Lessons Applicable: Forgery (Negotiable Instruments Law)
FACTS:
- July to December 1952: Corporacion de los Padres Dominicos acquired the 24 treasury warrants by accommodating Jacinto Carranza who asked the Corporacion to cash the warrants
- provided: deposited first with BPI Bank, and that actual payment of the value of the warrants would be made only after the same had been duly accepted and cleared by the Treasurer
- BPI accepted them w/ "subject to collection only"
- each bore the indorsement of the payees and that of the Corporation
- BPI Bank credited the proceeds
- December 23, 1952: 3 warrants returned - forged
- December 27, 1952: 2 warrants returned - forged
- January 16, 1953: 19 warrants returned - forged
- January 15, 1958: Treasurer notified the Equitable Bank of the 4 forged warrants deposited to it by and demanded reimbursement
- Republic of the Philippines seeks to recover from the Equitable Banking Corporation P17,100, representing 4 treasury warrants and BPI Bank P342,767.63 24 paid to them by the Treasurer of the Philippines
- genuine forms but signature of the drawing office and that of the representative of the Auditor General in that office are forged
- CFI: dismissed the case
ISSUE: W/N Republic has the right to recover from the banks
HELD: YES. Affirmed
- All items cleared at 11:00 o'clock a.m. shall be returned not later than 2:00 o'clock p.m. on the same day and all items cleared at 3:00 o'clock p.m. shall be returned not later than 8:30 a.m. of the following business day, except for items cleared on Saturday which may be returned not later than 3:30 a.m. of the following day
- irregularity of warrants was apparent the face from the viewpoint of the Treasury
- each over P5,000 - beyond the authority of the auditor of the Treasury
- it also did not advise the loss of genuine forms of its warrants
- did not inform the irregularity until after December 23, 1952 - not giving notice of forgery until December 5
- 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