INSULAR DRUG CO., INC., v. THE PHILIPPINE NATIONAL BANK G.R. No.

L-
38816, November 3, 1933 Malcoml, J.:
Doctrine:
“
Any person taking checks made payable to a corporation, which can act
only by agent does so at his peril, and must
same by the consequences if the agent who indorses the same is without
authority.”

Facts:
132 checks made out in the name of the Insular Drug Co., Inc., covering a
total of
₱
18,285.92 were brought to the
branch office of the Philippine National Bank (PNB) in Iloilo by Foerster, a
salesman of the drug company, Foerster’s wife, and Foerster’s clerk. The
checks were in that bank placed in the personal account of Foerster. After
the indorsement on
the checks was written by the Manager of PNB, the amounts stated were
subsequently withdrawn by U.E., Foerster, and Carmen E. de Foerster.
However, upon the discovery of the anomalies by the Manila office of the
drug company through its investigation of the transaction made by Foerster,
the latter committed suicide. There is no evidence showing that the bank
knew that Foerster was misappropriating the funds of his principal.
Issue:
Whether or not the bank incurred the liability to pay Insular Drug Co., Inc.,
Ruling:
Yes.
Jurisprudence states that, “in case the indorsement is forged or
unauthorized, the bank, in paying the check, become
s
liable to the payee for the value thereof.” Furthermore, “any person taking
checks made payable to a corporation, which
can act only by agent does so at his peril, and must same by the
consequences if the agent who indorses the same is without authority.
”
Hence, in the case at bar, when the bank credited those checks to the
personal account of Foerster and permitted the latter and his wife to make
withdrawals without there being made authority from the drug company to
do so, the made itself responsible to the drug company for the amounts
represented by the checks. The bank could relieve itself from responsibility
by pleading and proving that after the money was withdrawn from the bank,
it passed to the drug company which thus suffered loss, but the bank has
not done so. Therefore, the drawee bank will have to stand the loss
occasioned by the negligence of its agents.