PINEDA VS. DELA RAMA GR L-31831, 28 APRIL 1983 First Division, Gutierrez (J) Facts: Jose V.

dela Rama is a lawyer whose services were retained by Jesus Pineda for the purpose of making representations with the chairman and general manager of the National Rice and Corn Administration to stop and delay the institution of criminal charges against Pineda who allegedly misappropriated 11,000 cavans of palay deposited at his ricemill in Concepcion, Tarlac. Subsequently, Dela Rama filed suit to collect a P9,300 loan, evidenced by the matured promissory note, and P5,000 as attorneys fees. The Court of First Instance ruled in favor of Pineda, which was reversed by the Court of Appeals. Issue: Whether the promissory note is void for lack of consideration. Held: The presumption that a negotiable instrument is issued for a valuable consideration (Section 24, Negotiable Instruments Law) is only prima facie. It can be rebutted by proof to the contrary. The term of the note sustains the version of Pineda that he signed the promissory note because he believed dela Ramas story that these amounts had already been advanced by dela Rama and given as gifts for NARIC officials. The promissory note was thus executed for an illegal consideration; and thus is void like any other contract as per Article 1409 of the Civil Code. The consideration for the promissory note -- to influence public officers in the performance of their duties -- is contrary to law and public policy. The promissory note is void ab initio and no cause of action for the collection cases can arise from it. PHILIPPINE BANK OF COMMERCE VS. ARUEGO GR L-25836-37, 31 JANUARY 1981 First Division, Fernandez (J) Facts: Jose Aruego publishes a periodical called World Current Events. To facilitate payment of the printing, Aruego obtained a credit accommodation from the Philippine Bank of Commerce. For every printing of the periodical, the printer (Encal Press and Photo-Engraving) collected the cost of printing by drawing a draft against the bank, said draft being sent later to Aruego for acceptance. As an added security for the payment of the amounts advanced to the printer, the bank also required Aruego to execute a

trust receipt in favor of the bank wherein Aruego undertook to hold in trust for the bank the periodicals and to sell the same with the promise to turn over to the bank the proceeds of the sale to answer for the payment of all obligations arising from the draft. The bank instituted an action against Aruego to recover the cost of printing of the latters periodical for the period of 28 August 1950 to 14 March 1951. Issue [1]: Whether the drafts were bills of exchange or mere pieces of evidence of indebtedness. Held [1]: Under the Negotiable Instruments Law, a bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. As long as a commercial paper conforms with the definition of a bill of exchange, that paper is considered a bill of exchange. The nature of acceptance is important only in the determination of the kind of liabilities of the parties involved, but not in the determination of whether a commercial paper is a bill of exchange or not. Issue [2]: Whether Aruego is an agent of Philippine Education Foundation Company when he signed the supposed bills of exchange. Held [2]: Nowhere in the drafts accepted by Aruego that he disclosed that he was signing as representative of the Philippine Education Foundation Company. For failure to disclose his principal, Aruego is personally liable for the drafts he accepted, pursuant to Section 20 of the Negotiable Instruments Law. Issue [3]: Whether Aruego is primarily liable. Held [3]: An accommodation party is one who has signed the instrument as maker, drawer, acceptor, indorser, without receiving value therefor and for the purpose of lending his name to some other person. Herein, Aruego signed as a drawee / acceptor. Under the Negotiable Instruments Law, a drawee is primarily liable. If Aruego intended to be secondarily liable only, he should not have signed as an acceptor / drawee. In doing so, he became primarily and personally liable for the drafts.

CLARK VS. SELLNER GR 16477, 22 NOVEMBER 1921 First Division, Romualdez (J) Facts: George Sellner, with WH Clarke and John Mave, signed a note in favor of RN Clark dated 1 July 1914 in Manila for the amount of P12,000. The note matured, but its amount was not paid. Action was filed in court. Sellners counsel allege that Sellner did not receive anything of value for the transaction, that the instrumnet was not presented to sellner for payment, and that Sellner, being an accommodation party is not liable unless the note is negotiated, which was allegedly not done. Issue: Whether Sellner is an accommodation party liable for the note. Held: Sellner, as one of the signers of the note, is one of the joint and several debtors on the note, and as such he is liable under Section 60 of the Negotiable Instruments Law/ Sellner lent his name, not to the creditor, but to those who signed with him placing himself with respect to the creditor in the same position and with the same liability as the said signers; and thus is a joint surety rather than an accommodation party. As to the presentment for payment, such action is not necessary in order to charge the person primarily liable, as is Sellner (Section 70, Negotiable Instruments Law). PNB V. MAZA AND MECENAS 48 PHIL 207 FACTS: Maza and Mecenas executed a total of five promissory notes. These were not paid at maturity. And to recover the amounts stated on the face of the promissory notes, PNB initiated an action against the two. The special defense posed by the two is that the promissory notes were delivered to them in blank by a certain Enchaus and were made to sign the notes so that the latter could secure a loan from the bank. They also alleged that they never negotiated the notes with the bank nor have they received any value thereof. They also prayed that Enchaus be impleaded in the complaint but such was denied. The trial court then held in favor of the bank.

