Professional Documents
Culture Documents
FACTS
1) Spouses Manuel (President) and Rosita (Treasurer) Lim of Rigi Built
Industries (RIGI) have transacted with Linton Commercial Co.
(LINTON) for several years the latter supplying them with steel
structures (i.e. plates, bars)
2) Spouses Lim purchased the following goods listed below from
Linton Commercial Co. on different dates. As payment
simultaneously upon delivery of the goods, they issued
7
Consolidated Bank and Trust Co. (SOLIDBANK) checks
a. 100 pieces of mild steel plates Php51,815
b. 65 pieces of mild steel plates Php63,455
c. 2600 Z purlins Php241,800
ISSUE:
12) W/N RTC Malabon has jurisdiction (RTC Malabon has jurisdiction)
13) W/N spouses Lim are guilty of violating BP 22 (YES they are guilty)
RATIO
14) BP 22 punishes:
a. any person who makes or draws and issues any check to
apply on account or for value, knowing that the time of
issue that he does not have sufficient funds in or credit
with the drawee bank for the payment of such check in full
upon its presentment, which check is subsequently
dishonoured by the drawee bank for insufficiency of funds
or credit or would have been dishonoured for the same
reason had not the drawer, without any valid reason,
ordered the bank to stop payment
15) The gravamen of the offense is KNOWINGLY issuing a worthless
check
16) 2 essential elements:
a. KNOWLEDGE on the part of the drawer of the insufficiency
of funds
b. SUBSEQUENT DISHONOR of the check by the drawee bank
for insufficiency of funds or that the drawer without any
valid reason, order to stop payment
Determining Jurisdiction
17) Jurisdiction belongs to the court where the offense was committed
or where any one of the essential ingredients took place
18) Violations BP 22 is among those called continuing or transitory
crimes
19) The following is the breakdown of the essential elements of the
violation with corresponding locations
1
2
3
4
Balut, Navotas
Balut, Navotas
Kalookan City
IMPORTANT LESSON:
What was crucial in this case is the definition of ISSUE and DELIVERED as contemplated by
the law.
Spouses Lim contend that the checks were issued and delivered in their Kalookan office
when the collector of LINTON went there to get the checks.
However, under Negotiable Instruments Law, this is NOT TRUE.
20) In Negotiable instruments Law:
a. Issue means the first delivery of the instrument complete
in form to a person who takes it as a holder
b. Holder refers to the payee or indorsee of a bill or note
who is in possession of it or the bearer thereof
c. Delivery of the check signifies transfer of possession,
actual or constructive, from one person to another with
intent to transfer title thereto
___________, after date, for value received, I/we, jointly and severaIly
promise to pay to the ORDER of the REPUBLIC PLANTERS BANK, at its
office in Manila, Philippines, the sum of ___________ PESOS(....)
Philippine Currency...
II.
The name Worldwide Garment Manufacturing, Inc. was rubber stamped above the
signatures of Yamaguchi and Canlas above their printed names with the phrase "and
(in) his personal capacity The signatures were on the right bottom margin of the
promissory note. At the bottom of the promissory notes appeared:
1 1
Sec. 20. Liability of a person signing as agent and so forth. Where the instrument contains or a person adds to his signature
words indicating that he signs for or on behalf of a principal , or in a representative capacity, he is not liable on the instrument if
he was duly authorized; but the mere addition of words describing him as an agent, or as filling a representative character,
without disclosing his principal, does not exempt him from personal liability.
2
Sec. 14. Blanks; when may be filled. - Where the instrument is wanting in any material particular, the person in possession
thereof has a prima facie authority to complete it by filling up the blanks therein.
And a signature on a blank paper delivered by the person making the signature in order that the paper may be
converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount.
In order, however, that any such instrument when completed may be enforced against any person who became a
party thereto prior to its completion, it must be filled up strictly in accordance with the authority given and within a reasonable
time.
But if any such instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all
purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given and within
a reasonable time.
VI.
VII.
RPB filed a case with the RTC when Worldwide was not able to to settle its debt.
The RTC Ruled in favor of RPB and ordered Worldwide Garment Manufacturing,
Yamaguchi and Canlas to jointly and severally pay the bank.
From this decision, only Canlas appealed to the Intermediate Court/Court of
Appeals. He claims that he singed the promissory notes as an officer who as
authorized by WGM and should not be personally liable.
