Negotiable Instruments Cases Sec 23

Judge Caldona
DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES
2-D || Ateneo Law School
Negotiable Instruments Case Digests

Section 23
Forged signature of drawer

San Carlos Mining v. BPI (12/11/33)
D: A bank is bound to know the signatures of its customers; and if it pays
a forged check, it must be considered as making the payment out of its
own funds, and cannot ordinarily charge the amount so paid to the
account of the depositor whose name was forged. With negligence of the
bank as the proximate cause of its loss, it cannot hold the depositor liable
Facts:
1. Mr. Alfred Cooper manages the business of San Carlos Mining
(Hawaii-based company) in its Manila Office. He is under the
general power of attorney with power of substitution. Joseph L.
Wilson is its principal employee who was given a general power
of attorney but WITHOUT power of substitution.
2. Cooper wanted to go on a vacation so he GAVE a general
power of attorney to Newland Baldwin and REVOKED the power
of Wilson relative to dealing with BPI, which is one of the banks
where the company maintained a deposit account.
3. A year later, Wilson conspired with Alfredo Dolores, a
messenger-clerk at San Carloss Manila office, and sent a cable
gram in code to the company in Honolulu requesting for the
telegraphic transfer to China Banking Corp. in Manila of
$100,000
4. The money was transferred to the account maintained by the
company with China Bank. China bank then sent an exchange
contract to San Carlos offering P201,000. On this contract was Issu
forged the name of Baldwin and a note requesting China Bank to
issue a certified check in favor of San Carlos Mining when the
transfer is received
5. The following events happened on the same day (September 27,
1927)
a) The requested managers check was issued by China Bank
payable to San Carlos Mining or order was received by
Dolores
b) The check was deposited with BPI with the SPURIOUS
endorsement under the name of Baldwin as agent
1 Ad astra per alia fideles
c) BPI credited the P201,000 to San Carlos deposit account

and passed the cashiers check in the ordinary course of
business through the clearing house where it was paid by
China Bank.
d) BPIs cashier received a letter purportedly signed by Baldwin
directing the former to pack and deliver the next day
P200,000 in various denominations, named in the letter.
6. The next day, Dolores, witnessed the counting and packing of the
money and gave BPI a check for the sum of P200,000 purporting
to have been signed by Baldwin as agent. San Carlos has NEVER
withdrawn such a large amount and NEVER under the sole
supervision of Dolores as its representative
7. Dolores also issued a check for P1 purportedly signed by
Baldwin as payment for the cost of packing the money. Dolores
turned over the money to Wilson and then received his share.
8. When their crime was discovered and upon BPIs refusal to credit
San Carlos Mining for the P200,000 and P1 forged checks, the
latter filed a suit against BPI. BPI suggested to include China Bank
as a defendant
9. BPI argues that it is not guilty of any negligence and that the loss
was due to the dishonesty of San Carlos own employees.
10. Trial Court: The deposit of P201,000 in BPI being the result of a
forged endorsement only made BPI a gratuitous bailee. BPI was
not also guilty of negligence. The court also absolved China Bank
from any liability
Issues: WON China Bank should also be liable for drawing the check
payable to San Carlos
WON BPI was a gratuitous bailee
WON BPI should bear the loss of its payment on the forged notes
Held: NO, NO and Yeeeeeees
Ratio:
1. China Bank is not obliged to inspect and verify all the
endorsements of the check. BPI has the obligation to know to
whom it should have made payment.
2. BPI, like all other banks, is not a gratuitous bailee of the funds
deposited with them by their customers, because the relationship
between a bank and its depositor is one of a debtor-creditor
Judge Caldona
relationship with the banks being the debtors who use the money
of their customers (creditors) to gain profit.
3. A bank is bound to know the signatures of its customers; and if it
pays a forged check, it must be considered as making the
payment out of its own funds, and cannot ordinarily charge the
amount so paid to the account of the depositor whose name was
forged. With negligence of the bank as the proximate cause of
its loss, it cannot hold the depositor liable
4. San Carlos did not do any act to mislead BPI into making the
payment. BPI allowed itself to be misled by Dolores due to its
own negligence. As a consequence, under Sec. 23 of the NIL,
when the signatures to the checks being forged, neither should the
vale of the checks be charged against the depositor nor the
checks be considered of any value to the bank
Philippine National Bank v Quimpo (03/14/1988)
D: The prime duty of a bank is to ascertain the genuineness of the
signature of the drawer or the depositor on the check being encashed. It is
expected to use reasonable business prudence in accepting and cashing a
check presented to it
Facts:
1. Francisco S. Gozon II, was a depositor of the Philippine National Bank
(PNB or the Bank). In his car, Gozon left his friend Ernesto Santos
while he transacted business in the bank. Santos noticed that Gozon
left his checkbook in the car. Thereafter, Santos took a blank check
from such checkbook. Santos then filled up the check for the amount of
PhP5,000.00, forged the signature of Gozon, and then encashed the
check on the same day
2. Gozon asked that the said amount be returned to his account because
his signature was forged, but the bank refused
3. Gozon filed a complaint for recovery of the amount
4. The RTC ruled in favor of Gozon and ordered the bank to return the
amount
5. The bank filed a petition for review on certiorari before the Supreme
Court
Issue: WON the act of Gozon in putting his checkbook containing the check
in question into the hands of Santos was indeed the proximate cause of the
loss, thereby precluding him from setting up the defense of forgery or want of
authority under Section 23 of the Negotiable Instruments Law
Held: No
Ratio:
1. The prime duty of a bank is to ascertain the genuineness of the
signature of the drawer or the depositor on the check being
encashed. It is expected to use reasonable business prudence in
accepting and cashing a check presented to it
2. PNB was negligent in encashing said forged check without carefully
examining the signature which shows marked variation from the
genuine signature of Gozon
3. Gozon trusted Santos as a classmate and a friend. He brought him
along in his car to the bank and left his personal belongings in the
car. Santos however removed and stole a check from his checkbook
without the knowledge and consent of Gozon. No doubt Gozon
cannot be considered negligent under the circumstances of the case
PNB v C.A.
D: When one of two innocent persons must suffer by the wrongful act of
the third person, the loss must be borne by the one whose negligence was
the proximate cause of the loss or who put it into the power of the third
person to perpetrate wrong
Facts:
1. Augusto Lim deposited in his account in PCIB a GSIS check worth 57k
drawn against PNB. Upon receipt PCIB stamped the following on the
back of the check: All prior indorsements and or lack of Endorsement
Guaranteed.
2. Following banking practice, PCIB forwarded the check for clearing to
PNB through Central Bank
3. Despite being informed 2 months prior by GSIS that said check was
lost and that payment should be stopped, PNB did not return check
but kept the same, paid the amount and debited it against GSIS
account
4. Subsequently, payment of 57k was re-credited in GSIS account for
the reason that the signatures of GSIS officers on the checks as
drawers were forged
Judge Caldona
5. PNB filed a complaint to recover the 57k sum from PCIB which
refused.
6. RTC: dismissed complaint
7. C.A.: affirmed
Issue: WON indorsements at the back of the check were forged
Held/ratio: No
1. Question of whether or not the indorsements have been falsified is
immaterial to PNBs liability as drawee or its right to recover from
PCIB. This is so for as against the drawee, the indorsement of an
intermediate bank does not guarantee the signature of the drawer,
since forgery of the indorsement is not the cause of loss
Issue: WON PCIB is liable by virtue of the warranty at the back of the check
Held/ratio: NO
1. PCIB guaranteed all prior indorsements, not the auntheticty of the
signatures of the officers of GSIS who signed on behalf because GSIS
is not the indorser of the check. Such warranty Iis irrelevant to PNBs
alleged right to recover
Issue: WON acceptance is equal to payment
Held/ratio: NO
1. Under NIL, acceptance is not required for checks for they are
payable on demand
2. Acceptance is the promise to perform. Payment means actual
performance of the promise
3. Acceptance of a bill is the signification of the drawee of his assent to
the order of the drawer which in the case of checks is the payment on
demand, of a given money
4. Actual payment of the amount of the check implies not only assent to
the order of the drawer and recognition of the drawees obligation
to pay the aforementioned sum but also compliance to said obligation
Issue: WON PCIB is guilty of negligence
Held/ratio: NO
1. Undeniable that PNB had been guilty of greater negligence because
it had previous and formal notice form GSIS that checks were lost
with the payment that payments be stopped
2. In fact, when PCIB sent the check to Central Bank for clearing, PNB
did not return check which, under banking practice, implies that PNB
considered the check as good. By not returning the check, PNB
Induced PCIB to believe that the check was good and genuine in
every respect. PNB was the proximate cause of the loss hence, it
cannot recover from PCIB
MWSS v CA
Facts:
1. The Metropolitan Waterworks and Sewerage System (MWSS) is a
government owned and controlled corporation created under RA
6234 as the successor-in-interest of the defunct NWSA.
2. The Philippine National Bank (PNB), on the other hand, is the
depository bank of MWSS and its predecessor-in-interest NWSA.
3. Among the several accounts of NWSA with PNB is NWSA Account 6,
otherwise known as Account 381-777 and which is presently
allocated 010-500281. The authorized signature for said Account 6
were those of MWSS treasurer Jose Sanchez, its auditor Pedro
Aguilar, and its acting General Manager Victor L. Recio. Their
respective specimen signatures were submitted by the MWSS to and
on file with the PNB.
4. By special arrangement with the PNB, the MWSS used personalized
checks in drawing from this account.
5. These checks were printed for MWSS by its printer, F. Mesina
Enterprises, located at 1775 Rizal Extension, Caloocan City.
6. During the months of March, April and May 1969, 23 checks were
prepared, processed, issued and released by NWSA, all of which
were paid and cleared by PNB and debited by PNB against NWSA
Account 6.
7. During the same months of March, April and May 1969, 23 checks
bearing the same numbers as the NWSA checks were likewise paid
and cleared by PNB and debited against NWSA Account 6. The
checks were deposited by the payees Raul Dizon, Arturo Sison and
Antonio Mendoza in their respective current accounts with the
Philippine Commercial and Industrial Bank (PCIB) and Philippine Bank
of Commerce (PBC) in the months of March, April and May 1969.
Thru the Central Bank Clearing, these checks were presented for
payment by PBC and PCIB to the PNB, and paid, also in the months of
March, April and May 1969.
Judge Caldona
8. At the time of their presentation to PNB these checks bear the

