NEGO Forgery Cases APR118

(1) Jai Alai vs BPI

FACTS:
Petitioner deposited 10 checks in its current account
with BPI. The checks which were acquired by
petitioner from Ramirez, a sales agent of the InterIsland Gas were all payable to Inter-Island Gas
Service, Inc. or order. After the checks had been
submitted to Inter-bank clearing, Inter-Island Gas
discovered that all the indorsements made on the
checks purportedly by its cashiers were
forgeries. BPI thus debited the value of the checks
against petitioner's current account and forwarded to
the latter the checks containing the forged
indorsements which petitioner refused to accept.
ISSUE:
Whether BPI had the right to debit from petitioner's
current account the value of the checks with the
forged indorsements.

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(2) Republic vs Ebrada

65 SCRA 680 Mercantile Law Negotiable
Instruments Law Consideration Forgery
Liability of Accommodation Party
On January 15, 1963, the Bureau of Treasury
issued a back pay check to Martin Lorenzo in the
amount of P1,246.08. The drawee named therein
was Republic Bank. The check was subsequently
indorsed to Ramon Lorenzo, then to Delia
Dominguez and then to Mauricia Ebrada. Ebrada
encashed the check with the Republic Bank.
Republic Bank paid the amount of the check to
Ebrada. Ebrada, upon receiving the cash, gave it
to Dominguez; Dominguez in turn gave the cash
to Ramon Lorenzo.

RULING:
BPI acted within legal bounds when it debited the
petitioner's account. Having indorsed the checks to
respondent bank, petitioner is deemed to have given
the warranty prescribed in Section 66 of the NIL that
every single one of those checks "is genuine and in
all respects what it purports to be." Respondent
which relied upon the petitioner's warranty should not
be held liable for the resulting loss.

Later, the Bureau of Treasury notified that the

**The depositor of a check as indorser warrants that it

is genuine and in all respects what it purports to be.
Having indorsed the checks to respondent bank,
petitioner is deemed to have given the warranty
prescribed in Section 66 of the NIL that every single
one of those checks " is genuine and in all respects
what it purports to be."

ISSUE: Whether or not Republic Bank may

check was a forgery because the payee named

therein (Martin Lorenzo) was actually dead 11
years ago before the check was issued. Republic
Bank refunded the amount to the Bureau of
Treasury. The bank then demanded Ebrada to
refund them.

recover from Ebrada.

HELD: Yes. Ebrada, being the last indorser,
warranted the genuineness of the signatures of
the payee and the previous indorsers. The
drawee bank is not duty bound to ascertain
whether or not the signatures of the payee and
the indorsers are genuine. One who purchases a
check or draft is bound to satisfy himself that the
paper is genuine and that by indorsing it or
presenting it for payment or putting it into
circulation before presentation he impliedly

NEGO Forgery Cases APR118

asserts that he has performed his duty and the

drawee (in this case Republic Bank) who has
paid the forged check, without actual negligence
on his part, may recover the money paid from
such negligent purchasers.
But Ebrada did not profit from this because she,
upon receiving the encashment, gave the same
to Dominguez?
She is still liable because she is considered as
an accommodation party pursuant to Section
29 of the Negotiable Instruments Law. An
accommodation party is one who has signed the
instrument as maker, drawer, acceptor, or
indorser, without receiving value therefor, and for
the purpose of lending his name to some other
person. Such a person is liable on the instrument
to a holder for value, notwithstanding such holder
at the time of taking the instrument knew him to
be only an accommodation party.
(3) MWSS vs CA
FACTS:
MWSS had an account from PNB. Its
treasurer, auditor, and General Manager are
the ones authorized to sign checks. During a
period of time, 23 checks were drawn and
debited against the account of petitioner.
Bearing the same check numbers, the amounts
stated therein were again
debited from the account of petitioner. The
amounts drawn were deposited in the accounts
of the payees in PCIB. It was found out though
that the names stated in the drawn checks were
all fictitious. Petitioner demanded the return of
the amounts debited but the bank refused to do
so. Thus, it filed a complaint.
HELD:
There was no categorical finding that the 23
checks were signed by persons other than

