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126568. April 30, 2003.
FACTS: May 3, 1920: Great Eastern Life Ins. Co. (Eastern) drew its check for P2,000 on the
Hongkong and Shanghai Banking Corporation (HSBC) payable to the order of Lazaro Melicor. They signed the promissory notes in Blank

E. M. Maasim fraudulently obtained possession of the check, forged Melicor's signature, as an Incomplete NI, when delivered, the person in possession of such has the prima facie authority to
endorser, and then personally endorsed and presented it to the Philippine National Bank (PNB) fill in the blanks, to complete the NI. It has also the authority to fill up for any amount, and in
and it was placed to his credit.
accordance with the authority given and within a reasonable time.
Next day: PNB endorsed the check to the HSBC who paid it
FACTS: Spouses Quirino and Eufemia Gonzales of the Quirino Gonzales Logging Concessionaire
HSBC sent a bank statement to the Eastern showing the amount of the check was charged to its (QGLC) executed promissory notes in favour to respondent Republic Planters Bank to secure
account, and no objection was made certain advances from the Bank in connection with its exportation of logs. The notes were payable
30 days after date and provided for the solidary liability of petitioners as well as attorney’s fees at
4 months after the check was charged, it developed that Lazaro Melicor, to whom the check was
ten percent of the total amount due in the event of their non-payment at maturity.
made payable, had never received it, and that his signature, as an endorser, was forged by
Maasim, Later on, petitioner QGLC has long been defaulted in the payment of their obligations with the
promissory notes they executed. The Bank then filed a complaint against the petitioner for “sum of
Eastern promptly made a demand upon the HSBC to credit the amount of the forged check money.”
However, petitioners seek to evade liability under the Bank’s causes of action by claiming that
Eastern filed against HSBC and PNB they Gonzales signed the promissory notes in blank and that they had not received the value of
said notes.
RTC: dismissed the case

ISSUES: W/N Eastern has the right to recover the amount of the forged check ISSUE: W/N the petitioners would be held liable for the payment of the promissory notes they
executed despite of the fact that they signed the notes in blank.
HELD: YES. lower court is reversed. Eastern against HSBC who can claim against PNB
 forgery was that of Melicor (payees and NOT the maker) RULING: Yes, because as Section 14 of the Negotiable Instruments Law allows the prima
 Eastern received it banks statement, it had a right to assume that Melicor had personally facie authority of the person in possession of negotiable instruments, such as the notes
endorsed the check, and that, otherwise, the bank would not have paid it herein, to fill in the blanks, to complete an incomplete instrument.
Section 23 of Negotiable Instruments Law:
Moreover, a signature on a blank paper delivered in order that it may be converted into a
When a signature is forged or made without the authority of the person whose signature it purports negotiable instrument operates as a prima facie authority to fill it up as such for any amount.
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 Also petitioner admitted to the genuineness and due execution of the promissory notes. The
signature, unless the party against whom it is sought to enforce such right is precluded from promissory notes, however, appear to be negotiable as they meet the requirements of Section 1of
setting up the forgery or want of authority.
the Negotiable Instruments Law. Such being the case, the notes are prima facie deemed to
The Philippine National Bank had no license or authority to pay the money to Maasim or anyone have been issued for consideration. It bears noting that no sufficient evidence was adduced by
else upon a forge signature. petitioners to show otherwise.

Its remedy is against Maasim to whom it paid the money. In order, however, that any such instrument when completed may be enforced against a person
who became a party thereto prior to its completion, it must be filled up strictly in accordance
with the authority given and within a reasonable time. But if any such instrument, after
completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his
hands, and he may enforce it as if it had been filled up strictly in accordance with the authority
given and within a reasonable time.