PINEDA V. DELA RAMA plaintiff has no right to recover said amount.

The purpose was illegal, null and void.

121 SCRA 671
- CA: Reversed RTCs decision- Pineda, being
FACTS: a person of more than average intelligence
would not sign any document or paper with his
- Petition for review on certiorari assailing the name unless he was fully aware of its content.
decision of the CA which declared petitioner
Pineda liable on his promissory note to CA relied on Sec. 24 of NIL.
respondent, Dela Rama.
ISSUE: W/N the presumption that a negotiable
instrument was issued for valuable
- Dela Rama is a practising lawyer whose
consideration can be rebutted.
services were retained by Pineda for the
purpose of making representations with the
HELD: Yes, the presumption that a negotiable
chairman and general manager of National
instrument was issued for valuable
Rice and Corn Administration (NARIC) to stop
consideration is a rebuttable presumption. It
or delay the institution of criminal charges
can be rebutted by proof to the contrary.
against Pineda, who allegedly misappropriated
11, 000
- In the case at bar, the claims of Dela Rama
that the promissory note was for
- According to Dela Rama, petitioner Pineda
a loan advanced to Pineda is unbelievable. It
has used up all his funds to buy a big
is indeed unusual for a lawyer to lend a loan to
hacienda in Mindoro and therefore borrowed
his client whom he only knew for only 3
the P9, 300 subject of his complaint for
months.
collection.
- The SC agrees with the RTC that the
- In addition to filing of the suit, Dela Rama
promissory note was issued for an illegal
also sued to collect for attorneys fees for legal
consideration- to influence public officers in
services he rendered.
the performance of their duties- contrary to law
and public policy. Thus, it is void ab initio and
- Pineda then issued a promissory note in no cause of action for the collection cases can
favor of Dela Rama to pay for the advances arise from it.
that the lawyer made to the administrator to
delay the filing of the complaint.
PHILIPPINE BANK OF COMMERCE v.
ARUEGO
- Dela Rama on the other hand contended G.R. No. L-25836-37 (19810
that the promissory note was for the loan
advanced to Pineda by him. Dela Rama filed
Doctrines:
an action against Pineda for the collection of
the amount of the note.
1. An accommodation party is one who has
- CFI: In favour of petitioner. The evidence of
signed the instrument as maker, drawer,
Pineda that he signed the PN for P9, 300 only
indorser, without receiving value therefor and
because Dela Rama had told him that the
for the purpose of lending his name to some
amount had already been advanced to grease
other person. Such person is liable on the
the palms of the officers of NARIC to save
instrument to a holder for value,
petitioner from criminal prosecution.
notwithstanding such holder, at the time of the
taking of the instrument knew him to be only
- RTC: Finds that the amount of P9, 300 was
an accommodation party. One cannot be an
not received by the defendant nor given to any
accommodation party if he signs as a
party for the defendants benefit. Thus, the
drawee/acceptor.
2. 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.
FACTS:
-The defendant, Aruego, appealed to the CA
denying his motion to set aside the order
declaring him in default.
- The Philippine Bank of Commerce (plaintiff)
instituted against Aruego a case for the
recovery of Php. 35,000.00 with daily interest
plus attorneys fees.
- The complaint filed by the PBC contains 22
causes of action referring to 22 transactions
entered by said bank and Aruego on different
dates.
-The sum sought to be recovered represents
the cost of the printing of World Current
Events, a periodical published by the
defendant. To facilitate the payment of the
printing the defendant obtained a credit
accommodation from the plaintiff.
- Thus, for every printing, the printer, Encal
Press and Photo Engraving (EPPE), collected
the cost of printing by drawing a draft against
the plaintiff, said draft being sent later to the
defendant for acceptance.
- As an added security for the payment of the
amounts advanced to Encal Press and Photo-
Engraving, the plaintiff bank also required
defendant Aruego to execute a trust receipt in
favor of said bank wherein said defendant
undertook to hold in trust for plaintiff the
periodicals and to sell the same with the
promise to turn over to the plaintiff the
proceeds of the sale of said publication to
answer for the payment of all obligations
arising from the draft.
- Aruego received a complaint together with
the summons and as a response he filed an
urgent motion for extension of time to plead.
- The defendant filed a motion to dismiss on
the ground that the complaint states no cause
of action:
a. When the bills of exchange were presented
to the defendant as drawee for acceptance,
the amounts thereof had already been paid by
the plaintiff to the drawer (Encal Press) without
the knowledge or consent of the defendant
drawee.
b. In the case of bill of exchange, like those
involved in the case at bar, the defendant
drawee is an accommodating party only for the
drawer (Encal Press) and will be liable in the
event that the drawer fails to pay its obligation
to the plaintiff.
- The complaint was dismissed.
- In 1960, the plaintiff filed a motion for
reconsideration. On the same date, the
defendant filed an answer contending that he
signed the document upon which the plaintiff
sues in his capacity as President of Phil.
Education Foundation, that his liability is only
secondary, that he is an accommodating party
only.
- The defendant also contends that the drafts
signed by him were not really bills of exchange
but mere pieces of evidence of indebtedness
because payments were made before
acceptance.
ISSUE: Whether or not the defendant is an
accommodation party
HELD: No. Section 29 of the Negotiable
Instruments Law (NIL) provides:
An accommodation party is one who has
signed the instrument as maker, drawer,