HELD: The defendants attested to the genuineness of the instruments sued on. Neither did they point out any mistake in regard to the amount and interest that the lower court sentenced them to pay. Given such, the defendants are liable. They appear as the makers of the promissory notes and as such, they must keep their engagement and pay as promised. And assuming that they are accommodation parties, the defendants having signed the instruments without receiving value thereof, for the purpose of lending their names to some other person, are still liable for the promissory notes. The law now is such that an accommodation party cannot claim no benefit as such, but he is liable according to the face of his undertaking, the same as he himself financially interest in the transaction. It is also no defense to say that they didn't receive the value of the notes. To fasten liability however to an accommodation maker, it is not necessary that any consideration should move to him. The accommodation which supports the promise of the accommodation maker is that parted with by the person taking the note and received by the person accommodated. SADAYA V. SEVILLA 19 SCRA 924 FACTS: Sadaya, Sevilla and Varona signed solidarily a promissory note in favor of the bank. Varona was the only one who received the proceeds of the note. Sadaya and Sevilla both signed as co-makers to accommodate Varona. Thereafter, the bank collected from Sadaya. Varona failed to reimburse. Consequently, Sevilla died and intestate estate proceedings were established. Sadaya filed a creditors claim on his estate for the payment he made on the note. The administrator resisted the claim on the ground that Sevilla didn't receive any proceeds of the loan. The trial court admitted the claim of Sadaya though tis was reversed by the CA. HELD: Sadaya could have sought reimbursement from Varona, which is right and just as the latter was the only one who received value for the note

executed. There is an implied contract of indemnity between Sadaya and Varona upon the formers payment of the obligation to the bank. Surely enough, the obligations of Varona and Sevilla to Sadaya cannot be joint and several. For indeed, had payment been made by Varona, Varona couldn't had reason to seek reimbursement from either Sadaya or Sevilla. After all, the proceeds of the loan went to Varona alone. On principle, a solidary accommodation makerwho made payment has the right to contribution, from his co-accomodation maker, in the absence of agreement to the contrary between them, subject to conditions imposed by law. This right springs from an implied promise to share equally the burdens thay may ensue from their having consented to stamp their signatures on the promissory note. The following are the rules: 1. A joint and several accommodation maker of a negotiable promissory note may demand from the principal debtor reimbursement for the amount that he paid to the payee 2. A joint and several accommodation maker who pays on the said promissory note may directly demand reimbursement from his coaccommodation maker without first directing his action against the principal debtor provided that a. He made the payment by virtue of a judicial demand b. A principal debtor is insolvent. It was never shown that there was a judicial demand on Sadaya to pay the obligation and also, it was never proven that Varona was insolvent. Thus, Sadaya cannot proceed against Sevilla for reimbursement.

First Division, Martin (J) Facts: Mauricia Ebrada encashed a back pay check for P1246.08 at Republic Bank (Escolta Branch). The Bureau of Treasury, which issued the check advised the bank that the alleged indorsement of the check by one Martin Lorenzo was a forgery as the latter has been dead since 14 July 1952; and requested that it be refunded he sum deducted from its account. The bank refunded the amount to the Bureau and demanded upon Ebrada the sum in question, who refused. Hence, the present action. Issue: Whether the bank can recover from the last indorser. Held: According to Section 23 of the Negotiable Instruments Law, where the signature on a negotiable instrument is forged, the negotiation of the check is without force or effect. However, following the ruling in Beam vs. Farrel (US case), where a check has several indorsements on it, only the negotiation based on the forged or unauthorized signature which is inoperative. The last indorser, Ebrada, was duty-bound to ascertain whether the check was genuine before presenting it to the bank for payment. Her failure to do so makes her liable for the loss and the Bank may recover from her the money she received for the check. Had she performed her duty, the forgery would have been detected and fraud defeated. Even if she turned over the amount to Dominguez immediately after receiving the cash proceeds of the check, she is liable as an accommodation party under Section 29 of the Negotiable Instruments Law. UNITED GENERAL INDUSTRIES V PALER (1982) FACTS: Paler bought a tv in instalment basis, and executed as promissory note and chattel mortgage. Paler violated the contract of mortgage, plaintiff sued for estafa. Attys fees increased by 250 to 1k. Art 19 relate to Art 2208 (5). Paler wilfully refused to pay debt which he clearly ought to have paid. He even imposed a burden on this Court by filing an unnecessary and frivolous appeal.

