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

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

    Uploaded by

    Alexir Mendoza
    15 views1 page
    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.

    Original Description:

    Nego Digest

    Original Title

    Samsung v FEB

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    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.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    15 views1 page

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

    Uploaded by

    Alexir Mendoza
    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.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    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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