Francisco vs CA

ADALIA FRANCISCO vs. COURT OF APPEALS, ET AL.

G.R. No. 116320 November 29, 1999 

--agents

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.