indorser, without receiving value therefor 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 only
an accommodation party.
- Upon inspection of the drafts accepted by the
defendant shows that nowhere has he
disclosed that he was signing as a
representative of the Philippine Education
Foundation Company. For failure to disclose
his principal, Aruego is personally liable for the
drafts he accepted.
- 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.
Annotation
Accommodation- under NIL, is an act of
signing an instrument as maker, drawer,
acceptor or indorser by one who without
receiving value therefor lendshis name to
some other person.
- Such maker or drawer is known as
accommodation party and the instrument used
is an accommodation paper or note.
Right of an Accommodation Party
1. Right of recovery against accommodated
party
- As the accommodation party signed the
instrument as maker, drawer or indorser,
without receiving value therefor, just to lend
his name to the accommodated party, the
accommodation party will generally be
regarded as surety for the party
accommodated.
- When accommodated party makes payment
to the holder of the note, he has the right to
sue the accommodated party for
reimbursement since the relation between
them is in effect that of principal and sureties.
2. Right to demand contribution from an
accommodation co-maker
- Should there be more than one
accommodation party, each of them is jointly
and severally liable to the creditor.
- Where the principal debtor fails to pay the
what is due on the instrument, either one of
the solidary accommodation makers may be
held liable for what was due.
- However, if one of the accommodation party
pays the obligation of the accommodated party
in favour of the creditor, said accommodation
party can demand contribution from his
solidary co-maker subject to conditions
required by the NCC.
3. Right to Interpose Lack of Consideration
Against Accommodated Party
- Under the NIL, an absence or failure of
consideration is a matter of defense as against
any person not holder in due course.
Obligations of an Accommodation Party
A. Liability to a Holder for Value
- To become liable on the instrument the
holder thereof must have acquired it for value
in due course.
- In a case where a person signs a PN as a
maker to lend his credit or name to another
without receiving any consideration for the
note and the note was discounted before its
maturity with a bank on the basis of the
signature of the maker who has a very good
credit standing, SC in rejecting the defense
that the bank was not a holder in due course
because of its knowledge of the absence of
consideration between the accommodation
party and the party accommodated declared
that a holder for value can hold the
accommodation party and the party liable even
if he knows him to be an accommodation party
because the law now is that accommodation
party is liable according to the fact of his
undertaking as if he were himself financially
interested in the transaction.
B. Liability to an Accommodation Co-maker
- If there is more than one accommodation
party, the SC has recognized the right of the
paying accommodation co-maker to seek
contribution against the other accommodation
co-maker.
CLARK V. SELLNER
42 PHIL 384
FACTS:
- Defendant Sellner with two other persons,
signed a promissory note solidarily binding
themselves to pay to the order of R.N
Clark.
- The note matured but the amount wasn't
paid.
- The counsel for the defendant alleges
that the latter didn't receive any amount of
the debt; that the instrument wasn't
presented to him for payment and being
an accommodation party, he is not liable
unless the note is negotiated, which wasn't
done.
ISSUE: W/N defendant Sellner is liable for
being an accommodation party.
HELD:
- The liability of the defendant, as one of the
signers of the note, is not dependent on
whether he has or has not received any part of
the amount of debt.
- The defendant is really and expressly one of
the joint and several debtors on the note and
as such he is liable under section 60 of the
NIL.
- As to the presentment for payment, such
action is not necessary in order to charge the
person primarily liable, as is the defendant
Sellner.
- As to whether or not Sellner 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 him in
the same position and with the same liability
as the said signers.
- It should be noted that the phrase without
receiving value therefore as used in
section 29 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. It is
immaterial as far as the creditor is concerned,
whether one of the signers has or has not
received anything in payment for the use of his
name.
- In this 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
signers has or has not received anything in
payment for the use of his name.
- the defendant, as a joint security, may upon,
the maturity of the note, pay the debt, demand
the collateral security and dispose of it to his
benefit.
- As to the plaintiff, he is a holder for value for
he had paid the money to the signers at the
time the note was executed and delivered to
him.
- The defendant must pay the obligation due to
the plaintiff.
PNB V. MAZA AND MECENAS
48 PHIL 207
FACTS:
- Appeal from the judgment of the CFI.
- PNB is suing Maza and Mecenas on 5 PNs
of P10, 000/each.
- Maza and Macenas executed 2 of the PNs
on January 20, 1921, due three months after
date and the other 3, January 21, 1921 due
four months after date.
- These were not paid at maturity.
- To recover the amounts stated on the face of
the promissory notes, PNB initiated an action
against the two.
- The special defense posed by the two is by the person taking the note and received
that the promissory notes were delivered by the person accommodated.
to them in blank by a certain Enchaus
and were made to sign the notes so that SADAYA V. SEVILLA
the latter could secure a loan from the bank.
19 SCRA 924
- They also alleged that they never negotiated
the notes with the bank nor have they received
FACTS:
any value thereof.

