ADALIA FRANCISCO, petitioner, vs.

COURT OF APPEALS , HERBY

COMMERCIAL & CONSTRUCTION CORPORATION AND JAIME C.
ONG,respondents.

FACTS:

A. Francisco Realty & Development Corporation (AFRDC), of which petitioner Francisco is

the president, entered into a Land Development and Construction Contract with private
respondent Herby Commercial & Construction Corporation (HCCC), represented by its
President and General Manager private respondent Ong. Under the contract, HCCC was to
be paid on the basis of the completed houses and developed lands delivered to and accepted
by AFRDC and the GSIS. Sometime in 1979, Ong discovered that Diaz and Francisco, the
Vice-President of GSIS, had executed and signed seven checks of various dates and amounts
payable to HCCC for completed and delivered work under the contract. Ong, however,
claims that these checks were never delivered to HCCC. It turned out that Francisco forged
the indorsement of Ong on the checks and indorsed the checks for a second time by signing
her name at the back of the checks, petitioner then deposited said checks in her savings
account. A case was brought by private respondents against petitioner to recover the value of
said checks. Petitioner however claims that she was authorized to sign Ong's name on the
checks by virtue of the Certification executed by Ong in her favor giving her the authority to
collect all the receivables of HCCC from the GSIS, including the questioned checks.

ISSUE:

Whether petitioner cannot be held liable on the questioned checks by virtue of the
Certification executed by Ong giving her the authority to collect such checks from the GSIS.

RULING:

Petitioner is liable. The Negotiable Instruments Law provides that where any person is under
obligation to indorse in a representative capacity, he may indorse in such terms as to negative
personal liability. An agent, when so signing, should indicate that he is merely signing in
behalf of the principal and must disclose the name of his principal; otherwise he shall be held
personally liable. Even assuming that Francisco was authorized by HCCC to sign Ong's
name, still, Francisco did not indorse the instrument in accordance with law. Instead of
signing Ong's name, Francisco should have signed her own name and expressly indicated that
she was signing as an agent of HCCC. Thus, the Certification cannot be used by Francisco to
validate her act of forgery.
FACTS:

A. Fransisco Realty and Development and Herby Commercial and

Construction Corporation entered into a Land Development and
Construction Contract. Fransisco was the president of AFRDC while Ong
was the president of HCCC. It was agreed upon that HCCC would undertake the
construction of housing units and the development of a large parcel of land. The payment
would be on a turnkey basis. To facilitate the
payment, AFDRC executed a Deed of Assignment to enable the HCCC to collect
payments from the GSIS. Further, they opened an account with a
bank from which checks would be issued by Fransisco and the GSIS president.

HCCC later on filed a complaint for the unpaid balance in pursuance to its agreement with
AFRDC. However, an amicable settlement ensued, which was embodied in a Memorandum
of Agreement. It was embodied in said agreement that GSIS recognizes its indebtedness to
HCCC and that HCCC would also pay its obligations to AFRDC.

A year later, it was found out that Diaz and Fransisco had drawn checks payable to
Ong. Ong denied accepting said checks and it was further found
out that Diaz entrusted the checks to Fransisco who later forged the signature of Ong,
showing that he indorsed the checks to her and then she
deposited the checks to her personal savings account. This incident prompted Ong to
file a complaint against Fransisco.

HELD:

Ong’s signature was found to be forged by Fransisco.

Fransisco’s contention that he was authorized to sign Ong’s name in her favor giving
her authority to collect all the receivables of HCCC from
GSIS. This contention is bereft of any merit. The Negotiable Instruments
Law provides that when a person is under obligation to indorse in a representative
capacity, he may indorse in such terms as to negative personal liability. An agent, when so
signing, should indicate that he is merely signing as an agent in behalf of
the principal and must disclose the name of his principal. Otherwise, he
will be held liable personally. And assuming she was indeed authorized,
she didn't comply with the requirements of the law. Instead of signing Ong’s name,
she should have signed in her own name as agent of HCCC. Thus, her contentions cannot
support or validate her acts of forgery.