standard indorsement which reads all prior indorsement and/or lack
of endorsement guaranteed.
9. Subsequent investigation however, conducted by the NBI showed that
Dizon, Sison and Mendoza were all fictitious persons.
10. On 11 June 1969, NWSA addressed a letter to PNB requesting the
immediate restoration to its Account 6, of the total sum of
P3,457,903.00 corresponding to the total amount of the 23 checks
claimed by NWSA to be forged and/or spurious checks.
11. PNB refused to credit back the said total sum of P3,457,903.00.
12. MWSS filed the present complaint on 10 November 1972 before
the CFI Manila.
CFIs Decision:
On 6 February 1976, the CFI Manila rendered judgment in favor

of the MWSS, ordering the PNB to restore the total sum of
(P3,457,903.00) to MWSS's Account 6 with legal interest thereon
computed from the date of the filing of the complaint and until as
restored in the said account.
CAs Decision:
On appeal and on 29 October 1982, the Court of Appeals reversed the
decision of the CFI Manila and rendered judgment in favor of the respondent
Philippine National Bank.
ISSUE:
A.WON MWSS can assert forgery as a defense?
B. WON MWSS was negligent?
HELD:
A. No, there were no evidence that checks were forged.
Forgery cannot be presumed. It must be established by clear,
positive, and convincing evidence. This was not done in the
present case.
There is no express and categorical finding in these documents

that the 23 questioned checks were indeed signed by persons
other than the authorized MWSS signatories.
On the contrary, NBI reports show that MWSS fraud was an
"inside job" and that MWSS's delay in the reconciliation of bank
statements and the laxity and loose records control in the printing
of its personalized checks facilitated the fraud.
Likewise, the questioned Documents Report 159-1074 dated 21
November 1974 of the NBI does not declare or prove that the
signatures appearing on the questioned checks are forgeries. The
report merely mentions the alleged differences in the typeface,
check writing, and printing characteristics appearing in the
standard or submitted models and the questioned type writings.
The NBI Chemistry Report C-74-891 merely describes the inks
and pens used in writing the alleged forged signatures.
The 3 NBI Reports relied upon by MWSS are inadequate to
sustain its allegations of forgery. These reports did not touch on
the inherent qualities of the signatures which are indispensable in
the determination of the existence of forgery. There must be
conclusive findings that there is a variance in the inherent
characteristics of the signatures and that they were written by
two or more different persons.
B. Yes, MWSS was negligent and this was the proximate cause of its loss.
MWSS committed gross negligence in the printing of its
personalized checks. The records show that at the time the 23
checks were prepared, negotiated, and encashed, MWSS was
using its own personalized checks, instead of the official PNB
Commercial blank checks. In the exercise of this special privilege,
however, MWSS failed to provide the needed security measures.
That there was gross negligence in the printing of its personalized
checks is shown by the following uncontroverted facts, that MWSS
failed to:
(1) Give its printer, Mesina Enterprises, specific instructions
relative to the safekeeping and disposition of excess forms,
check vouchers, and safety papers
(2) Retrieve from its printer all spoiled check forms
(3) Provide any control regarding the paper used in the
printing of said checks
Judge Caldona
(4) Furnish the respondent drawee bank with samples of

typewriting, check writing, and print used by its printer in the
printing of its checks and of the inks and pens used in signing
the same
(5) Send a representative to the printing office during the
printing of said checks.
Another factor which facilitated the fraudulent encashment of the 23
checks was the failure of MWSS to reconcile the bank statements with
its own records. It is accepted banking procedure for the depository
bank to furnish its depositors bank statements and debt and credit
memos through the mail. MWSS requested the drawee bank to
discontinue the practice of mailing the bank statements, but instead to
deliver the same to a certain Mr. Emiliano Zaporteza. For reasons
known only to Mr. Zaporteza however, he was unreasonably delayed
in taking prompt deliveries of the said bank statements and credit
and debit memos. As a consequence, Mr. Zaporteza failed to
reconcile the bank statements with MWSS's records. If Mr. Zaporteza
had not been remiss in his duty of taking the bank statements and
reconciling them with MWSS's records, the fraudulent encashments of
the first checks should have been discovered, and further frauds
prevented. This negligence was, therefore, the proximate cause of the
failure to discover the fraud.
Republic v. Equitable Banking Corporation (1/30/1964)

D: Generally, where a drawee bank otherwise would have a right of
recovery against a collecting or indorsing bank for its payment of a forged
check, its action will be barred if it is guilty of an unreasonable delay in
discovering the forgery and in giving notice thereof
D: Where a loss, which must be borne by one of two parties alike
innocent of forgery, can be traced to the neglect or fault of either, it is
reasonable that it would be borne by him, even if innocent of any
intentional fraud, through whose means it has succeeded.
Facts:
Government (Treasurer): drawee -> the warrants are cleared thru Clearing
Office
Government (Auditor): drawer

1. 28 treasury warrants were executed on genuine government forms
but the signature thereon of the Auditor in General was alleged to be
forged
2. 24 of the treasury warrants amounting to P342, 767.63 were
deposited by the Corporacion to BPI. BPI then presented the
warrants for payment to the drawee (government) thru the Clearing
Office of CB and after being cleared, the warrants were paid by the
Treasurer. Hence, BPI credited the proceeds of warrants to
Corporacion. However, Treasurer later returned all warrants and
demanded that value of the warrants be charged against BPI on the
ground that they had been forged and be credited back to Treasury.
The demand for reimbursement was ignored by BPI.
3. On the other hand, 4 of the treasury warrants amounting to P17,100
were deposited by Wong, Kau and Ching to Equitable Bank which
cleared said warrants thru the Clearing Office and then collected the
corresponding amounts from the Treasurer. Later on, Treasurer
notified Equitable of alleged defect of warrants and demanded
reimbursement of the amounts. This demand was rejected by
Equitable.
4. Now, the government instituted an action for recovery against BPI of
P342, 767.63 and Equitable of P17,100
5. Both RTC and CA dismissed the case.
Issues:
(1st issue)WON Treasurer is bound by the 24-hour clearing house rule of
Clearing Office
(2nd issue)WON Treasurer may recover value of warrants from BPI and
Equitable
Held:
Yes. Treasurer is bound by the 24-hour clearing house rule of Clearing Office
No. Treasurer may not recover from both BPI and Equitable
Ratio:
(1st issue)
1. The clearing of the 28 warrants thru the Clearing Office was made
pursuant to the 24-hour clearing house rule, which had been
adopted by CB in a conference with representatives and officials of
different banking institutions in the Philippines.
Judge Caldona
2. The rule is embodied in Sec 4, subsection (c) of Circular No. 9 of CB.

The contention of Treasurer that it is not bound by this rule because
the Treasury is not a bank and that it had objected to this rule is
untenable because admittedly, the Treasury is a member of the
Clearing office which shows that the latter is subject to the rules and
regulations of CB. Besides, the rule applies not only to bank but also
to institutions.
3. The opposition (that it is physically impossible for Treasury to verify
the treasury warrants within 24 hrs because of limited personnel and
voluminous treasure warrants to be cleared)of the Treasurer to the
rule is not sufficient to exempt the Treasury from operation thereof.
Note: Because of this rule, the drawee bank should give notice of forgery on
time. However, in this case, Treasury was delayed in informing BPI and
Equitable of the forgery
(2nd issue)
4. Treasury was not only negligent in clearing the warrants but also
induced the BPI and Equitable to pay the amounts of treasury
warrants. The gross nature of the negligence becomes more evident
because the warrants involved was over P5,000 and hence, beyond
the authority of the auditor of the Treasury whose signature thereon
had been forged. Moreover, they did not advertise the loss of the
genuine forms of its warrants.
5. Neither BPI nor Equitable had been informed of any irregularity in
connection with the warrants but they were only informed of such
when the warrants had already been cleared and honored. As a
consequence, the loss of amounts thereof is imputable to acts and
omissions of Treasury for which BPI and Equitable cannot be
penalized.
6. SC cited case of PNB v. National City Bank of New York Where a
loss, which must be borne by one of two parties alike innocent of
forgery, can be traced to the neglect or fault of either, it is
reasonable that it would be borne by him, even if innocent of any
intentional fraud, through whose means it has succeeded.Hence,
because Treasury was negligent, loss shall be borne by it
7. Rule: Generally, where a drawee bank otherwise would have a right
of recovery against a collecting or indorsing bank for its payment of
a forged check, its action will be barred if it is guilty of an
unreasonable delay in discovering the forgery and in giving notice

thereof
National Bank v. National City Bank of New York (10/31/1936)

