Jai-Alai Corp. of the Phil. vs. Bank of the Phil.

Islands
G.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 InterIsland 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 interbank 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 petitioners 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 petitioners current
account the value of the checks with the forged endorsements?
HELD: YES. BPI acted within legal bounds when it debited the petitioners
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, theres 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

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.