[G. R. No. 116320. November 29, 1999] ADALIA FRANCISCO, petitioner, vs.

COURT OF APPEALS , HERBY COMMERCIAL & CONSTRUCTION CORPORATION AND JAIME C. ONG,respondents. DECISION GONZAGA_REYES, J.: 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: Ongs signature was found to be forged by Fransisco. Fransiscos contention that he was authorized to sign Ongs 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 Ongs name, she should have signed in her own name as agent of HCCC. Thus, her contentions cannot support or validate her acts of forgery.