[G.R. No. 149454. May 28, 2004] BANK OF THE PHILIPPINE ISLANDS, petitioner, vs.

CASA
MONTESSORI INTERNATIONALE and LEONARDO T. YABUT, respondents.
[G.R. No. 149507. May 28, 2004] CASA MONTESSORI INTERNATIONALE, petitioner, vs. BANK OF THE
PHILIPPINE ISLANDS, respondent.
Facts: Plaintiff CASA Montessori International opened a current account with BPI. In 1991, plaintiff discovered that
nine (9) of its checks had been encashed by a certain Sonny D. Santos since 1990 in the total amount
ofP782,000.00. 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.
On March 4, 1991, plaintiff filed the herein Complaint for Collection with Damages against defendant bank
praying that the latter be ordered to reinstate the amount of P782,500.00 in the current and savings accounts of
the plaintiff with interest at 6% per annum.
Issues: First, was there forgery under the Negotiable Instruments Law (NIL)?
Second, were any of the parties negligent and therefore precluded from setting up forgery as a defense?
Third, should moral and exemplary damages, attorneys fees, and interest be awarded? (Related Issue)
Ruling: First: There was a showing of negligence under Section 23 of the NIL
Section 23. Forged signature; effect of. -- 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 x x x 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 this provision, a forged signature is a real or absolute defense, and a person whose signature on a
negotiable instrument is forged is deemed to have never become a party thereto and to have never consented to
the contract that allegedly gave rise to it.
The counterfeiting of any writing, consisting in the signing of anothers name with intent to defraud, is forgery.
In the present case, we hold that there was forgery of the drawers signature on the check.
Second: Negligence is attributable to BPI alone.
A banking business is impressed with public interest, of paramount importance thereto is the trust and
confidence of the public in general. Consequently, the highest degree of diligence is expected, and high standards
of integrity and performance are even required, of it. BPI, despite claims of following its signature verification
procedure, still failed to detect the eight instances of forgery. Its negligence consisted in the omission of that
degree of diligence required of a bank. It cannot now feign ignorance, for very early on we have already ruled that
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.
Third: Moral damages were denied for lack of showing of bad faith on the part of BPI
As a general rule, a corporation -- being an artificial person without feelings, emotions and
senses, and having existence only in legal contemplation -- is not entitled to moral damages, because
it cannot experience physical suffering and mental anguish. However, for breach of the fiduciary
duty required of a bank, a corporate client may claim such damages when its good reputation is
besmirched by such breach, and social humiliation results therefrom. CASA was unable to prove that
BPI had debased the good reputation of, and consequently caused incalculable embarrassment to,
the former. CASAs mere allegation or supposition thereof, without any sufficient evidence on
record, is not enough.
Exemplary damages were also denied. However, attorneys fees and interests were granted.
WHEREFORE, the Petition in GR No. 149454 is hereby DENIED, and that in GR No. 149507 PARTLY GRANTED.
The assailed Decision of the Court of Appeals is AFFIRMED with modification: BPI is held liable for P547,115, the
total value of the forged checks less the amount already recovered by CASA from Leonardo T. Yabut, plus interest
at the legal rate of six percent (6%) per annum -- compounded annually, from the filing of the complaint until paid
in full; and attorneys fees of ten percent (10%) thereof, subject to reimbursement from Respondent Yabut for the
entire amount, excepting attorneys fees. Let a copy of this Decision be furnished the Board of Accountancy of the
Professional Regulation Commission for such action as it may deem appropriate against Respondent Yabut. No
costs.

[G.R. No. 141994. January 17, 2005] FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO
MEDICAL AND EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM) and
ANGELITA F. AGO, respondents
Facts: Expos is a radio documentary program hosted by Carmelo Mel Rima (Rima) and Hermogenes Jun Alegre
(Alegre). Expos is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc.
(FBNI).
In the morning of 14 and 15 December 1989, Rima and Alegre exposed various alleged complaints from
students, teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine
(AMEC) and its administrators. Claiming that the broadcasts were defamatory, AMEC and Angelita Ago (Ago), as
Dean of AMECs College of Medicine, filed a complaint for damages against FBNI, Rima and Alegre on 27 February
1990.
The complaint alleged that AMEC is a reputable learning institution. With the supposed expose, FBNI, Rima
and Alegre transmitted malicious imputations, and as such, destroyed plaintiffs (AMEC and Ago) reputation. AMEC
and Ago included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision
of its employees, particularly Rima and Alegre.
Rima and Alegre contended that the broadcasts against AMEC were fair and true, and that they were plainly
impelled by a sense of public duty to report the goings-on in AMEC, which is an institution imbued with public
interest. On FBNIs behalf, they claimed that they exercised due diligence in the selection of Rima and Alegre.
Furthermore, FBNI claimed that before hiring a broadcaster, the broadcaster should (1) file an application; (2) be
interviewed; and (3) undergo an apprenticeship and training program after passing the interview. FBNI likewise
claimed that it always reminds its broadcasters to observe truth, fairness and objectivity in their broadcasts and to
refrain from using libelous and indecent language. Moreover, FBNI requires all broadcasters to pass the Kapisanan
ng mga Brodkaster sa Pilipinas (KBP) accreditation test and to secure a KBP permit.
Issues: First: WHETHER THE BROADCASTS ARE LIBELOUS;
Second: WHETHER AMEC IS ENTITLED TO MORAL DAMAGES; (Related Issue)
Ruling: First: The broadcasts are libelous.
There is no question that the broadcasts were made public and imputed to AMEC defects or circumstances
tending to cause it dishonor, discredit and contempt. Rima and Alegres remarks such as greed for money on the
part of AMECs administrators; AMEC is a dumping ground, garbage of xxx moral and physical misfits; and AMEC
students who graduate will be liabilities rather than assets of the society are libelous per se. Taken as a whole, the
broadcasts suggest that AMEC is a money-making institution where physically and morally unfit teachers abound.
Every defamatory imputation is presumed malicious. Rima and Alegre failed to show adequately their good
intention and justifiable motive in airing the supposed gripes of the students. As hosts of a documentary or public
affairs program, Rima and Alegre should have presented the public issues free from inaccurate and misleading
information.
Second: AMEC is entitled to moral damages.
A juridical person is generally not entitled to moral damages because, unlike a natural person, it
cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to
justify the award of moral damages. However, the Courts statement in Mambulao that a corporation
may have a good reputation which, if besmirched, may also be a ground for the award of moral
damages is an obiter dictum.
Nevertheless, AMECs claim for moral damages falls under item 7 of Article 2219 of the Civil Code.
This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any
other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or
juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or
any other form of defamation and claim for moral damages.
Moreover, where the broadcast is libelous per se, the law implies damages. In such a case, evidence of an
honest mistake or the want of character or reputation of the party libeled goes only in mitigation of
damages. Neither in such a case is the plaintiff required to introduce evidence of actual damages as a condition
precedent to the recovery of some damages.[47] In this case, the broadcasts are libelous per se. Thus, AMEC is
entitled to moral damages.

However, we find the award of P300,000 moral damages unreasonable. The record shows that even though
the broadcasts were libelous per se, AMEC has not suffered any substantial or material damage to its reputation.
Therefore, we reduce the award of moral damages from P300,000 to P150,000.
WHEREFORE, we DENY the instant petition. We AFFIRM the Decision of 4 January 1999 and Resolution of 26
January 2000 of the Court of Appeals in CA-G.R. CV No. 40151 with the MODIFICATION that the award of moral
damages is reduced from P300,000 to P150,000 and the award of attorneys fees is deleted. Costs against
petitioner.