2017

Negotiable
Instruments Law

Ariola, Louella C.

CRIMINAL LIABILITY FOR ESTAFA AND

VIOLATION OF BP 22
A Legal and Jurisprudential Exposition
ESTAFA UNDER ARTICLE 315 OF THE REVISED PENAL CODE
Estafa, or swindling, is defined and penalized under Article 315 of the Revised Penal Code. It
provides:

Any person who shall defraud another by any of the means mentioned hereinbelow shall be
punished by:

1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum
period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos,
and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be
imposed in its maximum period, adding one year for each additional 10,000 pesos; but the
total penalty which may be imposed shall not exceed twenty years. In such cases, and in
connection with the accessory penalties which may be imposed under the provisions of this
Code, the penalty shall be termed prision mayor or reclusion temporal, as the case may be.

2nd. The penalty of prision correccional in its minimum and medium periods, if the amount of
the fraud is over 6,000 pesos but does not exceed 12,000 pesos;

3rd. The penalty of arresto mayor in its maximum period to prision correccional in its
minimum period if such amount is over 200 pesos but does not exceed 6,000 pesos; and

4th. By arresto mayor in its maximum period, if such amount does not exceed 200 pesos,
provided that in the four cases mentioned, the fraud be committed by any of the following
means:

1. With unfaithfulness or abuse of confidence, namely:

(a) By altering the substance, quantity, or quality or anything of value which the
offender shall deliver by virtue of an obligation to do so, even though such obligation
be based on an immoral or illegal consideration.

(b) By misappropriating or converting, to the prejudice of another, money, goods, or

any other personal property received by the offender in trust or on commission, or for
administration, or under any other obligation involving the duty to make delivery of or
to return the same, even though such obligation be totally or partially guaranteed by a
bond; or by denying having received such money, goods, or other property.

(c) By taking undue advantage of the signature of the offended party in blank,
and by writing any document above such signature in blank, to the prejudice of
the offended party or of any third person.

2. By means of any of the following false pretenses or fraudulent acts executed prior to
or simultaneously with the commission of the fraud:
 (a) By using fictitious name, or falsely pretending to possess power, influence,
qualifications, property, credit, agency, business or imaginary transactions, or by
means of other similar deceits.

(b) By altering the quality, fineness or weight of anything pertaining to his art or
business.

(c) By pretending to have bribed any Government employee, without prejudice to the
action for calumny which the offended party may deem proper to bring against the
offender. In this case, the offender shall be punished by the maximum period of the
penalty.

(d) [By post-dating a check, or issuing a check in payment of an obligation when

the offender 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 the
payee or holder that said check has been dishonored for lack of insufficiency of
funds shall be prima facie evidence of deceit constituting false pretense or
fraudulent act. (As amended by R.A. 4885, approved June 17, 1967.)]

(e) By obtaining any food, refreshment or accommodation at a hotel, inn, restaurant,

boarding house, lodging house, or apartment house and the like without paying
therefor, with intent to defraud the proprietor or manager thereof, or by obtaining
credit at hotel, inn, restaurant, boarding house, lodging house, or apartment house by
the use of any false pretense, or by abandoning or surreptitiously removing any part of
his baggage from a hotel, inn, restaurant, boarding house, lodging house or apartment
house after obtaining credit, food, refreshment or accommodation therein without
paying for his food, refreshment or accommodation.

3. Through any of the following fraudulent means:

(a) By inducing another, by means of deceit, to sign any document.

(b) By resorting to some fraudulent practice to insure success in a gambling game.

(c) By removing, concealing or destroying, in whole or in part, any court record, office
files, document or any other papers.

It may be seen from the lengthy provision that the penalty for estafa depends on the amount
involved. It also provides the means by which estafa may be committed, of which paragraphs 1(c), 2
(d), and 3(a) are significant to negotiable instruments.

Paragraph 1(c) of Article 315 may be used in cases where the a person signed his name on a
blank piece of paper and the perpetrator of the swindling wrote a document above the signature,
like a promissory note for example, making it appear that the signee authorized such document. In
Negotiable Instruments Law, this is known as fraud in factum which is by definition a type
of fraud where misrepresentation causes one to enter a transaction without accurately realizing the
risks, duties, or obligations incurred. This is a real defense which may be availed of even against a
holder in due course, which means that the signee may not be held liable on the instrument even by
a holder who had acquired the same in good faith.

Paragraph 2(d), on the other hand, penalizes the most common form of estafa involving
checks, and is intimately related to BP 22, also known as the Bouncing Checks Law. Under
paragraph 2(d), estafa is committed by issuing a check despite knowing that the drawer has
insufficient funds or is otherwise unable to pay the check upon presentment. An additional
requisite is a notice of dishonor, and failure to pay within 3 days from receipt of such notice creates
a prima facie evidence of deceit constituting false pretense or fraudulent act.

