circular No. 39-97 limits the authority to issue hold-departure
orders to criminal cases within the jurisdiction of second level courts, with paragraph 1
therof stating that that hold-departure orders shall be issued only in criminal cases within
the exclusive jurisdiction of the regional trial courts. With BP 22 cases falling under the
jurisdiction of first level courts, the issuance of hold-departure orders does not find
application in the latter. (Mondejar v. Buban, A.M. No. MTJ-01-1349 July 12, 2001)

Question 6: Brenton simultaneously filed two cases against Preston, one for violation of BP
22, and the other being a criminal complaint for Estafa under the Revised Penal Code, with

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-8-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
both cases arising from the issuance of a P3 million PNB check. Brentons counsel wanted to
intervene in the Estafa case with respect to the civil liability therein, notwithstanding the
fact that civil liability also attached from the issuance of the check pursuant to BP 22. In
such case, Brentons counsel will:
a. Be allowed to intervene because nothing in the Rules signifies that the necessary
inclusion of a civil action in a criminal case for violation of the Bouncing Checks Law
precludes the institution in an estafa case of the corresponding civil action, even if
both offenses relate to the issuance of the same check.
b. Not be allowed to intervene because the situation necessitates that Brenton resort to
the doctrine of election of remedies.
c. Not be allowed to intervene because although there are two criminal liabilities -- one
for estafa and another for violation of BP 22, the act of issuing the P3 million
bouncing check involves only one civil liability for the offended party, who has
sustained only a single injury.
d. Be allowed to intervene because nothing in the current law or rules on BP 22 vests
the jurisdiction of the corresponding civil case exclusively in the court trying the BP
22 criminal case.
Basis: The possible single civil liability arising from the act of issuing a bouncing check can
be the subject of both civil actions deemed instituted with the estafa case and the BP 22
violation prosecution. In the crimes of both estafa and violation of BP 22, Rule 111 of the
Rules of Court expressly allows, even automatically in the present case, the institution of a
civil action without need of election by the offended party. As both remedies are
simultaneously available to this party, there can be no forum shopping. (Rodriguez v.
Ponferrada, G.R. Nos. 155531-34 July 29, 2005)

Question 7: Select the most viable defense that maybe invoked for a violation of BP 22:
a. The drawer, within 5 banking days from receipt of the notice of dishonor, tried to make
arrangements for the partial payment of the check granted limited funds with the
payee refusing to accede to such scenario.
b. The check in issue is merely a memorandum check.
c. The person whose signature appears on the check is merely an employee of a
corporation, induced by her employer to countersign the checks in blank, without
knowing the names of the payees.
d. No written notice of dishonor of the check was received by the drawer or maker from
the drawee bank, the holder of the check, or the offended party.
Basis: Both the spirit and letter of the Bouncing Checks Law would require for the act to be
punished thereunder, not only that the accused issued a check that is dishonored, but that
likewise the accused has actually been notified in writing of the fact of dishonor. The
consistent rule is that penal statutes have to be construed strictly against the State and
liberally in favor of the accused. (Ambito v. People, G.R. No. 127327 February 13, 2009)

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
-9-

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
Question 8: To yield prima facie evidence of insufficiency of funds, the check must be
presented within:
a.
b.
c.
d.

Sixty days from the date of the check.

Ninety days from the date of the check.
Sixty days from delivery of the check to the order or bearer.
Ninety days from delivery of the check to the order or bearer.

Basis: 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 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 five banking days after receiving notice that such check has not been paid by
the drawee. (Section 2, BP 22)

Question 9: A stamped dishonored check shall be prima facie evidence of all these acts,
except:
a.
b.
c.
d.

Dishonor of the check.

Holder of check is a holder in due course.
Due presentment of the check to drawee bank.
Reason of the drawee bank for dishonoring the check.

Basis: 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. 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. (Section 3, BP 22)

Question 10: A person shall be liable under BP 22 when:

a. He issues an ante-dated check for P10,000 as a gift, without the knowledge that he
does not have sufficient funds with drawee bank.
b. He issues a check for P10,000 as payment for debt and it was dishonored by the
drawee bank upon its presentment 120 days from the checks date.
c. He issues a check for P20,000 as a donation to the Church, which was dishonored by
the drawee bank pursuant to a garnishment ordered by a court.

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
- 10 -

SPECIAL PENAL LAWS

TRUST RECEIPTS LAW, BOUNCING CHECKS LAW
Atty. J.A. De Castro
d. He issues a check for P15,000 for a television set believing to have P7,500 in credit
with the drawee bank.
Basis: The following are punishable acts are punished by BP 22: (1) 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 with the drawee bank for the full payment of such check upon
presentment; (2) drawing and issuing any check for value which is subsequently dishonored
by the drawee bank pursuant to a stop payment order, without any valid reason; and (3)
drawing and issuing any check while having sufficient funds, but failed to keep sufficient
funds or maintain a credit to cover the full amount of the check presented within 90 days
from the date appearing thereon. (Section 1, BP 22)

Antig . Castaneda . David . Dela Fuente. Flores . Go, M . Vargas

Midterm Requirement
- 11 -