CRUZ, MA. FRANCESSCA O.

Negotiable Instruments Law

TOPIC: Checks

METROPOLITAN BANK AND TRUST COMPANY, Petitioner,

vs.
WILFRED N. CHIOK, Respondent.

FACTS:

Chiok had been engaged in dollar trading for several years. He

usually buys dollars from Nuguid at the exchange rate prevailing
on the date of the sale. Chiok pays Nuguid either in cash or
manager’s check. Chiok maintained accounts with
petitioners Metrobank and Global Bank, the latter being then
referred to as the Asian Bank. Chiok likewise entered into a Bills
Purchase Line Agreement with Asian Bank. Under the BPLA,
checks drawn in favor of Chiok.Asian Bank “bills purchased”
Security Bank & Trust Company Manager’s Check issued in the
name of Chiok. He then deposited the three checks in Nuguid’s.
account. Nuguid was supposed to deliver the dollar equivalent of
the three checks as agreed upon, in the afternoon of the same
day. Nuguidfailed to do so.

ISSUE:

1. Whether or not the Court of Appeals detracted from well-

settled concepts and principles in commercial law regarding the
nature, causes, and effects of a manager’s check ?

2. Whether or not BPI is a holder in due course?

RULING:

The legal effects of a manager’s check and a cashier’s check are

the same. A manager’s check or a cashier’s check is regarded

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substantially to be as good as the money it represents.Manager’s
and cashier’s checks are still the subject of clearing to ensure
that the same have not been materially altered or counterfeited.A
cashier’s check is a primary obligation of the issuing bank
and accepted in advance by its mere issuance. In this
case, PCIB by issuing the check created an unconditional
credit in favor of any collecting bank.

BPI is not a holder in due course with respect to manager’s

checks. Said checks were never indorsed by Nuguid to FEBTC,
the predecessor-in-interest of BPI, for the reason that they were
deposited by Chiok directly to Nuguid’s account with FEBTC.
However, BPI has the rights of an equitable assignee for value
under Section 49 of the Negotiable Instruments Law.

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