Natividad Gempesaw vs Court ofAppeals

218 SCRA 682 – Mercantile Law – Negotiable Instruments Law – Liabilities of Parties –Forgery – Forged
Indorsements

Natividad Gempesaw is a businesswoman who entrusted to her bookkeeper, Alicia Galang,the

preparation of checks about to be issued in the course of her business transactions.From 1984 to 1986,
82 checks amounting to P1,208,606.89, were prepared and weresupposed to be delivered to
Gempesaw’s clients as payees named thereon. However,through Galang, these checks were never
delivered to the supposed payees. Instead, thechecks were fraudulently indorsed to Alfredo Romero
and Benito Lam.

ISSUE:

Whether or not the bank should refund the money lost by reason of the forgedindorsements.

HELD:

No. Gempesaw cannot set up the defense of forgery by reason of her negligence. As a rule, a drawee
bank (in this case the Philippine Bank of Communications) who haspaid a check on which an
indorsement has been forged cannot charge the drawer’s(Gempesaw’s) account for the amount of said
check. An exception to this rule is where thedrawer is guilty of such negligence which causes the bank to
honor such a check or checks.If a check is stolen from the payee, it is quite obvious that the drawer
cannot possiblydiscover the forged indorsement by mere examination of his cancelled check. A
differentsituation arises where the indorsement was forged by an employee or agent of the drawer,or
done with the active participation of the latter.The negligence of a depositor which will prevent recovery
of an unauthorized payment isbased on failure of the depositor to act as a prudent businessman would
under thecircumstances. In the case at bar, Gempesaw relied implicitly upon the honesty and loyaltyof
Galang, and did not even verify the accuracy of amounts of the checks she signedagainst the invoices
attached thereto. Furthermore, although she regularly received her bank statements, she apparently did
not carefully examine the same nor the check stubsand the returned checks, and did not compare them
with the same invoices. Otherwise, shecould have easily discovered the discrepancies between the
checks and the documentsserving as bases for the checks. With such discovery, the subsequent forgeries
would nothave been accomplished. It was not until two years after Galang commenced her
fraudulentscheme that Gempesaw discovered that eighty-two (82) checks were wrongfully charged
toher account, at which she notified the Philippine Bank of Communications