PNB vs.

Quimpo
[G.R. No. L-53194. March 14, 1988.]

FACTS: On 3 July 1973, Francisco S. Gozon II, who was a depositor of the Caloocan City Branch of
the PNB, went to the bank in his car accompanied by his friend Ernesto Santos whom he left in the
car while he transacted business in the bank. When Santos saw that Gozon left his check book he
took a check therefrom, filled it up for the amount of P5,000.00, forged the signature of Gozon, and
thereafter he encashed the check in the bank on the same day. The account of Gozon was debited
the said amount. Upon receipt of the statement of account from the bank, Gozon asked that the
said amount of P5,000.00 should be returned to his account as his signature on the check was
forged but the bank refused. Upon Gozon’s complaint on 1 February 1974 Ernesto Santos was
apprehended by the police authorities and upon investigation he admitted that he stole the check
of Gozon, forged his signature and encashed the same with the Bank.

Hence Gozon filed the complaint for recovery of the amount of P5,000.00, plus interest, damages,
attorney's fees and costs against the bank in the CFI Rizal (Branch XIC, Hon. Romulo S. Quimpo
presiding). After the issues were joined and the trial on the merits ensued, a decision was rendered
on 4 February 1980, ordering the bank to return the amount of P5,000 which it had unlawfully
withheld, with interest at the legal rate from 22 September 1972 until the amount is fully delivered.
The bank was further condemned to pay Gozon the sum of P2,000.00 as attorney's fees and to pay
the costs of the suit. The bank filed a petition for review on certiorari.

ISSUE: W/N PNB is Liable.

HELD: 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 (San Carlos Milling Co. vs.
Bank of the P.I., 59 Phil. 59).

The rule is absolutely 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. There is nothing inequitable in such a rule. If the paper comes to the drawee in the
regular course of business, and he, having the opportunity ascertaining its character, pronounces it
to be valid and pays it, it is 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 (12 ALR, 1901, citing many cases found in I Agbayani, supra).

A comparison of the signature on the forged check with Gozon's exemplar signatures found in the
PNB Form 35-A would immediately show the negligence of the employees of the bank. Even a not
too careful comparison would immediately arrest one's attention and direct it to the graceful lines
of Gozon’ss exemplar signatures in the bank form. The formation of the first letter 'F' in the
exemplars, which could be regarded as artistic, is completely different from the way the same letter
is formed in the check. That alone should have alerted a more careful and prudent signature
verifier.

The prime duty of a bank is to ascertain the genuineness of the signature of the drawer or the
depositor on the check being encashed. It is expected to use reasonable business prudence in
accepting and cashing a check presented to it.

Gozon’s act in leaving his checkbook in the car while he went out for a short while can not be
considered negligence sufficient to excuse the bank from its own negligence. When Gozon left his
car, Ernesto Santos, a long time classmate and friend remained in the same. Gozon could not have
been expected to know that the said Ernesto Santos would remove a check from his checkbook.
Gozon had trust in his classmate and friend. He had no reason to suspect that the latter would
breach that trust. Santos however removed and stole a check from his check book without Gozon’s
knowledge and consent. Gozon cannot be considered negligent under the circumstances of the
case.

The Supreme Court dismissed the petition for lack of merit, with costs against the bank.
 Gempesaw V. CA
G.R. No. 92244
February 9, 1993
Lessons Applicable: Promissory Notes and Checks (Negotiable Instruments Law)

FACTS:
-Gempesaw owns and operates four grocery stores
-to pay their debts of her supplies, she draws checks against her account
-she signed each and every crossed check without bothering to verify the accuracy of
the checks against the corresponding invoices because she reposed full and implicit
trust and confidence on her bookkeeper.
-although the Bank notified her of all checks presented to and paid by the bank,
petitioner did not verify he correctness of the returned checks, much less check if the
payees actually received the checks in payment for the supplies she received
-It was only after the lapse of more 2 years that petitioner found out about the
fraudulent manipulations of her bookkeeper
-November 7, 1984: Gempesaw made a written demand on respondent drawee Bank
to credit her account with the money value of the 82 checks totalling P1,208.606.89
for having been wrongfully charged against her account
-January 23, 1985: Gempesaw filed against Philippine Bank of Communications
(drawee Bank) for recovery of the money value of 82 checks charged against
the Gempesaw's account on the ground that the payees' indorsements were forgeries
-RTC: dismissed the complaint
-CA: affirmed
-Gempesaw gross negligence = promixate cause of the loss

ISSUE: W/N Gempesaw has a right to recover the amount attributable to the
forgeries

HELD: NO. 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.
 Petitioner completed the checks by signing them as drawer and thereafter
authorized her employee Alicia Galang to deliver to payees
 GR: drawee bank who has paid a check on which an indorsement has been
forged cannot charge the drawer's account for the amount of said check
 EX: where the drawer is guilty of such negligence which causes the bank to
honor such a check or checks.
 Under the NIL, the only kind of indorsement which stops the further
negotiation of an instrument is a restrictive indorsement which prohibits the
further negotiation thereof.

Sec. 36. When indorsement restrictive. - An indorsement is restrictive which

either chanrobles virtual law library
(a) Prohibits further negotiation of the instrument; or
xxx xxx xxx

 In this kind of restrictive indorsement, the prohibition to transfer or negotiate

must be written in express words at the back of the instrument, so that any
subsequent party may be forewarned that ceases to be negotiable.
 However, the restrictive indorsee acquires the right to receive
payment and bring any action thereon as any indorser, but he can no longer
transfer his rights as such indorsee where the form of the indorsement does not
authorize him to do so.
 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
 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 the bank in carrying out its
obligations to its depositors