Metrobank vs.

First National City Bank Facts: Joaquin Salas allegedly drew a check, drawn against his account with FNCB, payable to CASH and for the amount of 50 pesos. A certain Salvador Sales then deposited the check to Metrobank on August 25, 1964. Upon clearing that same day by FNCB, Metrobank credited Salvador Sales account for 50,000 pesos. Sales then now wants to withdraw the total amount of the account from Metrobank. Wary of the fast movement of the account, Metrobank consulted FNCB. FNCB said that the fast movement of the account was not unusual. Metrobank, with FNCBs assurance, allowed Sales to withdraw the amount. However, when the cancelled check was shown on September 4, 1963 to the drawer, Joaquin Sales, it was discovered that the checks had material alterations as it was made to a bearer instrument and the amount to be paid was also changed. FNCB now wants to seek reimbursement from Metrobank. Metrobank refuses to reimburse FNCB. FNCB followed suit. Issue: Which bank is to bear the loss over the materially altered check? Ruling: The Court ruled that it will be the drawee bank who should bear the loss. The indorsement of Metrobank in this case began with the words: For clearance, clearing office. Thus, such indorsement will lose its effectivity as against Metrobank if not returned to the collecting bank after the lapse of 24 hours, under Central Bank Circular No. 9. It was only after 9 days that FNCB returned the check to Metrobank. Republic Bank vs Court of Appeals Facts: San Miguel Corporation issued a check to Roberto Delgado for the amount of 240 pesos against SMCs account with the First National City Bank. Delgado then deposited the check with Republic Bank. Delgado materially altered the check by making the value to 9,240, inserting a number 9 between the peso sign and the 2. As a collecting bank, Republic Bank indorsed the check and was able to collect from FNCB 9,240 pesos. On April 19, 1966, SMC discovered that the check was forged, FNCB then credited the lost amount to SMCs account. FNCB then sought for reimbursement from Republic Bank on May 19, 1966 but Delgados account was already closed by that time. Issue: Which bank is liable over the materially altered check? Ruling:

It is FNCB that must bear the loss. The general rule is that the collecting bank should be the one who should bear the loss. However this must be interpreted in conjunction with banking laws relating to checks. Under Central Bank Circular No. 9 that after clearing of checks, all cleared items must be returned not later than 3:00pm the next business day. Thus when FNCB failed to return the forged or materially altered check to Republic Bank within the 24-hour period, the collecting bank cannot be held liable anymore. Philippine Commercial International Bank vs Court of Appeals Facts: There are three consolidated cases involved in this decision. The facts are as follows. For the first two consolidated cases, namely: G.R. No. 121413/G.R. No. 121479: Ford Philippines drew a check for payment of their taxes to the Commision of Internal Revenue. The check issued indicated that it was for the payees account only which is with Metrobank. However, the said check was presented to PCIB which accepted the same and after clearance made by Citibank, Citibank paid PCIB the amount on the check. However, it was discovered that CIR never received such amount. It was then discovered that one Godfredo Rivera, an accountant for Ford recalled the checks from PCIB for allegedly miscomputed tax figures, where PCIB replaced the checks with two managers checks. The said managers checks were deposited by Godfredo with Pacific Banking Corporation. It was discovered that Godfredo was a member of a syndicate. They have been Fugitives from justice since then. For the last case, namely: G.R. No. 128604 Ford issued checks for the payment of taxes to CIR. The checks again indicated that it was for CIRs account only or payees account only with Metrobank. The said checks again never reached CIR. After an investigation, the same syndicate responsible for the earlier mentioned cases were responsible for the incident. A syndicate member created an account under a fictitious name with PCIB, and deposited the checks to the account after clearing made by Citibank. Issue/s: What are the liabilities of each party? For the first two cases, the Court ruled that it should be PCIB who should bear the loss for gorss negligence because of a lack of the exercise of common caution and prudence in questioning the authority of Godfredo Rivera in recalling the said checks. Coupled with the indications that the check was issued for the Payees Account Only. For the last case, the Court ruled that Citibank and PCIB should share the burden 50:50. PCIBs liability stems from the accountability for the tortuous acts of its employees and their negligence for their failure to detect that the account was named under a fictitious personality. Citibanks

liability stems from the fact that the check indicated that it was for the payees account only but still paid PCIB the amount on the check. Ramon Ilusorio vs. Court of Appeals Facts: Ramon Ilusorio is a businessman who employed services from his secretary, Katherine Eugenio. Ilusorio is usually out of the country for business trips. Entrusting his secretary, for the payment of necessary finances, wtih his credit cards, passbooks and checks. However, it was then discovered after a long lapse of time that Eugenio had been fraudulently acquiring sums of money through Ilusorios entrusted checks by forging them, at the expense of the latter. This went on until finally, one of Ilusorios friends saw Eugenio using the credit card of the latter. It was only then did he check his financial statements and discovered the fraudulent acts. Manila Bank, as the bank of Ilusorio was sued by the latter for damages for failure to detect the forged checks. Issue: Whether or not Manila is liable for damages. Ruling: No. The Court ruled that this case is an exception to the general rule that banks should be the ones who are liable if ever there are fraudulent dealings with checks as they are the most capable of determining the authenticity of the signatures, indorsements and the checks themselves. However, in this case, the Court ruled that it is Ilusorio, through his failure to maintain his financial documents with the reasonable diligence of an ordinary person that is to blame for this incident. Furthermore, his failure to provide the bank with the necessary specimen signatures also contributed to the Courts decision. Samsung Construction Co. Philippines Inc. vs. FEBTC and Court of Appeals Facts: Samsung, petitioner, held an account with Far East Bank. Samsung allegedly issued a check payable to CASH for the amount of 900,000 pesos. Roberto Gonzaga then presented the check for payment to Far East Bank. The checks authenticity was assured also by one Jose Sempio, an assistant account of Samsung. However, it was then found out no such check was issued by Samsungs head accountant nor its President. Samsung sought for reimbursement of the debited value on the forged check. Issue: Whether or not Samsung is entitled to reimbursement. Ruling:

Yes. The Court applied Sec. 23 of the Negotiable Instruments Law that indicates that a forged signature is wholly inoperative. Since the signature forged was of the drawers it renders the whole instrument as an effect, wholly inoperative also. A bank is bound to know the signature of its depositor.