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.