PCIB V.

CA
G.R. No. 121413
350 SCRA 446
 

FACTS:

Ford Philippines filed actions to recover from the drawee bank Citibank and collecting   bank   PCIB   the   value  
of   several   checks   payable   to   the Commissioner of Internal Revenue which were embezzled  allegedly by an
organized  syndicate.    What  prompted  this  action  was  the  drawing  of  a check  by  Ford,  which  it  deposited 
to  PCIB  as  payment  and  was  debited from their Citibank account.  It later on found out that the payment wasn’t
received  by  the  Commissioner.    Meanwhile,  according  to  the  NBI  report, one of the checks issued by
petitioner was withdrawn from PCIB for alleged mistake in the amount to be paid.  This was replaced with
manager’s check by  PCIB,  which  were  allegedly  stolen  by  the  syndicate  and  deposited  in their own account.   

The trial court decided in favor of Ford.

 

ISSUE: Has Ford the right to recover the value of the checks intended as payment to CIR?
 

HELD:

The checks were drawn against the drawee bank but the title of the person negotiating the same was allegedly
defective because the instrument was obtained  by  fraud  and  unlawful  means,  and  the  proceeds  of  the  checks
were not remitted to the payee.  It was established that instead paying the Commissioner,  the  checks  were 
diverted  and  encashed  for  the  eventual distribution among members of the syndicate.