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those authorized to sign. On the contrary,

the NBI reports shows that the fraud was an
inside job and that the delay in the
reconciliation of the bank statements and the
laxity and loss of records
control in the printing of the personalized checks
facilitated the fraud. It further doesnt provide
that the signatures were forgeries.
Forgery cannot be presumed. It should be
proven by clear, convincing and positive
evidence. This wasnt done in the present case.
The petitioner cannot invoke Section 23 because
it was guilty of negligence not only before the
questioned checks but even after the same had
already been negotiated.
(4) BDO vs Equitable
FACTS:
BDO drew checks payable to member
establishments. Subsequently, the checks were
deposited in Trencios account with
Equitable. The checks were sent for clearing
and was thereafter cleared. Afterwards, BDO
discovered that the indorsements in the back of
the checks were forged. It then demanded that
Equitable credit its account but the latter
refused to do so. This prompted BDO to file a
complaint against Equitable and PCHC. The trial
court and RTC held in favor of the Equitable and
PCHC.
HELD:
First, PCHC has jurisdiction over the case in
question. The articles of incorporation of
PHHC extended its operation to clearing checks
and other clearing items. No doubt transactions
on non-negotiable checks are within the ambit of
its jurisdiction. Further, the participation of the
two banks in the clearing operations is
submission to the jurisdiction of the PCHC.
Petitioner is likewise estopped from raising
the non-negotiability of the checks in issue.
It stamped its guarantee at the back of the
checks and subsequently presented it for

NEGO Forgery Cases APR118

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clearing and it was in the basis of these

endorsements by the petitioner that the
proceeds were credited in its
clearing account. The petitioner cannot now
deny its liability as it assumed the liability of an
indorser by stamping its guarantee at the
back of the checks.

ISSUE: Whether or not the bank should refund

Furthermore, the bank cannot escape liability of

an indorser of a check and which may turn out to
be a forged indorsement. Whenever a bank
treats the signature at the back of the checks as
indorsements and thus logically guarantees the
same as such there can be no doubt that
said bank had considered the checks as
negotiable.

As a rule, a drawee bank (in this case the

A long line of cases also held that in

the matter of forgery in endorsements, it is
the collecting bank that generally suffers the
loss because it had the dutyh to ascertain
the genuineness of all prior indorsements
considering that the act of presenting the check
for payment
to the drawee is an assertion that the party
making the presentment has done its duty to
ascertain the genuineness of the indorsements.

honor such a check or checks. If a check is

(5) Gempesaw vs CA
218 SCRA 682 Mercantile Law Negotiable
Instruments Law Liabilities of Parties Forgery

the money lost by reason of the forged

indorsements.
HELD: No. Gempesaw cannot set up the
defense of forgery by reason of her negligence.
Philippine Bank of Communications) who has
paid a check on which an indorsement has been
forged cannot charge the drawers (Gempesaws)
account for the amount of said check. An
exception to this rule is where the drawer is guilty
of such negligence which causes the bank to
stolen from the payee, it is quite obvious that the
drawer cannot possibly discover the forged
indorsement by mere examination of his
cancelled check. A different situation arises
where the indorsement was forged by an
employee or agent of the drawer, or done with
the active participation of the latter.
The negligence of a depositor which will prevent
recovery of an unauthorized payment is based on
failure of the depositor to act as a prudent

