Professional Documents
Culture Documents
CASE LIST 3
Sec. 24 -50
1.
PINEDA
V.DE
LA
RAMA
121
SCRA
671
JED
Emergency
recit:
Dela
Rama
was
a
lawyer
hired
by
Pineda
to
help
him
stop
the
impending
criminal
case
that
will
be
filed
by
the
National
Rice
and
Corn
Administration's
(NARIC)
against
Pineda
for
allegedly
missapropriating
11,000
cavans
of
rice
on
account
of
the
NARIC
general
manager
being
a
friend
of
Dela
Rama.
Pineda
then
issued
a
promissory
note
worth
P9,300
to
Dela
Rama
which
he
thought
will
be
used
to
"grease"
the
hands
of
NARIC
officers.
Dela
Rama
then
sued
to
collect
on
the
check
issued
but
Pineda
contented
that
the
check
is
void
for
lack
of
valid
consideration
since
check
will
be
used
for
an
illegal
purpose.
Held:
SECTION
24.
Presumption
of
consideration.Every
negotiable
instrument
is
deemed
prima
facie
to
have
been
issued
for
a
valuable
consideration;
and
every
person
whose
signature
appears
thereon
to
have
become
a
party
thereto
for
value.
However,
the
presumption
that
a
negotiable
instrument
is
issued
for
a
valuable
consideration
is
only
prima
facie.
It
can
be
rebutted
by
proof
to
the
contrary.
The
promissory
note
was
executed
for
an
illegal
consideration
since
it
will
be
used
to
bride
the
NARIC
officers.
Because
contracts
"whose
cause,
object
or
purpose
is
contrary
to
law,
morals,
good
customs,
public
order
and
public
policy;
are
inexistent
and
void
from
the
beginning."
The
promissory
note
is
void
ab
initio
and
no
cause
of
action
for
the
collection
cases
can
arise
from
it.
Doctrine:
Every
negotiable
instrument
is
deemed
prima
facie
to
have
been
issued
for
a
valuable
consideration;
and
every
person
whose
signature
appears
thereon
to
have
become
a
party
thereto
for
value.
However,
the
presumption
that
a
negotiable
instrument
is
issued
for
a
valuable
consideration
is
only
prima
facie.
It
can
be
rebutted
by
proof
to
the
contrary.
Facts:
-
Dela
Rama
was
a
lawyer
hired
by
Pineda
to
help
him
stop
the
impending
criminal
case
that
will
be
filed
by
the
National
Rice
and
Corn
Administration's
(NARIC)
against
Pineda
for
allegedly
missapropriating
11,000
cavans
of
rice
on
stored
in
Pineda's
ricemill
in
Tarlac.
-
Dela
Rama
was
hired
he
is
the
friend
of
the
NARIC
general
manager.
-
Because
Pineda
(client)
allegedly
used
up
all
his
funds
to
buy
a
big
hacienda
in
Mindoro,
Dela
Rama
(lawyer)
lent
Pineda
P9,300.00
secured
by
a
promissory
note.
-
Dela
Rama
then
sued
to
collect
to
collect
on
the
promissory
note.
-
The
CFI
of
ruled
in
favor
of
Pineda
because
he
signed
the
promissory
note
for
P9,300.00
only
because
he
believed
that
this
amount
had
already
been
advanced
to
grease
the
palms
of
the
'Chairman
and
General
Manager
of
NARIC.
Since
the
purpose
was
illegal,
then
the
consideration
for
the
promissory
note
was
null
and
void.
As
such
dela
rama
can't
collect.
-
CA
reversed
the
CFI
saying:
Obligations
arising
from
contracts
have
the
force
of
law
between
the
contracting
parties
and
should
be
complied
with
in
good
faith.
In
furtherance
of
this
principle,
Section
24
of
the
Negotiable
instruments
Law
provides
that
every
negotiable
instrument
is
deemed
prima
facie
to
have
been
issued
for
a
valuable
consideration,
and
every
person
whose
signature
appears
thereon
to
have
become
a
party
thereto
for
value
Issue:
Whether
the
promissory
note
is
void
for
lack
of
consideration.
HELD:
Section
24
of
the
Negotiable
Instruments
Law
reads:
Presumption
of
consideration.Every
negotiable
instrument
is
deemed
prima
facie
to
have
been
issued
for
a
valuable
consideration;
and
every
person
whose
signature
appears
thereon
to
have
become
a
party
thereto
for
value.
Sec. 24 -50
Sec. 24 -50
Sec. 24 -50
o
o
o
Sellner
did
not
receive
in
that
transaction
either
the
whole
or
any
part
of
the
amount
of
the
debt;
The
instrument
was
not
presented
to
Sellner
for
payment;
Sellner,
being
an
accommodation
party,
is
not
liable
unless
the
note
is
negotiated,
which
was
not
done,
as
shown
by
the
evidence.
