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Trader’s Royal Bank v. Radio Philippines Network [G.R. No. 138510. October 10, 2002]

30 Jul

FACTS

Manager’s checks were procured by respondents payable to Bureau of Internal Revenue. These checks were crossed and deposited to a collecting bank by persons other than the payee.

 

ISSUE

Whether or not a collecting bank is precluded from setting up the forgery against the drawee bank.

 

RULING

YES. A collecting bank where a check is deposited and which indorses the check upon presentment with the drawee bank, is such an indorser. So even if the indorsement on the check deposited by the bank’s client is forged, the collecting bank is bound by his warranties as an indorser and cannot set up the defense of forgery as against the drawee bank.

 

 

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