PHILIPPINENATIONALBANK, petitioner, vs.

THE COURT OF APPEALS and PHILIPPINE COMMERCIAL

CONCEPCION, C.J.:

The Philippine National Bank — hereinafter referred to as the PNB — seeks the review
by certiorari of a decision of the Court of Appeals, which affirmed that of the Court of First
Instance of Manila, dismissing plaintiff's complaint against the Philippine Commercial and
Industrial Bank — hereinafter referred to as the PCIB — for the recovery of P57,415.00.
A partial stipulation of facts entered into by the parties and the decision of the Court of
Appeals show that, on about January 15, 1962, one Augusto Lim deposited in his current
account with the PCIB branch at Padre Faura, Manila, GSIS Check No. 645915- B, in the sum
of P57,415.00, drawn against the PNB; that, following an established banking practice in the
Philippines, the check was, on the same date, forwarded, for clearing, through the Central
Bank, to the PNB, which did not return said check the next day, or at any other time, but
retained it and paid its amount to the PCIB, as well as debited it against the account of the
GSIS in the PNB; that, subsequently, or on January 31, 1962, upon demand from the GSIS, said
sum of P57,415.00 was re-credited to the latter's account, for the reason that the signatures of
its officers on the check were forged; and that, thereupon, or on February 2, 1962, the PNB
demanded from the PCIB the refund of said sum, which the PCIB refused to do. Hence, the
present action against the PCIB, which was dismissed by the Court of First Instance of Manila,
whose decision was, in turn, affirmed by the Court of Appeals.
It is not disputed that the signatures of the General Manager and the Auditor of the GSIS on
the check, as drawer thereof, are forged; that the person named in the check as its payee
was one Mariano D. Pulido, who purportedly indorsed it to one Manuel Go; that the check
purports to have been indorsed by Manuel Go to Augusto Lim, who, in turn, deposited it with
the PCIB, on January 15, 1962; that, thereupon, the PCIB stamped the following on the back
of the check: "All prior indorsements and/or Lack of Endorsement Guaranteed, Philippine
Commercial and Industrial Bank," Padre Faura Branch, Manila; that, on the same date, the
PCIB sent the check to the PNB, for clearance, through the Central Bank; and that, over two
(2) months before, or on November 13, 1961, the GSIS had notified the PNB, which
acknowledged receipt of the notice, that said check had been lost, and, accordingly,
requested that its payment be stopped.
In its brief, the PNB maintains that the lower court erred: (1) in not finding the PCIB guilty of
negligence; (2) in not finding that the indorsements at the back of the check are forged; (3)
in not finding the PCIB liable to the PNB by virtue of the former's warranty on the back of the
check; (4) in not holding that "clearing" is not "acceptance", in contemplation of the
Negotiable Instruments law; (5) in not finding that, since the check had not been accepted
by the PNB, the latter is entitled to reimbursement therefor; and (6) in denying the PNB's right
to recover from the PCIB.
The first assignment of error will be discussed later, together with the last,with which it is
interrelated.
As regards the second assignment of error, the PNB argues that, since the signatures of the
drawer are forged, so must the signatures of the supposed indorsers be; but this conclusion
does not necessarily follow from said premise. Besides, there is absolutely no evidence, and
the PNB has not even tried to prove that the aforementioned indorsements are spurious.
Again, the PNB refunded the amount of the check to the GSIS, on account of the forgery in
the signatures, not of the indorsers or supposed indorsers, but of the officers of the GSIS as
drawer of the instrument. In other words, the question whether or not the indorsements have
been falsified is immaterial to the PNB's liability as a drawee, or to its right to recover from the
PCIB,1 for, as against the drawee, the indorsement of an intermediate bank does not
guarantee the signature of the drawer,2 since the forgery of the indorsement is not the cause
of the loss.3
With respect to the warranty on the back of the check, to which the third assignment of error
refers, 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.4 Said warranty is irrelevant, therefore, to
the PNB's alleged right to recover from the PCIB. It could have been availed of by a
subsequent indorsee5 or a holder in due course6 subsequent to the PCIB, but, the PNB is
neither.7 Indeed, upon payment by the PNB, as drawee, the check ceased to be a negotiable
instrument, and became a mere voucher or proof of payment.8
Referring to the fourth and fifth assignments of error, we must bear in mind that, in general,
"acceptance", in the sense in which this term is used in the Negotiable Instruments Law9 is not
required for checks, for the same are payable on demand.10 Indeed, "acceptance" and
"payment" are, within the purview of said Law, essentially different things, for the former is
"a promise to perform an act," whereas the latter is the "actual performance" thereof.11 In the
words of the Law,12 "the acceptance of a bill is the signification by the drawee of his assent to
the order of the drawer," which, in the case of checks, is the payment, on demand, of a given
sum of money. Upon the other hand, actual payment of the amount of a check implies not
only an assent to said order of the drawer and a recognition of the drawer's obligation to pay
the aforementioned sum, but, also, a compliance with such obligation.
Let us now consider the first and the last assignments of error. The PNB maintains that the lower
court erred in not finding that the PCIB had been guilty of negligence in not discovering that
the check was forged. Assuming that there had been such negligence on the part of the PCIB,
it is undeniable, however, that the PNB has, also, been negligent, with the particularity that the
PNB had been guilty of a greater degree of negligence, because it had a previous and formal
notice from the GSIS that the check had been lost, with the request that payment thereof be
stopped. Just as important, if not more important and decisive, is the fact that the PNB's
negligence was the main or proximate cause for the corresponding loss.
In this connection, it will be recalled that the PCIB did not cash the check upon its presentation
by Augusto Lim; that the latter had merely deposited it in his current account with the PCIB;
that, on the same day, the PCIB sent it, through the Central Bank, to the PNB, for clearing; that
the PNB did not return the check to the PCIB the next day or at any other time; that said failure
to return the check to the PCIB implied, under the current banking practice, that the PNB
considered the check good and would honor it; that, in fact, the PNB honored the check and
paid its amount to the PCIB; and that only then did the PCIB allow Augusto Lim to draw said
amount from his aforementioned current account.
Thus, by not returning the check to the PCIB, by thereby indicating that the PNB had found
nothing wrong with the check and would honor the same, and by actually paying its amount
to the PCIB, the PNB induced the latter, not only to believe that the check was genuine and
good in every respect, but, also, to pay its amount to Augusto Lim. In other words, the PNB was
the primary or proximate cause of the loss, and, hence, may not recover from the PCIB. 13
It is a well-settled maxim of law and equity that when one of two (2) innocent persons must
suffer by the wrongful act of a third person, the loss must be borne by the one whose
negligence was the proximate cause of the loss or who put it into the power of the third person
to perpetrate the wrong.14
Then, again, it has, likewise, been held that, where the collecting (PCIB) and the drawee (PNB)
banks are equally at fault, the court will leave the parties where it finds them. 15
Lastly, Section 62 of Act No. 2031 provides:
The acceptor by accepting the instrument engages that he will pay it according to the tenor
of his acceptance; and admits:
(a) The existence of the drawer, the genuineness of his signature, and his capacity and
authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
The prevailing view is that the same rule applies in the case of a drawee who pays a bill without
having previously accepted it.16
WHEREFORE, the decision appealed from is hereby affirmed, with costs against the Philippine
National Bank. It is so ordered.