Samsung Construction Company Philippines, Inc. vs. Far East Bank 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 company’s 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 chec k was encashed with Jong’s 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 Jong’s 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?
Ruling: 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.