Court of Appeals affirmed the decision of the RTC rodering WGM to pay, but
absolved Canlas from liability under the promissory notes.
RPB petitioned to the SC that Canlas is solidarily liable with Yamaguchi on each of
the 9 promissory notes because he singed.
ISSUE - Wno Canlas is solidarily liable with WGM and Yamaguchi?- YES. Canlas is solidarily liable
on each of the promissory notes bearing his signature for the following reasons:
RATIO
Canlas is one of the co-makers of the promissory notes. He cannot escape liability arising
therefrom.
VIII.
IX.
X.
The promissory motes are negotiable instruments and must be governed by the
Negotiable Instruments Law.
Under the Negotiable lnstruments Law, persons who write their names on the face of
promissory notes are makers and are.
By signing the notes, the maker promises to pay to the order of the payee or any
holder according to the tenor thereof.
The solidary liability of Canlas is clearer and certain, by the presence of the phrase "joint
and several" as describing the unconditional promise to pay to the order of Republic
Planters Bank. By making a joint and several promise to pay to the order of Republic Planters
Bank, Canlas assumed the solidary liability of a debtor and the payee may choose to enforce
the notes against him alone or jointly with Yamaguchi and Corporation as solidary debtors.
XI.
XII.
XIII.
XIV.
XV.
Where an instrument containing the words "I promise to pay" is signed by two or
more persons, they are deemed to be jointly and severally liable thereon.
An instrument which begins" with "I" ,We" , or "Either of us" promise to, pay, when
signed by two or more persons, makes them solidarily liable.
The fact that the singular pronoun is used indicates that the promise is individual as
to each other; meaning that each of the co-signers is deemed to have made an
independent singular promise to pay the notes in full.
A joint and several note is one in which the makers bind themselves both jointly and
individually to the payee so that all may be sued together for its enforcement, or the
creditor may select one or more as the object of the suit.
A joint and several obligation in common law corresponds to a civil law solidary
obligation; that is, one of several debtors bound in such wise that each is liable for
the entire amount, and not merely for his proportionate share.
Canlas cannot claim to be the agent of the corporation to exempt him from liablity.
Under the Negotiable Instruments Law, the liability of a person signing as an agent is
specifically provided for as follows is under Sec. 20. Where the agent signs his name
but did not that he is acting in a representative capacity, the agent is personally
liable to take holder of the instrument and cannot be permitted to prove that he was
merely acting as agent.
When the notes were given to Fermin Canlas for his signature, the notes were complete in
the sense that the spaces for the material particular had been filled up by the bank as per
agreement. The notes were not incomplete instruments, thus Section 14 of the NegotiabIe
Instruments Law is not applicable.
XVII.
XVIII.
A careful examination of the notes shows that they are the stereotype printed form
of promissory notes generally used by commercial banking institutions to be signed
by their clients in obtaining loans.
1) They only seem to be incomplete because there are blank spaces to be filled
up on material particulars such as payee's name, amount of the loan, rate of
interest, date of issue and the maturity date. The terms and conditions of the
loan are printed on the note for the borrower-debtor 's perusal.
2) However, this is customary procedure of commercial banks of requiring their
clientele to sign promissory notes prepared by the banks in printed form with
blank spaces already filled up as per agreed terms of the loan, leaving the
borrowers-debtors to do nothing but read the terms and conditions therein
printed and to sign as makers or co-makers.
The notes were filled up before they were given to Canlas and Yamaguchi for their
signatures as joint and several promissors.
For signing the notes above their
typewritten names, they bound themselves as unconditional makers.
Astro was granted several loans by the Philippine Trust Company (Philtrust)
amounting to P3,000,000.00 with interest and secured by three promissory notes
o 1st promissory note for P600,000 Dec. 14, 1981
o 2nd promissory note for P400,000 also Dec. 14, 1981
o 3rd promissory note for P2,000,000 August 27, 1981
Roxas as President of Astro, signed twice, as President of Astro and in his personal
capacity.
Roxas also signed a Continuing Surety ship Agreement in favor of Philtrust Bank, as
President of Astro and as surety.
Thereafter, Philguarantee, with the consent of Astro, guaranteed in favor of Philtrust
the payment of 70% of Astros loan with the condition that upon payment by
Philguarantee of 70% (P2,400,000), they will be proportionally subrogated in the
rights of Philtrust against Astro.
