PNB vs CA

To understand better the facts, here are the parties in

the case and their roles.
Mariano Pulido is the person named in the check as
the payee
Manuel Go is the first indorsee when Pulido indorsed
the check to him
Augusto Lim is the second and last indorsee
GSIS is the drawer
PNB is the drawee
PCIB is the last indorser in behalf of Lim
HERE ARE THE FACTS OF THE CASE:
Pulido indorsed the check to Go
Who then subsequently indorsed it to Lim
Lim deposited the check to his account in PCIB
PCIB then stamped All prior indorsements and/or Lack
of Endorsement Guaranteed, PCIB at the back of the
check And then, cleared it with the Central Bank and
then FORWARDED it to PNB
PNB, however, did not return the check but paid the
amount indicated in the check
However, PNB
Re-credited the amount back to
GSIS upon the latters demand by virtue of the fact
that their officers signatures were FORGED. In fact,
they informed PNB that the said check was lost two
months ago and requested that the payment be
stopped.
PNB then demanded refund
From PCIB but
The latter refused to do so. Hence this petition.
So the issues of the case are:
One: WON the indorsements at the back of the check
are forged
Two: WON PCIB is liable to PNB by virtue of the
formers warranty on the back of the check
Three: WON PNB accepted the check in the legal
sense

And lastly, WON PCIB was negligent and thus liable to

PNB for damages
For the first issue which is WON the indorsements
at the back of the check are forged, PNB PNB
argues that, since the signatures of the drawer are
forged, so must the signatures of the supposed
indorsers. However, the Court ruled that PNB did not
try to prove that PCIBs indorsement was spurious.
They merely argued that GSIS officers signatures
were forged. 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, 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.
For the second issue which is WON PCIB is liable to
PNB by virtue of the formers warranty on the
back of the check, the Court held that PCIB is not
liable since what PCIB guaranteed are the prior
indorsements and not the authenticity of the
signatures of GSIS because GSIS is the drawer not an
indorser of the check. If ever PCIB was indeed liable, it
would be to a subsequent indorser or subsequent
holder in due course so PNB cannot go against PCIB for
this ground since hes a drawee.
For the third issue which is WON PNB accepted
the check in the legal sense, the Supreme Court
considered PNBs payment as an implication that he
accepted the check since by paying the bill, he not
only accepted or assented to the obligation to pay but
he also complied with the said obligation.

For the last issue which is WON PCIB was negligent

and thus liable to PNB for damages, It was
actually PNB who was negligent for two reasons: one,
GSIS already told them two months ago that the check
was lost and requested that the payment be stopped,
and two, not only did they not followed the request of
GSIS, they also did not return the check when it was
forwarded to them by PCIB which indicates that found
nothing wrong with check and that they would honor
it. So assuming that PCIB was indeed negligent by
guaranteeing the prior indorsements, PNB is guilty of
of a greater degree of negligence.
How is the case related to section 62 of the NIL?
Section 62 of the NIL states that The case of PNB vs
CA taught us that
^same rule applies in the case a drawee who
PAYS THE BILL WITHOUT having previously
accepted it. Thus, there is already an implied
acceptance
of
the
instrument
and
its
corresponding liabilities if the drawee pays the
bill.

Thank you for listening :D