Case Summary (G.R. No. 149454)
Key Dates
• Account opened: November 8, 1982
• Forged withdrawals: March–December 1990
• Complaint filed: March 4, 1991
• RTC decision: February 16, 1999
• CA decision: March 23, 2001; Resolution: August 17, 2001
• Supreme Court decision: May 28, 2004
Applicable Law
• 1987 Philippine Constitution (Article III, Sections 12 and 17)
• Negotiable Instruments Law (Act No. 2031, Section 23)
• Civil Code provisions on obligations, negligence, damages, and interest
• General Banking Law of 2000 (Republic Act No. 8791)
Facts
CASA maintained Current Account No. 0291-0081-01 with BPI, listing Lebron among its signatories. Between April and December 1990, Yabut, using a fictitious payee, encashed nine checks totaling ₱782,600 by forging Lebron’s signature. CASA discovered the discrepancy in 1991; PNP laboratory examinations confirmed the forgeries. Yabut admitted forging and discarding the originals to conceal his fraud.
Procedural History
The Regional Trial Court (RTC) rendered judgment in favor of CASA, ordering BPI to reinstate the full amount. On appeal, the Court of Appeals (CA) affirmed liability but apportioned the loss equally between BPI and CASA, with Yabut ordered to reimburse BPI for half the amount. Both parties’ motions for reconsideration were denied.
Issues
- Whether there was forgery under the Negotiable Instruments Law and whether proof met the “clear, positive, and convincing” standard.
- Whether any party’s negligence barred the forgery defense.
- Whether moral damages, exemplary damages, attorney’s fees, and interest should be awarded.
Forgery as Absolute Defense
Under Section 23 of the NIL, a forged signature is wholly inoperative and constitutes an absolute defense. Yabut’s voluntary affidavit and PNP reports provided clear, positive, and convincing proof. His admission, made privately and without coercion, did not violate custodial-investigation or self-incrimination rights under the 1987 Constitution. Secondary evidence (microfilm copies) was admissible given the non-production of originals through no bad faith on CASA’s part. Lebron’s unchallenged testimony further corroborated the forgery.
Negligence and Bank Liability
Banks owe the highest diligence in verifying depositor signatures. BPI’s failure to detect eight forgeries demonstrated negligence. The ten-day notice on monthly statements is a confirmation request, not a condition precedent or waiver; CASA’s silence did not estop it from challenging wrongful withdrawals. Since BPI’s negligence was the proximate cause, it must bear the loss and cannot debit CASA’s account or seek indemnity from CASA.
Auditor’s Role and CASA’s Reliance
As an independent auditor, Yabut owed CASA a duty to perform reconciliations and detect irregularities. CASA reasonably relied on his work papers and monthly reconciliations prepared under generally accepted auditing standards. Yabut’s fraud did not constitute contributory negligence by CASA, which
Case Syllabus (G.R. No. 149454)
Procedural History
- Two petitions for review under Rule 45 (G.R. Nos. 149454 & 149507) challenge the Court of Appeals’ March 23, 2001 Decision and August 17, 2001 Resolution in CA-GR CV No. 63561.
- The CA affirmed the RTC’s finding of forgery, apportioned loss equally between BPI and CASA, ordered Yabut to reimburse BPI for half of the forged‐check value, and denied attorney’s fees, moral and exemplary damages, and interest.
- CASA and BPI both moved for reconsideration in the CA; all motions were denied.
Facts
- On November 8, 1982, CASA opened Current Account No. 0291-0081-01 at BPI, with Ms. Carina C. Lebron as one of its authorized signatories.
- In 1991, CASA discovered that nine checks totaling ₱782,600 had been encashed since March 1990 by “Sonny D. Santos,” a fictitious payee.
- Leonardo T. Yabut—CASA’s external auditor—voluntarily admitted forging Ms. Lebron’s signature and encashing the checks.
- The PNP Crime Laboratory reported that the handwritings on the checks did not match Lebron’s genuine signature.
- On March 4, 1991, CASA sued BPI for reinstatement of ₱782,500 plus 6% interest per annum.
- The RTC ruled in favor of CASA on February 16, 1999. The CA modified that ruling by apportioning liability and denying ancillary claims.
Issues
- Was there forgery of the drawer’s signature under Section 23 of the Negotiable Instruments Law (NIL)?
- Did negligence by either BPI or CASA preclude them from setting up forgery as a defense or claim?
- Should moral and exemplary damages, attorney’s fees, and interest be awarded to CASA?
Real Defense: Forged Signature
- Section 23 NIL treats a forged signature as “wholly inoperative” and an absolute defense against enforcement.
- Both RTC and CA found that Yabut voluntarily admitted forging Lebron’s signature and that the PNP examination corroborated non-match of handwriting