The
Trial
Court
ruled
in
favor
of
Sellner.
It
took
into
account
the
following
factual
circumstances:
o At
the
time
of
the
maturity
of
the
note,
the
collateral
security
given
to
guarantee
the
payment
was
worth
more
than
what
was
due
on
the
note,
but
it
depreciated
to
such
an
extent
that,
at
the
time
of
the
institution
of
this
action,
it
was
entirely
valueless.
o The
case
was
not
commenced
until
after
the
lapse
of
four
years
from
the
date
on
which
the
payment
fell
due
o Seller
has
not
received
any
part
of
the
amount
mentioned
in
the
note,
he
was
of
the
opinion,
and
so
decided,
that
Sellner
could
not
be
held
liable.
o The
theory
of
the
judge
a
quo
was
that
Clark's
failure
to
enforce
the
guaranty
for
the
payment
of
the
debt,
and
his
delay
in
instituting
this
action
constitute
laches,
which
had
the
effect
of
extinguishing
his
right
of
action.
FACTS:
The
judgment
appealed
from
is
reversed.
Sellner
is
under
obligation
to
pay
the
Clarke
the
amount
of
twelve
thousand
pesos
(P12,000),
as
principal
debt,
plus
one
thousand
two
hundred
pesos
(P1,200),
the
sum
agreed
upon
as
attorney's
fees,
and
10
per
cent
interest
on
the
principal
debt
from
July
1,
1914,
until
it
is
fully
paid,
deducting
therefrom
the
sum
of
three
hundred
pesos
(P300)
already
paid
on
account.
Ratio:
Sec. 24 -50
Liability
of
signers
when
the
whole
or
any
part
of
the
amount
of
the
debt
is
not
received
There
is
no
sufficient
ground
for
applying
the
theory
that
Clarks
failure
to
enforce
the
guaranty
for
the
payment
of
the
debt,
and
his
delay
in
instituting
this
action
constitute
laches,
thus,
extinguishing
his
right
of
action.
Sellners
position
being
a
joint
surety,
he
may,
at
any
time
after
the
maturity
of
the
note,
make
payment,
thus
subrogating
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.
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.
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
o BUT
it
is
a
recognized
doctrine
in
the
matter
of
suretyship
that
with
respect
to
the
surety,
the
creditor
is
under
no
obligation
Sec. 24 -50
4.
PNB
V.
MAZA
48
PHIL207
MAITI
Emergency
Recit:
Maza
and
Mecenas
made
5
promisory
notes
in
favor
of
PNB
worth
P10k
each.
However,
these
were
not
paid
at
maturity.
Their
obligations
accumulated
to
P65k
with
interest
and
so
PNB
sued
for
collection
of
money.
Maza
and
Mecenas
argue,
as
their
defense,
that
they
did
not
really
make
those
promisory
notes.
Echaus
made
them
sign
the
instruments
so
that
he
(Echaus)
can
negotiate
them
to
PNB.
They
petitioned
for
Echaus
to
be
impleaded
but
to
no
avail.
The
issue
to
be
decided
on
is
whether
or
not
Maza
and
Mecenas
are
liable
as
to
the
issued
promisory
notes.
SC
held
that
yes,
they
are
liable
even
if
they
are
only
deemed
as
accommodation
parties.
Doctrine:
Accommodation
parties,
having
signed
the
instruments
without
receiving
value
therefor
and
for
the
purpose
of
lending
their
names
to
some
other
person,
are
still
liable
on
the
instruments.
I
think
this
is
the
pertinent
provision
in
NIL.
Sec.
29.
Liability
of
accommodation
party.
-
An
accommodation
party
is
one
who
has
signed
the
instrument
as
maker,
drawer,
acceptor,
or
indorser,
without
receiving
value
therefor,
and
for
the
purpose
of
lending
his
name
to
some
other
person.
Such
a
person
is
liable
on
the
instrument
to
a
holder
for
value,
notwithstanding
such
holder,
at
the
time
of
taking
the
instrument,
knew
him
to
be
only
an
accommodation
party.
Facts:
PNB
is
suing
Ramon
Maza
and
Francisco
Mecenas
on
5
promisory
notes
worth
P10,000
each
2
were
made
on
Jan
20
1921,
due
3
months
after
date
3
were
made
on
Jan
21
1921,
due
4
months
after
date
one
of
the
notes
reads
as
follows:
After
three
months
of
the
date,
jointly
and
severally
pay
to
the
order
of
the
Philippine
National
Bank,
Iloilo,
Iloilo,
I.
F.,
the
amount
of
ten
thousand
(P10,
000)
pesos
in
the
Philippine
National
Bank.
Iloilo,
I.
F.
Value
Received.
No.
