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Mwss vs. Court of Appeals: (G.R. No. L-62943 July 14, 1986)

The Metropolitan Waterworks and Sewerage System (MWSS) filed a case against the Philippine National Bank (PNB) to recover over P3 million paid out on 23 checks deposited into accounts under fictitious names. MWSS claimed the checks were forged. The Court of Appeals ruled in favor of PNB, finding that MWSS was grossly negligent in printing and securing its checks, failing to reconcile its records, and lacked appropriate security measures. Therefore, MWSS's negligence was the proximate cause of the loss and MWSS was liable to bear the loss, not PNB.

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235 views4 pages

Mwss vs. Court of Appeals: (G.R. No. L-62943 July 14, 1986)

The Metropolitan Waterworks and Sewerage System (MWSS) filed a case against the Philippine National Bank (PNB) to recover over P3 million paid out on 23 checks deposited into accounts under fictitious names. MWSS claimed the checks were forged. The Court of Appeals ruled in favor of PNB, finding that MWSS was grossly negligent in printing and securing its checks, failing to reconcile its records, and lacked appropriate security measures. Therefore, MWSS's negligence was the proximate cause of the loss and MWSS was liable to bear the loss, not PNB.

Uploaded by

Jennifer Johnson
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
  • MWSS vs. Court of Appeals
  • Facts
  • Issue
  • Held

MWSS vs.

COURT OF APPEALS
(G.R. No. L-62943 July 14, 1986)

Facts:
Twenty three checks were deposited by the payees Dizon, Sison and Mendoza in their respective current accounts with the PCIB and PBC. Thru the Central Bank Clearing, these checks were presented for payment by PBC and PCIB to the defendant PNB, and were paid. At the time of their presentation to PNB these checks bear the standard indorsement which reads all prior indorsement and/or lack of endorsement guaranteed. Subsequent investigation however, conducted by the NBI showed that Raul Dizon, Arturo Sison and Antonio Mendoza were all fictitious persons. NWSS addressed a letter to PNB requesting the immediate restoration to its Account No. 6, of the total sum of P3,457,903.00 corresponding to the total amount of these twenty-three (23) checks claimed by NWSA to be forged and/or spurious checks.

Issue:

Whether or not MWSS is liable for the loss resulting from the alleged forged checks?

Held:
Yes, There was no express and categorical finding that the 23 checks were forged or signed by persons other than the authorized MWSS signatories. Forgery is not presumed but should be established by clear, positive and convincing evidence. MWSS is barred from setting up defense of forgery under Section 23 of the Negotiable Instruments Law as MWSS committed gross negligence in the printing of its personalized checks, failed to reconcile its bank statements with its own records, and failed to provide appropriate security measures over its own record. PNB, the drawee bank, had taken necessary measures in the detection of forged checks and the prevention of their fraudulent encashment through constant reminders to all its current account bookkeepers informing them of the activities of forgery syndicates. MWSS gross negligence was the proximate cause of the loss (P3 million), and should bear the loss.

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