D: Based on sec. 23 of the NIL, where a drawee accepts or certifies a
check, it is estopped to deny the genuineness of the drawers signature
and his capacity to issue the instrument; but in the absence of the
drawees actual fault, his constructive fault in not knowing the signature
of the drawer and detecting the forgery, he is not precluded from
recovering from one who took the check under suspicious circumstances
and without proper precaution, or whose conduct misled or induced the
drawee to pay the check without usual scrutiny or other precautions
against mistake or fraud
Facts:
1. On separate dates, some unknown persons negotiated with Motor
Service Company, Inc. (MTCI, one of the defendants) two checks for
payment of automobile tires, which purported to have been issued by
Pangasinan Transportation, Inc. against National Bank (PNB) and in
favor of International Auto Repair Shop.
2. One of the checks, which had a prior number, was issued on a later
date than the date of issuance of the other check with a later number
(check 1: 637020-D; check 2: 637023-D)
3. MTCI accepted these checks from the unknown persons. One of the
checks (check 2) was indorsed by a subagent of the agent of the
payee (International Auto Repair Shop)
4. MTCI then indorsed said checks for deposit at the National City Bank
of New York (NY)
5. MTCI was then credited with the amounts of the checks.
6. After the checks were cleared, PNB credited the amounts in favor of
NY
7. Later, however, PNB found out from the drawer that appeared on the
checks that his signatures were forged so PNB demanded from
defendants reimbursements of the amounts credited NY and for which
NY credited MTCI. The defendants refused
8. The drawer also refused to deduct the proceeds of the checks from its
deposit
9. RTC: Reimburse PNB
Judge Caldona
Issue: WON PNB, as drawee bank, may recover from defendants

Held: Yeeeeeees
Ratio:
1. As a rule, PNB became estopped when it accepted the checks
2. Exceptions:
a) If the holder of the instrument was negligent when he
accepted the checks without ascertaining that the signatures
therein arent forged
MTCI accepted the checks from unknown persons
The dates of issuance of the checks were suspicious
The indorsements on the checks were only made by a
subagent of the agent of the drawer
b) If the holders position would not become worse than if the
drawee had refused the payment of the checks upon their
presentation
c) If the drawee, by its acceptance of the checks, did not
warrant to the holder the genuineness of the checks and if it
did not perform any act which would have induced the holder
of the check to believe in the genuineness of the checks
before the latter purchased them for value
d) If the drawees fault is not actual, but only constructive,
because it did not know the signature of the drawer only
Ilusorio v. CA (11/27/2002)
D: When a signature is forged, it is wholly inoperative unless the party
against whom it is sought to enforce such right is precluded from setting
up the forgery or want of authority
Facts:
1. Ramon K. Ilusorio is a prominent businessman who serves as the
Managing Director of the Multinational Investment Bancorporation at
the time when this case was first instituted. He is also the chairman
and president of other corporations
2. As he was running about 20 corporations at a time and is often out of
the country. As such, he has entrusted his credit cards and his
checkbook with blank checks to his secretary, Katherine E. Eugenio
3. It was Eugenio who verified and reconciled the statements of the

checking accounts
4. Between September 1980 to January 1981, Eugenio was able to
encash and deposit to her personal account 17 checks drawn against
Ilusorios account with the Manila Banking Corporation. The
aggregate amount was PHP 119,634.34
5. Petitioner did not bother to check this until a business partner told him
that he was Eugenio using his credit cards
6. As a result, Ilusorio fired Eugenio and instituted a criminal action
against her for estafa thru falsification. Manila Banking Corporation
also filed a complaint against Eugenio on the basis of Ilusorios
complaint that his signatures in the checks were forged
7. In his statement, Mr. Razon (who works for Manila Bank) claimed that
he has examined the checks with utmost care in accordance to the
banks SOP by comparing the signatures on the check and specimen
of Ilusorios signature. Further, he testified that Eugenio personally
enchased the checks at their office
8. Ilusorio then requested the bank to credit back and restore to his
account the value of the checks which were wrongfully encashed.
Manila Bank refused (duh). Petitioner then filed a case against
Manila Bank, alleging that they were negligent in checking the
authenticity of the signature appearing on the checks
9. The NBI asked petitioner to submit at least 7 standard signatures for
verification. However, Ilusorio failed to comply with the request.
10. RTC: Dismissed complaint for lack of sufficient basis.
11. CA: Affirmed RTC decision, stating that it was petitioners own
negligence that was the proximate cause of his loss
Issue:
1. WON Manila Bank is liable for damages for its negligence in failing
to detect the discrepancy in the signatures on the checks
2. WON the forged check is inoperative under Sec. 23 of the NIL, thus
Manila Bank had no authority to pay for the forged checks
Held: No
Ratio:
1. FIRST ISSUE: Ilusorio contends that Manila Bank is liable for damages
since as a general rule, a bank which has obtained possession of
Judge Caldona
2.
3.
4.
5.
6.
7.
check upon an unauthorized or forged endorsement of the payees

signature and which collects the amount of the check from the drawee
is liable for the proceeds thereof to the payee. Further, Manila Bank
is stopped from asserting the fact that forgery was not proven
because they themselves instituted a case against Eugenio
But Manila Bank raises the defense that Sec. 23 of the NIL is
inapplicable since forgery was never proven
The Supreme Court held that it was Ilusorio who has the burden of
proving negligence on the part of the bank. It is incumbent upon him
to establish the fact of forgery by submitting his specimen signatures
and comparing them with those on the questioned check. However,
Ilusorio failed to submit specimen of signatures to the NBI
SC affirmed RTC and CAs decision that the bank employees
exercised due diligence in cashing the checks. They did not doubt
Eugenio since she was a regular customer of the bank, having been
designated by Ilusorio as his agent to transact with them on his
behalf. For the Court, it was Ilusorio and not the bank whos negligent
since he gave Eugenio unrestricted access on his various accounts
Proximate cause of damage = petitioners failure to examine his
bank statements. Bank sent him monthly bank statements, but he did
not check on any error or discrepancy in the entries
SECOND ISSUE: Ilusorio contends that under Sec 23 of the NIL, a
forged check is inoperative thus Manila Bank had no authority to pay
the checks.
a. General rule: When a signature is forged, the check is wholly
inoperative. No right to retain the instrument or enforce
payment against any party can be acquired under such
signature
b. Exception: Unless the party against whom it is sought to
enforce such right is precluded from setting up the forgery or
want of authority
Issu
In the current case, the exception applies since Ilusorio is precluded
from setting up forgery due to his own negligence.
BPI v. Casa Montessori Internationale (5/28/04)

D: A banks prime duty is to ascertain well the genuineness of
the signatures of its client-depositors on checks being encashed
and is expected to use reasonable business prudence. In the
performance of that obligation, it is bound by the internal
banking rules and regulations that form part of the contract it
enters into with its depositors. Failure to do so would amount
to negligence, which will make the bank bear the loss on its
encashment of a forged instrument
Facts:
1. Casa Montessori maintains an account with BPI with Casas
President Ms. Lebron as one of its authorized signatories.
2. In 1999, BPI conducted an investigation and discovered that a
Sonny D. Santos enchased 9 checks with a total amount of
P782,000. Sonny D. Santos is the fictitious name used by
Leonardo Yabut, external auditor of Casa. Yabut admitted to
forging Lebrons signature in order to encash the checks. Yabut,
later on, destroyed the checks to cover up his crime
3. With the signatures being confirmed by the police as forgeries,
Casa field a complaint against BPI for damages and
reinstatement of the amount P782,500 with 6% interest. Yabut
confessed of his crime
4. Since the checks were destroyed, both the RTC and CA admitted
microfilm copies of the checks destroyed as well as testimonial
and other documentary evidence
5. RTC: ruled in favor of Casa
6. CA: modified the decision of the RTC by apportioning the loss
between BPI and Casa, taking into consideration Casas
contributory negligence which resulted to the forgery
Issues: WON there was forgery under the Sec. 23 of NIL which makes the
instrument wholly inoperative
WON BPI was negligent thus making it liable for damages
WON moral and exemplary damages and attorneys fees and interest should
be awarded
Held: Yeeeeeees, No and partly NO and partly Yeeeeeees
Ratio:
1. Forgery under Sec. 23 of the NIL was committed as shown by the
admission of Yabut and the confirmation by the PNP Crime
Judge Caldona
Laboratory of the forgery. Counterfeiting of any writing,

consisting in the signing of anothers name with the intent to
defraud is FORGERY.
Under the NIL, a forged signature is a real or absolute defense,
and a person whose signature on a negotiable instrument is
forged is deemed to have never become a party thereto and to
have never consented to the contract that allegedly gave rise to
it.
2. The banking business is impressed with public interest, of
paramount importance thereto it the trust and confidence of the
public in general. Consequently, the highest degree of diligence
and high standards of integrity and performance are required of
it. Banks are under the obligation to treat the accounts of its
depositors with meticulous care, always having in mind the
fiduciary nature of their relationship
A banks prime duty is to ascertain well the genuineness of the
signatures of its client-depositors on checks being encashed and is
expected to use reasonable business prudence. In the
performance of that obligation, it is bound by the internal
banking rules and regulations that form part of the contract it
enters into with its depositors.
However, BPI failed to observe such prudence as seen in the
following instances:
a) Yabut was able to open an account with BPI even withput
the proper verification of his corresponding identification
papers (privity)
b) BPI was not able to identify early on the marked
difference of the signatures on the checks and those on
the signature card
c) The Central Verification Unit of BPI passed off the forged
signatures as genuine ones
Having contributed to the perpetration of fraud due to its
negligence, BPI then must bear the loss
Casa cannot likewise be faulted for not responding to the simple
confirmation or circularization policy of BPI as Casa merely
3.
committed an innocent mistake (for being ignorant of the policy);

therefore, estoppel will not arise
Casa was not granted any moral and exemplary damages for
failure to prove bad faith on the part of BPI. BPI was only negligent
in performing its duties to Casa. Casa was also granted the attorneys
fee and 6% interest on the amount due
Citibank, N.A. v Cabamongan (05/02/2006)

