FORGERY

QUESTION: (BAR 2009)

TRUE or FALSE: A bank is bound to know its depositor’s signature is an inflexible rule in
determining the liability of a bank in forgery cases.

SUGGESTED ANSWER:

False. In cases of forgery, the forger may not necessarily be a depositor of the bank, especially
in the case of a drawee bank. Yet in many cases of forgery, it is the drawee that is held liable for
the loss.

QUESTION: (BAR 2010)

Marlon deposited with LYRIC Bank a money market placement of P1 million for a term of 31
days. On maturity date, one claiming to be Marlon called up the LYRIC Bank account officer and
instructed him to give the manager’s check representing the proceeds of the money market
placement to Marlon’s girlfriend Ingrid. The check, which bore the forged signature of Marlon,
was deposited in Ingrid’s account with YAMAHA Bank. YAMAHA Bank stamped a guaranty on
the check reading: “All prior endorsements and/or lack of endorsement guaranteed.” Upon
presentment of the check, LYRIC Bank funds the check. Days later, Marlon goes to LYRIC Bank to
collect his money market placement and discovers the foregoing transactions. Marlon
thereupon sues LYRIC Bank which in turn files a third-party complaint against YAMAHA Bank.
Discuss the respective rights and liabilities of the two banks. (5%)

SUGGESTED ANSWER:

Since the money market placement of Marlon is in the nature of a loan to Lyric Bank, and since
he did not authorize the release of the money market placement to Ingrid, the obligation of
Lyric Bank to him has not been paid. Lyric Bank still has the obligation to pay him. Since Yamaha
Bank indorsed the check bearing the forged indorsement of Marlon and guaranteed all
indorsements, including the forged indorsement, when it presented the check to Lyric Bank, it
should be held liable to it. However, since the issuance of the check was attended with the
negligence of Lyric Bank, it should share the loss with Yamaha Bank on a fifty percent basis
(Allied Banking Corporation v. Lim Sio Wan, 549 SCRA 504 (2008)).

INDORSERS

QUESTION: (BAR 2009)

Gaudencio, a store owner, obtained a P1-million loan from Bathala Financing Corporation (BFC).
As security, Gaudencio executed a ―Deed of Assignment of Receivables. Assigning fifteen
checks received from various customers who bought merchandise from his store. The checks
were duly indorsed by Gaudencio’s customers.

The Deed of Assignment contains the ff. stipulation:

―If, for any reason, the receivables or any part thereof cannot be paid by the obligors, the
ASSIGNOR unconditionally and irrevocably agrees to pay the same, assuming the liability to pay
by way of penalty, three percent of the total amount unpaid, for the period of delay until the
same is fully paid.”

When the checks became due, BFC deposited them for collection, but the drawee banks
dishonored all the checks for one of the ff. reasons: ―account closed, ―payment stopped,
―account under garnishment, ―or ―insufficiency of funds.

BFC wrote Gaudencio notifying him of the dishonored checks, and demanding payment of the
loan. Because Gaudencio did not pay, BFC filed a collection suit. In his defense, Gaudencio
contended that (a) BFC did not give timely notice of dishonor (of the checks); and (b)
considering that the checks were duly indorsed, BfC should proceed against the drawers and
the indorsers of the checks.

Are Gaudencio’s defenses tenable? Explain. (5%)

SUGGESTED ANSWER:

No. Gaudencio’s defenses are untenable. The cause of action of BFC was really on the contract
of loan, with the checks merely serving as collateral to secure the payment of the loan. By
virtue of the Deed of Assignment which he signed, Gaudencio undertook to pay for the
receivables if for any reason they cannot be paid by the obligors (Velasquez v. Solidbank
Corporation, 550 SCRA 119 (2008)).