Forged Indorsements

businessman would under the circumstances. In

Natividad Gempesaw is a businesswoman who

the honesty and loyalty of Galang, and did not

entrusted to her bookkeeper, Alicia Galang, the

even verify the accuracy of amounts of the

preparation of checks about to be issued in the

checks she signed against the invoices attached

course of her business transactions. From 1984

thereto. Furthermore, although she regularly

to 1986, 82 checks amounting to P1,208,606.89,

received her bank statements, she apparently did

were prepared and were supposed to be

not carefully examine the same nor the check

delivered to Gempesaws clients as payees

stubs and the returned checks, and did not

named thereon. However, through Galang, these

compare them with the same invoices.

checks were never delivered to the supposed

Otherwise, she could have easily discovered the

payees. Instead, the checks were fraudulently

discrepancies between the checks and the

indorsed to Alfredo Romero and Benito Lam.

documents serving as bases for the checks. With

the case at bar, Gempesaw relied implicitly upon

such discovery, the subsequent forgeries would

NEGO Forgery Cases APR118

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not have been accomplished. It was not until two

the holders signature is forged, all parties

years after Galang commenced her fraudulent

prior to the forgery may raise the real

scheme that Gempesaw discovered that eighty-

defense of forgery against all parties subsequent

two (82) checks were wrongfully charged to her

thereto. In connection to this, an indorser

account, at which she notified the Philippine

warrants that the instrument is genuine. A

Bank of Communications.

collecting bank is such an indorser. So even

if the indorsement is forged, the collecting

(6) Associated Bank vs CA

FACTS:
The province of Tarlac maintains an account
with PNB-Tarlac. Part of its funds is
appropriated for the benefit of Concepcion
Emergency Hospital. During a post-audit done
by the province, it was found out that 30 of its
checks werent received by the hospital. Upon
further investigation, it was found out that the
checks were encashed by Pangilinan who was a
former cashier and administrative officer of
the hospital through forged indorsements.
This prompted the provincial treasurer to
ask for
reimbursement from PNB and thereafter,
PNB from Associated Bank. As the two banks
didn't want to reimburse, an action was filed
against them.
HELD:
There is a distinction on forged
indorsements with regard bearer instruments
and instruments payable to order.
With instruments payable to bearer, the signature
of the payee or holder is unnecessary to pass
title to the instrument. Hence, when the
indorsement is a forgery, only the person
whose signature is forged can raise the
defense of forgery against holder in due course.
In instruments payable to order, the
signature of the rightful holder is essential to
transfer title to the same instrument. When

bank is bound by his warranties as an indorser

and cannot set up
the defense of forgery as against the drawee
bank.
Furthermore, in cases involving checks with
forged indorsements, such as the case at bar,
the chain of liability doesn't end with the
drawee bank. The drawee bank may not
debit the account of the drawer but may
generally pass liability back through the
collection chain to the party who took from the
forger and of course, the forger himself, if
available. In other words, the drawee bank can
seek reimbursement or a return of the amount it
paid from the collecting bank or person.
The collecting bank generally suffers the loss
because it has te duty to ascertain the
genuineness of all prior endorsements
considering that the act of presenting the
check for payment to the drawee is an
assertion that the party making the
presentment has done its duty to ascertain
the
genuineness of the indorsements.
With regard the issue of delay, a delay in
informing the bank of the forgery, which
deprives it of the opportunity to go after the
forger, signifies negligence on the part of the
drawee bank and will preclude it from
claiming reimbursement. In this case, PNB

NEGO Forgery Cases APR118

wasn't guilty of any negligent delay. Its delay

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August 26, 1964: Sales made his 1st

withdrawal of P480.00 from his current account

hasn't prejudiced Associated Bank in any

way because even if there wasn't delay, the
fact that there was nothing left of the account

August 28, 1964: he withdrew P32,100.00

August 31, 1964: he withdrew the balance of

of Pangilinan, there couldn't be anymore

reimbursement.

P17,920 and closed his account with Metro Bank

(7) Metrobank vs FNCB

FACTS:

Metro Bank immediately sent the

cash check to the Clearing House of the Central
Bank with the following words stamped at the
back of the check:

Metropolitan Bank and

Trust Company Cleared (illegible) office All prior
endorsements and/or Lack of endorsements
Guaranteed.