D: A bank is bound to know the signatures of its customers; and if it pays
a forged check, it must be considered as making the payment out of its
own funds, and cannot ordinarily charge the amount so paid to the
account of the depositor whose name was forged.
Facts:
(1) Luis and Carmelita Cabamongan opened a joint and/or foreign
currency time deposit in trust for their sons Luis, Jr and Lito at Citibank
(the Bank), in the amount of $55,216.69 for a term of 182 days, at
2.5625 percent interest per annum. Prior to maturity, a person
claiming to be Carmelita went to the bank and pre-terminated the
said foreign currency time deposit by presenting a passport, a Bank
of America Versatele Card, and ATM card and a Mabuhay Credit
Card. Said person failed to surrender the original Certificate of
Deposit, she had to execute a notarized release and waiver
document, pursuant to the banks internal procedure, before the
money was released to her. The document was not notarized, but the
money was nonetheless released and given to her.
(2) San Pedro (Account Officer of the Bank) called up Carmelitas listed
address. Marites, the wife of Lito, received San Pedros call and was
stunned by the news that Carmelita pre-terminated her foreign
currency time deposit because Carmelita was in the US at that time.
Marites made an overseas call to inform Carmelita about what
happened. The spouses Cabamongan were shocked to hear the news.
It seems that an unidentified person broke into their house in the US.
They initially reported that only Carmelitas jewelry box was missing,
but later on, they discovered that other items, such as passports, bank
deposit certificates, including the subject foreign currency deposit,
and identification cards were also missing.
Judge Caldona
(3) The spouses Cabamongan informed the bank that Carmelita was in
the US and did not pre-terminate their deposit, and that the person
who did it was an impostor.
(4) San Pedro told the spouses to submit necessary documents to support
their claim, but the bank concluded nonetheless that Carmelita indeed
pre-terminated her deposit.
(5) The spouses made a formal demand, but the bank refused such
demand. The spouses then filed a complaint against the bank for
specific performance with damages.
(6) The RTC rendered a decision in favor of the spouses Cabamongan,
ordering the bank to pay the principal amount, plus moral damages
and attorneys fees.
(7) The CA affirmed the decision of the RTC, but reduced the amount for
moral damages and deleted the awards for exemplary damages
and litigation expenses.
Issue: WON the bank was negligent in allowing the pre-termination of the
account.
Held: Yeeeeees
Ratio:
(1) In this case, it has been sufficiently shown that the signatures of
Carmelita in the forms for pre-termination of deposits are forgeries.
Citibank, with its signature verification procedure, failed to detect the
forgery. Its negligence consisted in the omission of that degree of
diligence required of banks. A bank is bound to know the signatures
of its customers; and if it pays a forged check, it must be considered
as making the payment out of its own funds, and cannot ordinarily
charge the amount so paid to the account of the depositor whose
name was forged.
(2) The bank, through San Pedro, did not observe the degree of
diligence required of banking institutions when despite noticing
discrepancies in the signature and photograph of the person claiming
to be Carmelita and the failure to surrender the original certificate of
time deposit, the pre-termination of the account was allowed. Even
the waiver document was not notarized, a procedure meant to
protect the bank. Citibank is therefore liable for damages.
(3) The time deposit in this case is a simple loan. Thus, in a loan or
forbearance of money, the interest due should be that stipulated in
writing, and in the absence thereof, the rate shall be 12% per annum
counted from the time of demand. The stipulated rate of 2.562% per
annum shall apply for the 182-day contract. From the time of
demand until full payment, the interest rate shall be at 12%. As for
the period between the expiration of the 182-day contract and the
extrajudicial demand, the interest will be at rate then prevailing
granted by Citibank
Forged indorsement
Great Eastern Life Ins. Co. v. HongKong Shanghai Bank
D: The only remedy of a bank paying a check to a person who has forged
the name of the payee is against the forger.
FACTS:
1. Great Eastern Life Ins. Co (GELIC) is an insurance company which
drew a check worth 2k payable to the order of Lazaro Melicor from
drawee bank HSBC.
2. Check fraudulently got into the possession of E.M. Maasim who
forged Melicors signature as endorser and personally indorsed the
and presented said check to PNB where the amount was placed in his
credit.
3. After paying for the check, PNB endorsed the same to HSBC which
paid the amount charged in the account of GELIC. A bank statement
was then forwarded to GELIC which made no objection.
4. After four months, GELIC learned that Melicor never received any
check and that the latters signature was forged by Maasim
5. Subsequently, GELIC demanded from HSBC the credit for the amount
of the forged check but the bank refused to do so. Thus, a complaint
was filed.
6. RTC: dismissed
7. C.A.: affirmed
ISSUE: Who is responsible for the refund of the drawer of the amount of the
check drawn and payable to order when its value was collected by a third
person by means of forgery of the signature of the payee?
HELD/RATIO: forger
1. GELIC ordered the money to be paid to Melicor and not to Massim.
That the money was paid to Maasim and not to Melicor who dod s
not endorse or authorize Maasim to indorse it for him. HSBC has no
Judge Caldona
defense against the recovery of money. When GELIC received bank

statement from HSBC, the former had the right to assume that Melicor
personally endorsed the check and that otherwise, the bank would not
have paid the amount.
2. HSBCs remedy is to recover from PNB
3. PNB had no license or authority to pay the money to Maasim or
anyone else upon a forged signature. It was its legal duty to knoe
that Melicors endorsement was genuine before cashing the check.
4. PNBs remedy is to recover from Maasim
Gempesaw vs. CA
Facts:
1. Gempesaw owns and operates four grocery stores located in
Caloocan City. She also maintains a checking account with PBCOM
Caloocan City Branch.
2. Alicia Galang, her trusted bookkeeper who worked for her for 8
years, prepares and fills up all the material particulars of all her
checks. After which the completed checks are submitted to Gempesaw
for her signature, together with corresponding invoice receipts which
indicate the correct obligations due and payable to the suppliers. She
signed every check without bothering to verify the accuracy of the
checks against the corresponding invoices.
3. The issuance and delivery of the checks to the payees were left to
Galang. Gempesaw did not make any verification as to whether the
checks were actually delivered to their respective payees.
4. PBCOM notified Gempesaw of all her checks presented to and paid
by the bank. It also furnished her with a monthly statement of her
bank transactions, attaching thereto all the cancelled checks she had
issued and which were debited against her current account.
5. For the span of 2 years, Gempesaw issued 82 checks in favour of
several suppliers. These checks were all presented by the indorsees
as holders thereof to, and honoured by PBCOM.
6. PBCOM debited the amounts of the checks against Gempesaws
checking account. Most of the checks were for amounts in excess of
her actual obligations. All the checks issued were crossed checks.
7. All 82 checks were brought to Ernest Boon, Chief Accountant of
PBCOM Buendia Branch, who without authority accepted the all for
8.
9.
10.
11.
12.
deposit to the credit and/or in the accounts of Alfredo Romero and

Benito Lam. According to bank rules, only the Branch Manager may
accept a second indorsement on a check for deposit.
It was only after 2 years when she found out about the fraudulent
manipulations of her bookkeeper.
The auditors of PBCOM which conducted periodical inspection of the
branches operations failed to discover, check or stop the
unauthorized acts of Boon.
30 of the payees testified that they did not receive nor see the
subject checks and the indorsement appearing on the back were not
theirs.
On November 7, 1984, Gempesaw made a written demand on
PBCOM to credit her account with the money value of the 82 checks
totalling P 1, 208, 606. 89 for having wrongfully charged against
her account.
PBCOM refused to grant Gempesaws demand. On January 23,
1985, Gempesaw filed a complaint with the RTC.
ISSUE:
A. WON Gempesaw can assert forgery as a defense?
B. WON Gempesaw is entitled to damages?
HELD:
A. No, Gempasaws negligence was the proximate cause her loss.
As a rule, a drawee bank who has paid a check on which an
indorsement has been forged cannot charge the drawer's
account for the amount of said check. An exception to this rule
is where the drawer is guilty of such negligence which causes
the bank to honor such a check or checks.
The negligence of a depositor which will prevent recovery of
an unauthorized payment is based on failure of the depositor
to act as a prudent businessman would under the
circumstances. In the present case, Gempesaw relied implicitly
upon the honesty and loyalty of her bookkeeper, and did not
even verify the accuracy of the amounts of the checks she
signed against the invoices attached thereto. Furthermore,
although she regularly received her bank statements, she
apparently did not carefully examine the same nor the check
Judge Caldona
stubs and the returned checks, and did not compare them with
the sales invoices. Otherwise, she could have easily
discovered the discrepancies between the checks and the
documents serving as bases for the checks. With such
discovery, the subsequent forgeries would not have been
accomplished. It was not until two years after the bookkeeper
commenced her fraudulent scheme that Gempesaw
discovered that 82 checks were wrongfully charged to her
account, at which time she notified the drawee Bank.
B. Yes, Gempasaw is entitled to damages because PBCOM is liable
under Article 1170 of the Civil Code, and not Article 2179.
There is a contractual relation between Gempesaw as depositor
(obligee) and the drawee bank as the obligor. In the performance of
its obligation, the drawee bank is bound by its internal banking rules
and regulations which form part of any contract it enters into with any
of its depositors. When it violated its internal rules that second
endorsements are not to be accepted without the approval of its
branch managers and it did accept the same upon the mere approval
of Boon, a chief accountant, it contravened the tenor of its obligation
at the very least, if it were not actually guilty of fraud or negligence
Banco de Oro Savings and Mortgage Bank v. Equitable Banking

