FRANSISCO V. COURT OF APPEALS

319 SCRA 354

 

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.