TodayisMonday,February27,2017

CustomSearch

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L26001October29,1968

PHILIPPINENATIONALBANK,petitioner,
vs.
THECOURTOFAPPEALSandPHILIPPINECOMMERCIALANDINDUSTRIALBANK,respondents.

TomasBesa,JoseB.GalangandJuanC.Jimenezforpetitioner.
SanJuan,Africa&Benedictoforrespondents.

CONCEPCION,C.J.:

ThePhilippineNationalBankhereinafterreferredtoasthePNBseeksthereviewbycertiorariofadecision
oftheCourtofAppeals,whichaffirmedthatoftheCourtofFirstInstanceofManila,dismissingplaintiff'scomplaint
againstthePhilippineCommercialandIndustrialBankhereinafterreferredtoasthePCIBfortherecoveryof
P57,415.00.

A partial stipulation of facts entered into by the parties and the decision of the Court of Appeals show that, on
aboutJanuary15,1962,oneAugustoLimdepositedinhiscurrentaccountwiththePCIBbranchatPadreFaura,
Manila, GSIS Check No. 645915 B, in the sum of P57,415.00, drawn against the PNB that, following an
establishedbankingpracticeinthePhilippines,thecheckwas,onthesamedate,forwarded,forclearing,through
theCentralBank,tothePNB,whichdidnotreturnsaidcheckthenextday,oratanyothertime,butretainedit
and paid its amount to the PCIB, as well as debited it against the account of the GSIS in the PNB that,
subsequently,oronJanuary31,1962,upondemandfromtheGSIS,saidsumofP57,415.00wasrecreditedto
the latter's account, for the reason that the signatures of its officers on the check were forged and that,
thereupon, or on February 2, 1962, the PNB demanded from the PCIB the refund of said sum, which the PCIB
refusedtodo.Hence,thepresentactionagainstthePCIB,whichwasdismissedbytheCourtofFirstInstanceof
Manila,whosedecisionwas,inturn,affirmedbytheCourtofAppeals.

ItisnotdisputedthatthesignaturesoftheGeneralManagerandtheAuditoroftheGSISonthecheck,asdrawer
thereof,areforgedthatthepersonnamedinthecheckasitspayeewasoneMarianoD.Pulido,whopurportedly
indorsedittooneManuelGothatthecheckpurportstohavebeenindorsedbyManuelGotoAugustoLim,who,
inturn,depositeditwiththePCIB,onJanuary15,1962that,thereupon,thePCIBstampedthefollowingonthe
backofthecheck:"Allpriorindorsementsand/orLackofEndorsementGuaranteed,PhilippineCommercialand
Industrial Bank," Padre Faura Branch, Manila that, on the same date, the PCIB sent the check to the PNB, for
clearance,throughtheCentralBankandthat,overtwo(2)monthsbefore,oronNovember13,1961,theGSIS
hadnotifiedthePNB,whichacknowledgedreceiptofthenotice,thatsaidcheckhadbeenlost,and,accordingly,
requestedthatitspaymentbestopped.

Initsbrief,thePNBmaintainsthatthelowercourterred:(1)innotfindingthePCIBguiltyofnegligence(2)innot
findingthattheindorsementsatthebackofthecheckareforged(3)innotfindingthePCIBliabletothePNBby
virtueoftheformer'swarrantyonthebackofthecheck(4)innotholdingthat"clearing"isnot"acceptance",in
contemplationoftheNegotiableInstrumentslaw(5)innotfindingthat,sincethecheckhadnotbeenacceptedby
thePNB,thelatterisentitledtoreimbursementthereforand(6)indenyingthePNB'srighttorecoverfromthe
PCIB.

Thefirstassignmentoferrorwillbediscussedlater,togetherwiththelast,withwhichitisinterrelated.

