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NIL SET 2

1) PNB V. QUIMPO

158 SCRA 582

FACTS:

While Gozon was in the bank with Santos left in the car, the latter stole a check and forged the signatre of

the for!er" #e was able to encash the check" #e was later a$$rehended b% the $olice athorities and he ad!itted

to stealing the check" &he cort decided in fa'or of Gozon" &he bank now $osed the isse on whether Gozon(s act

of lea'ing his checkbook in the car the $roi!ate case of the loss"

HELD:

Where the $ri'ate res$ondent(s check was re!o'ed and stolen withot his knowledge and consent, he

cannot be considered negligent in this case"

Liabilities of Parties Forgery Liability of the Drawee Bank

FACTS*

+n ne 1-./, 0rancisco Gozon ++ went to the hili$$ine ational 3ank 4Caloocan Cit%) acco!$anied b%

his friend rnesto Santos" Gozon left Santos in his car and while Gozon was at the bank, Santos took a check fro!

Gozon(s checkbook" Santos forged Gozon(s signatre and filled ot the check with the a!ont of 5,666"66"

Santos was able to encash the check that da% with 3" Gozon learned of this when his state!ent arri'ed" Santos

e'entall% ad!itted to forging Gozon(s signatre" Gozon then de!anded the 3 to refnd hi! the a!ont" 3

refsed" dge 7i!$o rled in fa'or of Gozon"

ISSUE:Whether or not 3 is liable"

HELD:

es" A bank is bond to know the signatres of its csto!ers9 and if it $a%s a forged check, it !st be

considered as !aking the $a%!ent ot of its own fnds, and cannot ordinaril% change the a!ont so $aid to the

accont of the de$ositor whose na!e was forged" 3 failed to !eet its obligation to know the signatre of its

corres$ondent 4Gozon)" 0rther, it was fond b% the cort that there are glaring differences between Gozon(s

athentic s$eci!en signatres and that of the forged check"

2) PNB V. NATIONAL CITY BANK OF NY

:/ #+; .11

FACTS:

ent negotiation of the instr!ent, which is not tre in the

case of checks becase fro! the !o!ent it is $aid, it is withdrawn fro! circlation" When the drawee banks

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cashes or $a%s a check, the c%cle of negotiation is ter!inated and it is illogical thereafter to s$eak of

sbse>ent holders who can in'oke the warrant against the drawee"

0rther, in deter!ining the relati'e rights of a drawee who nder a !istake of fact, has $aid, a holder who

has recei'ed sch $a%!ent, $on a check to which the na!e of the drawer has been forged, it is onl% fair to

consider the >estion of diligence and negligence of the $arties in res$ect thereto" &he res$onsibilit% of the

drawee who $a%s a forged check, for the genineness of the drawer(s signatre is absolte onl% in fa'or of one

who has not, b% his own falt or negligence, contribted to the sccess of the frad or to !islead the drawee"

According to the ndis$ted facts, ational Cit% 3ank in $rchasing the $a$ers in >estion fro!

nknown $ersons withot !aking an% in>ir% as to the identit% and athorit% of said $ersons negotiating and

indorsing the!, acted negligentl% and contribted to the constrcti'e loss of 3 in failing to detect the forger%"

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@/6 SCRA 2:1

FACTS:

CASA has a crrent accont with 3+" +t was disco'ered that for a !aterial $eriod of ti!e, se'eral checks

were encashed b% a certain Sonn% Santos, who e'entall% was known to be a fictitios na!e sed b% the

eternal aditor of CASA" &he eternal aditor ad!itted forging the signatre of CASA(s $resident to be

able to encash the checks" &he trial cort held the bank liable bt this was !odified" &he !odified decision

a$$ortioned the loss between 3+ and CASA"

HELD:

A forged signatre is a real and absolte defense, and a $erson whose signatre a$$ears on a

negotiable instr!ent is forged is dee!ed to ne'er ha'e beco!e a $art% thereto and to ha'e ne'er consented to the

contract that allegedl% ga'e rise to it"

&he conterfeiting of an% writing, consisting in the signing of another(s na!e with intent to defrad,

is forger%"0irst, there was reall% a finding of forger%" &he forger ad!itted e'en in his affida'it of his forger%"

Second, there was a finding b% the $olice laborator% that indeed the signatres were forged"

