Case no.

4 Negotiable Instruments Law Westmont Bank vs Ong FACTS: This case started when respondent Ong while maintaining a current account with petitioner bank, sold certain shares of stocks through Island Securities Corp and to pay respondent, Island Securities Corp issued two managers checks in favor of respondent Ong; however, respondent was not able to get hold of the checks because his friend Tanlimco got hold of them forged the signature of respondent and deposited it with petitioner bank. Even though respondents signature specimens were kept by petitioner bank, it never checked it and simply accepted and credited both checks to the account of the forger Tanlimco. Five months after the discovery of the fraud and after seeking help from the help of the family of the forger and the Central bank which proved futile, respondent Ong sought to claim from petitioner the value of the 2 checks. Both the lower and appellate courts rendered their decision in favor of respondent ordering petitioner to pay the sum of P1,754,787.50 plus moral and exemplary damages and attorneys fees. Real Issues: 1. WON respondent Ong has cause of action to sue petitioner bank 2. WON respondent Ong is barred by laches Issue for purposes of the discussion today Nov. 20 2012 on signature particularly forgery : What is the nature of a signature that is forged or made without the authority of the person whose signature it purports to be Ruling: The SC declared that under sec 23 of the NIL When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority. In short a forged signature is inoperative and ineffectual. The collecting bank is liable to the payee and must bear the loss because it is its legal duty to ascertain that the payees endorsement is genuine before chasing the check. This petitioner Westmont Bank failed to do so.