Republic Bank vs Court of Appeals

on March 6, 2012
Negotiable Instruments Law Liabilities of Parties 196 SCRA 100 Forgery !
"our Clearing "ouse Rule
On January 25, 1966, San i!uel Corporation "SC# issue$ a %2&'('' c)eck in favor
of Roberto *el!a$o a!ainst SC+s account ,it) t)e -irst .ational City Bank "-.CB#(
*el!a$o frau$ulently c)an!e$ t)e a/ount ,ritten on t)e c)eck to %9,2&'(''(
*el!a$o /a$e a c)eck $eposit ,it) Republic Bank( Republic Bank accepte$ t)e
c)eck an$ en$orse$ it to -.CB by sta/pin! on t)e back of t)e c)eck 0all #rior
an$%or la&' of in$orsement guarantee$0( 1)e c)eck cleare$ an$ -.CB pai$ Republic
Bank %9,2&'(''(
On April 19, 1966, SC noti2e$ -.CB t)at t)e c)eck involve$ ,as for!e$( -.CB
refun$e$ SC t)e a/ount of t)e c)eck( On ay 19, 1966, -.CB infor/e$ Republic
bank about t)e for!ery, by t)en *el!a$o ,it)$re, )is account fro/ Republic Bank(
On Au!ust 15, 1966, -.CB $e/an$e$ Republic Bank to refun$ t)e a/ount of t)e
c)eck(
ISSUE: 3)et)er or not Republic Bank s)oul$ refun$ t)e a/ount to -.CB(
HELD: .o( 1)e 2&4)our clearin! )ouse rule e/bo$ie$ in Section &"c# of Central
Bank Circular .o( 9, as a/en$e$, applies to t)is case( 1)is rule /an$ates banks
t)at after a clearin!, all cleare$ ite/s /ust be returne$ not later t)an 56'' % of
t)e follo,in! business $ay(
7t is true t)at ,)en an en$orse/ent is for!e$, t)e collectin! bank or last en$orser,
as a !eneral rule, bears t)e loss( But t)e un8uali2e$ en$orse/ent of t)e collectin!
bank on t)e c)eck s)oul$ be rea$ to!et)er ,it) t)e 2&4)our re!ulation on clearin!
)ouse operation( 1)us, ,)en t)e $ra,ee bank "-.CB# fails to return a for!e$ or
altere$ c)eck to t)e collectin! bank "Republic Bank# ,it)in t)e 2&4)our clearin!
perio$, t)e collectin! bank is absolve$ fro/ liability(