Here, Juan Cruz, not X, is the intended payee. The
Section 23- Forged Signature; effect of
intention of the maker/ drawer is to make the note
Double intent in fraudulent impersonation: impersonation: Forgery, in general - the counterfeit making or fraudulent alteration of
any writing, and may consist in — 1.
the signing of another’s name with intent to defraud; or
2.
the alteration of an instrument in the name, amount, description of the person and the like, with intent to defraud
Forgery in Section 23 of the NIL - applies only to forged signatures or
signatures made without authority of the person whose authority of the person whose signature it purports to be.
payable to the person whom he believes the st
1 intention- the maker/ drawer intends to make
stranger to be.
the instrument payable to the person before him or to the person writing at the other end of the
Reason for the Rule (maker/drawer bears the loss):
line, in case the negotiation is by correspondence. The maker/ drawer bears the loss.
1.
Theory of actual intent - the drawee, in paying paper, or
the holder, in taking it upon the i ndorsement of the nd
2 intention- the maker/ drawer intends to make
impostor in the name of which the payee was
the instrument payable to the person whom he
described, carries out the intention that the drawer
believes the stranger to be.
entertained at the time of the delivery of the paper to the impostor.
Forms of forgery:
st
General Rule: The 1 intention is controlling; the maker/
1.
Fraud in factum or fraud in esse contractus - there is no
drawer bears the loss.
2.
intention to issue an instrument; amounts to forgery and i s a real defense (available against a holder in due course) Example: B obtains the signature of A by telling A
Theory of estoppel - as between two innocent persons,
the one whose act was the cause of the loss should Exception: Where the name of the payee was already known
bear the consequences thus it was the drawer’s duty to
to the maker or drawer, or was more particularly identified
use diligence to ascertain the identity of the party with
nd
in some manner, the 2 intention is controlling.
whom he dealt.
that it is only for autograph purposes. Then B writes above the signature a negotiable
Example: X represents himself to be Juan Cruz, when in fact
Rule qualified where impostor represent himself himself to be the agent of
instrument.
he is not. By this misrepresentation, X obtains from Y a note
the payee – payee –
payable to the order of Juan Cr uz. Then X indorses the note, Fraud in inducement - there is an intention to issue an
signing “Juan Cruz.”
instrument; does not amount to forgery and is only a personal defense.
Q: Is there forgery? A: It depends on the intention of Y –
Example: A sells to B what he represents to B as a diamond ring, which in fact is only glass. B issues
If Y intends that the proceeds of the note will go to
to A a check. The check is not a forgery. The fraud
X, the person dealing with him, named at the time
here is in inducing B to issue the check.
Juan Cruz, then X’s signature of the name of Juan
Cruz is not a forgery. Here, X is the intended 2.
Duress amounting to forgery - ordinarily, duress is a
payee. Following the general rule, the intention of
personal defense but where it amount to forg ery, it is a real
the maker/ drawer is to make the note payable to
defense.
the person before him, thus there is not forgery but the signature of an assumed name.
3.
rather than the drawer where the impostor upon whose indorsement the paper was purchased or paid, represented himself to be the agent of the payee, and not the payee himself. The doctrine of actual intent does not apply because the drawer did not regard the individual to whom he delivered the check as the payee but merely as the agent of the payee. Admission of genuineness and due execution
When an action or defense is f ounded upon a written instrument, such as negotiable instrument, copied in or
Example: A takes B’s hand and forces him to sign
his name.
The loss falls on the drawee or the purchaser
If Y intends that the proceeds of the note will go to
attached to the corresponding pleading, the genuiness and
the real Juan Cruz and not to X, but to whom Y
due execution of the instrument shall be deemed admitted
Fraudulent impersonation - whether or not it amounts to
issued the note on the belief that X was Juan Cruz,
unless specifically denied under oath by the adverse party.
forgery depends on the intention of the maker/ drawer
X’s signature of Juan Cruz would be a forgery.
Meaning of genuineness and due execution
3.