- They also prayed that Enchaus be - Petition for review on certiorari of a decision
impleaded in the of the CA.
complaint but such was denied. The trial
court then held in favor of the bank. - Sadaya, Sevilla and Varona signed solidarily
a promissory note in favor of the bank
amounting to P15, 000.
ISSUE: W/N Maza and Mecenas are
accommodation parties thus, liable for PNs. - Varona was the only one who received the
proceeds of the note. Sadaya and Sevilla
HELD: both signed as co-makers to
accommodate Varona.
- Yes, the defendants are liable.
- Thereafter, the bank collected from Sadaya.
Varona failed to reimburse Sadaya despite
- It is deduced that the defendants admit the
repeated demands.
genuineness of the instruments sued on.
Neither did they point out any mistake in
- Consequently, Sevilla died and
regard to the amount and interest that the
intestate estate proceedings were
lower court sentenced them to pay.
established.
Given such, the defendants are liable.
- Sadaya filed a creditors claim on his estate
- They appear as the makers of the promissory for the payment he made on the note. The
notes and as such, they must keep their administrator resisted the claim on the ground
engagement and pay as promised. that Sevilla didn't receive any proceeds of
the loan.
- And assuming that they are accommodation
parties, the defendants having signed the - The trial court admitted the claim of Sadaya
instruments without receiving value thereof, for and directing the administrator to pay the
the purpose of lending their names to some same from any available funds belonging to
other person, are still liable for the promissory the estate of the deceased Sevilla.
notes.
- CA: voted to set aside the RTCs decision
- The law now is such that an accommodation and disallow the claim against the estate.
party cannot claim no benefit as such, but
he is liable according to the face of his ISSUE: W/N Sadaya can reimburse from the
undertaking, the same as he himself financially estate of deceased Sevilla.
interest in the transaction. It is also no
defense to say that they didn't receive the HELD:
value of the notes. To fasten
liability however to an accommodation maker, - Nothing in the NIL would define the right to
it is not necessary that any consideration seek reimbursement from a co-
should move to him. The accommodation accommodation party. Thus, we go to the CC.
which supports the promise of the
accommodation maker is that parted with
- Article 273: When there are two or more
guarantors....
- Sadaya could have sought reimbursement
from Varona, which is right and just as the
latter was the only one who received
value for the note executed. There is an
implied contract of indemnity between Sadaya
and Varona upon the formers payment of the
obligation to the bank.
- Surely enough, the obligations of Varona and
Sevilla to Sadaya cannot be joint and several.
For indeed, had payment been made by
Varona, Varona couldn't had reason to seek
reimbursement from either Sadaya or Sevilla.
After all, the proceeds of the loan went to
Varona alone.
- On principle, a solidary accommodation
makerwho made paymenthas the right to
contribution, from his co-accomodation maker,
in the absence of agreement to the contrary
between them, subject to conditions imposed
by law. This right springs from an
implied promise to share equally the
burdens thay may ensue from their having
consented to stamp their signatures on the
promissory note.
The following are the rules:
1. A joint and several accommodation
maker of a negotiable promissory note
may demand from the principal debtor
reimbursement for the amount that he paid to
the payee
2. A joint and several accommodation
maker who pays on the said promissory
note may directly demand reimbursement from
his co-accommodation maker without first
directing his action against the
principal debtor provided that
a. He made the payment by virtue of a
judicial demand
b. A principal debtor is insolvent.
It was never shown that there was a judicial
demand on Sadaya to pay the obligation and
also, it was never proven that Varona was
insolvent. Thus, Sadaya cannot proceed
against Sevilla for reimbursement.
Republic Bank v. Ebrada
65 SCRA 680
FACTS:
On January 15, 1963, the Bureau of Treasury
issued a back pay check to Martin Lorenzo in
the amount of P1,246.08. The drawee named
therein was Republic Bank. The check was
subsequently indorsed to Ramon Lorenzo,
then to Delia Dominguez and then to Mauricia
Ebrada. Ebrada encashed the check with the
Republic Bank. Republic Bank paid the
amount of the check to Ebrada. Ebrada, upon
receiving the cash, gave it to Dominguez;
Dominguez in turn gave the cash to Ramon
Lorenzo.
Later, the Bureau of Treasury notified that the
check was a forgery because the payee
named therein (Martin Lorenzo) was actually
dead 11 years ago before the check was
issued. Republic Bank refunded the amount to
the Bureau of Treasury. The bank then
demanded Ebrada to refund them.
ISSUE: Whether or not Republic Bank may
recover from Ebrada.
HELD: Yes. Ebrada, being the last indorser,
warranted the genuineness of the signatures
of the payee and the previous indorsers. The
drawee bank is not duty bound to ascertain
whether or not the signatures of the payee and
the indorsers are genuine. One who
purchases a check or draft is bound to satisfy
himself that the paper is genuine and that by
indorsing it or presenting it for payment or
putting it into circulation before presentation he
impliedly asserts that he has performed his
duty and the drawee (in this case Republic
Bank) who has paid the forged check, without
actual negligence on his part, may recover the
money paid from such negligent purchasers.
But Ebrada did not profit from this because
she, upon receiving the encashment, gave the
same to Dominguez?
She is still liable because she is considered as Prudencio v. CA
an accommodation party pursuant to Section 143 SCRA 6
29 of the Negotiable Instruments Law. An
accommodation party is one who has signed FACTS:
the instrument as maker, drawer, acceptor, or
indorser, without receiving value therefor, and - Oct 7 1954: Eulalio and
for the purpose of lending his name to some Elisa Prudencios, registered owners of a
other person. Such a person is liable on the parcel of land mortgaged to Philippine National
instrument to a holder for value, Bank (PNB) to guarantee a loan of P1,000.00
notwithstanding such holder at the time of extended to Domingo Prudencio
taking the instrument knew him to be only an
accommodation party. - 1955: Concepcion & Tamayo Construction
Company (Concepcion) had a pending
United General Industries v. Paler contract with the Bureau of Public Works
112 SCRA 404 (Bureau) for the construction of the municipal
building in Puerto Princess, Palawan
FACTS: amounting to P36,800.00

