CASE #8, BATCH 2

BANK OF THE PHILIPPINE ISLANDS V. CASA MONTESSORI

INTERNATIONALE

G.R. No. 149454

May 28, 2004

Facts:

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:
Whether or not there forgery under the Negotiable Instruments Law.

Ruling:
 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.
CASE #9, BATCH 2

SAMSUNG CONSTRUCTION CO., INC V. FAR EAST BANK AND TRUST CO.

G.R. No. 129015

Aug.15, 2003

Facts:

Petitioner maintained a current account with respondent bank. The sole

signatory to petitioner’s account was Jong Kyu Lee ("Jong"), its Project Manager,
while the checks remained in the custody of the company’s accountant, Kyu
Yong Lee ("Kyu"). A certain Roberto Gonzaga presented for payment FEBTC
Check to the bank. The check, payable to cash and drawn against Samsung
Construction’s current account, was in the amount of P999, 500.00. After the
bank teller ascertained that there were enough funds to cover the check and
compared the signature as contained in the specimen signature, the bank teller
forwarded the check with two other bank branch officers, who counterchecked
the signature. One of the bank officers noticed Sempio, the assistant accountant
of Samsung Construction, was also in the bank and when asked, Sempio
vouched for the genuineness of Jong’s signature. The following day, Kyu
examined the balance of the bank account and discovered that a check
amounting to P999, 500.00 had been encashed. Aware that he had not prepared
such a check for Jong’s signature, Kyu perused the checkbook and found that
the last blank check was missing. He reported the matter to Jong, who then
proceeded to the bank. Jong learned of the encashment of the check, and
realized that his signature had been forged. Samsung Construction filed before
the RTC against respondent bank for violation of Section 23 of the Negotiable
Instruments Law who ruled in favor of Samsung Construction while the CA
reversed the RTC Decision and absolved FEBTC from any liability. The Court of
Appeals invoked the ruling in PNB v. National City Bank of New York that, if a
loss, which must be borne by one or two innocent persons, can be traced to the
neglect or fault of either, such loss would be borne by the negligent party, even if
innocent of intentional fraud. (equity principle).

Issue:
Whether or not Samsung Construction was precluded from setting up the
defense of forgery under Section 23 of the Negotiable Instruments Law.

Ruling:
No. On the premise that Jong’s signature was indeed forged, FEBTC is
liable for the loss since it authorized the discharge of the forged check. Such
liability attaches even if the bank exerts due diligence and care in preventing
such faulty discharge. Forgeries often deceive the eye of the most cautious
experts; and when a bank has been so deceived, it is a harsh rule which compels
it to suffer although no one has suffered by its being deceived. The forgery may
be so near like the genuine as to defy detection by the depositor himself, and yet
the bank is liable to the depositor if it pays the check. The Court recognize that
Section 23 of the Negotiable Instruments Law bars a party from setting up the
defense of forgery if it is guilty of negligence. Yet, we are unable to conclude that
Samsung Construction was guilty of negligence in this case. The appellate court
failed to explain precisely how the Korean accountant was negligent or how more
care and prudence on his part would have prevented the forgery. We cannot
sustain this "tar and feathering" resorted to without any basis. When the bank
receives the deposit, it impliedly agrees to pay ONLY UPON THE DEPOSITOR’S
ORDER. When the Bank pays a check, on which the depositor’s signature is a
forgery, it has failed to comply with its contract in this respect.
CASE #10, BATCH 2

