HSBC V. PEOPLE’S BANK

35 SCRA 140

 

FACTS:

People’s  Bank  is  sought  to  be  liable  for  the  amount  involved  in  checks subject of this case.  This arose from the following facts:
 
PLDT  drew  a  check  on  HSBC  with  the  latter  being  the payee.   The  check landed  in  the  hands  of  a  third  person  who  successfully  substituted  his name  as  payee  and  deposited  the  check  with  the  People’s  Bank.    Upon knowledge  of  this,  reimbursement  was  being  sought  from  the  People’s
Bank and it refused to do so.  This prompted to an action against it.   
 

HELD:

The  entire  case  of  HSBC  relied  on  the  indorsement  that  has  been heretofore copied—namely, a guarantee of all prior indorsements made by People’s Bank and since such an indorsement carries with it a concomitant guarantee of genuineness, the People’s Bank is liable to HSBC for alteration of the name of the payee.  On the other hand, the People’s Bank relied on the 24-hour  regulation  of the Central Bank that required after a clearing, that all cleared items must be returned not later than 24 hours.  It should
be noted that the checks were returned by HSBC 27 days later.  Dismissal of its complaint was therefore called for.