REPUBLIC BANK VS. EBRADA GR L-40796, 31 JULY 1975

PRUDENCIO VS. CA

GR L-34539, 14 JULY 1986 Second Division, Gutierrez Jr. (J) Facts: Eulalio and Elisa Prudencio are the registered owners of a parcel of land located in Sampaloc, Manila. The property was mortgaged to PNB to guarantee a loan of P1,000 extended to one Domingo Prudencio. Sometime in 1955, Concepcion & Tamayo Construction Co., through Jose Toribio (Prudencios relative), persuaded the Prudencios to mortgage their property to secure the loan of P10,000 which the company was negotiating with the PNB. The Prudencios signed the Amendment of Real Estate Mortgage. The promissory note covering the P10,000 loan was signed by Toribio. The Prudencios also signed the portion of the note indicating that they are requesting the PNB to issue the check covering the loan to the Company. Jose Toribio executed the Deed of Assignment assigning all payments made by the Bureau to the company on account of the Puerto Princesa building project in favor of PNB. The Bureau, however, conditioned that the payment should be for labor and materials. The Prudencios wrote PNB that since PNB authorized payments to the Company where there were changes in the conditions of the contract without their knowledge, they seek to cancel the mortgage contract. Failing to cancel the mortgage, they filed suit to cancel the same. Issue: Whether the Prudencios were solidary co-debtors or sureties as a result of being accommodation makers. Held: In lending his name to the accommodated party, the accommodation party is in effect a surety. However, unlike in a contract of suretyship, the liability of the accommodation party remains not only primary but also unconditional to a holder for value such that even if the accommodated party receives an extension of the period of 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 the holder for value is concerned, he is a solidary co-debtor. Consequently, the Prudencios cannot claim to have been released from their obligation simply because the time of payment of such obligation was temporarily deferred by PNB without their knowledge and consent. To be freed of obligation, it is thus necessary to determine if PNB, the payee of the promissory note, is a holder in due course. Herein, PNB was an immediate party or in privy to the note, besides that it dealt directly with the Prudencios knowing fully well that

they are accommodation makers. The general rule that a payee may be considered a holder in due course does not apply to PNB. CRISOLOGO JOSE V. CA 177 SCRA 594 FACTS: The president of Movers Enterprises, to accommodate its clients Spouses Ong, issued a check in favor of petitioner Crisologo-Jose. This was in consideration of a quitclaim by petitioner over a parcel of land, which the GSIS agreed to sell to spouses Ong, with the understanding that upon approval of the compromise agreement, the check will be encashed accordingly. As the compromise agreement wasn't approved during the expected period of time, the aforesaid check was replaced with another one for the same value. Upon deposit though of the checks by petitioner, it was dishonored. This prompted the petitioner to file a case against Atty. Bernares and Santos for violation of BP22. Meanwhile, during the preliminary investigation, Santos tried to tender a cashiers check for the value of the dishonored check but petitioner refused to accept such. This was consigned by Santos with the clerk of court and he instituted charges against petitioner. The trial court held that consignation wasn't applicable to the case at bar but was reversed by the CA. HELD: Petitioner averred that it is not Santos who is the accommodation party to the instrument but the corporation itself. But assuming arguendo that the corporation is the accommodation party, it cannot be held liable to the check issued in favor of petitioner. The rule on accommodation party doesn't include or apply to corporations which are accommodation parties. This is because the issue or indorsement of another is ultra vires. Hence, one who has taken the instrument with knowledge of the accommodation nature thereof cannot recover against a corporation where it is only an accommodation party. If the form of the instrument, or the nature of the transaction, is such as to charge the indorsee with the knowledge that the issue or indorsement of the instrument by the corporation is for the accommodation of another, he cannot recover against the corporation thereon.