Finally, paragraph 3(a) presupposes an instance wherein a person was made to sign a
document by means of deceit. This constitutes what is known in negotiable instruments law as
fraud in inducement which exists in those cases where a person without negligence has signed an
instrument which was in fact a negotiable instrument but was deceived as to the character thereof.
However, unlike fraud in factum, fraud in inducement is only a personal defense which means that
it cannot be availed of against a holder in due course. In other words, the person who signed the
instrument can only raise the defense that he was induced to place his signature by means of deceit
against a holder not in due course. If the person enforcing liability on the instrument is a holder in
due course, the signee is still liable thereon notwithstanding the deceit employed against him.

Jurisprudence

Goretti Ong v. People of the Philippines

G.R. No. 165275
September 23, 2008

In this case, petitioner was indicted for Estafa, particularly under paragraph 2(d). She was
likewise indicted for 10 counts of violation of B.P. 22 before the RTC of Manila. Petitioner
challenged the trial courts decision before the Court of Appeals, raising the issue of whether she
could be convicted of Estafa under Article 315, paragraph 2(a) of the Revised Penal Code when she
was, in the Information, charged of Estafa under Article 315, paragraph 2(d) of the same Code.
The Supreme Court ruled in favor of petitioner, relying on Section 14(2) of Article III of the
Constitution which grants the accused the right to be informed of the nature and cause of the
accusation, the purpose of which is to enable the accused to adequately prepare for his defense. An
accused cannot thus be convicted of an offense unless it is clearly charged in the complaint or
information. In other words, since the Information charged her with estafa under paragraph 2(d), a
conviction under Article 315, paragraph 2(a) would be a violation of her Constitutional right to be
informed of the nature and cause of the accusation against her.
 Spouses Pacheco v. Court of Appeals
G.R. No. 126670
December 2, 1999

In relation to Article 315, paragraph 2(d), it was held in Sps, Pacheco v. CA that estafa may
be committed in several ways. One of these is by postdating a check or issuing a check in payment
of an obligation, as provided in Article 315, paragraph 2(d) of the RPC. In order to sustain a
conviction, the following elements must be present:

1) that the offender postdated or issued a check in payment of an payment obligation

contracted at the time the check was issued;

2) that such postdating or issuing a check was done when the offender had no funds in the
bank, or his funds deposited therein were not sufficient to cover the amount of the check;

3) deceit or damage to the payee thereof.

BATAS PAMBANSA BLG. 22, or THE BOUNCING CHECKS LAW

Sections 1 and 2 of BP 22 provide as follows:

Section 1. Checks without sufficient funds. - Any person who makes or draws and issues 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, shall be punished by
imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less
than but not more than double the amount of the check which fine shall in no case exceed Two
Hundred Thousand Pesos, or both such fine and imprisonment at the discretion of the court.

The same penalty shall be imposed upon any person who, 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.

Where the check is drawn by a corporation, company or entity, the person or persons who
actually signed the check in behalf of such drawer shall be liable under this Act.

Section 2. Evidence of knowledge of insufficient funds. - 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 (90) 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 (5) banking days after
receiving notice that such check has not been paid by the drawee.

As may be seen from the provisions, the Bouncing Checks Law may be violated in two ways.
The first is by drawing or issuing a check despite knowing that the drawer has insufficient funds or
credit with the drawee bank to pay the check upon presentment. It is still considered a violation of
the law where the drawer orders the bank to stop payment without any valid reason, provided that
the check would still have been dishonored for insufficiency of funds were it not for such order.

The second way by which this law may be violated is when the drawer, despite having
sufficient funds at the time of making, drawing or issuance of the check, was unable to maintain
such funds at the time the check was presented for payment, provided that the presentation for
payment was within 90 days from the date appearing on the check.

Section 2 provides that there is prima facie evidence of knowledge of the insufficiency of
funds or credit when the check is presented within 90 days from its date but was refused by the
drawee bank for insufficiency of funds. In case of such dishonor, the drawer may only be relieved of
criminal liability if he:

a) pays the holder the amount due on the instrument: or

b) makes arrangements for payment in full by the drawee of such check within 5 banking days
after receipt of the notice of dishonour.