The check was cleared the same

day. Private respondent paid petitioner through
clearing the amount of P50,000.00, and Sales
was credited with the said amount in his deposit
with Metro Bank.

notified FNCB that the check had

been altered
actual amount of P50.00

was raised to P50,000.00

Earlier that day, Sales had opened

a current account with Metro Bank depositing
P500.00 in cash

cancelled Check to drawer Joaquin Cunanan &

Company, together with the monthly statement of
the company's account with FNCB.

August 25, 1964: Check dated July 8, 1964

for P50,000.00, payable to CASH, drawn by
Joaquin Cunanan & Company on First National
City Bank (FNCB) was deposited with
Metropolitan Bank and Trust Company (Metro
Bank) by Salvador Sales.

September 3, 1964: FNCB returned

name of the payee, Manila

Polo Club, was superimposed the word CASH.

September 10, 1964: FNCB wrote Metro

Bank asking for reimbursement

June 29, 1965: FNCB filed for recovery

CA affirmed Trial Court: Metro Bank to

reimburse FNCB

ISSUE: W/N Metrobank should reimsburse FNCB for

the altered amount as indorser

HELD: NO. FNCB liable.

Under the procedure prescribed, the drawee

bank receiving the check for clearing from the
Central Bank Clearing House must return the

NEGO Forgery Cases APR118

check to the collecting bank within the 24-hour

period if the check is defective for any reason. FNCB failed to do so

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check cleared and FNCB paid Republic Bank

P9,240.00.
On April 19, 1966, SMC notified FNCB that the

indorsement must be read together

with the 24-hour regulation on clearing House
Operations of the Central Bank

check involved was forged. FNCB refunded SMC

the amount of the check. On May 19, 1966,
FNCB informed Republic bank about the forgery,
by then Delgado withdrew his account from

Metro Bank cannot be held liable for the

payment of the altered check.

Republic Bank. On August 15, 1966, FNCB

demanded Republic Bank to refund the amount
of the check.

Moreover, FNCB did not deny the allegation

of Metro Bank that before it allowed the
withdrawal of the balance of P17,920.00 by
Salvador Sales, Metro Bank withheld payment
and first verified, through its Assistant Cashier
Federico Uy, the regularity and genuineness of
the check deposit from Marcelo Mirasol,
Department Officer of FNCB, because its (Metro
Bank) attention was called by the fast movement
of the account.

ISSUE: Whether or not Republic Bank should

(8) Republic Bank vs CA

It is true that when an endorsement is forged, the

refund the amount to FNCB.

HELD: No. The 24-hour clearing house rule
embodied in Section 4(c) of Central Bank Circular
No. 9, as amended, applies to this case. This rule
mandates banks that after a clearing, all cleared
items must be returned not later than 3:00 PM of
the following business day.

collecting bank or last endorser, as a general

196 SCRA 100 Mercantile Law Negotiable

rule, bears the loss. But the unqualified

Instruments Law Liabilities of Parties Forgery

endorsement of the collecting bank on the check

24 Hour Clearing House Rule

should be read together with the 24-hour

regulation on clearing house operation. Thus,

On January 25, 1966, San Miguel Corporation

when the drawee bank (FNCB) fails to return a

(SMC) issued a P240.00 check in favor of

forged or altered check to the collecting bank

Roberto Delgado against SMCs account with the

(Republic Bank) within the 24-hour clearing

First National City Bank (FNCB). Delgado

period, the collecting bank is absolved from

fraudulently changed the amount written on the

liability.

check to P9,240.00. Delgado made a check

deposit with Republic Bank. Republic Bank
accepted the check and endorsed it to FNCB by
stamping on the back of the check all prior
and/or lack of indorsement guaranteed. The

(9) PH Commercial Bank vs CA

350 SCRA 446 Mercantile Law Negotiable
Instruments Law Rights of the Holder What
Constitutes a Holder in Due Course

NEGO Forgery Cases APR118

Negligence of the Collecting Bank and the

Drawee Bank
There are three cases consolidated here: G.R.

