Gempesaw vs. Court of Appeals, 218 SCRA 682, February 09, 1993
Gempesaw vs. Court of Appeals, 218 SCRA 682, February 09, 1993
Gempesaw vs. Court of Appeals, 218 SCRA 682, February 09, 1993
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G.R. No. 92244. February 9, 1993.
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* SECOND DIVISION.
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VOL. 218, FEBRUARY 9, 1993 683
employee or a ent of the drawer, or done with the active participation of the
latter. Most of the cases involving forgery by an agent or employee deal
with the payee's indorsement. The drawer and the payee oftentimes have
business relations of long standing. The continued occurrence of business
transactions of the same nature provides the opportunity for the
agent/employee to commit the fraud after having developed familiarity with
the signatures of the parties. However, sooner or later, some leak will show
on the drawer's books. It will then be just a question of time until the fraud
is discovered. This is specially true when the agent perpetrates a series of
forgeries as in the case at bar. The negligence of a depositor which will
prevent recovery of an unauthorized payment is based on failure of the
depositor to act as a prudent businessman would under the circumstances.
Same; Same; No legal obligation on drawee not to honor crossed
checks.—Petitioner argues that respondent drawee Bank should not have
honored the checks because they were crossed checks. Issuing a crossed
check imposes no legal obligation on the drawee not to honor such a check.
It is more of a warning to the holder that the check cannot be presented to
the drawee bank for payment in cash. Instead, the check can only be
deposited with the payee's bank which in turn must present it for payment
against the drawee bank in the course of normal banking transactions
between banks. The crossed check cannot be presented for payment but it
can only be deposited and the drawee bank may only pay to another bank in
the payee's or indorser's account.
Banks and Banking; Contractual relation between depositor as obligee
and drawee bank as obligor; Violation of rule on non-acceptance of second
indorsements without approval of branch manager.—There is no question
that there is a contractual relation between petitioner as depositor (obligee)
and the respondents drawee bank as the obligor. In the performance of its
obligation, the drawee bank is bound by its internal banking rules and
regulations which form part of any contract it enters into with any of its
depositors. When it violated its internal rules that second endorsements are
not to be accepted without the approval of its branch managers and it did
accept the same upon the mere approval of Boon, a chief accountant, it
contravened the tenor of its obligation at the very least, if it were not
actually guilty of fraud or negligence. Furthermore, the fact that the
respondent drawee Bank did not discover the irregularity with respect to the
acceptance of checks with second indorsement for deposit even without the
approval of the branch manager despite
684
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685
"I
II
III
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1 Rollo, p. 11.
686
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"x x x (1) in Check No. 621127, dated June 27, 1984 in the amount of
P11,895.23 in favor of Kawsek Inc. (Exh. A-60), appellant's actual
obligation to said payee was only P895.33 (Exh. A-83); (2) in Check No.
652282 issued on September 18, 1984 in favor of Senson Enterprises in the
amount of P1 1,041.20 (Exh. A-67) appellant's actual obligation to said
payee was only P1,041.20 (Exh. 7); (3) in Check No. 589092 dated April 7,
1984 for the amount of P11,672.47 in favor of Marchem, (Exh. A-61)
appellant's obligation was only P 1,672.47 (Exh. B); (4) in Check No.
620450 dated May 10, 1984 in favor of Knotberry for P11,677.10 (Exh. A-
31) her actual obligation was only P677.10 (Exhs. C and C-1); (5) in Check
No. 651862 dated August 9, 1984 in favor of Malinta Exchange Mart for
P11,107,16 (Exh. A-62), her obligation was only P1,107.16 (Exh. D-2); (6)
in Check No. 651863 dated August 11,1984 in favor of Grocer's
International Food Corp. in the amount of P1 1,335.60 (Exh. A-66), her
obligation was only P1,335.60 (Exh. E and E-1); (7) in Check No. 589019
dated March 17, 1984 in favor of Sophy Products in the amount of
P11,648.00 (Exh. A-78), her obligation was only P648.00 (Exh. G); (8) in
Check No. 589028 dated March 10, 1984 for the amount of P11,520.00 in
favor of the Yakult Philippines (Exh. A-73), the latter's invoice was only
P520.00 (Exh. H-2); (9) in Check No. 62033 dated May 24, 1984 in the
amount of P11,504.00 in favor of Monde Denmark Biscuit (Exh. A-34), her
2
obligation was only P504.00 (Exhs. 1-1 and I-2)."
