LBP V.
NARCISO KHO> sole proprietor of United Oil WON Kho is preculed from asserting the
KHO Petroleum,
 Entered in a verbal agreement to
purchase Lbircant from RED ORANGE
Internationa Trading
 Red Orange insisted that it would
only LB Manager’s check as payment
KHO opend Saving account in LBP Araneta>
P25Million
 Kho also purchased LB manager
Checks > LBSupervisor prepared and
signed the check
 He asked for a PHOTOCPY oof the
Manager Check > to inform RO proof
of fudns
When he was going to PICK UP the Check>
P25million was debited from his savings
account
 UNFORTUNATELY, transaction with
RO did not push through
BPI called LBP> informing RO had deposited
check for payment. BM confirmed it is Kho’s
check> deposited check to BPI
 Kho was informed the check was
cleared and paid by the BPI,
Kamuning branch.
 SHOCKED> kho informed BM
FLORes> that he never negotiated the
check > deal never materialize
 KHO DISCOVRED THAT THE CHECK
DEPOSITED TO BPI> SPURIOUS
MANAGER’S CHECK > he demdened
the cancellation and realese of
hismoney> Flores denined> beyond
his authority
OIC told KHO> Freeze order> during
investigation
KHO FILED FOR DAMAGES
 asserted that the manager's check
No. 07410 was still in his possession
and that he had no obligation to
inform Land Bank whether or not he
had already negotiated the check
LBP> negligence of KHI> photocopy he
requested
forgery of the manager’s check because HIS
NEGLIGENCE substantially contributed to his
loss
NO
 COURT DOES NOT AGREE THAT THE
PHOTOCPY IS THE PROXIMATE
CAUSE OF THE LOSS
 P/C>t cause which, in natural and
continuous sequence, unbroken by any
efficient intervening cause, produces
the injury, and without which the
result would not have occurred
BANKING> PUBLIC INTERST
 Where the general public's trust and
confidence in the system is of
paramount importance
 ighest degree of, if not the utmost,
diligence IS EXPECTED
 BANK HOLD THEMESELVES AS
EXPERTS> DETERMINING THE
GENUUINENESS OF THE CHECKS AND
CORRESPONDING SIGNATURE
MANAGERS CHECK
 BIll of exchange drawn by a bank
upon itself, and is accepted by its
issuance. It is an order of the bank to
pay, drawn upon itself, committing in
effect its total resources, integrity, and
honor behind its issuance
 SIGNED BY AMANGER
THE PROXIMATE CAUSE OF THE LOSS> LB
FAILED TO RECOGNIZE THE FOREGERY OF
THE SIGNATIRE OR FALSITY OF THE CHECK>
BY OERROR OR NEGLECT
 They had the opportunity but failed to
do so
 Land Bank breached its duty of
diligence and assumed the risk of
incurring a loss on account of a forged
or counterfeit check. Hence, it should
suffer the resulting damage.