Ilusorio vs. Court of Appeals

G.R. No. 139130. November 27, 2002


Petitioner a businessman was going out of the country, and entrusted to his secretary, Katherine2 E. Eugenio, his credit cards and his checkbook with blank checks. 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.

One of his business partner apprised him that he saw Eugenio use his credit cards. Petitioner fired Eugenio immediately, and instituted a criminal action against her for estafa thru falsification

Petitioner then requested the Manila Banking Corporation to credit back and restore to its account the value of the checks which were wrongfully encashed but respondent bank refused.

The Bank contended that they had performed standard operating procedure.

Manila Bank also sought the expertise of the National Bureau of Investigation (NBI) in determining the genuineness of the signatures appearing on the checks.

Petitioner claims that Manila Bank is liable for damages for its negligence in failing to detect the discrepant checks. Petitioner further contends that under Section 23 of the Negotiable Instruments Law a forged check is inoperative, and that Manila Bank had no authority to pay the forged checks

CA disposed the case held that petitioner’s own negligence was the proximate cause of his loss


1) whether or not Manila Bank had no authority to pay the forged checks because under Sec. 23 of NIL


Under Sec 23 True, it is a rule that when a signature is forged or made without the authority of the person whose signature it purports to be, the check is wholly inoperative. However, the rule does provide for an exception, namely: “unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority.” In the instant case, it is the exception that applies. In our view, petitioner is precluded from setting up the forgery, assuming there is forgery, due to his own negligence in entrusting to his secretary his credit cards and checkbook including the verification of his statements of account.