METROPOLITAN WATERWORKS AND SEWERAGE
SYSTEM have personalized checks to be printed by Mesina Enterprises.
vs.
COURT OF APPEALS AND THE PHILIPPINE
NATIONAL BANK
G.R. No. 129015 August 13, 2004
TINGA, J.:
Forgery Sec. 23
PETITIONER: Metropolitan Waterworks and Sewerage System.
RESPONDENTS: Court of Appeals and The Philippine National Bank
SUMMARY:
The subject of this case are 23 checks written for the account of
NWSA, the predecessor of MWSS. The latter claims that the checks were
forgeries, and prayed for the restitution of the amount which had been
fraudulently encashed from its PNB account for the 23 checks that had been
cashed.
Doctrine:
Forgery cannot be presumed (Siasat, et al. v. Intermediate
Appellate Court, et al, 139 SCRA 238). It must be established by clear,
positive, and convincing evidence. This was not done in the present case.
Even if the twenty-three (23) checks in question are considered forgeries,
considering the petitioner's gross negligence, it is barred from setting up the
defense of forgery under Section 23 of the Negotiable Instruments Law.
FACTS:
Metropolitan Waterworks and Sewerage System (MWSS) had
an account with PNB. When it was still called NAWASA,
MWSS made a special arrangement with PNB so that it may
These personalized checks were the ones being used by MWSS
in its business transactions.
From March to May 1969, MWSS issued 23 checks to various
payees in the aggregate amount of P320,636.26. During the
same months, another set of 23 checks containing the same
check numbers earlier issued were forged. The aggregate
amount of the forged checks amounted to P3,457,903.00. This
amount was distributed to the bank accounts of three persons:
Arturo Sison, Antonio Mendoza, and Raul Dizon.
MWSS then demanded PNB to restore the amount of
P3,457,903.00. PNB refused. The trial court ruled in favor of
MWSS but the Court of Appeals reversed the trial court’s
decision.
ISSUE:
Whether or not PNB should restore the said amount. – No.
RULING:
No. MWSS is precluded from setting up the defense of
forgery.
It has been proven that MWSS has been negligent in supervising
the printing of its personalized checks. It failed to provide
security measures and coordinate the same with PNB. Further,
the signatures in the forged checks appear to be genuine as
reported by the National Bureau of Investigation so much so that
the MWSS itself cannot tell the difference between the forged
signature and the genuine one. The records likewise show that
MWSS failed to provide appropriate security measures over its
own records thereby laying confidential records open to
unauthorized persons. Even if the twenty-three (23) checks in
question are considered forgeries, considering the MWSS’s
gross negligence, it is barred from setting up the defense of
forgery under Section 23 of the Negotiable Instruments Law.

RATIO:
The Supreme Court further emphasized that forgery cannot be
presumed. It must be established by clear, positive, and
convincing evidence. This was not done in the present case.