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Samsung Construction Company Philippines, Inc. vs.

Far East Bank and Trust Company

and CA
G.R. No. 129015, August 13, 2004

Samsung Construction Company Philippines, Inc. (Samsung Construction) had a
deposit account with Far East Bank and Trust Company (FEBTC). A certain Robert Gonzaga
presented a check for payment before the FEBTC branch in Makati. The check was payable to
Cash and drawn against Samsung Construction's current account in the amount of
P999,500.00. The bank teller then compared the signature appearing on the check with the
specimen signature of Jong as contained in the specimen signature card with the bank. The
teller was satisfied that it was Jong’s signature on the check. She then asked Gonzaga to
submit proof of his identity, which the latter did through three identification cards. At the same
time, she forwarded the check to branch Senior Assistant Cashier Gemma Velez who counter
checked the signature on the check with the specimen. She then forwarded the check to Shirley
Syfu, another bank branch officer, for approval. Syfu noticed that Jose Sempio III, the assistant
accountant of Samsung Construction, was also in the bank. Syfu showed the check to Sempio,
who verified Jong’s signature and vouched for the identity of Gonzaga. Syfu then authorized the
bank's encashment of the check to Gonzaga.

The following day, accountant Kyu examined the balance of the bank account of
Samsung Construction and discovered that a check worth P999,500 had been encashed.
Aware that he had not prepared such check he reported the matter to Jong, who learned of the
encashment of the check, and realized that his signature had been forged. Samsung
Construction sued FEBTC before the Regional Trial Court (RTC) for violation of Section 23 of
the Negotiable Instruments Law to which the court granted in Samsung Construction’s favor.On
appeal, the Court of Appeals (CA) reversed the RTC decision and absolved FEBTC from any
liability. Hence, the present petition.

Issue: Whether or not the bank was negligent when it encashed the forged check.

Ruling: Yes, the bank is negligent in encashing the forged check. The Court rules that while it is
true that the bank complied with its internal rules prior to paying out the questionable check,
there are several troubling circumstances that led the Court to believe that the bank itself was
remiss in its duty. The Supreme Court reiterates that the highest degree of care and diligence is
required of banks. Banks are engaged in a business impressed with public interest, and it is
their duty to protect their many clients and depositors who transact business with them. They
have the obligation to treat their client's account meticulously and with the highest degree of
care, considering the fiduciary nature of their relationship. The diligence required of banks,
therefore, is more than that of a good father of a family. Given the circumstances, extraordinary
diligence dictates that FEBTC should have ascertained from Jong personally that the signature
in the questionable check was his.