Bank of Philippine Islands vs Court of Appeals (February 2000)

G.R. No. 112392 – 326 SCRA 641 – Mercantile Law – Negotiable Instruments Law – Negotiation – Indorsement – Withdrawal Slip 

Benjamin Napiza maintains an account with the Bank of the Philippine Islands (BPI). In 1987, Napiza was approached by Henry Chan and the latter gave him a $2,500 Continental Bank Manager’s check. Chan asked if Napiza can deposit the check to his (Napiza’s BPI account) by way of accommodation and for the purpose of clearing the said check. Napiza agreed and so he deposited the check on September 3, 1987. Napiza then delivered a signed blank withdrawal slip to Chan with the condition that the $2, may only be withdrawn if the check cleared. For some reason, the withdrawal slip ended up in the hands of one Ruben Gayon who went to BPI and successfully withdrew the $2,. At the time of the withdrawal, the check was not yet cleared. Then days later, BPI was notified by the drawee bank named in the check that the check is actually a counterfeit.

ISSUE: Whether or not Napiza may be held liable to refund the amount of the check.

HELD: No. The Supreme Court ruled that ordinarily, Napiza would have been liable because he is an accommodation indorser. But due to the attendant circumstances, Napiza is discharged from liability.

The withdrawal slip indicates as well as the rules promulgated by BPI that withdrawal from the bank should be accompanied by the presentment of the account holder’s (Napiza’s) savings bankbook. This was not done so in the case at bar because Gayon was able to withdraw without it. Further, BPI allowed the withdrawal even before the check cleared. BPI already credited the $2, to Napiza’s account even without the drawee bank clearing the check. This is contrary to common banking practices and because of such negligence and lack of diligence, BPI, as the collecting bank, shall suffer the loss.

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