SADAYA v SEVILLA
promissory note may demand from the principal debtor reimbursement
FACTS:
March 28, 1949: Victor Sevilla, Oscar Varona and Simeon Sadaya
executed, jointly and severally, in favor of the BPI, or its order, a
promissory note for P15,000.00 with interest at 8% per annum, payable
on demand.
The P15,000.00 proceeds was received by Oscar Varona alone.
Victor Sevilla and Simeon Sadaya signed the promissory note as co-
makers only as a favor to Oscar Varona.
June 15, 1950: outstanding balance is P4,850.00. No payment
thereafter made.
Oct 16 1952: bank collected from Sadaya total of P5,416.12(w/ int)
Varona failed to reimburse Sadaya despite repeated demands. V
Victor Sevilla died Francisco Sevilla was named administrator.
Sadaya filed a creditor's claim for the above sum of P5,746.12, plus
attorneys fees in the sum of P1,500.00
The administrator resisted the claim upon the averment that the
deceased Victor Sevilla "did not receive any amount as consideration for
the promissory note," but signed it only "as surety for Oscar Varona
June 5, 1957: Trial court order the administrator to pay
CA reversed.
ISSUE: W/N Sadaya can claim against the estate of Sevilla as co-
accomodation party when Verona as principal debtor is not yet insolvent
HELD: NO. Affirmed
Varona is bound by the obligation to reimburse Sadaya
solidary accommodation maker who made payment has the right
to contribution, from his co-accommodation maker, in the absence of
agreement to the contrary between them, and subject to conditions
imposed by law
requisites before one accommodation maker can seek reimbursement
from a co-accommodation maker.
ART. 2073. When there are two or more guarantors of the same debtor
and for the same debt, the one among them who has paid may demand
of each of the others the share which is proportionally owing from him.
If any of the guarantors should be insolvent, his share shall be borne by
the others, including the payer, in the same proportion.
(1) A joint and several accommodation maker of a negotiable
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, or -no judicial
demand just voluntarily
(b) a principal debtor is insolvent. - Varona is not insolvent
CRISOLOGO JOSE v CA
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.
Stelco vs CA
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.
TRAVEL ON v CA
FACTS:
Arturo S. Miranda
had a revolving credit line with Travel-On. Inc. (Travel-On), a travel
agency selling airline tickets on commission basis for and in behalf of
different airline companies
procured tickets from Travel-On on behalf of airline passengers and
derived commissions therefrom.
June 14 1972: Travel-On filed bef. the CFI to collect 6 checks issued by
Miranda totaling P115,000.00
August 5 1969 - January 16 1970: Travel-On sold and delivered airline
tickets to Miranda w/ total price of P278,201.57
paid in cash and 6 checks = P115,000 - all dishonored by the drawee
banks
March 1972: paid P10,000.00 reducing his debts to P105,000
Miranda: checks were issued for to "accommodate" Travel-On's General
Manager to show the BOD of Travel-On that their receivables were still
good
Travel-On's witness, Elita Montilla: related to situations where its
passengers needed money in Hongkong, and upon request of Travel-On,
Miranda would contact his friends in Hongkong to advance Hongkong
money to the passenger
CA affirmed CFI: ordered Travel-On to pay Miranda P8,894.91
representing net overpayments by private respondent, moral damages
of P10,000.00 (later increased to P50,000 by CFI and reduced by CA to
P20,000) for the wrongful issuance of the writ of attachment and for
the filing of this case, P5,000.00 for attorney's fees and the costs of the
suit - decision was because Travel-On did not show that Miranda had an
outstanding balance of P115,000.00
ISSUE: W/N Miranda is liable for the 6 dishonored checks because there was
no accomodation
HELD: YES. GRANT due course to the Petition for Review on Certiorari and to
REVERSE and SET ASIDE the Decision of the CA and trial court
failed to give due importance the checks themselves as evidence of the
debt
check which is regular on its face is deemed prima facie to have been
issued for a valuable consideration and every person whose signature
appears thereon is deemed to have become a party thereto for value.
negotiable instrument is presumed to have been given or indorsed for a
sufficient consideration unless otherwise contradicted and overcome by
other competent evidence
Those checks in themselves constituted evidence of indebtedness of
Miranda, evidence not successfully overturned or rebutted by private
respondent.
