GEMPESAW V.

CA 218 SCRA 682

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 Galang. In the signing of the checks prepared by Galang, Gempensaw didn't bother herself in verifying to whom the checks were being paid and if the issuances were necessary. She didn't even verify the returned checks of the bank when the latter notifies her of the same. 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: WON Gempensaw can still recover the amount of the forged checks HELD: Forgery is a real defense by the party whose signature was forged. A party whose signature was forged was never a party and never gave his consent to the instrument. Since his signature doesnt appear in the instrument, the same cannot be enforced against him even by a holder in due course. The drawee bank cannot charge the account of the drawer whose signature was forged because he never gave the bank the order to pay.

In the case at bar the checks were filled up by petitioners employee Galang and were later given to her for signature. Her signing the checks made the negotiable instruments complete. Prior to signing of the checks, there was no valid contract yet. Petitioner completed the checks by signing them and thereafter authorized Galang to deliver the same to their respective payees. The checks were then indorsed, forged indorsements thereon.

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 bookkeepers fraudulent schemes