Nego Lawww

TOMAS ANG, G.R. No.
146511
Petitioner,
Present:
PUNO, C.J., Chairperson,
- versus - SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
ASSOCIATED BANK AND
ANTONIO ANG ENG LIONG, Promulgated:
Respondents.
September 5, 2007
X -------------------------------------------------------------------------------------- X
DECISION
AZCUNA, J.:
This petition for certiorari under Rule 45 of the Rules on Civil Procedure seeks to
review the October 9, 2000 Decision[1] and December 26, 2000 Resolution[2] of the Court of
Appeals in CA-G.R. CV No. 53413 which reversed and set aside the January 5, 1996
Decision[3] of the Regional Trial Court, Branch 16, Davao City, in Civil Case No. 20,299-90,
dismissing the complaint filed by respondents for collection of a sum of money.
On August 28, 1990, respondent Associated Bank (formerly Associated Banking

Corporation and now known as United Overseas Bank Philippines) filed a collection suit
against Antonio Ang Eng Liong and petitioner Tomas Ang for the two (2) promissory notes
that they executed as principal debtor and co-maker, respectively.
In the Complaint,[4] respondent Bank alleged that on October 3 and 9, 1978, the
defendants obtained a loan of P50,000, evidenced by a promissory note bearing PN-No. DVO-
78-382, and P30,000, evidenced by a promissory note bearing PN-No. DVO-78-390. As
agreed, the loan would be payable, jointly and severally, on January 31, 1979 and December
8, 1978, respectively. In addition, subsequent amendments[5] to the promissory notes as well
as the disclosure statements[6] stipulated that the loan would earn 14% interest rate per annum,
2% service charge per annum, 1% penalty charge per month from due date until fully paid,
and attorneys fees equivalent to 20% of the outstanding obligation.
1|NEGO Secs. 60 to 69
Despite repeated demands for payment, the latest of which were on September 13,
1988 and September 9, 1986, on Antonio Ang Eng Liong and Tomas Ang, respectively,
respondent Bank claimed that the defendants failed and refused to settle their obligation,
resulting in a total indebtedness of P539,638.96 as of July 31, 1990, broken down as follows:
PN-No. DVO-78-382 PN-No. DVO-78-390
Outstanding Balance P50,000.00 P30,000.00

Add Past due charges for 4,199 days Past due charges for 4,253 days
(from 01-31-79 to 07-31-90) (from 12-8-78 to 07-31-90)
14% Interest P203,538.98 P125,334.41
2% Service Charge P11,663.89 P7,088.34
12% Overdue Charge P69,983.34 P42,530.00
Total P285,186.21 P174,952.75
Less: Charges paid P500.00 None
Amount Due P334,686.21 P204,952.75
In his Answer,[7] Antonio Ang Eng Liong only admitted to have secured a loan
amounting to P80,000. He pleaded though that the bank be ordered to submit a more
reasonable computation considering that there had been no correct and reasonable statement
of account sent to him by the bank, which was allegedly collecting excessive interest, penalty
charges, and attorneys fees despite knowledge that his business was destroyed by fire, hence,
he had no source of income for several years.
For his part, petitioner Tomas Ang filed an Answer with Counterclaim and Cross-
[8]
claim. He interposed the affirmative defenses that: the 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; he accepted the
promissory notes in blank, with only the printed provisions and the signature of Antonio Ang
Eng Liong appearing therein; it was the bank which completed the notes upon the orders,
instructions, or representations of his co-defendant; PN-No. DVO-78-382 was completed in
excess of or contrary to the authority given by him to his co-defendant who represented that
he would only borrow P30,000 from the bank; his signature in PN-No. DVO-78-390 was
procured through fraudulent means when his co-defendant claimed that his first loan did not
push through; the promissory notes did not indicate in what capacity he was intended to be
bound; the bank granted his co-defendant successive extensions of time within which to pay,
without his (Tomas Ang) knowledge and consent; the bank imposed new and additional
stipulations on interest, penalties, services charges and attorneys fees more onerous than the
terms of the notes, without his knowledge and consent, in the absence of legal and factual basis
and in violation of the Usury Law; the bank caused the inclusion in the promissory notes of
stipulations such as waiver of presentment for payment and notice of dishonor which are
against public policy; and the notes had been impaired since they were never presented for
payment and demands were made only several years after they fell due when his co-defendant
could no longer pay them.
Regarding his counterclaim, Tomas Ang argued that by reason of the banks acts or
omissions, it should be held liable for the amount of P50,000 for attorneys fees and expenses
of litigation. Furthermore, on his cross-claim against Antonio Ang Eng Liong, he averred that
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 attorneys
fees, respectively.
In its Reply,[9] respondent Bank countered that it is the real party in interest and is the
holder of the notes since the Associated Banking Corporation and Associated Citizens Bank
are its predecessors-in-interest. The fact that Tomas Ang never received any moneys in
consideration of the two (2) loans and that such was known to the bank are immaterial because,
as an accommodation maker, he is considered as a solidary debtor who is primarily liable for
the payment of the promissory notes. Citing Section 29 of the Negotiable Instruments Law
(NIL), the bank posited that absence or failure of consideration is not a matter of defense;
neither is the fact that the holder knew him to be only an accommodation party.
Respondent Bank likewise retorted that the promissory notes were completely filled up
at the time of their delivery. Assuming that such was not the case, Sec. 14 of the NIL provides
that the bank has the prima facie authority to complete the blank form. Moreover, it is
presumed that one who has signed as a maker acted with care and had signed the document
with full knowledge of its content. The bank noted that Tomas Ang is a prominent businessman
in Davao City who has been engaged in the auto parts business for several years, hence,
certainly he is not so nave as to sign the notes without knowing or bothering to verify the
amounts of the loans covered by them. Further, he is already in estoppel since despite receipt
of several demand letters there was not a single protest raised by him that he signed for only
one note in the amount of P30,000.
It was denied by the bank that there were extensions of time for payment accorded to
Antonio Ang Eng Liong. Granting that such were the case, it said that the same would not
relieve Tomas Ang from liability as he would still be liable for the whole obligation less the
share of his co-debtor who received the extended term.
The bank also asserted that there were no additional or new stipulations imposed other
than those agreed upon. The penalty charge, service charge, and attorneys fees were reflected
in the amendments to the promissory notes and disclosure statements. Reference to the Usury
Law was misplaced as usury is legally non-existent; at present, interest can be charged
depending on the agreement of the lender and the borrower.
Lastly, the bank contended that the provisions on presentment for payment and notice
of dishonor were expressly waived by Tomas Ang and that such waiver is not against public
policy pursuant to Sections 82 (c) and 109 of the NIL. In fact, there is even no necessity
therefor since being a solidary debtor he is absolutely required to pay and primarily liable on
both promissory notes.
On October 19, 1990, the trial court issued a preliminary pre-trial order directing the
parties to submit their respective pre-trial guide.[10] When Antonio Ang Eng Liong failed to
submit his brief, the bank filed an ex-parte motion to declare him in default.[11] Per Order
of November 23, 1990, the court granted the motion and set the ex-partehearing for the
presentation of the banks evidence.[12] Despite Tomas Angs motion[13] to modify the Order so
as to exclude or cancel the ex-parte hearing based on then Sec. 4, Rule 18 of the old Rules of
Court (now Sec. 3[c.], Rule 9 of the Revised Rules on Civil Procedure), the hearing
nonetheless proceeded.[14]
Eventually, a decision[15] was rendered by the trial court on February 21, 1991. For his
supposed bad faith and obstinate refusal despite several demands from the bank, 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. The overdue penalty charge and attorneys fees were,
however, reduced for being excessive, thus:
WHEREFORE, judgment is rendered against defendant Antonio Ang Eng

Liong and in favor of plaintiff, ordering the former to pay the latter:
On the first cause of action:
1) the amount of P50,000.00 representing the principal obligation with

14% interest per annum from June 27, 1983 with 2% service charge
and 6% overdue penalty charges per annum until fully paid;
2) P11,663.89 as accrued service charge; and

3) P34,991.67 as accrued overdue penalty charge.
On the second cause of action:
1) the amount of P50,000.00 (sic) representing the principal account

with 14% interest from June 27, 1983 with 2% service charge and 6%
overdue penalty charges per annum until fully paid;
2) P7,088.34 representing accrued service charge;
3) P21,265.00 as accrued overdue penalty charge;
4) the amount of P10,000.00 as attorneys fees; and
5) the amount of P620.00 as litigation expenses and to pay the costs.
SO ORDERED.[16]
The decision became final and executory as no appeal was taken therefrom. Upon the
banks ex-parte motion, the court accordingly issued a writ of execution on April 5, 1991.[17]
Thereafter, on June 3, 1991, the court set the pre-trial conference between the bank and
Tomas Ang,[18] who, in turn, filed a Motion to Dismiss[19] on the ground of lack of jurisdiction
over the case in view of the alleged finality of the February 21, 1991 Decision. He contended
that Sec. 4, Rule 18 of the old Rules sanctions only one judgment in case of several defendants,
one of whom is declared in default. Moreover, in his Supplemental Motion to
Dismiss,[20] Tomas Ang maintained that he is released from his obligation as a solidary
guarantor and accommodation party because, by the banks actions, he is now precluded from
asserting his cross-claim against Antonio Ang Eng Liong, upon whom a final and executory
judgment had already been issued.
The court denied the motion as well as the motion for reconsideration thereon.[21] Tomas
Ang subsequently filed a petition for certiorari and prohibition before this Court, which,
however, resolved to refer the same to the Court of Appeals.[22] In accordance with the prayer
of Tomas Ang, the appellate court promulgated its Decision on January 29, 1992 in CA G.R.
SP No. 26332, which annulled and set aside the portion of the Order dated November 23, 1990
setting the ex-parte presentation of the banks evidence against Antonio Ang Eng Liong, the
Decision dated February 21, 1991 rendered against him based on such evidence, and the Writ
of Execution issued on April 5, 1991.[23]
Trial then ensued between the bank and Tomas Ang. Upon the latters motion during the pre-
trial conference, Antonio Ang Eng Liong was again declared in default for his failure to answer
the cross-claim within the reglementary period.[24]
When Tomas Ang was about to present evidence in his behalf, he filed a Motion for Production
of Documents,[25] reasoning:
xxx
2. That corroborative to, and/or preparatory or incident to his testimony[,]

there is [a] need for him to examine original records in the custody and possession
of plaintiff, viz:
a. original Promissory Note (PN for brevity) # DVO-78-382

dated October 3, 1978[;]
b. original of Disclosure Statement in reference to PN # DVO-78-382;
c. original of PN # DVO-78-390 dated October 9, 1978;
d. original of Disclosure Statement in reference to PN # DVO-78-390;
e. Statement or Record of Account with the Associated Banking
Corporation or its successor, of Antonio Ang in CA No. 470 (cf. Exh.
O) including bank records, withdrawal slips, notices, other papers and
relevant dates relative to the overdraft of Antonio Eng Liong in CA No.
470;
f. Loan Applications of Antonio Ang Eng Liong or borrower relative to
PN Nos. DVO-78-382 and DVO-78-390 (supra);
g. Other supporting papers and documents submitted by Antonio Ang
Eng Liong relative to his loan application vis--vis PN. Nos. DVO-78-
382 and DVO-78-390 such as financial statements, income tax returns,
etc. as required by the Central Bank or bank rules and regulations.
3. That the above matters are very material to the defenses of defendant
Tomas Ang, viz:
- the bank is not a holder in due course when it accepted the [PNs] in
blank.
- The real borrower is Antonio Ang Eng Liong which fact is known to
the bank.
- That the PAYEE not being a holder in due course and knowing that
defendant Tomas Ang is merely an accommodation party, the latter
may raise against such payee or holder or successor-in-interest (of the
notes) PERSONAL and EQUITABLE DEFENSES such as FRAUD in
INDUCEMENT, DISCHARGE ON NOTE, Application of [Articles]
2079, 2080 and 1249 of the Civil Code, NEGLIGENCE in delaying
collection despite Eng Liongs OVERDRAFT in C.A. No. 470, etc.[26]
In its Order dated May 16, 1994,[27] the court denied the motion stating that the
promissory notes and the disclosure statements have already been shown to and inspected by
Tomas Ang during the trial, as in fact he has already copies of the same; the Statements or
Records of Account of Antonio Ang Eng Liong in CA No. 470, relative to his overdraft, are
immaterial since, pursuant to the previous ruling of the court, he is being sued for the notes
and not for the overdraft which is personal to Antonio Ang Eng Liong; and besides its non-
existence in the banks records, there would be legal obstacle for the production and inspection
of the income tax return of Antonio Ang Eng Liong if done without his consent.
When the motion for reconsideration of the aforesaid Order was denied, Tomas Ang filed a
petition for certiorari and prohibition with application for preliminary injunction and
restraining order before the Court of Appeals docketed as CA G.R. SP No.
34840.[28] On August 17, 1994, however, the Court of Appeals denied the issuance of a
Temporary Restraining Order.[29]
Meanwhile, notwithstanding its initial rulings that Tomas Ang was deemed to have waived his
right to present evidence for failure to appear during the pendency of his petition before the
Court of Appeals, the trial court decided to continue with the hearing of the case.[30]
After the trial, Tomas Ang offered in evidence several documents, which included a copy of
the Trust Agreement between the Republic of the Philippines and the Asset Privatization
Trust, as certified by the notary public, and news clippings from the Manila Bulletin dated May
18, 1994 and May 30, 1994.[31] All the documentary exhibits were admitted for failure of the
bank to submit its comment to the formal offer.[32] Thereafter, Tomas Ang elected to withdraw
his petition in CA G.R. SP No. 34840 before the Court of Appeals, which was then granted.[33]
On January 5, 1996, the trial court rendered judgment against the bank, dismissing the
complaint for lack of cause of action.[34] It held that:
Exh. 9 and its [sub-markings], the Trust Agreement dated 27 February 1987
for the defense shows that: the Associated Bank as of June 30, 1986 is one of DBPs
or Development Bank of the [Philippines] non-performing accounts for transfer; on
February 27, 1987 through Deeds of Transfer executed by and between the
Philippine National Bank and Development Bank of the Philippines and the National
Government, both financial institutions assigned, transferred and conveyed their
non-performing assets to the National Government; the National Government in turn
and as TRUSTOR, transferred, conveyed and assigned by way of trust unto the Asset
Privatization Trust said non-performing assets, [which] took title to and possession
of, [to] conserve, provisionally manage and dispose[,] of said assets identified for
privatization or disposition; one of the powers and duties of the APT with respect to
trust properties consisting of receivables is to handle the administration, collection
and enforcement of the receivables; to bring suit to enforce payment of the
obligations or any installment thereof or to settle or compromise any of such
obligations, or any other claim or demand which the government may have against
any person or persons[.]
The Manila Bulletin news clippings dated May 18, 1994 and May 30, 1994,
Exh. 9-A, 9-B, 9-C, and 9-D, show that the Monetary Board of the Bangko Sentral
ng Pilipinas approved the rehabilitation plan of the Associated Bank. One main
feature of the rehabilitation plan included the financial assistance for the bank by the
Philippine Deposit Insurance Corporation (PDIC) by way of the purchase of AB
Assets worth P1.3945 billion subject to a buy-back arrangement over a 10 year
period. The PDIC had approved of the rehab scheme, which included the purchase
of ABs bad loans worth P1.86 at 25% discount. This will then be paid by AB within
a 10-year period plus a yield comparable to the prevailing market rates x x x.
Based then on the evidence presented by the defendant Tomas Ang, it would
readily appear that at the time this suit for Sum of Money was filed which was on
August [28], 1990, the notes were held by the Asset Privatization Trust by virtue of
the Deeds of Transfer and Trust Agreement, which was empowered to bring suit to
enforce payment of the obligations. Consequently, defendant Tomas Ang has
sufficiently established that plaintiff at the time this suit was filed was not the holder
of the notes to warrant the dismissal of the complaint.[35]
Respondent Bank then elevated the case to the Court of Appeals. In the appellants brief
captioned, ASSOCIATED BANK, Plaintiff-Appellant versus ANTONIO ANG ENG LIONG and
TOMAS ANG, Defendants, TOMAS ANG, Defendant-Appellee, the following errors were
alleged:
I.
THE LOWER COURT ERRED IN NOT HOLDING DEFENDANT ANTONIO

