G.R. No. 156207; September 15, 2006
EQUITABLE PCI BANK (the Banking Entity into which Philippine Commercial International Bank was merged), petitioner, vs. ROWENA ONG, respondent.

FACTS

On November 29, 1991, Warliza Sarande deposited a TCBT check for P225,000.00 into her PCI Bank account. On December 5, 1991, she inquired if the check had cleared and received an affirmative answer from the bank. Relying on this, she issued her own PCI Bank check for P132,000.00 to respondent Rowena Ong. Ong presented this check to the same bank branch on the same day and requested its conversion into a manager’s check, which PCI Bank issued as Manager’s Check No. 10983. Ong deposited this manager’s check with Equitable Bank the next day.
PCI Bank later discovered that the original TCBT check deposited by Sarande was dishonored because the drawer’s account was closed. Consequently, PCI Bank stopped payment on the manager’s check issued to Ong. Despite demands, the bank refused to honor the manager’s check, prompting Ong to file a complaint for sum of money and damages. The trial court granted Ong’s motion for summary judgment and later awarded her moral and exemplary damages, attorney’s fees, and costs, which the Court of Appeals affirmed.

ISSUE

The primary issues are: (1) whether the grant of summary judgment was proper; (2) whether Ong is a holder in due course of the manager’s check; and (3) whether the award of damages was justified.

RULING

The Supreme Court affirmed the lower courts’ decisions. Summary judgment was proper as there was no genuine factual issue. The bank’s failure to file an opposition or comment to the motion and its failure to object to the formal offer of exhibits constituted an admission of the facts presented by Ong. The pivotal legal issue was the nature of the manager’s check.
A manager’s check is a bank’s primary obligation, equivalent to a cashier’s check. It is a bill of exchange drawn by the bank’s manager upon the bank itself, accepted in advance by the act of issuance. By converting Ong’s personal check into a manager’s check, PCI Bank assumed an unconditional obligation to pay the instrument to Ong as a holder in due course. The bank’s defense of want of consideration, stemming from the dishonor of Sarande’s deposited check, is a matter strictly between the bank and its depositor, Sarande. It cannot be invoked against Ong, who received the manager’s check in good faith and for value in a completed business transaction. The bank’s wrongful dishonor of its own solemn undertaking justified the award of damages for acting in bad faith.