Gempesaw vs.

CA
G.R. No. 92244. February 9, 1993. Facts: Natividad O. Gempesaw owns and operates four gro ery stores and t!at s!e maintains a !e "ing a ount wit! t!e #!i$ippine %an" of &ommuni ations 'drawee %an"( for easier payment of debts to !er supp$iers. )er ustomary pra ti e were as fo$$ows* &!e "s were prepared by !er trusted boo""eeper, +$i ia Ga$ang, &!e "s, toget!er wit! t!e invoi e re eipts ref$e ting !er ob$igations wit! t!e supp$iers, were submitted to !er for signature, -!at s!e signs a$$ t!e !e "s wit!out bot!ering to verify t!e a ura y of t!e !e "s against t!e orresponding invoi es onsidering t!e trust and onfiden e s!e reposed upon !er boo""eeper, .ssuan e and de$ivery of t!e !e "s to t!e payees were $eft to t!e boo""eeper, t!at s!e did not verify w!et!er !e "s were a tua$$y de$ivered to t!eir respe tive payees. +$t!oug! t!e drawee %an" notified !er of a$$ !e "s presented to and paid by t!e ban", Gempesaw did not verify t!e orre tness of t!e returned !e "s nor if t!e payees a tua$$y re eived t!e !e "s in payment for t!e supp$ies s!e re eived. Gempesaw issued /2 !e "s in favor of severa$ supp$iers for t!e span of 2 years and t!e drawee ban" debited t!e tota$ amount of #1,20/,101./9 against !er !e "ing

a ount sin e a$$ of t!e issued !e "s were !onored by t!e drawee ban". -!ese !e "s were a$$ rossed !e "s. .t was on$y after t!e $apse of more t!an 2 years t!at Gempesaw found out about t!e fraudu$ent manipu$ations of !er boo""eeper. Gempesaw made a written demand on respondent drawee %an" to redit !er a ount wit! t!e money va$ue of t!e /2 !e "s tota$$ing #1,20/,101./9 for !aving been wrongfu$$y !arged against !er a ount. 2rawee %an" refused to grant !er demand. +bout 30 of t!e payees w!ose names were spe ifi a$$y written on t!e !e "s testified t!at t!ey did not re eive nor even see t!e sub3e t !e "s and t!at t!e indorsements appearing at t!e ba " of t!e !e "s were not t!eirs. .t was $earned t!at a$$ t!e /2 !e "s wit! forged signatures of t!e payees were broug!t to 4rnest 5. %oon, &!ief + ountant of drawee w!o, wit!out aut!ority t!erefor, a epted t!em a$$ for deposit to t!e redit and6or in t!e a ounts of +$fredo 7. Romero and %enito 5am. -!e Regiona$ -ria$ &ourt, tried t!e ase and rendered a de ision dismissing t!e omp$aint as we$$ as t!e drawee %an"8s ounter $aim. On appea$, t!e &ourt of +ppea$s in a de ision affirmed t!e de ision of t!e R-& on two grounds, name$y '1( t!at Gempesaw9s gross neg$igen e in issuing t!e !e "s was t!e pro:imate ause of t!e $oss and '2( assuming t!at t!e ban" was a$so

neg$igent, t!e $oss must nevert!e$ess be borne by t!e party w!ose neg$igen e was t!e pro:imate ause of t!e $oss. )en e, a petition for review was fi$ed before ;&. Issue: <!et!er or not t!e petitioner an raise t!e defense of forgery, t!erefore t!e drawee ban" a$one s!a$$ bear t!e $oss. Ruling: Gempesaw precluded from using forgery as a defense; Gempesaws negligence was proximate cause of er loss. )ad Gempesaw e:amined !er re ords more arefu$$y, s!e wou$d !ave noti ed dis repan ies. )ad Gempesaw been more vigi$ant in going over !er urrent a ount by ta"ing arefu$ note of t!e dai$y reports made by t!e drawee %an" on !er issued !e "s, or at $east made random s rutiny of !er an e$$ed !e "s returned by drawee %an" at t!e $ose of ea ! mont!, s!e ou$d !ave easi$y dis overed t!e fraud being perpetrated by +$i ia Ga$ang, and ou$d !ave reported t!e matter to t!e drawee %an". -!e drawee %an" t!en ou$d !ave ta"en immediate steps to prevent furt!er ommission of su ! fraud. -!us, Gempesaw8s neg$igen e was t!e pro:imate ause of !er $oss. +nd sin e it was !er neg$igen e w!i ! aused t!e drawee %an" to !onor t!e forged !e "s or prevented it from re overing t!e amount it !ad a$ready paid on t!e !e "s, Gempesaw annot now omp$ain s!ou$d t!e ban" refuse to re redit

