FACTS:

Respondent Junnel' s Marketing Corporation (JMC) is a domestic

Corporation engaged in the business of selling wine and liquors. It has a current
account with MBTC from which it draws checks to pay its different suppliers
among them are Jardine Wines and Spirits (Jardine) and Premiere Wines
(Premiere).
JMC discovered that 11crossed checks issued amounting to P1,481,292 to
Jardine and Premiere on various dates from October 1998 to May 1999 were
charged against its MBTC current account but were not covered by any official
receipt from Jardine or Premiere.
Examination of the dorsal portion of the subject checks revealed that the
checks were deposited to BankCom Acct. No. 0015-32987-7. This account is
neither owned of the said suppliers.
Respondent Purificacion Delizo (Delizo), a former accountant of JMC,
executed a handwritten letter where she confessed that she stole several
company checks drawn against JMC's current account. The said checks were never
given to the named payees but were forwarded by her to one Lita Bituin (Bituin).
Delizo further admitted that she, Bituin and an unknown bank manager colluded to
cause the deposit and encashing of the stolen checks and shared in the proceeds
thereof.
JMC filed with the RTC for a complaint for sum of money against Delizo,
Bankcom, and Metrobank. Delizo for stealing the checks. Bankcom for having
negligently accepted the checks for deposit despite that they are crossed checks
payable to the orders of Jardine and Premiere and neither of them owns the
account. Lastly, Metrobank which is also in negligence for having honored the
checks even though the Bankcom account belongs to neither Jardine nor Premiere.
MNTC filed a cross-claim against Bankcom and Delizo for the right to be
reimbursed in the event it is ordered liable IFO JMC.

RTC- Bankcom and Metrobank liable to JMC at 2/3 and 1/3 ratio,
respectively- for the amount of checks, interest, and attorney’s fees. Delizo’s
liability is absolved. Cross-claim of MBTC denied.
CA- affirmed RTC with modification on the interest- 12% p.a. from date of
decision- June 2013 and 6% p.a. from July 1, 2013- full satisfaction.

ISSUE: WON Metrobank and Bankcom is liable to JMC at 2/3 and 1/3 ratio,
respectively.
RULING:
No. Metrobank is liable to return to JMC the entire amount plus interest.
Bankcom is liable to reimburse Metrobank the same amount plus interest.

Rule on Sequence of Recovery in Cases of Unauthorized Payment of Checks

The case involved unauthorized payment of valid checks i.e., payment of

checks to persons other than the payee or his order. The subject checks are
considered valid as they are complete and bears genuine signature.
The leading case for such cases is Bank of America. In this case it also
involved crossed checks payable to the order of a specified payee that were
deposited in a collecting bank under an account not belonging to the payee or his
indorsee but which, upon presentment, were subsequently honored by the drawee
bank. It was held that the drawee bank becomes liable to the drawer for the amount of
the checks but the drawee bank can seek reimbursement from the collecting bank.
Metrobank is liable to JMC
A drawee bank is obligated to follow the drawer-clients instruction when
paying checks issued by them. The instruction includes the designation of the payee or
to whom the check should be paid. When drawee bank pays a person other than the
payee named on the check, it commits breach of its obligation and the payment made
is deemed unauthorized. Hence, the drawee bank may be held liable to the drawer for
the amount charged against the latter’s account even if the drawee bank acted merely
upon the guarantees of a collecting bank.
In this case, MBTC had breached JMC’s instructions when it paid the value of
the checks to Bankcom as the account neither belongs to Jardine or Premiere.

Bankcom is liable to MBTC

MBTC’s reliable to Bankcom’s guarantees enabled the former to seek
reimbursement from Bankcom- the collecting bank.
A collecting or presenting bank-i. e., the bank that receives a check for
deposit and that presents the same to the drawee bank for payment-is an indorser of
such check. When it presents a check to the drawee bank for payment, it assumes the
same warranties assumed by an indorser of a negotiable instrument pursuant to
Section 66 of the Negotiable Instruments Law.
These warranties are:
1. that the instrument is genuine and in all respects what it purports to be;
2. that the indorser has good title to it;
3. that all prior parties had capacity to contract; and
 4. that the instrument is, at the time of the indorsement, valid and
subsisting.
If any of the foregoing warranties turns out to be false, a collecting bank
becomes liable to the drawee bank for payments made under such false warranty.
Bankcom assumed the warranties of an indorser when it forwarded the checks
to Philippine Clearing House Corporation (PCHC) for presentment to MBTC. The
presentment guaranteed to MBTC that the checks had been deposited to an account
that has good title. The guaranty, however, is false because the checks were deposited
to an account that neither belongs to the payees nor to their indorsees.

Recourse of Bankcom
In the event the collecting bank reimburses the drawee bank, the former can
seek similar reimbursement from the very persons who caused the checks to be
deposited and received the unauthorized payments.
Bankcom have a right of recourse against the persons which caused the
anomalous deposit.

Doctrine of Comparative Negligence (60%-40% rule) does not apply in the instant
case
The Doctrine of comparative negligence whereby wrongful encashment of
checks will be paid under 60% and 40% ratio is not applicable to this case. The
doctrine as applied in the case of BPI v. CA and Allied Banking Corporation v. Lio
Sim Wan have different factual contexts with this case.
In BPI v. CA 2 cashier’s checks were issued by BPI as payment for pre-
termination of money market placement of Eligia Fernando after a mere phone
request. It was later established that the real Eligia Fernando never requested the
same.
In Allied Banking Corp, on the other hand, involved a manager’s check issued
by the bank as payment for the pre-terminated money market placement which was
actually never requested.
In both cases the drawee bank is also the drawer bank and is not only guilty of
wrongfully paying the check but also of negligence in issuing such check.
In the case at bench, though MBTC is guilty of unauthorized check payments,
it only acted upon the guarantees made by Bankcom.

Order of CA are affirmed with modification on individual liabilities.

1. MBTC is liable to JMC for the principal amount plus interest of 6% from
January 28, 2002 until full satisfaction
2. Bankcom is liable to pay MBTC the principal amount plus interest of 6%
from March 5, 2003 until full satisfaction.