TRADERS ROYAL BANK V. RPN
390 SCRA 608
FACTS:RPN, IBC and BBC were all assessed for tax by the BIR. To pay the assessed taxes, they bought manager’s checks from petitioner bank. None of these checks were paid to the BIR. They were found to have been deposited in the account of a third person in Security Bank. As the taxes remained unpaid, the BIR issued a levy, distraint and garnishment against the three networks. An action was filed wherein it was decided that the networks should be reimbursed for the amounts of the checks by petitioner bank and the latter in turn, must be reimbursed by Security Bank. In the appellate court, it was held that Traders Bank should be the only bank liable.
HELD:Petitioner ought to have known that where a check is drawn payable to the order of one person and is presented for payment by another and purports upon its face to have been duly indorsed by the payee of the check, it is the primary duty of the petitioner to know that the check was duly indorsed by the original payee, and it pays the amount of the check to the third person, who has forged the signature of the payee, the loss falls upon the petitioner who cashed the check. Its only remedy is against the person
to whom it paid the money.
It should be further noted that one of the checks was a crossed check. The crossing of the check should have put petitioner on guard; it was duty-bound to ascertain the indorser’s title to the check or the nature of his possession.