Agro Conglomerates Inc. V.

CA (2000) subsidiary contract of suretyship had taken effect since Agro signed
the promissory notes as maker and accommodation party for the
G.R. No. 117660 December 18, 2000 benefit of Wonderland

Lessons Applicable: Consideration and Accommodation Party bank released the proceeds of the loan to Agro who failed to meet
(Negotiable Instruments Law) their obligations as they fell due

FACTS: bank, experiencing financial turmoil, gave Agro opportunity to

settle their account by extending payment due dates
July 17, 1982: Agro Conglomerates, Inc. (Agro) sold 2 parcels of
land to Wonderland Food Industries, Inc (Wonderland) for P 5M Mario Soriano manifested his intention to re-structure the loan, yet
under terms and conditions: did not show up nor submit his formal written request

Regent filed 3 separate complaints before the RTC for Collection of

P 1M Pesos shall be paid in cash upon the signing of the agreement sums of money

P 2M Pesos worth of common shares of stock of the Wonderland CA affirmed Trial court: held Agro liable
Food Industries, Inc.
ISSUE: W/N Agro should be liable because there was no
balance of P2,000,000.00 shall be paid in 4 equal installments, the accomodation or surety
first installment falling due, 180 days after the signing of the
agreement and every six months thereafter, with an interest rate HELD: YES. CA affirmed.
of 18% per annum, to be advanced by the vendee upon the signing First, there was no contract of sale that materialized. The
of the agreement original agreement was that Wonderland would pay cash and
Agro would deliver possession of the farmlands. But this was
changed through an addendum, that Agro would instead secure a
July 19, 1982: Agro, Wonderland and Regent Savings & Loan Bank loan and the settlement
(Regent) (formerly Summa Savings & Loan Association) amended of the same would be shouldered by Wonderland.
the arrangement resulting to a revision - addedum was not
notarized contract of surety between Woodland and petitioner was
extinguished by the rescission of the contract of sale of the
Agro would secure a loan in the name of Agro Conglomerates Inc. farmland
for the total amount of the initial payments, while the settlement of
loan would be assumed by Wonderland With the rescission, there was confusion in the persons of the
principal debtor and surety. The addendum thereon likewise
Mario Soriano (of Agro) signed as maker several promissory notes, lost its efficacy
payable to Regent in favor of Wonderland
accommodation party - NOT in this case because of recission

person who has signed the instrument as:

