TOPIC: THE HOLDER OF A MANAGER’S / CASHIER’S CHECK IS

STILL SUBJECT TO DEFENSES

*Pwedeng ilagay dito yung diagram na binibili yung manager’s check.. di ko
kasi alam kung paano ba talaga? Binibili yun ng isang tao?

DISTINCTION BETWEEN A MANAGER’S CHECK AND A CASHIER’S CHECK

A. Cashier's check. — It is a check of the bank's cashier on the bank itself
payable on demand to a payee.
CHARACTERS: CASHIER AND BANK
(a) It is, in effect, a bill of exchange drawn by the cashier of a bank upon the bank itself,
committing its total resources, integrity and honor behind the check. A cashier's check is a
primary obligation of the issuing bank and accepted in advance by the act of its issuance.
Hence, it is not subject to countermand by the payee after indorsement and has the same
legal effect as a certificate of deposit or a certified check.
It is really the bank's own check and may be treated as a promissory note with the bank
as the maker (see Sec. 130.) and, therefore, the holder need not prove presentment for
payment or present the bill to the drawee for acceptance. It operates as an assignment of
funds represented by die check to the credit of the payee or holder. (Sec. 189.)
(b) A cashier's check issued on request of a depositor is the substantial equivalent of a
certified check and the deposit represented by the check passes to the credit of the
checkholder who is, therefore, a depositor to that amount.
It is payable either to the person who purchases the check from the bank, or to the person
who is to cash it. It is a well-known and accepted practice in the business sector that a
cashier's check is deemed as cash or "regarded substantially to be as good as the money
which it represents. In transactions involving sale of property, the seller may require the
purchaser (or bidder) to submit cashier's (or manager's) checks if he wants to have
guaranteed payment of the price.
 B. Manager's check. — It is one drawn by the bank's manager upon the bank
itself.
CHARACTERS: BANK MANAGER AND BANK
(a) It is like a cashier's check and certified check both as to effect and use, which, in the
commercial world, is regarded substantially to be as good as the money it represents.
The mere fact that a manager's check does not bear the payee's signature at the back does
not negate deposit thereof in payee's account.

Manager’s check is accepted by the bank upon its issuance. As compared to an ordinary bill
of exchange where acceptance occurs after the bill is presented to the drawee.
As a general rule, the drawee bank is not liable until it accepts. (Pwedeng mag-act dito na
hindi inaccept so walang liability or inaccept so may liability. CHARACTERS: DRAWEE BANK
AND PAYEE) Acceptance, therefore, creates a privity of contract between the holder and the
drawee so much so that the latter, once it accepts, becomes the party primarily liable on the
instrument. Thus, once he accepts, the drawee admits the following:
(a) existence of the drawer;
(b) genuineness of the drawer's signature;
(c) capacity and authority of the drawer to draw the instrument; and
(d) existence of the payee and his then capacity to endorse.
The drawee bank, as a result, has the unconditional obligation to pay a manager's
check to a holder in due course irrespective of any available personal defenses. However,
jurisprudence dictates that although a manager's check is automatically accepted, a
holder other than a holder in due course is still subject to defenses.

A holder not in due course is still subject to defenses.

INSTANCES WHEN THE AUTOMATIC TRANSFER OF ACCOUNTS TO THE ACCOUNT OF

THE PAYEE DOES NOT APPLY:
1. When there is no delivery (Rizal Commercial Banking Corporation v. Hi-Tri
Development Corporation.)
2. Defective in the title of a holder not in due course arising from the defect on how
he acquired tittle thereto (Mesina vs. Intermediate Appellate Court, 145 SCRA 497
[1986].)
3. Partial failure of lack of consideration (RCBC vs. Odrada, GR No. 219037 [2016].)