FIRST DIVISION
G.R. No. L-29432 August 6, 1975
JAI-ALAI CORPORATION OF THE PHILIPPINES, Petitioner, v. BANK
OF THE PHILIPPINE ISLAND, Respondent.
CASTRO, J.:
This is a petition by the Jai-Alai Corporation of the
Philippines (hereinafter referred to as the petitioner) for review of the
decision of the Court of Appeals in C.A.-G.R. 34042-R dated June 25, 1968 in
favor of the Bank of the Philippine Islands (hereinafter referred to as the
respondent).
From April 2, 1959 to May 18, 1959, ten checks with a total
face value of P8,030.58 were deposited by the petitioner in its current account
with the respondent bank. The particulars of these checks are as follows:
1. Drawn by the Delta Engineering Service upon the Pacific
Banking Corporation and payable to the Inter-Island Gas Service Inc. or order:
Date Check Exhibit
Deposited Number Amount Number
4/2/59 B-352680 P500.00 18
4/20/59 A-156907 372.32 19
4/24/59 A-156924 397.82 20
5/4/59 B-364764 250.00 23
5/6/59 B-364775 250.00 24
2. Drawn by the Enrique Cortiz & Co. upon the Pacific
Banking Corporation and payable to the Inter-Island Gas Service, Inc. or
bearer:
4/13/59 B-335063 P 2108.70 21
4/27/59 B-335072 P2210.94 22
3. Drawn by the Luzon Tinsmith & Company upon the China
Banking Corporation and payable to the Inter-Island Gas Service, Inc. or
bearer:
5/18/59 VN430188 P940.80 25
4. Drawn by the Roxas Manufacturing, Inc. upon the
Philippine National Bank and payable to the Inter-Island Gas Service, Inc.
order:
5/14/59 1860160 P 500.00 26
5/18/59 1860660 P 500.00 27
All the foregoing checks, which were acquired by the
petitioner from one Antonio J. Ramirez, a sales agent of the Inter-Island Gas
and a regular bettor at jai-alai games, were, upon deposit, temporarily
credited to the petitioner's account in accordance with the clause printed on
the deposit slips issued by the respondent and which reads:
"Any credit allowed the depositor on the books of the
Bank for checks or drafts hereby received for deposit, is provisional only,
until such time as the proceeds thereof, in current funds or solvent credits,
shall 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 depositor, at any time
before that event, regardless of whether or not the item itself can be
returned."
About the latter part of July 1959, after Ramirez had
resigned from the Inter-Island Gas and after the checks had been submitted to
inter-bank clearing, the Inter-Island Gas discovered that all the indorsements
made on the checks purportedly by its cashiers, Santiago Amplayo and Vicenta
Mucor (who were merely authorized to deposit checks issued payable to the said
company) as well as the rubber stamp impression thereon reading "Inter-Island
Gas Service, Inc.," were forgeries. In due time, the Inter-Island Gas
advised the petitioner, the respondent, the drawers and the drawee-banks of the
said checks about the forgeries, and filed a criminal complaint against Ramirez
with the Office of the City Fiscal of Manila. 1
The respondent's cashier, Ramon Sarthou, upon receipt of the
latter of Inter-Island Gas dated August 31, 1959, called up the petitioner's
cashier, Manuel Garcia, and advised the latter that in view of the
circumstances he would debit the value of the checks against the petitioner's
account as soon as they were returned by the respective drawee-banks.
Meanwhile, the drawers of the checks, having been notified
of the forgeries, demanded reimbursement to their respective accounts from the
drawee-banks, which in turn demanded from the respondent, as collecting bank,
the return of the amounts they had paid on account thereof. When the
drawee-banks returned the checks to the respondent, the latter paid their value
which the former in turn paid to the Inter-Island Gas. The respondent, for its
part, debited the petitioner's current account and forwarded to the latter the
checks containing the forged indorsements, which the petitioner, however,
refused to accept.
