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- Wilfred Chiok regularly bought dollars from Leonardo Nuguid, paying him with manager's checks or depositing the equivalent amount in Nuguid's account.
- On July 6, 1996, Chiok had Asian Bank issue manager's checks worth P26.8 million to Nuguid, which were deposited in Nuguid's account. However, Nuguid failed to deliver the agreed dollar amount.
- Chiok then asked the banks to stop payment on the checks. The RTC ordered the banks to return the check amounts to Chiok, rescinding the contract between Chiok and Nuguid. The Court of Appeals affirmed this decision.
- Wilfred Chiok regularly bought dollars from Leonardo Nuguid, paying him with manager's checks or depositing the equivalent amount in Nuguid's account.
- On July 6, 1996, Chiok had Asian Bank issue manager's checks worth P26.8 million to Nuguid, which were deposited in Nuguid's account. However, Nuguid failed to deliver the agreed dollar amount.
- Chiok then asked the banks to stop payment on the checks. The RTC ordered the banks to return the check amounts to Chiok, rescinding the contract between Chiok and Nuguid. The Court of Appeals affirmed this decision.
- Wilfred Chiok regularly bought dollars from Leonardo Nuguid, paying him with manager's checks or depositing the equivalent amount in Nuguid's account.
- On July 6, 1996, Chiok had Asian Bank issue manager's checks worth P26.8 million to Nuguid, which were deposited in Nuguid's account. However, Nuguid failed to deliver the agreed dollar amount.
- Chiok then asked the banks to stop payment on the checks. The RTC ordered the banks to return the check amounts to Chiok, rescinding the contract between Chiok and Nuguid. The Court of Appeals affirmed this decision.
Metropolitan Bank and Trust Company, vs. Wilfred N. Chiok. G.R. No. 17!" in the latter#s bank account.
ccount. Nuguid delivers the dollars either on the same
Bank of the #hilippine $slands, vs. Wilfred N. Chiok. G.R. No. 17"%& day or on a later date as may be agreed upon between them, up to a week Glo'al Business Bank, $n(., vs. Wilfred N. Chiok. G.R. No. 17"%)*. later. Chiok and Nuguid had been dealing in this manner for about si( to eight Novem'er !, &1* Leonardo-De + Castro, J.: years, with their transactions running into millions of pesos. 1or this purpose, Chiok maintained accounts with petitioners etrobank and !lobal "ank the o(trine-Reciprocal obligations are those which arise from the same cause, latter being then referred to as %sian "ank. Chiok likewise entered into a "ills and in which each party is a debtor and creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to 2urchase -ine %greement "2-%/ with %sian "ank. 3nder the "2-%, checks drawn in favor of, or negotiated to, Chiok may be purchased by %sian "ank. be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other. When Nuguid failed to deliver 3pon such purchase, Chiok receives a discounted cash e4uivalent of the amount of the check earlier than the normal clearing period. the agreed amount to Chiok, the latter had a cause of action against Nuguid to ask for the rescission of their contract. On the other hand, Chiok did not On 5uly 6, &''6, pursuant to the "2-%, %sian "ank 7bills purchased8 9ecurity have a cause of action against etrobank and !lobal "ank that would allow "ank : Trust Company 9"TC/ anager#s Check C/ No. ;)<)=> in the him to rescind the contracts of sale of the manager#s or cashier$s checks, amount of 2?6,6;;,;;;.;; issued in the name of Chiok, and credited the which would have resulted in the crediting of the amounts thereof back to his same amount to the latter#s 9avings %ccount.On the same day, %sian "ank accounts. Otherwise stated, the right of rescission under %rticle &&'& of the issued manager#s checks with a total value of2&@,>66,)6;.;; were issued to civil code can only be e(ercised in accordance with the principle of relativity !on0alo "ernardo, who is the same person as !on0alo ". Nuguid pursuant of contracts under %rticle &)&& of the same code. to Chiok#s instruction and were debited from his account. -ikewise upon Chiok#s application, etrobank issued Cashier#s Check CC/ No. ;;))@; in Clearing should not be confused with acceptance. anager#s and cashier#s the amount of 2<,=&),;;;.;; in the name of !on0alo "ernardo. The same checks are still the sub*ect of clearing to ensure that the same have not been was debited for his savings account. materially altered or otherwise completely counterfeited. +owever, manager#s and cashier#s checks are preaccepted by the mere issuance thereof by the Chiok then deposited the three checks in Nuguid#s account with 1A"TC, the bank, which is both its drawer and drawee. Thus, while manager#s and predecessorininterest of petitioner "2B. Nuguid to deliver the e4uivalent cashier#s checks are still sub*ect to clearing, they cannot be countermanded dollar e4uivalent, prompting Chiok to re4uest that payment on the three for being drawn against a closed account, for being drawn against insufficient checks be stopped. funds, or for similar reasons such as a condition not appearing on the face of the check. -ong standing and accepted banking practices do not On the following