FACTS:
A friend took a check from private respondent’s checkbook, forged the latter’s signature, and encashed the check with petitioner bank. Upon receipt of the statement of account from the bank, private respondent asked for reimbursement as his signature on the check was forged but the bank refused.
ISSUE(S):
Whether or not petitioner bank was negligent in encashing a forged check.
HELD:
YES. The prime duty of a bank is to ascertain the genuineness of the signature of the drawer or the depositor on the check being encashed. It is expected to use reasonable business prudence in accepting and cashing a check presented to it. A comparison of the signature on the forged check and the sample signatures of private respondent show marked differences.