Astro failed to pay. Philguarantee therefore paid 70% of the loan. After, it filed a
complaint in RTC Makati for a sum of money against Astro Electronics Co. and
Roxas.
RTC ordered Astro and Roxas to pay jointly and severally, the plaintiff
(Philguarantee) the sum of P3,621.187.52 representing the total obligation of
defendants in favor of plaintiff Philguarantee as of December 31, 1984 with interest.
CA affirmed RTC.
The trial court observed that if Roxas really intended to sign the instruments merely
in his capacity as President of Astro, then he should have signed only once in the
promissory note.
Roxas failed to explain why he had to sign twice in the contract and therefore the
presumption that private transactions have been fair and regular must be sustained.
Roxas claim that the phrases in his personal capacity and in his official capacity were
inserted on the notes without his knowledge was correctly disregarded by the RTC
and the Court of Appeals.
It is not disputed that Roxas does not deny that he signed the notes twice. As aptly
found by both the trial and appellate court, Roxas did not offer any explanation why
he did so. It devolves upon him to overcome the presumptions that private
transactions are presumed to be fair and regular and that a person takes ordinary
care of his concerns.
Issue: Whether or not Roxas should be jointly and severally liable (solidary) with Astro for
the sum awarded by the RTC? YES!
Ratio:
As it appears on the notes, Roxas signed twice: first, as president of Astro and second, in
his personal capacity. In signing his name aside from being the President of Asro, Roxas
became a co-maker of the promissory notes and cannot escape any liability arising from it.
Under the Negotiable Instruments Law, persons who write their names on the face of
promissory notes are makers,[10 promising that they will pay to the order of the payee or
any holder according to its tenor.11 Thus, even without the phrase personal capacity, Roxas
will still be primarily liable as a joint and several debtor under the notes considering that his
intention to be liable as such is manifested by the fact that he affixed his signature on each
of the promissory notes twice which necessarily would imply that he is undertaking the
obligation in two different capacities, official and personal.
I
just
copy-pasted
the
value.
Its
probably
a
typo.
Im
guessing
it
was
supposed
to
be
$100,000.00
IN
A
NUTSHELL:
$100,000
was
transferred
to
China
Banking
Corporation.
CBC
converted
it
to
P201,000.
The
money
was
deposited
to
BPI.
4
5
Another
forgery
instance,
but
not
as
important:
Before
delivering
the
money,
the
bank
asked
Dolores
for
P1
to
cover
the
cost
of
packing
the
money,
and
he
left
the
bank
and
shortly
afterwards
returned
with
another
check
for
P1,
purporting
to
be
signed
by
Newland
Baldwin
Ratio:
The Court's Ruling
15. As to the China Banking Corporation, it will be seen that it drew its check payable to
the order of SCMC and delivered it to the agent who was authorized to receive it. A
bank that cashes a check must know to whom it pays. In connection with the
cashiers check, this duty was therefore upon the BPI, and the China Banking
Corporation was not bound to inspect and verify all endorsements of the check, even
if some of them were also those of depositors in that bank. The China Banking
Corporation is indebted neither to SCMC nor to the BPI.
16. The check of P201,000 was not for cash payment but for deposit only. It is a matter
of general knowledge that most endorsements for deposit only, are informal. The
bank would have been justified in accepting the check for deposit even with only a
typed endorsement. It accepted the check and duly credited SCMCs account with the
amount on the face of the check.
17. SCMC in its letter of December 23, 1928, to the BPI said in part:
1. . . . we now leave to demand that you pay over to us the entire amount of
said managers check of two hundred one thousand (P201,000) pesos,
together with interest thereon at the agreed rate of 3 per cent per annum on
daily balances of our credit in account current with your bank to this date. In
the event of your refusal to pay, we shall claim interest at the legal rate of 6
per cent from and after the date of this demand inasmuch as we desire to
withdraw and make use of the money. Such language might well be treated
as a ratification of the deposit.
18. Banks are not gratuitous bailees of the funds deposited with them by their
customers. Banks are run for gain, and they solicit deposits in order that they can
use the money for that very purpose. In this case the action was neither gratuitous
nor was it a bailment.
19. We now come to consider the legal effect of payment by the bank to Dolores of
Great Eastern Life Insurance Co. (GELI) indorsed a check to Lazaro Melicor or his
order for the amount of P2,000.