Jurisprudence

Florentina Lozano v. Hon. Antonio Martinez

G.R. No. L-63419
December 18, 1986

In this case, the Constitutionality of BP 22 was challenged. Petitioners alleged that BP 22

offends the constitutional provision forbidding imprisonment for debt. However, the Supreme
Court upheld its validity. It cited Mr. Justice Malcolm speaking for the Supreme Court in Ganaway
vs. Queen, who stated: "The 'debt' intended to be covered by the constitutional guaranty has a well-
defined meaning. Organic provisions relieving from imprisonment for debt, were intended to
prevent commitment of debtors to prison for liabilities arising from actions ex contractu The
inhibition was never meant to include damages arising in actions ex delicto, for the reason that
damages recoverable therein do not arise from any contract entered into between the parties but
are imposed upon the defendant for the wrong he has done and are considered as punishment, nor
to fines and penalties imposed by the courts in criminal proceedings as punishments for crime."
The Supreme Court thus ruled:

The gravamen of the offense punished by BP 22 is the act of making and issuing a
worthless check or a check that is dishonored upon its presentation for payment. It is not
the non-payment of an obligation which the law punishes. The law is not intended or
 designed to coerce a debtor to pay his debt. The thrust of the law is to prohibit, under pain
of penal sanctions, the making of worthless checks and putting them in circulation. Because
of its deleterious effects on the public interest, the practice is proscribed by the law. The law
punishes the act not as an offense against property, but an offense against public order.

Eumelia Mitra v. People of the Philippines

G.R. NO. 191404
July 5, 2010

Section 1 of BP 22 finds significant application in this case. Petitioner Mitra was the
Treasurer of Lucky Nine Credit Corporation, a corporation engaged in money lending activities.
Several checks, signed by Mitra and Cabrera (LNCC President), were issued by LNCC to Tarcelo.
However, when Tarcelo presented these checks for payment, they were dishonored for the reason
account closed, and remained unpaid despite demand. Thus, they were charged with violation of BP
22.

Before the Supreme Court, Mitra alleged that the liability of the corporation must first be
proven beyond reasonable doubt before criminal liability may attach to the actual signatories. The
Supreme Court held that petitioners contention was without merit.

The Court cited Llamado v. Court of Appeals, wherein it was held that the accused was liable
on the unfunded corporate check which he signed as treasurer of the corporation. He could not
invoke his lack of involvement in the negotiation for the transaction as a defense because BP 22
punishes the mere issuance of a bouncing check, not the purpose for which the check was issued or
in consideration of the terms and conditions relating to its issuance. In this case, Mitra signed the
LNCC checks as treasurer. Following Llamado, she must then be held liable for violating BP 22.

The third paragraph of Section 1 of BP 22 reads: "Where the check is drawn by a

corporation, company or entity, the person or persons who actually signed the check in behalf of
such drawer shall be liable under this Act." This provision recognizes the reality that a corporation
can only act through its officers. Hence, its wording is unequivocal and mandatory that the person
who actually signed the corporate check shall be held liable for a violation of BP 22. This provision
does not contain any condition, qualification or limitation.

DISTINCTIONS BETWEEN ESTAFA AND VIOLATION OF BP 22

In Nierras v. Dacuycuy, the Supreme Court enumerated the differences between estafa and
BP 22 as follows:

a) Deceit and damage are essential elements in Article 315 (2-d) Revised Penal Code, but
are not required in Batas Pambansa Bilang 22
 b) Under the BP 22, mere issuance of a check that is dishonored gives rise to the
presumption of knowledge on the part of the drawer that he issued the same without
sufficient funds and hence punishable which is not so under the Revised Penal Code.
c) A drawer of a dishonored check may be convicted under Batas Pambansa Bilang 22
even if he had issued the same for a pre-existing obligation, while under Article 315 (2-
d) of the Revised Penal Code such circumstance negates criminal liability.
d) Specific and different penalties are imposed in each of the two offenses.
e) Estafa is essentially a crime against property, while violation of Batas Pambansa Bilang
22 is principally a crime against public interest as it does injury to the entire banking
system.
f) Violations of Article 315 of the Revised Penal Code are mala in se, while those of Batas
Pambansa Bilang 22 are mala prohibita.

As to the issue of double jeopardy in cases where the accused is charged with both estafa
and violation of BP 22, the Supreme Court in the same case answered the question in this wise:

While the filing of the two sets of Information under the provisions of Batas Pambansa
Bilang 22 and under the provisions of the Revised Penal Code, as amended, on estafa, may
refer to identical acts committed by petitioner, the prosecution thereof cannot be limited to
one offense, because a single criminal act may give rise to a multiplicity of offenses and
where there is variance or differences between the elements of an offense in one law and
another law as in the case at bar there will be no double jeopardy because what the rule on
double jeopardy prohibits refers to identity of elements in the two offenses. Otherwise
stated, prosecution for the same act is not prohibited. What is forbidden is prosecution for
the same offense. Hence, the mere filing of the two sets of information does not itself give
rise to double jeopardy.

In sum, a person may be held criminally liable for both estafa under Article 315 of the
Revised Penal Code and for violation of BP 22. The same does not constitute double jeopardy since
they are two distinct offenses arising from the same act. To be sure, double jeopardy exists where a
person is prosecuted for the same offense, not for the same act. Since estafa and violation of BP 22
are two distinct offenses, they can proceed simultaneously without violating the right of the
accused against double jeopardy.