ANG ENG LIONG AND DEFENDANT-APPELLEE TOMAS ANG LIABLE TO
PLAINTIFF-APPELLANT ON THEIR UNPAID LOANS DESPITE THE
LATTERS DOCUMENTARY EXHIBITS PROVING THE SAID
OBLIGATIONS.
II.
THE LOWER COURT ERRED IN DISMISSING PLAINTIFF-

APPELLANTS COMPLAINT ON THE BASIS OF NEWSPAPER CLIPPINGS
WHICH WERE COMPLETELY HEARSAY IN CHARACTER AND IMPROPER
FOR JUDICIAL NOTICE.[36]
The bank stressed that it has established the causes of action outlined in its Complaint
by a preponderance of evidence. As regards the Deed of Transfer and Trust Agreement, it
contended that the same were never authenticated by any witness in the course of the trial; the
Agreement, which was not even legible, did not mention the promissory notes subject of the
Complaint; the bank is not a party to the Agreement, which showed that it was between the
Government of the Philippines, acting through the Committee on Privatization represented by
the Secretary of Finance as trustor and the Asset Privatization Trust, which was created by
virtue of Proclamation No. 50; and the Agreement did not reflect the signatures of the
contracting parties. Lastly, the bank averred that the news items appearing in the Manila
Bulletin could not be the subject of judicial notice since they were completely hearsay in
character.[37]
On October 9, 2000, the Court of Appeals reversed and set aside the trial courts ruling.
The dispositive portion of the Decision[38] reads:
WHEREFORE, premises considered, the Decision of

the Regional Trial Court of Davao City, Branch 16, in Civil Case No. 20,299-90 is
hereby REVERSED AND SET ASIDE and another one entered ordering defendant-
appellee Tomas Ang to pay plaintiff-appellant Associated Bank the following:
1. P50,000.00 representing the principal amount of the loan under PN-

No. DVO-78-382 plus 14% interest thereon per annum computed from January 31,
1979 until the full amount thereof is paid;
2. P30,000.00 representing the principal amount of the loan under PN-
No. DVO-78-390 plus 14% interest thereon per annum computed from December 8,
1978 until the full amount thereof is paid;
All other claims of the plaintiff-appellant are DISMISSED for lack of legal
basis. Defendant-appellees counterclaim is likewise DISMISSED for lack of legal
and factual bases.
No pronouncement as to costs.
SO ORDERED.[39]
The appellate court disregarded the banks first assigned error for being irrelevant in the
final determination of the case and found its second assigned error as not meritorious. Instead,
it posed for resolution the issue of whether the trial court erred in dismissing the complaint for
collection of sum of money for lack of cause of action as the bank was said to be not the holder
of the notes at the time the collection case was filed.
In answering the lone issue, the Court of Appeals held that the bank is a holder under
Sec. 191 of the NIL. It concluded that despite the execution of the Deeds of Transfer and Trust
Agreement, the Asset Privatization Trust cannot be declared as the holder of the subject
promissory notes for the reason that it is neither the payee or indorsee of the notes in possession
thereof nor is it the bearer of said notes. The Court of Appeals 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. Citing Sec. 29
of the NIL, he is liable to the bank in spite of the latters knowledge, at the time of taking the
notes, that he is only an accommodation party. Moreover, as a co-maker who agreed to be
jointly and severally liable on the promissory notes, 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.
Further, the Court of Appeals agreed with the bank that the experience of Tomas Ang in
business rendered it implausible that he would just sign the promissory notes as a co-maker
without even checking the real amount of the debt to be incurred, or that he merely acted on
the belief that the first loan application was cancelled. According to the appellate court, it is
apparent that he was negligent in falling for the alibi of Antonio Ang Eng Liong and such fact
would not serve to exonerate him from his responsibility under the notes.
Nonetheless, the Court of Appeals denied the claims of the bank for service, penalty and
overdue charges as well as attorneys fees on the ground that the promissory notes made no
mention of such charges/fees.
In his motion for reconsideration,[40] Tomas Ang raised for the first time the assigned errors as
follows:
xxx
2) Related to the above jurisdictional issues, defendant-appellee Tomas Ang has

recently discovered that upon the filing of the complaint on August 28, 1990,
under the jurisdictional rule laid down in BP Blg. 129, appellant bank
fraudulently failed to specify the amount of compounded interest at 14% per
annum, service charges at 2% per annum and overdue penalty charges at 12%
per annum in the prayer of the complaint as of the time of its filing, paying a
total of only P640.00(!!!) as filing and court docket fees although the total
sum involved as of that time was P647,566.75 including 20% attorneys fees.
In fact, the stated interest in the body of the complaint alone amount
to P328,373.39 (which is actually compounded and capitalized) in both
causes of action and the total service and overdue penalties and charges and
attorneys fees further amount to P239,193.36 in both causes of action, as of
July 31, 1990, the time of filing of the complaint. Significantly, appellant
fraudulently misled the Court, describing the 14% imposition as interest,
when in fact the same was capitalized as principal by appellant bank every
month to earn more interest, as stated in the notes. In view thereof, the trial
court never acquired jurisdiction over the case and the same may not be now
corrected by the filing of deficiency fees because the causes of action had
already prescribed and more importantly, the jurisdiction of the Municipal
Trial Court had been increased to P100,000.00 in principal claims last March
20, 1999, pursuant to SC Circular No. 21-99, section 5 of RA No. 7691, and
section 31, Book I of the 1987 Administrative Code. In other words, as of
today, jurisdiction over the subject falls within the exclusive jurisdiction of
the MTC, particularly if the bank foregoes capitalization of the stipulated
interest.
3) BY FAILING TO GIVE NOTICE OF ITS APPEAL AND APPEAL BRIEF TO

APPELLEE ANG ENG LIONG, THE APPEALED JUDGMENT OF THE
TRIAL COURT WHICH LEFT OUT TOMAS ANGS CROSS-CLAIM
AGAINST ENG LIONG (BECAUSE IT DISMISSED THE MAIN CLAIM),
HAD LONG BECOME FINAL AND EXECUTORY, AS AGAINST ENG
LIONG. Accordingly, Tomas Angs right of subrogation against Ang Eng
Liong, expressed in his cross-claim, is now SEVERAL TIMES foreclosed
because of the fault or negligence of appellant bank since 1979 up to its
insistence of an ex-parte trial, and now when it failed to serve notice of appeal
and appellants brief upon him. Accordingly, appellee Tomas Ang should be
10 | N E G O S e c s . 6 0 t o 6 9
released from his suretyship obligation pursuant to Art. 2080 of the Civil
Code. The above is related to the issues above-stated.
4) This Court may have erred in ADDING or ASSIGNING its own bill of error for
the benefit of appellant bank which defrauded the judiciary by the payment
of deficient docket fees.[41]
Finding no cogent or compelling reason to disturb the Decision, the Court of Appeals
denied the motion in its Resolution dated December 26, 2000.[42]
Petitioner now submits the following issues for resolution:
1. Is [A]rticle 2080 of the Civil Code applicable to discharge petitioner Tomas

Ang as accommodation maker or surety because of the failure of [private]
respondent bank to serve its notice of appeal upon the principal debtor,
respondent Eng Liong?
2. Did the trial court have jurisdiction over the case at all?
3. Did the Court of Appeals [commit] error in assigning its own error and
raising its own issue?
4. Are petitioners other real and personal defenses such as successive

extensions coupled with fraudulent collusion to hide Eng Liongs default, the
payees grant of additional burdens, coupled with the insolvency of the
principal debtor, and the defense of incomplete but delivered instrument,
meritorious?[43]
Petitioner allegedly learned after the promulgation of the Court of Appeals decision that,
pursuant to the parties agreement on the compounding of interest with the principal amount
(per month in case of default), the interest on the promissory notes as of July 31, 1990 should
have been only P81,647.22 for PN No. DVO-78-382 (instead of P203,538.98) and P49,618.33
for PN No. DVO-78-390 (instead of P125,334.41) while the principal debt as of said date
should increase to P647,566.75 (instead of P539,638.96). He submits that the bank carefully
and shrewdly hid the fact by describing the amounts as interest instead of being part of either
the principal or penalty in order to pay a lesser amount of docket fees. According to him, the
total fees that should have been paid at the time of the filing of the complaint on August 28,
1990 was P2,216.30 and not P614.00 or a shortage of 71%. Petitioner contends that the bank
may not now pay the deficiency because the last demand letter sent to him was
dated September 9, 1986, or more than twenty years have elapsed such that prescription had
already set in. Consequently, the banks claim must be dismissed as the trial court loses
jurisdiction over the case.
11 | N E G O S e c s . 6 0 t o 6 9
Petitioner also argues that the Court of Appeals should not have assigned its own error
and raised it as an issue of the case, contending that no question should be entertained on
appeal unless it has been advanced in the court below or is within the issues made by the parties
in the pleadings. At any rate, he opines that the appellate courts decision that the bank is the
real party in interest because it is the payee named in the note or the holder thereof is too
simplistic since: (1) the power and control of Asset Privatization Trust over the bank are clear
from the explicit terms of the duly certified trust documents and deeds of transfer and are
confirmed by the newspaper clippings; (2) even under P.D. No. 902-A or the General Banking
Act, where a corporation or a bank is under receivership, conservation or rehabilitation, it is
only the representative (liquidator, receiver, trustee or conservator) who may properly act for
said entity, and, in this case, the bank was held by Asset Privatization Trust as trustee; and (3)
it is not entirely accurate to say that the payee who has not indorsed the notes in all cases is
the real party in interest because the rights of the payee may be subject of an assignment of
incorporeal rights under Articles 1624 and 1625 of the Civil Code.
Lastly, petitioner maintains that when respondent Bank served its notice of appeal and
appellants brief only on him, it rendered the judgment of the trial court final and executory
with respect to Antonio Ang Eng Liong, which, in effect, released him (Antonio Ang Eng
Liong) from any and all liability under the promissory notes and, thereby, foreclosed
petitioners cross-claims. By such act, the bank, even if it be the holder of the promissory notes,
allegedly discharged a simple contract for the payment of money (Sections 119 [d] and 122,
NIL [Act No. 2031]), prevented a surety like petitioner from being subrogated in the shoes of
his principal (Article 2080, Civil Code), and impaired the notes, producing the effect of
payment (Article 1249, Civil Code).
The petition is unmeritorious.

Procedurally, it is well within the authority of the Court of Appeals to raise, if it deems
proper under the circumstances obtaining, error/s not assigned on an appealed case.
In Mendoza v. Bautista,[44] this Court recognized the broad discretionary power of an appellate
court to waive the lack of proper assignment of errors and to consider errors not assigned, thus:
As a rule, no issue may be raised on appeal unless it has been brought before
the lower tribunal for its consideration. Higher courts are precluded from
entertaining matters neither alleged in the pleadings nor raised during the
proceedings below, but ventilated for the first time only in a motion for
reconsideration or on appeal.
However, as with most procedural rules, this maxim is subject to exceptions.

Indeed, our rules recognize the broad discretionary power of an appellate court to
waive the lack of proper assignment of errors and to consider errors not assigned.
Section 8 of Rule 51 of the Rules of Court provides:
12 | N E G O S e c s . 6 0 t o 6 9
SEC. 8. Questions that may be decided. No error which does not affect the
jurisdiction over the subject matter or the validity of the judgment appealed from or
the proceedings therein will be considered, unless stated in the assignment of errors,
or closely related to or dependent on an assigned error and properly argued in the
brief, save as the court may pass upon plain errors and clerical errors.
Thus, an appellate court is clothed with ample authority to review rulings even
if they are not assigned as errors in the appeal in these instances: (a) grounds not
assigned as errors but affecting jurisdiction over the subject matter; (b) matters not
assigned as errors on appeal but are evidently plain or clerical errors within
contemplation of law; (c) matters not assigned as errors on appeal but consideration
of which is necessary in arriving at a just decision and complete resolution of the
case or to serve the interests of justice or to avoid dispensing piecemeal justice; (d)
matters not specifically assigned as errors on appeal but raised in the trial court and
are matters of record having some bearing on the issue submitted which the parties
failed to raise or which the lower court ignored; (e) matters not assigned as errors on
appeal but closely related to an error assigned; and (f) matters not assigned as errors
on appeal but upon which the determination of a question properly assigned is
dependent. (Citations omitted)[45]
To the Courts mind, even if the Court of Appeals regarded petitioners two assigned
errors as irrelevant and not meritorious, the issue of whether the trial court erred in dismissing
the complaint for collection of sum of money for lack of cause of action (on the ground that
the bank was not the holder of the notes at the time of the filing of the action) is in
reality closely related to and determinant of the resolution of whether the lower court correctly
ruled in not holding Antonio Ang Eng Liong and petitioner Tomas Ang liable to the bank on
their unpaid loans despite documentary exhibits allegedly proving their obligations and in
dismissing the complaint based on newspaper clippings. Hence, no error could be ascribed to
the Court of Appeals on this point.
Now, the more relevant question is: who is the real party in interest at the time of the
institution of the complaint, is it the bank or the Asset Privatization Trust?
To answer the query, a brief history on the creation of the Asset Privatization Trust is
proper.
Taking into account the imperative need of formally launching a program for the
rationalization of the government corporate sector, then President Corazon C. Aquino issued
Proclamation No. 50[46] on December 8, 1986. As one of the twin cornerstones of the program
was to establish the privatization of a good number of government corporations, the
proclamation created the Asset Privatization Trust, which would, for the benefit of the National Government,
take title to and possession of, conserve, provisionally manage and dispose of transferred assets that were identified for privatization
[47]
or disposition.
13 | N E G O S e c s . 6 0 t o 6 9
In accordance with the provisions of Section 23[48] of the proclamation, then President
Aquino subsequently issued Administrative Order No. 14 on February 3, 1987, which
approved the identification of and transfer to the National Government of certain assets
(consisting of loans, equity investments, accrued interest receivables, acquired assets and other
assets) and liabilities (consisting of deposits, borrowings, other liabilities and contingent
guarantees) of the Development Bank of the Philippines (DBP) and the Philippine National
Bank (PNB). The transfer of assets was implemented through a Deed of Transfer executed
on February 27, 1987 between the National Government, on one hand, and the DBP and PNB,
on the other. In turn, the National Government designated the Asset Privatization Trust to act
as its trustee through a Trust Agreement, whereby the non-performing accounts of DBP and
PNB, including, among others, the DBPs equity with respondent Bank, were entrusted to the
Asset Privatization Trust.[49] As provided for in the Agreement, among the powers and duties
of the Asset Privatization Trust with respect to the trust properties consisting of receivables
was to handle their administration and collection by bringing suit to enforce payment of the
obligations or any installment thereof or settling or compromising any of such obligations or
any other claim or demand which the Government may have against any person or persons,
and to do all acts, institute all proceedings, and to exercise all other rights, powers, and
privileges of ownership that an absolute owner of the properties would otherwise have the
right to do.[50]
Incidentally, the existence of the Asset Privatization Trust would have expired five (5)
years from the date of issuance of Proclamation No. 50.[51] However, its original term was
extended from December 8, 1991 up to August 31, 1992,[52] and again from December 31,
1993 until June 30, 1995,[53] and then from July 1, 1995 up to December 31, 1999,[54] and
further from January 1, 2000 until December 31, 2000.[55] Thenceforth, the Privatization and
Management Office was established and took over, among others, the powers, duties and
functions of the Asset Privatization Trust under the proclamation.[56]
Based on the above backdrop, respondent Bank does not appear to be the real party in interest
when it instituted the collection suit on August 28, 1990 against Antonio Ang Eng Liong and
petitioner Tomas Ang. 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. In fact,
during the pre-trial conference, Atty. Roderick Orallo, counsel for the bank, openly admitted
that it was under the trusteeship of the Asset Privatization Trust.[57] The Asset Privatization
Trust, which should have been represented by the Office of the Government Corporate
Counsel, had the authority to file and prosecute the case.
The foregoing notwithstanding, this Court can not, at present, readily subscribe to petitioners
insistence that the case must be dismissed. Significantly, it stands without refute, both in the
14 | N E G O S e c s . 6 0 t o 6 9
pleadings as well as in the evidence presented during the trial and up to the time this case
reached the Court, that the issue had been rendered moot with the occurrence of a supervening
event the buy-back of the bank by its former owner, Leonardo Ty, sometime in October 1993.
By such re-acquisition from the Asset Privatization Trust when the case was still pending in
the lower court, the bank reclaimed its real and actual interest over the unpaid promissory
notes; hence, it could rightfully qualify as a holder[58] thereof under the NIL.
Notably, Section 29 of the NIL defines an 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.[59] An accommodation party 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 party/ies thereto.[60] The accommodation party is liable on the
instrument to a holder for value even though the holder, at the
time of taking the instrument, knew him or her to be merely an
accommodation party, as if the contract was not for accommodation.[61]
As petitioner acknowledged it to be, the relation between an accommodation party and

