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Samsung Construction Corporation, Inc. v.

Far East Bank and Trust

G.R. No. 129015; August 13, 2004; Tinga, J.
Digest prepared by Jackie Canlas
Samsung Construction held an account with Far East Bank.
One day, a check worth P999,500 payable to case was presented by a certain
Roberto Gonzaga to the Makati Branch of Far East Bank. The check was certified
to be true by Jose Sempio, the assistant accountant of Samsung, who also
happened to be present in the bank during the time that the check was
Three bank personnel (teller, Assistant Cashier, and another bank officer)
examined the check and compared the signature appearing on the check with
the specimen signatures of Samsungs President Jong. After ascertaining that the
signature was genuine, and that the account had sufficient funds, Gonzaga was
asked to submit 3 proof of his identity. Eventually, Gonzaga was able to encash
the check.
When Samsung discovered the unauthorized withdrawal, it filed a complaint
against FEBTC for violation of Sec 23 of the Negotiable Instruments Law.
During the trial, both parties presented their respective expert witnesses:
o Samsung presented NBI Document Examiner Roda Flores.
o FEBTC presented PNP Crime Laboratory document Examiner Rosario Perez.
RTC rendered judgment in favor of Samsung, holding FEBTC liable. It gave more
credence to the testimony of NBI Examiner Flores.
CA reversed the RTC and absolved FEBTC from any liability.
o The contradictory findings of NBI and PNP created doubt as to the whether
there was forgery.
o Assuming there was forgery, it was due to the negligence of Samsung.
o As held in PNB v. National City Bank of NY, as between 2 innocent persons,
loss would be borne by the negligent party.
Samsung 45 to SC.
WON the check was forged YES
WON Samsung could set up the defense of forgery in Sec. 23
Petition granted.
WON the check was forged YES
(The details of the forgery are not really important to the lesson. The Court just
needed to answer this issue before the 2 nd issue can be resolved.)
The testimony of the NBI Examiner was more credible because even the
testimony of the PNP Examiner reveals that there are a lot of differences in the
questioned signature as compared to the standard signature specimen. The PNP
Examiner tried to excuse the differences by asserting that there were mere
variations, but such conclusion was not supported by sufficient cogent

The most telling difference between the question and genuine signatures
examined by the PNP is in the final upward stroke in the signature, or the
point to the short stroke of the terminal in the capital letter L. The difference
was glaring, yet the PNP Examiners brushed this off as a mere variation.
The NBI Examiner testified that there is a free rapid continuous execution or
stroke as shown by the tampering terminal stroke of the signatures whereas the
questioned signature is a hesitating slow drawn execution stroke.
The Court also compared the qualifications of the NBI Examiner to that the PNP
Examiner. The NBI Examiner was more experienced (15 years) and had
examined more than 50,000-55,000 questioned documents, as opposed to the
PNP Examiner who admitted to having examined only around 500 documents.

WON Samsung could set up the defense of forgery in Sec. 23 YES

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 drawers account. The traditional justification for the result is that the
drawee is in a superior position to detect a forgery because he has the makers
signature and is expected to know and compare it.
Under Sec 23 of the Negotiable Instruments Law, forgery is a real or absolute
defense by the party whose signature is forged. Such liability attaches even if
the bank exerts due diligence and care in preventing such faulty discharge.
Although the Court recognized that Sec 23 bars a party from setting up the
defense of forgery if it is guilty of negligence, it was unable to conclude that
Samsung was guilty of negligence.
o The bare fact that the forgery was committed by an employee of the party
whose signature was forged cannot necessarily imply that such partys
negligence was the cause for the forgery.
o Admittedly, the record does not establish what measures Samsung employed
to safeguard its blank checks. Jongs testimony regarding the use of a safety
box by Kyu was considered hearsay. But when CA ruled that Samsung was
negligent, it did not really explain how and why.
o In the absence of evidence to the contrary, the court concluded that there
was no negligence, the presumption being that every person takes ordinary
care of his concerns.
The CA Decision extensively discussed the FEBTCs efforts in establishing that
there no negligence on its part in the acceptance and payment of the forged
check. However, the degree of diligence exercised by the bank would be
irrelevant if the drawer is not precluded from setting up the defense of forgery
under Sec 23 by his own negligence.
WON FEBTC exercised extraordinary diligence required of it by the
situation NO
(This is irrelevant but the Court nevertheless made a comment since it was brought
up by FEBTC.)
The fact that the check was made out in the amount of nearly 1M is unusual
enough ti require a higher degree of caution on the part of the bank. FEBTC
confirmed this through its own internal procedures. As the amount increases, the
number of officers who need to approve it also increases.

Not only did the amount nearly total 1M, it was payable to cash. This should
have aroused suspicion of the banks, as it is not ordinary business practice for a
check for such large amount to be made payable to case or to bearer, instead of
to the order of a specified person.
Gonzaga did not carry any written proof that he was authorized by Samsung to
encash the check.
FEBTC Senior Assistant Cashier admitted that the bank tried, but failed, to
contact Jong over the phone to verify. The bank just heavily relied on the say-so
of Sempio. FEBTC Accountant Velez even admitted that she did not personally
know Sempio, and had met Sempio for the 1 st time only on the day the check
was enchased.