CASE DIGESTS: SECTION 67
JAI ALAI V. BPI
66 SCRA 29
FACTS:Checks were deposited by petitioner in its current account with the bank. These checks were from a certain Ramirez, a consistent better in its games, who was a sales agent from Inter-Island Gas. Inter-Island later found out that of the forgeries committed in the checks and thus, it informed all the parties concerned. Upon the demands on the bank as the collecting bank, it debited the account of petitioner. Thereafter, petitioner tried to issue a check for payment of shares of stock but such was dishonored for insufficient funds. It filed a complaint against the bank.
HELD:Considering that the petitioner indorsed the said checks when it deposited them with the respondent, the petitioner as an indorser guaranteed the genuineness of all prior indorsements thereon. The respondent which relied upon the petitioner’s warranty should not be held liable for the resulting loss.
Furthermore, the provision in the deposit slip on the right of reservation by the bank applies only when there is actual receipt of current funds or solvent credits. But as earlier on indicated, the transfer on account of the checks were ineffectual because it was made under the mistaken and valid assumption that the indorsements of the payee thereon were genuine.