the accommodated party is one of principal and surety the accommodation party being the
surety.[62] As such, he is deemed an original promisor and debtor from the beginning; [63] 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 as to be
inseparable.[64] Although a contract of suretyship is in essence accessory or collateral to a valid
principal obligation, the surety's liability to the creditor is immediate, primary and absolute;
he is directly and equally bound with the principal.[65] As an equivalent of a regular party to
the undertaking, a surety becomes liable to the debt and duty of the principal obligor even
without possessing a direct or personal interest in the obligations nor does he receive any
benefit therefrom.[66]
Contrary to petitioners adamant stand, however, Article 2080[67] of the Civil Code does
not apply in a contract of suretyship.[68] Art. 2047 of the Civil Code states that if a person binds
himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I,
Book IV of the Civil Code must be observed. Accordingly, Articles 1207 up to 1222 of the
Code (on joint and solidary obligations) shall govern the relationship of petitioner with the
bank.
The case of Inciong, Jr. v. CA[69] is illuminating:
15 | N E G O S e c s . 6 0 t o 6 9
Petitioner also argues that the dismissal of the complaint against Naybe, the
principal debtor, and against Pantanosas, his co-maker, constituted a release of his
obligation, especially because the dismissal of the case against Pantanosas was upon
the motion of private respondent itself. He cites as basis for his argument, Article
2080 of the Civil Code which provides that:
"The guarantors, even though they be solidary, are released from their
obligation whenever by come act of the creditor, they cannot be subrogated to the
rights, mortgages, and preferences of the latter."
It is to be noted, however, that 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."
A solidary or joint and several obligation is one in which each debtor is liable
for the entire obligation, and each creditor is entitled to demand the whole obligation.
On the other hand, Article 2047 of the Civil Code states:
"By guaranty a person, called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions
of Section 4, Chapter 3, Title I of this Book shall be observed. In such a case the
contract is called a suretyship." (Italics supplied.)
While a guarantor may bind himself solidarily with the principal debtor, the
liability of a guarantor is different from that of a solidary debtor. Thus, Tolentino
explains:
"A guarantor who binds himself in solidum with the principal debtor under
the provisions of the second paragraph does not become a solidary co-debtor to all
intents and purposes. There is a difference between a solidary co-debtor, and a fiador
in solidum (surety). The later, outside of the liability he assumes to pay the debt
before the property of the principal debtor has been exhausted, retains all the other
rights, actions and benefits which pertain to him by reason of rights of the fiansa;
while a solidary co-debtor has no other rights than those bestowed upon him in
Section 4, Chapter 3, title I, Book IV of the Civil Code."
Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint
and several obligations. Under Art. 1207 thereof, when there are two or more debtors
in one and the same obligation, the presumption is that obligation is joint so that
16 | N E G O S e c s . 6 0 t o 6 9
each of the debtors is liable only for a proportionate part of the debt. There is a
solidarily liability only when the obligation expressly so states, when the law so
provides or when the nature of the obligation so requires.
Because the promissory note involved in this case expressly states that the
three signatories therein are jointly and severally liable, any one, some or all of them
may be proceeded against for the entire obligation. The choice is left to the solidary
creditor to determine against whom he will enforce collection. (Citations omitted)[70]
In the instant case, petitioner agreed to be jointly and severally liable under the two
promissory notes that he co-signed with Antonio Ang Eng Liong as the principal debtor. This
being so, it is completely immaterial if the bank would opt to proceed only against petitioner
or Antonio Ang Eng Liong or both of them since the law confers upon the creditor the
prerogative to choose whether to enforce the entire obligation against any one, some or all of
the debtors. Nonetheless, petitioner, as an accommodation party, may seek reimbursement
from Antonio Ang Eng Liong, being the party accommodated.[71]
It is plainly mistaken for petitioner to say that just because the bank failed to serve the
notice of appeal and appellants brief to Antonio Ang Eng Liong, the trial courts judgment, in
effect, became final and executory as against the latter and, thereby, bars his (petitioners)
cross-claims against him: First, although no notice of appeal and appellants brief were served
to Antonio Ang Eng Liong, he was nonetheless impleaded in the case since his name appeared
in the caption of both the notice and the brief as one of the defendants-appellees;[72] Second,
despite including in the caption of the appellees brief his co-debtor as one of the defendants-
appellees, petitioner did not also serve him a copy thereof;[73] Third, in the caption of the Court
of Appeals decision, Antonio Ang Eng Liong was expressly named as one of the defendants-
appellees;[74] and Fourth, it was only in his motion for reconsideration from the adverse
judgment of the Court of Appeals that petitioner belatedly chose to serve notice to the counsel
of his co-defendant-appellee.[75]
Likewise, this Court rejects the contention of Antonio Ang Eng Liong, in his special
appearance through counsel, that the Court of Appeals, much less this Court, already lacked
jurisdiction over his person or over the subject matter relating to him because he was not a
party in CA-G.R. CV No. 53413. Stress must be laid of the fact that he had twice put himself
in default one, in not filing a pre-trial brief and another, in not filing his answer to petitioners
cross-claims. As a matter of course, Antonio Ang Eng Liong, being a party declared in default,
already waived his right to take part in the trial proceedings and had to contend with the
judgment rendered by the court based on the evidence presented by the bank and petitioner.
Moreover, even without considering these default judgments, Antonio Ang Eng Liong even
categorically admitted having secured a loan totaling P80,000. In his Answer to the complaint,
he did not deny such liability but merely pleaded that the bank be ordered to submit a more
reasonable computation instead of collecting excessive interest, penalty charges, and attorneys
17 | N E G O S e c s . 6 0 t o 6 9
fees. For failing to tender an issue and in not denying the material allegations stated in the
complaint, a judgment on the pleadings[76] would have also been proper since not a single issue
was generated by the Answer he filed.
As the promissory notes were not discharged or impaired through any act or omission
of the bank, Sections 119 (d)[77] and 122[78] of the NIL as well as Art. 1249[79] of the Civil Code
would necessarily find no application. Again, neither was petitioners right of reimbursement
barred nor was the banks right to proceed against Antonio Ang Eng Liong expressly renounced
by the omission to serve notice of appeal and appellants brief to a party already declared in
default.
Consequently, in issuing the two promissory notes, petitioner as accommodating party

warranted to the holder in due course that he would pay the same according to its tenor. [80] It
is no defense to state on his part that he did not receive any value therefor[81] because the
phrase "without receiving value therefor" used in Sec. 29 of the NIL means "without receiving
value by virtue of the instrument" and not as it is apparently supposed to mean, "without
receiving payment for lending his name."[82] Stated differently, when a third person advances
the face value of the note to the accommodated party at the time of its creation, the
consideration for the note as regards its maker is the money advanced to the accommodated
party. It is enough that value was given for the note at the time of its creation.[83] As in the
instant case, a sum of money was received by virtue of the notes, hence, it is 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.[84]
Under the law, upon the maturity of the note, a surety may pay the debt, demand the
collateral security, if there be any, and dispose of it to his benefit, or, if applicable, subrogate
himself in the place of the creditor with the right to enforce the guaranty against the other
signers of the note for the reimbursement of what he is entitled to recover from
them.[85] Regrettably, none of these were prudently done by petitioner. When he was first
notified by the bank sometime in 1982 regarding his accountabilities under the promissory
notes, he lackadaisically relied on Antonio Ang Eng Liong, who represented that he would
take care of the matter, instead of directly communicating with the bank for its
settlement.[86] Thus, petitioner cannot now claim that he was prejudiced by the supposed
extension of time given by the bank to his co-debtor.
Furthermore, 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.[87] In Clark v.
Sellner,[88] this Court held:
18 | N E G O S e c s . 6 0 t o 6 9
x x x The mere delay of the creditor in enforcing the guaranty has not by any
means impaired his action against the defendant. It should not be lost sight of that
the defendant's signature on the note is an assurance to the creditor that the collateral
guaranty will remain good, and that otherwise, he, the defendant, will be personally
responsible for the payment.
True, that if the creditor had done any act whereby the guaranty was impaired
in its value, or discharged, such an act would have wholly or partially released the
surety; but it must be born in mind that it is a recognized doctrine in the matter of
suretyship that with respect to the surety, the creditor is under no obligation to
display any diligence in the enforcement of his rights as a creditor. His mere inaction
indulgence, passiveness, or delay in proceeding against the principal debtor, or the
fact that he did not enforce the guaranty or apply on the payment of such funds as
were available, constitute no defense at all for the surety, unless the contract
expressly requires diligence and promptness on the part of the creditor, which is not
the case in the present action. There is in some decisions a tendency toward holding
that the creditor's laches may discharge the surety, meaning by laches a negligent
forbearance. This theory, however, is not generally accepted and the courts almost
universally consider it essentially inconsistent with the relation of the parties to the
note. (21 R.C.L., 1032-1034)[89]
Neither can petitioner benefit from the alleged insolvency of Antonio Ang Eng Liong
for want of clear and convincing evidence proving the same. Assuming it to be true, he also
did not exercise diligence in demanding security to protect himself from the danger thereof in
the event that he (petitioner) would eventually be sued by the bank. Further, whether petitioner
may or may not obtain security from Antonio Ang Eng Liong cannot in any manner affect his
liability to the bank; the said remedy is a matter of concern exclusively between themselves as
accommodation party and accommodated party. The fact that petitioner stands only as a surety
in relation to Antonio Ang Eng Liong is immaterial to the claim of the bank and does not a
whit diminish nor defeat the rights of the latter as a holder for value. To sanction his theory is
to give unwarranted legal recognition to the patent absurdity of a situation where a co-maker,
when sued on an instrument by a holder in due course and for value, can escape liability by
the convenient expedient of interposing the defense that he is a merely an accommodation
party.[90]
In sum, as regards the other issues and errors alleged in this petition, the Court notes
that these were the very same questions of fact raised on appeal before the Court of Appeals,
although at times couched in different terms and explained more lengthily in the petition.
Suffice it to say that the same, being factual, have been satisfactorily passed upon and
considered both by the trial and appellate courts. It is doctrinal that only errors of law and not
of fact are reviewable by this Court in petitions for review on certiorariunder Rule 45 of the
Rules of Court. Save for the most cogent and compelling reason, it is not our function under
19 | N E G O S e c s . 6 0 t o 6 9
the rule to examine, evaluate or weigh the probative value of the evidence presented by the
parties all over again.[91]
WHEREFORE, the October 9, 2000 Decision and December 26, 2000 Resolution of
the Court of Appeals in CA-G.R. CV No. 53413 are AFFIRMED. The petition
is DENIED for lack of merit.
No costs.
SO ORDERED.
20 | N E G O S e c s . 6 0 t o 6 9
G.R. No. 146511 September 5, 2007
Lessons Applicable: Consideration and Accommodation (Negotiable Instruments)
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
21 | N E G O S e c s . 6 0 t o 6 9
 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.
22 | N E G O S e c s . 6 0 t o 6 9
CLAUDE P. BAUTISTA, G.R. No. 166405
Petitioner,
Present:
QUISUMBING, J., Chairperson,
PUNO, C.J.,
- versus - TINGA,
VELASCO, JR., and
BRION, JJ.
AUTO PLUS TRADERS, Promulgated:

INCORPORATED and COURT OF
APPEALS (Twenty-First Division), August 6, 2008
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
This petition for review on certiorari assails the Decision [1] dated August 10, 2004 of
the Court of Appeals in CA-G.R. CR No. 28464 and the Resolution[2] dated October 29, 2004,
which denied petitioners motion for reconsideration. The Court of Appeals affirmed the
February 24, 2004 Decision and May 11, 2004 Order of the Regional Trial Court
(RTC), Davao City, Branch 16, in Criminal Case Nos. 52633-03 and 52634-03.
The antecedent facts are as follows:
Petitioner Claude P. Bautista, in his capacity as President and Presiding Officer of

Cruiser Bus Lines and Transport Corporation, purchased various spare parts from private
respondent Auto Plus Traders, Inc. and issued two postdated checks to cover his
purchases. The checks were subsequently dishonored. Private respondent then executed an
affidavit-complaint for violation of Batas Pambansa Blg. 22[3] against
petitioner. Consequently, two Informations for violation of BP Blg. 22 were filed with the
Municipal Trial Court in Cities (MTCC) of Davao City against the petitioner. These were
docketed as Criminal Case Nos. 102,004-B-2001 and 102,005-B-
[4]
2001. The Informations read:
Criminal Case No. 102,004-B-2001:
The undersigned accuses the above-named accused for violation of Batas
Pambansa Bilang 22, committed as follows:
That on or about December 15, 2000, in the City of Davao, Philippines, and
within the jurisdiction of this Honorable Court, the above-mentioned accused,
knowing fully well that he had no sufficient funds and/or credit with the drawee
23 | N E G O S e c s . 6 0 t o 6 9
bank, wilfully, unlawfully and feloniously issued and made out Rural Bank of Digos,
Inc. Check No. 058832, dated December 15, 2000, in the amount of P151,200.00, in
favor of Auto Plus Traders, Inc., but when said check was presented to the drawee
bank for encashment, the same was dishonored for the reason DRAWN AGAINST
INSUFFICIENT FUNDS and despite notice of dishonor and demands upon said
accused to make good the check, accused failed and refused to make payment to the
damage and prejudice of herein complainant.
CONTRARY TO LAW.
Criminal Case No. 102,005-B-2001:

