8/9/2019 Insular Drug Co. vs. Philippine National Bank-lib

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Trust, Agency and PartnershipAtty. Doris GamboaJD 2-1

Agency

Case# 29

Insular Drug Co. vs. Philippine National BankGR No. L-38816

November 3, 1933

Facts:

U.E. Foerster, a salesman and collector for Insular Drug Co., was instructed to depositchecks (total of 132) to the companys Chartered Bank of India, Australia and ChinaIloilo branch account. Foerster, his wife and clerk indorsed and deposited said checks to

Foersters personal account in PNB Iloilo branch instead. Foerster committed suicide

after the anomalies were investigated by the companys Manilabranch. Insular Drug Co.filed an action against PNB to credit the money withdrawn by Foerster and his wife

amounting to P18,285.92.

Issue:

Whether or not PNB is liable?

Held:

Yes, an agent who was given authority to collect money that belonged to his principal do

not have the implied authority to indorse checks received in payment.

PNB could tell that the checks indorsed by Foerster, his wife and clerk do not belong tothem but to Insular Drug Co. Therefore, when PNB accepted and allowed these indorsed

checks to be deposited and withdrawn from Foersters personal account, PNB made itselfresponsible to Insular Drug Co. for the amounts represented by said checks.