PNB vs Picornell

Doctrine: The fact that the drawer was a commission agent of the drawee in the purchase of the
merchandise covered by the bill does not necessarily make him an agent of the drawee in his obligations
emanating from the bill drawn by him. His acts in negotiating the bill constitute a contract distinct from that
made by his having purchased the merchandise on behalf of the drawee, unless at the. time of signing the bill
he should have added to his signature some expression to indicate it. (Sec. 20, Negotiable Instruments Law.)
Nor is his liability as drawer affected by the fact that the merchandise shipped by him, which constituted the
consideration for the drawing of the bill, was or was not of inferior quality.

Held: As to Picornell, he warranted, as drawer of the bill, that it would be accepted upon proper presentment
and paid in due course, and as it was not paid, he became liable to the payment do its value to the holder
thereof, which is the plaintiff bank.

This action for recovery is for the value of the bill of exchange. The firm accepted the bill unconditionally
but did not pay it at maturity, wherefore its responsibility to pay the same is clear. The question whether or
not the tobacco was worth the value of the bill doesnt concern the bank. Such partial want of
consideration if it was, doesnt exist with respect to the bank which paid Picornell the full value of the
said bill of exchange. The bank was a holder in due course, and was such for value full and complete. The
firm cannot escape liability.

Equitable vs Ong

Doctrine: Regarding the issue on consideration, the court stated that a managers check is one drawn by
the banks manger upon the bank itself. The check becomes the primary obligation of the bank which issues
it and constitutes it written promise to pay upon demand. Mere issuance of it is considered acceptance
thereof. Such acceptance implies that the check is drawn upon sufficient funds in the hands of the drawee
xxx, the check good, shall continue good, and binding on the bank.

Held: Further, PCI Banks issuance of the managers checks to Ong cements the latters position as a holder
for value. The court reiterated that because of their peculiar character and general use in commerce,
managers checks are regarded substantially to be as good as the money it represents (in other words it has
been given value). Further, a managers check is an order of the bank to pay, drawn upon itself, committing
in effect its total resources, integrity, and honor behind its issuance. Yes, not only was Ong a holder in due
course but most especially a holder for value. The case at bar falls squarely with the definition of a holder in
due course, as defined in section 52 of the NIL.

A check which has been cleared and credited to the account of the creditor shall be equivalent to a delivery to
the creditor of cash in an amount equal to the amount credited to his account. Having cleared the check
earlier, PCI Bank, therefore, became liable to Ong and it cannot allege want or failure of consideration
between it and Sarande. Under settled jurisprudence, Ong is a stranger as regards the transaction between
PCI Bank and Sarande.

FEBTC vs Gold Palace Jewelry

Doctrine: The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of
his acceptance. This provision applies with equal force in case the drawee pays a bill without having
previously accepted it. His actual payment of the amount in the check implies not only his assent to the order
of the drawer and a recognition of his corresponding obligation to pay the aforementioned sum, but also, his
clear compliance with that obligation. Actual payment by the drawee is greater than his acceptance, which is
merely a promise in writing to pay. The payment of a check includes its acceptance.

Held: As the transaction in this case had been closed and the principal-agent relationship between the payee
and the collecting bank had already ceased, the latter in returning the amount to the drawee bank was already
acting on its own and should now be responsible for its own actions. Neither can petitioner be considered to
have acted as the representative of the drawee bank when it debited respondent's account, because, as already
explained, the drawee bank had no right to recover what it paid. Likewise, Far East cannot invoke the
warranty of the payee/depositor who indorsed the instrument for collection to shift the burden it brought
upon itself. This is precisely because the said indorsement is only for purposes of collection which, under
Section 36 of the NIL, is a restrictive indorsement. It did not in any way transfer the title of the instrument to
the collecting bank. Far East did not own the draft, it merely presented it for payment. Considering that the
warranties of a general indorser as provided in Section 66 of the NIL are based upon a transfer of title and
are available only to holders in due course, these warranties did not attach to the indorsement for deposit and
collection made by Gold Palace to Far East. Without any legal right to do so, the collecting bank, therefore,
could not debit respondent's account for the amount it refunded to the drawee bank.

Ang Tiong vs Ting

Doctrine: 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 NIL, "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.

Held: Felipe Ang is a general indorser (Section 63, Negotiable Instruments Law), in the absence of any
indication by appropriate words his intention to be bound in some other capacity. Even on the assumption
that Ang is a mere accommodation party, he is 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 (Section
29, Negotiable Instruments Law). Assuming further that Ang is an accommodation indorser, the fact that Ang
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 Ang Tiong, as the said remedy is a matter of concern exclusively between
an accommodation indorser and an accommodated party. The liability of Felipe Ang remains primary and
unconditional.

