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Security Bank V.

Rizal Commercial (2009)

Lessons Applicable: Consideration and Accommodation Party
(Negotiable Instruments law)


January 9, 1981: Security Bank and Trust Company (SBTC) issued a

managers 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


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 managers 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 managers check.

managers check

one drawn by a banks 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 banks own check, a managers check becomes the

primary obligation of the bank and is accepted in advance by the act of its
RCBC, in immediately crediting the amount of P8 million to CMCs account,
relied on the integrity and honor of the check as it is regarded in commercial

July 9, 1980 Memorandum: banks were given the discretion to allow

immediate drawings on uncollected deposits of managers 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