Atty. Jun de Zuñiga
A manager’s check (MC) is a check issued by the bank’s manager upon the bank itself promising to pay to the payee or its order an amount certain in money at a certain date. By its very nature it is the bank’s order to pay drawn upon itself, committing in effect its total resources, integrity and honor behind the check. It is the primary obligation of the issuing bank and by its general use in the commercial world it is regarded substantially to be as good as the money which it represents.
For these reasons, parties in financial transactions would prefer payments through MCs rather than through personal checks for protection against bouncing checks and other risks. Consequently, it has been an understanding that MCs are not ordinarily subject to stop payment orders. To stop payment of its own check might impinge on the reliability of the bank’s own credit and, consequently, such action is looked at with reservation. However, there have been exceptions to this concept and three cases decided by the Supreme Court stand out.
In the first case, the Supreme Court noted that the holder was the indorsee of a stolen manager’s check. In this case, the purchaser of the MC inadvertently left the check on the desk of a bank officer who was attending to another customer. Later on the check could no longer be found for which reason the purchaser requested for a stop payment order. Subsequently, a third party deposited the MC with another bank but the same was dishonored. The Supreme Court ruled that the issuing bank could validly refuse payment stating thus: “The holder of a cashier’s check who is not a holder in due course cannot enforce such check against the issuing bank which dishonors the same” (Mesina vs. Intermediate Appellate Court, G.R. No. 70145, November 13, 1986).
In the second case, the Supreme Court held that the mere issuance of a manager’s check does not ipso facto work as an automatic transfer of funds to the account of the payee. In order for the holder to acquire title to the instrument, there must be delivery. The Supreme Court declared: “The doctrine that the deposit represented by a manager’s check automatically passes to the payee is inapplicable because the instrument, although accepted in advance, remains undelivered.” The Court ruled that the holder did not acquire the instrument in due course since title had not passed for lack of delivery (RCBC vs. Hi - Tri Devt. Corp., G.R. No. 192413, June 13, 2012).
In the third case, the Supreme Court noted that the payee of the manager’s checks deposited the same even after he had received complaint from his counterparty that the motor vehicle he (payee) sold had hidden defects. The Supreme Court stated that the payee cannot claim that he took the instrument “in good faith and for value,” a requirement for holders in due course. It held that in the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable; that since the claimant was not a holder in due course, the instrument becomes subject to personal defenses under the Negotiable Instruments Law; and, hence, the bank may legally act on a countermand by the purchaser of the manager’s check (RCBC Savings Bank vs. Odrada, G.R. No. 219037, Oct. 19, 2016).
The above comments are the personal views of the writer. His email address is jzuniga@bsp.gov.ph