Tan vs.

CAGR 108555, 20 December 1994First Division, Kapunan (J)

Facts:
Ramon Tan, a businessman from Puerto Princesa, secured a Cashier’s Check from Philippine
Commercial Industrial Bank (PCIBank) to P30,000 payable to his order to avoid carrying cash while
enroute to Manila. He deposited the check in his account in Rizal Commercial Banking Corporation
(RCBC) in its Binondo Branch. RCBC sent the check for clearing to the Central Bank which was
returned for having been “missent” or “misrouted.” RCBC debited Tan’s account without informing him.
Relying on common knowledge that a cashier’s check was as good as cash, and a month after
depositing the check, he issued two personal checks in the name of Go Lak and MS Development
Trading Corporation. Both checks bounced due to “insufficiency of funds.” Tan filed a suit for damages
against RCBC.

Issue:
Whether a cashier’s check is as good as cash, so as to have funded the two checks subsequently
drawn.

Held:
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. Herein, what is involved is
more than an
ordinary check, but a cashier’s check. 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 a
bank’s order to pay what is drawn upon itself, committing in effect its total resources, integrity and
honor beyond the check. Herein, PCIB by issuing the check created an unconditional credit in favor
any collecting bank. 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.