JAI-ALAI CORPORATION OF THE PHILIPPINES v.

BANK OF THE
PHILIPPINE ISLAND
66 SCRA 29
CASTRO, J.
FACTS:
Jai-Alai deposited checks in its current account with BPI. These checks
were from a certain Ramirez a bettor at Jai-Alai Games and a sales agent of
the Inter-Island Gas. Inter-Island found out the forgeries committed in the
checks and thus, it informed petitioner, respondent and drawee-banks. When
the drawee-banks returned the checks to the respondent, the latter paid
their value which the former in turn paid to the Inter-Island Gas. The
respondent, for its part, debited the petitioner's current account and
forwarded to the latter the checks containing the forged indorsements, which
the petitioner, however, refused to accept. Petitioner drew a check for
payment of shares of stock, but it was dishonored for insufficient funds.
Hence, this petition.
Issue: Does BPI have the right to debit the petitioner's current account
in the amount corresponding to the total value of the checks in question?
HELD:
Yes, BPI acted within legal bounds when it debited the account of
petitioner. When the petitioner deposited the checks to its account, the
relationship created was one of agency still and not of creditor-debtor. The
bank was to collect from the drawees of the checks with the corresponding
proceeds.
While BPI may have already collected the proceeds when it debited the
account of petitioner, the court held that no creditor-debtor relationship was
created.
According to Section 23 of NIL, when a signature is forged or made
without the authority of the person whose signature it purports to be, it is
inoperative, and no right 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.
It stands to reason that the respondent, as a collecting bank which
indorsed the checks to the drawee-banks, should be liable to the latter for
reimbursement, for the indorsements on the checks had been forged prior to
their delivery to the petitioner