Corporation (1/20/1988)
D: The collecting bank or last endorser generally suffers the loss because it
has the 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 endorsements
Facts:
Equitable Bank (Visa Card Dept.): drawer
Equitable Bank: drawee
Members of VCD: payee
BDO: Collecting bank
Aida Trencio: depositor
1. Equitable Bank, through its Visa Card Dept, drew 6 crossed

Managers check for P45,982.23. The checks were deposited with
BDO to the credit of its depositor, a certain Aida Trencio
2. BDO stamped at the back of the check its usual endorsement: All
prior and/or lack of endorsement guaranteed. Then, it sent the
checks for clearing through Phil. Clearing House Corporation (PCHC).
Accordingly, Equitable Bank paid the checks. Its clearing account was
debited for the value of the checks and BDOs clearing account was
credited for the same.
3. Thereafter, Equitable discovered that the endorsement appearing at
the back of the checks and purporting to be that of the payees were
forged and/or unauthorized or otherwise belong to persons other
than the payees.
4. Pursuant to PCHC Clearing Rules and Regulations, Equitable
presented checks directly to BDO for reimbursement. BDO refused to
reimburse Equitable for the value of the checks.
5. Hence plaintiff complained to Arbiter in accordance with Section 38
of Clearing House Rules and Regulations.
6. Arbiter rendered judgment in favor of Equitable and ordered BDO to
reimburse Equitable of the amount of P45,982.23 with 12% interest
7. MFR filed by BDO was denied and Board of Directors also affirmed
decision of Arbiter
8. BDO then filed a petition for review under RTC which also affirmed
the decision of PCHC. Hence, this petition to SC.
Issues:
WON PCHC have jurisdiction even if check is non-negotiable
WON BDO is negligent and thus responsible for any undue payment
Held: YES to both
Ratio:
1. The Articles of Incorporation of PCHC extend its operation to clearing
checks and other clearing items. No doubt transactions on nonnegotiable checks are within the ambit of its jurisdiction. The term
check, as used in the said Articles of Incorporation of PCHC can only
connote checks in general use in commercial and business activities. It
cannot be conceived to be limited to negotiable checks only because
settled is the rule that when the law does not distinguish, the court
should not distinguish.
2. SC also added that BDO is estopped from claiming that the checks
are non-negotiable due to its own act. It stamped its guarantee on
the back of the checks and subsequently presented these checks for
Judge Caldona
clearing and it was on the basis of these endorsements that the

proceeds were credited in its clearing account. It assumed the
liabilities of an endorser by stamping its guarantee at the back of the
checks. Hence, because of such action, it treated the checks, for all
intents and purposes, to be negotiable.
BPI v CA (11/26/1992)
D: Generally, payment made through a forged signature is ineffective or
does not discharge the instrument. The exception to this rule is when the
party who relied on the forgery is precluded from setting up the forgery or
want of authority due to its negligence
Note: The RULE is: Whenever any bank treats the signature at the back of the
checks as endorsements and thus logically guarantees the same as such there
can be no doubt said bank has considered the checks as negotiable
Facts:
1. Eligia Fernando was an employee of Philamlife who had money in a
money market placement in BPI. This was evidenced by a promissory
note and hasnt matured yet
2. One day, someone called up BPI to preterminate the placement but
was unable to due to time constraints. She said that she was Eligia
Fernando
3. Three days after, the same caller called and followed up on the
pretermination. The BPI employee who answered the phone verified
the identity of the caller, but failed to complete the verification when
it did not call up Philamlife to ascertain if h was really speaking with
the real Fernando
4. A delivery of the checks (in payment of the preterminated money
market placement) were made by BPI when the niece of the caller
(who pretended to be Fernandos niece and who is actually the same
person as the caller) picked up the two checks from BPIs dispatcher
5. The dispatcher failed to require the surrender of the promissory note
that was supposed to evidence the placement and it was not shown
also that a verification of the identity of the signature of Fernando
was made in the supposed authorization letter that the niece brought
with her when she picked up the checks
6. Later, impostor Fernando opened an account with China Banking
Corp. (CBC) and deposited therein the two checks that were paid to
her by BPI after the pretermination of the placement; these were
cleared by BPI on the same day
7. Two days after the deposit, large amounts of money were withdrawn
by the impostor from the CBC account
8. When the maturity of the placement came, the real Fernando
appeared and disclaimed that she preterminated her money market
placement with BPI
9. BPI, then, returned the two checks to CBC for the reason Payees
endorsement forged, but CBC gave these back for reason of
Beyond clearing time
3. Because of BDOs actions, it led Equitable to believe that it was

acting as endorser of the checks and on the strength of this
guarantee, Equitable cleared the checks in question and credited the
account of BDO. (doctrine of estoppel)
4. A commercial bank cannot escape the liability of an endorser of a
check and which may turn out to be a forged indorsement.
5. RULE: the collecting bank or last endorser generally suffers the loss
because it has the 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
endorsements. (PNB v. National City Bank)
6. RULE: When the drawee-bank discovers that the signature of the
payee was forged after it has paid the amount of the check to the
holder thereof, it can recover the amount paid from the collecting
bank.
Note: In the present case, the 2 previous rules I have just mentioned applies.
BDO (collecting bank) is liable to Equitable because it was estopped by its
own act (see ratio no. 2 and 3). Equitable (drawee bank) discovered the
forgery and can recover amount paid from collecting bank (BDO)
Judge Caldona
10. The Arbitration Committee ruled in favor of BPI and ordered CBC to
pay the former
11. The Board of Directors of the Philippine Clearing House Corp.
(PCHC), upon CBCs appeal, ruled in favor of CBC
12. The RTC and CA dismissed the petition for review of BPI
Issue: WON BPI was precluded from raising the defense of forgery
Held: Yeeeeeees
Ratio:
1. Since the instruments involved here are checks, which, under sec. 1 of
the NIL, are negotiable instruments, sec. 23 of NIL definitely covers
the issue at hand
2. Sec. 23 of the NIL provides for the general rule and exception in
case forgery attends a negotiable instrument
3. The negligence of the party invoking forgery is an exception to the
general rule that payment made in reliance of a forged signature in
an instrument is ineffective
4. In this case, it doesnt matter who was more negligent between BPI
and CBC because they are both banks and as banks, they are
presumed to exercise a higher standard of diligence
5. Fernando and BPI had more privity because Fernando was BPIs client
first, while CBC did not have any way of discovering the fraud
because their client was only an impostor of Fernando
6. Although the proximate cause of the success of forgery was BPIs
negligence, CBC was also negligent when it failed to act on the
suspicious circumstances that surrounded the transactions of the
impostor (huge over-the-counter withdrawals made immediately after
the account was opened)
Jai-Alai Corp v. BPI (8/6/1975)

D: Where check is deposited with a collecting bank, the relationship is that
of agency. Same rule follows where after the drawee-bank paid the
collecting bank, it was found that the signature of payee was forged by
one who previously encashed them.
Facts:
1. From April 1959 to May 1959, 10 checks with a total value of PHP
8,030.58 were deposited by Jai-Alai Corp of the Philippines in its BPI
account
2. The particulars of the 10 checks are as follows:
a. 5 checks were drawn by Delta Engineering Service upon the
Pacific Banking Corporation and payable to Inter-Island Gas
Service
b. 2 checks drawn by Enrique Cortiz & Co. upon the Pacific
Banking Corp and payable to Inter-Island Gas Service, Inc or
bearer
c. 1 check drawn by Luzon Tinsmith & Company upon the China
Banking Corporation and payable to Inter-Island Gas
Service, Inc or bearer
d. 2 checks drawn by Roxas Manufacturing Inc upon the PNB
and payable to Inter-Island Gas Service Inc or order
* Please see page 32 of the case for the complete breakdown.
Kthnxbai.
3. All the checks were acquired from Ramirez who is a sales agent of
the Inter-Island Gas and a regular bettor at jai-alai games
4. The checks were credited to the petitioners account in accordance
with the clause printed on the deposit slips issued by BPI. The clause
states that:
i. Any credit allowed to the depositoris provisional
only, until such time as the proceeds thereofshall
have been actually received by the bank and the
latter reserves to itself the right to charge back the
item to the account of its depositorregardless of
WON the item itself can be returned
5. July 1959 Ramirez resigned from Inter-Island Gas. After the checks
were submitted for clearing, they discovered that all the indorsements
made on the check (by the cashiers) as well as the rubber stamp
impression reading the company name were forgeries
Judge Caldona
6. Inter-Island gas informed Jai Alai, BPI, and the drawers and draweebanks of the said checks about the forgeries. They also filed a
criminal case against Ramirez
7. Upon receipt of the letter from Inter-Island, BPIs cashier (Sarthou)
called Jai Alais cashier (Garcia) and advised him that in view of the
present circumstance, he would debit the value of the checks against
Jai Alais account as soon as they were returned by the respective
drawee-banks
8. The drawers of the check (Delta, Enrique, Luzon Tinsmith, Roxas)
demanded reimbursement from their respective accounts from
drawee-banks (Pacific Banking, PNB, Chinabank) who then
demanded from BPI (collecting bank) the return of the amounts they
paid thereof
9. When drawee-banks returned the checks to BPI, the latter paid their
value which the former paid to Inter-Island gas
10. BPI debited Jai Alais current account and forwarded the checks
containing forged indorsements. Jai Alai refused to accept the checks
11. October 8, 1959 Jai Alai issued a check for PHP 135,000 payable
to Mariano Olondriz in payment of certain shares of stock. Check was
dishonored by BPI since the account only contains PHP 128,257.65.
BPI deducted PHP 8,030.58 (total amount of the 10 forged checks)
from the account. Thus, petitioner filed a complaint against BPI
12. RTC dismissed the case. CA affirmed.
Issues:
1. WON BPI had the right to debit the petitioners current account in the
amount corresponding to the total value of the checks in question
2. WON BPO is estopped from claiming that the amount of PHP
8,030.58 (total value of the checks with forged indorsements) had not
been properly credited to petitioners account since the same had
been paid by the drawee-banks and received in due course by BPI
3. WON Jai Alai is entitled to damages from BPI since they had
improperly debited the checks to petitioners account
Held: No to all
Ratio:
1. SC: BPI acted within legal bounds when it debited the petitioners
account.
2. When Jai Alai deposited the checks with BPO, the nature of the
relation was that of agency. BPI was to collect from the drawees of
checks. Not a creditor-debtor relationship.
3. Sec 23 of NIL a forged signature in a negotiable instrument is wholly

