BPI vs.

Casa Montessori
Facts:
Plaintiff CASA Montessori International opened a current account with BPI. In
1991, plaintiff discovered that 9 of its checks had been encashed by a certain
Sonny D. Santos since 1990 in the total amount of P782, 000.00. It turned out that
Sonny D. Santos with an account at BPI - Greenbelt was a fictitious name used by
third party defendant Leonardo T. Yabut who worked as external auditor of CASA.
A Third party defendant voluntarily admitted that he forged the signature of Ms.
Lebron and encashed the checks.  

Ruling:
Under this provision, a forged signature is a real or absolute defense, and a person
whose signature on a negotiable instrument is forged is deemed to have never
become a party thereto and to have never consented to the contract that allegedly
gave rise to it. The counterfeiting of any writing, consisting in the signing of
another’s name with intent to defraud, is forgery. In the present case, we hold that
there was forgery of the drawer’s signature on the check.
Forgery "cannot be presumed." It must be established by clear, positive and
convincing evidence. Under the best evidence rule as applied to documentary
evidence like the checks in question, no secondary or substitutionary evidence may
inceptively be introduced, as the original writing itself must be produced in court.
But when, without bad faith on the part of the offeror, the original checks have
already been destroyed or cannot be produced in court, secondary evidence may be
produced. In such a situation, secondary evidence like microfilm copies may be
introduced in court.
CASA never made any deed or representation that misled BPI. The former’s
omission, if any, may only be deemed an innocent mistake oblivious to the
procedures and consequences of periodic audits. Since its conduct was due to such
ignorance founded upon an innocent mistake, estoppel will not arise.97 A person
who has no knowledge of or consent to a transaction may not be estopped by it.
Negligence is attributable to BPI alone. A banking business is impressed with
public interest, of paramount importance thereto is the trust and confidence of the
public in general. Consequently, the highest degree of diligence is expected, and
high standards of integrity and performance are even required of it. BPI, despite
claims of following its signature verification procedure, still failed to detect the
eight instances of forgery. Its negligence consisted in the omission of that degree
of diligence required of a bank. It cannot now feign ignorance, for very early on we
have already ruled that 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 charge the amount so paid to the account of
the depositor whose name was forged.