55 GREAT EASTERN LIFE V. HSBC 43 PHIL 678
FACTS:
The plaintiff is an insurance corporation, which drew a check in favor of Melicor. This was stolen by Maasim, forged the signature of Melicor and deposited the check to his account in PNB. Thereafter, PNB endorsed the check to HSBC who later debited the account of plaintiff. Plaintiff believed all along that Melicor received the payment. Upon knowledge of the debit HSBC did on its account, it demanded that the same amount be credited.
HELD:
The banks are liable. The money was in deposit with the bank and it had no legal right to pay it out to anyone except the plaintiff or its order.
The only remedy of the bank paying a check to a person who has forged the name of the payee is against the forger.
56 GEMPESAW V. CA 218 SCRA 682 FACTS:
Gempensaw was the owner of many grocery stores. She paid her suppliers through the issuance of checks drawn against her checking account with respondent bank. The checks were prepared by her bookkeeper Galang.
In the signing of the checks prepared by Galang, Gempensaw didn't bother herself in verifying to whom the checks were being paid and if the issuances were necessary. She didn't even verify the returned checks of the bank when the latter notifies her of the same. During her two years in business, there were incidents shown that the amounts paid for were in excess of what should have been paid. It was also shown that even if the checks were crossed, the intended payees didn't receive the amount of the checks. This prompted Gempensaw to demand the bank to credit her account for the amount of the forged checks. The bank refused to do so and this prompted her to file the case against the bank.
HELD:
Forgery is a real defense by the party whose signature was forged. A party whose signature was forged was never a party and never gave his consent to the instrument. Since his signature doesn’t appear in the instrument, the same cannot be enforced against him even by a holder in due course.
The drawee bank cannot charge the account of the drawer whose signature was forged because he never gave the bank the order to pay.
In the case at bar the checks were filled up by petitioner’s employee Galang and were later given to her for signature. Her signing the checks made the negotiable instruments complete. Prior to signing of the checks, there was no valid contract yet. Petitioner completed the checks by signing them and thereafter authorized Galang to deliver the same to their respective payees. The checks were then indorsed, forged indorsements thereon.
As a rule, a drawee bank who has paid a check on which an indorsement has been forged cannot debit the account of a drawer for the amount of said check. An exception to this rule is when the drawer is guilty of negligence which causes the bank to honor such checks. Petitioner in this case has relied solely on the honesty and loyalty of her bookkeeper and never bothered to verify the accuracy of the amounts of the checks she signed the invoices attached thereto. And though she received her bank
statements, she didn't carefully examine the same to double-check her payments. Petitioner didn't exercise reasonable diligence which eventually led to the fruition of her bookkeeper’s fraudulent schemes.
57 BANCO DE ORO SAVING V. EQUITABLE 157 SCRA 188
FACTS:
BDO drew checks payable to member establishments. Subsequently, the checks were deposited in Trencio’s account with Equitable. The checks were sent for clearing and was thereafter cleared. Afterwards, BDO discovered that the indorsements in the back of the checks were forged. It then demanded that Equitable credit its account but the latter refused to do so. This prompted BDO to file a complaint against Equitable and PCHC.
The trial court and RTC held in favor of the Equitable and PCHC.
HELD:
First, PCHC has jurisdiction over the case in question. The articles of incorporation of PHHC extended its operation to clearing checks and other clearing items. No doubt transactions on non-negotiable checks are within the ambit of its jurisdiction. Further, the participation of the two banks in the clearing operations is submission to the jurisdiction of the PCHC.
Petitioner is likewise estopped from raising the non-negotiability of the checks in issue. It stamped its guarantee at the back of the checks and subsequently presented it for clearing and it was in the basis of these endorsements by the petitioner that the proceeds were credited in its clearing account. The petitioner cannot now deny its liability as it assumed the liability of an indorser by stamping its guarantee at the back of the checks.
Furthermore, the bank cannot escape liability of an indorser of a check and which may turn out to be a forged indorsement. Whenever a bank treats the signature at the back of the checks as indorsements and thus logically guarantees the same as such there can be no doubt that said bank had considered the checks as negotiable.
A long line of cases also held that in the matter of forgery in endorsements, it is the collecting bank that generally suffers the loss because it had the dutyh to ascertain the genuineness of all prior indorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the indorsements.
58 BPI V. CA 216 SCRA 51 FACTS:
Someone who identified herself to be Fernando called up BPI, requesting for the pre-termination of her money market placement with the bank.
The person who took the call didn't bother to verify with Fernando’s office if whether or not she really intended to preterminate her money market placement. Instead, he relied on the verification stated by the caller. He proceeded with the processing of the termination. Thereafter, the caller gave delivery instructions that instead of delivering the checks to her office, it would be picked up by her niece and it indeed happen as such. It was found out later on that the person impersonated Fernando and her alleged niece in getting the checks. The dispatcher also didn't bother to get the promissory note evincing the placement when he gave the checks to the impersonated niece. This was aggravated by the fact that this impersonator opened an account with the bank and deposited the subject checks. It then withdrew the amounts.
