Republic Bank vs.

Ebrada
GR L-40796, 31 July 1975
-forgery

FACTS:
Respondent Ebrada encashed a back pay check dated January 15, 1963 at Republic
Bank. The Bureau of Treasury, which issued the check advised the bank that the alleged
indorsement of the check by one “Martin Lorenzo” was a forgery as the latter has been
dead since 14 July 1952; and requested that it be refunded he sum deducted from its
account. The bank refunded the amount to the Bureau and demanded upon Ebrada the
sum in question, who refused.

ISSUES:
1) Whether the bank can recover from Ebrada who was the last indorser of the
check with the forged indorsement.
2) Whether the existence of one forged signature in the check will render void all
the other negotiations of the check with respect to the other parties whose signature are
genuine.

RULING:
1) Republic Bank should suffer the loss when it paid the amount of the check in
question to Ebrada but it has the remedy to recover from the latter the amount it paid to
her because as last indorser of the check, she has warranted that she has good title to it
even if in fact she did not because the payee of the check was already dead 11 years
before the check was issued.
2) The negotiation of the check in question from Martin Lorenzo, the original
payee whose indorsement was forged, to the second indorser, should be declared of no
affect, but the negotiation of the aforesaid check from the second indorser to the third
indorser, and from the third indorser to Ebrada who did not know of the forgery, should
be considered valid and enforceable, barring any claim of forgery.

**The existence of one forged signature in the check will not render void all the other negotiations
of the check with respect to the other parties whose signature are genuine. As last indorser of the
check, petitioner warranted that she has good title to it even if in fact she did not because the payee
of the check was already dead 11 years before the check was issued.