G.R. No. 116320 November 29, 1999
ADALIA FRANCISCO, petitioner, vs. COURT OF APPEALS, HERBY COMMERCIAL & CONSTRUCTION CORPORATION AND JAIME C. ONG, respondents.

FACTS

The case originated from a Land Development and Construction Contract between A. Francisco Realty & Development Corporation (AFRDC), represented by its President Adalia Francisco, and Herby Commercial & Construction Corporation (HCCC), represented by Jaime C. Ong. Payments from the GSIS for HCCC’s work were to be drawn from a joint account, with checks requiring the signatures of both Francisco and a GSIS vice-president. HCCC later sued for unpaid balances, leading to a settlement and dismissal of the case. Subsequently, Ong discovered that seven checks, drawn against the account and payable to HCCC, had been issued. Francisco, who had custody of these checks, allegedly forged Ong’s endorsement, signed them herself, and deposited them into her personal account. Ong filed criminal complaints for estafa through falsification, which were dismissed by the fiscal. HCCC and Ong then filed the present civil case against Francisco and the drawee bank, Insular Bank of Asia & America (IBAA), for recovery of the check value and damages.

ISSUE

The primary issue is whether Francisco is civilly liable to HCCC for the value of the checks she allegedly appropriated through forgery of Ong’s endorsement.

RULING

The Supreme Court affirmed the decisions of the lower courts, holding Francisco civilly liable. The legal logic rests on the conclusive finding of forgery and the failure of Francisco’s defense. The trial court’s finding, affirmed by the Court of Appeals, that Francisco forged Ong’s signature was based on credible handwriting expert testimony from the NBI. This factual finding is binding on the Supreme Court in a petition for review. Francisco’s claim that the checks were endorsed to her by Ong as repayment for loans was rejected. The Court found this defense implausible, noting it was improbable that HCCC would need loans from Francisco when GSIS checks payable to it were being issued concurrently. The Court reasoned that Francisco likely concealed the checks’ issuance to create the illusion of extending financial accommodation, while in reality, she was misappropriating HCCC’s own funds. Her act of forging the endorsement and converting the funds constituted a clear violation of her obligations and an abuse of her position of trust, making her civilly liable for the amount of P370,475.00. The Court modified the interest rate on the award to 6% per annum from the filing of the complaint until finality, and 12% per annum thereafter until full payment, in accordance with prevailing jurisprudence. The award of moral and exemplary damages, attorney’s fees, and litigation expenses was sustained due to Francisco’s fraudulent and wanton conduct.