Negotiable Instruments Case Digest: Security Bank v. Rizal Commercial (2009)

G.R. No. 170984               January 30, 2009
Lessons Applicable: Consideration and Accommodation Party (Negotiable Instruments law)

 FACTS:
  • January 9, 1981: Security Bank and Trust Company (SBTC) issued a manager’s check for P 8M, payable to "CASH," as proceeds of the loan granted to Guidon Construction and Development Corporation (GCDC)

    • deposited by Continental Manufacturing Corporation (CMC) in its Current Account with Rizal Commercial Banking Corporation (RCBC)

      • Immediately, RCBC honored the P8M check and allowed CMC to withdraw 

  • January 12, 1981: GCDC issued a "Stop Payment Order" to SBTC claiming that the P 8M check was released to a 3rd party by mistake

    • SBTC dishonored and returned the manager’s check to RCBC

  • February 13, 1981: RCBC filed a complaint for damages against SBTC with CFI then transferred to RTC

  • Following the rules of the Philippine Clearing House, RCBC and SBTC stopped returning the checks to each other. 

    • By way of a temporary arrangement pending resolution of the case, the P 8 M check was equally divided between RCBC and SBTC

  • May 9, 2000: RTC in favor of RCBC

  • CA: affirmed with modification RTC decision  by adding interest

ISSUE: W/N SBTC should be held liable for its manager's check

HELD: YES. CA affirmed.
  • At the outset, it must be noted that the questioned check issued by SBTC is not just an ordinary check but a manager’s check. 

    • manager’s check 

      • one drawn by a bank’s manager upon the bank itself

      • same footing as a certified check which is deemed to have been accepted by the bank that certified it

        • As the bank’s own check, a manager’s check becomes the primary obligation of the bank and is accepted in advance by the act of its issuance

  • RCBC, in immediately crediting the amount of P8 million to CMC’s account, relied on the integrity and honor of the check as it is regarded in commercial transactions

  • July 9, 1980 Memorandum: banks were given the discretion to allow immediate drawings on uncollected deposits of manager’s checks, among others

  • important that banks should guard against injury attributable to negligence or bad faith on its part

    • banking business is impressed with public interest, the trust and confidence of the public in it is of paramount importance

    • highest degree of diligence is expected, and high standards of integrity and performance are required of it