Bank of the Philippine Islands v Court of Appeals G.R. No 112392, February 29,2000

FACTS: Private Respondent Napiza deposited in Foreign Currency Deposit Unit (FCDU) Savings Account which he maintained in petitioner’s bank Continental Bank Manager’s Check payable to cash in the amount of Two Thousand Five Hundred Dollars and duly endorsed by Napiza on its dorsal side. It appears that the check belonged to Henry Chan who went to the office of Napiza and requested him to deposit the check in his dollar account. Napiza agreed to deliver to Chan a signed blank withdrawal slip with the understanding that as soon as the check is cleared , both of them would withdraw upon Napiza’s presentation of his passbook. Using the blank withdrawal slip , one Ruben Gayon Jr was able to withdraw the amount. It was later found out that the check was counterfeit. Petitioner filed a complaint against Napiza praying for the return of the amount of $2,500.00 plus interest.


ISSUES:
1. Is respondent Napiza liable under his warranties as a general indorser?
2. Is petitioner grossly negligent in allowing the withdrawal?


HELD: 1. Ordinarily, private respondent may be held liable as in indorser of the check or even as an accommodation party. Under the law, the holder or last indorsee of a negotiable instrument has the right to enforce payment of the instrument for the full amount thereof against all parties liable thereon. Among the parties liable thereon is an indorser of the instrument. Such an indorser ‘ who indorses without qualification ‘ inter alia ‘engages that on due presentment … the instrument shall be accepted or paid, or both,as the case may be, according to its tenor and that if it be dishonored ,he will pay the amount thereof to the holder.

However, to hold Napiza liable without considering the attending circumstances in the case would result in an injustice and in erosion of the public trust in the banking system. The interest of justice thus demands looking into the events that led to the encashment of the check.

2. Yes. To withdraw the amount, a duly-filled up withdrawal slip and depositor’s passbook must be presented. Such requirements were not complied with yet the amount was withdrawn. Petitioner violated its own rules by allowing the withdrawal of an amount that is definitely over and above the aggregate amount of private respondent’s dollar deposits that had yet to be cleared.

The negligence of petitioner’s personnel was the proximate cause of the loss that petitioner sustained. The proximate cause of the withdrawal and eventual loss of the amount was part of the petitioner’s negligence in allowing such withdrawal in disregard of its own rules.