inoperative. In the current case, BPI as collecting bank which indorsed
the checks to drawee-banks for clearing should be liable to the latter
for reimbursement since the indorsements on the checks had been
forged prior to delivery to Jai Alai.
4. Payments made by drawee-banks to BPI were ineffective =
relationship of creditor-debtor not established.
5. Great Eastern Life Ins v. HSBC:
a. it is the obligation of the collecting bank to reimburse the
drawee-bank the value of the checks found to contain a forged
indorsement of the payee. The reason is that the bank with
which the check was deposited has no right to pay the sum
stated therein to the forgerit was its duty to know that the
indorsement was genuine before cashing the check
6. Thus, petitioner must shoulder the loss of the amounts BPI had to
reimburse to drawee-banks
7. Also, under Sec.66 of the NIL, BPI cannot be expected to ascertain
the genuineness of all prior indorsements on the said check.
8. Jai Alai should have conducted a background investigation on
Ramirez before they accepted the check. The payee was a
corporation (Inter-Island Gas Services) and not Ramirez. They should
have asked for his authority to exchange checks belonging to the
payee-corporation.
9. Under Art 67 of NIL, where a person places his indorsement on an
instrument negotiable by delivery he incurs all the liability of an
indorser. Since Jai Ali indorsed the said forged checks, it is
therefore guaranteed to BPI the genuineness of all prior indorsement
thereon. Thus, BPI is not responsible for the resulting loss (see Sec 66
of NIL)
10. There was no valid payment of money made by the drawee-banks to
BPI on account of the questioned checks
Judge Caldona
Republic Bank v. Ebrada (7/31/75)

D: The indorsement and delivery of the negotiable instrument gives rise to
the presumption that the indorsee warrants the genuineness of the
instrument and at he has good title over the instrument. As a consequence
of such warranty, an indorsee may be held liable to pay the amount
erroneously paid to her
D: Only the negotiation predicated on the forged indorsement should be
declared inoperative. The others with genuine signatures should be
considered valid and enforceable
Facts:
1. Ebrada wanted to enchashed a Back Pay Check issued by the
Bureau of Treasury payable to the order of Martin Lorenzo
dated January 15, 1963 for P1,246.08 and drawn by Republic
Bank
2. The following signatures/ indorsements were found at the back of
the check:
a. Martin Lorenzo (forged)
b. Ramon R. Lorenzo
c. Delia Dominguez
d. Mauricia Ebrada
3. The check was delivered by Adelaida Dominguez to Ebrada for
encashment and Ebrada affixed her signature on the back of the
check when she encashed it with Republic
4. Ebrada turned over the cash proceeds to Dominguez who later on
turned over the cash to Tinio. This shows that Ebrada acted as an
accommodation party
5. The Bureau of Treasury later on advised Republic that the
indorsement Martin Lorenzo on the reverse side of the check is
a forgery since such person ha already died for 11 years
6. Republic requested that the Bureau refund the value of the check.
Republic also made verbal and formal demands on Ebrada to
account for the said amount, but the latter refused. Republic then
filed a suit against her
7. Ebrada argues that she is a holder in due course and that
Republic has no caused of action against her as the latter is
estopped from recovering from her
8. Ebrada also filed a Third-Party complaint against Adelaida
Dominguez. Dominguez, in turn, also filed a Fouth-Party complaint
against Justina Tinio
9. Trial Court: Ordered Ebrada to pay P1,246.08 plus interest

Issues: WON Ebrada warranted that she had good title over the said check
WON the existence of one forged signature will render void all the other
negotiations wherein the signatures were genuine
WON Republic can recover from the one who encashed the check
Held: Yeeeeeees, No and Yeeeeeees
Ratio:
1. By express provision of Sec. 65 of the NIL, Ebrada is presumed to
have warranted (a) that the instrument is genuine and in all
respects what it purports to be and (b) the she has good title to it
since Ebrada has delivered the note to Republic for encashment
2. Under Sec. 23 of the NIL, when the signature on the negotiable
instrument is forged, the negotiation of the check is without force
or effect. However, only the negotiation based on the forged or
unauthorized signature should be in operative. As regards the
other indorsements with genuine signatures, they should be
considered valid and enforceable, barring any claim of forgery
3. Although Republic should suffer the loss when it paid the face
value of the check, it is not precluded form recovering from
Ebrada the amount it paid her. Even if Ebrada was not the
proven to be the author of the forgery, she is liable to Republic
because as the last indorsee, she warranted that she had good
title to the instrument. Also, by express provision of Sec. 29 of the
NIL, Ebrada cannot be exempt from liability just because she is
an accommodation party
Judge Caldona
Manila Lighter Transportation, Inc. v Court of Appeals (02/15/1990)

D: Since the company was not a client of the bank, that is, it did not
maintain an account in said bank, the latter had no way of ascertaining
the authenticity of its indorsements on the checks which were deposited in
the accounts of the third-party defendants in said bank. The bank was not
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.
Facts:
(1) Manila Lighter Transportation, Inc. (the Company) filed a complaint
against China Banking Corporation (Chinabank). The complaint was
for the recovery of the value of 49 checks with alleged forged
indorsements of the payee (the Company) of which 26 were paid to
said company or order and 23 to said company or bearer.
(2) The complaint also alleged that the checks were issued by customers
of the company in payment of brokerage/lighterage services and
were all delivered, without the companys knowledge, to its collector,
Augusto Perez.
(3) The indorsement of the payee (the Company), by its general
manager, Luis Gaskell, appear on the checks. The company
disclaimed such signatures and presented a handwriting expert who
gave the opinion that the signatures were indeed forgeries. The
checks were negotiated by Wilfredo Lagamon, an accountant of the
company and a relative of Gaskell, with Cao Pek and Co., an
electronic store, whose treasurer is Ko Lit.
(4) The bank denied any liability and pointed out that the companys loss
was due to its own negligence.
(5) The bank filed a third-party complaint against Cao Pek & Co. and Ko
Lit who has deposited the checks in question and had thereafter
withdrawn the proceeds.
(6) The RTC found both parties equally negligent and ordered the bank
to pay the company an amount equal to 50% of the total amount of
the checks.
(7) The CA dismissed the complaint and freed the bank from any liability
to the company.
Issue: WON the company was negligent for allowing a state of affairs in
which its employees could appropriate the checks and falsify the indorsement
of its manager.
Held:
Yeeeeees
Ratio:
(1) The main issue of the companys negligence had already been
determined by the trial court against the company and affirmed by
the CA after examining the evidence in the records.
(2) Since the company was not a client of the bank, that is, it did not
maintain an account in said bank, the latter had no way of
ascertaining the authenticity of its indorsements on the checks which
were deposited in the accounts of the third-party defendants in said
bank. The bank was not 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
Associated Bank v. C.A. (1992)
D: Crossing a check is done by writing two parallel lines diagonally on
the left top portion the check. This signifies that check is only to be
deposited and not encashed.
FACTS:
1. Private respondent is engaged in the business of ready to wear
garments under the firm name Meliss RTW.
2. Her customers Robinsons Dept., Payless, Rempson and Corona Bar
issued in payment of their respective accounts crossed checks payable
to Melissa RTW and drawn from Solid Bank, FEBTC, TRB and RCBC.
3. When she went to these companies to collect, she was informed that
the checks have been deposited with Associated Bank and
subsequently paid to one Rafael Sayson. Sayson, however, was not
authorized to deposit and encash such checks by private respondent.
4. Private respondent sued the petitioners for the recovery of the total
value of the checks plus damages.
5. RTC: judgment was rendered in favor of private respondent
Judge Caldona
6. C.A.: affirmed RTC. It said that the cause of action of the private
respondent was the illegal, anomalous and irregular acts of the
petitioner in violating common banking practices by allowing checks
to be deposited and cashed as well as paying to improper parties
without the consent/knowledge/endorsement of private respondent
who was the payee of the crossed checks.
ISSUE: WON private respondent has a cause of action against the petitioners
for their encashment and payment to another person of crossed checks issue in
favor of the former
HELD/RATIO: YES
1. Accepted banking practice: crossing a check is done by writing two
parallel lines diagonally on the left portion of the checks. A.) Crossing
is special when the name/business institution is written in between the
two parallel lines which means that drawee should pay only with the
intervention of the company. B.) Crossing is general where the words
written between the two parallel lines are and Co. or for payees
account only. This means that the drawee bank should not encash the
check but merely accept for deposit.
2. Effects of crossing a check are: a) the check may not be encashed,
merely deposited b) check may be negotiated only once to the one
who has an account with the bank c)crossing a 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.
3. CASE AT BAR, the six checks had been crossed and issued for
payees account only which signifies that the checks were intended
only for deposit by Melissa RTW.
4. That the bank accepted checks to be deposited in account if Sayson
was a deliberate and positive act that the bank treated the checks as
if they were negotiable and, for all intents and purposes, assumed
the warranty of the endorser.
5. When 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 whether or not bank was aware of the
unauthorized/forged endorsement.
6. This is so because the law imposes a duty of diligence on the
collecting bank to scrutinize checks deposited for purpose of
determining their genuineness and regularity
That payee is allowed to directly recover from the collecting bank responsible
for such encashment is approved by the court
Associated Bank vs. CA