On October 8, 1959 the petitioner drew against its current
account with the respondent a check for P135,000 payable to the order of the
Mariano Olondriz y Cia. in payment of certain shares of stock. The check was,
however, dishonored by the respondent as its records showed that as of October
8, 1959 the current account of the petitioner, after netting out the value of
the checks P8,030.58) with the forged indorsements, had a balance of only
P128,257.65.
The petitioner then filed a complaint against the respondent
with the Court of First Instance of Manila, which was however dismissed by the
trial court after due trial, and as well by the Court of Appeals, on appeal.
Hence, the present recourse.
The issues posed by the petitioner in the instant petition
may be briefly stated as follows:
(a) Whether the respondent had the right to debit the
petitioner's current account in the amount corresponding to the total value of
the checks in question after more than three months had elapsed from the date
their value was credited to the petitioner's account:(b) Whether the respondent
is estopped from claiming that the amount of P8,030.58, representing the total
value of the checks with the forged indorsements, had not been properly
credited to the petitioner's account, since the same had already been paid by
the drawee-banks and received in due course by the respondent; and(c) On the
assumption that the respondent had improperly debited the petitioner's current
account, whether the latter is entitled to damages.
These three issues interlock and will be resolved jointly.
In our opinion, the respondent acted within legal bounds
when it debited the petitioner's account. When the petitioner deposited the
checks with the respondent, the nature of the relationship created at that
stage was one of agency, that is, the bank was to collect from the drawees of
the checks the corresponding proceeds. It is true that the respondent had
already collected the proceeds of the checks when it debited the petitioner's
account, so that following the rule in Gullas vs. Philippine National Bank 2 it
might be argued that the relationship between the parties had become that of
creditor and debtor as to preclude the respondent from using the petitioner's
funds to make payments not authorized by the latter. It is our view nonetheless
that no creditor-debtor relationship was created between the parties.
Section 23 of the Negotiable Instruments Law (Act 2031)
states that 3 —
"When a signature is forged or made without the
authority of the person whose signature it purports to be, it is wholly
inoperative, and no right to retain the instrument, or to give a discharge
therefor, or to enforce payment thereof against any party thereto, can be
acquired through or under such signature, unless the party against whom it is
sought to enforce such right is precluded from setting up the forgery or want
of authority."
Since under the foregoing provision, a forged signature in a
negotiable instrument is wholly inoperative and no right to discharge it or
enforce its payment can be acquired through or under the forged signature
except against a party who cannot invoke the forgery, it stands to reason, upon
the facts of record, that the respondent, as a collecting bank which indorsed
the checks to the drawee-banks for clearing, should be liable to the latter for
reimbursement, for, as found by the court a quo and by the appellate court, the
indorsements on the checks had been forged prior to their delivery to the
petitioner. In legal contemplation, therefore, the payments made by the
drawee-banks to the respondent on account of the said checks were ineffective;
and, such being the case, the relationship of creditor and debtor between the
petitioner and the respondent had not been validly effected, the checks not
having been properly and legitimately converted into cash. 4
In Great Eastern Life Ins. Co. vs. Hongkong & Shanghai
Bank, 5 the Court ruled that it is the obligation of the collecting bank to
reimburse the drawee-bank the value of the checks subsequently found to contain
the 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 forger
"or anyone else upon a forged signature." "It was its duty to
know," said the Court, "that [the payee's] endorsement was genuine
before cashing the check." The petitioner must in turn shoulder the loss
of the amounts which the respondent; as its collecting agent, had to reimburse
to the drawee-banks.
