PCIB V. CA

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    Meanwhile,  according  to  the  NBI  report, one of the checks issued by petitioner was withdrawn from PCIB for alleged mistake in the amount to be paid.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.
 
Pursuant  to  this,  it  is  vital  to  show  that  the  negotiation  is  made  by  the perpetrator in breach of faith amounting to fraud.  The person negotiating the checks must have gone beyond the authority given by his principal.  If the principal could prove that there was no negligence in the performance of  his  duties,  he  may  set  up  the  personal  defense  to  escape  liability  and recover from other parties who, through their own negligence, allowed the commission of the crime.
 
It  should  be  resolved  if  Ford  is  guilty  of  the  imputed  contributory negligence that would defeat its claim for reimbursement, bearing in mind that its employees were among the members of the syndicate.  It appears although  the  employees  of  Ford  initiated  the  transactions  attributable  to the  organized  syndicate,  their  actions  were  not  the  proximate  cause  of encashing  the  checks  payable  to  CIR.    The  degree  of  Ford’s  negligence couldn’t  be  characterized  as  the proximate  cause  of  the  injury  to  parties.    The  mere  fact  that  the  forgery  was  committed  by  a  drawer-payor’s confidential employee or agent, who by virtue of his position had unusual facilities for perpetrating the fraud and imposing the forged paper upon the bank, doesn’t entitle the bank to shift the loss to the drawer-payor, in the absence of some circumstance raising estoppel against the drawer.   
 
Note:  not  only  PCIB  but  also  Citibank  is  responsible  for  negligence.  Citibank was negligent in the performance of its duties as a drawee bank.  It  failed  to  establish  its  payments  of  Ford’s  checks  were  made  in  due course and legally in order.