Facts:
1. The Province of Tarlac maintains a current account with PNB Tarlac
Branch.
2. Checks issued by the Province are signed by the Provincial Treasurer
and countersigned by the Provincial Auditor or the Secretary of the
Sangguniang Bayan.
3. A portion of the funds of the province is allocated to the Concepcion
Emergency Hospital. The allotment checks for said government
hospital are drawn to the order of "Concepcion Emergency Hospital,
Concepcion, Tarlac" or "The Chief, Concepcion Emergency Hospital,
Concepcion, Tarlac." The checks are released by the Office of the
Provincial Treasurer and received for the hospital by its
administrative officer and cashier.
4. In January 1981, the books of account of the Provincial Treasurer
were post-audited by the Provincial Auditor. It was then discovered
that the hospital did not receive several allotment checks drawn by
the Province.
5. On 19 February 1981, the Provincial Treasurer requested the
manager of the PNB to return all of its cleared checks which were
issued from 1977 to 1980 in order to verify the regularity of their
encashment.
6. After the checks were examined, the Provincial Treasurer learned that
30 checks amounting to P203,300.00 were encashed by one Fausto
Pangilinan, with the Associated Bank acting as collecting bank. It
turned out that Fausto Pangilinan, who was the administrative officer
and cashier of payee hospital until his retirement on 28 February
1978, collected the checks from the office of the Provincial Treasurer.
He claimed to be assisting or helping the hospital follow up the
release of the checks and had official receipts. Pangilinan sought to
encash the first check with Associated Bank. However, the manager of
Associated Bank refused and suggested that Pangilinan deposit the
check in his personal savings account with the same bank.
Judge Caldona
7. Pangilinan was able to withdraw the money when the check was
cleared and paid by the drawee bank, PNB.
8. After forging the signature of Dr. Adena Canlas who was chief of the
payee hospital, Pangilinan followed the same procedure for the
second check, in the amount of P5,000.00 and dated 20 April 1978,
as well as for 28 other checks of various amounts and on various
dates. The last check negotiated by Pangilinan was for P8,000.00
and dated 10 February 1981.
9. All the checks bore the stamp of Associated Bank which reads "All
prior endorsements guaranteed Associated Bank."
10. Jesus David, the manager of Associated Bank, alleged that
Pangilinan made it appear that the checks were paid to him for
certain projects with the hospital. He did not find as irregular the fact
that the checks were not payable to Pangilinan but to the Concepcion
Emergency Hospital. While he admitted that his wife and Pangilinan's
wife are first cousins, the manager denied having given Pangilinan
preferential treatment on this account.
11. On 26 February 1981, the Provincial Treasurer wrote the manager
of the PNB seeking the restoration of the various amounts debited
from the current account of the Province. In turn, the PNB manager
demanded reimbursement from the Associated Bank on 15 May
1981.
12. As both banks resisted payment, the Province brought suit against
PNB which, in turn, impleaded Associated Bank as third-party
defendant. The latter then filed a fourth-party complaint against
Adena Canlas and Fausto Pangilinan.
RTCs Decision:
After trial on the merits, the lower court rendered its decision on 21
March 1988, on the basic complaint, in favor of the Province and
against PNB, ordering the latter to pay to the former, the sum of
P203,300.00 with legal interest thereon from 20 March 1981 until
fully paid
on the third-party complaint, in favor of PNB and against Associated
Bank ordering the latter to reimburse to the former the amount of
P203,300.00 with legal interests thereon from 20 March 20, 1981

until fully paid
on the fourth-party complaint, the same was ordered dismissed for
lack of cause of action as against Adena Canlas and lack of
jurisdiction over the person of Fausto Pangilinan as against the latter.
The court also dismissed the counterclaims on the complaint, thirdparty complaint and fourth-party complaint, for lack of merit.
CAs decision:
Affirmed Trial Courts decision
ISSUE:
WON Province of Tarlac was negligent and thus liable for its loss?
HELD:
Yes, the Province of Tarlac, together with PNB and Associated Bank, was
negligent. All three parties should bear the loss.
PNB, the drawee bank, cannot debit the current account of the
Province of Tarlac because it paid checks which bore forged
indorsements. However, if the Province as drawer was negligent to
the point of substantially contributing to the loss, then the drawee
bank PNB can charge its account. If both drawee bank-PNB and
drawer-Province were negligent, the loss should be properly
apportioned between them. The loss incurred by drawee bank-PNB
can be passed on to the collecting bank-Associated Bank which
presented and indorsed the checks to it. Associated Bank can, in turn,
hold the forger, Fausto Pangilinan, liable. If PNB negligently delayed
in informing Associated Bank of the forgery, thus depriving the latter
of the opportunity to recover from the forger, it forfeits its right to
reimbursement and will be made to bear the loss.
The Province of Tarlac is equally negligent as PNB. It permitted
Fausto Pangilinan to collect the checks when the latter, having already
retired from government service, was no longer connected with the
hospital.
PNB also breached its duty to pay only according to the terms of the
check which is payable to order of "Concepcion Emergency Hospital,
Judge Caldona
Concepcion, Tarlac" or "The Chief, Concepcion Emergency Hospital,

Concepcion, Tarlac." . Hence, it cannot escape liability and should
also bear part of the loss. Nonetheless, PNB can recover from the
collecting bank, Associated Bank.
Even if PNB did not return the questioned checks to Associated Bank
within 24 hours, as mandated by the rule, PNB did not commit
negligent delay. Under the circumstances, PNB gave prompt notice to
Associated Bank and the latter bank was not prejudiced in going
after Fausto Pangilinan.
PNB can still recover from Associated Bank. PNB's duty was to verify
the genuineness of the drawer's signature and not the genuineness of
payee's indorsement. Associated Bank, as the collecting bank, is the
entity with the duty to verify the genuineness of the payee's
indorsement. The drawer-Province is a client or customer of the PNB,
not of Associated Bank. There is no privity of contract between the
drawer and the collecting bank
Westmont Bank v. Ong(1/30/2002)

D: The collecting bank is liable to the payee and must bear the loss
because it is its legal duty to ascertain that the payees endorsement was
genuine before cashing the check
D: As a general rule, a bank or corporation who has obtained possession
of a check upon an unauthorized or forged indorsement of the payees
signature and who collects the amount of the check other from the drawee,
is liable for the proceeds thereof to the payee or other owner,
notwithstanding that the amount has been paid to the person from whom
the check was obtained
Eugene Ong: payee
Westmont Bank: collecting bank
Facts:
1. Eugene Ong maintained a currect account with Westmont Bank.
Sometime in May 1976, he sold his shares of stocks through Island
Securities Corporation (ISC)
2. To pay Ong, ISC purchased 2 Pacific Banking Corporation managers
checks worth P1, 753,787.50 issued in the name of Ong as payee.
3. Before Ong could get hold of these checks, his friend Paciano
Tanlimco got hold of them, forged Ongs signature, and deposited the
said checks on his own account with Westmont Bank
4. Westmont Bank accepted and credited both checks without verifying
the signature indorsement even though they have Ongs specimen
signature
5. Tamlico immediately withdrew the money and absconded
6. Instead of going straight to the bank, Ong first sought help of
Tanlimcos family to recover amount. Later, he reported the incident to
CB which also proved futile.
7. It was only after 5 mos. That Ong filed a suit and demanded that
Westmont Bank pay the value of checks.
8. RTC ordered Westmont Bank to pay the value of the checks. CA
affirmed decision
Issues:
WON Ong has cause of action against petitioner Westmont Bank
WON Ong is barred to recover the money from Westmont Bank due to
laches
Held:
Yes. Ong has cause of action against WB
No. Ong is not barred to recover money from WB
Ratio:
1. WB based his allegation on the fact that the note was not actually
delivered to Ong and hence he was not a holder thereof hence he
cannot sue in his own name. The court did not recognize this allegation
claiming that another view in certain cases applies in the present
case: That payee ought to be allowed to recover directly from
collecting bank regardless of whether the check was delivered to the
payee or not.
2. SC applied Sec 23 of NIL : Since the signature of the payee in this
case was forged to make it appear that he had made an
indorsement in favor of the forger, such signature should be deemed
as inoperative and ineffectual. Petitioner as the collecting bank,
grossly erred in making payment by virtue of said forged signature.
The payee, herein respondent, should therefore be allowed to
recover from the collecting bank
3. The collecting bank is liable to the payee and must bear the loss
because it is its legal duty to ascertain that the payees endorsement
Judge Caldona
4.
5.
6.
7.
was genuine before cashing the check, which WB failed to do (see

