G.R. No. 149454 & G.R. No. 149507; May 28, 2004
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. CASA MONTESSORI INTERNATIONALE and LEONARDO T. YABUT, respondents. (Consolidated Cases)

FACTS

Casa Montessori Internationale (CASA) maintained a current account with Bank of the Philippine Islands (BPI). In 1991, CASA discovered that nine checks totaling ₱782,600 had been fraudulently encashed between 1990 and 1991 by a certain “Sonny D. Santos.” An investigation revealed that “Santos” was a fictitious identity used by Leonardo T. Yabut, CASA’s external auditor, who voluntarily admitted to forging the signature of CASA’s president, Ma. Carina C. Lebron, on the checks. The PNP Crime Laboratory confirmed the signatures were forgeries.
CASA filed a complaint against BPI for collection and damages, seeking reimbursement of the withdrawn amount. The Regional Trial Court ruled in favor of CASA. On appeal, the Court of Appeals modified the decision, finding both parties negligent. It apportioned the loss, holding BPI liable for one-half of the amount (after deductions) and ordering Yabut to reimburse BPI for that half and to pay the other half directly to CASA. Both BPI and CASA filed separate petitions for review.

ISSUE

The primary issues were: (1) whether forgery under the Negotiable Instruments Law was established; (2) whether negligence of either party precluded the defense of forgery; and (3) the propriety of awarding damages, attorney’s fees, and interest.

RULING

The Supreme Court affirmed the CA’s finding of forgery but modified the apportionment of liability. Under Section 23 of the Negotiable Instruments Law, a forged signature is “wholly inoperative.” Yabut’s judicial admission and the PNP findings conclusively proved the forgery. The Court rejected BPI’s argument that CASA failed to prove forgery by clear and convincing evidence.
On negligence, the Court held both parties were at fault. BPI was negligent in failing to detect the forged signatures despite its duty to know its client’s signature and exercise meticulous care. CASA was also negligent for its lack of internal controls, which allowed its auditor, Yabut, prolonged access to check supplies and records, facilitating the forgery. However, the Court found the CA’s equal apportionment of loss erroneous. Applying comparative negligence, the Court held CASA’s negligence was the proximate cause of the loss, as it created the opportunity for the fraud. Thus, BPI’s liability was reduced. The Court allocated 60% of the loss to CASA and 40% to BPI, with Yabut ordered to reimburse BPI for the latter’s share.
The Court denied awards for moral and exemplary damages due to the absence of bad faith by BPI, but granted legal interest on the amounts due from the date of judicial demand. Attorney’s fees were also denied as both parties were found to have contributed to the loss.