LIM vs.

FLORENCIO SABAN
FACTS:
The late Eduardo Ybaez, the owner of the lot in Cebu City entered into an Agreement and
Authority to negotiate and Sell with respondent Saban. Ybaez authorized Saban to look for a
buyer of the lot for P200, 000.00 and to mark up the selling price to include the amounts needed
for payment of taxes, transfer of title and other expenses as well as the commission for the sale of
Saban. Through the effort of Saban, the spouses were able to sell the lot to petitioner Lim.
However, it appears that the vendees agreed to purchase the lot at the price of six hundred
thousand pesos (P600, 000.00) inclusive all the expenses of the sale. After the sale, Lim remitted
to Saban initial payment and also issued postdated checks. These checks were Bank of the
Philippine Islands (BPI).
Subsequently, Ybaez wrote a letter to Lim to cancel all the checks issued to Saban and issue
another checks in favor of him. Saban found out because all the checks were dishonored when
presented to the bank. Saban filed a complaint against Ybaez and Lim alleging that the two
connive against him. In his Answer, Ybaez claimed that Saban was not entitled to any
commission because he concealed the actual selling price from him and because he was not a
licensed real estate broker.
Ybaez died during the pendency of the case before the RTC. Upon motion of his counsel, the trial
court dismissed the case only against him without any objection from the other parties. RTC
renedered a decision dismissing the complaint of Saban as the checks were stale and nonnegotiable. However, it was reversed by CA. The appellate court further ruled that, in issuing the
checks in payment of Sabans commission, Lim acted as an accommodation party. She signed the
checks as drawer, without receiving value therefor, for the purpose of lending her name to a third
person. As such, she is liable to pay Saban as the holder for value of the checks.
ISSUE
Whether or not Lim is an accommodation party.
RULING
No, Lim is not an accommodation party in this case. The appellate court however erred in ruling
that Lim is liable on the checks because she issued them as an accommodation party. Section 29
of the Negotiable Instruments Law defines an accommodation party as a person "who has signed
the negotiable instrument as maker, drawer, acceptor or endorser, without receiving value
therefor, for the purpose of lending his name to some other person." The accommodation party is
liable on the instrument to a holder for value even though the holder at the time of taking the
instrument knew him or her to be merely an accommodation party. The accommodation party may
of course seek reimbursement from the party accommodated.34
As gleaned from the text of Section 29 of the Negotiable Instruments Law, the accommodation
party is one who meets all these three requisites, viz: (1) he signed the instrument as maker,
drawer, acceptor, or endorser; (2) he did not receive value for the signature; and (3) he signed for
the purpose of lending his name to some other person. In the case at bar, while Lim signed as
drawer of the checks she did not satisfy the two other remaining requisites.

The absence of the second requisite becomes pellucid when it is noted at the outset that Lim
issued the checks in question on account of her transaction, along with the other purchasers,
with Ybaez which was a sale and, therefore, a reciprocal contract. Specifically, she drew the
checks in payment of the balance of the purchase price of the lot subject of the transaction. And
she had to pay the agreed purchase price in consideration for the sale of the lot to her and her covendees. In other words, the amounts covered by the checks form part of the cause or
consideration from Ybaezs end, as vendor, while the lot represented the cause or consideration
on the side of Lim, as vendee.35 Ergo, Lim received value for her signature on the checks.
Neither is there any indication that Lim issued the checks for the purpose of enabling Ybaez, or
any other person for that matter, to obtain credit or to raise money, thereby totally debunking the
presence of the third requisite of an accommodation party.