NATIVIDAD GEMPESAW, petitioner,

vs.
COURT OF APPEALS

Facts:

Gempensaw was the owner of many grocery stores. She paid her suppliers
through the issuance of checks drawn against her checking account with
respondent bank. The checks were prepared by her bookkeeper Alicia
Galang. In the signing of the checks prepared by Galang, petitioner signed each and
every 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. Petitioner admitted that she did not make any verification as to
whether or not the checks were delivered to their respective payeesAlthough the
respondent drawee 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.

In the course of her business operations covering a period of two years, petitioner
issued, following her usual practice stated above, a total of eighty-two (82) checks in
favor of several suppliers. During her two years in
business, there were incidents shown that the amounts paid for were in excess
of what should have been paid. It was also shown that even if the checks were
crossed, the intended payees didn't receive the amount of the
checks. This prompted Gempensaw to demand the bank to credit her account
for the amount of the forged checks. The bank refused to do so and this prompted her
to file the case against the bank.

iSsue: Who bears the loss resulting from the forged indorsements.

HELD:

As a rule, a drawee bank who has paid a check on which an indorsement

has been forged cannot debit the account of a drawer for the amount of
said check. An exception to this rule is when the drawer is guilty of
negligence which causes the bank to honor such checks. Petitioner in this
case has relied solely on the honesty and loyalty of her bookkeeper and
never bothered to verify the accuracy of the amounts of the checks she
signed the invoices attached thereto. And though she received her bank
statements, she didn't carefully examine the same to double-check her
payments. Petitioner didn't exercise reasonable diligence which eventually led to the
fruition of her bookkeeper’s fraudulent schemes. 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 amount of such
checks. 10 Under Section 23 of the NIL, she is now precluded from using the forgery to
prevent the bank's debiting of her account.

Associated Bank vs. CA, January 31, 1996 G.R. No. 107382/G.R. No. 107612
Facts: Faustino Pangilinan, cashier of the Concepcion Emergency Hospital, forged
the signature of Dr. Adena Canlas who was the Chief of the said hospital and
endorsed 30 checks amounting to P203,300 to himself. The money was drawn from
the account of the Province of Tarlac with PNB. Pangilinan deposited the checks to
hispersonal savings account with Associated Bank which was cleared and paid for by
PNB. The checks have a stamp of Associated Bankwhich reads “All prior
endorsements guaranteed by Associated Bank”.

The Province of Tarlac, through the Provincial Treasurer, wrote PNB to restore the
various amounts debited from the current account of the Province. PNB on its part
demanded reimbursement fromAssociated Bank. Both banks resisted payment which
led to the Province of Tarlac suing PNB. PNB in turn impleaded Associated Bank in
the suit as a third-party defendant while Associated Bankimpleaded Canlas and
Pangilinan as fourth-party defendants.

Issue: Who should bear the loss arising from the forgery, the Province of Tarlac,
PNB, Associated Bank or Pangilinan?

Held: The SC held that the Province and Associated Bank should bear losses in the
proportion of 50-50. The Province can only recover 50% of the P203,300 from PNB
because of the negligence they exhibited in releasing the checks to the then already
retired Pangilinan who is an unauthorized person to handle the said checks. On the
other hand, Associated Bank is liable to PNB only to 50% of the same amount
because of its liability as indorser of the checks that were deposited by Pangilinan,
and guaranteed the genuineness of the said checks. They failed to exercise due
diligence in checking the veracity of indorsements.