Gueco, Jennifer Denise D. September 28, 2014
11300256 BUSLAW4

BANCO DE ORO SAVINGS AND MORTGAGE BANK, Petitioner, v. EQUITABLE BANKING CORPORATION, PHILIPPINE CLEARING HOUSE CORPORATION, AND REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH XCII (92) respondents.
157 SCRA 188

Facts:
Sometime in March, April, May, and August, Banco De Oro (“BDO”) drew six crossed Manager’s check payable to certain member establishments of Visa Card. The checks were then deposited with Equitable Bank Corporation (“EBC”) to the credit of its depositor, Aida Trencio. After stamping on the usual indorsements ‘All prior and/or lack of endorsement guaranteed,’ the checks were afterwards sent for clearing through the Philippine Clearing House Corporation (“PCHC”) and were thus cleared. However, BDO discovered that the indorsements in the back of the checks were forged. It then demanded for EBC to credit its account, but the latter refused to do so. This prompted BDO to file a complaint against BDO and PCHC, requiring the same to pay the sum of the checks with interest at the rate of 12% per annum from the date of the complaint plus attorney’s fees in the amount of P10,000.00 as well as the cost of the suit.

Decision:
The court ruled in favor of EBC and PCHC. BDO is estopped from raising the non-negotiability of the checks in issue as it stamped its guarantee at the back of its checks and subsequently presented it for clearing. Further, it was in the basis of these indorsements that the proceeds were credited in its clearing account. A commercial bank cannot escape liability of an indorser of a check which may turn out to be a forged indorsement. Whenever a bank treats the signature at the back of the checks as indorsements and hence guarantees the same as such, there can be no doubt that said bank had considered the checks as negotiable. Also, it