0rther!ore, the negligence is attribtable to 3+ alone" +ts negligence consisted in the o!ission of

the degree of diligence re>ired of a bank"

;oss borne b% $roi!ate case of negligence

5) BANCO DE ORO SAVING V. EQUITABLE

15. SCRA 188

FACTS:

3DE drew checks $a%able to !e!ber establish!ents" Sbse>entl%, the checks were de$osited in

&rencio(s accont with >itable" &he checks were sent for clearing and was thereafter cleared"

Afterwards, 3DE disco'ered that the indorse!ents in the back of the checks were forged" +t then de!anded that

>itable credit its accont bt the latter refsed to do so" &his $ro!$ted 3DE to file a co!$laint against

>itable and C#C" &he trial cort and R&C held in fa'or of the >itable and C#C"

HELD:

0irst, C#C has ?risdiction o'er the case in >estion" &he articles of incor$oration of ##Cetended its o$eration to clearing checks and other clearing ite!s" o dobt transactions on nonBnegotiable checks

are within the a!bit of its ?risdiction" 0rther, the $artici$ation of the two banks in the clearing o$erations is

sb!ission to the ?risdiction of the C#C"

etitioner is likewise esto$$ed fro! raising the nonBnegotiabilit% of the checks in isse" +t

sta!$ed its garantee at the back of the checks and sbse>entl% $resented it for clearing and it was in

the basis of these endorse!ents b% the $etitioner that the $roceeds were credited in its clearing accont"

&he $etitioner cannot now den% its liabilit% as it ass!ed the liabilit% of an indorser b% sta!$ing its garantee

at the back of the checks"

0rther!ore, the bank cannot esca$e liabilit% of an indorser of a check and which !a% trn ot to be a

forged indorse!ent" Whene'er a bank treats the signatre at the back of the checks as indorse!ents and ths

logicall% garantees the sa!e as sch there can be no dobt that said bank had considered the checks as

negotiable"A long line of cases also held that in the !atter of forger% in endorse!ents, it is the

collecting bank that generall% sffers the loss becase it had the dt%h to ascertain the genineness of all

$rior indorse!ents considering that the act of $resenting the check for $a%!ent

to the drawee is an assertion that the $art% !aking the $resent!ent has done its dt% to ascertain the genineness of

the indorse!ents"

:) BPI V. CA

21: SCRA 51

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FACTS:

So!eone who identified herself to be 0ernando called $ 3+, re>esting for the $reBter!ination of

her !one% !arket $lace!ent with the bank" &he $erson who took the call didnFt bother to 'erif% with

0ernando(s office if whether or not she reall% intended to $reter!inate her !one% !arket $lace!ent" +nstead,

he relied on the 'erification stated b% the caller" #e $roceeded with the $rocessing of the ter!ination"

&hereafter, the caller ga'e deli'er% instrctions that instead of deli'ering the checks to her office, it wold

be $icked $ b% her niece and it indeed ha$$en as sch" +t was fond ot later on that the $erson i!$ersonated

0ernando and her alleged niece in getting the checks" &he dis$atcher also didnFt bother to get the

$ro!issor% note e'incing the $lace!ent when he ga'e the checks to the i!$ersonated niece" &his was

aggra'ated b% the fact that this i!$ersonator o$ened an accont with the bank and de$osited the sb?ect checks"

+t then withdrew the a!onts"

&he da% of the !atrit% of the !one% !arket $lace!ent ha$$ened and the real 0ernando srfaced herself"

She denied $reter!inating the !one% !arket $lace!ents and thogh she was the $a%ee of the checks in isse,

she didnFt recei'e an% of its $roceeds" &his $ro!$ted the bank to srrender to C3C the checks and

asking for rei!brse!ent on alleged forger% of $a%ee(s indorse!ents"

HELD:

&he general rle shall a$$l% in this case" Since the $a%ee(s indorse!ent has been forged, the

instr!ent is wholl% ino$erati'e" #owe'er, nderl%ing circ!stances of the case show that the general rle

on forger% isn(t a$$licable" &he isse as to who between the $arties shold bear the loss in the $a%!ent of the

forged checks necessitates the deter!ination of the rights and liabilities of the $arties in'ol'ed in the

contro'ers% in relation to the forged checks"

&he acts of the e!$lo%ees of 3+ were tainted with !ore negligence if not cri!inal than the acts of C3C"

