Jai-Alai Corp vs BPI

Jai-Alai Corp. of the Phil. vs. Bank of the Phil. Islands

G.R. No. L-29432    August 6, 1975    66 SCRA 29

-forgery

FACTS:

Petitioner deposited 10 checks in its current account with BPI.  The checks which were acquired by petitioner from Ramirez, a sales agent of the Inter-Island Gas were all payable to Inter-Island Gas Service, Inc. or order.  After the checks had been submitted to Inter-bank clearing, Inter-Island Gas discovered that all the indorsements made on the checks purportedly by its cashiers were forgeries.  BPI thus debited the value of the checks against petitioner's current account and forwarded to the latter the checks containing the forged indorsements which petitioner refused to accept.

        

ISSUE:

Whether BPI had the right to debit from petitioner's current account the value of the checks with the forged indorsements.

RULING:

BPI acted within legal bounds when it debited the petitioner's account.  Having indorsed the checks to respondent bank, petitioner is deemed to have given the warranty prescribed in Section 66 of the NIL that every single one of those checks "is genuine and in all respects what it purports to be."  Respondent which relied upon the petitioner's warranty should not be held liable for the resulting loss.

**The depositor of a check as indorser warrants that it is genuine and in all respects what it purports to be.  Having indorsed the checks to respondent bank, petitioner is deemed to have given the warranty prescribed in Section 66 of the NIL that every single one of those checks " is genuine and in all respects what it purports to be."