You are on page 1of 3

[19] EQUITABLE PCI BANK v ONG  The object of certifying a check is to enable the holder to use it as money.

GR No. 156207 | September 15, 2006 When the holder procures the check to be certified, the check operates as an
Chico-Nazario, J. assignment of a part of the funds to the creditors.
Teodoro Jose Bruno
FACTS:
PETITIONER: EQUITABLE PCI BANK (entity to which PCI Bank was merged)  Sarande deposited in her account at PCI Bank Magsaysay Ave. Branch Check
RESPONDENTS/DEFENDANTS: ROWENA ONG 0249188 in the amount of P225,000
 Upon her inquiry on whether the said check had been cleared, the bank said yes
TOPIC:  So she issued 2 checks drawn against the proceeds of the Check 0249188
 Bills of Exchange o One of these was Check 073661 for P132,000, which Sarande issued
to Ong owing to a business transaction
CASE SUMMARY: Sarande deposited Check 1 in her account. She then issued to  Ong presented to PCI Bank check 073661, and instead of encashing it, requested
Ong Check 2, which was drawn against the proceeds of Check 1. Ong requested to PCI Bank to convert its proceeds into a manager’s check. Bank obliged.
convert Check 2’s proceeds into a Manager’s check, so she was issued a manager’s  Ong was issued PCI Bank Managers Check 10983 for P132,000, the value of
check. Ong deposited said Manager’s check in her account, but the bank had check 073661
stopped payment due to irregular issuance. Bank refused to pay the amount in the  Next day, Ong deposited Managers Check 10983 in her account with Equitable
Manager’s check. Bank alleges that Ong will be unjustly enriched if the Bank will Bank Davao City Branch.
pay, and that Ong is not a holder in due course. Court disagreed with the Bank.  She then received a check return-slip informing her that PCI Bank had stopped
payment of said check in the ground of irregular issuance.
DOCTRINE:  Despite several demands made by her to PCI Bank for the payment of the
 A check which has been cleared and credited to the account of creditor shall amount in Managers Check 10983, it was met with refusal.
be equivalent to a delivery to the creditor of cash in an amount equal to the  Ong filed complaint for sum of money, damages and atty’s fees against PCI Bank
amount credited to his account.  PCI Bank’s version:
 Manager’s check is an order of the bank to pay, drawn upon itself, o Check 0249188 was returned on the ground that the account against
committing in effect its total resources, integrity and honor behinds its which it was drawn was already closed.
issuance. In effect, it is a bill of exchange drawn by the bank’s cashier upon o Bank immediately gave notice to Sarande and Ong about the return
the bank itself, and accepted in advance by the act of its issuance of Check 0249188 and requested Ong to return Managers Check
 By certification of the check, the funds represented by the check are 10983, since
transferred from the credit of the maker to that of the payee or holder, and  the return of Check 0249188 on the ground that the
for all intents and purposes, the latter becomes the depositor of the drawee account from which it was drawn had already been closed
bank resulted in failure or want of consideration for the
 Where a check is certified by the bank on which it is drawn, the certification issuance of Managers Check 10983
is equivalent to acceptance.  TC ordered PCI Bank to pay Sarande P132,000 equivalent to the amount of
 Certification implies that the check is drawn upon sufficient funds in the Managers Check 10983
hands of the drawee, that they have been set apart for its satisfaction, and  CA affirmed TC.
that they shall be so applied whenever the check is presented for payment.
ISSUES and RULING: (Doctrine in bold letters)
 WON Ong would be unjustly enriched at the expense of PCI Bank, if Bank  Where a check is certified by the bank on which it is
would be required to pay an unfunded check -- NO drawn, the certification is equivalent to acceptance.
o PCI claims that there will be unjust enrichment on the part of Ong if the  Certification implies that the check is drawn upon
Bank would be compelled to make good the manager’s check it had issued sufficient funds in the hands of the drawee, that they have
o But the Court said that the check of Sarande had been cleared by PCI for been set apart for its satisfaction, and that they shall be so
which reason Sarande issued the check to Ong. A check which has been applied whenever the check is presented for payment.
cleared and credited to the account of creditor shall be equivalent to a  The object of certifying a check is to enable the holder to
delivery to the creditor of cash in an amount equal to the amount credited to use it as money. When the holder procures the check to be
his account. certified, the check operates as an assignment of a part of
o Having cleared the check earlier, PCI Bank therefore became liable to Ong the funds to the creditors.
and it cannot allege want or failure of consideration between it and Sarande.  A check which has been cleared and credited to the
Ong is a stranger as regards the transaction between PCI Bank and Sarande. account of creditor shall be equivalent to a delivery to the
 WON Ong is a holder in due course -- YES creditor of cash in an amount equal to the amount credited
o PCI asserts that Ong is not a holder in due course because the Manager’s to his account.
Check was drawn against a closed account, therefore it was issued without o By accepting PCI Bank Check 073661 issued by Sarande to Ong and issuing
consideration in turn a manager’s check in exchange thereof, PCI Bank assumed the
o But Court disagreed. See Secs. 52, 24, 26, 28, NIL. liabilities of an acceptor under Sec. 62, NIL.
o What Ong obtained from PCI Bank was not just any ordinary check but a
manager’s check, which is an order of the bank to pay, drawn upon itself, DISPOSITIVE: Petition denied. CA affirmed.
committing in effect its total resources, integrity and honor behinds its
issuance.
PROVISIONS:
o A manager’s check stands on the same footing as a certified check. The effect  Sec. 52, NIL. What constitutes a holder in due course. A holder in cue course is a holder who has taken
of certification is found in Sec. 187, NIL the instrument under the ff. conditions:
o That it is complete and regular upon its face
o A manager’s check is one drawn by the bank’s manager upon the bank itself.
o That he became the holder of it before it was overdue, and without notice it had
 In effect, it is a bill of exchange drawn by the bank’s been previously dishonored, if such was the fact
cashier upon the bank itself, and accepted in advance by o That he took it in good faith and for value
the act of its issuance. o That at the time it was negotiated to him, he had no notice of any infirmity in the
instrument or defect in the title of the person negotiating it.
 It is really the bank’s own check and may be treated as a
 Sec. 24. Presumption of consideration. Every nego. instrument is deemed prima facie to have been
promissory note with the bank as maker.
issued for valuable consideration; and every person whose signature appears thereon to have become
 The check becomes primary obligation of the bank which a party thereto for value
issues it and constitutes its written promise to pay upon  Sec. 26. What constitutes holder for value. Where value has at any time been given for the instrument,
demand. the holder is deemed a holder for value in respect to all parties who become such prior to that time.

 Mere issuance of it is considered an acceptance thereof.  Sec. 28. Effect of want of consideration. Absence or failure of consideration is a matter of defense as
against any person not holder in due course; and partial failure of consideration is a defense pro
o New Pacific Timber & Supply Co Inc v Seneris
tanto, whether failure is an ascertained and liquidated amount or otherwise.
 By certification of the check, the funds represented by the
 Sec. 187. Certification of check; effect of. Where a check is certified by the bank on which it is drawn,
check are transferred from the credit of the maker to that the certification is equivalent to an acceptance.
of the payee or holder, and for all intents and purposes,  Sec. 62. Liability of acceptor. The acceptor by accepting the instruments engages that he will pay it
the latter becomes the depositor of the drawee bank according to the tenor of his acceptance; and admits
o The existence of the drawer, the genuineness of his signature, and his capacity and
authority to draw the instrument; and
o The existence of the payee and his then capacity to indorse.

You might also like