0irst, the act of disclosing infor!ation abot the !one% !arket $lace!ent o'er the $hone is a 'iolation of the

General 3anking ;aw" Second, there was failre on the bank(s $art to e'en co!$are the signatres dring

the ter!ination of the $lace!ent, o$ening of a new accont with the s$eci!en signatre in file of 0ernando"

And third, there was failre to ask the srrender of the $ro!issor% note e'idencing the $lace!ent"

&he acts of 3+ e!$lo%ees was the $roi!ate case to the loss" e'ertheless, the negligence of the

e!$lo%ees of C3C shold be taken also into consideration" &he% closed their e%es to the ss$icios large a!ont

withdrawals !ade o'er the conter as well as the o$ening of the accont"

.) REPUBLIC V. EBRADA

:5 SCRA :86

FACTS:

brada encashed a 3ack a% CheckH issed b% the 3rea of &reasr% at the Re$blic 3ank in scolta

=anila" &he 3rea of &reasr% ad'ised the Re$blic 3ank that the instr!ent was forged" +t infor!ed

the bank that the original $a%ee of the check died 11 %ears before the check was issed" &herefore, there was a

forger% of his signatre"

&his is the se>ence*

=artin ;orenzo

&he deceased $erson, original

$a%eeH, where the forger%

ha$$enedRa!on ;orenzo

Delia Do!ingez

=aricia brada

DefendantBa$$elant

brada refses to retrn the $roceeds of the check clai!ing that she alread% ga'e it to Delia

Do!ingez" She also clai!s that she is a #DC 4holder in de corse) and that the bank is alread% esto$$ed"

#;D*

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brada shold retrn the $roceeds of the check to Re$blic 3ank" As an indorser of the check, she

was s$$osed to ha'e warranted that she has good title to said check" See Section :5"

Section 2/* When the signatre is forged or !ade withot the athorit% of the $erson whose signatre it

$r$orts to be, it is wholl% ino$erati'e, and no right to retain the instr!ents, or to gi'e a discharge thereof against

an% $art% thereto, can be ac>ired throgh or nder sch signatre nless the $art% against who! it is soght to

enforce sch right is RC;

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$re?diced Associated 3ank in an% wa% becase e'en if there wasnFt dela%, the fact that there was nothing

left of the accont of angilinan, there coldnFt be an%!ore rei!brse!ent"

-) TRADERS ROYAL BANK V. RPN

/-6 SCRA :68

FACTS:

R, +3C and 33C were all assessed for ta b% the 3+R" &o $a% the assessed taes, the% boght

!anager(s checks fro! $etitioner bank" one of these checks were $aid to the 3+R" &he% were fond to

ha'e been de$osited in the accont of a third $erson in Secrit% 3ank" As the taes re!ained n$aid, the 3+R

issed a le'%, distraint and garnish!ent against the three networks" An action was filed wherein it was

decided that the networks shold be rei!brsed for the a!onts of the checks b% $etitioner bank and the latter in

trn, !st be rei!brsed b% Secrit% 3ank" +n the a$$ellate cort, it was held that &raders 3ank shold be

the onl% bank liable"

HELD:

etitioner oght to ha'e known that where a check is drawn $a%able to the order of one $erson and is

$resented for $a%!ent b% another and $r$orts $on its face to ha'e been dl% indorsed b% the $a%ee of the check,

it is the $ri!ar% dt% of the $etitioner to know that the check was dl% indorsed b% the original $a%ee, and it

$a%s the a!ont of the check to the third $erson, who has forged the signatre of the $a%ee, the loss falls $on the

$etitioner who cashed the check" +ts onl% re!ed% is against the $erson to who! it $aid the !one%"

+t shold be frther noted that one of the checks was a crossed check" &he crossing of the check shold

ha'e $t $etitioner on gard9 it was dt%Bbond to ascertain the indorser(s title to the check or the natre

of his $ossession"

16) HSBC V. PEOPLES BANK

/5 SCRA 1@6

FACTS:

eo$le(s 3ank is soght to be liable for the a!ont in'ol'ed in checks sb?ect of this case" &his

arose fro! the following facts*

;D& drew a check on #S3C with the latter being the $a%ee" &he check landed in the hands of

a third $erson who sccessfll% sbstitted his na!e as $a%ee and de$osited the check with the eo$le(s3ank"

