MBTC v.

Chiok ● On the same day, 6 July 1995, the RTC issued TRO directing the spouses
G.R. Nos. 175394, 175302, 172652 | Nov. 26, 2014 Nuguid to refrain from presenting the said checks for payment and the
depositary banks from honoring the same until further orders from the
FACTS court.
● Respondent Wifred Chiok had been engaged in dollar trading with ● Asian Bank refused to honor the manager’s checks in deference to the
Bernardo Nuguid for about six to eight years. He usually buys dollars from TRO. Metrobank claimed that when it received the TRO, it refused to honor
Nuguid at the exchange rate prevailing on the date of the sale. Chiok pays the cashier’s check and stopped payment thereon.
Nuguid either in cash or manager’s check, to be picked up by the latter or ● However, in a letter also issued on 6 July, FEBTC informed Metrobank that
deposited in the latter’s bank account. Nuguid delivers the dollars either on the TRO was issued a day after the check was presented for payment.
the same day or on a later date as may be agreed upon between them, up Thus, according to FEBTC, the transaction was already consummated and
to a week later. FEBTC had already validly accepted the same.
● For this purpose, Chiok maintained accounts with petitioners Metrobank o Metrobank replied to said letters, reiterating Metrobank’s
and Global Bank (then referred to as Asian Bank). Chiok likewise entered position to comply with the TRO lest it be cited for contempt by
into a Bills Purchase Line Agreement (BPLA) with Asian Bank, where checks the trial court.
drawn in favor of, or negotiated to, Chiok may be purchased by Asian Bank. ● In the meantime, FEBTC, as the collecting bank, filed a complaint against
Upon such purchase, Chiok receives a discounted cash equivalent of the Asian Bank before the Philippine Clearing House Corporation (PCHC)
amount of the check earlier than the normal clearing period. Arbitration Committee for the collection of the value of the manager’s
● On 5 July 1995, Asian Bank issued two manager’s checks in the total checks, which FEBTC had allegedly allowed Nuguid to withdraw on the
amount of P18,455,350.00 to Gonzalo Bernardo (same person as Nuguid) same day the checks were deposited. However, the PCHC refused to
pursuant to Chiok’s instruction and was debited from his account. Likewise, assume jurisdiction over the case on the ground that any step it may take
upon Chiok’s application, Metrobank issued a cashier’s check in the might be misinterpreted as undermining the jurisdiction of the RTC.
amount of P7,613,000.00 in the name of Gonzalo Bernardo, which was also ● On 25 July 1995, the RTC issued an Order directing the issuance of a writ of
debited from Chiok’s savings account. preliminary prohibitory injunction, restraining Asian Bank and Metro Bank
● Chiok then deposited the three checks with Far East Bank & Trust Company from paying the checks.
(FEBTC), the predecessor-in-interest of BPI. ● On 18 October 1995, FEBTC filed a Complaint-in- Intervention, wherein it
● Nuguid was supposed to deliver US$1,022,288.50, the dollar equivalent of claimed that it allowed the immediate withdrawal of the proceeds of Asian
the three checks as agreed upon, in the afternoon of the same day. Bank manager’s checks on the ground that, as manager’s checks, they were
Nuguid, however, failed to do so, prompting Chiok to request that the direct obligations of Asian Bank and were accepted in advance by Asian
payment on the three checks be stopped. Chiok was allegedly advised to Bank by the mere issuance thereof.
secure a court order within the 24-hour clearing period. ● [RTC] Ordered Asian Bank and Metrobank to pay Chiok the amounts of the
● On the following day, Chiok filed a Complaint for damages with application checks. Complaint-in-intervention of BPI dismissed.
for ex parte restraining order and/or preliminary injunction with the RTC of ● [CA] RTC decision affirmed.
Quezon City against the spouses Nuguid, and the depositary banks, Asian ● [SC] The Court received a Joint Manifestation and Motion allegedly filed by
Bank and Metrobank. Metrobank, Global Bank and Chiok, stating that the parties have decided to
o The complaint was later amended to include the prayer of Chiok forego their respective claims against each other, including, past, present
to be declared the legal owner of the proceeds of the subject and/or contingent, in relation to the above referenced cases. BPI opposed
checks and to be allowed to withdraw the entire proceeds this. Aside from procedural issues, the Court did not consider this motion,
thereof. giving weight to the opposition of BPI.
ISSUE/s and RATIO notes in circulation, a certificate of deposit payable to the order of the
depositor, or any other obligation it can assume. The object of certifying a
WON payment of manager’s and cashier’s checks are subject to the condition that check, as regards both parties, is to enable the holder to use it as money.
the payee thereof should comply with his obligations to the purchaser of the ● Thus, any long-standing and accepted banking practice which can be
checks considered as a valid cause to return manager’s or cashier’s checks should
No. be of a similar nature to the enumerated cause applicable to manager’s or
cashier’s checks: material alteration. An example of a similar cause is the
● The legal effects of a manager’s check and a cashier’s check are the same. presentation of a counterfeit check.
A manager’s check, like a cashier’s check, is an order of the bank to pay,
drawn upon itself, committing in effect its total resources, integrity, and WON BPI has a right to the proceeds of the manager’s checks from Global Bank
honor behind its issuance. By its peculiar character and general use in Yes.
commerce, a manager’s check or a cashier’s check is regarded substantially
to be as good as the money it represents. ● The lower courts dismissed BPI’s complaint-in intervention because (1) it
