G.R. No. L-38816 November 3, 1933
Lessons Applicable: Liabilities of person who did not sign and liability of an agent (Negotiable Instruments Law)
FACTS:
- Foerster
- formerly a salesman and collector of Insular Drug Co., Inc (Insular) for the Islands of Panay and Negros
- instructed to take the checks which came to his hands to the Iloilo branch of the Chartered Bank of India, Australia and China and deposit the amounts to the credit of the Insular
- Instead, placed the checks in his personal account
- Some of the checks were drawn against the Bank of Philippine National Bank.
- After the indorsement on the checks was written "Received payment prior indorsement guaranteed by Philippine National bank, Iloilo Branch, Angel Padilla, Manager."
- Insular Manila office discovered the anomalies and Foerster committed suicide
- Insular filed against the bank for total of 132 checks amounting to P18,285.92
ISSUE: W/N Insular can file against the bank
HELD: YES. bank will have to stand the loss occasioned by the negligence of its agent
- the bank permitted Foerster, Foerster's wife and clerk to indorse checks and then place them to his personal account
- The right of an agent to indorse commercial paper is a very responsible power and will not be lightly inferred.
- A salesman with authority to collect money belonging to his principal does not have the implied authority to indorse checks received in payment