We do not consider material for the purposes of the case at
bar that more than three months had elapsed since the proceeds of the checks in
question were collected by the respondent. The record shows that the respondent
had acted promptly after being informed that the indorsements on the checks
were forged. Moreover, having received the checks merely for collection and
deposit, the respondent cannot he expected to know or ascertain the genuineness
of all prior indorsements on the said checks. Indeed, having itself indorsed
them to the respondent in accordance with the rules and practices of commercial
banks, of which the Court takes due cognizance, the petitioner is deemed to
have given the warranty prescribed in Section 66 of the Negotiable Instruments
Law that every single one of those checks "is genuine and in all respects
what it purports to be.".
The petitioner was, moreover, grossly recreant in accepting
the checks in question from Ramirez. It could not have escaped the attention of
the petitioner that the payee of all the checks was a corporation — the
Inter-Island Gas Service, Inc. Yet, the petitioner cashed these checks to a
mere individual who was admittedly a habitue at its jai-alai games without
making any inquiry as to his authority to exchange checks belonging to the
payee-corporation. In Insular Drug Co. vs. National 6 the Court made the
pronouncement that.
". . . The right of an agent to indorse commercial
paper is a very responsible power and will not be lightly inferred. A salesman
with authority to collect money belonging to his principal does not have the
implied authority to indorse checks received in payment. Any person taking
checks made payable to a corporation, which can act only by agents, does so at
his peril, and must abide by the consequences if the agent who indorses the
same is without authority." (underscoring supplied)
It must be noted further that three of the checks in
question are crossed checks, namely, exhs. 21, 25 and 27, which may only be
deposited, but not encashed; yet, the petitioner negligently accepted them for
cash. That two of the crossed checks, namely, exhs. 21 and 25, are bearer
instruments would not, in our view, exculpate the petitioner from liability
with respect to them. The fact that they are bearer checks and at the same time
crossed checks should have aroused the petitioner's suspicion as to the title
of Ramirez over them and his authority to cash them (apparently to purchase
jai-alai tickets from the petitioner), it appearing on their face that a
corporate entity — the Inter Island Gas Service, Inc. — was the payee thereof
and Ramirez delivered the said checks to the petitioner ostensibly on the
strength of the payee's cashiers' indorsements.
At all events, under Section 67 of the Negotiable
Instruments Law, "Where a person places his indorsement on an instrument
negotiable by delivery he incurs all the liability of an indorser," and
under Section 66 of the same statute a general indorser warrants that the
instrument "is genuine and in all respects what it purports to be."
Considering that the petitioner indorsed the said checks when it deposited them
with the respondent, the petitioner as an indorser guaranteed the genuineness
of all prior indorsements thereon. The respondent which relied upon the
petitioner's warranty should not be held liable for the resulting loss. This
conclusion applied similarly to exh. 22 which is an uncrossed bearer
instrument, for under Section 65 of the Negotiable Instrument Law. "Every
person negotiating an instrument by delivery . . . warrants (a) That the
instrument is genuine and in all respects what it purports to be." Under
that same section this warranty "extends in favor of no holder other than
the immediate transferee," which, in the case at bar, would be the
respondent.
The provision in the deposit slip issued by the respondent
which stipulates that it "reserves to itself the right to charge back the
item to the account of its depositor," at any time before "current
funds or solvent credits shall have been actually received by the Bank,"
would not materially affect the conclusion we have reached. That stipulation prescribes
that there must be an actual receipt by the bank of current funds or solvent
credits; but as we have earlier indicated the transfer by the drawee-banks of
funds to the respondent on account of the checks in question was ineffectual
because made under the mistaken and valid assumption that the indorsements of
the payee thereon were genuine. Under article 2154 of the New Civil Code
"If something is received when there is no right to demand it and it was
unduly delivered through mistake, the obligation to return it arises."
There was, therefore, in contemplation of law, no valid payment of money made
by the drawee-banks to the respondent on account of the questioned checks.
ACCORDINGLY, the judgment of the Court of Appeals is
affirmed, at petitioner's cost.
Makasiar, Esguerra, Muñoz Palma and Martin, JJ., concur.
Teehankee, J., is on leave.