BPI v CA
It is to be noted that
GR No. 102383
Ponente: J. Gutierrez, Jr.
Topic: As distinguished from doctrine of comparative negligence
A/N: Full disclosure! This is also dervied from a digest we had during our nego
time.
Doctrine: If there is Comparative negligence on the part of both the banks,
substantial justice requires that both will proportionately share in the loss.
ER: Eligia had a money market placement with BPI. An imposter withdrew the
money market placement through fraudulent machinations. The money was
deposited to Chinabank under Eligia’s name. The check was stamped by Chinabank
of “all prior endorsements and/or lack of endorsements”. The real Eligia appeared
and is claiming to recover from BPI. BPI claims that it is already relieved from
liability because of the stamp of Chinabank. The SC ruled that they are not absolved
and that both banks were negligent in their duty so they shall be liable 60-40.
Facts:
 BPI got a call from a woman allegedly Eligia Fernando. She sought to pre-
terminate a money market placement amounting to P2.4 Million. Initially,
the alleged “Eligia” asked for the proceeds to be delivered to the real
Fernando’s office but later said that the proceeds, in the form of cashier’s
checks (one for P 1.8 M, the other for P600K), would be picked up by her
niece. BPI did not contact to confirm with the real Eligia at her Philamlife
office to verify, information which BPI had on their file, BPI allowed this
impersonator to receive the checks. The “niece” only presented a written
authorization as well as a letter requesting the pre-termination, both of
which had forged signatures of the true Eligia (bearing a “close
similarity”). No surrender of the promissory note evidencing the
placement was required by BPI.
 Then, two days later, the impostor opened a current account in China Bank
under Eligia’s name. The impostor showed only her tax account number as
a means of identification. Antonio Concepcion, a person opening an
account in China Bank, vouched for her. Cash Supervisor Cuaso was not
comfortable with this; she made it appear that the Fernando impostor was
introduced by a long-standing client, Valentin Co.
 The processed application shows the signature of the alleged Eligia
Fernando. The impostor deposited the two checks in the China Bank
account and deposited the proceeds thereof days later.
the computerized teller terminal where the tellers delivering the money did
not display the account’s opening date, the amounts and dates of deposits
and withdrawals.
 China Bank found that this impostor’s endorsement conformed with the
depositor’s specimen signature, the depositor being the impostor. China
Bank thus stamped on the two checks its guaranty of prior indorsements or
lack thereof. Checks were sent to clearing. BPI cleared, not seeing that the
endorsement of Eligia Fernando at the back of the checks were forged.
Around a month later, the true Eligia Fernando came to BPI and demanded
the proceeds of the placement. She showed the original promissory note
evidencing the placement. BPI issued her a new promissory note
evidencing the placement’s roll over. BPI returned the two checks due to
“Payee’s endorsement forged”. China Bank returned the checks due to
“Beyond Clearing Time”.
 BPI sued China Bank for the crediting of 1.2 Million, which BPI paid, to
its clearing account in the Philippine Clearing House Corporation (PCHC).
PCHC’s Arbitration Committee ruled in BPI’s favor but the same was
overturned through a Motion for Reconsideration by the PCHC’s Board of
Directors. RTC affirmed the order with the modification on attorney’s fees
and interests. CA affirmed RTC.
Issue: Is BPI already absolved?
Held: No. Both banks should be liable. The guarantee made by BPI mandates the
collecting bank or the last endorser to suffer the loss due to its negligence in not
detecting the defect. This guarantee can only be enforced to a certain extent (40%)
as it was BPI that was more negligent (60%).
BPI’s basis for arguing that it should be absolved from liability is Sec. 23 of the
NIL, which states that forged signatures are wholly inoperative. Thus, the check
presented by China Bank bearing an endorsement with a wholly inoperative
signature cannot be enforced against BPI. The Court interpreted Sec 23 of the NIL to
hold that estoppel by a party’s own negligence can bar a party from setting up
forgery as a defense. BPI is either grossly negligent or fraudulent in this case.
Despite how easy it is to call the true Fernandez to verify the pre-termination, BPI
did not do so. BPI also did not even require the presentation of the promissory note
that evidenced the placement. BPI cannot rely on the last clear chance doctrine. SC
analyzed the Picart case which explained the doctrine. According to Picart, when a
party can no longer prevent an expected harm, the duty to avoid injury passes to the
person who has complete control of the situation. Here, China Bank had no complete
control of the situation. China Bank had no prior notice of BPI’s fraud on the pre-
termination of the placement. Fernando’s signature comparison does not result in the
discovery of the fraud. China Bank could not have any knowledge of the fraud.
Being negligent, BPI cannot setup the forgery against China Bank. However, while
bereft of complete control, China Bank is not without blame. Their employees
closed their eyes to the suspicious circumstances of: 1. Huge over-the-counter
withdrawals shortly after the account was opened; 2. The account was opened only
on the strength of the tax account number as identification as well as that of the
introduction of its client

Considering the comparative negligence of the two banks, BPI is responsible for
60% while China Bank is responsible for 40%.