Negotiable Instruments Digest: BANK OF THE PHILIPPINE ISLANDS v. CASA MONTESSORI INTERNATIONALE and LEONARDO T. YABUT

BANK OF THE PHILIPPINE ISLANDS v. CASA MONTESSORI INTERNATIONALE and LEONARDO T. YABUT

[G.R. No. 149454. May 28, 2004] (430 SCRA 261)

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 1:

            Was there forgery under the Negotiable Instruments Law (NIL)?

HELD:

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.

Even with respect to documentary evidence, the best evidence rule applies only when the contents of a document -- such as the drawers signature on a check -- is the subject of inquiry.

ISSUE 2:

            Is BPI liable as the drawee bank for allowing payment on the checks to a wrongful and fictitious payee?

HELD:

            YES. BPI -- the drawee bank -- becomes liable to its depositor-drawer for allowing payment on the checks to a wrongful and fictitious payee. Since the encashing bank is one of its branches, BPI can easily go after it and hold it liable for reimbursement.  It may not debit the drawers account and is not entitled to indemnification from the drawer. In both law and equity, when one of two innocent persons must suffer by the wrongful act of a third person, the loss must be borne by the one whose negligence was the proximate cause of the loss or who put it into the power of the third person to perpetrate the wrong.

            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.