Scribd Logo
Upload

Welcome to Scribd!

  • 67 views

    Associated Bank V CA

    Uploaded by

    Anakata
    - The Province of Tarlac issued checks to Concepcion Emergency Hospital that were deposited by the retired cashier Fausto Pangilinan into his personal account at Associated Bank after forging signatures. - PNB, as the drawee bank, demanded reimbursement from Associated Bank for honoring the forged checks based on Associated Bank's indorsement guaranteeing prior endorsements. - Associated Bank is liable to reimburse PNB for honoring the forged checks due to its indorsement guaranteeing prior endorsements, however PNB is only entitled to half reimbursement from the Province due to the Province's contributory negligence in continuing to issue checks to the retired cashier. PNB can

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Associated Bank V CA

    Uploaded by

    Anakata
    67 views2 pages
    - The Province of Tarlac issued checks to Concepcion Emergency Hospital that were deposited by the retired cashier Fausto Pangilinan into his personal account at Associated Bank after forging signatures. - PNB, as the drawee bank, demanded reimbursement from Associated Bank for honoring the forged checks based on Associated Bank's indorsement guaranteeing prior endorsements. - Associated Bank is liable to reimburse PNB for honoring the forged checks due to its indorsement guaranteeing prior endorsements, however PNB is only entitled to half reimbursement from the Province due to the Province's contributory negligence in continuing to issue checks to the retired cashier. PNB can

    Original Description:

    Associated Bank v CA

    Original Title

    Associated Bank v CA

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    - The Province of Tarlac issued checks to Concepcion Emergency Hospital that were deposited by the retired cashier Fausto Pangilinan into his personal account at Associated Bank after forging signatures. - PNB, as the drawee bank, demanded reimbursement from Associated Bank for honoring the forged checks based on Associated Bank's indorsement guaranteeing prior endorsements. - Associated Bank is liable to reimburse PNB for honoring the forged checks due to its indorsement guaranteeing prior endorsements, however PNB is only entitled to half reimbursement from the Province due to the Province's contributory negligence in continuing to issue checks to the retired cashier. PNB can

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    67 views2 pages

    Associated Bank V CA

    Uploaded by

    Anakata
    - The Province of Tarlac issued checks to Concepcion Emergency Hospital that were deposited by the retired cashier Fausto Pangilinan into his personal account at Associated Bank after forging signatures. - PNB, as the drawee bank, demanded reimbursement from Associated Bank for honoring the forged checks based on Associated Bank's indorsement guaranteeing prior endorsements. - Associated Bank is liable to reimburse PNB for honoring the forged checks due to its indorsement guaranteeing prior endorsements, however PNB is only entitled to half reimbursement from the Province due to the Province's contributory negligence in continuing to issue checks to the retired cashier. PNB can

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    The Province of Tarlac was disbursing funds to Concepcion Emergency Hospital via checks

    drawn against its account with the Philippine National Bank (PNB). These checks were drawn
    payable to the order of Concepcion Emergency Hospital. Fausto Pangilinan was the cashier
    of Concepcion Emergency Hospital in Tarlac until his retirement in 1978. He used to handle
    checks issued by the provincial government of Tarlac to the said hospital. However, after his
    retirement, the provincial government still delivered checks to him until its discovery of this
    irregularity in 1981. By forging the signature of the chief payee of the hospital (Dr. Adena
    Canlas), Pangilinan was able to deposit 30 checks amounting to P203k to his account with
    the Associated Bank.
    When the province of Tarlac discovered this irregularity, it demanded PNB to reimburse the
    said amount. PNB in turn demanded Associated Bank to reimburse said amount. PNB
    averred that Associated Bank is liable to reimburse because of its indorsement borne on the
    face of the checks:
    All prior endorsements guaranteed ASSOCIATED BANK.
    ISSUE: What are the liabilities of each party?
    HELD: The checks involved in this case are order instruments.
    Liability of Associated Bank
    Where the instrument is payable to order at the time of the forgery, such as the checks in this
    case, the signature of its rightful holder (here, the payee hospital) is essential to transfer title
    to the same instrument. When the holders indorsement is forged, all parties prior to the
    forgery may raise the real defense of forgery against all parties subsequent thereto.
    A collecting bank (in this case Associated Bank) where a check is deposited and which
    indorses the check upon presentment with the drawee bank (PNB), is such an indorser. So
    even if the indorsement on the check deposited by the bankss client is forged, Associated
    Bank is bound by its warranties as an indorser and cannot set up the defense of forgery as
    against the PNB.
    EXCEPTION: If it can be shown that the drawee bank (PNB) unreasonably delayed in
    notifying the collecting bank (Associated Bank) of the fact of the forgery so much so that the
    latter can no longer collect reimbursement from the depositor-forger.
    Liability of PNB
    The bank on which a check is drawn, known as the drawee bank (PNB), is under strict liability
    to pay the check to the order of the payee (Provincial Government of Tarlac). Payment under
    a forged indorsement is not to the drawers order. When the drawee bank pays a person other
    than the payee, it does not comply with the terms of the check and violates its duty to charge
    its customers (the drawer) account only for properly payable items. Since the drawee bank
    did not pay a holder or other person entitled to receive payment, it has no right to
    reimbursement from the drawer. The general rule then is that the drawee bank may not debit
    the drawers account and is not entitled to indemnification from the drawer. The risk of loss
    must perforce fall on the drawee bank.
    EXCEPTION: If the drawee bank (PNB) can prove a failure by the customer/drawer (Tarlac
    Province) to exercise ordinary care that substantially contributed to the making of the forged
    signature, the drawer is precluded from asserting the forgery.
    In sum, by reason of Associated Banks indorsement and warranties of prior indorsements as
    a party after the forgery, it is liable to refund the amount to PNB. The Province of Tarlac can
    ask reimbursement from PNB because the Province is a party prior to the forgery. Hence, the
    instrument is inoperative. HOWEVER, it has been proven that the Provincial Government of
    Tarlac has been negligent in issuing the checks especially when it continued to deliver the
    checks to Pangilinan even when he already retired. Due to this contributory negligence, PNB
    is only ordered to pay 50% of the amount or half of P203 K.
    BUT THEN AGAIN, since PNB can pass its loss to Associated Bank (by reason of Associated
    Banks warranties), PNB can ask the 50% reimbursement from Associated Bank. Associated
    Bank can ask reimbursement from Pangilinan but unfortunately in this case, the court did not
    acquire jurisdiction over him.

    You might also like