Commercial Law, 2019 Bar — Question B.18-b

ESSAY

Mrs. T maintained a checking account with Bank U. While Mrs. T was abroad, she left her checkbook inside her drawer, which she kept under lock and key. However, Mrs. T's long-time secretary, Ms. S, knew where the checkbook was hidden. Ms. S then broke the lock on the office drawer, took one of Mrs. T's blank checks, and succeeded to encash P200,000.00 from Bank U by imitating Mrs. T's signature. As soon as Mrs. T returned from abroad and discovered the incident, she immediately reported the matter to Bank U, seeking that the transaction be reversed. However, the bank refused, contending that Mrs. T should bear the loss arising from the forgery. (b) Is Bank U's contention tenable? Explain.

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