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the syndicate. Thereafter, Rivera and the other

members became fugitives of justice.
G.R. No. 128604

No. 121413 (PCIB vs CA and Ford and Citibank),

G.R. No. 121479 (Ford vs CA and Citibank and

In July 1978 and in April 1979, Ford drew two

PCIB), and G.R. No. 128604 (Ford vs Citibank

checks in the amounts of P5,851,706.37 and

and PCIB and CA).

P6,311,591.73 respectively. Both checks are

again for tax payments. Both checks are for

G.R. No. 121413/G.R. No. 121479

Payees account only or for the CIRs bank

savings account only with Metrobank. Again,

In October 1977, Ford Philippines drew a

these checks never reached the CIR.

Citibank check in the amount of P4,746,114.41 in

favor of the Commissioner of the Internal

In an investigation, it was found that these

Revenue (CIR). The check represents Fords tax

checks were embezzled by the same syndicate

payment for the third quarter of 1977. On the

to which Rivera was a member. It was

face of the check was written Payees account

established that an employee of PCIB, also a

only which means that the check cannot be

member of the syndicate, created a PCIB

encashed and can only be deposited with the

account under a fictitious name upon which the

CIRs savings account (which is with Metrobank).

two checks, through high end manipulation, were

The said check was however presented to PCIB

deposited. PCIB unwittingly endorsed the checks

and PCIB accepted the same. PCIB then

to Citibank which the latter cleared. Upon

indorsed the check for clearing to Citibank.

clearing, the amount was withdrawn from the

Citibank cleared the check and paid PCIB

fictitious account by syndicate members.

P4,746,114.41. CIR later informed Ford that it

never received the tax payment.

ISSUE: What are the liabilities of each party?

An investigation ensued and it was discovered

HELD: G.R. No. 121413/G.R. No. 121479

that Fords accountant Godofredo Rivera, when

the check was deposited with PCIB, recalled the
check since there was allegedly an error in the
computation of the tax to be paid. PCIB, as
instructed by Rivera, replaced the check with two

PCIB is liable for the amount of the check

(P4,746,114.41). PCIB, as a collecting bank has
been negligent in verifying the authority of Rivera
to negotiate the check. It failed to ascertain

of its managers checks.

whether or not Rivera can validly recall the check

It was further discovered that Rivera was actually

managers checks as in fact, Ford has no

a member of a syndicate and the managers

knowledge and did not authorize such. A bank (in

checks were subsequently deposited with the

this case PCIB) which cashes a check drawn

Pacific Banking Corporation by other members of

upon another bank (in this case Citibank), without

and have them be replaced with PCIBs

NEGO Forgery Cases APR118

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requiring proof as to the identity of persons

negligent for failing to examine its passbook in a

presenting it, or making inquiries with regard to

timely manner which could have avoided further

them, cannot hold the proceeds against the

loss. But this negligence is not the proximate

drawee when the proceeds of the checks were

cause of the loss but is merely contributory.

afterwards diverted to the hands of a third party.

Nevertheless, this mitigates the liability of PCIB

Hence, PCIB is liable for the amount of the

and Citibank hence the rate of interest, with

embezzled check.

which PCIB and Citibank is to pay Ford, is

lowered from 12% to 6% per annum.