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Atlantico to collect fro! the hili$$ine !bass% for the fnds released to 3oncan bt the latter refsed" &his

e'entall% led to filing of !one% clai! of the bank with the Aditor General"

HELD:

En whether or not 3anco Atlantico was a holder in de corse, it is not" 0ollowing the decision

of the Aditor General in den%ing the clai! of the bank, the checks were de!and notes" +t shold ha'e been

$t on gard when 3oncan negotiated the checks with the! and sbse>entl% de$osited the sa!e to her accont"

'en thogh it were de!and notes, she instrcted the bank that the sa!e be not $resented for collection till a

later date" &he fact that the a!ont was >ite big and it was the $a%ee herself who !ade the re>est that the sa!e

be not $resented for collection ntil a fied date in the ftre was $roof of a glaring infir!it% or defect in

the instr!ent" +t lodl% $roclai!s &ake !e at %or own risk"H +t was ob'ios b% then that the bank had

knowledge of the infir!it% or defect of the checks" 0rther!ore, what it did when it allowed $a%!ent before

clearing is be%ond the nor!al and ordinar% banking $ractice es$eciall% when the bank in'ol'ed is a foreign

bank and the a!onts in'ol'ed were large" 3oncan wasnFt e'en a client of the bank bt was so!eone who had

s$ecial relations with its officers"+n 'iew of the foregoing, the e!bass% as the drawer of the / checks in >estion cannot be held

liable" +t is a$$arent that the said / checks were 4fradlentl% altered) b% 3oncan as to their acconts and therefore

wholl% ino$erati'e 4note* shold be a'oidedH)"

12) THE INTERNATIONAL CORPORATE BANK, INC. v. COURT OF APPEALS an PHILIPPINE

A&+EA; 3AJ

561 SCRA 26

1/) METROBANK V. CABLI!O

516 SCRA 25-

FACTS:

Cablizo !aintained an accont with $etitioner" +t drew a check $a%able to cash $a%able to a certain

=ar>ez, for the latter(s sales co!!ission" &he check was sbse>entl% de$osited in West!ont bank and the

latter sb!itted it with =etrobank for clearing" &he check was cleared"

&hereafter, the bank(s re$resentati'e asked Cablizo if he issed a check for -1,666" &he answer was in

the negati'e" &his $ro!$ted Cablizo to call =etrobank and ask for the recrediting of -6,666 bt $etitionerfailed to recredit the a!ont $ro!$ting Cablizo to file an action against it"

HELD:

An alteration is said to be !aterial if it alters the effect of the instr!ent" +t !eans an nathorized change

in the instr!ent that $r$orts to !odif% in an% res$ect the obligation of a $art% or an nathorized addition

of words or n!bers or other change to an inco!$lete instr!ent relating to the obligation of the $art%" +n

other words, a !aterial alteration is one which changes the ite!s which are re>ired to be stated nder Section

1 of the +;"

&he check in isse was !ateriall% altered when its a!ont was increased fro! 1666 to -1666" Cablizo

was not the one who athorized or !ade sch increase" &here is no showing that he was negligent in

eercising what was de in a $rdent !an which cold ha'e otherwise $re'ented the loss" Cablizo was ne'er

re!iss in the $re$aration and issance of the check"&he doctrine of e>itable esto$$el is ina$$licable against Cablizo" &his doctrine states that when one

of the two innocent $erson, each giltiness of an intentional or !oral wrong, !st sffer a loss, it !st be borne b%

the one whose erroneos condct, either b% o!ission or co!!ission, was the case of the in?r%" egligence is

ne'er $res!ed"

=etrobank was actall% the one re!iss in its dties" &he CA took into consideration that the

alterations were actall% 'isible in the e%e and %et the bank allowed so!eone not ac>ainted with the ea!inationof checks to do the sa!e" 0rther!ore, it cannot rel% on the indorse!ent of West!ont 3ank of the check"

+t shold ha'e eercised !eticlos care in handling the affairs of its clients es$eciall% if the client(s !one% is

in'ol'ed"

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1@) PNB V. MA!A AND MECENAS

@8 #+; 26.