Melicors signature was forged to said check so that the person to whose order
the check was issued did not receive the money, which was collected by E. M.
Maasim.
Maasim encashed said check in the Philippine National Bank (PNB), the latter not
making any inquiry as regards an endorsement by Melicor. The PNB then brought
said check to the Hongkong and Shanghai Banking Corp. (HSBC) for payment.
A case was filed against both PNB and HSBC assailing the transaction
o The lower court held that the PNB cannot be held liable for a payment
made to Maasim was in good faith. They added that the PNB did not have
any obligations to question the endorsement because
it was not
obligated to identify the signature of the former indorser (Melicor)
o Neither was the HSBC held liable because it was a holder in due course.
Hence this appeal/petition.
W/N PNB should be held liable for the payment of the check to Maasim YES
W/N HSBC should be held liable for the payment made to the PNB YES
Ratio:
GELIs check was drawn on Shanghai Bank payable to the order of Melicor.
o GELI authorized and directed the Shanghai Bank to pay Melicor, or his
order, P2,000. It did not authorize or direct the bank to pay the check to
any other person than Melicor, or his order.
-
This is not a case where the plaintiffs own signature was forged to one of it
checks.
o The forgery was that of Melicor, who was the payee of the check, and the
legal presumption is that the bank would not honor the check without the
genuine endorsement of Melicor.
-
Sec. 23 of the Negotiable Instruments Law:
When a signature is forged or made without the authority of the person whose
signature it purports to be, it is wholly inoperative, and no right to retain the
instrument, or to give a discharge therefor, or to enforce payment thereof
against any party thereto, can be acquired through or under such signature,
unless the party against whom it is sought to enforce such right is precluded from
setting up the forgery or want of authority.
-
The money was on deposit in the Shanghai Bank, and it had no legal right to pay
it out to anyone except the plaintiff or its order.
o GELI ordered the Shanghai Bank to pay the check to Melicor, and the
money was actually paid to Maasim and he never paid to Melicor, and he
never personally endorsed the check, or authorized any one to endorse it
for him, and the alleged endorsement was a forgery.
-
The Philippine National Bank had no license or authority to pay the money to
Maasim or anyone else upon a forge signature. It was its legal duty to know that
Melicors endorsment was genuine before cashing the check. Its remedy is
against Maasim to whom it paid the money.
-
The judgment of the lower court is reversed, and one will be entered here in favor of the
plaintiff and against the Hongkong and Shanghai Banking Corporation for the P2,000, with
interest thereon from November 8, 1920 at the rate of 6 per cent per annum, and the costs
of this action, and a corresponding judgment will be entered in favor of the Hongkong
Shanghai Banking Corporation against the Philippine National Bank for the same amount,
together with the amount of its costs in this action. So ordered.
Doctrine: Sec. 23 of the NIL
7. Republic Bank v. Ebrada 65 SCRA 680 - Gaston Perez de Tagle
Emergency Recit
FACTS: Ebrada encashed a check at the office of RB (the drawee) for P1,246.08. The check
was indorsed a total of 3 times. Ebrada was the last holder. It turned out that the first
indorsees (Martin Lorenzo) signature was forged, evidenced by the fact that he was dead at
the time when he allegedly signed it. RB refunded the check to the Bureau of Treasury and
sought to recover the amount from Ebrada. RB won in the lower courts; Ebrada appealed
until SC.
Facts
Ebrada encashed Back Pay Check No. 508060 dated January 15, 1963 for P1,246.08
at the office of the plaintiff Republic Bank (RB)
o Check was issued by the Bureau of Treasury
RB was later advised by the said Bureau that the alleged indorsement on the reverse
side of the aforesaid check by the payee, "Martin Lorenzo" was a forgery since the
latter had allegedly died as of July 14, 1952.
RB was then requested by the Bureau of Treasury to refund the amount of
P1,246.08.
To recover what it had refunded to the Bureau of Treasury, RB made verbal and
formal demands upon Ebrada to account for the sum of P1,246.08, but said
defendant refused to do so.
o So RB sued Ebrada before the City Court of Manila
City Court of Manila rendered judgment for the plaintiff Bank against Ebrada; for
Third-Party plaintiff against Third-Party defendant, Adelaida Dominguez, and for
Fourth-Party plaintiff against Fourth-Party defendant, Justina Tinio.
