<Forgery> < Samsung Construction Co. Phils, Inc. vs. FEBTC, et. al.
> <Marie Titular>
< G.R. No. 129015> <Aug. 13, 2004> <TINGA, J.>
KEY TAKE-AWAY OR DOCTRINE TO REMEMBER
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. If payment is made, the drawee cannot charge it to the
drawer’s account.
RECIT-READY / SUMMARY
Samsung Construction filed a complaint in the RTC after a certain Robert Gonzaga, drew cash against Samsung’s current
account amounting to P999,500 from Far East Bank and Trust Company at Bel-Air Makati. The signature was alleged to be
forged according to Jong, the sole signatory of Samsung Construction’s checks and demanded that the amount be credited to
it. RTC ruled in favor of Samsung Construction after examining the testimonies presented by both parties. FEBTC filed an
appeal before the Court of Appeals and reversed the ruling of the RTC. Samsung Construction elevated the case to the
Supreme Court and granted its petition, reversing the decision of the Court of Appeals and held that Samsung Construction
is not precluded by negligence from setting up the forgery hence the general rule should apply: liability is imputed on the
drawee who paid out on the forgery.
FACTS
Plaintiff Samsung Construction maintained a current account with defendant Far East Bank and Trust Company
(FEBTC) at Bel-Air Makati branch. Jong Kyu Lee, Project Manager, is the sole signatory to Samsung Constructions
account while Kyu Yong Lee, the company’s accountant, has the custody of all the checks.
On March 19, 1992, a certain Robert Gonzaga presented for payment FEBTC check, payable to cash and drawn
against Samsung Construction’s current account, amounting to P999, 500.
After ascertaining that there were enough funds to cover the check, the bank teller compared the signature on
check with the specimen signature of Jong as contained in the specimen signature card with the bank. The bank
teller, justified with the authenticity of the signature, asked for Gonzaga’s proof of identity and provided with 3
identification cards.
The teller forwarded the check to the branch Senior Asst. Cashier and another bank officer who both concluded the
check was signed by Jong and approved of the cash encashment. This was further bolstered by Sempio, who was at
the bank during that time and vouched for the genuineness of the check.
Immediately after discovery, Jong proceeded to the police station and filed a criminal case against Sempio and
demanded that FEBTC credit to it the amount encashed plus interest. FEBTC claimed that it was still conducting an
investigation.
Jong filed a complaint against FEBTC in the RTC for the violation of Sec. 23 of the Negotiable Instruments Law. Both
parties presented their expert witness to testify on Jong’s claim that his signature on check was forged. RTC ruled in
favor of Samsung Corporation and chose to believe the findings of the NBI expert.
FEBTC filed an appeal to the Court of Appeals where it reversed the ruling of the RTC.
Aggrieved, Samsung Corporation elevated the case to the Supreme Court
ISSUES ARTICLES/LAWS/STATCON MAXIM INVOLVED
1. Whether or not the check was forged
2. Whether or not Samsung Construction was Sec. 23 of the Negotiable Instruments Law
precluded from setting up the defense of forgery
under Section 23 of the Negotiable Instruments Law
HELD / RATIO / RULING
1. Yes. The Supreme Court held that forgery cannot be presumed but must be proved by clear, positive, and
convincing evidence. In the case at bar, the Court held that the Court of Appeals is remiss in reversing the RTC’s
decision without thoroughly evaluating the evidence and relying on presumptions haphazardly drawn. RTC
subjected the evidence of both parties to a crucible of analysis and arrived at the conclusion that the testimony of
the NBI expert is more credible than the testimony of the PNP expert because it presented apparent and glaring
differences such as handwriting strokes that the PNP expert chose to downplay.
2. No. Sec. 23 of the Negotiable Instruments Law states that a forged makes the instrument “wholly inoperative,
and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any
party thereto, can be acquired through or under such signature, unless the party against whom it is sought to
enforce such right is precluded from setting up the forgery or want of authority. The Court held that Samsung
Corporation was not guilty of negligence hence, was not barred from setting up the defense of forgery. It contended
that the bare fact that the forgery was committed by a drawer-payor’s confidential employee or agent, who by
virtue of his position had unusual facilities for perpetrating the fraud and imposing the forged paper upon the bank,
does not entitle the bank to shift the loss to the drawer-payor. Furthermore, it was held that negligence is not
<Forgery> < Samsung Construction Co. Phils, Inc. vs. FEBTC, et. al.> <Marie Titular>
< G.R. No. 129015> <Aug. 13, 2004> <TINGA, J.>
presumed but must be proved by him who alleges it and in this case, FEBTC failed to dispute the presumption of
ordinary care exercised by Samsung Construction. Additionally, the Court upheld the general rule that imputes
liability on the drawee who paid out on the forgery. The Court held that the bank was amiss in its failure to employ
a higher degree of caution considering the circumstances such as the amount in the check nearly total one million
pesos and payable in cash which should arouse the suspicion of the bank as it is not ordinary business practice for a
check that large amount to be made payable to cash or to bearer, instead of to the order of a specified person.
FEBTC should have not merely complied with its internal procedures but undertake mandatory earnest efforts to
ensure the validity of the check and authority of Gonzaga to collect the payment. Lastly, extraordinary diligence
dictates that FEBTC should have ascertained from Jong personally that the signature in the questionable check was
his. Hence, the Court granted the petition and reversed the decision of the Court of Appeals.