FACTS:

=aza and =acenas eected a total of fi'e $ro!issor% notes" &hese were not $aid at !atrit%" And to

reco'er the a!onts stated on the face of the $ro!issor% notes, 3 initiated an action against the two" &he

s$ecial defense $osed b% the two is that the $ro!issor% notes were deli'ered to the! in blank b% a

certain nchas and were !ade to sign the notes so that the latter cold secre a loan fro! the bank" &he%

also alleged that the% ne'er negotiated the notes with the bank nor ha'e the% recei'ed an% 'ale thereof" &he%

also $ra%ed that nchas be i!$leaded in the co!$laint bt sch was denied" &he trial cort then held in

fa'or of the bank"

HELD:

&he defendants attested to the genineness of the instr!ents sed on" either did the% $oint otan% !istake in regard to the a!ont and interest that the lower cort sentenced the! to $a%" Gi'en

sch, the defendants are liable" &he% a$$ear as the !akers of the $ro!issor% notes and as sch, the% !st kee$

their engage!ent and $a% as $ro!ised"

And ass!ing that the% are acco!!odation $arties, the defendants ha'ing signed the instr!ents withot

recei'ing 'ale thereof, for the $r$ose of lending their na!es to so!e other $erson, are still liable for the

$ro!issor% notes" &he law now is sch that an acco!!odation $art% cannot clai! no benefit as sch, bt he is

liable according to the face of his ndertaking, the sa!e as he hi!self financiall% interest in the transaction" +t

is also no defense to sa% that the% didnFt recei'e the 'ale of the notes" &o fasten liabilit% howe'er to an

acco!!odation !aker, it is not necessar% that an% consideration shold !o'e to hi!" &he acco!!odation which

s$$orts the $ro!ise of the acco!!odation !aker is that $arted with b% the $erson taking the note and

recei'ed b% the $erson acco!!odated"

15) STELCO MARKETING V. CA

216 SCRA 51

FACTS:

etitioner was engaged in the distribtion and sale of strctral steel bars" R; boght on se'eral occasion

large >antities of steel bars bt the sa!e were ne'er $aid for des$ite se'eral de!ands b% $etitioner"En a rele'ant date, R; ga'e to Ar!strong +ndstries a check in $a%!ent of its obligations" &he check

was drawn b% Steelweld Cor$orationIallegedl% the owner of R; $ersaded the $resident of Steelweld

to acco!!odate the for!er in its obligation" &he check, when de$osited was thereafter dishonored de to

insfficient fnds" A case ensed for 'iolations of 322 bt the case was dis!issed as the check was held to be

for acco!!odation $r$oses onl%"

&hereafter a co!$laint was filed b% $etitioner against R; and Steelweld for the reco'er% of s!

of !one% in $a%!ent of the steel bars ordered" R; was nowhere to be fond that is wh% the $roceedings

co!!enced as against Steelweld onl%" &he trial cort decided in fa'or of $etitioner bt this was re'ersed

b% the CA"

HELD:

etitioner contends that the ac>ittal of ;i! and &ianson didnFt o$erate to release Steelweld fro! itsliabilit% as an acco!!odation $art%" oteworth% is that neither said $rononce!ent nor an% other $art of the

?dg!ent of ac>ittal declared it liable to $etitioner" &o be sre, as regards an acco!!odation $art%, the

condition of lack of notice of an% infir!it% or defect in title of the $ersons negotiating it is of no a$$lication

since the law $reser'es the right of recorse of a holder for 'ale against an acco!!odation $art%

notwithstanding knowledge that at the ti!e of taking the instr!ent, knew hi! onl% as an acco!!odation $art%"

0rther, there is no e'idence to show that $etitioner $ossessed the check before the instr!ent(s$resent!ent and dishonor" +n what trans$ired dring the transactions in'ol'ing the check, e'idence and facts

show that there was an% $artici$ation or inter'ention on the $art of $etitioner" What the record shows is that

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onl% after the check was de$osited and dishonored, $etitioner ca!e into $ossession of it in so!e wa% and was

able to gi'e it in e'idence at the trial of the ci'il case it has institted against the drawers of the check"

1:) AGRO CONGLOMERATES V. SORIANO

/@8 SCRA @56

FACTS:

etitioner sold to Wonderland 0ood +ndstries two $arcels of land" &he% sti$lated nder a

=e!orand! of Agree!ent that the ter!s of $a%!ent wold be 1,666,666 in cash, 2,666,666 in shares of

stock, and the balance wold be $a%able in !onthl% install!ents" &hereafter, an addend! was eected

between the!, >alif%ing the cash $a%!ent" +nstead of cash $a%!ent, the 'endee athorized the 'endor to

obtain a loan fro! the financier on which the 'endee bond itself to $a% for" &his loan was to co'er for the

