Question

1. A depositor of XYZ Bank issued a crossed check payable to the order of ABC Company. The check was deposited in the account of DEF Corporation in DEF Bank. Upon presentment of the check to XYZ Bank, it was dishonored due to insufficient funds. ABC Company then filed a complaint against XYZ Bank for its failure to exercise due diligence in verifying the availability of funds. XYZ Bank contends that it should not be held liable because it acted as a drawee bank and has no control over the funds in the account of DEF Corporation. Is XYZ Bank correct? Discuss.

2. Mr. Juan borrowed money from Mr. Pedro and issued a post-dated check in the amount of Php 100,000 as payment. When Mr. Pedro presented the check to his bank, XYZ Bank, it was dishonored due to a stop payment order issued by Mr. Juan. Mr. Pedro filed a complaint against XYZ Bank for its failure to diligently scrutinize the check and verify its validity. XYZ Bank argues that it cannot be held liable because it merely acted as a drawee bank. Is XYZ Bank correct? Explain your answer.

3. DEF Bank received a check drawn against XYZ Bank. The check was properly endorsed by the payee, but when DEF Bank presented the check to XYZ Bank for payment, it was dishonored due to a forged indorsement. DEF Bank files a lawsuit against XYZ Bank for its negligence in failing to detect the forged indorsement. XYZ Bank claims that it is not liable because it is a drawee bank and the payee's indorsement is not within its control. Analyze and evaluate the arguments of the parties.

4. ABC Bank received a crossed check deposited by its client, Mr. Smith. Upon presentment of the check to the drawee bank, XYZ Bank, it was dishonored due to a mismatch in the account name and account number provided by Mr. Smith. ABC Bank files a complaint against XYZ Bank for its failure to exercise due diligence in verifying the account details of the depositor. XYZ Bank contends that it should not be held liable because it acted as a drawee bank and has no responsibility to verify such details. Discuss the legal implications of this situation.