Sr. Jeanette M.

Formentera BSA-4
NIL Case Analysis
Metropolitan Waterworks and Sewerage System V. Court of Appeals, 143 SCRA 20
[1986]
Case background:
With special arrangement with PNB, MWSS used personalized checks in
drawing from its account. The checks were printed by its printer, F. Mesina Enterprises.
23 checks were paid and cleared by PNB, and debited against MWSS’ account from
March to May 1969. The checks were deposited by payees Raul Dizon, Arturo Sison,
and Antonio Mendoza in their account with PCI Bank. Said persons were later found to
be fictitious. MWSS requested PNB to restore the amount debited due to 23 checks,
allegedly forged, to its account.

Court decision:
WHEREFORE, the petition for review on certiorari is hereby DISMISSED for lack
of merit. The decision of the respondent Court of Appeals dated October 29, 1982 is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.

Explain:

The court arrived on such decision because the National Bureau of

Investigation concluded in its Report dated November 2, 1970 that the fraudulent
encashment of the twenty-three (23) cheeks in question was an "inside job".
Nonetheless, the petitioner claims that it was the negligence of the respondent
Philippine National Bank that was the proximate cause of the loss. But the
argument has no merit. The records show that the respondent drawee bank, had
taken the necessary measures in the detection of forged checks and the
prevention of their fraudulent encashment. In fact, long before the encashment of
the twenty-three (23) checks in question, the respondent Bank had issued
constant reminders to all Current Account Bookkeepers informing them of the
activities of forgery syndicates. Under the circumstances, MWSS was in a better
position to detect and prevent the fraudulent encashment of its checks.