G.R. No. 128604

PCIB and Citibank are liable for the amount of
the checks on a 50-50 basis.
As a general rule, a bank is liable for the
negligent or tortuous act of its employees within
the course and apparent scope of their
employment or authority. Hence, PCIB is liable
for the fraudulent act of its employee who set up
the savings account under a fictitious name.
Citibank is likewise liable because it was
negligent in the performance of its obligations
with respect to its agreement with Ford. The
checks which were drawn against Fords account
with Citibank clearly states that they are payable
to the CIR only yet Citibank delivered said

(10) Ilusorio vs CA
FACTS:
Petitioner was a prominent businessman who,
because of different business commitments,
entrusted to his then secretary the handling of
his credit cards and checkbooks. For a material
period of time, the secretary was able to encash
and deposit in her personal account money from
the account of petitioner. Upon knowledge of
her acts, she was fired immediately and criminal
actions were filed against her. Thereafter,
petitioner requested the bank to restore its money but
the bank refused to
do so.

payments to PCIB. Citibank however argues that

the checks were indorsed by PCIB to Citibank

HELD:

and that the latter has nothing to do but to pay it.

The Supreme Court cited Section 62 of the
Negotiable Instruments Law which mandates the
Citibank, as an acceptor of the checks, to engage
in paying the checks according to the tenor of the
acceptance which is to deliver the payment to the
payees account only.
But the Supreme Court ruled that in the
consolidated cases, that PCIB and Citibank are
not the only negligent parties. Ford is also

The petitioner doesnt have a course of action

against the bank. To be entitled to damages,
petitioner has the burden of proving negligence on the
part of the bank for failure to detect the discrepancy in
the signatures on the checks. It is incumbent upon
petitioner to establish the fact of forgery. Curiously
though, petitioner failed to supply additional signature
specimens as requested by the NBI. The bank was
not also remiss in performance of its duties, it
practices due diligence in encashing checks. The
bank didnt

NEGO Forgery Cases APR118

have any hint of the modus operandi of Eugenio

as she was a regular customer, designated by the
petitioner himself to transact on his behalf.
It was petitioner who was negligent in this case. He
failed to examine his bank statements and this
was the proximate cause of his own damage.
Because of this negligence, he is precluded from
setting up the defense of forgery with regard the
checks.

(11)
Samsung
Construction
Corporation, Inc. v. Far East Bank
and Trust Company
G.R. No. 129015; August 13, 2004;
Tinga, J.
FACTS:
Samsung Construction held an
account with Far East Bank.
One day, a check worth P999,500
payable to case was presented by
a certain Roberto Gonzaga to the

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Makati Branch of Far East Bank.

The check was certified to be true
by Jose Sempio, the assistant
accountant of Samsung, who also
happened to be present in the bank
during the time that the check was
presented.
Three bank personnel (teller,
Assistant Cashier, and another
bank officer) examined the check
and
compared
the
signature
appearing on the check with the
specimen signatures of Samsungs
President Jong. After ascertaining
that the signature was genuine,
and that the account had sufficient
funds, Gonzaga was asked to
submit 3 proof of his identity.
Eventually, Gonzaga was able to
encash the check.
When Samsung discovered the
unauthorized withdrawal, it filed a
complaint
against
FEBTC
for
violation of Sec 23 of the
Negotiable Instruments Law.
During the trial, both parties
presented their respective expert
witnesses:
o Samsung
presented
NBI
Document
Examiner
Roda
Flores.
o FEBTC presented PNP Crime
Laboratory document Examiner
Rosario Perez.
RTC rendered judgment in favor of
Samsung, holding FEBTC liable. It
gave more credence to the
testimony of NBI Examiner Flores.
CA reversed the RTC and absolved
FEBTC from any liability.
o The contradictory findings of
NBI and PNP created doubt as to
the whether there was forgery.
o Assuming there was forgery, it
was due to the negligence of
Samsung.
o As held in PNB v. National City
Bank of NY, as between 2

NEGO Forgery Cases APR118

innocent persons, loss would be

borne by the negligent party.
Samsung 45 to SC.

