Banco de Oro Savings v. Equitable Banking Corporation

Summary

This Supreme Court case involved a dispute between two banks over forged endorsements on crossed manager's checks totaling P45,982.23. Banco de Oro issued the checks to Visa Card establishments, but they were deposited by Aida Trencio with Equitable Banking Corporation, which guaranteed all prior endorsements before clearing them through PCHC. When forgery was discovered, Equitable Banking refused reimbursement, arguing PCHC lacked jurisdiction over non-negotiable checks. The Supreme Court affirmed lower court decisions favoring Banco de Oro, establishing that: (1) PCHC has jurisdiction over both negotiable and non-negotiable checks; (2) collecting banks that guarantee endorsements are estopped from denying liability; (3) collecting banks bear responsibility for verifying endorsement genuineness; and (4) warranty obligations apply regardless of negotiability. This decision reinforced banking industry standards for endorsement warranties and clearing house jurisdiction, emphasizing that banks cannot escape liability through technical arguments about negotiability when they have expressly guaranteed endorsements in commercial banking operations.