Post-dated checks or PDCs are usually issued to cover future payments in various transactions. PDCs are used for loan and rental payments for residential and commercial units. PDCs are also used for payments in supply agreements and non-loan commercial transactions. Now that the government has imposed a 30-day grace period (see extension of quarantine), what happens to PDCs and the accompanying risk of being charged under the Bouncing Checks Law (Batas Pambasa Blg. 22)?
There can be no general answer to or opinion on this question. So far, the Department of Finance (DOF) has issued the implementing rules for the grant of a 30-day grace period for ALL loans, pursuant to Republic Act No. 11469, also known as the “Bayanihan to Heal as One Act“. This grace period applies during the Enhanced Community Quarantine (ECQ) period. [See Grace Period for Loans Already in Effect and Implementing Rules and Regulations of Section 4(aa) of Republic Act No. 11469, Otherwise Known as the “Bayanihan to Heal as One Act”; see also the updated BSP FAQ clarifying that loans with due dates falling on 1 June 2020 and thereafter are no longer entitled to the 30-day grace period.]
Republic Act No. 11469 and its Implementing Directives also cover rent for residential units. While the 30-day grace period for residential rents is already effective, we are yet to see the implementing rules, if any, to be issued by the Department of Trade and Industry (DTI).
To be liable for violation under the Bouncing Checks Law, the following essential elements must be present:
- (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 creditor dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.
[See also: COVID-19 Lockdown: Fortuitous Event or Force Majeure Exemption from Obligations]
The 30-day grace period means that the loan or rent is not yet payable and, therefore, the post-dated check should not be deposited or, if deposited, the drawee bank should not process it, which means that there is no occasion for the PDC to be dishonored. With this element missing, there can be no liability under BP 22 for PDCs falling due during the ECQ Period.
It is important to note that any entity which refuses or fails to grant the 30-day grace period is criminally liable under Section 6(e) of RA 11467. This means that the payee of the PDC, who is normally the landlord or the entity which extended the loan, may be charged for violation of RA 11467 in the event that he/she/it deposits the PDC.
The practical problem with PDCs is this — are banks required to check the nature of PDCs before they process it for clearing? In any case, even if the covered PDC is deposited, cleared and dishonored, there is enough basis to argue that there is still no liability for Bouncing Checks under BP 22.
The grace period covers only loan transactions and rental payments for residential units. The grace period does not cover other transactions, such as non-loan commercial transactions and rent for commercial units.
Update: The Department of Trade and Industry (DTI) subsequently issued the guidelines for the 30-day grace period for rents, covering both residential and commercial rents (see Grace Period for Rents (Residential and MSMEs) during the Enhanced Community Quarantine). There is an interesting provision in the DTI Memorandum Circular No. 20-12, which reads: “Lessors are not obligated to refund residential and commercial rents paid by the lessees during the period of the quarantine. In such case, the lessor shall grant a minimum of 30-day grace period from the next due date of the residential/commercial rents without incurrent interest, penalties, fees, and charges.” If we harmonize all the provisions, we will have the following scenarios:
(a) If the rent was paid in cash, the lessee cannot ask for a refund, but the 30-day grace period shall be applied in the next month.
(b) If there is a PDC for the rent and the lessor deposited it before the effectivity of the grace period requirement (or if the lessee does not object or, pursuant to MC 20-12, does not signify the intention to avail of the grace period), then (a) applies.
(c) If the lessor deposits the PDC after the effectivity and the check is cleared, then we will have to grapple with the issue whether the lessor is criminally liable for failure to grant the 30-day grace period. This liability is explicitly provided in RA 11469.
(d) If the lessor deposits the PDC and the check bounces (the lessee issued a “stop payment order” or the account is insufficiently funded), then the discussions above, with respect to PDCs for loans, applies.
I have a situation. My check, dated November, is about to be stale by the first week of May and I’m not allowed to go outside due to the ECQ since I don’t have a quarantine pass. I was in my province until February and was only able to claim the cheque, which was addressed in QC, probably in March, a few days before the quarantine has been implemented. Is there something else I can do to encash it or is there an exception esp if ECQ lasts longer than expected? Kindly advise. Thank you.
Hi Shan. That is a very interesting topic. There is a related discussion on “force majeure” during the ECQ period, here: https://pnl-law.com/blog/covid-19-lockdown-fortuitous-event-or-force-majeure-exemption-from-obligations/
However, a check is deposited with a bank and we suspect that because banks are governed by strict regulations, the bank will most probably hesitate to clear a stale check. Please note that banks are open and checks are still being cleared during the ECQ period. Good luck.
