BPI V CA, CHINA BANKING CORP

L-102383; 216 SCRA 51; November 26,

1992
~kiyo~
FACTS
SUBJECT: 2 checks for the pretermination of a money
market placement
DRAWER/DRAWEE: BPI
PAYEE: Eligia Fernando, impersonated by Susan Lopez
INDORSMENT: China Banking Corp., collecting bank of
the BPI checks
-Lopez impersonated Fernando, preterminated the latters
money market placement evidenced by a promissory note
(P2,462,243.19) from and through BPI, who issued her 2
checks. She later opened an account at CBC and
endorsed the checks there; CBC stamped them with
guaranty of prior endorsements and/or lack of
endorsement; BPI cleared them. Lopez withdrew nearly the
whole amount. The real Fernando came on the maturity
date of the placement for rollover and claimed forgery of
endorsements.

ISSUE
WON in the event that the payees signature is forged, BPI
may claim reimbursement from CBC
HELD: NO
-Under Sec. 23, the general rule is that forged signatures
are wholly inoperative and payments through such are
ineffectual; the exception is where the party relying on the
forgery is precluded from setting up the forgery or want of
authority. The court recognizes negligence of the party
invoking forgery as an exception; hence general rule does
not apply here. BPI claims the clearing guaranty makes
CBC wholly liable for forged checks. Records show both
BPI (not calling Fernando to confirm pretermination; not
verifying Fernandos signatures; not asking for the
promissory note upon pickup of checks) and CBC (opening
account for Lopez with only Fernandos tax account
number as ID, not questioning Lopez huge deposit and
withdrawals) were negligent in the selection/supervision of
their employees and thus both liable.
Disposition BPI is liable 60%, CBC is liable 40%