In Banco de Oro
Savings and Mortgage Bank v. Equitable Banking Corporation, we held that:
x x x the law
imposes a duty of diligence on the collecting bank to scrutinize checks
deposited with it for the purpose of determining their genuineness and
regularity. The collecting bank being primarily engaged in banking holds
itself out to the public as the expert and the law holds it to a high standard
of conduct. x x x in presenting the checks for clearing and for payment, the
defendant [collecting bank] made an express guarantee on the validity of
"all prior endorsements." Thus, stamped at the back of the checks are
the defendant’s clear warranty: ALL PRIOR ENDORSEMENTS AND/OR LACK OF
ENDORSEMENTS GUARANTEED. Without such warranty, plaintiff [drawee] would not
have paid on the checks. No amount of legal jargon can reverse the clear
meaning of defendant’s warranty. As the warranty has proven to be false and
inaccurate, the defendant is liable for any damage arising out of the falsity
of its representation.
Associated Bank
was also clearly negligent in disregarding established banking rules and
regulations by allowing the four checks to be presented by, and deposited in
the personal bank account of, a person who was not the payee named in the
checks. The checks were issued to the "Order of Miller Offset Press,
Inc.," but were deposited, and paid by Associated Bank, to the personal
joint account of Ching Uy Seng (a.k.a. Robert Ching) and Uy Chung Guan Seng. It
could not have escaped Associated Bank’s attention that the payee of the checks
is a corporation while the person who deposited the checks in his own account
is an individual. Verily, when the bank allowed its client to collect on
crossed checks issued in the name of another, the bank is guilty of negligence.
As ruled by this Court in Jai-Alai Corporation of the Philippines v. Bank of
the Philippine Islands, one who accepts and encashes a check from an individual
knowing that the payee is a corporation does so at his peril.
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