FACTS: Respondent Wilfred N.

Chiok (Chiok) had been engaged in dollar trading for

several years. He usually buys dollars from Gonzalo B. Nuguid (Nuguid) at the exchange
rate prevailing on the date of the sale. Chiok pays Nuguid either in cash or manager’s
check, to be picked up by the latter or deposited in the latter’s bank account. Nuguid
delivers the dollars either on the same day or on a later date as may be agreed upon
between them, up to a week later.
Chiok and Nuguid had been dealing in this manner for about six to eight years, with their
transactions running into millions of pesos. For this purpose, Chiok maintained accounts
with petitioners Metropolitan Bank and Trust Company (Metrobank) and Global
Business Bank, Inc. (Global Bank), the latter being then referred to as the Asian Banking
Corporation (Asian Bank). Chiok likewise entered into a Bills Purchase Line Agreement
(BPLA) with Asian Bank. Under the BPLA, checks drawn in favor of, or negotiated to,
Chiok may be purchased by Asian Bank. Upon such purchase, Chiok receives a
discounted cash equivalent of the amount of the check earlier than the normal clearing
period.
On July 5, 1995, Chiok and Naguid had another transaction where Chiok was supposed to
buy US$1,022,288.50 from the latter, he deposited 3 Managers Checks (Asian Bank MC
No. 025935, Asian Bank MC No. 025939, Metrobank CC No. 003380) with the total
amount of ₱26,068,350.00 to BPI in the account of Naguid. Naguid failed to hold up his
end of the bargain, 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 the same day, July 6, 1995, the RTC issued a temporary restraining order (TRO)
directing the spouses Nuguid to refrain from presenting the said checks for payment and
the depositary banks from honoring the sameuntil further orders from the court.
Upon presentation of the checks for payment, Asian Bank refused to honor MC Nos.
025935 and 025939 in deference to the TRO. Metrobank claimed that when it received
the TRO on July 6, 1995, it refused to honor CC No. 003380 and stopped payment
thereon. 
However, in a letter also dated July 6, 1995, Ms. Jocelyn T. Paz of FEBTC, Cubao-
Araneta Branch informed Metrobank that the TRO was issued a day after the check was
presented for payment. Thus, according to Paz, the transaction was already consummated
and FEBTC had already validly accepted the same.
In another letter, FEBTC informed Metrobank that "the restraining order indicates the
name of the payee of the check as GONZALO NUGUID, but the check isin fact payable
to GONZALO BERNARDO. We believe there is a defect in the restraining order and as
such should not bind your bank."
Alice Rivera of Metrobank replied to said letters, reiterating Metrobank’s position
tocomply with the TRO lest it be cited for contempt by the trial court. However, as would
later be alleged in Metrobank’s Answer before the trial court, Metrobank eventually
acknowledged the check when it became clear that nothing more can be done to retrieve
the proceeds of the check. Metrobank furthermore claimed that since it is the issuer of CC
No. 003380, the check is its primary obligation and should not be affected by any prior
transaction between the purchaser (Chiok) and the payee (Nuguid).
In the meantime, FEBTC, as the collecting bank, filed a complaint against Asian Bank
before the Philippine Clearing House Corporation (PCHC) Arbitration Committee for the
collection of the value of Asian Bank MC No. 025935 and 025939, which FEBTC had
allegedly allowed Nuguid to withdraw on July 5, 1995, the same day the checks were
deposited. The case was docketed as Arbicom Case No. 95-082. The PCHC Arbitration
Committee later relayed, in a letter dated August 4, 1995, its refusal to assume
jurisdiction over the case on the ground that any step it may take might be misinterpreted
as undermining the jurisdiction of the RTC over the case or a violation of the July 6, 1995
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?
RULING: NO.
The legal effects of a manager’s check and a cashier’s check are the same. 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.

Thus, the succeeding discussions and jurisprudence on manager’s checks, unless stated
otherwise, are applicable to cashier’s checks, and vice versa. The RTC effectively ruled
that payment of manager’s and cashier’s checks are subject to the condition that the
payee thereof complies with his obligations to the purchaser of the checks:
The dedication of such checks pursuant to specific reciprocal undertakings between their
purchasers and payees authorizes rescission by the former to prevent substantial and
material damage to themselves, which authority includes stopping the payment of the
checks.