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2 Rollo, pp. 20-21; CA Decision, pp. 2-3. See Notes 2-6 thereof.
3 A crossed check is defined as a check crossed with two (2) lines, between which
are either the name of a bank or the words "and company," in full or abbreviated. In
the former case, the banker on whom it is drawn must not pay the money for the
check to any other than the banker named; in the latter case, he must not pay it to any
other than a banker. Black's Law Dictionary 301 (4th Ed.), citing 2 Steph. Comm.
118, note C; 7 Exch. 389; [1903] A.C. 240; Farmers' Bank v. Johnson, King & Co.,
134 Ga. 486, 68 S.E. 85, 30 L.R.A., N.S. 697.
688
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using forgery as a basis for his claim for recrediting of his account.
In the case at bar, petitioner admitted that the checks were filled
up and completed by her trusted employee, Alicia Galang, and were
later given to her for her signature. Her signing the checks made the
negotiable instrument complete. Prior to signing the checks, there
was no valid contract yet.
Every contract on a negotiable instrument is incomplete and
revocable until delivery of the7 instrument to the payee for the
purpose of giving effect thereto. The first delivery of the instrument,
complete in form, to the payee who takes it as a holder, is called
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issuance of the instrument. Without the initial delivery of the
instrument from the drawer of the check to the payee, there can be
no valid and binding contract and no liability on the instrument.
Petitioner completed the checks by signing them as drawer and
thereafter authorized her employee Alicia Galang to deliver the
eighty-two (82) checks to their respective payees. Instead of issuing
the checks to the payees as named in the checks, Alicia Galang
delivered them to the Chief Accountant of the Buendia branch of the
respondent drawee Bank, a certain Ernest L. Boon. It was
established that the signatures of the payees as first indorsers were
forged. The record fails to show the identity of the party who made
the forged signatures. The checks were then indorsed for the second
time with the names of Alfredo Y. Romero and Benito Lam, and
were deposited in the latter's accounts as earlier noted. The second
indorsements were all genuine signatures of the alleged holders. All
the eighty-two (82) checks bearing the forged indorsements of the
payees and the genuine second indorsements of Alfredo Y. Romero
and Benito Lam were accepted for deposit at the Buendia branch of
respondent drawee Bank to the credit of their respective savings
accounts in the Buendia, Ongpin and Elcano branches of the same
bank. The total amount of Savings Bank, 252 Mich. 163, 233 N.W.
185 (1930); C.E. Erickson Co. vs. lowa Nat. Bank, 211 lowa 495,
230 N.W. 342 (1930).
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692
693
would not have been accomplished. It was not until two years after
the bookkeeper commenced her fraudulent scheme that petitioner
discovered that eighty-two (82) checks were wrongfully charged to
her account, at which time she notified the respondent drawee bank.
It is highly improbable that in a period of two years, not one of
petitioner's suppliers complained of non-payment. Assuming that
even one single complaint had been made, petitioner would have
been duty-bound, as far as the respondent drawee Bank was
concerned, to make an adequate investigation on the matter. Had this
been done, the discrepancies would have been discovered, sooner or
later. Petitioner's failure to make such adequate inquiry constituted
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9 Detroit Piston Ring Co. vs. Wayne County & Home Savings Bank, supra, note 3.
694
nent sales invoices, she would have easily discovered that in some
checks, the amounts did not tally with those appearing in the sales
invoices. Had she noticed these discrepancies, she should not have
signed those checks, and should have conducted an inquiry as to the
reason for the irregular entries. Likewise, had petitioner been more
vigilant in going over her current account by taking careful note of
the daily reports made by respondent drawee Bank on her issued
checks, or at least made random scrutiny of her cancelled checks
returned by respondent drawee Bank at the close of each month, she
could have easily discovered the fraud being perpetrated by Alicia
Galang, and could have reported the matter to the respondent drawee
Bank. The respondent drawee Bank then could have taken
immediate steps to prevent further commission of such fraud. Thus,
petitioner's negligence was the proximate cause of her loss. And
since it was her negligence which caused the respondent drawee
Bank to honor the forged checks or prevented it from recovering the
amount it had already paid on the checks, petitioner cannot now
complain should the bank refuse to recredit her account with the
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amount of such checks. Under Section 23 of the NIL, she is now
precluded from using the forgery to prevent the bank's debiting on
her account.