Ebrada and co. appealed to the CFI and entered the ff. stipulation of facts:
o Treasury of the Philippines issued its Check No. BP-508060, payable to the
order of one MARTIN LORENZO, in the sum of P1,246.08, and drawn on the
RB.
o That the back side of the check bears the following signatures, in this order:
MARTIN LORENZO;
RAMON R. LORENZO;
DELIA DOMINGUEZ; and
MAURICIA T. EBRADA;
o The aforementioned check was delivered to the defendant EBRADA by the
Third-Party defendant and Fourth-Party plaintiff ADELAIDA DOMINGUEZ, for
the purpose of encashment;
o That the signature of defendant EBRADA was affixed on said check on
February 27, 1963 when she encashed it with the plaintiff Bank;
o Immediately after defendant MAURICIA T. EBRADA received the cash
proceeds of said check in the sum of P1,246.08 from the plaintiff Bank, she
immediately turned over the said amount to the third-party defendant and
fourth-party plaintiff ADELAIDA DOMINGUEZ
Trial Court decided against Ebrada; ordered her to pay RB P1,246.08.
Issue
W/N The Trial Court erred IN ORDERING THE APPELLANT TO PAY THE APPELLEE THE
FACE VALUE OF THE SUBJECT CHECK AFTER FINDING THAT THE DRAWER ISSUED THE
SUBJECT CHECK TO A PERSON ALREADY DECEASED FOR 11 YEARS
Held
IN VIEW OF THE FOREGOING, the judgment appealed from is hereby affirmed in toto
with costs against defendant-appellant
Ratio
It is admitted that Ebrada was the last indorser of the said check.
o As such indorser, she was supposed to have warranted that she has good
title to said check under Section 65 of the Negotiable Instruments Law.
It turned out, however, that the signature of the original payee of the check, Martin
Lorenzo was a forgery because he was already dead for almost 11 years before the
check in question was issued by the Bureau of Treasury. Under Section 23 of the
Negotiable Instruments Law (Act 2031):
o When a signature is forged or made without the authority of the person
whose signature it purports to be, it is wholly inoperative, and no right to
retain the instruments, or to give a discharge thereof against any party
thereto, can be acquired through or under such signature unless the party
against whom it is sought to enforce such right is precluded from setting up
the forgery or want of authority.
But does this mean that the existence of one forged signature therein will
render void all the other negotiations of the check with respect to the other
parties whose signature are genuine?
o Beam vs. Farrel - where a check has several indorsements on it, it was held
that it is only the negotiation based on the forged or unauthorized
signature which is inoperative.
o Applying this principle to this case, it can be safely concluded that it is only
the negotiation predicated on the forged indorsement that should be
declared inoperative.
This means that the negotiation of the check in question from Martin
Lorenzo, the original payee, to Ramon R. Lorenzo, the second
indorser, should be declared of no affect.
But the negotiation of the check from Ramon R. Lorenzo to Adelaida
Dominguez, the third indorser, and from Adelaida Dominguez to the
Ebrada who did not know of the forgery, should be considered valid
and enforceable, barring any claim of forgery
[I FEEL LIKE THIS IS NOT THE MAIN POINT, BUT GOOD TO KNOW IF YOU HAVE
TIME] What happens then, if, after the drawee bank has paid the amount of the
check to the holder thereof, it was discovered that the signature of the payee
was forged? Can the drawee bank recover from the one who encashed the
check?
o State v. Broadway Mut. Bank - held that the drawee of a check can recover
from the holder the money paid to him on a forged instrument. It is not
supposed to be its duty to ascertain whether the signatures of the payee or
indorsers are genuine or not.
o This is because the indorser is supposed to warrant to the drawee that the
signatures of the payee and previous indorsers are genuine, warranty not
extending only to holders in due course.
o Although the drawee was in a way negligent in failing to detect the forgery,
yet if the encasher of the check had performed his duty, the forgery would in
all probability, have been detected and the fraud defeated.
o In the instant case, EBRADA, upon receiving the check in question from
Adelaida Dominguez, was duty-bound to ascertain whether the check in
question was genuine before presenting it to plaintiff Bank for payment.
1.
Forgery in Sec. 23 does not pertain only to the signature of a maker or drawer. It
also pertains to forged signatures of indorsers.
2.
Forged signature of indorser will act as a real defense for all parties prior to the
forgery, and release them from liability.
3.
