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