maker
acceptor
indorser
without receiving value therefor
for the purpose of lending his name to some other person
is liable on the instrument to a holder for value, notwithstanding
such holder at the time of taking the instrument knew (the
signatory) to be an accommodation party
has the right, after paying the holder, to obtain reimbursement
from the party accommodated, since the relation between them
has in effect become one of principal and surety, the
accommodation party being the surety.
Suretyship
relation which exists where:
1 person has undertaken an obligation
another person is also under the obligation or other duty to the
obligee, who is entitled to but one performance
The suretys liability to the creditor or promisee is directly and
equally bound with the principal and the creditor may proceed
against any one of the solidary debtors
Novation - NOT in this case
extinguishment of an obligation by the substitution or change of
the obligation by a subsequent one which extinguishes or modifies
the first, either by changing the object or principal conditions, or by
substituting another in place of the debtor, or by subrogating a
third person in the rights of the creditor
never presumed and it must be clearly and unequivocally shown
requisites:
There must be a previous valid obligation - lacking
There must be an agreement of the parties concerned to a new
contract
There must be the extinguishment of the old contract; and
There must be the validity of the new contract
Sec. 22 of the Civil Code provides:
Every person who through an act of performance by another, or
any other means, acquires or comes into possession of something
at the expense of the latter without just or legal ground, shall
return the same to him.
Agro had no legal or just ground to retain the proceeds of the loan
at the expense of Wonderland.
Neither could Agro excuse themselves and hold Wonderland still
liable to pay the loan upon the rescission of their sales contract -
surety no effect because of the rescission
If Agro sustained damages as a result of the rescission, they should
have impleaded Wonderland and asked damages
The non-inclusion of a necessary party does not prevent the court
from proceeding in the action, and the judgment rendered therein
shall be without prejudice to the rights of such necessary party
But respondent appellate court did not err in holding that Agro are
duty-bound under the law to pay the claims of Regent from whom
they had obtained the loan proceeds
ALLIED BANKING CORPORATION vs. BANK OF THE
PHILIPPINE ISLANDS G.R. No. 188363, February 27, 2013
FACTS:
On October 10, 2002, a check in the amount of P1,000,000.00
payable to "Mateo Mgt. Group International" (MMGI) was presented
for deposit and accepted at petitioner's (Allied Bank) Kawit Branch.
The check, post-dated "Oct. 9, 2003", was drawn against the
account of Marciano Silva, Jr. (Silva) with respondent BPI Bel-Air
Branch. Upon receipt, petitioner sent the check for clearing to
respondent through the Philippine Clearing House Corporation
(PCHC). The check was cleared by respondent and petitioner
credited the account of MMGI with P1,000,000.00. On October 22,
2002, MMGIs account was closed and all the funds therein were
withdrawn. A month later, Silva discovered the debit of
P1,000,000.00 from his account. In response to Silvas complaint,
respondent credited his account with the aforesaid sum. Petitioner
filed a complaint before the Arbitration Committee, asserting that
respondent should solely bear the entire face value of the check
due to its negligence in failing to return the check to petitioner
within the 24-hour reglementary period as provided in Section
20.1of the Clearing House Rules and Regulations (CHRR) 2000. In
its Answer with Counterclaims, respondent charged petitioner with
gross negligence for accepting the post- dated check in the first
place. It contended that petitioners admitted negligence was the
sole and proximate cause of the loss.
ISSUE
: What does the Doctrine of Last Clear Chance enunciate?
RULING
: The doctrine of last clear chance, stated broadly, is that the
negligence of the plaintiff does not preclude a recovery for the
negligence of the defendant where it appears that the defendant,
by exercising reasonable care and prudence, might have avoided
injurious consequences to the plaintiff notwithstanding the
plaintiffs
negligence. The doctrine necessarily assumes negligence on the
part of the defendant and contributory negligence on the part of
the plaintiff, and does not apply except upon that assumption.
Stated differently, the antecedent negligence of the plaintiff does
not preclude him from recovering damages caused by the
supervening negligence of the defendant, who had the last fair
chance to prevent the impending harm by the exercise of due
diligence. Moreover, in situations where the doctrine has been
applied, it was defendants failure to exercise such ordinary care,
havi ng the last clear chance to avoid loss or injury, which was the
proximate cause of the occurrence of such loss or injury.
ISSUE
: Does the Doctrine of Last Clear Chance apply in this case?
RULING
: YES. In this case, the evidence clearly shows that the proximate
cause of the unwarranted encashment of the subject check was the
negligence of respondent who cleared a post-dated check sent to it
thru the PCHC clearing facility without observing its own
verification procedure. As correctly found by the PCHC and upheld
by the RTC, if only respondent exercised ordinary care in the
clearing process, it could have easily noticed the glaring defect
upon seeing the date written on the face of the check "Oct. 9,
2003". Respondent could have then promptly returned the check
and with the check thus dishonored, petitioner would have not
credited the amount thereof to the payees account. Thus,
notwithstanding the antecedent negligence of the petitioner in
accepting the post-dated check for deposit, it can seek
reimbursement from respondent the amount credited to the
payees account covering the check.
Ang Tiong V. Ting (1968)
G.R. No. L-26767 February 22, 1968
FACTS:
August 15, 1960: Lorenzo Ting issued Philippine Bank of
Communications check K-81618, w/ sum of P4,000, payable to
"cash or bearer"
With Felipe Ang's signature (indorsement in blank) at the back
thereof, the instrument was received by the Ang Tiong who