By way of exception, an officer or agent of a corporation shall have the power to execute or indorse a negotiable paper in the name of the corporation for the accommodation of a third party only is specifically authorized to do so. Corollarily, corporate officers have no power to execute for mere accommodation a negotiable instrument of the corporation for their individual debts and transactions arising from or in relation to matters in which the corporation has no legitimate concern. Since such accommodation paper cannot be enforced against the corporation, the signatories thereof shall be personally liable therefore, as well as the consequences arising from their acts in connection therewith TRAVEL ON VS. CA GR 56169, 26 JUNE 1992 Third Division, Feliciano (J) Facts: Travel-On Inc. is a travel agency selling airline tickets on commission basis for and in behalf of different airline companies. Arturo S. Miranda had a revolving credit line with Travel-On. He procured tickets on behalf of airline passengers and derived commissions therefrom. Miranda apparently owed Travel-On the amount of P278,201.57 (the value of airline tickets sold to the former), to which Miranda paid various amounts in cash and in kind. He thereafter issued 6 post-dated checks amounting to P115,000 which were all dishonored by the drawee bank. Travel-On filed suit to recover the value of the checks. Miranda countered that he instead overpaid his obligations, and that he merely issued the checks for purposes of accommodation as he allegedly had in the past accorded Travel-On. Issue: Whether Miranda is indebted to Travel-On, or whether he is an accommodation party. Held: 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. Thus, the mere introduction of the instrument sued on, in evidence prima facie, entitles the plaintiff to recovery. Such presumption subsists unless otherwise contradicted by other competent evidence. The checks, being presented for payment, were thus intended for encashment. There is nothing in the checks (nor in other documents) that stated otherwise. Travel-On was

a payee, not an accommodated party for the checks, as it realized no value on the checks which bounced. Travel-On, thus, is entitled to the benefit of the presumption that it is a holder in due course. TOWN SAVINGS AND LOAN BANK V. CA 223 SCRA 459 FACTS: Spouses Hipolito applied for and was granted a loan by the bank, which was secured by a promissory note. For failure to pay their monthly payments, they were declared in default. The spouses denied having any liability. They stated that the real party-ininterest is the sister of the husband, Pilarita Reyes. The spouses, not having received part of the loan, were mere guarantors of Reyes. As such, they protested against being dragged into the litigation. The trial court held that they were liable as accommodation parties to the promissory note. This was reversed by the Court of Appeals. HELD: An accommodation party is one who has signed the instrument as maker, drawer, indorser, without receiving value therefore and for the purpose of lending his name to some other person. Such person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of the taking of the instrument knew him to be an accommodation party. In lending his name to the accommodated party, the accommodation party is in effect a surety for the latter. He lends his name to enable the accommodated party to obtain credit or to raise money. He receives no part of the consideration for the instrument but assumes liability to the other parties thereto because he wants to accommodate another. In the case at bar, it is indisputable that the spouses signed the promissory note to enable Reyes to secure a loan from the bank. She was the actual beneficiary of the loan and the spouses accommodated her by signing the note. BAUTISTA V. AUTO PLUS TRADERS INC (2008)

G.R. NO. 166405 AUGUST 06, 2008 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 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 1. he must be a party to the instrument, signing as maker, drawer, acceptor, or indorser -present 2. he must not receive value therefor - present 3. he must sign for the purpose of lending his name or credit to some other person - lacking Cruiser Bus Lines and Transport Corporation, however, remains liable for the checks especially since there is no evidence that the debts covered by the subject checks have been paid.

SIAIN ENTERPRISES, INC VS. CUPERTINO REALTY CORP GR 170782, JUNE 22 2009 ***no digest EUSEBIO GONZALES V. PHILIPPINE COMMERCIAL & INTERNATIONAL BANK, ET AL.; G.R. NO. 180257. FEBRUARY 23, 2011.

Dishonor of check. This case involved certain loans for which petitioner was an accommodation party. The borrowers under the loans had defaulted triggering the solidary liability of the accommodation party, and the cancellation of the petitioners credit line with that bank under a certain agreement. Consequently, one of the petitioners checks was dishonored. The Supreme Court held that the bank improperly dishonored the check of the petitioner since it had failed to formally notify the petitioner as accommodation party of the default under the loan.