- In need of funds, Jose Toribio, Concepcions'

relative, and attorney-in-fact of the Company,
approached PNB to mortgage their property to
secure the loan of P10,000.00 w/ PNB.

- The terms and conditions of the original

mortgage for Pl,000.00 were made integral
part of the new mortgage for P10,000.00 and
both documents were registered with the
Register of Deeds

- Dec 23 1955: promissory note covering the

loan of P10,000.00 dated Dec 29 1955,
ISSUE: maturing on Apr 27 1956, was signed by Jose
Toribio, as attorney-in-fact of the Company,
HELD: and by the Prudencios'

- Deed of Assignment assigning all payments

to be made by the Bureau to the Co. on
account of the contract for the construction in
favor of the PNB.

- PNB approved the Bureau's release of 3

payments directly to Concepcion for material
and labor instead of paying the same to the
Bank on account of the contract price totalling
P11,234.40 without the knowledge of the
Prudencios'

- PNB did not apply the initial and subsequent

payments to the Prudencios' debt as provided
for in the deed of assignment
- Jun 30 1956: Concepcion abandoned their therefor, and for the purpose
work so Bureau rescinded the construction of lending his name to some
contract and assumed the work of completing other person. Such a person
is liable on the instrument to a
- Jun 27 1959: Concepcion filed to cancelled holder for value,
their mortgage notwithstanding such holder at
the time of taking the
- complaint was amended to exclude the instrument knew him to be
Company as defendant, it having been shown only an accommodation party.
that its life as a partnership had already Philippine Bank of Commerce v.
expired and, in lieu thereof, Ramon Aruego: liability of the accommodation
Concepcion and Manuel M. Tamayo, partners party remains not only primary but
of the defunct Company, were impleaded in also unconditional to a holder for value
their private capacity as defendants. remedy is a matter of concern
exclusively between accommodation
- CA affirmed RTC: Denied indorser and accommodated party

