Sadaya vs Sevilla 19 SCRA 924

Stelco Marketing vs CA 210 SCRA 594

Travel-on vs CA 210 SCRA 352
BPI vs CA 326 SCRA 641
Agro-Conglomerate Inc vs CA 348 SCRA 350

Sec. 29. Liability of accommodation party. - An accommodation party is one 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. Such a person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of
taking the instrument, knew him to be only an accommodation party.

SADAYA V. SEVILLA 19 SCRA 924

FACTS:
Sadaya, Sevilla and Varona signed solidarily a promissory note in favor of the bank. Varona was the only one who
received the proceeds of the note. Sadaya and Sevilla both signed as co-makers to accommodate Varona.
Thereafter, the bank collected from Sadaya. Varona failed to reimburse.

Consequently, Sevilla died and intestate estate proceedings were established. Sadaya filed a creditors claim on
his estate for the payment he made on the note. The administrator resisted the claim on the ground that Sevilla didn't
receive any proceeds of the loan. The trial court admitted the claim of Sadaya though tis was reversed by the CA.

HELD:
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-
accommodation 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 that 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.
Stelco Marketing vs. CA GR 96160, 17 June 1992, 210 scra 51 --accommodation party

FACTS:

Stelco Marketing Corporation sold structural steel bars to RYL Construction Inc. RYL gave Stelcos sister corporation,
Armstrong Industries, a MetroBank check from Steelweld Corporation. The check was issued by Steelwelds President
to Romeo Lim, President of RYL, by way of accommodation, as a guaranty and not in payment of an obligation. When
Armstrong deposited the check at its bank, it was dishonored because it was drawn against insufficient funds. When so
deposited, the check bore two indorsements, i.e. RYL and Armstrong. Subsequently, Stelco filed a civil case against RYL
and Steelweld to recover the value of the steel products.

ISSUE:

Whether Steelweld as an accommodating party can be held liable by Stelco for the dishonored check.

RULING:

Steelweld may be held liable but not by Stelco. Under Section 29 of the NIL, Steelweld Corp. can be held liable for
having issued the subject check for the accommodation of Romeo Lim. An accommodation party is one who has singed
the instrument as maker, drawer, acceptor, or indorser, without receiving valued therefor, and for the purpose of
lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding
such holder, at the time of taking the instrument, knew him to be only an accommodation party. Stelco however,
cannot be deemed a holder of the check for value as it does not meet two essential requisites prescribed by statute, i.e.
that it did not become the holder of it before it was overdue, and without notice that it had been previously
dishonored, and that it did not take the check in good faith and for value.

Crisologo-Jose vs Court of Appeals (1989) February 14, 2013 markerwins Corporation Law, Mercantile Lawcorpo, merc

Facts:

Plaintiff Ricardo S. Santos, Jr. was the vice-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 G.R. No. L-56169 June 26, 1992 -accommodation party

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.

RULING: 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.
Negotiable Instruments Case Digest: BPI v. CA (2000) G.R. No. 112392 February 29, 2000
Lessons Applicable: Liabilities of the Parties (Negotiable Instruments Law)
FACTS:
September 3, 1987: Bejanmin Napiza deposited in Foreign Currency Deposit Unit (FCDU) Savings Account which he
maintained in BPI a Continental Bank Manager's Check dated August 17, 1984, payable to "cash" $2,500.00

check belonged to Henry who went to the office of Napiza and requested him to deposit the check in his dollar account
by way of accommodation and for the purpose of clearing the same.

Napiza acceded, and agreed to deliver to Chan a signed blank withdrawal slip, with the understanding that as soon as the
check is cleared, both of them would go to the bank to withdraw

October 23, 1984: Using the blank withdrawal slip given by Napiza to Chan, Ruben Gayon, Jr. was able to withdraw

the withdrawal slip shows that the amount was payable to Ramon A. de Guzman and Agnes C. de Guzman and was duly
initialed by the branch assistant manager, Teresita Lindo

November 20, 1984: BPI received communication from the Wells Fargo Bank International of New York that check
deposited by Napiza was a counterfeit check because it was "not of the type or style of checks issued by Continental Bank
International."