While the Negotiable Instruments Law does refer to accommodation
transactions, no such transaction was here shown
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.
Having issued or indorsed the check, the accommodating party has
warranted to the holder in due course that he will pay the same
according to its tenor.
Travel-On obviously was not an accommodated party; it realized no
value on the checks which bounced
BPI v CA
Benjamin Napiza maintains an account with the Bank of the Philippine Islands
(BPI). In 1987, Napiza was approached by Henry Chan and the latter gave him
a $2,500 Continental Bank Managers check. Chan asked if Napiza can deposit
the check to his (Napizas BPI account) by way of accommodation and for the
purpose of clearing the said check. Napiza agreed and so he deposited the
check on September 3, 1987. Napiza then delivered a signed blank withdrawal
slip to Chan with the condition that the $2,500.00 may only be withdrawn if
the check cleared. For some reason, the withdrawal slip ended up in the
hands of one Ruben Gayon who went to BPI and successfully withdrew the
$2,500.00. At the time of the withdrawal, the check was not yet cleared. Then
days later, BPI was notified by the drawee bank named in the check that the
check is actually a counterfeit.
ISSUE: Whether or not Napiza may be held liable to refund the amount of the
check.
HELD: No. The Supreme Court ruled that ordinarily, Napiza would have been
liable because he is an accommodation indorser. But due to the attendant
circumstances, Napiza is discharged from liability.
The withdrawal slip indicates as well as the rules promulgated by BPI that
withdrawal from the bank should be accompanied by the presentment of the
account holders (Napizas) savings bankbook. This was not done so in the
case at bar because Gayon was able to withdraw without it. Further, BPI
allowed the withdrawal even before the check cleared. BPI already credited
the $2,500.00 to Napizas account even without the drawee bank clearing the
check. This is contrary to common banking practices and because of such
negligence and lack of diligence, BPI, as the collecting bank, shall suffer the
loss.
AGRO CONGLOMERATES v CA
FACTS:
July 17, 1982: Agro Conglomerates, Inc. (Agro) sold 2 parcels of land to
Wonderland Food Industries, Inc (Wonderland) for P 5M under terms
and conditions:
1. P 1M Pesos shall be paid in cash upon the signing of the agreement
2. P 2M Pesos worth of common shares of stock of the Wonderland Food
Industries, Inc.
3. balance of P2,000,000.00 shall be paid in 4 equal installments, the first
installment falling due, 180 days after the signing of the agreement
and every six months thereafter, with an interest rate of 18% per
annum, to be advanced by the vendee upon the signing of the
agreement
July 19, 1982: Agro, Wonderland and Regent Savings & Loan Bank
(Regent) (formerly Summa Savings & Loan Association) amended the
arrangement resulting to a revision - addedum was not notarized
Agro would secure a loan in the name of Agro Conglomerates Inc. for
the total amount of the initial payments, while the settlement of loan
would be assumed by Wonderland
Mario Soriano (of Agro) signed as maker several promissory
notes, payable to Regent in favor of Wonderland
subsidiary contract of suretyship had taken effect since Agro signed the
promissory notes as maker and accommodation party for the benefit of
Wonderland
bank released the proceeds of the loan to Agro who failed to meet their
obligations as they fell due
 bank, experiencing financial turmoil, gave Agro opportunity to settle
their account by extending payment due dates
Mario Soriano manifested his intention to re-structure the loan, yet did
not show up nor submit his formal written request
Regent filed 3 separate complaints before the RTC for Collection of
sums of money
CA affirmed Trial court: held Agro liable
ISSUE: W/N Agro should be liable because there was no accomodation or
surety
HELD: YES. CA affirmed.
First, there was no contract of sale that materialized. The 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 loan and the
settlement
of the same would be shouldered by Wonderland.
contract of surety between Woodland and petitioner was
extinguished by the rescission of the contract of sale of the farmland
With the rescission, there was confusion in the persons of
the principal debtor and surety. The addendum thereon likewise l
ost its efficacy
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:
1. There must be a previous valid obligation - lacking
 2. There must be an agreement of the parties concerned to a new
contract

3. There must be the extinguishment of the old contract; and

4. 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