GREAT EASTERN LIFE V. HSBC

43 PHIL 678

FACTS:

The  plaintiff  is  an  insurance  corporation,  which  drew  a  check  in  favor  of Melicor.    This  was  stolen  by  Maasim,  forged  the  signature  of  Melicor  and deposited the check to his account in PNB.  Thereafter, PNB endorsed the check to HSBC who later debited the account of plaintiff. Plaintiff believed all along that Melicor received the payment.  Upon knowledge of the debit HSBC did on its account, it demanded that the same amount be credited.   
 

HELD:

The banks are liable.  The money was in deposit with the bank and it had no legal right to pay it out to anyone except the plaintiff or its order.  

The only remedy of the bank paying a check to a person who has forged the name of the payee is against the forger.