The party whose signature the instrument bears admits – 1.
That he signed it or that it was signed by another for him and with his authority;
2. 3.
That at the time it was signed, it was in words and figures as
That, nevertheless, as against a party precluded from setting
Example: A makes a note payable to B or bearer. X
up the forgery or want of authority the signature forged or
obtains the note fraudulently and indorses the
made without authority is operative, and rights to retain the
same to C by forging B’s signature. Can C hold A
instrument, to give discharge therefor, or to enforce
liable? Yes, because instruments payable to bearer
payment thereof, can be acquired through or under the
can be negotiated by mere delivery. The forged
signature forged or made without authority.
indorsement is not necessary to the title of C.
exactly set out in the pleading of the party relying upon it;
Example: B makes a note, making it appear that A is the maker
That any formal requisites required by law, such as swearing
thereof, by forging the signature of A. B makes himself the payee.
and acknowledgment, or revenue stamp which it requires,
precluded from setting up the defense of forgery, even
Thereafter, he indorses the note to C, a holder in due course.
against those whose signatures are forged.
3.
are waived by him. Q: Can C enforce the note against A? Defense cut off by admission of genuineness, etc. (defenses which
are inconsistent with the admission of genuineness, etc) –
A: No, because A’s signature is ino perative and it did make A party to
the instrument nor bind him therein. As against A, C acquired no right 1.
Forgery
2.
Signature was unauthorized
3.
That the party charged signed the instrument in some other
Q: But suppose that C showed A the instrument before buying it and A
capacity than that alleged
tells C to go ahead and but it as it is alright. Can C enforce the note
The instrument can be enforced against those who are
Persons precluded from setting up the defense of forgery
1.
Those who warrant or admit the genuineness of the signature in question
to retain, discharge or enforce payment on the note. a.
the instrument indorsed by them is genuine in all respects what it purports to be. They c annot interpose
against A?
that signatures prior to them are forged.
Defenses not cut off (defenses which are not inconsistent with the
admission of genuineness, etc) –
A: Yes, A’s signature is operative and C acquired the right to retain,
Example: A, maker. B, payee. X fr audulently
discharge and enforce payment on the note. By his declaration, A is 1.
Payment
2.
Statute of limitations
3.
Illegality or want of consideration
4.
Fraud
5.
Mistake
6.
Indorsers- whether qualified or general, warrant that
obtains possession of the note and indorses the
precluded from setting up the forgery of his signature.
same to C, forging B’s signature. C indorses the
note to D, D to E and E to F, the present holder. F
Extent of the effect of forgery:
can enforce the note against C, D and E, who being 1.
Only the signature forged or made without authority is
indorsers, cannot interpose the defense that B’s
Compromise
inoperative but neither the instrument itself nor the genuine
signature is forged.
7.
Estoppels
signatures are rendered inoperative.
8.
Coercion
9.
Imbecility
b.
10. Etc.
Persons negotiating delivery - also warrant that the
Example: A makes a note payable to the order of
instrument negotiated by them is genuine in all
B. Y obtains the note fraudulently and indorses the
respects what it purports to be.
note to C, by forging B’s signature. Suppose that C
indorses the note to D. D can recover from C
Effects of forgery:
whose signature is genuine and therefore 1. 2.
That the signature forged or made without authority is
operative. C is bound as an indorser of the note
wholly inoperative;
and has a right of recourse against the forger (Y).
That no right to retain the instrument, or to give discharge therefor, or to enforce payment thereof against any party
c.
Acceptors- a drawee, by accepting the bill, admits the
genuineness of the signature of the drawer. Example: A, draw er. B, payee. X, drawee. But A’s signature is really a forgery made by Y. On
2.
The instrument can be enforced by holders to whose title
presentment for acceptance, X accepts the bill. B
thereto, can be acquired through or under such signature
over the instrument the forged signature is not necessary
then negotiates the bill to C, C to D, D to E and E to
forged or made without authority; and
such as an indorsement of an instrument payable to bearer.