The day of the maturity of the money market placement happened and the real Fernando surfaced herself. She denied preterminating the money market placements and though she was the payee of the checks in issue, she didn't receive any of its proceeds. This prompted the bank to surrender to CBC the checks and asking for reimbursement on alleged forgery of payee’s indorsements.
HELD:
The general rule shall apply in this case. Since the payee’s indorsement has been forged, the instrument is wholly inoperative. However, underlying circumstances of the case show that the general rule on forgery isn’t applicable. The issue as to who between the parties should bear the loss in the payment of the forged checks necessitates the determination of the rights and liabilities of the parties involved in the controversy in relation to the forged checks.
The acts of the employees of BPI were tainted with more negligence if not criminal than the acts of CBC. First, the act of disclosing information about the money market placement over the phone is a violation of the General Banking Law. Second, there was failure on the bank’s part to even compare the signatures during the termination of the placement, opening of a new account with the specimen signature in file of Fernando. And third, there was failure to ask the surrender of the promissory note evidencing the placement.
The acts of BPI employees was the proximate cause to the loss.
Nevertheless, the negligence of the employees of CBC should be taken also into consideration. They closed their eyes to the suspicious large amount withdrawals made over the counter as well as the opening of the account.
59 JAI ALAI V. BPI 66 SCRA 29 FACTS:
Checks were deposited by petitioner in its current account with the bank.
These checks were from a certain Ramirez, a consistent better in its games, who was a sales agent from Inter-Island Gas. Inter-Island later found out that of the forgeries committed in the checks and thus, it informed all the parties concerned. Upon the demands on the bank as the collecting bank, it debited the account of petitioner. Thereafter, petitioner tried to issue a check for payment of shares of stock but such was dishonored for insufficient funds. It filed a complaint against the bank.
HELD:
Respondent bank acted within legal bounds when it debited the account of petitioner. When the petitioner deposited the checks to its account, the relationship created was one of agency still and not of creditor-debtor. The bank was to collect from the drawees of the checks with the corresponding proceeds.
Bank may have the proceeds already when it debited the account of petitioner. Nonetheless, there is still no creditor-debtor relationship.
Following Section 23, a forged signature is wholly inoperative and no right to discharge it or enforce its payment can be acquired through or under the forged signature except against a party who cannot invoke its forgery or want of authority. It stands to reason that as a collecting bank which indorsed the checks to the drawee-banks for clearing, should be liable to the latter for reimbursement for the indorsements on the checks had been forged prior to their delivery to the petitioner. The payments made by the drawee banks to respondent were ineffective—the creditor-debtor relationship hadn’t been validly effected.
60 REPUBLIC V. EBRADA 65 SCRA 680
FACTS:
Ebrada encashed a “Back Pay Check” issued by the Bureau of Treasury at the Republic Bank in Escolta Manila. The Bureau of Treasury advised the Republic Bank that the instrument was forged. It informed the bank that the original payee of the check died 11 years before the check was issued.
Therefore, there was a forgery of his signature.
This is the sequence:
Martin Lorenzo The deceased person, original
“payee”, where the forgery happened
Ramon Lorenzo Delia Dominguez
Mauricia Ebrada Defendant-appelant
Ebrada refuses to return the proceeds of the check claiming that she already gave it to Delia Dominguez. She also claims that she is a HDC (holder in due course) and that the bank is already estopped.
HELD:
Ebrada should return the proceeds of the check to Republic Bank. As an indorser of the check, she was supposed to have warranted that she has good title to said check. See Section 65.
Section 23: When the signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instruments, or to give a discharge thereof against any party thereto, can be acquired through or under such signature unless the party against whom it is sought to enforce such right is PRECLUDED from setting up the forgery or want of authority.
It is only the negotiation based on the forged or unauthorized signature which is inoperative. Therefore:
Martin Lorenzo Signature inoperative
Ramon Lorenzo To Dominguez: operative
Delia Dominguez To Ebrada: operative
Mauricia Ebrada
Drawee bank can collect from the one who encashed the check. If Ebrada performed the duty of ascertaining the genuiness of the check, in all probability, the forgery wouyld have been detected and the fraud defeated.
NOTES FOR WEEK #5:
NOTES FOR WEEK #5:
JULY 10
JULY 10 --15, 200715, 2007
61 MANILA LIGHTER TRANS V. CA 182 SCRA 251
FACTS:
Perez was able to collect the checks payable to petitioner. The petitioner wasn't able however to receive the checks. Instead, the payee’s signatures therein were forged and was able to land in the hands of third persons who deposited the same to their account in China bank. Petitioner sued Chinabank for the sum of money. The trial court held that there was equal negligence on the part of petitioner and bank but the appellate court held that the bank had no liability whatsoever.