The undersigned accuses the above-named accused for violation of Batas
Pambansa Bilang 22, committed as follows:
That on or about October 30, 2000, in the City of Davao, Philippines, and
within the jurisdiction of this Honorable Court, the above-mentioned accused,
knowing fully well that he had no sufficient funds and/or credit with the drawee
bank, wilfully, unlawfully and feloniously issued and made out Rural Bank of Digos,
Inc. Check No. 059049, dated October 30, 2000, in the amount of P97,500.00, in
favor of Auto Plus Traders, [Inc.], but when said check was presented to the drawee
bank for encashment, the same was dishonored for the reason DRAWN AGAINST
INSUFFICIENT FUNDS and despite notice of dishonor and demands upon said
accused to make good the check, accused failed and refused to make payment, to the
damage and prejudice of herein complainant.
CONTRARY TO LAW.
Petitioner pleaded not guilty. Trial on the merits ensued. After the presentation of the
prosecutions evidence, petitioner filed a demurrer to evidence. On April 21, 2003, the MTCC
granted the demurrer, thus:
WHEREFORE, the demurrer to evidence is granted, premised on reasonable
doubt as to the guilt of the accused. Cruiser Bus Line[s] and Transport Corporation,
through the accused is directed to pay the complainant the sum of P248,700.00
representing the value of the two checks, with interest at the rate of 12% per annum
to be computed from the time of the filing of these cases in Court, until the account
is paid in full; ordering further Cruiser Bus Line[s] and Transport Corporation,
through the accused, to reimburse complainant the expense representing filing fees
amounting to P1,780.00 and costs of litigation which this Court hereby fixed
at P5,000.00.
SO ORDERED.[5]
Petitioner moved for partial reconsideration but his motion was denied. Thereafter, both
parties appealed to the RTC. On February 24, 2004, the trial court ruled:
WHEREFORE, the assailed Order dated April 21, 2003 is hereby MODIFIED
to read as follows: Accused is directed to pay and/or reimburse the complainant the
24 | N E G O S e c s . 6 0 t o 6 9
following sums: (1) P248,700.00 representing the value of the two checks, with
interest at the rate of 12% per annum to be computed from the time of the filing of
these cases in Court, until the account is paid in full; (2) P1,780.00 for filing fees
and P5,000.00 as cost of litigation.
SO ORDERED.[6]
Petitioner moved for reconsideration, but his motion was denied on May 11,
2004. Petitioner elevated the case to the Court of Appeals, which affirmed the February 24,
2004 Decision and May 11, 2004 Order of the RTC:
WHEREFORE, premises considered, the instant petition is DENIED. The
assailed Decision of the Regional Trial Court, Branch 16, Davao City,
dated February 24, 2004 and its Order dated May 11, 2004 are AFFIRMED.
SO ORDERED.[7]
Petitioner now comes before us, raising the sole issue of whether the Court of Appeals erred
in upholding the RTCs ruling that petitioner, as an officer of the corporation, is personally and
civilly liable to the private respondent for the value of the two checks.[8]
Petitioner asserts that BP Blg. 22 merely pertains to the criminal liability of the accused
and that the corporation, which has a separate personality from its officers, is solely liable for
the value of the two checks.
Private respondent counters that petitioner should be held personally liable for both
checks. Private respondent alleged that petitioner issued two postdated checks: a personal
check in his name for the amount of P151,200 and a corporation check under the account of
Cruiser Bus Lines and Transport Corporation for the amount of P97,500.According to private
respondent, petitioner, by issuing his check to cover the obligation of the corporation, became
an accommodation party. Under Section 29[9] of the Negotiable Instruments Law, an
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.
At the outset, we note that private respondents allegation that petitioner issued a
personal check disputes the factual findings of the MTCC. The MTCC found that the two
checks belong to Cruiser Bus Lines and Transport Corporation while the RTC found that one
of the checks was a personal check of the petitioner. 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, [10] we are
compelled to settle this issue.
25 | N E G O S e c s . 6 0 t o 6 9
A perusal of the two check return slips[11] in conjunction with the Current Account
Statements[12] 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, we find the appellate court in error for affirming the decision of the RTC
holding petitioner liable for the value of the checks considering that petitioner 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.
Juridical entities have personalities separate and distinct from its officers and the
persons composing it.[13] Generally, the stockholders and officers are not personally liable for
the obligations of the corporation except only when the veil of corporate fiction is being used
as a cloak or cover for fraud or illegality, or to work injustice. [14] These situations, however,
do not exist in this case. The evidence shows that it is Cruiser Bus Lines and Transport
Corporation that has obligations to Auto Plus Traders, Inc. for tires.There is no agreement that
petitioner shall be held liable for the corporations obligations in his personal capacity. Hence,
he cannot be held liable for the value of the two checks issued in payment for the corporations
obligation in the total amount of P248,700.
Likewise, contrary to private respondents contentions, petitioner cannot be considered liable

as an accommodation party for Check No. 58832. Section 29 of the Negotiable Instruments
Law defines an 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. [15] An accommodation party
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 party/ies thereto.[16] The first two elements are present here, however there is insufficient
evidence presented in the instant case to show the presence of the third requisite. All that the
evidence shows is that petitioner signed Check No. 58832, which is drawn against his personal
account. The said check, dated December 15, 2000, corresponds to the value of 24 sets of tires
received by Cruiser Bus Lines and Transport Corporation on August 29, 2000.[17] There is no
showing of when petitioner issued the check and in what capacity. In the absence of concrete
evidence it cannot just be assumed that petitioner intended to lend his name to the
corporation.Hence, petitioner cannot be considered as an accommodation party.
26 | N E G O S e c s . 6 0 t o 6 9
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.
WHEREFORE, the petition is GRANTED. The Decision dated August 10, 2004 and
the Resolution dated October 29, 2004 of the Court of Appeals in CA-G.R. CR No. 28464
are REVERSED and SET ASIDE. Criminal Case Nos. 52633-03 and 52634-03
are DISMISSED, without prejudice to the right of private respondent Auto Plus Traders, Inc.,
to file the proper civil action against Cruiser Bus Lines and Transport Corporation for the value
of the two checks.
No pronouncement as to costs.
SO ORDERED.
27 | N E G O S e c s . 6 0 t o 6 9
Negotiable Instruments Case Digest: Bautista V. Auto Plus Traders Inc (2008)
G.R. No. 166405 August 06, 2008

Lessons Applicable: Consideration and Accommodation Party (Negotiable Instruments Law)
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 the corporation, 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
28 | N E G O S e c s . 6 0 t o 6 9
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
 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
 he must be a party to the instrument, signing as maker, drawer, acceptor, or indorser

-present
 he must not receive value therefor - present
 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.
29 | N E G O S e c s . 6 0 t o 6 9
30 | N E G O S e c s . 6 0 t o 6 9
31 | N E G O S e c s . 6 0 t o 6 9
GENEVIEVE LIM, G.R. No. 163720
Petitioner,
Present:
PUNO, J.,
- versus - Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
FLORENCIO SABAN, CHICO-NAZARIO, JJ.
Respondent.
Promulgated:
December 16, 2004
x-------------------------------------------------------------------x
DECISION
TINGA, J.:
Before the Court is a Petition for Review on Certiorari assailing

the Decision[1] dated October 27, 2003 of the Court of Appeals, Seventh
Division, in CA-G.R. V No. 60392.[2]
The late Eduardo Ybaez (Ybaez), the owner of a 1,000-square meter lot in
Cebu City (the lot), entered into an Agreement and Authority to Negotiate and
Sell (Agency Agreement) with respondent Florencio Saban (Saban) on
February 8, 1994. Under the Agency Agreement, Ybaez authorized Saban to
look for a buyer of the lot for Two Hundred Thousand Pesos (P200,000.00)
and to mark up the selling price to include the amounts needed for payment
of taxes, transfer of title and other expenses incident to the sale, as well as
Sabans commission for the sale.[3]
Through Sabans efforts, Ybaez and his wife were able to sell the lot to the
petitioner Genevieve Lim (Lim) and the spouses Benjamin and Lourdes Lim
(the Spouses Lim) on March 10, 1994. The price of the lot as indicated in
the Deed of Absolute Sale is Two Hundred Thousand Pesos
(P200,000.00).[4] It appears, however, that the vendees agreed to purchase
the lot at the price of Six Hundred Thousand Pesos (P600,000.00), inclusive
of taxes and other incidental expenses of the sale. After the sale, Lim remitted
to Saban the amounts of One Hundred Thirteen Thousand Two Hundred Fifty
32 | N E G O S e c s . 6 0 t o 6 9
Seven Pesos (P113,257.00) for payment of taxes due on the transaction as
well as Fifty Thousand Pesos (P50,000.00) as brokers commission.[5] Lim also
issued in the name of Saban four postdated checks in the aggregate amount
of Two Hundred Thirty Six Thousand Seven Hundred Forty Three Pesos
(P236,743.00). These checks were Bank of the Philippine Islands (BPI) Check
No. 1112645 dated June 12, 1994 for P25,000.00; BPI Check No. 1112647
dated June 19, 1994 for P18,743.00; BPI Check No. 1112646 dated June 26,
1994 for P25,000.00; and Equitable PCI Bank Check No. 021491B dated
June 20, 1994 for P168,000.00.
Subsequently, Ybaez sent a letter dated June 10, 1994 addressed to Lim. In
the letter Ybaez asked Lim to cancel all the checks issued by her in Sabans
favor and to extend another partial payment for the lot in his (Ybaezs) favor.[6]
After the four checks in his favor were dishonored upon presentment, Saban
filed a Complaint for collection of sum of money and damages against Ybaez
and Lim with the Regional Trial Court (RTC) of Cebu City on August 3,
1994.[7] The case was assigned to Branch 20 of the RTC.
In his Complaint, Saban alleged that Lim and the Spouses Lim agreed to
purchase the lot for P600,000.00, i.e., with a mark-up of Four Hundred
Thousand Pesos (P400,000.00) from the price set by Ybaez. Of the total
purchase price of P600,000.00, P200,000.00 went to Ybaez, P50,000.00
allegedly went to Lims agent, and P113,257.00 was given to Saban to cover
taxes and other expenses incidental to the sale. Lim also issued four (4)
postdated checks[8] in favor of Saban for the remaining P236,743.00.[9]
Saban alleged that Ybaez told Lim that he (Saban) was not entitled to any
commission for the sale since he concealed the actual selling price of the lot
from Ybaez and because he was not a licensed real estate broker. Ybaez was
able to convince Lim to cancel all four checks.
Saban further averred that Ybaez and Lim connived to deprive him of his
sales commission by withholding payment of the first three checks. He also
claimed that Lim failed to make good the fourth check which was dishonored
because the account against which it was drawn was closed.
In his Answer, Ybaez claimed that Saban was not entitled to any commission
because he concealed the actual selling price from him and because he was
not a licensed real estate broker.
33 | N E G O S e c s . 6 0 t o 6 9
Lim, for her part, argued that she was not privy to the agreement between
Ybaez and Saban, and that she issued stop payment orders for the three
checks because Ybaez requested her to pay the purchase price directly to
him, instead of coursing it through Saban. She also alleged that she agreed
with Ybaez that the purchase price of the lot was only P200,000.00.
Ybaez died during the pendency of the case before the RTC. Upon motion of
his counsel, the trial court dismissed the case only against him without any
objection from the other parties.[10]
On May 14, 1997, the RTC rendered its Decision[11] dismissing Sabans
complaint, declaring the four (4) checks issued by Lim as stale and non-
negotiable, and absolving Lim from any liability towards Saban.
Saban appealed the trial courts Decision to the Court of Appeals.
On October 27, 2003, the appellate court promulgated

its Decision reversing the trial courts ruling. It held that Saban was entitled
[12]
to his commission amounting to P236,743.00.[13]

The Court of Appeals ruled that Ybaezs revocation of his contract of agency
with Saban was invalid because the agency was coupled with an interest and
Ybaez effected the revocation in bad faith in order to deprive Saban of his
commission and to keep the profits for himself.[14]
The appellate court found that Ybaez and Lim connived to deprive Saban of
his commission. It declared that Lim is liable to pay Saban the amount of the
purchase price of the lot corresponding to his commission because she issued
the four checks knowing that the total amount thereof corresponded to
Sabans commission for the sale, as the agent of Ybaez. The appellate court
further ruled that, in issuing the checks in payment of Sabans commission,
Lim acted as an accommodation party. She signed the checks as drawer,
without receiving value therefor, for the purpose of lending her name to a
third person. As such, she is liable to pay Saban as the holder for value of
the checks.[15]
Lim filed a Motion for Reconsideration of the appellate courts Decision, but
her Motion was denied by the Court of Appeals in a Resolution dated May 6,
2004.[16]
Not satisfied with the decision of the Court of Appeals, Lim filed the
present petition.
34 | N E G O S e c s . 6 0 t o 6 9
Lim argues that the appellate court ignored the fact that after paying
her agent and remitting to Saban the amounts due for taxes and transfer of
title, she paid the balance of the purchase price directly to Ybaez.[17]
She further contends that she is not liable for Ybaezs debt to Saban
under the Agency Agreement as she is not privy thereto, and that Saban has
no one but himself to blame for consenting to the dismissal of the case against
Ybaez and not moving for his substitution by his heirs.[18]
Lim also assails the findings of the appellate court that she issued the
checks as an accommodation party for Ybaez and that she connived with the
latter to deprive Saban of his commission.[19]
Lim prays that should she be found liable to pay Saban the amount of
his commission, she should only be held liable to the extent of one-third (1/3)
of the amount, since she had two co-vendees (the Spouses Lim) who should
share such liability.[20]
In his Comment, Saban maintains that Lim agreed to purchase the lot
for P600,000.00, which consisted of the P200,000.00 which would be paid to
Ybaez, the P50,000.00 due to her broker, the P113,257.00 earmarked for
taxes and other expenses incidental to the sale and Sabans commission as
broker for Ybaez. According to Saban, Lim assumed the obligation to pay him
his commission. He insists that Lim and Ybaez connived to unjustly deprive
him of his commission from the negotiation of the sale.[21]
The issues for the Courts resolution are whether Saban is entitled to receive
his commission from the sale; and, assuming that Saban is entitled thereto,
whether it is Lim who is liable to pay Saban his sales commission.
The Court gives due course to the petition, but agrees with the result reached
by the Court of Appeals.
The Court affirms the appellate courts finding that the agency was not
revoked since Ybaez requested that Lim make stop payment orders for the
checks payable to Saban only after the consummation of the sale on March
10, 1994. At that time, Saban had already performed his obligation as Ybaezs
agent when, through his (Sabans) efforts, Ybaez executed the Deed of
Absolute Sale of the lot with Lim and the Spouses Lim.
35 | N E G O S e c s . 6 0 t o 6 9
To deprive Saban of his commission subsequent to the sale which was
consummated through his efforts would be a breach of his contract of agency
with Ybaez which expressly states that Saban would be entitled to any excess
in the purchase price after deducting the P200,000.00 due to Ybaez and the
transfer taxes and other incidental expenses of the sale.[22]
In Macondray & Co. v. Sellner,[23] the Court recognized the right of a broker to
his commission for finding a suitable buyer for the sellers property even
though the seller himself consummated the sale with the buyer.[24] The Court
held that it would be in the height of injustice to permit the principal to
terminate the contract of agency to the prejudice of the broker when he had
already reaped the benefits of the brokers efforts.
In Infante v. Cunanan, et al.,[25] the Court upheld the right of the brokers to
their commissions although the seller revoked their authority to act in his
behalf after they had found a buyer for his properties and negotiated the sale
directly with the buyer whom he met through the brokers efforts. The Court
ruled that the sellers withdrawal in bad faith of the brokers authority cannot
unjustly deprive the brokers of their commissions as the sellers duly
constituted agents.
The pronouncements of the Court in the aforecited cases are applicable to

the present case, especially considering that Saban had completely performed
his obligations under his contract of agency with Ybaez by finding a suitable
buyer to preparing the Deed of Absolute Sale between Ybaez and Lim and her
co-vendees. Moreover, the contract of agency very clearly states that Saban
is entitled to the excess of the mark-up of the price of the lot after deducting
Ybaezs share of P200,000.00 and the taxes and other incidental expenses of
the sale.
However, the Court does not agree with the appellate courts pronouncement
that Sabans agency was one coupled with an interest. Under Article 1927 of
the Civil Code, an agency cannot be revoked if a bilateral contract depends
upon it, or if it is the means of fulfilling an obligation already contracted, or
if a partner is appointed manager of a partnership in the contract of
partnership and his removal from the management is unjustifiable. Stated
differently, an agency is deemed as one coupled with an interest where it is
established for the mutual benefit of the principal and of the agent, or for the
interest of the principal and of third persons, and it cannot be revoked by the
principal so long as the interest of the agent or of a third person subsists. In
an agency coupled with an interest, the agents interest must be in the subject
matter of the power conferred and not merely an interest in the exercise of
the power because it entitles him to compensation. When an agents interest
36 | N E G O S e c s . 6 0 t o 6 9
is confined to earning his agreed compensation, the agency is not one coupled
with an interest, since an agents interest in obtaining his compensation as
such agent is an ordinary incident of the agency relationship.[26]
Sabans entitlement to his commission having been settled, the Court

must now determine whether Lim is the proper party against whom Saban
should address his claim.
Sabans right to receive compensation for negotiating as broker for Ybaez

