NEGOTIABLE INSTRUMENTS LAW

Case Digest

MBTC v. Chiok

FACTS:
Chiok regularly purchases US dollars from Nuguid. On July 7, Chiok purchased 3 Cashier’s Checks
(2 from Asian Bank, 1 from MBTC) and deposited these directly to Nuguid’s account with FEBTC (now
BPI). Nuguid failed to deliver the promised amount of about USD 1.02M later that afternoon, prompting
Chiok to request for stop-payment order to MBTC & Asian Bank the next day as well as successfully
securing a TRO for both banks from honoring said Cashier’s Checks.
However, BPI already allowed Nuguid to withdraw the amount from his account on the
afternoon of July 7 on the face of the Cashier’s Checks. MBTC paid BPI the amount of their Cashier’s
Check but Asian Bank refused to honor them despite BPI’s demands.

ISSUE:
W/N Asian Bank should honor its Cashier’s Checks and credit to BPI the amounts therein

HELD:
YES. A Cashier’s Check is a check issued by a bank, who is both drawer and drawee. The bank
places all its resources, integrity, and honesty behind the check. It is considered pre-accepted by the
mere fact of its issuance.
Even if BPI is not a holder in due course (the checks were not endorsed to it by Nuguid since
there were deposited directly to Nuguid’s account with FEBTC), he may compel the endorsement of
Nuguid for being a holder for value or an equitable assignee. As an equitable assignee, BPI may demand
collection from Asian Bank being a holder for value since it allowed Nuguid to withdraw the equivalent
amount of the checks from his account.