Natividad Gempesaw v. The Honorable Court of Appeals

Summary

Grocery store owner Natividad Gempesaw sued Philippine Bank of Communications to recover P1,208,606.89 representing 82 checks with forged payee endorsements that the bank honored and charged to her account. Her trusted bookkeeper facilitated the fraud over two years, with checks deposited through a bank employee into third-party accounts. The Supreme Court found both parties negligent: Gempesaw for failing to verify check amounts and examine bank records, and the bank for violating internal rules and inadequate supervision. Under the Negotiable Instruments Law, Gempesaw was precluded from using forgery as a defense due to her negligence. However, under Civil Code provisions on contractual obligations, the bank was also liable for contravening its duties. The Court ordered a 50-50 sharing of losses, emphasizing that banking requires the highest degree of diligence given its public interest nature. The case was remanded to determine exact damages after considering Gempesaw's partial benefit from extinguished supplier obligations.