S1LLCC MAkkL1ING CCkCkA1ICN vsCA S1LLLWLLD CCkCkA1ICN CI 1nL nILIINLS INC

Gk No 96160 Iune 17 1992

IAC1S
1 SLelco MarkeLlng CorporaLlon ls engaged ln Lhe dlsLrlbuLlon and sale Lo Lhe publlc of sLrucLural
sLeel bars Cn 7 dlfferenL occaslons lL sold Lo 8?L ConsLrucLlon lnc quanLlLles of sLeels bars of
varlous slzes and rolls of Cl wlre 1he laLLer made no paymenLs for Lhe consLrucLlon maLerlals
ordered and dellvered desplLe lnslsLenL demands for paymenL by Lhe former
2 8?L gave Lo ArmsLrong lndusLrles S1LLCC's slsLer corporaLlon and manufacLurlng arm

a
check drawn agalnsL MeLrobank 1he check was a company check respondenL SLeelweld
CorporaLlon of Lhe hlllpplnes slgned by lLs resldenL Llmson and lLs vlceresldenL 1orres
3 1he check was lssued by Llmson aL Lhe behesL of hls frlend Llm resldenL of 8?L Llm had asked
Llmson for flnanclal asslsLance and Lhe laLLer had agreed Lo glve Llm a check only by way of
accommodaLlon only as guaranLy buL noL Lo pay for anyLhlng Powever lL was sLaLed LhaL Lhe
check was glven by Llm Lo ArmsLrong lndusLrles ln paymenL of an obllgaLlon
4 When Lhe laLLer deposlLed Lhe check aL lLs bank lL was dlshonored because drawn agalnsL
lnsufflclenL funds When so deposlLed Lhe check bore 2 endorsemenLs LhaL of 8?L
ConsLrucLlon followed by LhaL of ArmsLrong lndusLrles
3 ArmsLrong flled complalnL agalnsL Llmson and 1orres and were charged wlLh vlolaLlon of 8 22
1hey were acqulLLed on Lhe ground LhaL Lhe check ln quesLlon was noL lssued by Lhe drawer Lo
apply on accounL for value lL belng merely for accommodaLlon purposes
6 S1LLCC flled wlLh 81C Caloocan a clvll complalnL agalnsL boLh 8?L and S1LLLWLLu for Lhe
recovery of Lhe valued of Lhe sLeel bars and wlre sold Lo and dellvered Lo 8?L alleglng LhaL
MeLrobank Check had been glven Lo lL ln paymenL of 8?Ls lndebLedness duly lndorsed by Llm
SLeelweld CorporaLlon was ordered Lo pay Lo S1LLCC SLeelweld appealed and declslon was
reversed Pence Lhls

ISSUL
WCn S1LLCC ls Lhe holder ln due course Lo whom SLeelweld may be held llable as an accommodaLlon
parLy

nLLD
no 1hough SLeelweld was sald Lo be an occommoJotloo potty lL cannoL be held llable Lo S1LLCC as
S1LLCC was noL proved Lo be a Lhe holder ln due course Lo whom such accommodaLlon parLy ls Lo be
held llable under Sec 29 of Lhe nlL 1he fourLh condlLlon le lack of noLlce of any lnflrmlLy ln Lhe
lnsLrumenLs or defecL ln LlLle of Lhe persons negoLlaLlng lL has no appllcaLlon 1hls ls because SecLlon 29
of nlL preserves Lhe rlghL of recourse of a holder for value agalnsL Lhe accommodaLlon parLy
noLwlLhsLandlng LhaL such holder aL Lhe Llme of Laklng Lhe lnsLrumenL knew hlm Lo be only an
accommodaLlon
parLy

1he record does show LhaL oftet Lhe check had been deposlLed and dlshonored S1LLCC came lnLo
possesslon of lL ln some way and was able several years afLer Lhe dlshonor of Lhe check Lo glve lL ln
evldence aL Lhe Lrlal of Lhe clvll case lL had lnsLlLuLed agalnsL Lhe drawers of Lhe check (Llmson and
1orres) and 8?L 8uL as already polnLed ouL possesslon of a negoLlable lnsLrumenL afLer presenLmenL
and dlshonor or paymenL ls uLLerly lnconsequenLlal lL does noL make Lhe possessor a holder for value
wlLhln Lhe meanlng of Lhe law lL glves rlse Lo no llablllLy on Lhe parL of Lhe maker or drawer and
lndorsers
lL ls clear from Lhe relevanL clrcumsLances LhaL S1LLCC cannoL be deemed a holder of Lhe check for
value lL does noL meeL Lwo of Lhe essenLlal requlslLes prescrlbed by Lhe sLaLuLe lL dld noL become Lhe
holder of lL before lL was overdue and wlLhouL noLlce LhaL lL had been prevlously dlshonored and lL dld
noL Lake Lhe check ln good falLh and for value nelLher ls Lhere any evldence whaLever LhaL ArmsLrong
lndusLrles Lo whom 8? Llm negoLlaLed Lhe check accepLed Lhe lnsLrumenL and aLLempLed Lo encash lL
ln behalf and as agenL of S1LLCC Cn Lhe conLrary Lhe lndlcaLlons are LhaL ArmsLrong was really Lhe
lnLended payee of Lhe check and was Lhe parLy acLually ln[ured by lLs dlshonor lL was afLer all lLs
represenLaLlve (a Mr ?oung) who lnsLlLuLed Lhe crlmlnal prosecuLlon of Lhe drawers Llmson and 1orres
albelL unsuccessfully

eLlLlon was dlsmlssed