arises from the Agency Agreement between them. Lim is not a party to the
contract. However, the record reveals that she had knowledge of the fact that
Ybaez set the price of the lot at P200,000.00 and that the P600,000.00the
price agreed upon by her and Sabanwas more than the amount set by Ybaez
because it included the amount for payment of taxes and for Sabans
commission as broker for Ybaez.
According to the trial court, Lim made the following payments for the
lot: P113,257.00 for taxes, P50,000.00 for her broker, and P400.000.00
directly to Ybaez, or a total of Five Hundred Sixty Three Thousand Two
Hundred Fifty Seven Pesos (P563,257.00).[27] Lim, on the other hand, claims
that on March 10, 1994, the date of execution of the Deed of Absolute
Sale, she paid directly to Ybaez the amount of One Hundred Thousand Pesos
(P100,000.00) only, and gave to Saban P113,257.00 for payment of taxes
and P50,000.00 as his commission,[28] and One Hundred Thirty Thousand
Pesos (P130,000.00) on June 28, 1994,[29] or a total of Three Hundred Ninety
Three Thousand Two Hundred Fifty Seven Pesos (P393,257.00). Ybaez, for
his part, acknowledged that Lim and her co-vendees paid him P400,000.00
which he said was the full amount for the sale of the lot.[30] It thus appears
that he received P100,000.00 on March 10, 1994, acknowledged receipt
(through Saban) of the P113,257.00 earmarked for taxes and P50,000.00 for
commission, and received the balance of P130,000.00 on June 28, 1994.
Thus, a total of P230,000.00 went directly to Ybaez. Apparently, although the
amount actually paid by Lim was P393,257.00, Ybaez rounded off the
amount to P400,000.00 and waived the difference.
Lims act of issuing the four checks amounting to P236,743.00 in Sabans

favor belies her claim that she and her co-vendees did not agree to purchase
the lot at P600,000.00. If she did not agree thereto, there would be no reason
for her to issue those checks which is the balance of P600,000.00 less the
amounts of P200,000.00 (due to Ybaez), P50,000.00 (commission), and
the P113,257.00 (taxes). The only logical conclusion is that Lim changed her
37 | N E G O S e c s . 6 0 t o 6 9
mind about agreeing to purchase the lot at P600,000.00 after talking to Ybaez
and ultimately realizing that Sabans commission is even more than what
Ybaez received as his share of the purchase price as vendor. Obviously, this
change of mind resulted to the prejudice of Saban whose efforts led to the
completion of the sale between the latter, and Lim and her co-vendees. This
the Court cannot countenance.
The ruling of the Court in Infante v. Cunanan, et al., cited earlier, is

enlightening for the facts therein are similar to the circumstances of the
present case. In that case, Consejo Infante asked Jose Cunanan and Juan
Mijares to find a buyer for her two lots and the house built thereon for Thirty
Thousand Pesos (P30,000.00) . She promised to pay them five percent (5%)
of the purchase price plus whatever overprice they may obtain for the
property. Cunanan and Mijares offered the properties to Pio Noche who in
turn expressed willingness to purchase the properties. Cunanan and Mijares
thereafter introduced Noche to Infante. However, the latter told Cunanan and
Mijares that she was no longer interested in selling the property and asked
them to sign a document stating that their written authority to act as her
agents for the sale of the properties was already cancelled. Subsequently,
Infante sold the properties directly to Noche for Thirty One Thousand Pesos
(P31,000.00). The Court upheld the right of Cunanan and Mijares to their
commission, explaining that
[Infante] had changed her mind even if respondent had found a buyer
who was willing to close the deal, is a matter that would not give rise
to a legal consequence if [Cunanan and Mijares] agreed to call off the
transaction in deference to the request of [Infante]. But the situation
varies if one of the parties takes advantage of the benevolence of the
other and acts in a manner that would promote his own selfish
interest. This act is unfair as would amount to bad faith. This act
cannot be sanctioned without according the party prejudiced the
reward which is due him. This is the situation in which [Cunanan
and Mijares] were placed by [Infante]. [Infante] took advantage of the
services rendered by [Cunanan and Mijares], but believing that she
could evade payment of their commission, she made use of a ruse by
inducing them to sign the deed of cancellation.This act of subversion
cannot be sanctioned and cannot serve as basis for [Infante] to
escape payment of the commission agreed upon.[31]
The appellate court therefore had sufficient basis for concluding that Ybaez
and Lim connived to deprive Saban of his commission by dealing with each
other directly and reducing the purchase price of the lot and leaving nothing
to compensate Saban for his efforts.
38 | N E G O S e c s . 6 0 t o 6 9
Considering the circumstances surrounding the case, and the undisputed
fact that Lim had not yet paid the balance of P200,000.00 of the purchase
price of P600,000.00, it is just and proper for her to pay Saban the balance
of P200,000.00.
Furthermore, since Ybaez received a total of P230,000.00 from Lim, or an

excess of P30,000.00 from his asking price of P200,000.00, Saban may claim
such excess from Ybaezs estate, if that remedy is still available,[32] in view of
the trial courts dismissal of Sabans complaint as against Ybaez, with Sabans
express consent, due to the latters demise on November 11, 1994.[33]
The appellate court however erred in ruling that Lim is liable on the checks
because she issued them as an accommodation party. Section 29 of the
Negotiable Instruments Law defines an accommodation party as a person
who has signed the negotiable instrument as maker, drawer, acceptor or
indorser, without receiving value therefor, for the purpose of lending his name
to some other person. The accommodation party is liable on the instrument
to a holder for value even though the holder at the time of taking the
instrument knew him or her to be merely an accommodation party. The
accommodation party may of course seek reimbursement from the party
accommodated.[34]
As gleaned from the text of Section 29 of the Negotiable Instruments

Law, the accommodation party is one who meets all these three
requisites, viz: (1) he signed the instrument as maker, drawer, acceptor, or
indorser; (2) he did not receive value for the signature; and (3) he signed for
the purpose of lending his name to some other person. In the case at bar,
while Lim signed as drawer of the checks she did not satisfy the two other
remaining requisites.
The absence of the second requisite becomes pellucid when it is noted

at the outset that Lim issued the checks in question on account of her
transaction, along with the other purchasers, with Ybaez which was a sale
and, therefore, a reciprocal contract. Specifically, she drew the checks in
payment of the balance of the purchase price of the lot subject of the
transaction. And she had to pay the agreed purchase price in consideration
for the sale of the lot to her and her co-vendees. In other words, the amounts
covered by the checks form part of the cause or consideration from Ybaezs
end, as vendor, while the lot represented the cause or consideration on the
39 | N E G O S e c s . 6 0 t o 6 9
side of Lim, as vendee.[35] Ergo, Lim received value for her signature on the
checks.
Neither is there any indication that Lim issued the checks for the
purpose of enabling Ybaez, or any other person for that matter, to obtain
credit or to raise money, thereby totally debunking the presence of the third
requisite of an accommodation party.
WHEREFORE, in view of the foregoing, the petition is DISMISSED.
SO ORDERED.
40 | N E G O S e c s . 6 0 t o 6 9
LIM v. SABAN
G.R. No. 163720; December 16, 2004
Ponente: J. Tinga
FACTS:
Under an Agency Agreement, Ybañez authorized Saban to look for a buyer of the lot for
Two Hundred Thousand Pesos (P200,000.00) and to mark up the selling price to include the
amounts needed for payment of taxes, transfer of title and other expenses incident to the
sale, as well as Saban's commission for the sale.
Through Saban's efforts, Ybañez and his wife were able to sell the lot to the petitioner
Genevieve Lim (Lim) and the spouses Benjamin and Lourdes Lim (the Spouses Lim) on
March 10, 1994. The price of the lot as indicated in the Deed of Absolute Sale is Two
Hundred Thousand Pesos (P200,000.00). It appears, however, that the vendees agreed to
purchase the lot at the price of Six Hundred Thousand Pesos (P600,000.00), inclusive of
taxes and other incidental expenses of the sale.
After the sale, Lim remitted to Saban the amounts of P113,257 for payment of taxes due on
the transaction as well as P50,000.00 as broker's commission. Lim also issued in the name
of Saban four postdated checks in the aggregate amount of P236,743.00.
Subsequently, Ybañez sent a letter dated June 10, 1994 addressed to Lim. In the letter
Ybañez asked Lim to cancel all the checks issued by her in Saban's favor and to "extend
another partial payment" for the lot in his (Ybañez's) favor.
After the four checks in his favor were dishonored upon presentment, Saban filed a
complaint for collection of sum of money and damages against Ybañez and Lim
Saban alleged that Ybañez told Lim that he (Saban) was not entitled to any commission for
the sale since he concealed the actual selling price of the lot from Ybañez and because he
was not a licensed real estate broker. Ybañez was able to convince Lim to cancel all four
checks.
41 | N E G O S e c s . 6 0 t o 6 9
In his Answer, Ybañez claimed that Saban was not entitled to any commission because he
concealed the actual selling price from him and because he was not a licensed real estate
broker.
ISSUE:
Whether Saban is entitled to receive his commission from the sale
HELD:
Yes, Saban is entitled to receive his commission from the sale.
The Supreme Court held that to deprive Saban of his commission subsequent to the
sale which was consummated through his efforts would be a breach of his contract of
agency with Ybañez which expressly states that Saban would be entitled to any excess in
the purchase price after deducting the P200,000.00 due to Ybañez and the transfer taxes
and other incidental expenses of the sale.
Moreover, the Court has already decided in earlier cases that would be in the height
of injustice to permit the principal to terminate the contract of agency to the prejudice of
the broker when he had already reaped the benefits of the broker's efforts.
42 | N E G O S e c s . 6 0 t o 6 9
[G.R. No. 130570. May 19, 1998]
SPOUSES GIL AND NOELLI GARDOSE, petitioners, vs. REYNALDO S.

TARROZA, respondent.
DECISION
PUNO, J.:
This is a petition for review on certiorari assailing the Decision of the Court of
Appeals dated April 29, 1997 and its Resolution dated September 10, 1997 in CA-
G.R. CV No. 45046.
On September 20, 1989, private respondent filed a complaint for a sum of money
with preliminary attachment against the petitioners, spouses Gil and Noelli Gardose,
and a certain Cecilia "Baby" Cacnio. The case was docketed as Civil Case No. Q-89-
3500 and raffled to Branch 92 of the RTC of Quezon City, presided by then Judge
Pacita Canizares-Nye.
On February 7, 1990, private respondent was allowed to summon by publication
the petitioners who were abroad. On August 28, 1990, the complaint against the
petitioners was dismissed for failure of the private respondent to have the summons
published in a newspaper of general circulation within a reasonable time, amounting
to failure to prosecute. The case against Cacnio was also later dismissed for failure
of private respondent to file a pre-trial brief. The orders of dismissal became final and
executory.
On February 13, 1991, private respondent filed a new complaint for a sum of
money against the petitioners. The case was raffled to Branch 78 of the RTC of
Quezon City and docketed as Civil Case No. Q-91-7959. The complaint contained the
same allegations as the complaint in Civil Case No. Q-89-3500 except that it excluded
Baby Cacnio as defendant.
On April 25, 1991, petitioners filed their Answer with Counterclaim. They invoked
the principle of res judicata. They also alleged that Noelli Gardose issued the checks
in question merely to guarantee the loans of Cacnio. Petitioners moved to dismiss the
complaint on the ground of res judicata but failed. The case was set for hearing on
the merits.
It appears that petitioners' counsel failed to appear in the hearing of March 31,
1992. The trial court allowed private respondent to present his evidence ex-
parte but reset the continuation of the case to May 26, 1992 for cross-examination of
the witness. The petitioners challenged the action of the trial court via a petition
for certiorari but the challenge was dismissed by this Court on April 27, 1992.
The May 26, 1992 hearing for cross-examination of witness was reset to
September 10, 1992 on motion of the petitioners. Again, petitioners failed to appear
on September 10, 1992.The trial court considered petitioners' right of cross-
examination waived and allowed private respondent to make a formal offer of his
43 | N E G O S e c s . 6 0 t o 6 9
evidence. Still, the case was reset to October 15, 1992 to receive petitioners'
evidence.
Through a new counsel, petitioners again moved for a reconsideration of the order
denying their motion for dismissal on the ground of res judicata. They also insisted
that they be allowed to cross-examine the private respondent. In the hearing of
October 15, 1992, the trial court denied the reiterated motion to dismiss. It reinstated
petitioners' right to cross-examine but their new counsel refused to exercise the right
during said hearing. It then ordered petitioners to present their evidence but said
counsel sought a resetting of the case as he has yet to familiarize himself with its
facts. The trial court ruled that petitioners have waived their right to cross-examine
and right to present evidence. The case was deemed submitted for
decision.Petitioners' motion for reconsideration was denied on March 15, 1993. They
went to the Court of Appeals on certiorari, injunction and prohibition.[1] Their petition
was denied on May 31, 1993.
On January 11, 1994, the trial court rendered its Decision in favor of the private
respondent. It ordered:
"WHEREFORE, judgment is rendered ordering defendants to pay plaintiff the following:
1. P70,000.00 plus interest thereon at 12% per annum from the date of the filing of the
complaint until fully paid;
4. P50,000.00 as and for attorney's fees; and
5. Cost of suit."
Petitioners again appealed to the Court of Appeals.[2] On April 29, 1997, the
appellate court affirmed the decision of the trial court.[3] Petitioners' motion for
reconsideration was denied on September 10, 1997.
Petitioners now contend:
I
The Court of Appeals gravely erred in not holding that the dismissal in the first case for
failure to prosecute and for lack of interest had the effect of an adjudication on the merits and
operates as res judicata to the second case.
II
44 | N E G O S e c s . 6 0 t o 6 9
The Court of Appeals gravely erred in not holding that the filing of the second case after
dismissal of the first case for failure to prosecute and lack of interest constitutes forum
shopping.
III
The Court of Appeals seriously erred in holding that since petitioners failed to include forum
shopping as one of the grounds in their omnibus motion, they cannot now raise the said issue
on appeal.
IV
The Court of Appeals gravely erred in holding that the petitioners were not denied
procedural due process and they were not denied of their right to cross-examine private
respondent and present their evidence.
The Court of Appeals gravely erred in considering petitioner Noelli Gardose as an

accommodation party primarily and unconditionally liable to the private respondent for the
three dishonored checks.
VI
The Court of Appeals gravely erred in awarding 12% interest on petitioners' alleged
obligation to the private respondent as well as attorney's fees.
The petition is unmeritorious.

