Jai-Alai Corp. of the Phil. vs. Bank of the Phil. IslandsG.R. No. L-29432 August 6, 1975 66 SCRA 29-forgery

FACTS:Petitioner deposited 10 checks in its current account with BPI. The checks which were acquired by petitioner from Ramirez, a sales agent of the Inter-Island Gas were all payable to Inter-Island Gas Service, Inc. or order. After the checks had been submitted to Inter-bank clearing, Inter-Island Gas discovered that all the indorsements made on the checks purportedly by its cashiers were forgeries. BPI thus debited the value of the checks against petitioner's current account and forwarded to the latter the checks containing the forged indorsements which petitioner refused to accept. ISSUE:Whether or not BPI had the right to debit from petitioner's current account the value of the checks with the forged indorsements.

RULING:BPI acted within legal bounds when it debited the petitioner's account. Having indorsed the checks to respondent bank, petitioner is deemed to have given the warranty prescribed in Section 66 of the NIL that every single one of those checks "is genuine and in all respects what it purports to be." Respondent which relied upon the petitioner's warranty should not be held liable for the resulting loss.

**The depositor of a check as indorser warrants that it is genuine and in all respects what it purports to be. Having indorsed the checks to respondent bank, petitioner is deemed to have given the warranty prescribed in Section 66 of the NIL that every single one of those checks " is genuine and in all respects what it purports to be."

PETITIONER: Jai- Alai Corporation of the Philippines

RESPONDENT: Bank of the Philippine Islands

G.R. No. L-2943 August 6, 1975

FACTS: From April 2, 1959 to May 18, 1959, Jai – Alai Corporation of the Philippines deposited 10 checks in its current account with the Bank of the Philippine Islands (BPI). The checks which were acquired by Antonio J. Ramirez, a sales agent of the Inter-Island Gas and regular better of Jai-Alai were all payable to Inter-Island. After the checks had been submitted to inter-bank clearing, Inter-Island discovered that all the endorsements made on the checks purportedly by its cashiers (Santiago Amplayo and Vicenta Mucor) were forgeries. Thus, it informed all the parties concerned. Upon the demands on BPI as the collecting bank, BPI debited the value of the checks against petitioner’s current account and forwarded to the latter

the checks containing forged endorsements which the petitioner refused to accept. Thereafter, petitioner tried to issue a check for payment of shares of stocks but such was dishonored for insufficiency of funds. It filed a complaint against the bank.

ISSUE: Whether or not the BPI had the right to debit from petitioner’s current account the value of the checks with the forged endorsements?

HELD: YES. BPI acted within legal bounds when it debited the petitioner’s account. When the petitioner deposited the checks to its account, the relationship created was one of agency and not of creditor-debtor of BPI was to collect from the drawee – bank of the checks with the corresponding proceeds. BPI may have the proceeds already when it debited the account of petitioner. Nonetheless, there’s still no creditor – debtor relationship. The payments made by the drawee – bank to respondent were ineffective. Hence, the creditor – debtor relationship had not been validly established.

65 SCRA 680 – Mercantile Law – Negotiable Instruments Law – Consideration –Forgery – Liability of Accommodation Party

Republic Bank vs. Ebrada

On January 15, 1963, the Bureau of Treasury issued a back pay check to Martin Lorenzo in the amount of P1,246.08. The drawee named therein was Republic Bank. The check was subsequently indorsed to Ramon Lorenzo, then to Delia Dominguez and then to Mauricia Ebrada. Ebrada encashed the check with the Republic Bank. Republic Bank paid the amount of the check to Ebrada. Ebrada, upon receiving the cash, gave it to Dominguez; Dominguez in turn gave the cash to Ramon Lorenzo.

Later, the Bureau of Treasury notified that the check was a forgery because the payee named therein (Martin Lorenzo) was actually dead 11 years ago before the check was issued. Republic Bank refunded the amount to the Bureau of Treasury. The bank then demanded Ebrada to refund them.

ISSUE: Whether or not Republic Bank may recover from Ebrada.

HELD: Yes. Ebrada, being the last indorser, warranted the genuineness of the signatures of the payee and the previous indorsers. The drawee bank is not duty bound to ascertain whether or not the signatures of the payee and the indorsers are genuine. One who purchases a check or draft is bound to satisfy himself that the paper is genuine and that by indorsing it or presenting it for payment or putting it into circulation before presentation he impliedly asserts that he has performed his duty and the drawee (in this case Republic Bank) who has paid the forged check, without actual negligence on his part, may recover the money paid from such negligent purchasers.

But Ebrada did not profit from this because she, upon receiving the encashment, gave the same to Dominguez?

She is still liable because she is considered as an accommodation party – pursuant to Section 29 of the Negotiable Instruments Law. An accommodationparty is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.

Republic v. Ebrada (July 31, 1975)

Facts: Mauricia T. Ebrada (defendant) encashed a check at theRepublic Bank. The check was

issued by the Bureau of Treasury and was indorsed several times before falling into the hands

of the defendant. Defendant managed to cash the check (worth around 1200 pesos). It was

however discovered that the original payee, Martin Lorenzo, was already dead for more than a

decade. Therefore the initial endorsement must have been a forgery.

Issues:

(1) Whether or not Ebrada is liable to return the amount that she cashed.

(2) Whether or not a drawee of a check (bank) can recover from the holder (Ebrada) the money

paid from a forged instrument.

Held: Sec. 23 of the Negotiable Instruments Law dictates that where the signature on the

negotiable instrument is forged then the negotiation of the check is without force or effect. In

this specific case the court held that since the check was endorsed multiple times already it was

not the responsibility of the bank to ascertain if the signatures of the previous endorsements

were genuine or not. It was the responsibility of the holder of the check to satisfy himself that

the paper is genuine. The acts of presenting the check forpayment or putting it into circulation

asserts that the holder has performed his duty to ascertain the validity of the instrument.

“Everyone with even the least experience in business knows that no business man would accept

a check in exchange for money or goods unless he is satisfied that the check is genuine. If he is

deceived he has suffered a loss of his cash or goods through his own mistake.” Ebrada, upon

receiving the check in question, was duty bound to ascertain if it was genuine or not before

presenting it to plaintiff Bank. The Bank may recover from Ebrada the amountshe received for

the check.