Samsung Construction Company Philippines, Inc. vs.
Far East Bank Ruling:
and Trust and CA
Facts:
Samsung Construction maintained a current account with Far East Bank and
Trust Bank (FETBC) in its Bel-Air Makati Branch, with Jong Kyu Lee who is
the Project Manager as the sole signatory and Kyu Yong Lee having the
checks in his custody as the companys accountant. A certain Roberto
Gonzaga presented an FETBC Check on the same branch. The check was
payable to cash and drawn against the account of Samsung Construction
amounting to P995, 500.00. The teller and the bank officers were satisfied
with the genuineness of the signature in the check and confirmed the identity
of Gonzaga with the assistant accountant of Samsung Construction who was
also familiar and known to them, the latter being present at the bank premises
at that time. In the end, the check was authorized to be encashed. The Project
Manager and the Accountant of the company found out the next day that the
last blank check was missing and that the check was encashed with Jongs
signature being forged. Samsung Construction demanded reimbursement of
the amount encashed and when it was not heeded immediately, it filed a
Complaint against the bank for violation of Sec. 23 of Negotiable Instruments
Law.
In the RTC, it held that Jongs signature on the check was forged and ordered
the bank to pay company for the amount plus interest. During appeal in CA,
this decision was reversed by stating that even assuming there was forgery,
it occurred due to the negligence of Samsung Construction specifically the
accountant for lack of care in keeping the checks. The decision was appealed
to SC, based on the grounds that the CA misapprehended the facts and erred
when it said that the company has been negligent in safekeeping the check.
Issue:
Is bank liable to reimburse the amount encashed through forgery?
Yes, the bank is liable to pay Samsung Construction. Therefore, the decision
of CA is set aside.
Under Sec. 23 of Negotiable Instruments Law, forgery is a real or absolute
defense by the party whose signature is forged. The general rule remains that
the drawee who has paid upon the forged signature bears the loss. The
exception to this rule arises only when negligence can be traced on the part
of the drawer whose signature was forged, and the need arises to weigh the
comparative negligence between the drawer and the drawee to determine
who should bear the burden of loss. The Court finds no basis to conclude that
Samsung Construction was negligent in the safekeeping of its checks
especially that Samsung Construction reported the forgery almost
immediately upon discovery. The general rule imputing liability on the drawee
who paid out on the forgery holds in this case.
The circumstances should have aroused the suspicion of the bank, as it is not
ordinary business practice for a check for such large amount to be made
payable to cash or to bearer, instead of to the order of a specified person.
Extraordinary diligence dictates that FEBTC should have ascertained from
Jong personally that the signature in the questionable check was his. Still,
even if the bank performed with utmost diligence, the drawer whose signature
was forged may still recover from the bank as long as he or she is not
precluded from setting up the defense of forgery. After all, Section 23 of the
Negotiable Instruments Law plainly states that no right to enforce the payment
of a check can arise out of a forged signature. Since the drawer, Samsung
Construction, is not precluded by negligence from setting up the forgery, the
general rule should apply. Consequently, if a bank pays a forged check, it
must be considered as paying out of its funds and cannot charge the amount
so paid to the account of the depositor. A bank is liable, irrespective of its
good faith, in paying a forged check.