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.
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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.