Jerome Nikki Q.

Reyes
JD 2B

Ilusorio vs. Court of Appeals, 393 SCRA 89, G.R. No. 139130 November 27, 2002

FACTS: Ramon K. Ilusorio, a prominent businessman, entrusted to his secretary, Katherine E.

Eugenio, his credit cards and his checkbook with blank checks, as well as the verification and
reconciliation of said checking account. Due to this, Eugenio was able to encash and deposit to her
personal account about seventeen (17) checks drawn against the account of Ilusorio at the
respondent bank, Manila Banking Corporation, with an aggregate amount of P119,634.34. Such
fact was not known to Ilusorio, until a business partner asked him whether he had entrusted his
credit card to his secretary because the said partner had seen her used the same. Prompted by
this, he was minded to verify the records of his account. Thereafter, Ilusorio fired Eugenio and
filed a case of estafa thru falsification. Consequently, the bank also filed a case of estafa thru
falsification of commercial documents against her.

Petitioner then requested the bank to credit back and restore to its account the value of the checks
which were wrongfully encashed but the latter refused; hence, the instant case.

RTC and CA dismissed the case for there is no sufficient basis on the plaintiffs cause.

ISSUE: Whether or not Ilusorio has a cause of action against Manila Banking Corporation

Whether or not Manila Bank had no authority to pay the forged check

RULING: No. The Court ruled that in order to be entitled to damages, the petitioner has the burden
of proving negligence on the part of the bank for failure to detect the discrepancy in the signatures
on the checks. It is incumbent upon petitioner to establish the fact of forgery, which he failed to
do so. It was clear in this case that respondent bank took all the precautions in verifying the same.
Moreover, it appears that petitioner accorded his secretary unusual degree of trust and
unrestricted access to his credit cards, passbooks, check books, bank statements, including
custody and possession of cancelled checks and reconciliation of accounts, which caused him
added injury.

The contention of the petitioner that the bank had no authority to pay the forged check is
correct. 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. No right to retain the
instrument, or to give a discharge therefor, or to enforce payment thereof against any party, can
be acquired through or under such signature. 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. The
Supreme Court held that the 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.