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Samsung Construction Company Philippines V. Far East Bank GR No. 129015, 2004-08-13 Tinga, J, Facts

Samsung Construction Company Philippines maintained a bank account with Far East Bank and Trust Company. A Samsung employee presented a check from Samsung's account, payable to cash, that had Jong Kyu Lee's forged signature. Far East Bank encashed the check. Samsung Construction argued the signature was forged and they were not negligent in keeping their checks. The Supreme Court ruled that (1) Samsung was not negligent since forgery by an employee does not imply negligence, and Far East Bank did not prove negligence, and (2) Samsung could raise the defense of forgery since general rule is a forged signature is invalid and Far East Bank is liable for losses from a check with a forged signature even if it exercised due diligence.

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59 views1 page

Samsung Construction Company Philippines V. Far East Bank GR No. 129015, 2004-08-13 Tinga, J, Facts

Samsung Construction Company Philippines maintained a bank account with Far East Bank and Trust Company. A Samsung employee presented a check from Samsung's account, payable to cash, that had Jong Kyu Lee's forged signature. Far East Bank encashed the check. Samsung Construction argued the signature was forged and they were not negligent in keeping their checks. The Supreme Court ruled that (1) Samsung was not negligent since forgery by an employee does not imply negligence, and Far East Bank did not prove negligence, and (2) Samsung could raise the defense of forgery since general rule is a forged signature is invalid and Far East Bank is liable for losses from a check with a forged signature even if it exercised due diligence.

Uploaded by

Alexir Mendoza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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SAMSUNG CONSTRUCTION COMPANY PHILIPPINES v.

FAR EAST BANK


GR No. 129015, 2004-08-13
TINGA, J,
Facts:
Samsung Construction Company Philippines, Inc. maintained a current account with
defendant Far East Bank and Trust Company‘s ("FEBTC").
The sole signatory to Samsung Construction's account was Jong Kyu Lee ("Jong"), its
Project Manager, while the checks remained in the custody of the company's accountant, Kyu
Yong Lee ("Kyu").
A Samsung Employee presented for payment FEBTC Check to the bank. The check,
payable to cash and drawn against Samsung Construction's current account. The bank teller
verified their authenticity and the checks were later encashed to Gonzaga.
Kyu discovered that a check in the amount of P999,500.00 had been encashed. It was
found that Jong’s signature had been forged.
Issues:
1. Was Samsung Construction negligent in keeping its checks?
2. Was Samsung Construction precluded from setting up the defense of forgery under
Section 23 of the Negotiable Instruments Law?
Ruling:
1. No, Samsung was not guilty of negligence in this case.
The bare fact that the forgery was committed by an employee of the party whose signature
was forged cannot necessarily imply that such party's negligence was the cause for the forgery.
Negligence is not presumed, but must be proven by him who alleges it, yet, FEBTC was unable
to do so.
2. No, Samsung Construction was not precluded from setting up the defense of Forgery.
The general rule is to the effect that a forged signature is "wholly inoperative," and payment
made "through or under such signature" is ineffectual or does not discharge the instrument.
Under Section 23 of the Negotiable Instruments Law, forgery is a real or absolute defense by
the party whose signature is forged but it cannot be raised if said party had been negligent.
Hence, if Jong's signature was indeed forged, FEBTC is liable for the loss since it authorized the
discharge of the forged check. Such liability attaches even if the bank exerts due diligence and
care in preventing such faulty discharge.

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