ISSUES/HELD:
WON the check
was forged YES
WON Samsung could
set up the defense of forgery in
Sec. 23 YES
RULING:
Petition granted.
RATIO:
WON the check was forged YES
(The details of the forgery are not
really important to the lesson. The
Court just needed to answer this issue
before the 2nd issue can be resolved.)
The testimony of the NBI Examiner
was more credible because even
the testimony of the PNP Examiner
reveals that there are a lot of
differences in the questioned
signature as compared to the
standard signature specimen. The
PNP Examiner tried to excuse the
differences by asserting that
there were mere variations, but
such conclusion was not supported
by sufficient cogent reasons.
o The most telling difference
between the question and
genuine signatures examined
by the PNP is in the final upward
stroke in the signature, or the
point to the short stroke of the
terminal in the capital letter L.
The difference was glaring, yet
the PNP Examiners brushed this
off as a mere variation.
The NBI Examiner testified that
there is a free rapid continuous
execution or stroke as shown by
the tampering terminal stroke of
the
signatures
whereas
the
questioned signature is a hesitating
slow drawn execution stroke.
The Court also compared the
qualifications of the NBI Examiner
to that the PNP Examiner. The NBI
Examiner was more experienced

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(15 years) and had examined more
than 50,000-55,000 questioned
documents, as opposed to the PNP
Examiner who admitted to having
examined
only
around
500
documents.

WON Samsung could set up the

defense of forgery in Sec. 23
YES
The general rule is to the effect
that a forged signature is wholly
inoperative, and payment made
through or under such signature is
ineffectual or does not discharge
the instrument. If payment is
made, the drawee cannot charge it
to the drawers account. The
traditional justification for the
result is that the drawee is in a
superior position to detect a
forgery because he has the
makers signature and is expected
to know and compare it.
Under Sec 23 of the Negotiable
Instruments Law, forgery is a real
or absolute defense by the party
whose signature is forged. Such
liability attaches even if the bank
exerts due diligence and care in
preventing such faulty discharge.
Although the Court recognized that
Sec 23 bars a party from setting up
the defense of forgery if it is guilty
of negligence, it was unable to
conclude that Samsung was guilty
of negligence.
o The bare fact that the forgery
was committed by an employee
of the party whose signature
was forged cannot necessarily
imply
that
such
partys
negligence was the cause for
the forgery.
o Admittedly, the record does not
establish
what
measures
Samsung
employed
to
safeguard its blank checks.
Jongs testimony regarding the
use of a safety box by Kyu was

NEGO Forgery Cases APR118

considered hearsay. But when

CA ruled that Samsung was
negligent, it did not really
explain how and why.
o In the absence of evidence to
the
contrary,
the
court
concluded that there was no
negligence, the presumption
being that every person takes
ordinary care of his concerns.
The
CA
Decision
extensively
discussed the FEBTCs efforts in
establishing
that
there
no
negligence on its part in the
acceptance and payment of the
forged check. However, the degree
of diligence exercised by the bank
would be irrelevant if the drawer is
not precluded from setting up the
defense of forgery under Sec 23 by
his own negligence.

WON
FEBTC
exercised
extraordinary diligence required
of it by the situation NO
(This is irrelevant but the Court
nevertheless made a comment since it
was brought up by FEBTC.)
The fact that the check was made
out in the amount of nearly 1M is
unusual enough ti require a higher
degree of caution on the part of the
bank. FEBTC confirmed this through
its own internal procedures. As the
amount increases, the number of
officers who need to approve it also
increases.
Not only did the amount nearly
total 1M, it was payable to cash.
This should have aroused suspicion
of the banks, as it is not ordinary

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business practice for a check for
such large amount to be made
payable to case or to bearer,
instead of to the order of a
specified person.
Gonzaga did not carry any written
proof that he was authorized by
Samsung to encash the check.
FEBTC Senior Assistant Cashier
admitted that the bank tried, but
failed, to contact Jong over the
phone to verify. The bank just
heavily relied on the say-so of
Sempio. FEBTC Accountant Velez
even admitted that she did not
personally know Sempio, and had
met Sempio for the 1st time only on
the day the check was enchased.