EDWIN V. DE NICOLAS Ll.B.

1-LO1 NEGLAW 030 January 16, 2014

No. 8844. December 16, 1914
FERNANDO MAULINI ET AL., plaintiffs and appellees, vs. ANTONIO G. SERRANO, defendant and appellant.

FACTS:
This is an appeal from a judgment of the Court of First Instance of the City of Manila in favor of the plaintiff for the sum
of P3,000, with interest thereon at the rate of 1 per cent per month from September 5, 1912, together with the costs.

The action was brought by the plaintiff upon the contact of indorsement alleged to have been made in his favor by the
defendant upon the following promissory note:

P3,000. Due 5th of September, 1912.
We jointly and severally agree to pay to the order of Don Antonio G. Serrano on or before the 5th day of
September, 1912, the sum of three thousand pesos (P3,000) for value received for commercial operations. Notice and
protest renounced. If the sum herein mentioned is not completely paid on the 5th day of September, 1912, this instrument
will draw interest at the rate of 1 per cent per month from the date when due until the date of its complete payment. The
makers hereof agree to pay the additional sum of P500 as attorney's fees in case of failure to pay the note.
Manila, June 5, 1912.
(Sgd.) For Padern, Moreno & Co., by F. Moreno, member of the firm. For Jose Padern, by F. Moreno. Angel Gimenez.
The note was indorsed on the back as follows:
Pay note to the order of Don Fernando Maulini, value received. Manila, June 5, 1912. (Sgd.) A.G. Serrano.

That the defendant SERRANO was a broker doing business in the city of Manila and that part of his business
consisted in looking up and ascertaining persons who had money to loan as well as those who desired to borrow money and,
acting as a mediary, negotiate a loan between the two.

According to his custom in transactions of this kind, the broker obtained compensation for his services of the borrower,
the lender paying nothing therefor. Sometimes this was a certain per cent of the sum loaned; at other times it was a part of the
interest which the borrower was to pay, the latter paying 1 per cent and the broker per cent.

According to the method usually followed, the broker delivered the money personally to the borrower, took note in his
own name and immediately transferred it by indorsement to the lender.

In the case at bar this was done at the special request of the indorsee and simply as a favor to him, the latter stating to
the broker that he did not wish his name to appear on the books of the borrowing company as a lender of money and that he
desired that the broker take the note in his own name, immediately transferring to him title thereto by indorsement. This was
done, the note being at once transferred to the lender.

Although the trial court received parol evidence on the subject provisionally , on the final decision of the case, it held
that such evidence was not admissible to alter, very, modify or contradict the terms of the contract of indorsement, and,
therefore, refused to consider the evidence thus provisionally received, which tended to show that, by verbal agreement between
the indorser and the indorsee, the indorser, in making the indorsement, was acting as agent for the indorsee, as a mere vehicle
for the transference of naked title, and that his indorsement was wholly without consideration. The trial court also held that it was
immaterial whether there was a consideration for the transfer or not, as the indorser, under the evidence offered, was an
accommodation indorser.

ISSUE:
Whether or not Serrano is an accommodation indorser and is liable on the note.

HELD:

The judgment appealed from is reversed and the complaint dismissed on the merits; no special finding as to costs.

The defendant Serrano is an accommodation indorser. The trial court quoted that provision of the Negotiable
Instruments Law which defines an accommodation party as "one who has signed the instrument as maker, drawer, acceptor, or
indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable
on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew the same to be only
an accommodation party."

The Supreme Court is of the opinion that the trial court misunderstood this definition. The accommodation to which
reference is made in the section quoted is not one to the person who takes the note that is, the payee or indorsee, but one to
the maker or indorser of the note. It is true that in the case at bar it was an accommodation to the plaintiff Maulini, in a popular
sense, to have the defendant Serrano indorse the note; but it was not the accommodation described in the law, but, rather, a
mere favor to him and one which in no way bound Serrano.

























Parol Evidence
Parol refers to verbal expressions or words. Verbal evidence, such as the testimony of a witness
at trial.
In the context of contracts, deeds, wills, or other writings, parol evidence refers to extraneous
evidence such as an oral agreement (a parol contract), or even a written agreement, that is not
included in the relevant written document. The parol evidence rule is a principle that preserves
the integrity of written documents or agreements by prohibiting the parties from attempting to
alter the meaning of the written document through the use of prior and contemporaneous oral or
written declarations that are not referenced in the document.
Terms of a contract are commonly proposed, discussed, and negotiated before they are
included in the final contract. When the parties to the negotiations do put their agreement in
writing and acknowledge that the statement is the complete and exclusive declaration of their
agreement, they have integrated the contract. The parol evidence rule applies to integrated
contracts and provides that when parties put their agreement in writing, all prior and
contemporaneous oral or written agreements merge in the writing. Courts do not permit
integrated contracts to be modified, altered, amended, or changed in any way by prior or
contemporaneous agreements that contradict the terms of the written agreement.
The parol evidence rule applies to written contracts to safeguard the terms of the contract. The
courts assume by the parol evidence rule that contracts contain the terms and provisions that
the parties specifically intended and lack those provisions that the parties did not want.
Clark vs. SellnerGR 16477, 22 November 1921First Division, Romualdez (J)Facts:

George Sellner, with WH Clarke and John Mave, signed a note in favor of RN Clark dated 1 July 1914in
Manila for the amount of P12,000. The note matured, but its amount was not paid. Action was filed incourt. Sellners
counsel allege that Sellner did not receive anything of value for the transaction, that theinstrumnet was not presented
to sellner for payment, and that Sellner, being an accommodation party is notliable 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 suchhe
is liable under Section 60 of the Negotiable Instruments Law/ Sellner lent his name, not to the creditor, butto those
who signed with him placing himself with respect to the creditor in the same position and with thesame liability as the
said signers; and thus is a joint surety rather than an accommodation party. As to thepresentment for payment, such
action is not necessary in order to charge the person primarily liable, as isSellner (Section 70, Negotiable Instruments
Law)