People vs Maniego

Doctrine: The holder or last indorsee of a negotiable instrument has the right to enforce payment of the
instrument for the full amount thereof against all parties liable thereon. Among the parties liable thereon is an
indorser of the instrument. Such an indorser who indorses without qualification, inter alia, engaged that on
due presentment, the instrument shall be accepted or paid, or both, according to its tenor, and that if it be
dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the
holder, or to any subsequent indorser who may be compelled to pay it.

Held: Maniego may also be deemed an "accommodation party" in the light of the facts, i.e., 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 such, she is under the law "liable on the
instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew **
(her) to be only an accommodation party," although she has the right, after paying the holder, to obtain
reimbursement from the party accommodated, "since the relation between them is in effect that of principal
and surety, the accommodation party being the surety." . The Trial Court acted correctly in adjudging
Maniego to be civilly liable in the same criminal action in which she had been acquitted of the felony of
Malversation ascribed to her, dispensing with the necessity of having a separate civil action subsequently
instituted against her for the purpose.

PBCOM vs Aruego

Doctrine: When a person adds to his signature words indicating that he signs for or on behalf of a principal
or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere
addition of words describing him as an agent or as filing a representative character, without disclosing his
principal, does not exempt him from personal liability.

Held: Under the NIL, a bill of exchange is an unconditional order in writing addressed by one person to
another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a
fixed or determinable future time a sum certain in money to order or to bearer. As long as a commercial
paper conforms with the definition of a bill of exchange, that paper is considered a bill of exchange. The
nature of acceptance is important only in the determination of the kind of liabilities of the parties involved,
but not in the determination of whether a commercial paper is a bill of exchange or not.

Nowhere in the drafts accepted by Aruego that he disclosed that he was signing as representative of the
Philippine Education Foundation Company. For failure to disclose his principal, Aruego is personally liable
for the drafts he accepted, pursuant to Section 20 of the Negotiable Instruments Law.

Clark vs Sellner

Doctrine: "holder for value," under the phrase of said section 29, for he had paid the money to the signers
at the time the note was executed and delivered to him. Who is the "holder" is defined in section 191 of the
said law thus: "Holder" means the payee or indorsee of a bill or note, who is in possession of it, or the bearer
thereof. And as such holder, he has the right to demand payment of the debt from the signer of the note, even
though he knows that said person is merely an accommodation party.

Held: And as to whether or not the defendant is an accommodation party, it should be taken into account
that by putting his signature to the note, he lent his name, not to the creditor, but to those who signed with
him placing himself with respect to the creditor in the same position and with the same liability as the said
signers. It should be noted that the phrase "without receiving value therefor," as used in section 29 NIL,
means "without receiving value by virtue of the instrument" and not, as it apparently is supposed to mean,
"without receiving payment for lending his name." If, as in the instant case, a sum of money was received by
virtue of the note, it is immaterial, so far as the creditor is concerned, whether one of the singers has, or has
not, received anything in payment of the use of his name. In reality the legal situation of the defendant in this
case may properly be regarded as that of a joint surety rather than that of an accommodation party. The
defendant, as a joint surety, may, upon the maturity of the note, pay the debt, demand the collateral security
and dispose of it to his benefit; but there is no proof whatever that this was done. As to the plaintiff, he is the
"holder for value," under the phrase of said section 29, for he had paid the money to the signers at the time
the note was executed and delivered to him.

Maulini vs Serrano

Doctrine: Parol evidence is admissible to show that an indorsement was made wholly without
consideration and, that in making it, the indorser acted as agent for the indorsee and as a mere vehicle for the
transfer of the naked title from the maker to the indorsee.
Held: The prohibition against the introduction of parol evidence contained in section 285 of the Code of
Civil Procedure was designed to prevent alteration, change, modification, variation or contraction of the
terms of a written instrument admittedly existing except in cases
specifically named therein. The prohibition does not apply where the purpose of the parol evidence is to
show that no written contract ever existed, that the minds of the parties never met on the terms of such a
contract, that they never mutually agreed to enter into such a contract, and that there never existed any
consideration upon which such an agreement could be founded. The contention has some of the appearances
of a case in which an indorser seeks prove forgery. Where an indorser claims that his name was forged, it is
clear that parol evidence is admissible to prove that fact, and, if he proves it, it is a complete defense. In the
case before us we have a condition somewhat similar. While the indorser does not claim that his name was
forged, he does claim that it was obtained from him in a manner which, between the parties themselves,
renders, the contract as completely inoperative as if it had been forged

PNB vs Maza and Mesenas

Doctrine: that when the accommodation parties make payment to the holder of the notes, they have the
right to sue the accommodated party for reimbursement, since the relation between them is in effect that of
principal and sureties, the accommodation parties being the sureties.