- No stipulation in the deed making it 2. NO

obligatory on the part of the PNB to notify the
petitioners everytime it authorizes payment to - payee PNB is an immediate party and,
the Company therefore, is NOT a holder in due course and
stands on no better footing than a mere
- Prudencios' contend that as accommodation assignee
makers, the nature of their liability is only that
of mere sureties instead of solidary co-debtors o holder in due course - payee
such that "a material alteration in the principal either acquired the note from
contract, effected by the creditor without the another holder or has not
knowledge and consent of the sureties, directly dealt with the maker
completely discharges the sureties from all thereof
liability on the contract of suretyship. PNB, in effect, waived payments of
the first three releases
ISSUE: o PNB can not be regarded as
having acted in good faith
1. W/N the Prudencios' as accomodating which is also one of the
party are liable as solidary debtors requisites of a holder in due
so real estate mortgage executed by course under Section 52 of
them CANNOT be cancelled the Negotiable Instruments
2. W/N PNB was a holder in due course Law
o It was only when the deed of
assignment was shown to the
HELD: Petition is Granted. CA reversed. spouses that they consented
to the mortgage and signed
1. YES the promissory note in the
Bank's favor.
- Section 29 of the Negotiable Instrument Law
Crisologo-Jose vs Court of
o Liability of accommodation Appeals (1989)
party. An accommodation
party is one who has signed FACTS:
the instrument as maker,
drawer, acceptor, or indorser, - Plaintiff Ricardo S. Santos, Jr. was the vice-
without receiving value president of Mover Enterprises, Inc. in-charge
of marketing and sales; and the president of
the said corporation was Atty. Oscar Z.
Benares.
- Atty. Benares, in accommodation of his
clients, the spouses Jaime and Clarita Ong,
issued check against Traders Royal Bank,
payable to defendant Ernestina Crisologo-
Jose. Since the check was under the account
of Mover Enterprises, Inc., the same was to be
signed by its president, Atty. Oscar Z.
Benares, and the treasurer of the said
corporation. However, since at that time, the
treasurer of Mover Enterprises was not
available, Atty. Benares prevailed upon the
plaintiff, Ricardo S. Santos, Jr., to sign the
aforesaid check.
- The check was issued to defendant
Ernestina Crisologo-Jose in consideration of
the waiver or quitclaim by said defendant over
a certain property which the Government
Service Insurance System (GSIS) agreed to
sell to the spouses Jaime and Clarita Ong,
with the understanding that upon approval by
the GSIS of the compromise agreement with
the spouses Ong, the check will be encashed
accordingly.
- Since the compromise agreement was not
approved within the expected period of time,
the aforesaid check was replaced by Atty.
Benares. This replacement check was also
signed by Atty. Oscar Z. Benares and by the
plaintiff Ricardo S. Santos, Jr. When
defendant deposited this replacement check
with her account at Family Savings Bank,
Mayon Branch, it was dishonored for
insufficiency of funds. The petitioner filed an
action against the corporation for
accommodation party.
ISSUE: WON the corporation can be held
liable as accommodation party?
HELD: No. 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.
Travel-On, Inc. vs Court of Appeals
210 SCRA 351
FACTS:
- Petitioner Travel-On Inc. is a travel agency
from which Arturo Miranda procured tickets on
behalf of airline passengers and derived
commissions therefrom.
- Miranda was sued by petitioner to collect on
the six postdated checks he issued which
were all dishonored by the drawee banks.
Miranda, however, claimed that he had
already fully paid and even overpaid his
obligations and that refunds were in fact due to
him. He argued that he had issued the
postdated checks not for the purpose of
encashment to pay his indebtedness but for
purposes of accommodation, as he had in the
past accorded similar favors to petitioner.
