Haystack: PNB vs. Court of Appeals (GR L-26001, 29 October 1968)

PNB vs. CA
[G.R. No. L-26001. October 29, 1968.]
En Banc, Concepcion (J): 8 concurring, 1 took no part

Facts: On 15 January 1962, one Augusto Lim deposited in his current account with the Philippine Commercial and Industrial Bank (PCIB) branch at Padre Faura, Manila, GSIS Check 645915-B, in the sum of P57,415, drawn against the PNB. Following an established banking practice in the Philippines, the check was, on the same date, forwarded, for clearing, through the Central Bank, to the PNB, which did not return said check the next day, or at any other time, but retained, and paid its amount to the PCIB as well as debited it against account of the GSIS in the PNB. Subsequently on 31 January 1962, upon demand from the GSIS, said sum of P57,415 was re-credited to the latter's account, for the reason that the signatures of its officers on the check were forged. Thereupon on 2 February 1962, the PNB demanded from PCIB the refund of said sum, which the PCIB refused to do. Hence, the present action against the PCIB, which was dismissed the CFI Manila, whose decision was, in turn, affirmed by the Court of Appeals. PNB filed the petition for review on certiorari.

It is not disputed that the signatures of the General Manager and the Auditor of the GSIS on the check, as drawer thereof, are forged; that the person named in the check as its payee was Mariano D. Pulido, who purportedly indorsed it to one Manuel Go; that the check purports to have been indorsed by Manuel Go to Augusto Lim, who, in turn, deposited it with the PCIB, on 15 January 1962; that thereupon, the PCIB stamped following on the back of the check: "All prior indorsements/or Lack of Endorsement Guaranteed, Philippine Commercial Industrial Bank," Padre Faura Branch, Manila; that, on the same date, the PCIB sent the check to the PNB, for clearance, through the Central Bank; and that, over two 2 months before, or on 13 November 13, 1961, the GSIS had notified the PNB, which acknowledged receipt of the notice, that said check had been lost, and, accordingly, requested that its payment be stopped.

The Supreme Court affirmed the decision appealed from, with costs against the PNB.

1. No proof that indorsements forged; Arguendo, forgery of indorsements not the cause of loss
The conclusion does not necessarily follow from the premise that since the signatures of the drawer are forged, so must the signatures of the supposed indorsers be. There is absolutely no evidence, and the PNB has not even tried to prove that the indorsements are spurious. The PNB refunded the amount of the check to the GSIS, on account of the forgery in the signatures, not of the indorsers or supposed indorsers, but of the officers of the GSIS as drawer of the instrument. In other words, whether the indorsements have been falsified is immaterial to the PNB's liability as a drawee, or to its right to recover from the PCIB, for, as against the drawee, the indorsement of an intermediate bank does not guarantee the signature of the drawer, since the forgery of the indorsement is not the cause of the loss.

2. Guarantee of all prior indorsement irrelevant to alleged right to recover; Upon PNB’s payment, check is no longer a negotiable instrument but a mere voucher or proof of payment
With respect to the warranty on the back of the check, it should be noted that the PCIB thereby guaranteed "all prior indorsements", not the authenticity of the signatures of the officers of the GSIS who signed on its behalf, because the GSIS is not an indorser of the check, but its drawer. Said warranty is irrelevant, therefore, to the PNB's alleged right to recover from the PCIB. It could have been availed of by a subsequent indorsee or a holder in due course subsequent to the PCIB, but, the PNB is neither. Indeed, upon payment by the PNB, as drawee, the, check ceased to be a negotiable instrument, and became a mere voucher or proof of payment.

3. Acceptance, as used in Negotiable Instruments Law, is not required of checks; Acceptance and Payment distinguished
"Acceptance", in the sense in which this term is used in the Negotiable Instruments Law is not required for checks, for the same are payable on demand. Indeed, "acceptance" and "payment" are, within the purview of said Law, essentially different things, for the former is "a promise to perform an act," whereas the latter is the "actual performance" thereof. In the words of the law, "the acceptance of a bill is the signification by the drawee of his assent to the order of the drawer," which, in the case of checks, is the payment, on demand, of a given sum of money. Upon the other hand, actual payment of the amount of a check implies not only an assent to said order of the drawer and a recognition of the drawee's obligation to pay the sum, but, also, a compliance with such obligation.

4. PNB of greater degree of negligence; PNB’s negligence was the proximate cause of the loss
Assuming that there had been such negligence on the part of the PCIB in discovering that the check was forged, it is undeniable, however, that the PNB has, also, been negligent, with the particularity that the PNB had been guilty of a greater degree of negligence, because it had a previous and formal notice from the GSIS that the check had been lost, with the request that payment thereof be stopped. Just as important, if not more important and decisive, is the fact that the PNB's negligence was the main or proximate cause for the corresponding loss.

5. Failure of bank to return the check implied that the check is good; PNB even in fact honored the check; PNB may not recover from PCIB
The PNB did not return the check to the PCIB the next day or at any other time. Said failure to return the check to the PCIB implied, under the current banking practice, that the PNB considered the check good and would honor it. In fact, the PNB honored the check and paid its amount to the PCIB; and only then did the PCIB allow Augusto Lim to draw said amount from his current account. Thus, by not returning the check to the PCIB, by thereby indicating that the PNB had found nothing wrong with the check and would honor the same, and by actually paying its amount to the PCIB, the PNB induced the latter, not only to believe that the check was genuine and good in every respect, but, also, to pay its amount to Augusto Lim. In other words, the PNB was the primary or proximate cause of the loss, and, hence, may not recover from the PCIB.

6. When two innocent persons suffer wrongful act of third person, loss to be borne out by proximate cause of loss
It is a well-settled maxim of law and equity that when one of two (2) innocent persons must suffer by the wrongful act of a third person, the loss must be borne by the one whose negligence was the proximate cause of the loss or who put it into the power of the third person to perpetrate the wrong.

7. When the innocent persons are equally at fault
Where the collecting (PCIB) and the drawee (PNB) banks are equally at fault, the court will leave the parties where it finds them.

8. Section 62 of Act 2031
Section 62 of Act No. 2031 provides: "The acceptor by accepting the instrument engages that he will pay it according to the tenor of his acceptance; and admits: "(a) The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument; and "(b) The existence of the payee and his then capacity to indorse." The prevailing view is that the same rule applies in the case of a drawee who pays a bill without having previously accepted it.

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