Case Digest

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THE GREAT EASTERN LIFE INSURANCE CO., plaintiff-appellant,
vs.
HONGKONG & SHANGHAI BANKING CORPORATION and PHILIPPINE NATIONAL BANK, defendants-appellees.

Ponente: Justice
Facts:
* May 3, 1920: Great Eastern Life Ins. Co. (Eastern) drew its check for P2,000 on the Hongkong and Shanghai Banking Corporation (HSBC) payable to the order of Lazaro Melicor.  * E. M. Maasim fraudulently obtained possession of the check, forged Melicor's signature, as an endorser, and then personally endorsed and presented it to the Philippine National Bank (PNB) and it was placed to his credit.  * Next day: PNB endorsed the check to the HSBC who paid it * HSBC sent a bank statement to the Eastern showing the amount of the check was charged to its account, and no objection was made * 4 months after the check was charged, it developed that Lazaro Melicor, to whom the check was made payable, had never received it, and that his signature, as an endorser, was forged by Maasim,  * Eastern promptly made a demand upon the HSBC to credit the amount of the forged check * Eastern filed against HSBC and PNB

* RTC: dismissed the case
Issue: Whether the Hongkong & Shanghai Banking Corporation (HSBC) and Philippine National Bank (PNB), defendants should be charged for the payment made to E.M Maasim for the P2000 which was paid on the forged check. Held: The Supreme Court held that judgment of the lower court is reversed. In favor of the plaintiff and against the Hongkong and Shanghai Banking Corporation for the P2,000, with interest thereon from November 8, 1920 at the rate of 6 per cent per annum, and the costs of this action, and a corresponding judgment will be entered in favor of the Hongkong and Shanghai Banking Corporation against the Philippine National Bank for the same amount, together with the amount of its costs in this action.
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