G.R. No. L-37467 December 11, 1993
Lessons Applicable:
Lessons Applicable:
FACTS:
- San Carlos Milling Co. Ltd. (San Carlos) was in the hands of Alfred D. Cooper, its agent under general power of attorney with authority of substitution
- The principal employee in the Manila office was Joseph L. Wilson, to whom had been given a general power of attorney but without power of substitution.
- 1926: Cooper, desiring to go on vacation, gave a general power of attorney to Newland Baldwin and at the same time revoked the power of Wilson relative to the dealings with BPI
- Wilson, conspiring together with Alfredo Dolores, a messenger-clerk in San Carlos' Manila office, sent a cable gram in code to the company in Honolulu requesting a telegraphic transfer to the China Banking Corporation (China Bank) of Manila of $100,00.
- The money was transferred by cable, and upon its receipt China Bank sent an exchange contract to San Carlos offering the sum of P201K, which was then the current rate of exchange.
- September 28, 1927: A manager's check on the China Banking Corporation for P201K payable to San Carlos Milling Company or order was receipted for by Dolores
- deposited with the BPI having a fake endorsement (Baldwin forged as drawer)
For deposit only with Bank of the Philippine Islands, to credit of account of San Carlos Milling Co., Ltd.
By (Sgd.) NEWLAND BALDWIN
For Agent
For Agent
- San Carlos had frequently withdrawn currency for shipment to its mill but never in so large an amount, and never under the sole supervision of Dolores
- Before delivering the money, the bank asked Dolores for P1 to cover the cost of packing the money, and he left the bank and shortly afterwards returned with another check for P1, purporting to be signed by Newland Baldwin
- the crime was discovered and San Carlos filed against the BPI and China Bank (after ammendment complaint)
- China Bank: as the prior endorsement had in law been guaranteed by the BPI, they are absolved even if the endorsement of Newland Baldwin on the check was a forgery
- BPI: guilty of no negligence, loss was due to the dishonesty of San Carlos employees and the negligence of San Carlos general agent
- RTC: BPI in GF and San Carlos could not recover
ISSUE: W/N BPI was bound to inspect the checks and shall therefore be liable in case of forgery
HELD: YES. judgment absolving the Bank of the Philippine Islands must therefore be reversed
- duty was upon the BPI, and the China Banking Corporation was not bound to inspect and verify all endorsements of the check, even if some of them were also those of depositors in that bank
- 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.
- under section 23 of the Negotiable Instruments Law they are not a charge against San Carlos nor are the checks of any value to the BPI.
- proximate cause of loss was due to the negligence of the Bank of the Philippine Islands in honoring and cashing the two forged checks