The last portion of Sec. 23 speaks of the exeption. Even if theres a subsequent
forgery, if its caused by fraud or negligence by said party, he will not be able to avail of
this defense.
Facts:
Gempesaw (GEMPESAW) appeals to SC from adverse rulings of RTC and CA on the issue of
the right of the drawer to recover from the drawee Philippine Bank of Communications
(DRAWEE BANK) who pays a check with a forged indorsement of the payee, debiting the
same against the drawer's account. This suit was brought in order to recover the amounts
debited from Gempesaw's account by Drawee Bank. Two lower courts ruled against
Gempesaw, saying that 1. her negligence was proximate cause of loss, 2. Even if Drawee
Bank was negligent, Gempesaw was still proximate cause of loss.
Gempesaw owns and operates four grocery stores located at Rizal Avenue Extension and
at Second Avenue, Caloocan City.
The checks were prepared and filled up as to all material particulars by her trusted
bookkeeper, Alicia Galang (GALANG), an employee for more than eight (8) years and
one she fully and implicitly trusted.
the completed checks were submitted to the petitioner for her signature, together
with the corresponding invoice receipts which indicate the correct obligations due
her suppliers. She signed them without verifying amounts expressed therein.
The checks were then delivered by Galang to the payees. Again, Gempesaw never
verified if payees actually received such checks or payments.
Bank would send regular reports of disbursed checks, Gempesaw never reviewed
them.
All checks were presented to Drawee Bank as checks supposedly indorsed by payees.
After payment, Drawee debited account of Gempesaw.
Example of the fraud perpetrated, as shown in the Court exhibits: Invoice of Php
1,189.00 would be paid in check as Php 11,189.00
This practice continued for 2 years. 82 checks were concerned. Total amount debited
was Php 1.2 M.
Issue:
W/N Gempesaw's account can be re-credited by Drawee Bank.
Held:
Account to be re-credited but only for half of the actual loss incurred. Other half shall be
borne by the Drawee Bank. Case remanded back to trial court to determine actual loss
incurred by Gempesaw.
Ratio:
The applicable law is the Negotiable Instruments Law 4 (heretofore referred to as the NIL).
Section 23 of the NIL provides:
When a signature is forged or made without the authority of the person whose
signature it purports to be, it is wholly inoperative, and no right to retain the
instrument, or to give a discharge therefor, or to enforce payment thereof against any
party thereto, can be acquired through or under such signature, unless the party
against whom it is sought to enforce such right is precluded from setting up the
forgery or want of authority.
Under the aforecited provision, forgery is a real or absolute defense by the party whose
signature is forged. A party whose signature to an instrument was forged was never a party
and never gave his consent to the contract which gave rise to the instrument. Since his
signature does not appear in the instrument, he cannot be held liable thereon by anyone,
not even by a holder in due course. Thus, if a person's signature is forged as a maker of a
xxx
xxx
Issue: The main question is whether MWSS should bare the loss of the checks or should PNB
restore to the accounts of MWSS the debited money due to the checks.
Held: MWSS should bare the loss.
Ratio:
The appellate court applied Section 24 of the Negotiable Instruments Law which
provides:
o Every negotiable instrument is deemed prima facie to have been issued for
valuable consideration and every person whose signature appears thereon to
have become a party thereto for value.
MWSS submits that the above provision does not apply to the case because the
questioned checks were not those of the MWSS and neither were they drawn by its
authorized signatories.
o The same creates only a prima facie presumption which was overcome by the
following documents, to wit:
(1) the NBI Report ; (2) another NBI Report (3) the NBI Chemistry
Report (4) the Memorandum of the Assistant Auditor of PNB (5) the
admission of the PNBs counsel in open court that the National Bureau
of Investigation found the signature on the twenty-three (23) checks
in question to be forgeries;
The petitioner contends that since the signatures of the checks were
forgeries, the respondent drawee bank must bear the loss under the
rulings of this Court.
A bank is bound to know the signatures of its customers; and if it pays a forged
check it must be considered as making the payment out of its obligation funds, and
cannot ordinarily charge the amount so paid to the account of the depositor whose
name was forged.
The signatures to the checks being forged, under Section 23 of the Negotiable
Instruments Law they are not a charge against MWSS nor are the checks of any value
to PNB.