Asregardsthesecondassignmentoferror,thePNBarguesthat,sincethesignaturesofthedrawerareforged,
so must the signatures of the supposed indorsers be but this conclusion does not necessarily follow from said
premise. Besides, there is absolutely no evidence, and the PNB has not even tried to prove that the
aforementioned indorsements are spurious. Again, the PNB refunded the amount of the check to the GSIS, on
accountoftheforgeryinthesignatures,notoftheindorsersorsupposedindorsers,butoftheofficersoftheGSIS
asdraweroftheinstrument.Inotherwords,thequestionwhetherornottheindorsementshavebeenfalsifiedis
immaterialtothePNB'sliabilityasadrawee,ortoitsrighttorecoverfromthePCIB,1for,asagainstthedrawee,
the indorsement of an intermediate bank does not guarantee the signature of the drawer,2sincetheforgeryof
theindorsementisnotthecauseoftheloss.3

Withrespecttothewarrantyonthebackofthecheck,towhichthethirdassignmentoferrorrefers,itshouldbe
noted that the PCIB thereby guaranteed "all prior indorsements," not the authenticity of the signatures of the
officersoftheGSISwhosignedonitsbehalf,becausetheGSISisnotanindorserofthecheck,butitsdrawer.4
Said warranty is irrelevant, therefore, to the PNB's alleged right to recover from the PCIB. It could have been
availed of by a subsequent indorsee5 or a holder in due course6 subsequent to the PCIB, but, the PNB is
neither.7 Indeed, upon payment by the PNB, as drawee, the check ceased to be a negotiable instrument, and
becameamerevoucherorproofofpayment.8

Referringtothefourthandfifthassignmentsoferror,wemustbearinmindthat,ingeneral,"acceptance",inthe
senseinwhichthistermisusedintheNegotiableInstrumentsLaw9isnotrequiredforchecks,forthesameare
payable on demand.10 Indeed, "acceptance" and "payment" are, within the purview of said Law, essentially
different things, for the former is "apromise to perform an act," whereas the latter is the "actual performance"
thereof.11InthewordsoftheLaw,12"theacceptanceofabillisthesignificationbythedraweeofhisassentto
the order of the drawer," which, in the case of checks, is the payment, on demand, of a given sum of money.
Upon the other hand, actual payment of the amount of a check implies notonly an assent to said order of the
drawerandarecognitionofthedrawer'sobligationtopaytheaforementionedsum,but,also,acompliancewith
suchobligation.

Letusnowconsiderthefirstandthelastassignmentsoferror.ThePNBmaintainsthatthelowercourterredin
not finding that the PCIB had been guilty of negligence in not discovering that the check was forged. Assuming
thattherehadbeensuchnegligenceonthepartofthePCIB,itisundeniable,however,thatthePNBhas,also,
beennegligent,withtheparticularitythatthePNBhadbeenguiltyofagreaterdegreeofnegligence,becauseit
had a previous and formal notice from the GSIS that the check had been lost, with the request that payment
thereof be stopped. Just as important, if not more important and decisive, is the fact that the PNB's negligence
wasthemainorproximatecauseforthecorrespondingloss.

Inthisconnection,itwillberecalledthatthePCIBdidnotcashthecheckuponitspresentationbyAugustoLim
thatthelatterhadmerelydepositeditinhiscurrentaccountwiththePCIBthat,onthesameday,thePCIBsentit,
throughtheCentralBank,tothePNB,forclearingthatthePNBdidnotreturnthechecktothePCIBthenextday
oratanyothertimethatsaidfailuretoreturnthechecktothePCIBimplied,underthecurrentbankingpractice,
thatthePNBconsideredthecheckgoodandwouldhonoritthat,infact,thePNBhonoredthecheckandpaidits
amount to the PCIB and that only then did the PCIB allow Augusto Lim to draw said amount from his
aforementionedcurrentaccount.

