Jai-Alai Corp. of the Phil. vs. Bank of the Phil.

Islands
G.R. No. L-29432 August 6, 1975 66 SCRA 29

FACTS:
Petitioner deposited 10 checks in its current account with BPI. The checks which were acquired by
petitioner from Ramirez, a sales agent of the Inter-Island Gas were all payable to Inter-Island Gas
Service, Inc. or order. After the checks had been submitted to Inter-bank clearing, Inter-Island Gas
discovered that all the indorsements made on the checks purportedly by its cashiers were forgeries. BPI
thus debited the value of the checks against petitioner's current account and forwarded to the latter the
checks containing the forged indorsements which petitioner refused to accept.

ISSUE:
Whether BPI had the right to debit from petitioner's current account the value of the checks with the
forged indorsements.

RULING:
BPI acted within legal bounds when it debited the petitioner's account. Having indorsed the checks to
respondent bank, petitioner is deemed to have given the warranty prescribed in Section 66 of the NIL
that every single one of those checks "is genuine and in all respects what it purports to be." Respondent
which relied upon the petitioner's warranty should not be held liable for the resulting loss.