GR. No.

133179
March 27, 2008
FACTS:
September 21, 1983: FCC had deposited a money market placement for P 2M with
Producers Bank.
Santos was the money market trader assigned to handle FCCs account. Such
deposit is evidenced by Official Receipt and a Letter When the placement matured,
FCC demanded the payment of the proceeds of the placement. November 14, 1983:
Lim Sio Wan deposited with Allied Banking Corporation (Allied) a money market
placement of P 1,152,597.35 for a term of 31 days. December 5, 1983: a person
claiming to be Lim Sio Wan called up Cristina So, an officer of Allied, and instructed
the latter to pre-terminate Lim Sio Wans money market placement, to issue a
managers check representing the proceeds of the placement, and to give the check
to Deborah Dee Santos who would pick up the check. Lim Sio Wan described the
appearance of Santos. Santos arrived at the bank and signed the application form
for a managers check to be issued. The bank issued Managers Check representing
the proceeds of Lim Sio Wans money market placement in the name of Lim Sio
Wan, as payee, cross-checked "For Payees Account Only" and given to Santos.
Allied managers check was deposited in the account of Filipinas Cement
Corporation (FCC) at Metropolitan Bank and Trust Co. (Metrobank), with the forged
signature of Lim Sio Wan as indorser. Metrobank stamped a guaranty on the check,
which reads: "All prior endorsements and/or lack of endorsement guaranteed."Upon
the presentment of the check, Allied funded the check even without checking the
authenticity of Lim Sio Wans purported indorsement. The amount on the face of
the check was credited to the account of FCC
December 9, 1983: Lim Sio Wan deposited with Allied a second money market
placement to mature on January 9, 1984
December 14, 1983: upon the maturity date of the first money market placement,
Lim Sio Wan went to Allied to withdraw it. She was then informed that the
placement had been pre-terminated upon her instructions which she denied. Lim Sio
Wan filed with the RTC against Allied to recover the proceeds of her first money
market placement, Allied filed a third party complaint against Metrobank and Santos
Metrobank filed a fourth party complainagainst FCC,
FCC for its part filed a fifth party complaint against Producers Bank.
Summonses were duly served upon all the parties except for Santos, who was no
longer connected with Producers Bank
May 15, 1984: Allied informed Metrobank that the signature on the check was
forged
Metrobank withheld the amount represented by the check from FCC.
Metrobank agreed to release the amount to FCC after the FCC executed an
undertaking, promising to indemnify Metrobank in case it was made to reimburse
the amount
Lim Sio Wan thereafter filed an amended complaint to include Metrobank as a partydefendant, along with Allied.
RTC : Allied Bank to pay Lim Sio Wan plus damages and atty. fees
Allied Banks cross-claim against Metrobank is DISMISSED.
Metrobanks third-party complaint as against Filipinas Cement Corporation is
DISMISSED
Filipinas Cement Corporations fourth-party complaint against Producers Bank is
DISMISSED
CA: Modified. Allied Banking Corporation to pay 60% and Metropolitan Bank and
Trust Company 40%

ISSUE: W/N Allied should be solely liable to Lim Sio Wan.

HELD: YES. CA affirmed. Modified Porudcers Bank to reimburse Allied and
Metrobank.

Articles 1953 and 1980 of the Civil Code

Art. 1953. A person who receives a loan of money or any other fungible thing
acquires the ownership thereof, and is bound to pay to the creditor an equal amount
of the same kind and quality.
Art. 1980. Fixed, savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loan.

bank deposit is in the nature of a simple loan or mutuum

money market is a market dealing in standardized short-term

credit instruments (involving large amounts) where lenders and borrowers do
not deal directly with each other but through a middle man or dealer in open
market. In a money market transaction, the investor is a lender who loans his
money to a borrower through a middleman or dealer.

Lim Sio Wan, as creditor of the bank for her money market placement,
is entitled to payment upon her request, or upon maturity of the
placement, or until the bank is released from its obligation as debtor

GR: collecting bank which indorses a check bearing a forged indorsement and
presents it to the drawee bank guarantees all prior indorsements, including
the forged indorsement itself, and ultimately should be held liable therefor

EX: when the issuance of the check itself was attended with negligence.

Allied negligent in issuing the managers check and in transmitting it to

Santos without even a written authorization

Allied did not even ask for the certificate evidencing the money market
placement or call up Lim Sio Wan at her residence or office to confirm
her instructions.

Allieds negligence must be considered as the proximate cause of the

resulting loss.

When Metrobank indorsed the check without verifying the authenticity of Lim
Sio Wans indorsement and when it accepted the check despite the fact that
it was cross-checked payable to payees account only

contributed to the easier release of Lim Sio Wans money and

perpetuation of the fraud

Given the relative participation of Allied and Metrobank to the instant case,
both banks cannot be adjudged as equally liable. Hence, the 60:40 ratio of
the liabilities of Allied and Metrobank, as ruled by the CA, must be upheld.

FCC, having no participation in the negotiation of the check and in the forgery
of Lim Sio Wans indorsement, can raise the real defense of forgery as against
both banks

Producers Bank was unjustly enriched at the expense of Lim Sio Wan

Producers Bank should reimburse Allied and Metrobank for the

amounts ordered to pay Lim Sio Wan