While indeed, it cannot be said that manager’s and cashier’s checks are pre-cleared,
clearing should not be confused with acceptance. Manager’s and cashier’s checks are still
the subject of clearing to ensure that the same have not been materially altered or
otherwise completely counterfeited. However, manager’s and cashier’s checks are pre-
accepted by the mere issuance thereof by the bank, which is both its drawer and drawee.
Thus, 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. On the contrary,
the accepted banking practice is that such checks are as good as cash.
A cashier’s check is a primary obligation of the issuing bank and accepted in advance by
its mere issuance. By its very nature, a cashier’s check is the bank’s order to pay drawn
upon itself, committing in effect its total resources, integrity and honor behind the check.
A cashier’s check by its peculiar character and general use in the commercial world is
regarded substantially to be as good as the money which it represents. In this case,
therefore, PCIB by issuing the check created an unconditional credit in favor of any
collecting bank
Furthermore, under the principle of ejusdem generis, where a statute describes things of a
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 particularly enumerated,
unless there be something in the context of the statute which would repel such inference.
Thus, any long standing and accepted banking practice which can be considered as a
valid cause to return manager’s or cashier’s checks should be of a similar nature to the
enumerated cause applicable to manager’s or cashier’s checks: material alteration. As
stated above, an example of a similar cause is the presentation of a counterfeit check.

FACTS: On May 10,1979, the parties in this case entered into a Loan Agreement
with Assumption of Solidary Liability whereby petitioners were given a loan of
P500,000.00 by private respondent. The contract provided for the payment of 12%
annual interest, 2% monthly penalty, 1 1/2% monthly service charge, and 10% attorney's
fees. the loan was secured by a chattel mortgage on the printing machinery in petitioners'
establishment.
Petitioners subsequently obtained a second IGLF loan of P300,000.00. For this
purpose, a new loan agreement was entered into by the parties containing identical
provisions as the first one.

By April 2, 1985, petitioners had paid their first loan of P500,000.00. On November
4, 1985, private respondent was placed under receivership by the Central Bank and
Ricardo Lirio and Cristina Destajo were appointed as receiver and in-house examiner,
respectively.
On May 17, 1986, petitioners made a partial payment of P50,000.00 on the second
loan. They later wrote private respondent a letter, dated June 18, 1986, proposing to
settle their obligation. On July 2, 1986, private respondent, through its counsel,
replied with a counter-offer, namely, that it would reduce the penalty charges up to
P140,000.00, provided petitioners can pay their obligation on or before July 30,
1986.
As of July 31, 1986, petitioners' total liability to private respondent was P727,001.35,
broken down as follows:

Principal — P295,469.47

Interest — 165,385.00

Penalties — 254,820.55

Service Charges — 11,326.33

—————

TOTAL P727,001.35

On this date, petitioners paid P410,854.47 by means of a Pilipinas Bank check, receipt of
which was acknowledged by Destajo. The corresponding voucher for the check bears the
following notation: "full payment of IGLF LOAN."
The amount of P410,854.47 was the sum of the principal (P295,469.47) and the interest;
(P165,385.00) less the partial payment of P50,000.00. The private respondent sent two
demand letters to petitioners, dated September 4, 1986 and September 25, 1986, seeking
payment of the balance of P266,146.88. As petitioners did not respond, private
respondent filed this case in the Regional Trial Court of Metro Manila for the collection
of P266,146.88 plus interests, penalties, and service charges or, in the alternative, for the
foreclosure of the mortgaged machineries.
ISSUE: whether petitioners are liable for the payment of the penalties and service
charges on their loan?
RULING: YES. Art. 1270, par. 2 of the Civil Code provides that express condonation
must comply with the forms of donation.
Art. 748, par. 3 provides that the donation and acceptance of a movable, the value of
which exceeds P5,000,00, must be made in writing, otherwise the same shall be void. In
this connection, under Art. 417, par. 1, obligations, actually referring to credits, are
considered movable property. In the case at bar, it is undisputed than the alleged
agreement to condone P266,196.88 of the second IGLF loan was not reduced in writing.
Moreover, it is to be noted that the alleged agreement to condone the amount in question
was supposedly entered into by the parties sometime in July 1986, that is, after
respondent corporation had been placed under receivership on November 4, 1985. "the
appointment of a receiver operates to suspend the authority of a [corporation] and of its
directors and officers over its property and effects, such authority being reposed in the
receiver:" Thus, Sobrepeñas had no authority to condone the debt.