FACTS:

The petitioner, a prominent businessman and depositor of the respondent bank, entrusted his credit cards and checkbook with blank checks to his secretary. Between September 5, 1980, and January 23, 1981, the secretary was able to encash and deposit several checks drawn against the petitioner's account, totaling an amount of P119,634.34. The petitioner only discovered the alleged forgeries when his business partner informed him that he saw the secretary use his credit cards. The petitioner immediately fired the secretary and filed a criminal action for estafa thru falsification against her. The respondent bank filed a complaint for estafa thru falsification of commercial documents against the secretary based on the petitioner's claim of forged signatures. The petitioner requested the respondent bank to credit back the value of the wrongfully encashed checks, but the bank refused. The petitioner then filed a civil case for damages against the bank. The trial court dismissed the case, and the Court of Appeals affirmed the dismissal, holding that the petitioner's own negligence was the proximate cause of his loss. The petitioner, in his appeal to the Supreme Court, argues that the bank is estopped from asserting that the fact of forgery was not established because it filed a criminal complaint based on the petitioner's claim of forged signatures. The issues in the case are whether or not the petitioner has a cause of action against the bank and whether or not the bank is barred from raising the defense of forgery in the criminal complaint.

ISSUES:

1. Whether the petitioner has a cause of action against Manila Bank.

2. Whether Manila Bank was negligent in failing to detect the discrepancy in the signatures on the checks.

3. Whether Manila Bank can be held liable for petitioner's loss.

4. Whether the petitioner's failure to examine his bank statements is the proximate cause of his own damage, thus precluding him from recovering damages.

5. Whether the petitioner is precluded from setting up the forgery of the checks due to his own negligence in entrusting his credit cards and checkbook to his secretary.

6. Whether the fact of forgery has been clearly established in this case.

7. Whether the filing of the estafa case by respondent bank against the petitioner's secretary estops them from asserting that forgery has not been clearly established.

RULING:

1. The petitioner does not have a cause of action against Manila Bank. The burden of proof to establish the fact of forgery lies with the petitioner, and he failed to submit additional specimen signatures as requested by the National Bureau of Investigation. The Court of Appeals found that the evidence presented by the petitioner on the alleged forgery is not convincing enough, and he did not submit his own specimen signatures for examination and comparison with those of the questioned checks.

2. Manila Bank was not negligent in failing to detect the discrepancy in the signatures on the checks. The bank's employees exercised due diligence in cashing the checks by verifying the drawer's signatures as against his specimen signature cards, seeking confirmation by calling the depositor, and taking other precautionary measures before releasing the funds. Any mistakes made by the bank's employees were not deliberate and were not equivalent to negligence.

3. Manila Bank cannot be held liable for petitioner's loss. It was the petitioner who was negligent by giving his secretary unrestricted access to his credit cards, check books, and bank statements. The petitioner entrusted his secretary with the verification and reconciliation of his account, and failed to personally check the monthly statements of accounts and cancelled checks issued under his account. The bank cannot be faulted for the petitioner's lack of supervision and failure to take necessary precautions.

4. Yes. The petitioner's failure to examine his bank statements is the proximate cause of his own damage. Under Article 2179 of the New Civil Code, when the plaintiff's own negligence was the immediate and proximate cause of his injury, no recovery can be had for damages.

5. Yes. The petitioner is precluded from setting up the forgery of the checks due to his own negligence in entrusting his credit cards and checkbook to his secretary.

6. No. The fact of forgery has not been clearly established in this case.

7. No. The filing of the estafa case by respondent bank against the petitioner's secretary does not estop them from asserting that forgery has not been clearly established.

PRINCIPLES:

• To be entitled to damages, the burden of proving negligence and forgery lies with the party seeking damages.

• Negligence is the omission to do something which a reasonable man would do, or the doing of something which a prudent and reasonable man would not do.

• Factual findings of a trial court, especially when affirmed by the appellate court, are binding upon higher courts and entitled to utmost respect and even finality.

• Proximate cause is the cause that produces the injury, unbroken by any efficient intervening cause, and without which the result would not have occurred.

• Under the Negotiable Instruments Law, a forged check is inoperative unless the party against whom enforcement is sought is precluded from setting up the forgery.

• A party may be precluded from setting up the forgery if they were negligent in preventing or detecting the forgery.

• The fact of forgery must be clearly established to hold the collecting bank liable.

• Filing a criminal case for forgery does not estop a party from asserting that forgery has not been clearly established in a civil case.