The doctrine in the case of11Great Eastern Life Insurance Co. us.
Hongkong & Shanghai Bank is not applicable to the case at bar
because in said case, the check was fraudulently taken and the
signature of the payee was forged not by an agent or employee of the
drawer. The drawer was not found to be negligent in the handling of
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its business affairs and the theft of the check by a total stranger was
not attributable to negligence of the drawer; neither was the forging
of the payee's indorsement due to the drawer's negligence. Since the
drawer was not negligent, the drawee was duty-bound to restore to
the drawer's account the amount theretofore paid under the check
with
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10 Defiance Lumber Co. vs. Bank of California, N.A., 180 Wash. 533, 41 P. 2d 135
(1935); National Surety Co. vs. President and Directors of Manhattan Co., et al, 252
N.Y. 247, 169 N.E. 372 (1929); Erickson Co. vs. lowa National Bank, supra, note 3
11 43 Phil. 678 (1922).
695
696
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indorsement does not authorize him to do so.
Although the holder of a check cannot compel a drawee bank to
honor it because there is no privity between them, as far as the
drawer-depositor is concerned, such bank may not legally refuse to
honor a negotiable bill of exchange or a check drawn against it with
more than one indorsement if there is nothing irregular with the bill
or check and the drawer has sufficient funds. The drawee cannot be
compelled to accept or pay the check by the drawer or any holder
because as a drawee, he incurs no liability on the check unless he
accepts it. But the drawee will make itself liable to a suit for
damages at the instance of the drawer for wrongful dishonor of the
bill or check.
Thus, it is clear that under the NIL, petitioner is precluded from
raising the defense of forgery by reason of her gross negligence. But
under Section 196 of the NIL, any case not provided for in the Act
shall be governed by the provisions of existing legislation. Under the
laws of quasi-delict, she cannot point to the negligence of the
respondent drawee Bank in the selection and supervision of its
employees as being the cause of the loss because her negligence is
the proximate cause thereof and under Article 2179 of the Civil
Code, she may not be awarded damages. However, under Article
1170 of the same Code the respondent drawee Bank may be held
liable for damages. The article provides—
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697
approval of its branch managers and it did accept the same upon the
mere approval of Boon, a chief accountant, it contravened the tenor
of its obligation at the very least, if it were not actually guilty of
fraud or negligence.
Furthermore, the fact that the respondent drawee Bank did not
discover the irregularity with respect to the acceptance of checks
with second indorsement for deposit even without the approval of
the branch manager despite periodic inspection conducted by a team
of auditors from the main office constitutes negligence on the part of
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the bank in carrying out its obligations to its depositors. Article 1173
provides—
With the foregoing provisions of the Civil Code being relied upon, it
is being made clear that the decision to hold the drawee bank liable
is based on law and substantial justice and not on mere equity. And
although the case was brought before the court not on breach of
contractual obligations, the courts are not precluded from applying
to the circumstances of the case
698
the laws pertinent thereto. Thus, the fact that petitioner's negligence
was found to be the proximate cause of her loss does not preclude
her from recovering damages. The reason why the decision dealt on
a discussion on proximate cause is due to the error pointed out by
petitioner as allegedly committed by the respondent court. And in
breaches of contract under Article 1173, due diligence on the part of
the defendant is not a defense.
PREMISES CONSIDERED, the case is hereby ordered
REMANDED to the trial court for the reception of evidence to
determine the exact amount of loss suffered by the petitioner,
considering that she partly benefited from the issuance of the
questioned checks since the obligation for which she issued them
were apparently extinguished, such that only the excess amount over
and above the total of these actual obligations must be considered as
loss of which one half must be paid by respondent drawee bank to
herein petitioner.
SO ORDERED.
—o0o—
699
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