HELD:
Since the petitioner had no account with the bank and wasn't a client thereof, the latter had no way of ascertaining the authenticities of its indorsements on the checks which were deposited in the accounts of the third party defendants in said bank. Respondent bank wasn't negligent because, in accordance with banking practice, it caused the checks to pass through the clearing house before it allowed their proceeds to be withdrawn by the depositors.
62 ASSOCIATED BANK V. CA 208 SCRA 465
FACTS:
Reyes was engaged in the RTW business and held transactions with different department stores. She was about to collect payments from the department stores when she was informed that the payments had already been made, through crossed checks issued in her business’ name and the same were deposited with the bank. The bank consequently allowed its transfer to Sayson who later encashed the checks. This prompted Reyes to sue the bank and its manager for the return of the money. The trial and appellate court ruled in her favor.
HELD:
There is no doubt that the checks were crossed checks and for payee’s account only. Reyes was able to show that she has never authorized Sayson to deposit the checks nor to encash the same; that the bank had allowed all checks to be deposited, cleared and paid to one Sayson in violation of the instructions in the said crossed checks that the same were
for payee’s account only; and that Reyes maintained a savings account with the bank which never cleared the said checks.
Under accepted banking practice, crossing a check is done by writing two parallel lines diagonally on the top left portion of the checks. The crossing is special where the name of a bank or a business institution is written between the two parallel lines, which means that the drawee should pay only with the intervention of the company. The crossing is general where the words written in between are “And Co.” and “for payee’s account only”, as in the case at bar. This means that the drawee bank should not encash the check but merely accept it for deposit.
The effects of crossing a check are as follows:
1. That the check may not be encashed but only deposited in the bank
2. That the check may be negotiated only once—to one who has an account with a bank
3. That the act of crossing the check serves as a warning to the holder that the check has been issued for a definite purpose so that he must inquire if he has received the check pursuant to the purpose
The subject checks were accepted for deposit by the bank for the account of Sayson although they were crossed checks and the payee wasn't Sayson but Reyes. The bank stamped thereon its guarantee that all prior endorsements and/or lack of endorsements guaranteed. By such deliberate and positive act, the bank had for all legal intents and purposes treated the said checks as negotiable instruments and accordingly assumed the warranty of the endorser.
When the bank paid the checks so endorsed notwithstanding that title has not passed to the endorser, it did so at its peril and became liable to the payee for the value of the checks.
63 ASSOCIATED BANK V. CA 252 SCRA 620
FACTS:
The province of Tarlac maintains an account with PNB-Tarlac. Part of its funds is appropriated for the benefit of Concepcion Emergency Hospital.
During a post-audit done by the province, it was found out that 30 of its checks weren’t received by the hospital. Upon further investigation, it was found out that the checks were encashed by Pangilinan who was a former cashier and administrative officer of the hospital through forged
indorsements. This prompted the provincial treasurer to ask for reimbursement from PNB and thereafter, PNB from Associated Bank. As the two banks didn't want to reimburse, an action was filed against them.
HELD:
There is a distinction on forged indorsements with regard bearer instruments and instruments payable to order.
With instruments payable to bearer, the signature of the payee or holder is unnecessary to pass title to the instrument. Hence, when the indorsement is a forgery, only the person whose signature is forged can raise the defense of forgery against holder in due course.
In instruments payable to order, the signature of the rightful holder is essential to transfer title to the same instrument. When the holder’s signature is forged, all parties prior to the forgery may raise the real defense of forgery against all parties subsequent thereto. In connection to this, an indorser warrants that the instrument is genuine. A collecting bank is such an indorser. So even if the indorsement is forged, the collecting bank is bound by his warranties as an indorser and cannot set up the defense of forgery as against the drawee bank.
Furthermore, in cases involving checks with forged indorsements, such as the case at bar, the chain of liability doesn't end with the drawee bank.
The drawee bank may not debit the account of the drawer but may generally pass liability back through the collection chain to the party who took from the forger and of course, the forger himself, if available. In other words, the drawee bank can seek reimbursement or a return of the amount it paid from the collecting bank or person. The collecting bank generally suffers the loss because it has te duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the indorsements.
With regard the issue of delay, a delay in informing the bank of the forgery, which deprives it of the opportunity to go after the forger, signifies negligence on the part of the drawee bank and will preclude it from claiming reimbursement. In this case, PNB wasn't guilty of any negligent delay. Its delay hasn't prejudiced Associated Bank in any way because even if there wasn't delay, the fact that there was nothing left of the account of Pangilinan, there couldn't be anymore reimbursement.
With regard the issue of delay, a delay in informing the bank of the forgery, which deprives it of the opportunity to go after the forger, signifies negligence on the part of the drawee bank and will preclude it from claiming reimbursement. In this case, PNB wasn't guilty of any negligent delay. Its delay hasn't prejudiced Associated Bank in any way because even if there wasn't delay, the fact that there was nothing left of the account of Pangilinan, there couldn't be anymore reimbursement.