Case Summary (G.R. No. 93397)
Facts and Transactions
The petitioner deposited ten checks, totaling ₱8,030.58, between April and May 1959, drawn on different drawee banks and payable to Inter-Island Gas Service Inc. or bearer/order. These checks were acquired from Ramirez, who was a sales agent of Inter-Island Gas and a habitual bettor at the petitioner's jai-alai games. The respondent bank provisionally credited the petitioner’s current account based on the terms printed on the deposit slips, which reserved the right to debit the depositor’s account should the checks not be finally collected in current funds.
Discovery of Forged Indorsements
In late July 1959, Inter-Island Gas discovered the signatures of its cashiers and corporate seal on the checks were forged. It promptly informed the petitioner, respondent, drawers, and drawee banks, and filed a criminal complaint against Ramirez. Following this, the drawee banks demanded reimbursement from the respondent bank, which had collected on the checks and forwarded payments to Inter-Island Gas. In turn, the respondent debited the petitioner’s account for the amount of the forged checks, but the petitioner refused to accept the checks evidencing the forged indorsements.
Issues Presented
- Whether the respondent had the legal right to debit the petitioner’s account for the total value of the forged checks after more than three months from provisional crediting.
- Whether the respondent is estopped from debiting the amount since it had collected proceeds from the drawee banks and credited the petitioner.
- Whether the petitioner is entitled to damages assuming the debit was improper.
Nature of the Bank-Depositor Relationship Upon Deposit
Upon deposit of checks for collection, the relationship created is that of agency; the bank acts as a collecting agent in seeking funds from the drawee banks. Although the respondent had collected the proceeds when it debited the petitioner’s account, the Supreme Court rejected the notion that a creditor-debtor relationship had arisen because the checks were not validly converted into cash due to the forged indorsements.
Legal Effect of Forged Indorsements
Section 23 of the Negotiable Instruments Law declares a forged signature wholly inoperative, granting no right to enforce payment or discharge the instrument under such forged signatures. The forged endorsements on the checks rendered the instruments invalid for collection purposes. Consequently, the drawee banks’ payments to the respondent were ineffective as legal tender, obliging the respondent, as the collecting bank, to reimburse the drawee banks for the invalid payments. Accordingly, the respondent was entitled to debit the petitioner’s account to recover these funds.
Liability of the Petitioner as Depositor
The petitioner, having accepted the checks from Ramirez, who lacked authority to endorse corporate checks on behalf of Inter-Island Gas, bore responsibility for the loss. The petitioner’s indorsement upon deposit constituted a warranty under Sections 65, 66, and 67 of the Negotiable Instruments Law that the checks were genuine and entitled to be collected. The petitioner was negligent in accepting the checks, including crossed checks payable to a corporate entity delivered to an individual without inquiry into his authority.
Impact of Time Lapse and Bank’s Deposit Slip Clause
The passage of more than three months since provisional crediting did not bar the respondent from debiting the petitioner’s account because the provisional credit was contingent upon the actual final collection of funds. The clause on the respondent’s deposit slip explicitly reserved the right to reverse credits until confirmed receipt of cur
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Case Syllabus (G.R. No. 93397)
Facts of the Case
- The petitioner, Jai-Alai Corporation of the Philippines, deposited ten checks totaling P8,030.58 from April 2, 1959, to May 18, 1959, into its current account with the respondent bank, Bank of the Philippine Islands.
- The checks were drawn on various banks, payable to Inter-Island Gas Service, Inc. or order/bearer, and were acquired from Antonio J. Ramirez, a sales agent of Inter-Island Gas and regular bettor at jai-alai games.
- Upon deposit, the respondent bank provisionally credited the amount to the petitioner’s account, under a stipulation on the deposit slips reserving the right to charge back the deposits until actual payment was received.
- By late July 1959, Inter-Island Gas discovered the endorsements on the checks—purportedly by its cashiers—were forgeries.
- Inter-Island Gas notified the petitioner, respondent, drawers, and drawee banks of the forgery and filed criminal charges against Ramirez, although charges were later dropped for lack of damages.
- The respondent, upon notification, intended to debit the petitioner’s account once checks were returned unpaid by drawee banks.
- Drawee banks, after reclaiming the checks, reimbursed Inter-Island Gas; respondent debited petitioner’s account accordingly and returned the forged checks, which the petitioner refused to accept.
- On October 8, 1959, the petitioner’s issued check for P135,000 was dishonored due to insufficient funds after debiting the forged checks’ value.
- The petitioner sued the respondent for wrongful debit of its account; the Court of First Instance and the Court of Appeals dismissed the complaint.
Issues Presented
- Whether the respondent bank had the legal right to debit the petitioner’s current account for the value of the checks after more than three months from deposit.
- Whether the respondent is estopped from denying proper credit of the forged endorsed checks to the petitioner’s account, given that drawee banks had paid and the respondent received proceeds.
- Assuming the debit was improper, whether the petitioner is entitled to damages.
Held Ruling
- The respondent bank acted within its legal rights when debiting the petitioner’s account