BANK OF THE PHILIPPINE ISLANDS vs. CASA MONTESSORI INTERNATIONALE LEONARDO T.

YABUT FACTS: CASA opened with BPI a current account with CASAs president Ms. Lebron as one of its authorized signatories. The latter conducted an investigation and discovered that 9 checks had been encashed by a certain Sonny D. Santos which turned out to be a fictitious name used by Yabut, the third party defendant, who worked as the external auditor of CASA. Yabut admitted that forged Ms. Lebrons signature and encashed the checks. The PNP crime laboratory conducted an examination of the checks and concluded that the handwriting were not written my Ms. Lebron. CASA filed a complaint for collection with damages against the Bank praying for reinstatement of the lost money to its account. The RTC rendered judgment in CASAs favor. However, on appeal, the CA apportioned the loss between BPI and CASA taking the latters contributory neglige nce that resulted in the undetected forgery and ordered Yabut to reimburse BPI and CASA half of the amount each. ISSUE: 1. Whether or not there was negligence on the part of CASA. 2. Whether or not failure to repost error on bank statement constitute as waiver. RULING: No, the negligence is attributable to BPI alone. Being a banking institution, it is impressed with public interest. Consequently, the highest degree of diligence is expected and high standards of integrity and performance are even required, of it. By the nature of its functions, a bank is "under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. Having failed to exercise the highest degree of diligence required of a bank when it failed to detect the 8 instances of forgery, it must solely bear the lost. Moreover, a bank is bound to know the signatures of its clients, and paying a forged check, it must be considered as making payment out of its own funds. Depositors are not stopped from questioning wrongful withdrawals, even if it failed to question errors in the statement sent by the bank to them for verification. BPI has no right to impose a condition unilaterally and thereafter consider failure to meet such condition a waiver. Neither may CASA renounce a right it has never possessed.