fact no. 4)
General rule: a bank or corporation who has obtained possession of
a check upon an unauthorized or forged indorsement of the payees
signature and who collects the amount of the check other from the
drawee, is liable for the proceeds thereof to the payee or other
owner, notwithstanding that the amount has been paid to the person
from whom the check was obtained.
On 2nd issue, SC found that there was no undue delay of Ong in
asserting his rights. The fact that he has exhausted all remedies (see
fact no. 6) before filing in RTC cannot be construed as undue delay or
abandonment of the assertion of his rights
One last note of SC: it is WB who has the last clear chance to stop the
fraudulent encashment of the subject checks had it only exercised due
diligence and followed the proper and regular banking procedures in
clearing checks.
Rule: One who had the last clear opportunity to avoid the impending
harm but failed to do so is chargeable with the consequences thereof
Philippine Commercial and International Bank v CA (1/29/2001)

D: T he mere fact that the forgery was committed by a drawer-payor's
confidential employee or agent, who by virtue of his position had unusual
facilities for perpetrating the fraud and imposing the forged paper upon
the bank, does not entitle the bank to shift the loss to the drawer-payor, in
the absence of some circumstance raising estoppel against the drawer.
This rule likewise applies to the checks fraudulently negotiated or diverted
by the confidential employees who hold them in their possession
Facts: G.R. Nos. 121413 and 121479
1. Ford drew and issued a Citibank check, which was crossed and had
Payees account only on its face, in favor of the Commission on
Internal Revenue (CIR) as payment of Fords manufacturers sales
taxes (1977)
2. This check was deposited with PCIB, cleared by the Central Bank, and
PCIB then collected from Citibank the amount corresponding to the
check
3. The proceeds were never paid to or received by the payee, CIR, so

the it demanded payment and Ford was forced to make a second
payment
4. Months later, the check whose proceeds werent paid to the CIR was
deposited at PCIB-Ermita together with a tax receipt; it had all prior
indorsements and/or lack of indorsements guaranteed on its face
5. PCIB accepted this after the Central Clearing House cleared it and
the Citibank then paid the amount on the check; this amount was
debited in Fords account with the Citibank
6. Later, Ford discovered that the first check it drew was not paid to the
payee so it claimed reimbursement from Citibank and PCIB
7. The investigation showed that the general ledger accountant of Ford
held back the check due to computational errors so PCIB replaced it
with two manager checks
8. Alleged members of a syndicate later deposited the manager checks
with PCIB
9. RTC: PCIB and Citibank should pay Ford and PCIB should reimburse
Citibank thereafter
10. CA: Only PCIB should pay Ford
Facts: G.R. No. 128604
1. Ford drew other checks for the same purpose that it did in the first
case and these never reached the payee
2. Here, it was shown how the embezzlement of the funds of the said
checks were carried out by the syndicate
3. One of the perpetrators opened an account with PCIB-Meralco
where at first, worthless checks were deposited and were then
replaced by the checks from Ford while it was en route for clearing
4. The perpetrators were able to accomplish their criminal act by using
their capacity and authority in the positions that they held in Ford and
PCIB
5. RTC: Citibank is liable
6. CA: Affirmed the RTC
Issues1: G.R. Nos. 121413 and 121479 WON Ford has the right to recover
from the drawee bank (Citibank) and the collecting bank (PCIB)
WON PCIB was negligent in preparing two managers checks to replace the
check in the first case on orders of persons besides the CIR
1
Berne Guerrero, Summary: Philippine Commercial International Bank vs. Court of

Appeals (GR 121413, 29 January 2001), available at
http://berneguerrero.com/node/281 (last accessed June 22, 2011).
Judge Caldona
Held2: No and yeeeeeees

Ratio3:
1. The mere fact that the forgery was committed by a drawer-payor's
confidential employee or agent, who by virtue of his position had
unusual facilities for perpetrating the fraud and imposing the forged
paper upon the bank, does not entitle the bank to shift the loss to the
drawer-payor, in the absence of some circumstance raising estoppel
against the drawer. This rule likewise applies to the checks
fraudulently negotiated or diverted by the confidential employees
who hold them in their possession
a) The Board of Directors of Ford did not confirm the request of
Godofredo Rivera to recall Citibank Check SN-04867
b) Rivera's instruction to replace the said check with PCIB's
Manager's Check was not in the ordinary course of business
which could have prompted PCIB to validate the same
c) As to the preparation of Citibank Checks SN-10597 and
16508, it was established that these checks were made
payable to the CIR. Both were crossed checks. These checks
were apparently turned around by Ford's employees, who
were acting on their own personal capacity
2. PCIB was an authorized collector of the CIR as to the payment of
taxes, hence, it was duty bound to consult the CIR when someone who
was not PCIBs client gave instructions as to the checks (when Ford
accountant recalled the checks)
a) PCIB failed to verify the authority of Mr. Rivera to negotiate
the checks. The neglect of PCIB employees to verify whether
his letter requesting for the replacement of the Citibank
Check SN-04867 was duly authorized, showed lack of care
and prudence required in the circumstances
b) PCIB should receive instructions only from its principal BIR and
not from any other person especially so when that person is
not known to IBAA/PCIB. It is very imprudent on the part of
IBAA/PCIB to just rely on the alleged telephone call of one
(Rivera) and in his signature to the authenticity of such
Id.
Id.
signature considering that the Ford is not a client of

IBAA/PCIB
Issues4: G.R. No. 128604 WON Citibank can raise the defenses that it has
no knowledge of any infirmity in the issuance of the checks in question and
that the endorsement of the Payee or lack thereof was guaranteed by PCIB
and thus, it has the obligation to honor and pay the same, among others
WON PCIB is liable for fraud (embezzlement) committed by PCIB employees
while the checks were in transit for clearing
Held5: No and yeeeeeees
Ratio6:
1. Citibank as drawee bank was likewise negligent in the performance
of its duties. Citibank failed to establish that its payment of Ford's
checks were made in due course and legally in order
Citibank should have scrutinized the two Citibank checks
before paying the amount of the proceeds thereof to the
collecting bank of the BIR. The clearing stamps at the back of
Citibank checks did not bear any initials. Citibank failed to
notice and verify the absence of the clearing stamps. Had this
been duly examined, the switching of the worthless checks to
the Citibank checks would have been discovered in time
2. As a general rule, however, a banking corporation is liable for the
wrongful or tortuous acts and declarations of its officers or agents
within the course and scope of their employment. A bank will be held
liable for the negligence of its officers or agents when acting within
the course and scope of their employment
Id.
Id.
Id.

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Judge Caldona

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

2-D || Ateneo Law School

Negotiable Instruments Case Digests

Forged signature of drawer

c) BPI credited the P201,000 to San Carlos deposit account

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

2-D || Ateneo Law School

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

2-D || Ateneo Law School

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

8. At the time of their presentation to PNB these checks bear the

On 6 February 1976, the CFI Manila rendered judgment in favor

2-D || Ateneo Law School

There is no express and categorical finding in these documents

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

(4) Furnish the respondent drawee bank with samples of

Republic v. Equitable Banking Corporation (1/30/1964)

2-D || Ateneo Law School

Government (Auditor): drawer

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

2. The rule is embodied in Sec 4, subsection (c) of Circular No. 9 of CB.

2-D || Ateneo Law School

unreasonable delay in discovering the forgery and in giving notice

National Bank v. National City Bank of New York (10/31/1936)

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

Issue: WON PNB, as drawee bank, may recover from defendants

2-D || Ateneo Law School

3. It was Eugenio who verified and reconciled the statements of the

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

check upon an unauthorized or forged endorsement of the payees

8 Ad astra per alia fideles

2-D || Ateneo Law School

BPI v. Casa Montessori Internationale (5/28/04)

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

Laboratory of the forgery. Counterfeiting of any writing,

2-D || Ateneo Law School

committed an innocent mistake (for being ignorant of the policy);

Citibank, N.A. v Cabamongan (05/02/2006)

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

2-D || Ateneo Law School

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

defense against the recovery of money. When GELIC received bank

2-D || Ateneo Law School

deposit to the credit and/or in the accounts of Alfredo Romero and

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

Banco de Oro Savings and Mortgage Bank v. Equitable Banking

12 Ad astra per alia fideles

2-D || Ateneo Law School

1. Equitable Bank, through its Visa Card Dept, drew 6 crossed

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

2-D || Ateneo Law School

clearing and it was on the basis of these endorsements that the

3. Because of BDOs actions, it led Equitable to believe that it was

13 Ad astra per alia fideles

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

14 Ad astra per alia fideles

2-D || Ateneo Law School

Jai-Alai Corp v. BPI (8/6/1975)

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES

2-D || Ateneo Law School

3. Sec 23 of NIL a forged signature in a negotiable instrument is wholly

DIZON | LORESCA | LUMINARIAS | SANTOS, K. | SY | TY | VILCHES