presented it to the drawee bank for payment but it was dishonored
Ting made a written demand to both Ting and Ang to no avail
March 6, 1962: Municipal Court of Manila favored Tiong against Ting
and Ang
CA: ordered Ang to pay with interest
Ang contends that he is an accomodating indorser
ISSUE: W/N Ang is an accomodating indorser and not a general
indorser a
HELD: NO. Affirmed
Section 63 of the Negotiable Instruments Law: a person placing his
signature upon an instrument otherwise than as maker, drawer or
acceptor = a general indorser, unless he clearly indicates
plaintiff appropriate words his intention to be bound in some other
capacity
warrants:
(a) that the instrument is genuine and in all respects what it
purports to be;
(b) that he has a good title to it;
(c) that all prior parties have capacity to contract; and
(d) that the instrument is at the time of his indorsement valid and
subsisting
Even on the assumption that the appellant is a mere
accommodation party, as he professes to be, he is by the clear
mandate of section 29 of the Negotiable Instruments Law, "liable
on the instrument to a holder for value, notwithstanding that such
holder at the time of taking the instrument knew him to be only an
accommodation party."
It is not a valid defense that the accommodation party did not
receive any valuable consideration when he executed the
instrument.
Nor is it correct to say that the holder for value is not a holder in
due course merely because at the time he acquired the instrument,
he knew that the indorser was only an accommodation party.
assuming him to be an accommodation indorser, may obtain
security from the maker to protect himself against the danger of
insolvency of the latter, cannot in any manner affect his liability to
the Tiong, as the said remedy is a matter of concern exclusively
between accommodation indorser and accommodated party.
The liability of the appellant remains primary and unconditional.
Ang V. Associated Bank (2007)
G.R. No. 146511 September 5, 2007
FACTS:
August 28, 1990: Associated Bank (formerly Associated Banking
Corporation and now known as United Overseas Bank Philippines)
filed a collection suit against Antonio Ang Eng Liong (principal
debtor) and petitioner Tomas Ang (co-maker) for the 2 promissory
notes
October 3 and 9, 1978: obtained a loan of P50,000 and P30,000
evidenced by promissory note payable, jointly and severally, on
January 31, 1979 and December 8, 1978
Despite repeated demands for payment, the latest on September
13, 1988 and September 9, 1986, they failed to settle their
obligations totalling to P539,638.96 as of July 31, 1990
Antonio Ang Eng Liong only admitted to have secured a loan
amounting to P80,000
Tomas Ang: bank is not the real party in interest as it is not the
holder of the promissory notes, much less a holder for value or a
holder in due course; the bank knew that he did not receive any
valuable consideration for affixing his signatures on the notes but
merely lent his name as an accommodation party
bank granted his co-defendant successive extensions of time within
which to pay, without his knowledge and consent
the bank imposed new and additional stipulations on interest,
penalties, services charges and attorney's fees more onerous than
the terms of the notes, without his knowledge and consent
he should be reimbursed by his co-defendant any and all sums that
he may be adjudged liable to pay, plus P30,000, P20,000 and
P50,000 for moral and exemplary damages, and attorney's fees,
respectively.
October 19, 1990: RTC held Antonio Ang Eng Liong was ordered to
pay the principal amount of P80,000 plus 14% interest per annum
and 2% service charge per annum
Lower Court: Granted against the bank, dismissing the complaint
for lack of cause of action.
CA: ordered Ang to pay the bank - bank is a holder
CA observed that the bank, as the payee, did not indorse the notes
to the Asset Privatization Trust despite the execution of the Deeds
of Transfer and Trust Agreement and that the notes continued to
remain with the bank until the institution of the collection suit.
With the bank as the "holder" of the promissory notes, the Court of
Appeals held that Tomas Ang is accountable therefor in his capacity
as an accommodation party.
Tomas Ang cannot validly set up the defense that he did not receive
any consideration therefor as the fact that the loan was granted to
the principal debtor already constitutes a sufficient consideration.
ISSUE: W/N Ang is liable as accomodation party even without
consideration and his co-accomodation party was granted
accomodation w/o his knowledge
HELD: CA AFFIRMED
At the time the complaint was filed in the trial court, it was the
Asset Privatization Trust which had the authority to enforce its
claims against both debtors
accommodation party as a person "who has signed the instrument
as maker, drawer, acceptor, or indorser, without receiving value
therefor, and for the purpose of lending his name to some other
person." As gleaned from the text, an accommodation party is one
who meets all the three requisites, viz: (1) he must be a party to
the instrument, signing as maker, drawer, acceptor, or indorser; (2)
he must not receive value therefor; and (3) he must sign for the
purpose of lending his name or credit to some other person
petitioner signed the promissory note as a solidary co-maker and
not as a guarantor. This is patent even from the first sentence of
the promissory note which states as follows:
"Ninety one (91) days after date, for value received, I/we, JOINTLY
and SEVERALLY promise to pay to the PHILIPPINE BANK OF
COMMUNICATIONS at its office in the City of Cagayan de Oro,
Philippines the sum of FIFTY THOUSAND ONLY (P50,000.00) Pesos,
Philippine Currency, together with interest x x x at the rate of
SIXTEEN (16) per cent per annum until fully paid."
immaterial so far as the bank is concerned whether one of the
signers, particularly petitioner, has or has not received anything in
payment of the use of his name.
since the liability of an accommodation party remains not only
primary but also unconditional to a holder for value, even if the
accommodated party receives an extension of the period for
payment without the consent of the accommodation party, the
latter is still liable for the whole obligation and such extension does
not release him because as far as a holder for value is concerned,
he is a solidary co-debtor.