REPUBLIC V. EBRADA

65 SCRA 680

FACTS:

Ebrada encashed a “Back Pay Check” issued by the Bureau of Treasury at the  Republic  Bank  in  Escolta  Manila.  The  Bureau  of  Treasury  advised  the Republic  Bank  that  the  instrument  was  forged.  It  informed  the  bank  that the original payee of the check died 11 years before the check was issued.  Therefore, there was a forgery of his signature.
 
This is the sequence:
Martin Lorenzo
The    deceased    person,    original
“payee”,     where     the     forgery
happened
Ramon Lorenzo
 
Delia Dominguez
 
Mauricia Ebrada
Defendant-appelant
 
Ebrada  refuses  to  return  the  proceeds  of  the  check  claiming  that  she already  gave  it  to  Delia  Dominguez.    She  also  claims  that  she  is  a  HDC (holder in due course) and that the bank is already estopped.
 
HELD:
 
Ebrada  should  return  the  proceeds  of  the  check  to  Republic  Bank.  As  an indorser of the check,  she was supposed to have warranted that she has good title to said check.  See Section 65. 
 
Section 23:  When the signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instruments, or to give a  discharge thereof against any party thereto, can be acquired through or under such signature unless the  party  against  whom  it  is  sought  to  enforce  such  right  is  PRECLUDED from setting up the forgery or want of authority. 
 
It  is  only  the  negotiation  based  on  the  forged  or  unauthorized  signature
which is inoperative. Therefore:
 
Martin Lorenzo
Signature inoperative
Ramon Lorenzo
To Dominguez:  operative
Delia Dominguez
To Ebrada:  operative
Mauricia Ebrada
 
 
Drawee bank can collect from the one who encashed the check.  If Ebrada performed  the  duty  of  ascertaining  the  genuiness  of  the  check,  in  all probability, the forgery wouyld have been detected and the fraud defeated.