● The Court disagreed with the RTC when it held, “[It] seems to be fallacious failed to prove that Nuguid withdrew the proceeds from his account, and
to hold that the unconditional payment of manager’s and cashier’s checks (2) BPI was not a holder in due course.
is the rule. To begin with, both manager’s and cashier’s checks are still ● In Security Bank and Trust Company v. Rizal Commercial Banking
subject to regular clearing under the regulations of the Bangko Sentral ng Corporation, the Court held that: “As the bank’s own check, a manager’s
Pilipinas…” check becomes the primary obligation of the bank and is accepted in
● It also disagreed with the RTC when, citing Section 20 of the Rule Book of advance by the act of its issuance. In this case, RCBC, in immediately
the PCHC (see notes), it said that “the enumeration of causes to return crediting the amount of P8 million to CMC’s account, relied on the
checks is not exclusive but may include other causes which are consistent integrity and honor of the check as it is regarded in commercial
with long standing and accepted bank practice.” transactions.”
● While indeed, it cannot be said that manager’s and cashier’s checks are ● As in aforementioned case, BPI in the case at bar relied on the integrity
pre-cleared, clearing should not be confused with acceptance. and honor of the manager’s and cashier’s checks as they are regarded in
● Manager’s and cashier’s checks are still the subject of clearing to ensure commercial transactions when it immediately credited their amounts to
that the same have not been materially altered or otherwise completely Nuguid’s account.
counterfeited. However, manager’s and cashier’s checks are pre-accepted ● The Court found that BPI sufficiently proved that Nuguit withdrew the
by the mere issuance thereof by the bank, which is both its drawer and proceeds of the checks. In his pleading, Nuguid has admitted that FEBTC
drawee. (now BPI) has paid him the value of the subject checks. The Court
● Thus, while manager’s and cashier’s checks are still subject to clearing, considered this as a judicial admission, thus not require proof.
they cannot be countermanded for being drawn against a closed account, ● However, it agreed with the CA in holding that BPI is not a holder in due
for being drawn against insufficient funds, or for similar reasons such as a course. Said checks were never indorsed by Nuguid to FEBTC, the
condition not appearing on the face of the check. predecessor-in-interest of BPI, for the reason that they were deposited by
● Long-standing and accepted banking practices do not countenance the Chiok directly to Nuguid’s account with FEBTC.
countermanding of manager’s and cashier’s checks on the basis of a mere ● Nevertheless, in view of the Court’s ruling that Nuguid has withdrawn the
allegation of failure of the payee to comply with its obligations towards the value of the checks from his account, BPI has the rights of an equitable
purchaser. On the contrary, the accepted banking practice is that such assignee for value under Section 49 of the Negotiable Instruments Law (see
checks are as good as cash. notes).
● New Pacific Timber & Supply Company, Inc. v. Seneris: It is a well-known ● As an equitable assignee, BPI acquires the instrument subject to defenses
and accepted practice in the business sector that a Cashier’s Check is and equities available among prior parties and, in addition, the right to
deemed as cash… It is an understanding that the check is good then, and have the indorsement of Nuguid. Since the checks in question are
shall continue good, and this agreement is as binding on the bank as its manager’s checks, the drawer and the drawee thereof are both Global
 Bank. Respondent Chiok cannot be considered a prior party as he is not the
check’s drawer, drawee, indorser, payee or indorsee. Global Bank is
consequently primarily liable upon the instrument, and cannot hide behind
respondent Chiok’s defenses.
● As previously above, manager’s checks are pre-accepted. By issuing the
manager’s check, therefore, Global Bank committed in effect its total
resources, integrity and honor towards its payment.
● Resultantly, Global Bank should pay BPI the amount of P18,455,350.00,
representing the aggregate face value of the manager’s checks. Since
Global Bank was merely following the TRO and preliminary injunction
issued by the RTC, it cannot be held liable for legal interest during the time
said amounts are in its possession (but the amounts will be treated as
savings deposits in Global Bank).
● However, respondent Chiok is not left without recourse. Respondent
Chiok’s cause of action to recover the value of the checks is against Nuguid.
Unfortunately, Nuguid allowed his appeal with the Court of Appeals to
lapse, without taking steps to have it reinstated. As stated above, parties
who did not appeal will not be affected by the decision of the appellate
court rendered to appealing parties. Moreover, since Nuguid was not
impleaded as a party to the present consolidated cases, he cannot be
bound by our judgment herein. Respondent Chiok should therefore pursue
his remedy against Nuguid in a separate action to recover the amounts of
the checks.

RULING
WHEREFORE, the Court resolves to DENY the Joint Manifestation and Motion filed
with this Court on May 28, 2013.

NOTE:
Section 49. Transfer without indorsement; effect of. – Where the holder of an
instrument payable to his order transfers it for value without indorsing it, the
transfer vests in the transferee such title as the transferor had therein, and the
transferee acquires in addition, the right to have the indorsement of the transferor.
But for the purpose of determining whether the transferee is a holder in due
course, the negotiation takes effect as of the time when the indorsement is actually
made.