Firstly, the principle of res judicata cannot be invoked. The principle is enunciated
in Section 49 (b) and (c) of Rule 39, viz:
"Sec. 49. Effects of judgments. -- The effect of a judgment or final order rendered by a court
or judge of the Philippines, having jurisdiction to pronounce the judgment or order, may be
as follows:
"xxx xxx xxx
"(b) In other cases, the judgment or order is, with respect to the matter directly adjudged or
as to any other matter that could have been raised in relation thereto, conclusive between the
parties and their successors in interest by title subsequent to the commencement of the action
or special proceeding, litigating for the same thing and under the same title and in the same
capacity;
"(c) In any other litigation between the same parties or their successors in interest, that only
is deemed to have been adjudged in a former judgment which appears upon its face to have
been so adjudged, or which was actually and necessarily included therein or necessary
thereto."
45 | N E G O S e c s . 6 0 t o 6 9
The rule in Section 49 (b) is known as "bar by former judgment" while the rule
embodied in paragraph (c) of the same section is known as "conclusiveness of
judgment". There are four (4) requisites which must concur in order for res judicata as
a "bar by former judgment" to attach, viz: (1) the former judgment must be final; (2) it
must have been rendered by a court having jurisdiction over the subject matter
and the parties; (3) it must be a judgment or order on the merits; and (4) there must
be between the first and second action identity of parties, identity of subject matter
and identity of causes of action.
The Court of Appeals correctly ruled that petitioners cannot rely on the principle of bar by
former judgment. Civil Case No. Q-89-3500 was dismissed for the continuing failure of
private respondent to effect service of summons by publication on the petitioners. In other
words, the dismissal was made before the trial court acquired jurisdiction over the
petitioners. In Republic Planters Bank vs. Molina,[4] we held:
"xxx xxx xxx
"The questioned orders of the trial court in Civil Case No. 129829 supporting private
respondent's motion to dismiss on the ground of res judicata are without cogent basis. We
sustain petitioner's claim that respondent trial judge acted without or in excess of jurisdiction
when he issued said orders because he thereby traversed the constitutional precept that `no
person shall be deprived of property without due process of law' and that jurisdiction is
vitally essential for any order or adjudication to be binding. Justice cannot be sacrificed for
technicality. Originally, the action for collection of the loan, evidenced by a promissory
note, was only for P100,000.00 but petitioner claims that as of March 5, 1981, the obligation
was already P429,219.74. It is a cardinal rule that no one must be allowed to enrich himself
at the expense of another without just cause.
"In the very order of dismissal of Civil Case No. 116028, the trial court admitted that it did
not acquire jurisdiction over the persons of private respondents and yet, it held that it was of
no moment as to the dismissal of the case. We disagree. For the court to have authority to
dispose of the case on the merits, it must acquire jurisdiction over the subject matter and the
parties. If it did not acquire jurisdiction over the private respondents as parties to Civil
Case No. 116028, it cannot render any binding decision, favorable or adverse to them, or
dismiss the case with prejudice which, in effect, is an adjudication on the merits. The
controverted orders in Civil Case No. 116028 disregarded the fundamental principles of
remedial law and the meaning and the effect of jurisdiction. A judgment, to be considered res
judicata, must be binding, and must be rendered by a court of competent
jurisdiction. Otherwise, the judgment is a nullity.
"The order of dismissal in Civil Case No. 116028 does not have the effect of an adjudication
on the merits of the case because the court that rendered the same did not have the requisite
jurisdiction over the persons of the defendants therein. This being so, it cannot be the basis
of res judicata and it cannot be a bar to a lawful claim. If at all, such a dismissal may be
considered as one without prejudice."
46 | N E G O S e c s . 6 0 t o 6 9
Secondly, petitioners' charge of forum shopping is baseless. To start with,
petitioners did not raise the issue in the trial court. Moreover, Revised Circular No. 28-
91, the anti-forum shopping rule, took effect on January 1, 1992, and it initially applied
only to the Court of Appeals. Administrative Circular No. 04-94, which extended the
application of the rule to trial courts and administrative agencies, took effect only on
April 1, 1994. The second case against petitioners, Civil Case No. Q-91-7959, was
filed on February 13, 1991 or before the effectivity of the rules on forum shopping on
trial courts.
Thirdly, petitioners cannot claim denial of due process. The essence of due
process is a fair opportunity to be heard. Petitioners were given all the opportunities
to cross-examine the private respondent and to present their evidence. They failed to
make use of these opportunities either through negligence or unpreparedness of their
counsel. The right of private respondent to speedy justice is just as valuable as the
right of petitioners to due process.
Fourthly, petitioner Noelli's defense that she was merely an accommodation party
was rightly rejected by the Court of Appeals which ruled:
"xxx xxx xxx
"Appellants persistently insist that when appellant Noelli Gardose issued the three (3) checks
to appellee she merely acted as a guarantor and therefore should not be held primarily liable
to appellee.
"We disagree, the mere fact that appellant Noelli Gardose issued the three (3) checks to
appellee make her liable to the latter without the need for the appellee to first go after Cecilia
Cacnio because the relationship between an accommodation party and the party
accommodated is in effect one of principal and surety (Coneda, Jr. vs. Court of Appeals, 181
SCRA 673; Prudencio vs. Court of Appeals, 143 SCRA 7). In the recent case of Town
Savings & Loan Bank, Inc. vs. Court of Appeals, 223 SCRA 459, the Supreme Court held:
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 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 (The Phil. Bank of Commerce vs. Aruego, 102 SCRA 530, 539, 540).
"From the foregoing pronouncement of the Supreme Court, it is clear that appellant Noelli
Gardose as an accommodation party is primarily and unconditionally liable to appellee for
the three (3) checks that were dishonored by the drawee bank. Hence, the lower court did not
err in ordering appellants to pay appellee the amount of THREE HUNDRED TWENTY
THOUSAND P(320,000.00) PESOS with interest at 12% per annum counted from the filing
of the complaint. Under Section 151 of the Negotiable Instruments Law, when a bill is
47 | N E G O S e c s . 6 0 t o 6 9
dishonored by non-acceptance, an immediate right of recourse against the drawers and
indorsers accrues to the holder (Travel On, Inc. vs. Court of Appeals, G.R. No. L-56169,
June 26, 1992). The drawer of a negotiable instrument engages that, on due presentment, the
instrument will be accepted or paid, or both, and if dishonored, he will pay the amount
thereof to the holder. x x x"
Lastly, petitioners cannot assert that the award of 12% interest and attorney's fees
to private respondent is not justified. The Court of Appeals correctly affirmed the trial
court's monetary award to private respondent, viz:
"x x x The lower court was likewise correct in ordering appellants to pay interest at the legal
rate of 12% per annum counted from the filing of the complaint. This is in accordance with
Article 2209 of the Civil Code which provides that if the obligation consists in the payment
of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, should be the payment of the interest agreed upon, and in the
absence of stipulation, the legal rate of interest which is now 12 percent per
annum. (National Power Corporation vs. Agnar, G.R. No. 60225-26, May 8, 1992).The trial
court was likewise correct in granting attorney's fees in the amount of P50,000.00. As found
by the court a quo, appellants acted in gross evident bad faith in refusing to pay appellee's
just and demandable claim (Reyes v. Zubirri, 208 SCRA 561; Maersk Line vs. Court of
Appeals, 222 SCRA 108)."
IN VIEW WHEREOF, the petition is dismissed. Costs against the petitioners.

SO ORDERED.
48 | N E G O S e c s . 6 0 t o 6 9
49 | N E G O S e c s . 6 0 t o 6 9
50 | N E G O S e c s . 6 0 t o 6 9
G.R. No. L-56169 June 26, 1992
TRAVEL-ON, INC., petitioner,

vs.
COURT OF APPEALS and ARTURO S. MIRANDA, respondents.
RESOLUTION
FELICIANO, J.:
Petitioner Travel-On. Inc. ("Travel-On") is a travel agency selling airline tickets on

commission basis for and in behalf of different airline companies. Private respondent Arturo
S. Miranda had a revolving credit line with petitioner. He procured tickets from petitioner on
behalf of airline passengers and derived commissions therefrom.
On 14 June 1972, Travel-On filed suit before the Court of First Instance ("CFI") of Manila to
collect on six (6) checks issued by private respondent with a total face amount of
P115,000.00. The complaint, with a prayer for the issuance of a writ of preliminary
attachment and attorney's fees, averred that from 5 August 1969 to 16 January 1970,
petitioner sold and delivered various airline tickets to respondent at a total price of
P278,201.57; that to settle said account, private respondent paid various amounts in cash and
in kind, and thereafter issued six (6) postdated checks amounting to P115,000.00 which were
all dishonored by the drawee banks. Travel-On further alleged that in March 1972, private
respondent made another payment of P10,000.00 reducing his indebtedness to P105,000.00.
The writ of attachment was granted by the court a quo.
In his answer, private respondent admitted having had transactions with Travel-On during
the period stipulated in the complaint. Private respondent, 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 for purposes of accommodation, as he had
in the past accorded similar favors to petitioner. During the proceedings, private respondent
contested several tickets alleged to have been erroneously debited to his account. He claimed
reimbursement of his alleged over payments, plus litigation expenses, and exemplary and
moral damages by reason of the allegedly improper attachment of his properties.
In support of his theory that the checks were issued for accommodation, private respondent
testified that he bad issued the checks in the name of Travel-On in order that its General
Manager, Elita Montilla, could show to Travel-On's Board of Directors that the accounts
receivable of the company were still good. He further stated that Elita Montilla tried to
encash the same, but that these were dishonored and were subsequently returned to him after
the accommodation purpose had been attained.
Travel-On's witness, Elita Montilla, on the other hand explained that the "accommodation"
extended to Travel-On by private respondent related to situations where one or more of its
passengers needed money in Hongkong, and upon request of Travel-On respondent would
51 | N E G O S e c s . 6 0 t o 6 9
contact his friends in Hongkong to advance Hongkong money to the passenger. The
passenger then paid Travel-On upon his return to Manila and which payment would be
credited by Travel-On to respondent's running account with it.
In its decision dated 31 January 1975, the court a quo ordered Travel-On to pay private
respondent the amount of P8,894.91 representing net overpayments by private respondent,
moral damages of P10,000.00 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.
The trial court ruled that private respondent's indebtedness to petitioner was not satisfactorily
established and that the postdated checks were issued not for the purpose of encashment to
pay his indebtedness but to accommodate the General Manager of Travel-On to enable her to
show to the Board of Directors that Travel-On was financially stable.
Petitioner filed a motion for reconsideration that was, however, denied by the trial court,
which in fact then increased the award of moral damages to P50,000.00.
On appeal, the Court of Appeals affirmed the decision of the trial court, but reduced the
award of moral damages to P20,000.00, with interest at the legal rate from the date of the
filing of the Answer on 28 August 1972.
Petitioner moved for reconsideration of the Court of Appeal's' decision, without success.
In the instant Petition for Review, it is urged that the postdated checks are per se evidence of
liability on the part of private respondent. Petitioner 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.
Both the trial and appellate courts had rejected the checks as evidence of indebtedness on the
ground that the various statements of account prepared by petitioner did not show that
Private respondent had an outstanding balance of P115,000.00 which is the total amount of
the checks he issued. It was pointed out that while the various exhibits of petitioner showed
various accountabilities of private respondent, they did not satisfactorily establish the
amount of the outstanding indebtedness of private respondent. The appellate court made
much of the fact that the figures representing private respondent's unpaid accounts found in
the "Schedule of Outstanding Account" dated 31 January 1970 did not tally with the figures
found in the statement which showed private respondent's transactions with petitioner for the
years 1969 and 1970; that there was no satisfactory explanation as to why the total
outstanding amount of P278,432.74 was still used as basis in the accounting of 7 April 1972
considering that according to the table of transactions for the year 1969 and 1970, the total
unpaid account of private respondent amounted to P239,794.57.
We have, however, examined the record and it shows that the 7 April 1972 Statement of
Account had simply not been updated; that if we use as basis the figure as of 31 January
1970 which is P278,432.74 and from it deduct P38,638.17 which represents some of the
payments subsequently made by private respondent, the figure — P239,794.57 will be
obtained.
52 | N E G O S e c s . 6 0 t o 6 9
Also, the fact alone that the various statements of account had variances in figures, simply
did not mean that private respondent had no more financial obligations to petitioner. It must
be stressed that private respondent's account with petitioner was a running or open one,
which explains the varying figures in each of the statements rendered as of a given date.
The appellate court erred in considering only the statements of account in determining
whether private respondent was indebted to petitioner under the checks. By doing so, it failed
to give due importance to the most telling piece of evidence of private respondent's
indebtedness — the checks themselves which he had issued.
Contrary to the view held by the Court of Appeals, this Court finds that the checks are the all
important evidence of petitioner's case; that these checks clearly established private
respondent's indebtedness to petitioner; that private respondent was liable thereunder.
It is important to stress that a 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. 1 Thus, the mere introduction of
the instrument sued on in evidence prima facie entitles the plaintiff to recovery. Further, the
rule is quite settled that a negotiable instrument is presumed to have been given or indorsed
for a sufficient consideration unless otherwise contradicted and overcome by other
competent evidence. 2
In the case at bar, the Court of Appeals, contrary to these established rules, placed the burden
of proving the existence of valuable consideration upon petitioner. This cannot be
countenanced; it was up to private respondent to show that he had indeed issued the checks
without sufficient consideration. The Court considers that Private respondent was unable to
rebut satisfactorily this legal presumption. It must also be noted that those checks were
issued immediately after a letter demanding payment had been sent to private respondent by
petitioner Travel-On.
The fact that all the checks issued by private respondent to petitioner were presented for
payment by the latter would lead to no other conclusion than that these checks were intended
for encashment. There is nothing in the checks themselves (or in any other document for that
matter) that states otherwise.
We are unable to accept the Court of Appeals' conclusion that the checks here involved were
issued for "accommodation" and that accordingly private respondent maker of those checks
was not liable thereon to petitioner payee of those checks.
In the first place, while the Negotiable Instruments Law does refer to accommodation
transactions, no such transaction was here shown. Section 29 of the Negotiable Instruments
Law provides as follows:
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,
53 | N E G O S e c s . 6 0 t o 6 9
notwithstanding such holder, at the time of taking the instrument, knew him to
be only an accommodation party.
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, unless of course the accommodating party intended to make a
donation to the accommodated 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. 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. 3
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.
Travel-On was entitled to the benefit of the statutory presumption that it was a holder in due
course, 4 that the checks were supported by valuable consideration. 5 Private respondent
maker of the checks did not successfully rebut these presumptions. The only
evidence aliunde that private respondent offered was his own self-serving uncorroborated
testimony. He claimed that he had issued the checks to Travel-On as payee to
"accommodate" its General Manager who allegedly wished to show those checks to the
Board of Directors of Travel-On to "prove" that Travel-On's account receivables were
somehow "still good." It will be seen that this claim was in fact a claim that the checks were
merely simulated, that private respondent did not intend to bind himself thereon. Only
evidence of the clearest and most convincing kind will suffice for that purpose; 6 no such
evidence was submitted by private respondent. The latter's explanation was denied by
Travel-On's General Manager; that explanation, in any case, appears merely contrived and
quite hollow to us. Upon the other hand, the "accommodation" or assistance extended to
Travel-On's passengers abroad as testified by petitioner's General Manager involved, not the
accommodation transactions recognized by the NIL, but rather the circumvention of then
existing foreign exchange regulations by passengers booked by Travel-On, which
incidentally involved receipt of full consideration by private respondent.
Thus, we believe and so hold that private respondent must be held liable on the six (6)
checks here involved. Those checks in themselves constituted evidence of indebtedness of
private respondent, evidence not successfully overturned or rebutted by private respondent.
Since the checks constitute the best evidence of private respondent's liability to petitioner
Travel-On, the amount of such liability is the face amount of the checks, reduced only by the
P10,000.00 which Travel-On admitted in its complaint to have been paid by private
respondent sometime in March 1992.
54 | N E G O S e c s . 6 0 t o 6 9
The award of moral damages to Private respondent must be set aside, for the reason that
Petitioner's application for the writ of attachment rested on sufficient basis and no bad faith
was shown on the part of Travel-On. If anyone was in bad faith, it was private respondent
who issued bad checks and then pretended to have "accommodated" petitioner's General
Manager by assisting her in a supposed scheme to deceive petitioner's Board of Directors
and to misrepresent Travel-On's financial condition.
ACCORDINGLY, the Court Resolved to GRANT due course to the Petition for Review
on Certiorari and to REVERSE and SET ASIDE the Decision dated 22 October 1980 and
the Resolution of 23 January 1981 of the Court of Appeals, as well as the Decision dated 31
January 1975 of the trial court, and to enter a new decision requiring private respondent
Arturo S. Miranda to pay to petitioner Travel-On the amount of P105,000.00 with legal
interest thereon from 14 June 1972, plus ten percent (10%) of the total amount due as
attorney's fees. Costs against Private respondent.
Gutierrez, Jr., Bidin, Davide, Jr. and Romero, JJ., concur.
55 | N E G O S e c s . 6 0 t o 6 9
G.R. No. L-56169 June 26, 1992
Lessons Applicable: Consideration and Accomodation Party (Negotiable Instruments)
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
56 | N E G O S e c s . 6 0 t o 6 9
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.
57 | N E G O S e c s . 6 0 t o 6 9
58 | N E G O S e c s . 6 0 t o 6 9
[G.R. No. 112392. February 29, 2000]
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. COURT OF APPEALS and

BENJAMIN C. NAPIZA, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari of the Decision of the Court of Appeals in CA-
[1]
G.R. CV No. 37392 affirming in toto that of the Regional Trial Court of Makati, Branch
139, which dismissed the complaint filed by petitioner Bank of the Philippine Islands
[2]
against private respondent Benjamin C. Napiza for sum of money. Sdaad
On September 3, 1987, private respondent deposited in Foreign Currency Deposit Unit

(FCDU) Savings Account No. 028-187 which he maintained in petitioner banks
[3]
Buendia Avenue Extension Branch, Continental Bank Managers Check No.

