Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 236 views

    Metrobank Vs PBCom

    Uploaded by

    Raiden Dalusag
    This case involves four crossed checks issued by PBCom totaling ₱964,303.62 that were payable to Pipe Master Corporation but were deposited by Yu Kio, the president of Pipe Master, in his personal bank accounts at Metro Bank and Solid Bank instead of Pipe Master's account. When the four Metro Bank checks that Pipe Master used to obtain the crossed PBCom checks from Filipinas Orient Finance Corporation were later dishonored, Filipinas Orient demanded reimbursement from PBCom, who then sought reimbursement from Metro Bank and Solid Bank as the collecting banks. The Supreme Court ruled that Metro Bank and Solid Bank were liable to Filipinas Orient because as the collecting banks, they failed to ensure the

    Copyright:

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

    Metrobank Vs PBCom

    Uploaded by

    Raiden Dalusag
    236 views2 pages
    This case involves four crossed checks issued by PBCom totaling ₱964,303.62 that were payable to Pipe Master Corporation but were deposited by Yu Kio, the president of Pipe Master, in his personal bank accounts at Metro Bank and Solid Bank instead of Pipe Master's account. When the four Metro Bank checks that Pipe Master used to obtain the crossed PBCom checks from Filipinas Orient Finance Corporation were later dishonored, Filipinas Orient demanded reimbursement from PBCom, who then sought reimbursement from Metro Bank and Solid Bank as the collecting banks. The Supreme Court ruled that Metro Bank and Solid Bank were liable to Filipinas Orient because as the collecting banks, they failed to ensure the

    Original Title

    Metrobank vs PBCom

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This case involves four crossed checks issued by PBCom totaling ₱964,303.62 that were payable to Pipe Master Corporation but were deposited by Yu Kio, the president of Pipe Master, in his personal bank accounts at Metro Bank and Solid Bank instead of Pipe Master's account. When the four Metro Bank checks that Pipe Master used to obtain the crossed PBCom checks from Filipinas Orient Finance Corporation were later dishonored, Filipinas Orient demanded reimbursement from PBCom, who then sought reimbursement from Metro Bank and Solid Bank as the collecting banks. The Supreme Court ruled that Metro Bank and Solid Bank were liable to Filipinas Orient because as the collecting banks, they failed to ensure the

    Copyright:

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

    Metrobank Vs PBCom

    Uploaded by

    Raiden Dalusag
    This case involves four crossed checks issued by PBCom totaling ₱964,303.62 that were payable to Pipe Master Corporation but were deposited by Yu Kio, the president of Pipe Master, in his personal bank accounts at Metro Bank and Solid Bank instead of Pipe Master's account. When the four Metro Bank checks that Pipe Master used to obtain the crossed PBCom checks from Filipinas Orient Finance Corporation were later dishonored, Filipinas Orient demanded reimbursement from PBCom, who then sought reimbursement from Metro Bank and Solid Bank as the collecting banks. The Supreme Court ruled that Metro Bank and Solid Bank were liable to Filipinas Orient because as the collecting banks, they failed to ensure the

    Copyright:

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

    Metrobank vs. PB Com, et. al.

    G.R. No. 141408, Oct. 18, 2007

    FACTS: Pipe Master Corporation represented by Yu Kio, its president, applied for check discounting with
    Filipinas Orient Finance Corporation. The latter approved and granted the same. The Board of Directors of
    Pipe Master issued a Board Resolution authorizing Yu Kio, in his capacity as president, and/or Tan Juan Lian,
    in his capacity as vice-president, to execute, indorse, make, sign, deliver or negotiate instruments, documents
    and such other papers necessary in connection with any transaction coursed through Filipinas Orient for and
    in behalf of the corporation.

    Under the check discounting agreement between Pipe Master and Filipinas Orient, Yu Kio sold to Filipinas
    Orient four Metro Bank checks amounting to ₱1,000,000. In exchange for the four Metro Bank checks,
    Filipinas Orient issued to Yu Kio four PBCom crossed checks totaling ₱964,303.62, payable to Pipe Master
    with the statement "for payee’s account only."