$a%!ent of 1,666,666" &his addend! was not notarized"

etitioner Soriano signed as !aker the $ro!issor% notes $a%able to the bank" #owe'er, the

$etitioners failed to $a% the obligations as the% were de" Dring that ti!e, the bank was in financial distressand this $ro!$ted it to endorse the $ro!issor% notes for collection" &he bank ga'e a!$le ti!e to $etitioners then

to satisf% their obligations"

&he trial cort held in fa'or of the bank" +t didnFt find !erit to the contention that Wonderland

was the one to be held liable for the $ro!issor% notes"

HELD:

0irst, there was no contract of sale that !aterialized" &he original agree!ent was that Wonderland

wold $a% cash and $etitioner wold deli'er $ossession of the far!lands" 3t this was changed throgh

an addend!, that $etitioner wold instead secre a loan and the settle!ent of the sa!e wold be sholdered b%

Wonderland"

etitioners beca!e liable as acco!!odation $arties" &he% ha'e the right after $a%ing the instr!ent to

seek rei!brse!ent fro! the $art% acco!!odated, since the relation between the! has in effect beca!e one of

$rinci$al and sret%"

0rther!ore, as it trned ot, the contract of sret% between Woodland and $etitioner was

etingished b% the rescission of the contract of sale of the far!land" With the rescission, there was confsion in

the $ersons of the $rinci$al debtor and sret%" &he addend! thereon likewise lost its

efficac%"

1.) BPI V. COURT OF APPEALS

GR 1/:262

FACTS:

&e!$lone'o de!anded $a%!ent fro! $etitioner of a s! of !one% re$resenting the aggregate

'ale of three checks which were allegedl% $a%able to hi! bt which were de$osited with the $etitioner

to Salazar(s accont, withot his knowledge and corres$onding endorse!ent" 0inding !erit in the de!ands of

&e!$lone'o, the bank then froze the accont of the engineering fir! as the accont of Salazar was alread% closed

or had insfficient fnds" 0ailre of an% settle!ent between &e!$lone'o and Salazar, this $ro!$ted the

bank to debit the accont of Salazar and gi'e back the !one% to &e!$lone'o throgh cashier(s check" &he

accont of Salazar was also debited for whate'er charges incrred for the issance of the cashier(s check"

&he trial cort held in fa'or of Salazar"

ISSUE:

Does a collecting bank, o'er the ob?ections of its de$ositor, ha'e the athorit% to withdraw

nilaterall% fro! sch de$ositor(s accont the a!ont it had $re'iosl% $aid $on certain nendorsed order

instr!ents de$osited b% the de$ositor to another accont that she later closed

HELD:

+n the $resent case, the records do not s$$ort the finding !ade b% the CA and the trial cort that a $rior

arrange!ent eisted between Salazar and &e!$lone'o regarding the transfer of ownershi$ of the checks" &his fact

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is crcial as Salazar(s entitle!ent to the 'ale of the instr!ents is based on the ass!$tion that she is a transferee

within the conte!$lation of Section @- of the egotiable +nstr!ents ;aw"

&ransferees in this sitation do not en?o% the $res!$tion of ownershi$ in fa'or of holders since the%

are neither $a%ees nor indorsees of sch instr!ents" &he weight of athorit% is that the !ere $ossession

of a negotiable instr!ent does not in itself conclsi'el% establish either the right of the $ossessor to recei'e

$a%!ent, or of the right of one who has !ade $a%!ent to be discharged fro! liabilit%" &hs, so!ething !ore than

!ere $ossession b% $ersons who are not $a%ees or indorsers of the instr!ent is necessar% to athorize

$a%!ent to the! in the absence of an% other facts fro! which the athorit% to recei'e $a%!ent !a% be

inferred"

'en if the dela% in the de!and for rei!brse!ent is taken in con?nction with Salazar(s $ossession of

the checks, it cannot be said that the $res!$tion of ownershi$ in &e!$lone'o(s fa'or as the designated

$a%ee therein was sfficientl% o'erco!e" &his is consistent with the $rinci$le that if instr!ents $a%able to

na!ed $a%ees or to their order ha'e not been indorsed in blank, onl% sch $a%ees or their indorsees can be

holders and entitled to recei'e $a%!ent in their own right"