00014757 dated August 17, 1984, payable to "cash" in the amount of Two Thousand
[4]
Five Hundred Dollars ($2,500.00) and duly endorsed by private respondent on its
dorsal side. It appears that the check belonged to a certain Henry Chan who went to
[5]
the office of private respondent and requested him to deposit the check in his dollar
account by way of accommodation and for the purpose of clearing the same. Private
respondent 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 the amount of the check upon private respondents presentation to the
bank of his passbook.
Using the blank withdrawal slip given by private respondent to Chan, on October 23,
1984, one Ruben Gayon, Jr. was able to withdraw the amount of $2,541.67 from FCDU
Savings Account No. 028-187. Notably, 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. [6]
On November 20, 1984, petitioner received communication from the Wells Fargo Bank
International of New York that the said check deposited by private respondent was a
counterfeit check because it was "not of the type or style of checks issued by
[7]
Continental Bank International." Consequently, Mr. Ariel Reyes, the manager of

[8]
petitioners Buendia Avenue Extension Branch, instructed one of its employees,

Benjamin D. Napiza IV, who is private respondents son, to inform his father that the
check bounced. Reyes himself sent a telegram to private respondent regarding the
[9]
dishonor of the check. In turn, private respondents son wrote to Reyes stating that the
check had 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. He also said that
upon learning of the dishonor of the check, his father immediately tried to contact Chan
but the latter was out of town. [10]
Private respondents son undertook to return the amount of $2,500.00 to petitioner

bank. On December 18, 1984, Reyes reminded private respondent of his sons promise
59 | N E G O S e c s . 6 0 t o 6 9
and warned that should he fail to return that amount within seven (7) days, the matter
would be referred to the banks lawyers for appropriate action to protect the banks
interest. This was followed by a letter of the banks lawyer dated April 8, 1985
[11]
demanding the return of the $2,500.00. [12]
In reply, private respondent wrote petitioners counsel on April 20, 1985 stating that he
[13]
deposited the check "for clearing purposes" only to accommodate Chan. He added:
"Further, please take notice that said check was deposited on September
3, 1984 and withdrawn on October 23, 1984, or a total period of fifty (50)
days had elapsed at the time of withdrawal. Also, it may not be amiss to
mention here that I merely signed an authority to withdraw said deposit
subject to its clearing, the reason why the transaction is not reflected in the
passbook of the account. Besides, I did not receive its proceeds as may be
gleaned from the withdrawal slip under the captioned signature of recipient.
If at all, my obligation on the transaction is moral in nature, which (sic) I

have been and is (sic) still exerting utmost and maximum efforts to collect
from Mr. Henry Chan who is directly liable under the circumstances. Scsdaad
xxx......xxx......xxx."
On August 12, 1986, petitioner filed a complaint against private respondent, praying for
the return of the amount of $2,500.00 or the prevailing peso equivalent plus legal
interest from date of demand to date of full payment, a sum equivalent to 20% of the
total amount due as attorney's fees, and litigation and/or costs of suit.
Private respondent filed his answer, 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. He likewise alleged that he
instructed the party to whom he issued the signed blank withdrawal slip to return it to
him after the bank drafts clearance so that he could lend that party his passbook for the
purpose of withdrawing the amount of $2,500.00. However, without his knowledge, said
party was able to withdraw the amount of $2,541.67 from his dollar savings account
through collusion with one of petitioners employees. Private respondent added that he
had "given the Plaintiff fifty one (51) days with which to clear the bank draft in question."
Petitioner should have disallowed the withdrawal because his passbook was not
presented. He claimed that petitioner had no one to blame except itself "for being
grossly negligent;" in fact, it had allegedly admitted having paid the amount in the check
"by mistake" x x x "if not altogether due to collusion and/or bad faith on the part of (its)
employees." Charging petitioner with "apparent ignorance of routine bank procedures,"
by way of counterclaim, private respondent prayed for moral damages of P100,000.00,
exemplary damages of P50,000.00 and attorneys fees of 30% of whatever amount that
would be awarded to him plus an honorarium of P500.00 per appearance in court.
Private respondent also 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 private respondents passbook. Thus, private
60 | N E G O S e c s . 6 0 t o 6 9
respondent prayed that third party defendant Chan be made to refund to him the
amount withdrawn and to pay attorneys fees of P5,000.00 plus P300.00 honorarium per
appearance.
Petitioner filed a comment on the motion for leave of court to admit the third party
complaint, wherein it asserted that per paragraph 2 of the Rules and Regulations
governing BPI savings accounts, private respondent alone was liable "for the value of
the credit given on account of the draft or check deposited." It contended that private
respondent was estopped from disclaiming liability because he himself authorized the
withdrawal of the amount by signing the withdrawal slip. Petitioner prayed for the denial
of the said motion so as not to unduly delay the disposition of the main case asserting
that private respondents claim could be ventilated in another case.
Private respondent replied that for the parties to obtain complete relief and to avoid
multiplicity of suits, the motion to admit third party complaint should be granted.
Meanwhile, the trial court issued orders on August 25, 1987 and October 28, 1987
directing private respondent to actively participate in locating Chan. After private
respondent failed to comply, the trial court, on May 18, 1988, dismissed the third party
complaint without prejudice.
On November 4, 1991, a decision was rendered dismissing the complaint. The lower
court held that petitioner could not hold private respondent liable based on the checks
face value alone. To so hold him liable "would render inutile the requirement of
clearance from the drawee bank before the value of a particular foreign check or draft
can be credited to the account of a depositor making such deposit." The lower court
further held that "it was incumbent upon the petitioner to credit the value of the check in
question to the account of the private respondent only upon receipt of the notice of final
payment and should not have authorized the withdrawal from the latters account of the
value or proceeds of the check." 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, petitioner should suffer the resultant loss. Supremax
On appeal, the Court of Appeals affirmed the lower courts decision. The appellate court
held that petitioner committed "clear gross negligence" in allowing Ruben Gayon, Jr. to
withdraw the money without presenting private respondents passbook and, before the
check was cleared and in crediting the amount indicated therein in private respondents
account. It stressed that the mere deposit of a check in private respondents account did
not mean that the check was already private respondents property. The check still had
to be cleared and its proceeds can only be withdrawn upon presentation of a passbook
in accordance with the banks rules and regulations. Furthermore, petitioners contention
that private respondent warranted the checks genuineness by endorsing it is untenable
for it would render useless the clearance requirement. Likewise, the requirement of
presentation of a passbook to ascertain the propriety of the accounting reflected would
be a meaningless exercise. After all, these requirements are designed to protect the
bank from deception or fraud.
The Court of Appeals cited the case of Roman Catholic Bishop of Malolos, Inc. v.
IAC, where this Court stated that a personal check is not legal tender or money, and
[14]
61 | N E G O S e c s . 6 0 t o 6 9
held that the check deposited in this case must be cleared before its value could be
properly transferred to private respondent's account.
Without filing a motion for the reconsideration of the Court of Appeals Decision,
petitioner filed this petition for review on certiorari, raising the following issues:
1.......WHETHER OR NOT RESPONDENT NAPIZA IS LIABLE UNDER

HIS WARRANTIES AS A GENERAL INDORSER.
2.......WHETHER OR NOT A CONTRACT OF AGENCY WAS CREATED

BETWEEN RESPONDENT NAPIZA AND RUBEN GAYON.
3.......WHETHER OR NOT PETITIONER WAS GROSSLY NEGLIGENT IN

ALLOWING THE WITHDRAWAL.
Petitioner claims that private respondent, having affixed his signature at the dorsal side
of the check, should be liable for the amount stated therein in accordance with the
following provision of the Negotiable Instruments Law (Act No. 2031):
"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."
Section 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. In People v.
[15]
Maniego, this Court described the liabilities of an indorser as follows: Juris

[16]
"Appellants contention that as mere indorser, she may not be liable on

account of the dishonor of the checks indorsed by her, is likewise
untenable. Under the law, 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, i.e., a person placing his signature
upon an instrument otherwise than as a maker, drawer or acceptor * *
unless he clearly indicated by appropriate words his intention to be bound
62 | N E G O S e c s . 6 0 t o 6 9
in some other capacity. Such an indorser who indorses without
qualification, inter alia engages that on due presentment, * * (the
instrument) 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 any subsequent indorser who may be compelled to pay it.
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."
It is thus clear that ordinarily private respondent may be held liable as an indorser of the
check or even as an accommodation party. However, to hold private respondent liable
[17]
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.
Petitioner asserts that by signing the withdrawal slip, private respondent "presented the
opportunity for the withdrawal of the amount in question." Petitioner relied "on the
genuine signature on the withdrawal slip, the personality of private respondents son
and the lapse of more than fifty (50) days from date of deposit of the Continental Bank
draft, without the same being returned yet." We hold, however, that the propriety of
[18]
the withdrawal should be gauged by compliance with the rules thereon that both
petitioner bank and its depositors are duty-bound to observe.
In the passbook that petitioner issued to private respondent, the following rules on
withdrawal of deposits appear:
"4.......Withdrawals must be made by the depositor personally but in some

exceptional circumstances, the Bank may allow withdrawal by another
upon the depositors written authority duly authenticated; and neither a
deposit nor a withdrawal will be permitted except upon the presentation of
the depositors savings passbook, in which the amount deposited withdrawn
shall be entered only by the Bank.
5.......Withdrawals may be made by draft, mail or telegraphic transfer in

currency of the account at the request of the depositor in writing on the
withdrawal slip or by authenticated cable. Such request must indicate the
name of the payee/s, amount and the place where the funds are to be paid.
Any stamp, transmission and other charges related to such withdrawals
shall be for the account of the depositor and shall be paid by him/her upon
63 | N E G O S e c s . 6 0 t o 6 9
demand. Withdrawals may also be made in the form of travellers checks
and in pesos. Withdrawals in the form of notes/bills are allowed subject
however, to their (availability).
6.......Deposits shall not be subject to withdrawal by check, and may be

withdrawn only in the manner above provided, upon presentation of the
depositors savings passbook and with the withdrawal form supplied by the
Bank at the counter." Scjuris
[19]
Under these rules, to be able to withdraw from the savings account deposit 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 (b) the depositors passbook. Private respondent admits that he signed a blank
withdrawal slip ostensibly in violation of Rule No. 6 requiring that the request for
withdrawal must name the payee, the amount to be withdrawn and the place where
such withdrawal should be made. That the withdrawal slip was in fact a blank one with
only private respondents two signatures affixed on the proper spaces is buttressed by
petitioners allegation in the instant petition that had private respondent indicated therein
the person authorized to receive the money, then Ruben Gayon, Jr. could not have
withdrawn any amount. Petitioner contends that "(i)n failing to do so (i.e., naming his
authorized agent), he practically authorized any possessor thereof to write any amount
and to collect the same." [20]
Such contention would have been valid if not for the fact that the withdrawal slip itself
indicates a special instruction that the amount is payable to "Ramon A. de Guzman
&/or Agnes C. de Guzman." Such being the case, petitioners personnel should have
been duly warned that Gayon, who was also employed in petitioners Buendia Ave.
Extension branch, was not the proper payee of the proceeds of the check. Otherwise,
[21]
either Ramon or Agnes de Guzman should have issued another authority to Gayon for
such withdrawal. Of course, at the dorsal side of the withdrawal slip is an "authority to
withdraw" naming Gayon the person who can withdraw the amount indicated in the
check. Private respondent does not deny having signed such authority. However,
considering petitioners clear admission that the withdrawal slip was a blank one except
for private respondents signature, the unavoidable conclusion is that the typewritten
name of "Ruben C. Gayon, Jr." was intercalated and thereafter it was signed by Gayon
or whoever was allowed by petitioner to withdraw the amount. Under these facts, there
could not have been a principal-agent relationship between private respondent and
Gayon so as to render the former liable for the amount withdrawn.
Moreover, the withdrawal slip contains a boxed warning that states: "This receipt must
be signed and presented with the corresponding foreign currency savings passbook by
the depositor in person. For withdrawals thru a representative, depositor should
accomplish the authority at the back." The requirement of presentation of the passbook
when withdrawing an amount cannot be given mere lip service even though the person
making the withdrawal is authorized by the depositor to do so. This is clear from Rule
No. 6 set out by petitioner so that, for the protection of the banks interest and as a
reminder to the depositor, the withdrawal shall be entered in the depositors passbook.
The fact that private respondents passbook was not presented during the withdrawal is
64 | N E G O S e c s . 6 0 t o 6 9
evidenced by the entries therein showing that the last transaction that he made with the
bank was on September 3, 1984, the date he deposited the controversial check in the
amount of $2,500.00. [22]
In allowing the withdrawal, petitioner likewise overlooked another rule that is printed in
the passbook. Thus:
"2.......All deposits will be received as current funds and will be repaid in the
same manner; provided, however, that deposits of drafts, checks, money
orders, etc. will be accepted as subject to collection only and credited to the
account only upon receipt of the notice of final payment. Collection charges
by the Banks foreign correspondent in effecting such collection shall be for
the account of the depositor. If the account has sufficient balance, the
collection shall be debited by the Bank against the account. If, for any
reason, the proceeds of the deposited checks, drafts, money orders, etc.,
cannot be collected or if the Bank is required to return such proceeds, the
provisional entry therefor made by the Bank in the savings passbook and
its records shall be deemed automatically cancelled regardless of the time
that has elapsed, and whether or not the defective items can be returned to
the depositor; and the Bank is hereby authorized to execute immediately
the necessary corrections, amendments or changes in its record, as well as
on the savings passbook at the first opportunity to reflect such
cancellation." (Italics and underlining supplied.) Jurissc
As correctly held by the Court of Appeals, in depositing the check in his name, private
respondent did not become the outright owner of the amount stated therein. Under the
above rule, by depositing the check with petitioner, private respondent was, in a way,
merely designating petitioner as the collecting bank. This is in consonance with the rule
that a negotiable instrument, such as a check, whether a managers check or ordinary
check, is not legal tender. As such, after receiving the deposit, under its own rules,
[23]
petitioner shall credit the amount in private respondents account or infuse value
thereon only after the drawee bank shall have paid the amount of the check or the
check has been cleared for deposit. Again, this is in accordance with ordinary banking
practices and with this Courts pronouncement that "the collecting bank or last endorser
generally suffers the loss because it has the duty to ascertain the genuineness of all
prior endorsements considering that the act of presenting the check for payment to the
drawee is an assertion that the party making the presentment has done its duty to
ascertain the genuineness of the endorsements." The rule finds more meaning in this
[24]
case where the check involved is drawn on a foreign bank and therefore collection is
more difficult than when the drawee bank is a local one even though the check in
question is a managers check. Misjuris [25]
In Banco Atlantico v. Auditor General, Banco Atlantico, a commercial bank in Madrid,

