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    Associated Bank and Conrado Cruz Vs CA, G.R. No. 89802, May 7, 1992

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    Celinka Chun
    Associated Bank permitted the encashment of six crossed checks by Rafael Sayson that were issued to Melissa's RTW. Crossed checks are intended for deposit only by the named payee. The bank was negligent for not verifying Sayson's authority to endorse and deposit the checks into his own account. As the checks were crossed and intended for deposit only by Melissa's RTW, the bank breached its duty to the payee by failing to inquire into Sayson's authority. Melissa's RTW had a right of action against the bank to recover the total value of the illegally encashed checks plus damages.

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    Associated Bank and Conrado Cruz Vs CA, G.R. No. 89802, May 7, 1992

    Uploaded by

    Celinka Chun
    204 views1 page
    Associated Bank permitted the encashment of six crossed checks by Rafael Sayson that were issued to Melissa's RTW. Crossed checks are intended for deposit only by the named payee. The bank was negligent for not verifying Sayson's authority to endorse and deposit the checks into his own account. As the checks were crossed and intended for deposit only by Melissa's RTW, the bank breached its duty to the payee by failing to inquire into Sayson's authority. Melissa's RTW had a right of action against the bank to recover the total value of the illegally encashed checks plus damages.

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    Case Digest

    Original Title

    89. Associated Bank and Conrado Cruz vs CA, G.R. No. 89802, May 7, 1992

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    Associated Bank permitted the encashment of six crossed checks by Rafael Sayson that were issued to Melissa's RTW. Crossed checks are intended for deposit only by the named payee. The bank was negligent for not verifying Sayson's authority to endorse and deposit the checks into his own account. As the checks were crossed and intended for deposit only by Melissa's RTW, the bank breached its duty to the payee by failing to inquire into Sayson's authority. Melissa's RTW had a right of action against the bank to recover the total value of the illegally encashed checks plus damages.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    204 views1 page

    Associated Bank and Conrado Cruz Vs CA, G.R. No. 89802, May 7, 1992

    Uploaded by

    Celinka Chun
    Associated Bank permitted the encashment of six crossed checks by Rafael Sayson that were issued to Melissa's RTW. Crossed checks are intended for deposit only by the named payee. The bank was negligent for not verifying Sayson's authority to endorse and deposit the checks into his own account. As the checks were crossed and intended for deposit only by Melissa's RTW, the bank breached its duty to the payee by failing to inquire into Sayson's authority. Melissa's RTW had a right of action against the bank to recover the total value of the illegally encashed checks plus damages.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    89. Associated Bank and Conrado Cruz vs CA, G.R. No.

    89802, May 7,
    1992
    Facts:
    Respondent, Melissas RTW, is engaged in the business of readytowear garments. When she
    went to her clients to collect on what she thought were still unpaid accounts, she was informed of
    the issuance of crossed checks. Further inquiry revealed that the said checks had been deposited
    with the Associated Bank ("the Bank") and subsequently paid by it to one Rafael Sayson, one of
    its "trusted depositors," in the words of its branch manager and copetitioner, Conrado Cruz,
    Sayson had not been authorized by the private respondent to deposit and encash the said
    checks. Respondent sued petitioners for recovery of the total value of the checks plus damages.
    Issue: Whether or not the private respondent has a cause of action against the petitioners for
    their encashment and payment to another person of certain crossed checks issued in her favor
    Ruling: Yes.
    The six checks in the case at bar had been crossed and issued "for payee's account only." This
    could only signify that the drawers had intended the same for deposit only by the person indicated
    Melissa's RTW.
    The petitioners were negligent when they permitted the encashment of the checks by Sayson.
    The Bank should have first verified his right to endorse the crossed checks, of which he was not
    the payee, and to deposit the proceeds of the checks to his own account. The Bank was by
    reason of the nature of the checks put upon notice that they were issued for deposit only to the
    private respondent's account. Its failure to inquire into Sayson's authority was a breach of a duty it
    owed to the private respondent.
    There being no evidence that the crossed checks were actually received by the private
    respondent, she would have a right of action against the drawer companies, which in turn could
    go against their respective drawee banks, which in turn could sue the herein petitioner as
    collecting bank. In a similar situation, it was held that, to simplify proceedings, the payee of the
    illegally encashed checks should be allowed to recover directly from the bank responsible for
    such encashment regardless of whether or not the checks were actually delivered to the payee

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