    Upon his receipt of the four PBCom checks, Yu Kio indorsed and deposited in the Metro Bank, in his personal
    account, three of the checks valued at ₱721,596.95. As to the remaining check amounting to ₱242,706.67, he
    deposited it in the Solid Bank Corporation, also in his personal account. Eventually, PBCom paid Metro Bank
    and Solid Bank the amounts of the checks. In turn, Metro Bank and Solid Bank credited the value of the checks
    to the personal accounts of Yu Kio.

    Subsequently, when Filipinas Orient presented the four Metro Bank checks equivalent to ₱1,000,000, it
    received from Yu Kio, they were dishonored by the drawee bank. Pipe Master, the drawer, refused to pay the
    amounts of the checks, claiming that it never received the proceeds of the PBCom checks as they were
    delivered and paid to the wrong party, Yu Kio, who was not the named payee.

    Filipinas Orient then demanded that PBCom restore to its (Filipinas Orient’s) account the value of the PBCom
    checks. In turn, PBCom sought reimbursement from Metro Bank and Solid Bank, being the collecting banks,
    but they refused. Thus, Filipinas Orient filed a complaint for a sum of money against Pipe Master, Tan Juan
    Lian and/or PBCom.

    ISSUE: WON Metro Bank and Solid Bank, petitioners, are liable to respondent Filipinas Orient for accepting
    the PBCom crossed checks payable to Pipe Master.

    HELD: YES. A check is defined by law as a bill of exchange drawn on a bank payable on demand. The
    Negotiable Instruments Law is silent with respect to crossed checks. Nonetheless, this Court has taken
    judicial cognizance of the practice that a check with two parallel lines on the upper left hand corner means
    that it could only be deposited and not converted into cash. 2 The crossing of a check with the phrase "Payee’s
    Account Only" is a warning that the check should be deposited in the account of the payee. It is the collecting
    bank which is bound to scrutinize the check and to know its depositors before it can make the clearing
    indorsement, "all prior indorsements and/or lack of indorsement guaranteed." 3

    Here, petitioner banks have the obligation to ensure that the PBCom checks were deposited in accordance
    with the instructions stated in the checks. The four PBCom checks in question had been crossed and issued
    "for payee’s account only." This could only mean that the drawer, Filipinas Orient, intended the same for
    deposit only by the payee, Pipe Master. The effect of crossing a check means that the drawer had intended the
    check for deposit only by the rightful person, i.e., the payee named therein – Pipe Master.

    As what transpired in this case, petitioner banks accommodated Yu Kio, being a valued client and the
    president of Pipe Master, and accepted the crossed checks. They stamped at the back thereof that "all prior
    indorsements and/or lack of indorsements are guaranteed." In so doing, they became general endorsers.
    Under Section 66 of the Negotiable Instruments Law, an endorser warrants "that the instrument is genuine
    and in all respects what it purports to be; that he has a good title to it; that all prior parties had capacity to
    contract; and that the instrument is at the time of his indorsement valid and subsisting."

    Clearly, petitioner banks, being endorsers, cannot deny liability.

    In Associated Bank v. Court of Appeals, we held that the collecting bank or last endorser generally suffers the
    loss because it has the duty to ascertain the genuineness of all prior indorsements and is privy to the
    depositor who negotiated the check.

    PBCom, as the drawee bank, cannot be held liable since it mainly relied on the express guarantee made by
    petitioners, the collecting banks, of all prior indorsements.

    Evidently, petitioner banks disregarded established banking rules and procedures. They were negligent in
    accepting the checks and allowing the transaction to push through. In Jai-Alai Corp. of the Phil. v. Bank of the
    Phil. Islands, we ruled that one who accepts and encashes a check from an individual knowing that the payee
    is a corporation does so at his peril. Therefore, petitioner banks are liable to respondent Filipinas Orient.

    Since petitioner banks’ negligence was the direct cause of the misappropriation of the checks, they should
    bear and answer for respondent Filipinas Orient’s loss, without prejudice to their filing of an appropriate
    action against Yu Kio.

    You might also like