day, 5uly =, &''6, Chiok filed a Complaint for damages with countenance the countermanding of manager#s and cashier#s checks on the application for ex parte restraining order andor preliminary in*unction with the basis of a mere allegation of failure of the payee to comply with its RTCDC against the spouses !on0alo and arinella Nuguid, and the obligations towards the purchaser. On the contrary, the accepted banking depositary banks, %sian "ank and etrobank. The complaint was later practice is that such checks are as good as cash. +owever, in view of the amended to include the prayer of Chiok to be declared the legal owner of the peculiar circumstances of the case at bench, We are constrained to set aside proceeds of the sub*ect checks and to be allowed to withdraw the entire the foregoing concepts and principles in favor of the e(ercise of the right to proceeds thereof. The RTC issued a TRO directing the spouses Nuguid to rescind a contract upon the failure of consideration thereof. refrain from presenting the said checks for payment and the depositary banks from honoring the same until further orders from the court. a(ts- %sian "ank refused to honor the manager#s checks in deference to the Respondent Wilfred N. Chiok Chiok/ had been engaged in dollar trading for TRO. etrobank claimed that it initially refused to honor the checks but several years. +e usually buys dollars from !on0alo ". Nuguid Nuguid/ at 1A"TC informed them that the check was already presented for payment the e(change rate prevailing on the date of the sale. Chiok pays Nuguid before the issuance of the TRO. %lso there was an alleged defect on the either in cash or manager#s check, to be picked up by the latter or deposited TRO because the restraining order indicates the name of the payee of the The RTC made an error at this point. While indeed, it cannot be said that check as !ONE%-O N3!3BF, but the check isin fact payable to !ONE%-O manager#s and cashier#s checks are precleared, clearing should not be "ARN%RFO. etrobank eventually acknowledged the check when it confused with acceptance. anager#s and cashier#s checks are still the became clear that nothing more can be done to retrieve the proceeds of the sub*ect of clearing to ensure that the same have not been materially altered check. or otherwise completely counterfeited. +owever, manager#s and cashier#s checks are preaccepted by the mere issuance thereof by the bank, which is On %ugust ?', ?;;?, the RTC rendered its Fecision in favor Chiok and both its drawer and drawee. Thus, while manager#s and cashier#s checks are ordering !lobal "ank and etrobank to pay him. The RTC went on to rule still sub*ect to clearing, they cannot be countermanded for being drawn that due to the timely service of the TRO and the in*unction, the value of the against a closed account, for being drawn against insufficient funds, or for three checks remained with !lobal "ank and etrobank. The RTC similar reasons such as a condition not appearing on the face of the check. concluded that since Nuguid did not have a valid title to the proceeds of the -ong standing and accepted banking practices do not countenance the manager#s and cashier#s checks, Chiok is entitled to be paid back everything countermanding of manager#s and cashier#s checks on the basis of a mere he had paid to the drawees for the checks. allegation of failure of the payee to comply with its obligations towards the purchaser. On the contrary, the accepted banking practice is that such On ay 6, ?;;=, the Court of %ppeals affirmed the RTC Fecision rescinding the contract to buy foreign currency between Chiok and Nuguid. The checks are as good as cash. BnG New 2acific Timber : 9upply manager and cashier checks were ordered cancelled. Bt held that %rticle &&'& Bt is a wellknown and accepted practice in the business sector that a of the Civil Code provides a legal basis of the right of purchasers of Cs and Cashier$s Check is deemed as cash. oreover, since the said check had CCs to make a stop payment order on the ground of the failure of the payee been certified by the drawee bank, by the certification, the funds represented to perform his obligation to the purchaser. The appellate court ruled that such by the check are transferred from the credit of the maker to that of the payee claim was impliedly incorporated in Chiok#s complaint or holder, and for all intents and purposes, the latter becomes the depositor $ssue- of the drawee bank, with rights and duties of one in such situation. Where a check is certified by the bank on which it is drawn, the certification is &/ Whether or not payment of manager#s and cashier#s checks are sub*ect to e4uivalent to acceptance. 9aid certification Himplies that the check is drawn the condition that the payee thereof should comply with his obligations to the upon sufficient funds in the hands of the drawee, that they have been set purchaser of the checks N/ apart for its satisfaction, and that they shall be so applied whenever the check is presented for payment. Bt is an understanding that the check is good ?