Metropolitan Bank and Trust Company vs. Chiok

Metropolitan Bank and Trust Company vs. Wilfred N. Chiok

(G.R. No. 172652; November 26, 2014)

Doctrine: While manager’s and cashier’s checks are still subject to clearing, they cannot be countermanded for being drawn against a closed account, for being drawn against insufficient funds, or for similar reasons such as a condition not appearing on the face of the check.

Facts: On July 5, 1995, respondent Wilfred N. Chiok (Chiok) bought US$1,022,288.50 dollars from Gonzalo B. Nuguid (Nuguid) where Chiok deposited the three manager’s checks (Asian Bank MC Nos. 025935 and 025939, and Metrobank CC No. 003380), with an aggregate value of ₱26,068,350.00 in Nuguid’s account with petitioner Bank of the Philippine Islands (BPI). Nuguid, however, failed to deliver the dollar equivalent of the three checks as agreed upon, prompting Chiok to request that payment on the three checks be stopped. On the following day, July 6, 1995, Chiok filed a Complaint for damages with application for ex parte restraining order and/or preliminary injunction with the Regional Trial Court (RTC) of Quezon City against the spouses Gonzalo and Marinella Nuguid, and the depositary banks, Asian Bank and Metrobank. On July 25, 1995, the RTC issued an Order directing the issuance of a writ of preliminary prohibitory injunction. When checks were presented for payment, Asian Bank refused to honor MC Nos. 025935 and 025939 in deference to the TRO.

Issue: Whether or not payment of manager’s and cashier’s checks are subject to the condition that the payee thereof should comply with his obligations to the purchaser of the checks.

Held: No. 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 honor behind its issuance. By its peculiar character and general use in commerce, a manager’s check or a cashier’s check is regarded substantially to be as good as the money it represents. While manager’s and cashier’s checks are still subject to clearing, they cannot be countermanded for being drawn against a closed account, for being drawn against insufficient funds, or for similar reasons such as a condition not appearing on the face of the check. Long standing and accepted banking practices do not countenance the countermanding of manager’s and cashier’s checks on the basis of a mere allegation of failure of the payee to comply with its obligations towards the purchaser. Therefore, when Nuguid failed to deliver the agreed amount to Chiok, the latter had a cause of action against Nuguid to ask for the rescission of their contract; but, Chiok did not have a cause of action against Metrobank and Global Bank that would allow him to rescind the contracts of sale of the manager’s or cashier’s checks, which would have resulted in the crediting of the amounts thereof back to his accounts.