F, present holder. When F demands payment from X, the latter cannot refuse to pay on the ground
that A’s signature is forged. By accepting the bill, X
recover from Y bank? No. A was stopped by its negligence in the
admitted the genuineness of the drawer’s
delivery of the check to dispute the f orgery, if it existed.
signature and is therefore, precluded from setting up the defense of forgery. 2.
Those who, by their acts, silence or negligence, are stopped
Cases of forgery in general –
1.
from setting up the defense of forgery Estoppels may arise from – 1.
A declaration
2.
An act
3.
Omission or negligence
Estoppel by omission or negligence –
1.
Unreasonable delay in giving notice of the forgery Requisites: 1. The delay must be unreasonable 2. That the one who ought to be apprised of the forgery must have been prejudiced Example: Y, agent of B, comes into possession of a check with B as payee and indorses and cashes the same. B, however, delays in complaining to the collecting bank of the forgery for three years. B is barred by his delay in complaining the forgery, which amount to ratification of the agent’s unauthorized acts. Reasonably prompt notice of forgery - depends upon the
circumstances of the case and the situation of the parties with reference to the remedies against any party is a proper element to enter into the estimate of the reasonableness of the notice. 2.
Negligence in delivery Example: A has accounts with two persons named B, one in Oklahoma and the other in Texas. A closed its accounts with the Texas B. Subsequently, A sold securities for the Oklahoma B and drew a check against X in favor of Oklahoma B but the check was, by mistake, mailed to the Texas B who indorsed it to C who in turn, cashed the same at Y Bank. The Oklahoma B then assigned whatever claims he had on the check to A. Can A, the drawer,
2.
Forgery of promissory notes a.
Forgery of an indorsement in the note
b.
Forgery of the maker’s signature
Forgery of bills of exchange a.
Forgery of an indorsement on the bill
b.
Forgery of the drawers signature aa. with acceptance by the drawee bb. without acceptance by the draw
Qualifications to the rules on rights of parties in forgery of
2. The drawer’s negligence must be the proximate cause of
who is a stranger to B, without requiring proof as
instruments –
the payment by the drawee upon the forged indorsement.
to identity or making inquiries in regards to Y.
Thus, there must be on the part of the drawer –
Then B collects from X, drawee bank. In this case, X
1. 2.
Rules precluding the setting up of the defense of forgery by
can recover from B bank which has been negligent.
warranty
1.
Negligence by delivery
Estoppel as in the case of negligence
2.
Unreasonable delay in the giving of notice
Indorser’s negligence (holder receiving payment) –
3. Drawer’s duty does not extend to the examination and
If it appears that one to whom payment was made was not
verification of the genuineness of the indorsements on the
an innocent sufferer but guilty of negligence in not doing
Precluded from setting up the defense of forgery as they
checks or to the discovery of forgeries therein because a
something which plain duty demanded and which if it had
may be held liable under warranties and liabilities stated in
depositor is not required and may not be expected to know
been done, would not have entailed loss on anyone, he is
Section 65 and 66
the signature of the payee and of the various indorsers
not entitled to retain the moneys pad through a mistake on
Example:
4. A drawer is under the duty towards the drawee to
Indorsers and parties negotiating subsequent to the forgery —
1.
the part of the drawee bank.
A’s signature is forged as maker. B payee. He
indorses to C, C to D, D to E and E to F. F can hold B, C, D and E liable because as indorsers, they warrant that the note is genuine and in all respects
2.
examine the returned vouchers and notify the drawee
Purchaser of check or bill –
within reasonable time of any mistakes or inaccuracies in the amounts of the check or forgeries of the depositor’s
1.
