G.R. No. 108555, 20 December 1994, 239 SCRA 310

FACTS:

Petitioner Ramon Tan, a trader-businessman and community leader in Puerto Princesa, had maintained since 1976 Current Account No. 109058068 with respondent bank’s Binondo branch. To avoid carrying cash while enroute to Manila, he secured a Cashier’s Check No. L 406000126 from the PCIB, Puerto Princesa branch, in the amount of 30,000.00 Pesos, payable to his order. He deposited the check in his account with RCBC Binondo. On the same day, RCBC erroneously sent the same cashier’s check for clearing to the Central Bank which was returned for having been “missent” or “misrouted.” The next day, RCBC debited the amount covered by the same cashier’s check from the account of the petitioner. Respondent bank at this time had not informed the petitioner of its action which the latter claims he learned of only 42 days after.

Relying on the common knowledge that a cashier’s check was as good as cash, that the usual banking practice that local checks are cleared within 3 working days and regional checks within 7 working days, and the fact that the cashier’s check was accepted, petitioner issued 2 personal checks. Upon presentment of the issued checks, both checks were dishonored due to insufficiency of funds.

ISSUE:

Whether the petitioner’s reliance that a cashier’s check is good as cash is correct.

RULING:

An ordinary check is not a mere undertaking to pay an amount of money. There is an element of certainty or assurance that it will be paid upon presentation that is why it is perceived as a convenient substitute for currency in commercial and financial transactions. The basis of the perception being confidence. Any practice that destroys that confidence will impair the usefulness of the check as a currency substitute and create havoc in trade circles and the banking community.

Now, what was presented for deposit in the instant cases was not just an ordinary check but a cashier’s check payable to the account of the depositor himself. 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.

All these considered, petitioner’s reliance on the layman’s perception that a cashier’s check is as good as cash is not entirely misplaced, as it is rooted in practice, tradition, and principle. We see no reason thus why this so-called discretion was not exercised in favor of petitioner, especially since PCIB and RCBC are members of the same clearing house group relying on each other’s solvency. RCBC could surely rely on the solvency of PCIB when the latter issued its cashier’s check.

*Case digest by Meriam Rika R. Wong, JD-IV, Andres Bonifacio Law School, SY 2019-2020