Thus,bynotreturningthechecktothePCIB,bytherebyindicatingthatthePNBhadfoundnothingwrongwiththe
checkandwouldhonorthesame,andbyactuallypayingitsamounttothePCIB,thePNBinducedthelatter,not
onlytobelievethatthecheckwasgenuineandgoodineveryrespect,but,also,topayitsamounttoAugustoLim.
Inotherwords,thePNBwastheprimaryorproximatecauseoftheloss,and,hence,maynotrecoverfromthe
PCIB.13

Itisawellsettledmaximoflawandequitythatwhenoneoftwo(2)innocentpersonsmustsufferbythewrongful
actofathirdperson,thelossmustbebornebytheonewhosenegligencewastheproximatecauseofthelossor
whoputitintothepowerofthethirdpersontoperpetratethewrong.14

Then,again,ithas,likewise,beenheldthat,wherethecollecting(PCIB)andthedrawee(PNB)banksareequally
atfault,thecourtwillleavethepartieswhereitfindsthem.15

Lastly,Section62ofActNo.2031provides:

The acceptor by accepting the instrument engages that he will pay it according to the tenor of his
acceptanceandadmits:

(a)Theexistenceofthedrawer,thegenuinenessofhissignature,andhiscapacityandauthoritytodraw
theinstrumentand

(b)Theexistenceofthepayeeandhisthencapacitytoindorse.

Theprevailingviewisthatthesameruleappliesinthecaseofadraweewhopaysabillwithouthavingpreviously
acceptedit.16
WHEREFORE,thedecisionappealedfromisherebyaffirmed,withcostsagainstthePhilippineNationalBank.Itis
soordered.

Reyes,J.B.L.,Dizon,Makalintal,Sanchez,Castro,Angeles,FernandoandCapistrano,JJ.,concur.
Zaldivar,J.,tooknopart.

Footnotes
1FirstNationalBankofWichitaFallsv.FirstNationalBankofBorger,37S.W.(2d)802.

2VIBanks&Banking,Zollmann,378.

3FirstNationalBankofMarshalltownv.MarshalltownStateBank,77N.W.1045.

4FirstNationalBankofWichitaFallsv.FirstNationalBankofBorger,supra.

5AmericanHominyCo.v.MillikinNationalBank,273F.550,556.

6WellsFargoBank&UnionTrustCo.v.BankofItaly,4P(2d)781,784785.

7ThePNBhadpreviousnoticeoftheinfirmityofthecheckwhenitcameintoitspossession.Art.52(d),Act
No.2031.
8NationalBankofCommerceofSeattlev.SeattleNat.Bank,187P.342,346.

9Section132,ActNo.2031.

10Sections143and185,ActNo.2031Phil.Nat.Bankv.Nat.CityBankofNewYork,63Phil.711IMorse
onBanksandBanking,6thed.898,899Wachtelv.Rosen,249N.Y.386,164N.E.326.
11FirstNationalBankofWashingtonv.Whitman,94U.S.343,347,24L.ed.229.

12Section132thereof.

13 Marlin National Bank v. Reed, 164 S.W. (2d) 260 First National Bank of Wichita Falls v. First National
BankofBorger,37S.W.(2d)802.See,also,CommerceGuardianBankv.ToledoTrustCo.,21N.E.(2d)
173, 176 National Bank of Rolla v. First National Bank of Salem, 125 S.W. 513, 516 Philippine National
Bankv.NationalCityBankofNY,supraVIIIBanksandBanking,Zollman,421.

14Blondeauv.Nano,61Phil.625,631,632.

15VIBanksandBankingbyZollman,416.

16FirstNationalBankofPortlandv.UnitedStatesNationalBankofPortland,197P.547Fidelity&Casualty
Co.ofNewYorkv.Planenscheck,227NW387USv.BankofNY,NationalBankingAssociation,219F.648
USFidelity&GuarantyCo.v.FirstNat.BankofOmaha,260NW798FirstNationalBankofCottageGrove
v.BankofCottageGrove,117F.293.

TheLawphilProjectArellanoLawFoundation