PNB v.

Concepcion Mining FACTS: A case for collection of a sum of money was filled against defendant in connection with a promissory note they issued with others. The defendants move that since their co-makers (Legarda) have died, claim should be also against the estates of such. This was denied by the court. Promisory Note: NINETY DAYS after date, for value received, I promise to pay to the order of the Philippine National Bank . . . . In case it is necessary to collect this note by or through an attorney-at-law, the makers and indorsers shall pay ten percent (10%) of the amount due on the note as attorney's fees, which in no case shall be less than P100.00 exclusive of all costs and fees allowed by law as stipulated in the contract of real estate mortgage. Demand and Dishonor Waived. Holder may accept partial payment reserving his right of recourse again each and all indorsers. (Purpose mining industry) CONCEPCION MINING COMPANY, INC., By: (Sgd.) VICENTE LEGARDA President (Sgd.) VICENTE LEGARDA (Sgd.) JOSE S SARTE "Please issue check to Mr. Jose S. Sarte" Issue: Is the contention of the defendants correct? HELD: No. Where an instrument containing the words I promise to pay is signed by two or more persons, they are deemed to be jointly and severally liable thereon. By virtue of this provision found in Section 17(g) of the Negotiable Instrument Law and Art. 1216 of the Civil Code, where the promissory note was executed jointly and severally by two or more persons, the payee of the promissory note had the right to hold any one or any two of the signers of the promissory note responsible for the payment of the amount of the note.

SAN CARLOS MILLING CO., LTD vs. BANK OF THE PHILIPPINE ISLANDS AND CHINABANKING CORPORATION. G.R. No. L-37467December 11, 1933. Source: http://www.scribd.com/doc/47027645/San-Carlos-Milling-vs-BPI FACTS: San Carlos milling, organized under the laws of the Territory of Hawaii was authorized to engage in business in the Philippines. The business in the Philippines was in the hands of Alfred Cooper, its agent under general power of attorney with authority of substitution. The principal employee in the Manila Office was Joseph Wilson who had a general power of attorney but without power of substitution. Cooper went on a vacation and gave a general power of attorney to Newland Baldwin and revoked the power of Wilson relative to the dealings with BPI. After a year, Wilson conspired with Dolores, a messenger-clerk and sent a cable gram in code to the company in Honolulu requesting a telegraphic transfer to the China Banking Corporation of Manila for $100,000. The money was transferred by cable to Chinabank and upon receipt, sent to San Carlos Milling an exchange contract for P201,000 (exchange rate then). Such contract was forged in the name of Newland Baldwin. It further asked China bank to send a certified check in SanCarlos Millings favor, payable for deposit only with BPI. The endorsement to which the name of Newland Baldwin was affixed was spurious.BPI credited the current account of plaintiff in the sum of P201, 000 and after it was cleared, it was paid by China Banking Corporation the next day, BPI received a letter purported to be signed by Newland Baldwin, directing that the money be paid in certain denominations. The quoting and packing of the money was witnessed by Dolores who in turn returned with a check purporting to be signed by NewlandBaldwin as agent. . Dolores also returned with a forged check for P1 covering the cost of packing the money. Shortly thereafter, the crime was discovered but BPI refused to credits an Carlos Milling with the amount withdrawn by the two forged checks and brought the case to the Trial Court. Upon the petition of BPI, Chinabank was also impleaded as defendant. The trial court held that the deposit of P201, 000 in the BPI being the result of a forged endorsement, the relation of the depositor and banker did not exist, but the bank was only a gratuitous bailee; that BPI acted in good faith in the ordinary course of business and was not guilty of negligence and that San Carlos Milling could not recover since the loss was due to the criminal actions of its employees. San Carlos appealed its case to the Supreme Court. ISSUE: WON BPI is guilty of negligence and is liable to pay San Carlos Milling for the amount it had cashed out HELD: Judgment absolving BPI was reversed. BPI is guilty of negligence because it should have taken care in ensuring that the signatures were not forged; China Bank is not liable since the responsibility of verifying all endorsements on the check is with the bank that cashes the check, in this case, BPI. A bank that cashes a check must know to whom it pays. In connection with the cashiers check, this duty was therefore upon the BPI and the CBC was not bound to inspect and verify all endorsements of the check, even if some of them were also those of the depositors in that bank. It had a right to rely upon the endorsement of BPI when it gave the latter bank credit for its own cashiers check. Since the money was in fact paid by CBC to BPI, CBC is not indebted to San Carlos Milling or BPI. A bank is bound to know the signatures of its customers; and if it pays a forged check, it must be considered as making the payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged. (7 C.J. 683) No act of San Carlos Milling ledBPI to go astray. The bank paid out its money because it relied upon the genuiness of the purported signatures of Baldwin. Its employees should have used care. Therefore, the proximate cause of loss was due to the negligence of type in honouring and cashing two forged checks (P201, 000 and P1).

Ilusorio v. CA and Manila Banking Corporation, 2002 Source: http://www.scribd.com/archive/plans?doc=39812569 Facts: Petitioner entrusted to his secret falsification, encashed and deposited to her personal account seventeen checks drawn against the account of the espondent bank to credit back and restore to his neness of

On appeal, the Court of A Hence, this petition. Issue: Whether that Manila Bank is liable for damages for its negligence in failing to detect the discrepant checks. Ruling: No. To be entitled to damages, petitioner has the burden of proving negligence on the part of the bank for failure to detect the discrepancy in the signatures on the checks. It is incumbent upon petitioner to establish the fact of forgery, i.e., by submitting his specimen signatures and comparing them with those on the questioned checks. Curiously though, petitioner failed to submit additional specimen signatures as requested by the NBI from which to draw a conclusive finding regarding forgery. Further, the bank's employees in the present case did not have a hint as to the secretarys modus operandi because she was a regular customer of the bank, having been designated by petitioner himself to transact in his behalf. It was petitioner, not the bank, who was negligent. In the present case, it appears that petitioner accorded his secretary unusual degree of trust and unrestricted access to his credit cards, passbooks, check books, bank statements, including custody and possession of cancelled checks and reconciliation of accounts. Petitioner's failure to examine his bank statements appears as the proximate cause of his own damage. True, it is a rule that when a signature is forged or made without the authority of the person whose signature it purports to be, the check is wholly inoperative. However, the rule does provide for an exception, namely: "unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority." In the instant case, it is the exception that applies. Petitioner is precluded from setting up the forgery, assuming there is forgery, due to his own negligence in entrusting to his secretary his credit cards and checkbook including the verification of his statements of account.