Quoting cases:
o It must therefore be held that the proximate cause of loss was due to the
negligence of the Bank of the Philippine Islands in honoring and cashing the
two forged checks.
o It was its legal duty to know that xs endorsement was genuine before
cashing the check. Its remedy is against Maasim to whom it paid the money.
We have carefully reviewed the documents cited by the petitioner.
o There is no express and categorical finding in these documents that the
twenty-three (23) questioned checks were indeed signed by persons other
than the authorized MWSS signatories.
o On the contrary, the findings of the National Bureau of Investigation in its
Report show that the MWSS fraud was an "inside job"
o That the petitioner's delay in the reconciliation of bank statements and the
laxity and loose records control in the printing of its personalized checks
facilitated the fraud.
o Likewise, the questioned Documents of the National Bureau of Investigation
does not prove that the signatures appearing on the questioned checks are
forgeries.
The report merely mentions the alleged differences in the type face,
checkwriting, and printing characteristics appearing in the standard or
submitted models and the questioned typewritings.
The NBI Chemistry merely describes the inks and pens used in writing
the alleged forged signatures.
Forgery cannot be presumed. It must be established by clear, positive, and
convincing evidence. This was not done in the present case.
Considering the absence of sufficient security in the printing of the checks coupled
with the very close similarities between the genuine signatures and the alleged
forgeries,
o The twenty-three (23) checks in question could have been presented to the
MWSSs signatories without their knowing that they were bogus checks.
o Indeed, the cashier of the petitioner whose signatures were allegedly forged
was unable to discern the difference between the allegedly forged signature
and his own genuine signature.
Moreover, the MWSS is barred from setting up the defense of forgery under Section
23 of the Negotiable Instruments Law which provides that:
o SEC. 23. FORGED SIGNATURE; EFFECT OF.- When the signature is forged or
made without authority of the person whose signature it purports to be, it is
wholly inoperative, and no right to retain the instrument, or to give a
discharge therefor, or to enforce payment thereof against any party thereto
can be acquired through or under such signature unless the party against
whom it is sought to enforce such right is precluded from setting up the
forgery or want of authority.
Because it was guilty of negligence not only before the questioned checks were
negotiated but even after the same had already been negotiated.
o The records show that at the time the twenty-three (23) checks were
prepared, negotiated, and encashed, the petitioner was using its own
personalized checks, instead of the official PNB Commercial blank checks.
o In the exercise of this special privilege, they failed to provide the needed
security measures.
o That there was gross negligence in the printing of its personalized checks is
shown by the following uncontroverted facts, to wit:
There were no specific instructions relative to the safekeeping
The petitioner failed to retrieve from its printer all spoiled check
forms;
Failed to provide any control regarding the paper used in the printing
of said checks;
I.
II.
K. Ilusorio
Managing Director of Multinational Investment Bancorporation
Chairman and/or President of several other corporations
Depositor in good standing of the Manila Banking Corporation (Respondent Bank)
(current Checking Account No. 06-09037-0)
Ilusorio was running about 20 corporations and was going out of the country so he assigned
his credit cards and checkbooks with blank checks to Katherine Eugenio, his secretary. She
verified and reconciled the statements of his checking account.
September 5, 1980- January 23, 1981
4. Eugenio was able to encash and deposit to her personal account about 17 checks
drawn against the account of Ilusorio at the Manila Banking Corporation worth P
119,634.34
A business partner appraised Ilusorio of Eugenios actions and Ilusorio fired Eugenio
immediately.
Cases against Eugenio:
Ilusorio v. Eugenio Estafa thru falsification
Manila Banking Corporation thru an affidavit executed by its employee, Mr. Dante Razon
Estafa thru falsification of commercial documents on the basis of Ilusorios statement that
his signatures in the checks were forged.
Ilusorio requested that Manila Banking Corporation credit back and restore to its full
account the value of the checks which were wrongfully encashed but the bank refused.
Ilusorio testified. Employees of the Manila Bank Corporation testified and said that the SOP
of their bank was that whenever a check is presented for encashment or clearing, the
signature is first verified against the specimen signature cards on file.
Manila Bank sought the expertise of NBI to determine genuineness of the signatures. NBI
could not do the test because they said that the standard specimens submitted were not
sufficient for purposes of rendering a definitive opinion. NBI asked for 7 more signatures.
Bellosillo, Acting C.J., (Chairman), Mendoza, Austria-Martinez, and Callejo, Sr., JJ., concur.