PNB v.

Quimpo
G.R. No. L-53194 – March 14, 1988
J. Gancayco

Topic: Defenses and equities – forgery – In general

Doctrine: 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 change the amount so paid to the account of the depositor whose
name was forged.
Petitioner: Philippine National Bank
Respondents: Honorable Romulo Quimpo, and Francisco Gozon II

Case Summary: Gozon was accomplishing his errands at the Caloocan City branch of PNB. He left his checkbook in the car with
his longtime friend and trusted confidante. Santos tore a check from the book, placed P5,000, forged Gozon’s signature and
thereafter encashed the check. Upon reaching the Supreme Court, the Court declared that there was negligence on the part of the
bank for it is bound to know the signatures of its customers. Gozon’s regular signature and that one forged of Santos were
noticeably different and this should have put the bank on inquiry, but it did not. 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
change the amount so paid to the account of the depositor whose name was forged

Facts:
 July 3, 1973: Gozon, who was a depositor of the Caloocan City Branch of PNB went to the bank accompanied by his
friend Ernesto Santos
o He left Santos in the car while he transacted business in the bank
o Santos saw that Gozon left his checkbook in the car  he took a check; filled it up for the amount of P5,000,
forged the signature of Gozon, and thereafter encashed the check in the bank on the same day!
 Account was debited
 Upon receipt of statement, Gozon asked the bank to return the P5,000 since the signature on the check was forged 
bank refused
 February 1, 1974: Gozon filed a complaint, and Santos was thereafter apprehended  he admitted upon investigation
that he stole the check and that he forged his signature
 Gozon filed the complaint for recovery of the P5,000  judgment was rendered in favor of Gozon
o Bank then filed a petition for review  the bank contends that Gozon was negligent in leaving his checkbook
in the car; that this act was the proximate cause of the loss of the money

Issues + Held:
1. W/N Gozon was negligent and therefore liable for the loss of his own money – NO
 The Court reproduced the parts of the lower court decision:
o “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 change the amount so paid to the
account of the depositor whose name was forged.”
o This rule is necessary to the circulation of drafts and checks and is based upon the presumed negligence of the
drawee in failing to meet its obligation to know the signature of its correspondent
 If the paper comes to drawee in the regular course of business, and he, having the opportunity to
ascertain the character of the check, and thereafter pronounces it as valid and pays for it  NOT only
a question of payment under mistake, but payment in neglect of duty which the commercial law
places upon him, and the result of his negligence must rest upon him
o The bank interposes the defense that it exercised diligence in accordance with the accepted norms of banking
practice when it accepted the check
 They said that the check had to pass scrutiny by a signature verifier
 Court declared that the comparison of the signatures on Gozon’s regular checks and the forged checks
would immediately show the negligence of the employees of the bank
 Even a not too careful comparison would immediately arrest one’s attention
 The prime duty of a bank is to ascertain the genuineness of the signature of the drawer or the
depositor on the check being encased  it is expected to use reasonable business prudence in
accepting and cashing a check presented to it
o Even NBI handwriting expert marked many differences between the signature of Gozon and Santos
  Obviously, bank was negligent in encashing the forged check without carefully examining the
signature which shows marked variation from the genuine signature of Gozon
 With regard to the allegation of bank that Gozon was negligent in leaving the checkbook in the car
o Court agreed with the lower court which said that his act of leaving the checkbook was not negligent since he
only did so for a short while, and with his long-time classmate and friend whom he trusted  he had no reason
to suspect that Santos would breach that trust

Ruling: WHEREFORE, the petition is DISMISSED for lack of merit with costs against petitioner.