Mr. Ariel Reyes, manager of BPI, instructed one of its employees, Benjamin D. Napiza IV, who is Napiza's son, to inform
his father that the check bounced.
Reyes himself sent a telegram to Napiza regarding the dishonor of the check
Napiza's son told Reyes that:
check been assigned "for encashment" to Ramon A. de Guzman and/or Agnes C. de Guzman after it shall have been
cleared upon instruction of Chan
his father immediately tried to contact Chan but Chan was out of town
Napiza's son undertook to return the amount of $2,500.00 to BPI
August 12, 1986: BPI filed a complaint against Napiza for the return of $2,500.00 or the prevailing peso equivalent plus
legal interest, attorney's fees, and litigation and/or costs of suit
Napiza:
admitting that he indeed signed a "blank" withdrawal slip with the understanding that the amount deposited would
be withdrawn only after the check in question has been cleared.
However, without his knowledge, it was withdrawn through collusion with one of BPI's employees.
BPI aslo filed a motion for admission of a third party complaint against Chan. He alleged that "thru strategem and/or
manipulation," Chan was able to withdraw the amount of $2,500.00 even without Napiza's passbook.
November 4, 1991: Lower Court dismissed the complaint.
Having admitted that it committed a "mistake" in not waiting for the clearance of the check before authorizing the
withdrawal of its value or proceeds, BPI should suffer the resultant loss.
CA: Affirmed the lower courts decision
BPI committed "clears gross negligence" in allowing Ruben Gayon, Jr. to withdraw the money without presenting BPI's
passbook and, before the check was cleared and in crediting the amount indicated therein in Napiza's account.
BPI claims that Napiza, having affixed his signature at the dorsal side of the check, should be liable in accordance to Sec.
66 of the Negotiable Instrument Law
Sec. 66. Liability of general indorser. Every indorser who indorses without qualification, warrants to all subsequent
holders in due course
(a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding section; and
(b) That the instrument is at the time of his indorsement, valid and subsisting.
And, 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.

Sec. 65, on the other hand, provides for the following warranties of a person negotiating an instrument by delivery or by
qualified indorsement: (a) that the instrument is genuine and in all respects what it purports to be; (b) that he has a good
title to it, and (c) that all prior parties had capacity to contract.

ISSUE: W/N Napiza can be held liable as an indorser or accommodation party

HELD: NO. Ordinarily Napiza may be held liable as an indorser of the check or even as an accommodation party. However,
to hold Napiza liable for the amount of the check he deposited by the strict application of the law and without considering
the attending circumstances in the case would result in an injustice and in the erosion of the public trust in the banking
system. The interest of justice thus demands looking into the events that led to the encashment of the check.

Under the Philippine foreign currency deposit system, two requisites must be presented to petitioner bank by the person
withdrawing an amount:

(a) a duly filled-up withdrawal slip, and Napiza signed a blank deposit slip

BUT withdrawal slip itself indicates a special instruction that the amount is payable to "Ramon A. de Guzman &/or
Agnes C. de Guzman."

(b) the depositor's passbook

In depositing the check in his name, Napiza did not become the outright owner of the amount stated therein. By depositing
the check with BPI, he was, in a way, merely designating BPI as the collecting bank. This is in consonance with the rule that
a negotiable instrument, such as a check, whether a manager's check or ordinary check, is not legal tender

Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily
regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would
do. While it is true that Napiza's having signed a blank withdrawal slip set in motion the events that resulted in the
withdrawal and encashment of the counterfeit check, the negligence of BPI's personnel was the proximate cause of the
loss that petitioner sustained. Proximate cause, which is determined by a mixed consideration of logic, common sense,
policy and precedent, is "that cause, which, in natural and continuous sequence, unbroken by any efficient intervening
cause, produces the injury, and without which the result would not have occurred."

The proximate cause = disregard of its own rules and the clearing requirement in the banking system