Good day. I have issued PDCs to the developer for the monthly payment for the equity for the house unit that I applied for acquisition. I would like to know if I can still enjoy the 30-day grace period without penalty obligations since my case is I think different from rental or lease that RA 11469 has been specifically mentioned. I am planning of withdrawing my fund and use it for our daily necessities while we are still on ECQ. I am just worried that if the bank process the PDC then I have insufficient balance I may be held liable for bouncing checks or I may be penalized by the developer. I would highly appreciate it if you could give me some advice/clarifications in layman’s term. THANK YOU!
Hi Eke. We already noted somewhere that the guidelines only cover loans. It would seem that installments in purchase transactions are not covered. You may want to discuss the matter with your developer. Good luck.
Hello, good morning po, i have concern about my PDC condo Rental, ang nangyari po is yong march 2020 and April 2020 na check ko in nag bounce check because of sufficient funds dahil nagkaroon ako ng financial problem during the ECQ period but somehow nakita while ago sa Checkque account ko nagkaroon ako ng penalty charges dahil sa bounce check ang gusto lang po malaman pwede ko po kaya ipawavied yong penalty charges na dineduct sa account ko sa bank branch ko…Babayaran ko naman po yong dues ko for rental but not this time especially habang ECQ Period pa po… please advice po…. maraming salamat
Hi Jobie. So long as the check payment covers rentals falling due on the ECQ, there should be no charges (shouldn’t have been deposited in the first place). Good luck.
Hi! I have PDC check issued for car insurance dated May 30. I may not have sufficient money to fund it as our office is temporarily closed because of ECQ and until further notice and we have no-work, no-pay scheme. Can I ask the bank not to deposit or clear said check?
Hi Girlie, no harm in negotiating with your insurance company. Note, however, that the grace period is for loans. Payments for car insurance is not a loan. Good luck.
Good pm po atty.. I issued cheque to my supplier on march to may,, exactly lock down,, this coming june he try to pick on the bank.. Then bounce check and i suffer to pay a penalty,, this is possible in the bank, we should not give penalty during lock down?
Good morning, i would like to know your contact number to ask about legalities during covid. im about to file a case its an investment scam so i guess case would be. “estafa through falscification” and “bouncing cheques”.
may i know your contact number or any means to contact you directly.
Hi Aiko. Our office is physically closed until end of the month (so no one will answer the phone call). May we suggest that you send your concern by email. We can pick it up from there. Use this form: https://pnl-law.com/contact/
Hi Relly. First off, the grace period is only for rents and loans. All other obligations, including supply or sales, are not covered. Good luck.
Hello. May I be able to encash my salary loan check that expired last April 30, 2020 and issued on January 2020? I only received my check today from my employer because of the ECQ. Please help me what should I do regarding this matter. Thank you and have a nice day.?
Hi Karen. Unfortunately, banks won’t clear the stale checks. One option is to ask the employer is to re-issue the check. Good luck.
Hi! First of all, thank you for providing this venue. The article is enlightening po. I hope you can help me with my concern. It has to do with the PDCs I issued with my landlord for our unit rental. My checking account is that of a small saving bank and the branch that is close to my place of residence closed together with most of the bank’s branches at the height of the ECQ. In April, I informed my landlord about it and we agreed that I’ll pay in cash for the meantime and he’ll just return my check and that’s what actually happened.
The same set up is what I had in mind when the ECQ was extended until May and so by May 11 (checks are due every 15th of the month), I gave him a heads up about the arrangement and also requested for a payment extension because my mother was in the hospital and we needed cash on hand as the hospital’s card facility was always offline and lining up at the bank to withdraw (beyond the maximum for ATM, I’m referring to another bank (more established) I have an account with but it’s just plain savings) takes too long because of social distancing. Fully understanding the situation, my landlord agreed. In the morning of May 15, I even dropped by to remind him about it before going to the hospital. By this time, the branch is already open though their operations are limited. At first they were only open TTh and eventually they moved to MWF. My mother passed on on May 16 and we buried her on May 19. By May 22, I paid my landlord the rental for the month of May in cash.
Yesterday (May 31), my landlord paid me a visit and I thought that it was to return my check. Unfortunately, it was to inform and apologize to me about a miscommunication. He said that confusion led to their messenger depositing my check and he offered to shoulder the penalty charges it incurred.
Earlier today, I went to the bank to inquire about it and after checking, the manager confirmed that it was deposited on May 20. I asked for penalties that I need to settle and he said there’s no need for it because they already closed my account for insufficient funds. When I asked if there is anything that can be done about it, he said that nothing can be done about it anymore.
