Philippine Savings Bank v. Chowking Food Corporation

Summary

This case involves Philippine Savings Bank's liability for encashing five checks totaling P556,981.86 belonging to Chowking Food Corporation with improper endorsements. Chowking's acting accounting manager Rino Manzano encashed the checks at PSBank's Bustos branch with only his endorsement, despite banking practice requiring multiple authorized signatures. After Manzano absconded with the proceeds, Chowking sued for reimbursement. The Supreme Court affirmed the Court of Appeals' decision holding PSBank and its branch head solidarily liable, rejecting the bank's defenses of estoppel and contributory negligence. The Court emphasized that banks owe the highest degree of diligence to depositors due to the public interest nature of banking, and PSBank's negligent supervision of employees was the proximate cause of Chowking's loss. The decision reinforces banking institutions' fiduciary obligations and strict liability standards in protecting depositor funds.