If drawee is merely constructively negligent, he may recover from the recipient who must actually be negligent provided
signature.
that the drawee has promptly notified the recipient of the
what it purports to be. If they are general
Example: If A, whose signature is forged as the
indorsers, they also warrant that the note is valid
drawer, fails to examine statements of accounts or
and subsisting.
checks returned by the drawee bank X, A would be
offset the active negligence of the recipient and in such a
A, drawer, B payee, X drawee. Y steals the bill and
considered negligent and may be barred from
case, the drawee cannot recover from the recipient what he
forges B’s signature and indorses the bill to C. C to
recovery of the amount paid if the drawee has
has paid
D. D to E. E to F. F can hold C, D and E liable.
already charged his account.
forgery 2.
If drawee is actively negligent, then his active negligence will
Example: A’s signature is forged by strangers in two checks. B is Negligence in forgery of indorsements in bill GR: Drawee bears the loss –
1.
The duty of verifying the genuineness of the indorsements rests on the drawee.
EXC: Drawer, payee or indorser may bear the loss – Drawer’s negligence in forgery of his own signature –
Payee’s negligence in forgery of drawer’s signature –
purchases, pretending to be agents of B. C did not make any The payee in a check or draft may be supposed to have
inquiries whatsoever. One check was crossed generally. The
knowledge of the circumstances under which it is drawn and
check with a prior number to the other was issued on a later
generally, of the person drawing it, and is in a better
date. A is a good customer of C which receives checks from A
situation to judge the genuiness of the paper than are
every month in payment of account. C indorsed the checks to D
indorsees.
bank for deposit and was cr edited with the amount. Thereafter,
Doctrine of comparative negligence - constructive
negligence of the drawee bank is overcome by the active
1. The drawer himself must not be negligent or guilty as
negligence of the paying bank in not using the ordinary
would estop him from asserting the forged character of the
precautions used by banks in determining the identity of the
indorsement as against the drawee, and that if he was
person presenting the check the genuineness of such check
negligent or guilty of such conduct, the loss must fall on him.
payee. The strangers negotiated the checks to C for tire
Example: Y forges the signature of A, making A
the checks were credited at the c learing house and X, drawee, credited D bank with the amount. When X bank found that A’s
signature was forged, it demanded payment from C. Held: C was negligent and had no right to retain the proceeds of the check. X can recover from it what is has paid. Forgery of both drawer’s and payee’s signature
appear as drawer in a check. X, drawee bank. B
1. The indorser is liable on his warranty to all to whom it
bank is the payee. B bank pays for the check to Y,
runs if the indorsement of the payee is forged
Reason: The indorser guarantees the genuineness
impostor who could not even acquire ownership through
of prior indorsements
acquisitive prescription.
2. The drawee’s right to recover depends on the presence
2. The person who identifies an impostor to whom the
or absence of negligence on the part of one who negotiated
amount of a check is paid is co-principal by direct
the paper and the presence or absence of his own
participation in the commission of the crime if he has
negligence
knowledge of the case.
Reason: The drawee is held not to be a holder in
Commercialdocuments- documents or instruments which are used by
due course and therefore is not entitled to the
merchants or businessmen to promote or fac ilitate trade or credit.
benefit of the indorser’s warranty. The result is
that, the situation is the same as though the paper bore no idorsement, but was payable to bearer. Other rules – change of position
When negligence of the recipient has been established, the right of the drawee to r ecover depends upon the existence of negligence in his part. The negligent recipient is still entitled to receive prompt notice of the forgery from the drawee. Penal liabilities incurred from forgery of signature
1.
Falsification of private document – element of damage or intent to cause damage is not necessary; forger need not imitate genuine signature
2.
Swindling/ estafa through posr-dating of checks –failure of the drawer to deposit the amount necessary to c over his check within 3 dyas from notice from the bank/payee/holder that said check has been dishonored for insufficiency of funds shall be prima facie evidence of deceit constituting false pretence or fraudulent act.
3.
Estafa by falsification of signature- where because of the forger’s representation, the offended party is induced to
issue the check in exchange for the value of the merchandise which he purchased Encashment of check by impostor
1. Money paid through check to an impostor still belongs to the legal owner or possessor thereof. Its delivery through estafa does not transmit ownership of the amount to the