Held: The defendants attested to the genuineness of the instruments sued on. Neither did they
point out any mistake in regard to the amount and interest that the lower court sentenced them to
pay. Given such, the defendants are liable. They appear as the makers of the promissory notes and as
such, they must keep their engagement and pay as promised.

And assuming that they are accommodation parties, the defendants having signed the instruments without
receiving value thereof, for the purpose of lending their names to some other person, are still liable for the
promissory notes. The law now is such that an accommodation party cannot claim no benefit as such, but
he is liable according to the face of his undertaking, the same as he himself financially interest in the
transaction. It is also no defense to say that they didn't receive the value of the notes. To fasten liability
however to an accommodation maker, it is not necessary that any consideration should move to him. The
accommodation which supports the promise of the accommodation maker is that parted with by the
person taking the note and received by the person accommodated.

Town Savings and Loan Bank vs CA

Doctrine: An accommodation party is one who has signed the instrument as maker, drawer, indorser,
without receiving value therefore and for the purpose of lending his name to some other person. Such
person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of the
taking of the instrument knew him to be an accommodation party. In lending his name to the accommodated
party, the accommodation party is in effect a surety for the latter. He lends his name to enable the
accommodated party to obtain credit or to raise money. He receives no part of the consideration
for the instrument but assumes liability to the other parties thereto because he wants to accommodate
another.

Held: In the case at bar, it is indisputable that the spouses signed the promissory note to enable Reyes to
secure a loan from the bank. She was the actual beneficiary of the loan and the spouses accommodated her
by signing the note.

Gonzales vs RCBC

Doctrine: Sec. 66. Liability of general indorser. - Every indorser who indorses without qualification,
warrants to all subsequent holders in due course
The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding section;
(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 had capacity to contract

2. That the instrument is, at the time of his indorsement, valid and subsisting

In addition, he engages that, on due presentment, it shall be accepted or paid, or both, as the case may
be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be
duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be
compelled to pay it

Held: The SC found that the irregular indorsement is due to the qualified indorsement made by Olivia
Gomez. The defect was introduced by RCBC, hence it should be the one liable for their own fault. Gonzales
et al's liability should only be up to the time they made their endorsement and any subsequent endorsement
by RCBC should bind them. Under Section 66, the warranties for which Alviar and Gonzales are liable as
general endorsers in favor of subsequent endorsers extend only to the state of the instrument at the time of
their endorsements, this provision cannot be used by the party which introduced a defect on the instrument
(RCBC) w/c qualifiedly endorsed it. Had it not been for the qualified endorsement "up to P17,500.00 only"
of Olivia Gomez, who is the employee of RCBC, there would have been no reason for the dishonor of the
check the holder or subsequent endorser who tries to claim under the instrument which had been dishonored
for "irregular endorsement" must not be the irregular endorser himself who gave cause for the dishonor.
Otherwise, a clear injustice results when any subsequent party to the instrument may simply make the
instrument defective and later claim from prior endorsers who have no knowledge or participation in causing
or introducing said defect to the instrument, which thereby caused its dishonor.

Crisologo-Jose vs CA

Doctrine: a corporation cannot be an accommodation party. The law on accommodation parties does not
include corporation because it is ultra vires on their part. Thus, if one knows and takes an instrument that
was accommodated by a corporation cannot recover against the corporation.

Held: Accommodation party liable on the instrument to a holder for value, although such holder at the time
of taking the instrument knew him to be only an accommodation party, does not include nor apply to
corporations which are accommodation parties. This is because the issue or indorsement of negotiable paper
by a corporation without consideration and for the accommodation of another is ultra vires. Hence, one
who has taken the instrument with knowledge of the accommodation nature thereof cannot recover against a
corporation where it is only an accommodation party. If the form of the instrument, or the nature of the
transaction, is such as to charge the indorsee with knowledge that the issue or indorsement of the instrument
by the corporation is for the accommodation of another, he cannot recover against the corporation thereon.
By way of exception, an officer or agent of a corporation shall have the power to execute or indorse a
negotiable paper in the name of the corporation for the accommodation of a third person only if specifically
authorized to do so. Corollarily, corporate officers, such as the president and vice-president, have no power
to execute for mere accommodation a negotiable instrument of the corporation for their individual debts or
transactions arising from or in relation to matters in which the corporation has no legitimate concern. Since
such accommodation paper cannot thus be enforced against the corporation, especially since it is not
involved in any aspect of the corporate business or operations, the inescapable conclusion in law and in logic
is that the signatories thereof shall be personally liable therefor, as well as the consequences arising from
their acts in connection therewith.