!er a ount wit! t!e amount of su ! !e "s. =nder ;e tion 23 of t!e N.5, s!e is now pre $uded from using t!e forgery to prevent t!e ban"8s debiting of !er a ount. ;e tion 23 of t!e N.5 provides t!at >w!en a signature is forged or made wit!out t!e aut!ority of t!e person w!ose signature it purports to be, it is w!o$$y inoperative, and no rig!t to retain t!e instrument, or to give a dis !arge t!erefor, or to enfor e payment t!ereof against any party t!ereto, an be a ?uired t!roug! or under su ! signature, un$ess t!e party against w!om it is soug!t to enfor e su ! rig!t is pre $uded from setting up t!e forgery or want of aut!ority.> !wo types of cases of pro"lems arising from forged indorsements of c ec#s #rob$ems arising from forged indorsements of !e "s may genera$$y be bro"en into two types of ases* '1( w!ere forgery was a omp$is!ed by a person not asso iated wit! t!e drawer @for e:amp$e a mai$ robberyA, and '2( w!ere t!e indorsement was forged by an agent of t!e drawer. -!is differen e in situations wou$d determine t!e effe t of t!e drawer8s neg$igen e wit! respe t to forged indorsements. $uty of drawer; %ffect of negligence + depositor is under a duty to set up an a ounting system and a business pro edure as are reasonab$y a$ u$ated to prevent or render diffi u$t t!e forgery of

indorsements, parti u$ar$y by t!e depositor8s own emp$oyees. +nd if t!e drawer 'depositor( $earns t!at a !e " drawn by !im !as been paid under a forged indorsement, t!e drawer is under duty prompt$y to report su ! fa t to t!e drawee ban". For !is neg$igen e or fai$ure eit!er to dis over or to report prompt$y t!e fa t of su ! forgery to t!e drawee, t!e drawer $oses !is rig!t against t!e drawee w!o !as debited !is a ount under t!e forged indorsement. .n ot!er words, !e is pre $uded from using forgery as a basis for !is $aim for re rediting of !is a ount. &an#ing "usiness impressed wit pu"lic interest; 'tmost diligence re(uired -!e ban"ing business is so impressed wit! pub$i interest w!ere t!e trust and onfiden e of t!e pub$i in genera$ is of paramount importan e su ! t!at t!e appropriate standard of di$igen e must be a !ig! degree of di$igen e, if not t!e utmost di$igen e. ;ure$y, drawee %an" annot $aim it e:er ised su ! a degree of di$igen e t!at is re?uired of it. -!ere is no way t!at it be a$$owed to es ape $iabi$ity for su ! neg$igen e. .ts $iabi$ity as ob$igor is not mere$y vi arious but primary w!erein t!e defense of e:er ise of due di$igen e in t!e se$e tion and supervision of its emp$oyees is of no moment. #remises onsidered, respondent drawee %an" is ad3udged $iab$e to s!are t!e $oss wit! t!e petitioner on a fiftyBfifty ratio in a ordan e wit! +rti $e 1C2 w!i ! provides*
Responsibi$ity arising from neg$igen e in t!e

performan e of every "ind of ob$igation is a$so demandab$e, but su ! $iabi$ity may be regu$ated by t!e ourts a ording to t!e ir umstan es.