Jai-Alai Corp. of the Phil. vs. Bank of the Phil.

No. L-29432. August 6, 1975

FACTS:

Jai – Alai deposited 10 checks with a total face value of P8,030.58 with BPI. All checks were acquired by the petitioner from one Antonio J. Ramirez, a sales agent of the Inter-Island Gas and a regular bettor at jai-alai games.

Inter-Island Gas discovered that all the indorsements made on the checks purportedly by its cashiers were forgeries.  In due time, the Inter-Island Gas advised the petitioner, the respondent, the drawers and the drawee-banks of the said checks about the forgeries, and filed a criminal complaint against Ramirez.

BPI debit the value of the checks against the petitioner’s account as soon as they were returned by the respective drawee-banks.

Jai – Alai filed a case.

ISSUE:

(1) Whether BPI had the right to debit the petitioner’s current account in the amount corresponding to the total value of the checks in question after more than three months had elapsed from the date their value was credited to the petitioner’s account:

HELD:

YES. The instrument are bearer checks and at the same time crossed checks should have aroused the petitioner’s suspicion as to the title of Ramirez over them and his authority to cash them.

In the case, Jai – Alai, indorsed the said checks when it deposited them with the respondent, Under Sec. 66 of NIL, a general indorser warrants that the instrument “is genuine and in all respects what it purports to be.”

It could not have escaped the attention of the petitioner that the payee of all the checks was a corporation—the Inter-Island Gas Service, Inc. Yet, the petitioner cashed these checks, to a mere individual who was admittedly a habitue at its jai-alai games without making any inquiry as to his authority to exchange checks belonging to the payee-corporation.