RAMON K. ILUSORIO, petitioner, vs. HON.

COURT OF APPEALS, and

THE MANILA BANKING CORPORATION, respondents.
[G.R. No. 139130. November 27, 2002]

Facts:

Ilusorio is a prominent businessman and a depositor in good standing Manila Banking

Corporation. As he was then running about 20 corporations, and was going out of the country a
number of times, petitioner entrusted to his secretary, Katherine E. Eugenio, his credit cards and
his check book with blank checks. It was also Eugenio who verified and reconciled the
statements of said checking account.

Apparently, Eugenio was able to encash and deposit to her personal account about
seventeen (17) checks drawn against the account of the petitioner at the respondent bank, with
an aggregate amount of P119,634.34. Petitioner did not bother to check his statement of
account until a business partner apprised him that he saw Eugenio use his credit cards.
Petitioner fired Eugenio immediately.

Petitioner then requested the respondent bank to credit back and restore to its account
the value of the checks which were wrongfully encashed but respondent bank refused. During
trial, the bank testified that signature on the check was verified against the specimen signature
cards on file with the bank. When asked by the NBI to submit additional standard signatures
which will aid them in determining the genuineness of the signatures appearing on the
questioned checks, petitioner failed to comply.

RTC ruled in favour of Manila Banking Corporation. CA affirmed RTC. Hence, this
petition.

Issue:
Whether or not Manila Banking Corporation was negligent in accepting the forged
checks

Ruling:
No. To be entitled to damages, Ilusorio has the burden of proving that the bank was
negligent in failing to detect the discrepancy in the signatures on the checks. Ilusorio had to
establish the fact of forgery which he failed to do by failing to submit his specimen signatures for
NBI to conclusively establish forgery.

Furthermore, the Bank was not negligent in verifying the checks as they verified the
drawer’s signatures against their specimen signatures and in doubt, referred to more
experienced verifier for further verification. On the contrary, it was Ilusorio who was found to be
negligent. He accorded his secretary with an unusual degree of trust and unrestricted access to
his finances. Furthermore, despite the fact that the bank was regularly sending statements of
account, he failed to check them until he found out that his secretary was using his credit cards.

Sec. 23 of the Negotiable Instruments law provides that a forged check is inoperative,
meaning there was no right to enforce payment against any party. But it also provides an
exception: “unless the party against whom it is sought enforce such right is precluded from
setting up the forgery or want of authority”. This case falls under the exception since Ilusorio is
precluded from setting up forgery due to his own negligence considering that he allowed his
secretary access to his credit cards, checkbook, and allowed his secretary to verify his
statements of account.

WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision of
the Court of Appeals is AFFIRMED.