On banks and checks: DAUD and DAIF, distinguished

There are several reasons why drawee banks dishonor checks upon presentment for payment. Among these reasons are DAUD and DAIF.

Between DAUD and DAIF, there are various significant distinctions that needs to be pointed out. And this is primarily for the benefit of those who, at one point or another, were issued, or were the ones who issued, checks, which were later on dishonored for the reasons of DAUD or DAIF.

DAUD, to begin with, is an acronym which stands for “Drawn Against Uncollected Deposits,” while DAIF refers to “Drawn Against Insufficient Funds.”

DAUD means that the account has, on its face, sufficient funds but not yet available to the drawer because the deposit, usually a check, had not yet been cleared.

DAIF, on the other hand, is a condition in which a depositor’s balance is inadequate for the bank to pay a check.

In other words, in the case of DAUD, the depositor has, on its face, sufficient funds in his account, although it is not available yet at the time the check was drawn, whereas in DAIF, the depositor lacks sufficient funds in his account to pay the check.

But the most notable distinction between these banking terms is that DAUD does not expose the drawer to possible prosecution for  the crime of Estafa, defined and penalized under the Revised Penal Code (Act No. 3815, as amended), and violation of Batas Pambansa Blg. 22 (BP 22), popularly known as the “Anti-Bouncing Checks Law.”

In stark contrast, DAIF subjects the depositor to liability for such offenses.

[Reference: Bank of the Philippine Islands v. Reynald R. Suarez, G.R. No. 167750, March 15, 2010]

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4 thoughts on “On banks and checks: DAUD and DAIF, distinguished

  1. Thank you… Will DAUD checks be returned to the depositor or the bank will just wait for the account’s pending deposits to be cleared? Does a debit advice required?

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  2. My sister issued a check for building rental but unfortunately the check was returned by thw building owner and DAIF was noted. He said that his bank charges him 1,200 for it.. I was confused because my mother said charges is only imposed to the issuing bank or to the one whk issued the check. Can u help me clarify things? Thank u.

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