[26]
Spain, paid the amounts represented in three (3) checks to Virginia Boncan, the finance
officer of the Philippine Embassy in Madrid. The bank did so without previously clearing
the checks with the drawee bank, the Philippine National Bank in New York, on account
of the "special treatment" that Boncan received from the personnel of Banco Atlanticos
foreign department. The Court held that the encashment of the checks without prior
65 | N E G O S e c s . 6 0 t o 6 9
clearance is "contrary to normal or ordinary banking practice specially so where the
drawee bank is a foreign bank and the amounts involved were large." Accordingly, the
Court approved the Auditor Generals denial of Banco Atlanticos claim for payment of
the value of the checks that was withdrawn by Boncan.
Said ruling brings to light the fact that the banking business is affected with public
interest. By the nature of its functions, a bank is under obligation to treat the accounts
of its depositors "with meticulous care, always having in mind the fiduciary nature of
their relationship." As such, in dealing with its depositors, a bank should exercise its
[27]
functions not only with the diligence of a good father of a family but it should do so with
the highest degree of care. [28]
In the case at bar, petitioner, in allowing the withdrawal of private respondents deposit,
failed to exercise the diligence of a good father of a family. In total disregard of its own
rules, petitioners personnel negligently handled private respondents account to
petitioners detriment. As this Court once said on this matter:
"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. The seventy-eight (78)-year-old, yet still
relevant, case of Picart v. Smith, provides the test by which to determine
the existence of negligence in a particular case which may be stated as
follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would
have used in the same situation? If not, then he is guilty of negligence. The
law here in effect adopts the standard supposed to be supplied by the
imaginary conduct of the discreet pater-familias of the Roman law. The
existence of negligence in a given case is not determined by reference to
the personal judgment of the actor in the situation before him. The law
considers what would be reckless, blameworthy, or negligent in the man of
ordinary intelligence and prudence and determines liability by that."
[29]
Petitioner violated its own rules by allowing the withdrawal of an amount that is
definitely over and above the aggregate amount of private respondents dollar deposits
that had yet to be cleared. The banks ledger on private respondents account shows
that before he deposited $2,500.00, private respondent had a balance of only
$750.00. Upon private respondents deposit of $2,500.00 on September 3, 1984, that
[30]
amount was credited in his ledger as a deposit resulting in the corresponding total
balance of $3,250.00. On September 10, 1984, the amount of $600.00 and the
[31]
additional charges of $10.00 were indicated therein as withdrawn thereby leaving a

balance of $2,640.00. On September 30, 1984, an interest of $11.59 was reflected in
the ledger and on October 23, 1984, the amount of $2,541.67 was entered as
withdrawn with a balance of $109.92. On November 19, 1984 the word "hold" was
[32]
written beside the balance of $109.92. That must have been the time when Reyes,
[33]
petitioners branch manager, was informed unofficially of the fact that the check
deposited was a counterfeit, but petitioners Buendia Ave. Extension Branch received a
copy of the communication thereon from Wells Fargo Bank International in New York
66 | N E G O S e c s . 6 0 t o 6 9
the following day, November 20, 1984. According to Reyes, Wells Fargo Bank
[34]
International handled the clearing of checks drawn against U.S. banks that were
deposited with petitioner. Jjlex
[35]
From these facts on record, it is at once apparent that petitioners personnel allowed the
withdrawal of an amount bigger than the original deposit of $750.00 and the value of
the check deposited in the amount of $2,500.00 although they had not yet received
notice from the clearing bank in the United States on whether or not the check was
funded. Reyes contention that after the lapse of the 35-day period the amount of a
deposited check could be withdrawn even in the absence of a clearance thereon,
otherwise it could take a long time before a depositor could make a withdrawal, is
[36]
untenable. Said practice amounts to a disregard of the clearance requirement of the

banking system.
While it is true that private respondents 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 petitioners 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 of the
[37]
withdrawal and eventual loss of the amount of $2,500.00 on petitioners part was its
personnels negligence in allowing such withdrawal in disregard of its own rules and the
clearing requirement in the banking system. In so doing, petitioner assumed the risk of
incurring a loss on account of a forged or counterfeit foreign check and hence, it should
suffer the resulting damage.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision of the
Court of Appeals in CA-G.R. CV No. 37392 is AFFIRMED.
SO ORDERED. Newmiso
67 | N E G O S e c s . 6 0 t o 6 9
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
68 | N E G O S e c s . 6 0 t o 6 9
 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

69 | N E G O S e c s . 6 0 t o 6 9
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."
70 | N E G O S e c s . 6 0 t o 6 9
 The proximate cause = disregard of its own rules and the clearing requirement in the
banking system
71 | N E G O S e c s . 6 0 t o 6 9
72 | N E G O S e c s . 6 0 t o 6 9
[G.R. No. 136729. September 23 ,2003]
ASTRO ELECTRONICS CORP. and PETER ROXAS, petitioner, vs. PHILIPPINE

EXPORT AND FOREIGN LOAN GUARANTEE
CORPORATION, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court is
the decision of the Court of Appeals in CA-G.R. CV No. 41274, affirming the decision of
[1]
the Regional Trial Court (Branch 147) of Makati, then Metro Manila, whereby petitioners
Peter Roxas and Astro Electronics Corp. (Astro for brevity) were ordered to pay
respondent Philippine Export and Foreign Loan Guarantee Corporation (Philguarantee),
jointly and severally, the amount of P3,621,187.52 with interests and costs.
The antecedent facts are undisputed.
Astro was granted several loans by the Philippine Trust Company (Philtrust)
amounting to P3,000,000.00 with interest and secured by three promissory notes: PN
NO. PFX-254 dated December 14, 1981 for P600,000.00, PN No. PFX-258 also dated
December 14, 1981 for P400,000.00 and PN No. 15477 dated August 27, 1981 for
P2,000,000.00. In each of these promissory notes, it appears that petitioner Roxas
signed twice, as President of Astro and in his personal capacity. Roxas also signed a
[2]
Continuing Surety ship Agreement in favor of Philtrust Bank, as President of Astro and
as surety. [3]
Thereafter, Philguarantee, with the consent of Astro, guaranteed in favor of Philtrust

the payment of 70% of Astros loan, subject to the condition that upon payment by
[4]
Philguanrantee of said amount, it shall be proportionally subrogated to the rights of

Philtrust against Astro. [5]
As a result of Astros failure to pay its loan obligations, despite demands,

Philguarantee paid 70% of the guaranteed loan to Philtrust. Subsequently, Philguarantee
filed against Astro and Roxas a complaint for sum of money with the RTC of Makati.
In his Answer, Roxas disclaims any liability on the instruments, alleging, inter alia,
that he merely signed the same in blank and the phrases in his personal capacity and in
his official capacity were fraudulently inserted without his knowledge. [6]
After trial, the RTC rendered its decision in favor of Philguarantee with the following
dispositive portion:
WHEREFORE, in view of all the foregoing, the Court hereby renders judgment in favor or (sic)
the plaintiff and against the defendants Astro Electronics Corporation and Peter T. Roxas,
ordering the then (sic) to pay, jointly and severally, the plaintiff the sum of P3,621.187.52
representing the total obligation of defendants in favor of plaintiff Philguarantee as of December
31, 1984 with interest at the stipulated rate of 16% per annum and stipulated penalty charges of
16% per annum computed from January 1, 1985 until the amount is fully paid. With costs.
73 | N E G O S e c s . 6 0 t o 6 9
SO ORDERED. [7]
The trial court observed that if Roxas really intended to sign the instruments merely
in his capacity as President of Astro, then he should have signed only once in the
promissory note. [8]
On appeal, the Court of Appeals affirmed the RTC decision agreeing with the trial
court that Roxas failed to explain satisfactorily why he had to sign twice in the contract
and therefore the presumption that private transactions have been fair and regular must
be sustained. [9]
In the present petition, the principal issue to be resolved is whether or not Roxas
should be jointly and severally liable (solidary) with Astro for the sum awarded by the
RTC.
The answer is in the affirmative.
Astros loan with Philtrust Bank is secured by three promissory notes. These
promissory notes are valid and binding against Astro and Roxas. As it appears on the
notes, Roxas signed twice: first, as president of Astro and second, in his personal
capacity. In signing his name aside from being the President of Asro, Roxas became a
co-maker of the promissory notes and cannot escape any liability arising from it. Under
the Negotiable Instruments Law, persons who write their names on the face of
promissory notes are makers, promising that they will pay to the order of the payee or
[10]
any holder according to its tenor. Thus, even without the phrase personal capacity,
[11]
Roxas will still be primarily liable as a joint and several debtor under the notes considering
that his intention to be liable as such is manifested by the fact that he affixed his signature
on each of the promissory notes twice which necessarily would imply that he is
undertaking the obligation in two different capacities, official and personal.
Unnoticed by both the trial court and the Court of Appeals, a closer examination of
the signatures affixed by Roxas on the promissory notes, Exhibits A-4 and 3-A and B-4
and 4-A readily reveals that portions of his signatures covered portions of the typewritten
words personal capacity indicating with certainty that the typewritten words were already
existing at the time Roxas affixed his signatures thus demolishing his claim that the
typewritten words were just inserted after he signed the promissory notes. If what he
claims is true, then portions of the typewritten words would have covered portions of his
signatures, and not vice versa.
As to the third promissory note, Exhibit C-4 and 5-A, the copy submitted is not clear
so that this Court could not discern the same observations on the notes, Exhibits A-4 and
3-A and B-4 and 4-A.
Nevertheless, the following discussions equally apply to all three promissory notes.
The three promissory notes uniformly provide: FOR VALUE RECEIVED, I/We jointly,
severally and solidarily, promise to pay to PHILTRUST BANK or order... An instrument
[12]
which begins with I, We, or Either of us promise to pay, when signed by two or more
persons, makes them solidarily liable. Also, the phrase joint and several binds the
[13]
makers jointly and individually to the payee so that all may be sued together for its
enforcement, or the creditor may select one or more as the object of the suit. Having[14]
74 | N E G O S e c s . 6 0 t o 6 9
signed under such terms, Roxas assumed the solidary liability of a debtor and Philtrust
Bank may choose to enforce the notes against him alone or jointly with Astro.
Roxas claim that the phrases in his personal capacity and in his official capacity were
inserted on the notes without his knowledge was correctly disregarded by the RTC and
the Court of Appeals. It is not disputed that Roxas does not deny that he signed the notes
twice. As aptly found by both the trial and appellate court, Roxas did not offer any
explanation why he did so. It devolves upon him to overcome the presumptions that
private transactions are presumed to be fair and regular and that a person takes
[15]
ordinary care of his concerns. Aside from his self-serving allegations, Roxas failed to
[16]
prove the truth of such allegations. Thus, said presumptions prevail over his claims. Bare
allegations, when unsubstantiated by evidence, documentary or otherwise, are not
equivalent to proof under our Rules of Court. [17]
Roxas is the President of Astro and reasonably, a businessman who is presumed to

take ordinary care of his concerns. Absent any countervailing evidence, it cannot be
gainsaid that he will not sign document without first informing himself of its contents and
consequences. Clearly, he knew the nature of the transactions and documents involved
as he not only executed these notes on two different dates but he also executed, and
again, signed twice, a continuing Surety ship Agreement notarized on July 31, 1981,
wherein he guaranteed, jointly and severally with Astro the repayment of P3,000,000.00
due to Philtrust. Such continuing suretyship agreement even re-enforced his solidary
liability Philtrust because as a surety, he bound himself jointly and severally with Astros
obligation. Roxas cannot now avoid liability by hiding under the convenient excuse that
[18]
he merely signed the notes in blank and the phrases in personal capacity and in his
official capacity were fraudulently inserted without his knowledge.
Lastly, Philguarantee has all the right to proceed against petitioner, it is subrogated
to the rights of Philtrust to demand for and collect payment from both Roxas and Astro
since it already paid the value of 70% of roxas and Astro Electronics Corp.s loan
obligation. In compliance with its contract of Guarantee in favor of Philtrust.
Subrogation is the transfer of all the rights of the creditor to a third person, who
substitutes him in all his rights. It may either be legal or conventional. Legal subrogation
[19]
is that which takes place without agreement but by operation of law because of certain
acts. Instances of legal subrogation are those provided in Article 1302 of the Civil
[20]
Code. Conventional subrogation, on the other hand, is that which takes place by
agreement of the parties. [21]
Roxas acquiescence is not necessary for subrogation to take place because the
instant case is one of the legal subrogation that occurs by operation of law, and without
need of the debtors knowledge. Further, Philguarantee, as guarantor, became the
[22]
transferee of all the rights of Philtrust as against Roxas and Astro because the guarantor
who pays is subrogated by virtue thereof to all the rights which the creditor had against
the debtor. [23]
WHEREFORE, finding no error with the decision of the Court of Appeals dated
December 10, 1998, the same is hereby AFFIRMED in toto.
SO ORDERED.
75 | N E G O S e c s . 6 0 t o 6 9
Astro Electronics Corp. v Philguarantee; G.R. No. 136729; 23 Sep 2003; 411
SCRA 462
FACTS:
Respondent guaranteed the payment of 70% of petitioner corporation’s loans on the
condition that upon payment of said amount it shall be proportionally subrogated to
the rights of the original creditor. The loans were secured by three promissory notes,
each of which petitioner Roxas signed twice – as president of petitioner corporation
and in his personal capacity. For their failure to pay their loan obligations,
respondent filed against both petitioners a complaint for sum of money.
ISSUE(S):
Whether or not petitioner Roxas should be jointly and severally liable.
RULING:
Under the Negotiable Instruments Law, persons who write their names on the face
of promissory notes are makers, promising that they will pay to the order of the
payee or any holder according to its tenor. Thus, even without the phrase
“personal capacity,” petitioner Roxas will still be primarily liable as a joint and
several debtors under the notes considering that his intention to be liable as such is
manifested by the fact that he affixed his signature on each of the promissory notes
twice which necessarily would imply that he is undertaking the obligation in two
different capacities, official and personal.
76 | N E G O S e c s . 6 0 t o 6 9

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TOMAS ANG, G.R. No.

On August 28, 1990, respondent Associated Bank (formerly Associated Banking

PN-No. DVO-78-382 PN-No. DVO-78-390

Outstanding Balance P50,000.00 P30,000.00

WHEREFORE, judgment is rendered against defendant Antonio Ang Eng

On the first cause of action:

1) the amount of P50,000.00 representing the principal obligation with

2) P11,663.89 as accrued service charge; and

On the second cause of action:

1) the amount of P50,000.00 (sic) representing the principal account

2. That corroborative to, and/or preparatory or incident to his testimony[,]

a. original Promissory Note (PN for brevity) # DVO-78-382

THE LOWER COURT ERRED IN NOT HOLDING DEFENDANT ANTONIO

THE LOWER COURT ERRED IN DISMISSING PLAINTIFF-

WHEREFORE, premises considered, the Decision of

1. P50,000.00 representing the principal amount of the loan under PN-

2) Related to the above jurisdictional issues, defendant-appellee Tomas Ang has

3) BY FAILING TO GIVE NOTICE OF ITS APPEAL AND APPEAL BRIEF TO

1. Is [A]rticle 2080 of the Civil Code applicable to discharge petitioner Tomas

4. Are petitioners other real and personal defenses such as successive

The petition is unmeritorious.

However, as with most procedural rules, this maxim is subject to exceptions.

As petitioner acknowledged it to be, the relation between an accommodation party and

The case of Inciong, Jr. v. CA[69] is illuminating:

It is to be noted, however, that petitioner signed the promissory note as a

Consequently, in issuing the two promissory notes, petitioner as accommodating party

Furthermore, since the liability of an accommodation party remains not

AUTO PLUS TRADERS, Promulgated:

The antecedent facts are as follows:

Petitioner Claude P. Bautista, in his capacity as President and Presiding Officer of

Criminal Case No. 102,005-B-2001:

Likewise, contrary to private respondents contentions, petitioner cannot be considered liable

G.R. No. 166405 August 06, 2008

 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

 Section 29 of the Negotiable Instruments Law

 he must be a party to the instrument, signing as maker, drawer, acceptor, or indorser

 he must not receive value therefor - present

Before the Court is a Petition for Review on Certiorari assailing

Saban appealed the trial courts Decision to the Court of Appeals.

On October 27, 2003, the appellate court promulgated

to his commission amounting to P236,743.00.[13]

The pronouncements of the Court in the aforecited cases are applicable to

Sabans entitlement to his commission having been settled, the Court

Sabans right to receive compensation for negotiating as broker for Ybaez

Lims act of issuing the four checks amounting to P236,743.00 in Sabans

The ruling of the Court in Infante v. Cunanan, et al., cited earlier, is

Furthermore, since Ybaez received a total of P230,000.00 from Lim, or an

As gleaned from the text of Section 29 of the Negotiable Instruments

The absence of the second requisite becomes pellucid when it is noted

WHEREFORE, in view of the foregoing, the petition is DISMISSED.

Yes, Saban is entitled to receive his commission from the sale.

SPOUSES GIL AND NOELLI GARDOSE, petitioners, vs. REYNALDO S.

"WHEREFORE, judgment is rendered ordering defendants to pay plaintiff the following:

4. P50,000.00 as and for attorney's fees; and

The Court of Appeals gravely erred in considering petitioner Noelli Gardose as an

The petition is unmeritorious.

"xxx xxx xxx

"xxx xxx xxx

"xxx xxx xxx

IN VIEW WHEREOF, the petition is dismissed. Costs against the petitioners.