NATIVIDAD GEMPESAW, petitioner v.

COURT OF APPEALS and PHILIPPINE

BANK OF COMMUNICATIONS, respondents
G.R. NO. 92244, FEBRUARY 9, 1993

Facts:

Natividad Gempesaw owns and operated four grocery stores filed a complaint against
the private respondent Philippine Bank of Communications (drawee bank) for recovery
of money value 82 checks charged against the petitioner’s account with respondent on
the ground that the payees’ indorsements were forgeries. She maintained a checking
account with the drawee bank to pay for the suppliers. She has a customary practice in
issuing checks in payment to her suppliers: (1) checks were prepared by her trusted
bookkeeper of 8 years, (2) after the preparation of the checks, the completed checks
were submitted to the petitioner for her signature, together with the corresponding in-
voice receipts which indicate the correct obligations due and payable for her suppliers.
She signed every check without verifying the accuracy of the checks against the corre-
sponding invoices. She followed this practice for two years for the total of 82 checks in
favor of several suppliers. These were presented by the indorsees as holders, honored
by, the respondent drawee bank which correspondingly debited amounts thereof
against petitioner’s checking account. The checks were all crossed checks. The respon-
dent drawee bank had been giving notices to petitioner, the latter furnishing a monthly
statement of her bank transactions, all the cancelled checks she issued debuted against
her current account. But, it was only after the lapse of more than 2 years that the peti -
tioner found out about the fraudulent manipulations of her bookkeeper. All the 82
checks with forged signatures of the payees were brought to the respondent drawee
bank, with the chief accountant, without authority, accepted them all for deposit, 63 of
which were deposited to Alfredo Romero savings account in Buendia branch, and the
four (4) Ongpin branch. About 30 of the payees whose names were specifically written
on the checks testified that they did not receive nor even see the subject checks and
that the indorsements appearing at the back of the checks were not theirs.

Issue: Whether the petitioner is precluded from raising the defense of forgery by reason
of her gross negligence

Ruling: No.
The Court ruled that under Section 196 of Negiotable Instruments Law, however, any
case not provided for in the Act shall be governed by the provisions of existing legisla -
tion. Under the laws of quasi-delict, she cannot point to the negligence of the respon-
dent drawee Bank in the selection and supervision of its employees as being the cause
of the loss because her negligence is the proximate cause thereof and under Article
2179 of the Civil Code, she may not be awarded damages. The respondent, being a
negligent obligor was adjudged liable to share the loss with the petitioner on a fifty-fifty
ration in accordance with Article 1172. And although the case was brought before the
court not on breach of contractual obligations, the courts are not precluded from apply -
ing to the circumstances of the case the laws pertinent thereto. Thus, the fact that peti-
tioner's negligence was found to be the proximate cause of her loss does not preclude
her from recovering damages. The reason why the decision dealt on a discussion on
proximate cause is due to the error pointed out by petitioner as allegedly committed by
the respondent court.