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From March to May 1969, MWSS issued 23 checks to various payees in the
aggregate amount of P320,636.26. During the same months, another set of 23
checks containing the same check numbers earlier issued were forged. The
aggregate amount of the forged checks amounted to P3,457,903.00. This
amount was distributed to the bank accounts of three persons: Arturo Sison,
Antonio Mendoza, and Raul Dizon.
ISSUE:
Whether or not PNB should restore the said amount.
HELD:
No. MWSS is precluded from setting up the defense of forgery.
ANALYSIS:
It has been proven that MWSS has been negligent in supervising the printing of its
personalized checks. It failed to provide security measures and coordinate the same
with PNB. Further, the signatures in the forged checks appear to be genuine as reported
by the National Bureau of Investigation so much so that the MWSS itself cannot tell the
difference between the forged signature and the genuine one. The records likewise
show that MWSS failed to provide appropriate security measures over its own records
thereby laying confidential records open to unauthorized persons. Even if the twentythree (23) checks in question are considered forgeries, considering the MWSSs gross
negligence, it is barred from setting up the defense of forgery under Section 23 of the
Negotiable Instruments Law.
CONCLUSION:
The Supreme Court further emphasized that forgery cannot be presumed. It must be
established by clear, positive, and convincing evidence. This was not done in the
present case.