/ Whether or not the purchaser of manager#s and cashier#s checks has the then, and shall continue good, and this agreement is as binding on the bank right to have the checks cancelled by filing an action for rescission of its as its notes in circulation, a certificate of deposit payable to the order of the contract with the payee N/ depositor, or any other obligation it can assume. The ob*ect of certifying a check, as regards both parties, is to enable the holder to use it as money.H 0eld- When the holder procures the check to be certified, Hthe check operates as an assignment of a part of the funds to the creditors.H +ence, the e(ception &/ % manager#s check, like a cashier#s check, is an order of the bank to pay, to the rule enunciated under 9ection =) of the Central "ank %ct to the effect drawn upon itself, committing in effect its total resources, integrity, and honor Hthat a check which has been cleared and credited to the account of the behind its issuance. "y its peculiar character and general use in commerce, creditor shall be e4uivalent to a delivery to the creditor in cash in an amount a manager#s check or a cashier#s check is regarded substantially to be as e4ual to the amount credited to his accountH shall apply in this case. ( ( (. good as the money it represents. The RTC effectively ruled that payment of manager#s and cashier#s checks are sub*ect to the condition that the payee The case Tan v. Court of %ppeals une4uivocally settled the unconditional thereof complies with his obligations to the purchaser of the checks nature of the credit created by the issuance of manager#s or cashier#s checks holding that I 7% cashier#s check is a primary obligation of the issuing bank The right to rescind invoked by the C% is provided by %rticle &&'&. The cause and accepted in advance by its mere issuance. "y its very nature, a cashier#s of action supplied by the article, however, is clearly predicated upon the check is the bank#s order to pay drawn upon itself, committing in effect its reciprocity of the obligations of the in*ured party and the guilty party. total resources, integrity and honor behind the check. % cashier#s check by its Reciprocal obligations are those which arise from the same cause, and in peculiar character and general use in the commercial world is regarded which each party is a debtor and a creditor of the other, such that the substantially to be as good as the money which it represents8 obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned 3nder the principle of e*usdem generis, where a statute describes things of a upon the simultaneous fulfillment of the other. particular class or kind accompanied by words of a generic character, the generic word will usually be limited to things of a similar nature with those When Nuguid failed to deliver the agreed amount to Chiok, the latter had a particularly enumerated, unless there be something in the conte(t of the cause of action against Nuguid to ask for the rescission of their contract. On statute which would repel such inference. %ny long standing and accepted the other hand, Chiok did not have a cause of action against etrobank and banking practice which can be considered as a valid cause to return !lobal "ank that would allow him to rescind the contracts of sale of the manager#s or cashier#s checks should be of a similar nature to the manager#s or cashier#s checks, which would have resulted in the crediting of the amounts thereof back to his accounts. enumerated cause applicable to manager#s or cashier#s checksG material alteration. %s stated above, an e(ample of a similar cause is the presentation Otherwise stated, the right of rescission under %rticle &&'& of the Civil Code of a counterfeit check can only be e(ercised in accordance with the principle of relativity of contracts under %rticle &&)& of the same code, which providesG %rt. &)&&. . The %mended Complaint of Chiok was in reality an action for rescission of Contracts take effect only between the parties, their assigns and heirs, the contract to buy foreign currency between Chiok and Nuguid. The Court of e(cept in case where the rights and obligations arising from the contract are %ppeals proceeded to cancel the manager#s and cashier#s checks as a not transmissible by their nature, or b y stipulation or by provision of law. ( ( conse4uence of the granting of the action for rescission, e(plaining that 7the (. Bn several cases, this Court has ruled that under the civil law principle of sub*ect checks would not have been issued were it not for the contract relativity of contracts under %rticle &&)&, contracts can only bind the parties between Chiok and Nuguid. Therefore, they cannot be disassociated from who entered into it, and it cannot favor or pre*udice a third person, even if he the contract and given a distinct and e(clusive signification, as the purchase is aware of such contract and has acted with knowledge thereof. etrobank thereof is part and parcel of the series of transactions necessary to and !lobal "ank are not parties to the contract to buy foreign currency consummate the contract. We disaree 2ith the a'ove held 'y the C3. between Chiok and Nuguid. Therefore, they are not bound by such contract and cannot be pre*udiced by the failure of Nuguid to comply with the terms thereof.