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    Banco de Oro V Equitable Banking Corp

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    Jen
    Banco de Oro v. Equitable Banking Corporation was a 1988 case before the Supreme Court of the Philippines. The plaintiff bank had drawn checks payable to certain establishments that were deposited with the defendant bank by a third party. The endorsements on the checks were later discovered to be forged. The defendant bank refused the plaintiff's direct presentation of the checks for reimbursement according to clearing house rules. The Supreme Court ruled that a commercial bank cannot escape liability as an endorser of checks that contain forged endorsements. As the collecting bank, the defendant had a duty of diligence to verify the genuineness of prior endorsements before presenting the checks for payment.

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    Banco de Oro V Equitable Banking Corp

    Uploaded by

    Jen
    89 views2 pages
    Banco de Oro v. Equitable Banking Corporation was a 1988 case before the Supreme Court of the Philippines. The plaintiff bank had drawn checks payable to certain establishments that were deposited with the defendant bank by a third party. The endorsements on the checks were later discovered to be forged. The defendant bank refused the plaintiff's direct presentation of the checks for reimbursement according to clearing house rules. The Supreme Court ruled that a commercial bank cannot escape liability as an endorser of checks that contain forged endorsements. As the collecting bank, the defendant had a duty of diligence to verify the genuineness of prior endorsements before presenting the checks for payment.

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    Banco de Oro vs Equitanble Banking Corp

    Original Title

    Banco de Oro v Equitable Banking Corp

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    Banco de Oro v. Equitable Banking Corporation was a 1988 case before the Supreme Court of the Philippines. The plaintiff bank had drawn checks payable to certain establishments that were deposited with the defendant bank by a third party. The endorsements on the checks were later discovered to be forged. The defendant bank refused the plaintiff's direct presentation of the checks for reimbursement according to clearing house rules. The Supreme Court ruled that a commercial bank cannot escape liability as an endorser of checks that contain forged endorsements. As the collecting bank, the defendant had a duty of diligence to verify the genuineness of prior endorsements before presenting the checks for payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    89 views2 pages

    Banco de Oro V Equitable Banking Corp

    Uploaded by

    Jen
    Banco de Oro v. Equitable Banking Corporation was a 1988 case before the Supreme Court of the Philippines. The plaintiff bank had drawn checks payable to certain establishments that were deposited with the defendant bank by a third party. The endorsements on the checks were later discovered to be forged. The defendant bank refused the plaintiff's direct presentation of the checks for reimbursement according to clearing house rules. The Supreme Court ruled that a commercial bank cannot escape liability as an endorser of checks that contain forged endorsements. As the collecting bank, the defendant had a duty of diligence to verify the genuineness of prior endorsements before presenting the checks for payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Banco de Oro v.

    Equitable Banking Corporation


    157 SCRA 189 (1988)

    FACTS:

    Plaintiff drew six crossed Manager’s and payable to certain member establishments of Visa
    Card. Subsequently, the Checks were deposited with the defendant to the credit of its depositor,
    a certain Aida Trencio. Following normal procedures, and after stamping at the back of the
    Checks the usual endorsements. All prior and/or lack of endorsement guaranteed the defendant
    sent the checks for clearing through the Philippine Clearing House Corporation (PCHC).

    Accordingly, plaintiff paid the Checks; its clearing account was debited for the value of the
    Checks and defendant’s clearing account was credited for the same amount, Thereafter, plaintiff
    discovered that the endorsements appearing at the back of the Checks and purporting to be that
    of the payees were forged and/or unauthorized or otherwise belong to persons other than the
    payees. Pursuant to the PCHC Clearing Rules and Regulations, plaintiff presented the Checks
    directly to the defendant for the purpose of claiming reimbursement from the latter.

    However, defendant refused to accept such direct presentation and to reimburse the plaintiff for
    the value of the Checks; hence, this case.

    ISSUE:

    Whether or not the petitioner can escape liability by reason of forgery.

    RULING:

    No. A commercial bank cannot escape the liability of an endorser of a check and which may
    turn out to be a forged endorsement. Whenever any bank treats the signature at the back of the
    checks as endorsements and thus logically guarantees the same as such there can be no doubt
    said bank has considered the checks as negotiable.

    Apropos the matter of forgery in endorsements, this Court has succinctly emphasized that the
    collecting bank or last endorser generally suffers the loss because it has the duty to ascertain
    the genuineness of all prior endorsements considering that the act of presenting the check for
    payment to the drawee is an assertion that the party making the presentment has done its duty
    to ascertain the genuineness of the endorsements.

    Section 66 of the Negotiable Instruments ordains that:

    Every indorser who indorse without qualification, warrants to all subsequent holders in due
    course’ (a) that the instrument is genuine and in all respects what it purports to be; (b) that he
    has good title to it; (c) that all prior parties have capacity to contract; and (d) that the instrument
    is at the time of his indorsement valid and subsisting.
    Thus we hold that while the drawer generally owes no duty of diligence to the collecting bank,
    the law imposes a duty of diligence on the collecting bank to scrutinize checks deposited with it
    for the purpose of determining their genuineness and regularity. The collecting bank being
    primarily engaged in banking holds itself out to the public as the expert and the law holds it to a
    high standard of conduct.

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