Republic Bank v Ebrada; G.R. No. L-40796; 31 Jul 1975; 65 SCRA 680

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Defendant encashed with plaintiff bank a check the payee of which had already died years long before its issuance. After it was advised of the forgery and drawer bureau of the check’s amount, plaintiff bank made verbal and formal demands upon defendant to account for the sum but the latter refused to do so.

Whether or not petitioner bank may recover from the defendant for the payment for the forged check.

YES. Where a check has several indorsement on it, it is not supposed to be drawee’s duty to ascertain whether the signatures of the payee or indorsers are genuine or not. This is because the indorser is supposed to warrant to the drawee that the signatures of the payee and previous indorsers are genuine, warranty not extending only to holders in due course. One who purchases a check or draft is bound to satisfy himself that the paper is genuine and that by indorsing it or presenting it for payment or putting it into circulation before presentation he impliedly asserts that he has performed his duty and the drawee who has paid the forged check, without actual negligence on his part, may recover the money paid from such negligent purchasers. In such cases the recovery is permitted because although the drawee was in a way negligent in failing to detect the forgery, yet if the encasher of the check had performed his duty, the forgery would in all probability, have been detected and the fraud defeated.

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