&he $res!$tion that a negotiable instr!ent was gi'en for a sfficient consideration will not inreto the benefit of Salazar becase the ter! gi'enH does not $ertain !erel% to a transfer of $h%sical $ossession

of the instr!ent" &he $hrase gi'en or indorsedH in the contet of a negotiable instr!ent refers to the !anner

in which sch instr!ent !a% be negotiated"

+t is an ece$tion to the general rle for a $a%ee of an order instr!ent to transfer the instr!ent

withot indorse!ent" recisel% becase the sitation is abnor!al, it is bt fair to the !aker and to $rior

holders to re>ire $ossessors to $ro'e withot the aid of an initial $res!$tion in their fa'or, that the%

ca!e into $ossession b% 'irte of a legiti!ate transaction with the last holder" Salazar failed to discharge

this brden, and the retrn of the check $roceeds to &e!$lone'o was therefore warranted nder the

circ!stances des$ite the fact that &e!$lone'o !a% not ha'e clearl% de!onstrated that he ne'er athorized

Salazar to de$osit the checks or to encash the sa!e" oteworth% also is the fact that $etitioner sta!$ed on

the back of the checks the words* KAll $rior endorse!ents andLor lack of endorse!ents garanteed,K

thereb% !aking the assrance that it had ascertained the genineness of all $rior endorse!ents" #a'ing

ass!ed the liabilit% of a general indorser, $etitioner(s liabilit% to the designated $a%ee cannot be

denied"

Conse>entl%, $etitioner, as the collecting bank, had the right to debit Salazar(s accont for the 'ale

of the checks it $re'iosl% credited in her fa'or" #owe'er, the isse of whether it acted ?diciosl% is an

entirel% different !atter" As bsinesses affected with $blic interest, and becase of the natre of their

fnctions, banks are nder obligation to treat the acconts of their de$ositors with !eticlos care, alwa%sha'ing in !ind the fidciar% natre of their relationshi$" +n this regard, $etitioner was clearl% re!iss in

its dt% to $ri'ate res$ondent Salazar as its de$ositor"

&o begin with, the irreglarit% a$$eared $lainl% on the face of the checks" Des$ite the ob'ios lack of

indorse!ent thereon, $etitioner $er!itted the encash!ent of these checks three ti!es on three se$arate occasions"

&his negates $etitioner(s clai! that it !erel% !ade a !istake in crediting the 'ale of the checks to Salazar(s

accont and instead bolsters the conclsion of the CA that $etitioner recognized Salazar(s clai! of ownershi$ of

checks and acted deliberatel% in $a%ing the sa!e, contrar% to ordinar% banking $olic% and $ractice" +t !st be

e!$hasized that the law i!$oses a dt% of diligence on the collecting bank to scrtinize checks de$osited with it,

for the $r$ose of deter!ining their genineness and reglarit%" &he collecting bank, being $ri!aril% engaged in

banking, holds itself ot to the $blic as the e$ert on this field, and the law ths holds it to a high standard

of condct" &he taking and collection of a check withot the $ro$er indorse!ent a!ont to a

con'ersion of the check b% the bank"=ore i!$ortantl%, howe'er, solel% $on the $ro!$ting of &e!$lone'o, and with fll knowledge

of the brewing dis$te between Salazar and &e!$lone'o, $etitioner debited the accont held in the na!e of

the sole $ro$rietorshi$ of Salazar withot e'en ser'ing de notice $on her" &his ran contrar% to $etitioner(s

assrances to $ri'ate res$ondent Salazar that the accont wold re!ain ntoched, $ending the resoltion of

the contro'ers% between her and &e!$lone'o" 0or the abo'e reasons, the Cort finds no reason to distrb the

award of da!ages granted b% the CA against $etitioner" &his whole incident wold ha'e been a'oided had$etitioner adhered to the standard of diligence e$ected of one engaged in the banking bsiness" A de$ositor has

the right to reco'er reasonable !oral da!ages e'en if the bank(s negligence !a% not ha'e been attended

8/12/2019 NIL SET 2

11/11

with !alice and bad faith, if the for!er sffered !ental angish, serios aniet%, e!barrass!ent and

h!iliation

18) PEOPLE V. MANIEGO

1@8 SCRA /6