I was upset, dismayed and disappointed and I also needed to go back home because I had a virtual meeting to attend. But I’ve asked some people and since it was first time to issue a check with insufficient funds and it even happened during ECQ, I hope that you can confirm whether it’s true that accounts can only be closed after having checks bounced twice and consideration can be given considering the circumstance. May I also ask if it’s really proper for the bank not to have notified me about it (they’re not required to initiate the communication)?
Thank you very much and God bless.
Hi, attorney.
What happens to personal loans(with PDC) that you can no longer pay due to losing your income and even losing your job because of covid19 pandemic?
Makukulong po ba ung di makabayad dahil bankrupt na?
Hi Jessie. Read this post: https://pnl-law.com/blog/bouncing-checks-bp-22/
Good luck.
Same din situation ko. Yung nakuha ko sa separation ko dahil nilagay ko sa bangko nakuha din nila kaya wala ako panimula na negosyo. Hindi ko alam saan na ako kukuha ng pang popondo ko. Nainirahan lang ako sa magulang ko atvwala naman ako naipundar
Hi, would like to know any remedy if the bouncing checks were due to lapses on the part of bank employee. For example, bank grants grace period to pay the loans until end of June. Client already issued PDCs but balance is still insufficient funds and promise to fund the PDC on a certain date agreed. However the bank employee processed the PDC for the payment of loans in advance versus the agreed date. Hence client was charged for bouncing checks as the issued PDC was still not funded. Hoping for your kind assistance.
Hi Atty.. thank you in advance for noticing my message. My seller client sold his condo unit. The pinoy buyer my client too… is a resident of japan, but travels because of business weekly in the Phlis. Because of the Travel Ban caused by Covid 19 His PDCs for March April and May have not been funded. The pdcs bounced.
Is the buyer liabke for bounced checques?
Is there a proviision in the Bayanihan Act to protect my client buyer this pandemic times? Help pls…
Hi Cyn. First off, sorry we cannot give any legal advice in the absence of an attorney-client relationship. By way of general information, and as discussed in another post, BP 22 is meant to punish the mere issuance of a worthless check. COVID and the quarantine, however, creates a difficult situation that will definitely affect BP 22 cases (if one is filed). Note that the penalty may only be a fine (for the value of the check), considering that good faith is presumed. Refer to this post: https://pnl-law.com/blog/bouncing-checks-bp-22/
Hi Atty. My checking account has been closed during lock down. 2x po kasi dineposit ni Citibank though naka hold ung PDCs ko. May mga remaining PDCs pa aq with them. Can they used those checks para kasuhan ako ng estafa?? I do bot intend na ndi magbayad, affected lang po kami ng oandemic last year. But this year,plan ko makipagnegotiate with them though pinapabayadan na nila ng buo ung loans kom
Hi Atty Fred. Question po. Nawalan kasi ako ng work sa hindi inaasahang pagkakataon dahil sa pandemic or crisis na kinakaharap natin. Nag rerequest po ako ng another atleast 2 months extension sa banko kasi wla po ako pambayad. Naghahanap parin kasi ako ng job. Kaya lang hindi nag rereply sa email, phone or social media ang banko. Pag pina stop ko po ung payment or PDC, at hindi ako nakabayad ng say 1 to 2 months, pwede po ba ako kasuhan ng banko given na ginawa ko nman lahat to reached out pero wala lang tlga ako nakuha na assistance so no choice but to request to put a stop sa pdc?
Sobrang depress na po ako dahil s mga nangyayari.
Salamat po sa sagot.
I applied an SSS salary loan back in February and was approved back in March 2 respectively, the cheque was sent and addressed to Taytay Rizal branch of my Employer while I am working in Naga branch Camarines Sur. But due to this pandemic Company’s operation was temporarily shutdown in mid March, so the cheque was on hold for atleast 2 months, when the operation resumed it was the only time they send it thru courier (LBC) and delivered it to Naga, but due to GCQ transmitting the parcel was delayed for another month. Until I received the cheque last June 16th tuesday only to find out that it was already staled, considering that it was a loan check validity to encash it is only good for 3 months (on the face of the check it says ”NOT VALID after June 2”) so there’s really no way that we can encash it. I have already consulted SSS officer and advised me to request a Cancelation of my salary loan processed thru SSS Central Office, I have already submitted it yesterday June 17th, and as per sss officer it will be at least a month of process waiting before i could reloan again.
With this regard I would like to ask for your advise about what to do more, Since I cannot blame either the courier nor the Compenben office about any negligence on their part transmitting the cheque because of this pandemic. I am only hoping that SSS do have some contingency plan about this kind of issue. Thank you for your time and stay safe.
