The King’s Old Clothes: A Plea for the Re-examination of the “Actual Notice of Dishonor” Requirement in BP 22 Prosecutions

SUMMARY

The leading case of King v. People, 319 SCRA 654 (1999), held that in a prosecution under B.P. Blg. 22, the prosecution must not only prove that the check was dishonored but also that the accused was actually notified of such dishonor.  The King holding has been unstintingly followed by the Supreme Court in succeeding cases and has ossified into canonical doctrine.  This article argues that the King doctrine is not in accord with the plain text of B.P. Blg. 22 and with fundamental principles of evidence law and should thus be re-examined and overturned.

The offense under B.P. Blg. 22

The offense of the violation of B.P. Blg. 22, also referred to as the Bouncing Checks Law, is defined in Section 1 thereof:

“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.”

A parsing of Section 1 reveals that, at least in theory, there are two offenses penalized in Section 1.  The first one, defined in the first paragraph, covers the offense wherein a drawer issues a check, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank to cover the check, which is subsequently dishonored by the drawee bank for insufficiency of funds or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment. This is the offense which we will be concerned of.

The second paragraph covers the offense wherein a drawer 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 90 days from the date appearing thereon, for which reason it is dishonored by the drawee bank.  One notices that no knowledge of insufficiency of funds is required here.

A prosecution under the second paragraph is extremely rare.  The reason is that it is very hard to show that the drawer has sufficient funds in or credit with the drawee bank when he issues a check.  A court would most likely hold that such  information is absolutely confidential under R.A. No. 1405 or the Bank Secrecy Law.  This is why virtually all prosecutions under B.P. Blg. 22 are brought under the first paragraph. 

Presumption of scienter

An element of the offense under the first paragraph is that the issuer  must have knowledge 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.  This knowledge  or scienter is something which is extremely difficult for the prosecution to prove being a state of mind of the issuer.

B.P. Blg. 22 therefore provides for a presumption of scienter under Section 2 thereof.

“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.“

A careful analysis of this section is required.  It is quite clear that notice of dishonor is not an element of the offense punished under the first paragraph of Section 1 since it is not found in the definition of the offense but in Section 2 regarding the presumption of scienter.  King and its progeny concede this.

Deconstructing presumptions

A presumption is an inference which the law requires a factfinder or judge to draw from proof of a fact or set of facts.  The inference required to be drawn is known as the presumed fact while the fact which gave rise to the inference is known as the basic fact. Upon proof of the basic fact, the judge is mandated to find that the presumed fact exists unless rebutted by competent evidence.  The relationship between the basic fact and the presumed fact is founded on logic and/or policy considerations.

A perusal of Section 2 shows that the basic fact is the issuance of a check  which is dishonored 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.  Proof of the basic fact leads to the presumed fact that the drawer had knowledge of the insufficiency of funds when he issued the check.  

A judicious reading of Section 2 shows that there is nothing therein which provides that notice of dishonor to the drawer is included in the basic fact or facts.  In other words there is no need for the prosecution to prove that notice of dishonor, much less, actual notice of dishonor was given to the drawer. 

Presumptions in criminal law are classified into two.  One is the permissive presumption (actually an inference) wherein the court may but is not required to infer the existence of the presumed fact from proof of the basic fact.  The other is the mandatory presumption wherein the court is required to infer the existence of the presumed fact from proof of the basic fact.

The wordings of Section 2 show that it is a mandatory presumption.  The section provides that proof of the basic facts shall be prima facie evidence of scienter.   This means that unless rebutted, the presumption that the drawer has knowledge of the insufficiency of the funds holds. 

Section 2 provides for a way  of rebutting the presumption: the  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.

The section shows that the receipt of notice of dishonor is not part of the basic facts but part of the facts needed to rebut the mandatory presumption.  Clearly it is the issuer of the check who must prove that he received notice of dishonor.  Otherwise put the burden of evidence regarding receipt of notice of dishonor is with the drawer.

There is a good reason for this.  It is exceedingly hard for the prosecution to prove notice of dishonor, let alone “actual” notice of dishonor, to an issuer of a dishonored check who has resolved not to pay it.  Subsequent experience after King has borne this observation out. 

Requirement that notice of dishonor be “actual notice” is not justified by the text of the law

The opening sentence of King runs as follows:

“Under Batas Pambansa Blg. 22 (BP 22), the prosecution must prove not only that the accused issued a check that was subsequently dishonored. It must also establish that the accused was actually notified that the check was dishonored, and that he or she failed, within five banking days from receipt of the notice, to pay the holder of the check the amount due thereon or to make arrangement for its payment. Absent proof that the accused received such notice, a prosecution for violation of the Bouncing Check Law cannot prosper.”

These pronouncements are quite radical in that there is nothing at all in the text of B.P. Blg. 22 to support them.  However inertia has led to the King doctrine being followed without question in subsequent cases and being accepted by the members of the bench and the bar without cavil.

The court justified its pronouncements as follows:

“[T]he full payment of the amount appearing in the check within five banking days from notice of dishonor is a ‘complete defense.’ The absence of a notice of dishonor necessarily deprives an accused an opportunity to preclude a criminal prosecution. Accordingly, procedural due process clearly enjoins that a notice of dishonor be actually served on petitioner. Petitioner has a right to demand — and the basic postulates of fairness require — that the notice of dishonor be actually sent to and received by her to afford her the opportunity to avert prosecution under BP 22.”