MONTINOLA VS. PHILIPPINE NATIONAL BANK

G.R. No. L-2861
Feb. 26, 1951

Facts:
In 1942, Mariano Ramos, as disbursing officer of an army division of
United States Armed Forces in the Far East (USAFFE) and based in Misamis
Oriental, procured cash advances in the amount of Php800,000 with the
Provincial Treasurer (PT) of Lanao for the use of USAFFE in Cagayan de
Misamis. PT-Lanao did not have that amount in cash so he gave Ramos
P300,000 in emergency notes and a check for P500,000. Thereafter, Ramos
presented the check to their PT in their province for encashment. PT-Misamis did
not have enough cash to cover the check so he gave Ramos P400,000 in
emergency notes and a check for P100,000 drawn on the PNB as he had
previously deposited P500,000 emergency notes in the PNB branch in Cebu and
thus he expected to have the check issued by him cashed in Cebu against said
deposit. Ramos was unable to encash said check for he was captured by the
Japanese and later made a prisoner of war. After his release, sometime in 1945,
Ramos allegedly indorsed the check to herein plaintiff-appellant. According to
Montinola’s version of the circumstances that roused the present controversy,
Ramos, who then was no longer connected with the USAFFE but already a
civilian who needed the money only for himself and his family, offered to sell the
check to him. But as stated by Ramos, he and Montinola agreed to the sale of
said check and the agreement regarding the transfer of the check was that he
was selling only P30,000 of it and for such reason, at the back of the document
he wrote in longhand: Pay to the order of Enrique P. Montinola P30,000 only.
The balance to be deposited in the Philippine National Bank to the credit of M. V.
Ramos. Ramos further said that in exchange for this assignment of P30,000,
Montinola would pay him P90,000 in Japanese military notes but that the latter
gave him only two checks of P20,000 and P25,000, leaving a balance unpaid of
P45,000. The writing made at the back of the check was, however, mysteriously
obliterated and in its place, a supposed indorsement appearing on the back of
the check was made for the whole amount of the check.

Issue:
Whether or not the check was legally negotiated within the meaning of the
NIL in view of the fact that the instrument was indorsed for a lesser amount?

Ruling:
No. Section 32 of the NIL provides that "the indorsement must be an
indorsement of the entire instrument. An indorsement which purports to transfer
to the indorsee a part only of the amount payable (as in this case) does not
operate as a negotiation of the instrument." As to what was really written at the
back of the check which Montinola claims to be a full indorsement of the check,
the Court agreed with trial court that the original writing of Ramos on the back of
the check was to the effect that he was assigning only P30,000 of the value of
the document and that he was instructing the bank to deposit to his credit the
balance. Montinola may therefore not be regarded as an indorsee. At most he
may be regarded as a mere assignee of the P30,000 sold to him by Ramos, in
which case, as such assignee, he is subject to all defenses available to the
drawer Provincial Treasurer of Misamis Oriental and against Ramos.
CASE #11, BATCH 2

PHILIPPINE NATIONAL BANK v. COURT OF APPEALS

G.R. No. 108052
July 24, 1996

Facts:
PNB, herein petitioner, doubly credited the private respondent’s account
erroneously. Petitioner then demanded the private respondent to return the
amount in excess, equal to P34,340.58. Thereafter, remittances from abroad to
the private respondent were coursed through petitioner PNB. Without his
knowledge and consent, the bank deducted P34,340.58 from the remittances, by
virtue of compensation. Private respondent averred contending that the bank
does not have a legal justification to make compensation on the remittances. The
trial and the CA ruled in favor of the private respondent and ordered the amount
taken by the petitioner to be returned the private respondent.

Issue:
Whether or not a local correspondent bank can make compensation
against remittances coursed through it.

Ruling:
No. The Court affirms the decision of the lower courts. The trial court
correctly ruled that the petitioner and the private respondent are not debtors and
creditors of each other. As to the relationship created by the telexed fund
transfers from abroad: A contract between a foreign bank and local bank asking
the latter to pay an amount to a beneficiary is a stipulation pour autrui. the parties
are not both principally bound with respect to the $2,627.11 from Jeddah; neither
are they at the same time principal creditor of the other. Therefore, as matters
stand, the parties’ obligations are not subject to compensation or set off under
Art. 1279 of the Civil Code, for the reason that the defendant is not a principal
debtor nor, is the plaintiff a principal creditor insofar as the amount of $2,627.11
is concerned. They are debtor and creditor only with respect to the double
payments; but are trustee-beneficiary as to the fund transfer of $2,627.11.