- Petitioner however urges that the postdated
checks are per se evidence of liability on the
part of private respondent and further argues
that even assuming that the checks were for
accommodation, private respondent is still
liable thereunder considering that petitioner is
a holder for value.
ISSUE: Whether Miranda is liable on the
postdated checks he issued even assuming
that said checks were issued for
accommodation only.
HELD:
- There was no accommodation transaction in
the case at bar.
-In accommodation transactions recognized by
the Negotiable Instruments Law, an
accommodating party lends his credit to the
accommodated party, by issuing or indorsing a
check which is held by a payee or indorsee as
a holder in due course, who gave full value
therefor to the accommodated party.
- The latter, in other words, receives or
realizes full value which the accommodated
party then must repay to the accommodating
party. But the accommodating party is bound
on the check to the holder in due course who
is necessarily a third party and is not the
accommodated party.
- In the case at bar, Travel-On was payee of
all six (6) checks, it presented these checks for
payment at the drawee bank but the checks
bounced. Travel-On obviously was not an
accommodated party; it realized no value on
the checks which bounced. Miranda must be
held liable on the checks involved as petitioner
is entitled to the benefit of the statutory
presumption that it was a holder in due course
and that the checks were supported by
valuable consideration.
**In accommodation transactions recognized
by the Negotiable Instruments Law, an
accommodating party lends his credit to the
accommodated party, by issuing or indorsing a
check which is held by a payee or indorsee as
a holder in due course, who gave full value
therefor to the accommodated party. In the
case at bar, Travel-On was the payee of all six
(6) checks, it presented these checks for
payment at the drawee bank but the checks
bounced. Travel-On obviously was not an
accommodated party; it realized no value on
the checks which bounced.
TOWN SAVINGS AND LOAN BANK V. CA-
223 SCRA 459
FACTS:
- Spouses Hipolito applied for and was
granted a loan by the bank, which was
secured by a promissory note. For failure
to pay their monthly payments, they were
declared in default.
- The spouses denied having any liability.
They stated that the real party-in-interest is
the sister of the husband, Pilarita Reyes.
The spouses, not having received part of the
loan, were mere guarantors of Reyes. As
such, they protested against being dragged
into the litigation.
- The trial court held that they were liable as
accommodation parties to the promissory
note. This was reversed by the Court of
Appeals.
HELD:
- 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.
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.
Bautista v. Auto Plus Traders
561 SCRA 223
FACTS:
- Claude P. Bautista, in his capacity as
President and Presiding Officer of Cruiser Bus
Lines and Transport Corporation (Cruiser),
purchased various spare parts from Auto Plus
Traders, Inc. (Auto Plus) and issued 2
postdated checks
-The checks were subsequently dishonored
- 2 Informations for violation of BP Blg. 22
were filed with the MTCC
- MTCC: Cruiser directed to pay the Auto Plus
- CA Affirmed RTC: Bautista personally issued
the check
- According to Auto Plus, Bautista, by issuing
his check to cover the obligation of the
corporation, became an accommodation party
ISSUE: W/N Bautista as an officer of
thecorporation, is personally and civilly liable
for the 2 checks
HELD: NO. petition is GRANTED. CA
REVERSED and SET ASIDE. Criminal Case
DISMISSED
- Section 29 of the Negotiable Instruments
Law: accommodation party is liable on the
instrument to a holder for value Private
respondent adds that petitioner should also be
liable for the value of the corporation check
because instituting another civil action against
the corporation would result in multiplicity of
suits and delay.
- Generally this Court, in a petition for review
