A GSIS check with petitioner PNB as the drawee bank was deposited by a payee in his current account with the private respondent PCIB. PNB paid PCIB the amount in the check without returning the same in the course of clearing. The check was later discovered to have forged signatures.
Whether or not PNB may recover from PCIB.
YES. By not returning the check to the PCIB, by thereby indicating that the PNB had found nothing wrong with the check and would honor the same, and by actually paying its amount to the PCIB, the PNB induced the latter, not only to believe that the check was genuine and good in every respect, but, also, to pay its amount to payee. In other words, the PNB was the primary or proximate cause of the loss, and, hence, may not recover from the PCIB.