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PNB v. CA: Check Liability Dispute

PNB was notified that a GSIS check was lost. Augusto Lim deposited the check into his PCIB account, which was then sent to PNB for clearing. PNB paid PCIB without acting on the check. When GSIS demanded repayment, PNB complied and then demanded repayment from PCIB. The lower court and Court of Appeals ruled in favor of PCIB. The Supreme Court affirmed, finding that PNB was negligent for not acting on the lost check despite prior notification, and that PCIB only guaranteed prior endorsements, not the authenticity of the drawer's signature.

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196 views2 pages

PNB v. CA: Check Liability Dispute

PNB was notified that a GSIS check was lost. Augusto Lim deposited the check into his PCIB account, which was then sent to PNB for clearing. PNB paid PCIB without acting on the check. When GSIS demanded repayment, PNB complied and then demanded repayment from PCIB. The lower court and Court of Appeals ruled in favor of PCIB. The Supreme Court affirmed, finding that PNB was negligent for not acting on the lost check despite prior notification, and that PCIB only guaranteed prior endorsements, not the authenticity of the drawer's signature.

Uploaded by

Kevin Hernandez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

PNB v.

CA
FACTS:
In November 1961, GSIS advised PNB that a check bearing check number 645915- B has
been lost.
On January 15, 1962, Augusto Lim, holding GSIS Check No. 645915- B which was in the
amount of P57,415.00, went to PCIB to have the check deposited in his PCIB account.
Apparently, the check was indorsed to him by Manuel Go, which was previously indorsed by
Mariano Pulido to Go. Pulido was the named payee in the check.
PCIB did not encash the check in favor of Augusto Lim but rather it deposited the amount to
Lims PCIB account. Lim cannot withdraw the amount yet as it needs clearing. PCIB
stamped the check with All prior indorsements and/or Lack of Endorsement Guaranteed,
Philippine Commercial and Industrial Bank. PCIB then sent the check to PNB for clearing.
PNB did not act on the check but it paid PCIB the amount of the check. PCIB considered
this as a manifestation that the check was good hence it cleared Lim to withdraw the
amount.
On January 31, 1962, GSIS demanded PNB to restore the amount and PNB complied. PNB
then demanded PCIB to refund the amount of the check. PCIB refused. The lower court
ruled in favor of PCIB. This was affirmed by the Court of Appeals. PNB argued that the
indorsements are forged hence it has no liability.

ISSUE:
Whether or not PCIB should refund the amount to PNB.

HELD:
No. The question whether or not the indorsements have been falsified is immaterial to
PNBs liability as a drawee or to its right to recover from the PCIB for, as against the
drawee, the indorsement of an intermediate bank does not guarantee the signature of the
drawer, since the forgery of the indorsement is not the cause of the loss.

With respect to the warranty on the back of the check, it should be noted that the PCIB
thereby guaranteed all prior indorsements, not the authenticity of the signatures of the
officers of the GSIS who signed on its behalf, because the GSIS is not an indorser of the
check, but its drawer. Further, PNB has been negligent. It has been notified months before
about the lost check

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