on certiorari under Rule 45 of the Rules of
Court, has no jurisdiction over questions of
facts. But, considering that the findings of the
MTCC and the RTC are at variance, we are
compelled to settle this issue.
- 2 check return slips in conjunction with the
Current Account Statements would show that
the check for P151,200 was drawn against the
current account of Claude Bautista while the
check for P97,500 was drawn against the
current account of Cruiser Bus Lines and
Transport Corporation.
- Hence, we sustain the factual finding of the
RTC. Nonetheless, appellate court in error for
affirming the decision of the RTC holding
petitioner liable for the value of the checks
considering that he was acquitted of the crime
charged and that the debts are clearly
corporate debts for which only Cruiser Bus
Lines and Transport Corporation should be
held liable.
- There is no agreement that petitioner shall be
held liable for the corporation's obligations in
his personal capacity. Hence, he cannot be
held liable for the value of the 2 checks issued
in payment for the corporation's obligation
- Section 29 of the Negotiable Instruments
Law: accommodation party is 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
- Requisites:
1. he must be a party to the instrument,
signing as maker, drawer, acceptor, or
indorser -present
2. he must not receive value therefor - present
3. he must sign for the purpose of lending his
name or credit to some other person - lacking
- Cruiser Bus Lines and Transport
Corporation, however, remains liable for the
checks especially since there is no evidence
that the debts covered by the subject checks
have been paid.
Gonzales vs PCIB
GR No. 180257 (2011)
FACTS:
- Gonzales was a client of PCIB. He was
granted a credit line by the bank through a
Credit-On-Hand-Loan Agreement (COHLA).
He drew from the credit line through a check
and said credit line was secured by a collateral
in the form of his accounts with PCIB which
was a foreign currency deposit worth USD
8000.
- He obtained below loans from PCIB:
1. obtained with his wife P500K
2. obtained with spouses Panlilio P1M,
P300K
- The above loans (total: 1.8M) were covered
by 3 promissory notes and were secured by a
real estage mortgage on a land co owned by
Gonzales and spouses Panlilio. the
promissory notes states the solidary liability of
Gonzales andspouses Panlilio. However, it
was the spouses Panlilio who received the
proceeds of 1.8M. The monthly interest dues
were paid by the spouses Panlilio through auto
debit from their PCIB account. however, they
defaulted in the payment because their PCIB
account had insufficient deposits.
- Gonzales issued a check to Rene Unson
worth 250K drawn against his credit line but
said check was subsequently dishonored due
to termination of gonzales credit line because
of the unpaid period interest dues from the
loans. PCIB also froze the foreign currency
deposit account of Gonzales.
ISSUE: W/N Gonzales is liable for the three
promissory notes covering PHP1.8M loan he
made with spouses Panlilio?
HELD: Yes. Gonzales was an accommodation
party of the loan. An accommodation party is
one who meets all the three requisites
according to Sec 29 of NIL:
1. he must be a party to the instrument,
signing as a maker, drawer, acceptor, or
indorser
2. he must not receive value therefor
3. he must sign for the purpose of lending his
name or credit to some other person.
- An accommodation party lends his name to
enable the accommodated partyy to obtain
credit or raise money. he receives no part but
assumed liability.
- The relation between an accommodation
party is one of principal and surety, the AP
being the surety. As such, he is deemed an
original promisor and debtor from the
beginning. He is considered in law as the
same party as the debtor in relation to
whatever is adjudged touching the obligation
of the latter since their liabilities are
interwoven.
- Lastly, the solidary nature of the loan was
expressly stated in the promissory notes which
state:
the undersigned JOINTLY AND
SEVERALLY promise
to pay xx.