Attorney, good day po.
ask ko lng po, i got a loan from a lending and 1 of their requirements to loan is to open a checking account in their chosen bank so that my payment shld be through check every month. However i failed to pay some of my monthly installment due to valid reasons of financial plus this pandemic crisis po kaya sobrang mahirap lalong di ako nakabayad. But willing naman po ako to pay just i need enough time to settle my utang. Now, nag file sila ng bp 22 against me po. What is my right to defend myself po? praying for ur advise po.
Hi, I have a problem. I have a loan wherein I issued multiple PDCs for monthly payments. In good faith I tried to keep my checking account funded in case Citibank tries to encash my check even after ECQ was announced. On the due date during ECQ (april 17) they did not try to clear/encash the check. A few days later we had a medical emergency and I, assuming that the bank has complied with Bayanihan Act which is why the funds on my account was untouched, decided to withdraw the money to cover the medical expenses. However they charged my account a week late (April 24). As per my checking account bank, charges for dishonored checks are not covered by the Bayanihan Act. What is my recourse. They have since closed my account and I use the same one to pay my rent.
Good after atty.ive sent a message to your website regarding my concerns i hope you could give me a good advice about my issue
thank you very much !
Good day! I was terminated due to retrenchment and that means no source of income. What would happen to my PDCs issued for my personal loans? What would happen to me as well? Will that be considered as a criminal case?
Hi attorney,i have a salary loan ,since march i have no work already until now,as far as i knowy cheque account was already close since May ,i have a legal notice recieved right now,what should i do?
Hi. I just want to ask, i have a warrant for bp22,2 counts of bouncing checks.. Total amount ng checks 27k, di ako nkareceive ng subpoena or baka di lng naiabot akn, kaya akala ko sadyng di lng ngreply ung legal officer nung lending firm dati. Tapos po anglockdown na, then yesterday po sb ng brgy dadamputin ako dhl may warrant na, willing ako isettle ung amt wag lng makulong.. anu po ba dpt kng gawin, and pwede ba sa PAO lumapit for assistance? mkukulong po ba ko sa ganung amt lng? Thanks in advance
Good day! How much is the usual penalty of a bounced cheque? For example Php50,000
Good Day po Atty, Hindi po ako nakapag bayad ng house rental ko po starting nung april 1 to august 1 sa dahilan pong lubha pong naapektuhan nang pandemic ang income namin. Ngayon po nakiusap po ako sa house owner namin na wag po muna i encash yung PDC dahil po wala pong pondo ang check ko . Tapos po inencash nya parin po yung PDC kaya po nakatanggap po ako nang penalty sa bank dahil po nag bounce yung check. At kinakasuhan nya po ako nang bouncing check. Tama po ba yon? ano po ang dapat kong gawin?. salamat po Atty.
Hi Atty.,
I have PDC issued in 2018 from a lending company for my monthly payments. Exactly this Pandemic I have been on bed rest due to high risk pregnancy and has been in a difficult financial situation this year. I advised them that I won’t be able to fund the check until I get back to work in December and thought we were in a good agreement. To my surprise, they are now threatening me of getting sued for Estafa due to bounce check. Is it possible especially at this time of Pandemic?.. Thank you in advance.
i issued a pdc to megamall on dec 30’20. it was a confusion wen i thought i issued metrobank to pay off for d pdc i issued to megaworld. while all along i mistook issuing a metrobank check instead only wen my pnb check bounced then i realized that i issued a pnb. can pnb waive their charges on d check that bounced? can bayanihan act 2 be used not to penalyze by charging too much?
is it legal for a bank to suspend/cancel pdc check during bayanihan act 2 without informing the client but the client already funded the check as in a car loan payment for cbs bank?
Hi Atty. My checking account has been closed during lock down. 2x po kasi dineposit ni Citibank though naka hold ung PDCs ko. May mga remaining PDCs pa aq with them. Can they used those checks para kasuhan ako ng estafa?? I do bot intend na ndi magbayad, affected lang po kami ng oandemic last year. But this year,plan ko makipagnegotiate with them though pinapabayadan na nila ng buo ung loans ko.
Pls do not publish my name
Hello Atty, due to lockdown, nadeposit po ang 3 checks (Mar,Apr and May 2020) dated, May 26, 2020 galing sa Chinese na umuupa samin. Accepted naman sya ng PNB Angono branch after lockdown, But since down ang system ng PNB as per them for almost 6 monthd, Feb 18,2021 lang kami na inform na nag bounced daw ang 3 checks, at pinapagbayad kami for payments sa home loan, since auto debit sya. Ang problema, hindi na sila (Chinese) yun umuupa samin ngayon sa condo. May liabilities din po ba ang banko? Thanks po.