BANK OF THE PHILIPPINE ISLANDS VS.

CASA Even with respect to documentary evidence, the best

MONTESSORI AND LEONARDO YABUT evidence rule applies only when the contents of a
G.R. NO. 149454, MAY 28, 2004 document -- such as the drawers signature on a check --
is the subject of inquiry.

FACTS: ISSUE 2:

CASA Montessori International opened a current
account with BPI with CASAs President Ms. Ma. Carina
C. Lebron as one of its authorized signatories. In 1991,
after conducting an investigation, plaintiff discovered
that nine (9) of its checks had been encashed by a
certain Sonny D. Santos since 1990 in the total amount
of P782,000.00. It turned out that Sonny D. Santos with
account at BPIs Greenbelt Branch [was] a fictitious
name used by third party defendant Leonardo T. Yabut
who worked as external auditor of CASA. Third party
defendant voluntarily admitted that he forged the
signature of Ms. Lebron and encashed the checks.
The PNP Crime Laboratory conducted an
examination of the nine (9) checks and concluded that
the handwritings thereon compared to the standard
signature of Ms. Lebron were not written by the latter.
On March 4, 1991, plaintiff filed the herein
Complaint for Collection with Damages against
defendant bank.
ISSUE 1:
Is BPI liable as the drawee bank for allowing
payment on the checks to a wrongful and fictitious
payee?
HELD:
YES. BPI -- the drawee bank -- becomes liable to
its depositor-drawer for allowing payment on the
checks to a wrongful and fictitious payee. Since the
encashing bank is one of its branches, BPI can easily go
after it and hold it liable for reimbursement. It may not
debit the drawers account and is not entitled to
indemnification from the drawer. In both law and
equity, when one of two innocent persons must suffer
by the wrongful act of a third person, the loss must be
borne by the one whose negligence was the proximate
cause of the loss or who put it into the power of the
third person to perpetrate the wrong.
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 own funds,
and cannot ordinarily charge the amount so paid to the
account of the depositor whose name was forged.

Was there forgery under the Negotiable

Instruments Law (NIL)?

HELD:

YES. Forgery cannot be presumed. It must be

established by clear, positive and convincing evidence.
Under the best evidence rule as applied to documentary
evidence like the checks in question, no secondary or
substitutionary evidence may inceptively be introduced,
as the original writing itself must be produced in court.
But when, without bad faith on the part of the offeror,
the original checks have already been destroyed or
cannot be produced in court, secondary evidence may
be produced. Without bad faith on its part, CASA
proved the loss or destruction of the original checks
through the Affidavit of the one person who knew of
that fact- Yabut. He clearly admitted to discarding the
paid checks to cover up his misdeed. In such a situation,
secondary evidence like microfilm copies may be
introduced in court.