These statements of the Court are quite arguable.  For one, the full payment of the amount appearing in the check within five banking days from notice of dishonor is not a “complete defense.”  It is simply a means of rebutting the prima facie presumption of knowledge of insufficiency of funds provided in Section 2.   It is axiomatic that payment of the civil liability is not a mode of extinguishing criminal liability.  In his book, Notes and Comments on the Bouncing Checks Law (B.P. Blg. 22), 2^nd rev. ed., 1995, Judge David G. Nitafan wrote:

“The provision of sec. 2 of B.P. 22 relative to five (5) banking days after notice is evidentiary in nature and need not be averred in the information. Payment of the value of the check within said period after notice merely negates the element of knowledge of insufficiency of funds or credit.”

[p. 97, note h]

Thus the statements that “[t]he absence of a notice of dishonor necessarily deprives an accused an opportunity to preclude a criminal prosecution” and that “[p]etitioner has a right to demand — and the basic postulates of fairness require — that the notice of dishonor be actually sent to and received by her to afford her the opportunity to avert prosecution under BP 22 [italics supplied]” are also altogether not correct.  The reason is that the accused’s receipt of notice of dishonor is not an element of the offense punished under the first paragraph of Section 1. As Judge Nitafan has pointed out, such receipt need not even be alleged in the information. Thus absence of notice of dishonor does not “preclude a criminal prosecution” or “avert prosecution under BP 22.”  This is because the offense was already consummated upon the dishonor of the check.

Holder’s failure to give notice of dishonor to the drawer will not preclude the latter from rebutting the prima facie presumption under Section 2 nor does it implicate the due process clause

It cannot be argued that the drawer cannot rebut the presumption if the drawer does not give him notice of dishonor.  There is nothing in the law which states that it is the holder  alone who can give notice of dishonor to the drawer.   For one, the drawee bank invariably gives notice of dishonor to the drawer in line with banking practice.   

Even assuming that the drawer claims that he did not receive notice of dishonor, a claim of which one can rightly be skeptical, it is inevitable that the drawer will eventually receive notice of dishonor, either at the prosecutor’s office or in court during the arraignment of the criminal case.   Far from prejudicing the drawer, the failure of the holder to give him notice of dishonor will afford the drawer a longer period of time to rebut the prima facie presumption. 

Nothing in the law entitles the drawer to notice of dishonor, much less one coming from the holder.  The reason is evident:  a drawer who has knowledge of the insufficiency of funds at the time he issued the check to the holder can hardly complain that the latter did not give him notice of dishonor.

Moreover the claim of lack of dishonor is one which is hardly credible given banking practice and the common experience of man.   The drawer who issues the check expects that it will be presented for payment forthwith or in the case of a post-dated check, at the date indicated therein.  He should be the last to claim surprise if the check is dishonored for his failure to keep sufficient funds within 90 days from the date of the check.  Moreover it is banking practice that the drawee bank will advise the drawer of the dishonor of his check and impose penalties for such.  

Hence it can be seen that the holder’s failure to give notice of dishonor to the drawer does not at all implicate the due process clause of the Constitution.  Moreover prior to the filing of the complaint with the prosecutor or the information with the court, there is no occasion yet to speak of due process.   As earlier stated the accused can hardly cry that his right to due process was violated when the filing of the complaint or information would notify him of the dishonor of the check and afford him a chance to rebut the presumption by presenting proof of payment within five banking days from notice.

Policy considerations also call for the re-examination of the King doctrine

The King doctrine skirts the line between judicial interpretation and judicial legislation. One may argue that by imposing a duty upon the prosecution to prove actual notice of dishonor, King has in effect imposed a requirement not found in B.P. Blg. 22 and has thus virtually amended the law.

It is an open secret that the promulgation of the King doctrine was a judicial push-back against the perceived practice of check holders of using the courts as a “collection agency.”  Whether such perceived practice would merit the judicial neutering of B.P. Blg. 22 is debatable.  On the contrary, allowing bouncing check issuers to easily defeat criminal prosecution has only led to the proliferation of a class of “professional check bouncers” who have exploited the loophole created by King.  This in turn has led to more B.P. 22 cases being filed and to the courts being swamped with more such cases.

The laudable purpose behind the enactment of B.P. Blg. 22 is to encourage the use of checks as a medium of payment in trade and commerce and thereby increase productivity and economic activity.  The law recognizes that the issuance of bouncing checks is detrimental to the economy.  In an apt metaphor, it was stated that “[f]looding the [banking] system with worthless checks is like pouring garbage into the bloodstream of the nation’s economy.” (Lozano v. Martinez, 146 SCRA 323 [1986]).

It cannot be gainsaid that the King doctrine has made it extremely difficult to prosecute B.P. 22 cases.  The result has been that many MSMEs which could have otherwise helped our economy by generating productivity and employment have instead sunk into bankruptcy  after having been victimized by bouncing check issuers.  Big corporations may afford a bouncing check here and there but that is hardly the case with MSMEs.  Revisiting and overturning the King doctrine will not only harmonize jurisprudence with the text of the law but will help our country achieve faster and more inclusive economic progress.    

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