Jai-Alai vs. BPI66 SCRA 29, Aug. 6, 1975FACTS: Jai-Alai Corp. deposited with BPI the ten checks acquired from Ramirez, a sales agent of the Inter-Island Gas and a regular jai-alai bettor. The checks were all payable to Inter-Island Gas Service, Inc. or order. Inter-Island Gas discovered that all the indorsements made on the checks purportedly by its cashiers were forgeries.The drawers of the checks demanded reimbursement from the drawee bank-banks, who in turn demanded from BPI. BPI thus debited Jai-Alai's currentaccountand forwarded to it the checks containing the forged indorsementswhich the petitioner refused to accept.

ISSUE:Whether or not BPI had the right to debit the current account of Jai0Alai Corporation.

HELD: YES. The court held that BPI acted within legal bounds when it debited the petitioners account. When the Jai-alai deposited the checks with BPI, the nature of the relationship created at that stage was one of agency, that is, bank was to collect from the drawee of the checks the corresponding proceeds. Since the indorsements were forgeries, they are inoperative, the payment made by drawee banks therefore is inoperative and relationship of a creditor and debtor was not created. 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 everysingleone of those checks is genuine and in all respects what it purports to be. Moreover, Jai Alai Corporation negligent in accepting the checks withoutquestionfrom Antonio Ramirez, notwithstanding that the payee was the Inter-Island Gas Services, Inc. and it did not appear that he was authorized to indorse it.