340
Payable
on
4/20/21
RAMOS
MAZA
FRANCISCO
MECENAS
Sec. 24 -50
Issue:
WON
Maza
and
Mecenas
are
liable
for
the
promisory
notes
worth
P65k?
Held:
From
the
pleadings
and
the
stipulation
of
facts,
it
is
deduced
that
the
defendants
admit
the
genuineness
and
due
execution
of
the
instruments
sued
on
.
Neither
do
the
appellants
point
out
any
mistake
in
regard
to
the
amount
and
interest
that
the
lower
court
sentenced
them
to
pay
to
the
plaintiff
bank.
Predicated
on
these
premises,
from
whatever
point
of
view
we
look
at
the
case,
we
arrive
at
the
same
conclusion
that
the
defendants
are
liable.
Ratio:
On
the
first
assumption
that
Maza
and
Mecenas
were
the
principals
and
Echaus
the
agent,
as
argued
by
counsel
for
the
appellee,
the
principals
must
fulfill
their
obligations.
On
another
assumption,
which
is
a
fact,
that
the
defendants
are
exactly
what
they
appear
to
be,
the
makers
of
the
negotiable
instruments,
then
they
must
keep
their
engagement
and
must
pay
as
promised.
Their
liability
on
the
instruments
is
primary
and
unconditional.
The
most
plausible
and
reasonable
stand
for
the
defendants
(Maza
and
Mecenas)
is
that
they
are
accommodation
parties.
but
as
accommodation
parties,
the
defendants
(Maza
and
Mecenas)
having
signed
the
instruments
without
receiving
value
therefor
and
for
the
purpose
of
lending
their
names
to
some
other
person,
are
still
liable
on
the
instruments.
The
law
now
is
that
the
accommodation
party
can
claim
no
benefit
as
such,
but
he
is
liable
according
to
the
face
of
his
undertaking,
the
same
as
if
he
were
himself
financially
interested
in
the
transaction.
The
defense
is
made
to
the
action
that
the
defendants
never
received
the
value
of
the
promissory
notes.
it
is,
of
course,
fundamental
that
an
instrument
given
without
consideration
does
not
create
any
obligation
at
law
or
in
equity
in
favor
of
the
payee.
However,
to
fasten
liability
upon
an
accommodation
maker,
it
is
not
necessary
that
any
consideration
should
move
to
him.
The
consideration
Sec. 24 -50
which
supports
the
promise
of
the
accommodation
maker
is
that
parted
with
by
the
person
taking
the
note
and
received
by
the
person
accommodated.
While
perhaps
unnecessary
to
this
decision,
it
may
properly
be
remarked
that
when
the
accommodation
parties
make
payment
to
the
holder
of
the
notes,
they
have
the
right
to
sue
the
accommodated
party
for
reimbursement,
since
the
relation
between
them
is
in
effect
that
of
principal
and
sureties,
the
accommodation
parties
being
the
sureties.
5.
SADAYA
V.
SEVILLA
19
SCRA
924
DONDON
Emergency
Recit:
Victor
Sevilla,
Oscar
Varona,
and
Simeon
Sadaya
executed
a
promissory
note,
jointly
and
severally,
for
Php15,000
with
interest
8%
per
annum
in
favour
of
BPI
or
its
order,
payable
on
demand.
Varona
received
the
entire
Php15,000
alone
and
Sadaya
and
Sevilla
in
reality
only
signed
as
co-makers
of
the
PN
as
a
favour
to
Varona.
After
partial
payments,
there
remained
a
balance
of
Php5,746.12
which
BPI
ended
up
collecting
from
Sadaya
as
a
co-maker,
solidary
guarantor
of
the
PN
to
BPI.
Sadaya
sought
reimbursement
from
Varona
but
Varona
wasnt
able
to
pay
him
back.
Subsequently,
Sevilla
died
and
during
his
intestate
estate
proceedings,
Sadaya
sought
to
recover
reimbursement
for
half
of
the
Php5,746.12
that
he
paid
out
to
BPI
by
filing
a
creditor
claim.
He
contends
that
he
is
entitled
to
reimbursement
since
they
are
joint
and
several
accommodation
makers
of
the
PN
and
therefore
must
share
the
burden
equally.
The
administrator
of
Sevillas
estate
opposed
this
claim
saying
that
Sevilla
did
not
receive
any
consideration
from
the
PN
and
that
he
merely
signed
as
a
surety.
Issue:
W/N
Sadayas
creditor
claim
against
Sevillas
intestate
estate
proceedings
will
prosper.
NO
IT
WONT!
Held:
CA
Ruling
affirmed.
Sadaya
cannot
claim
from
Sevilla
Sec. 24 -50
Sadaya
Contention:
Sadaya
now
seeks
reversal
of
CA
Ruling
and
prays
for
a
new
claim
of
Php2,873.06
(50%
of
the
previous
total
balance
of
Php
5,746.12)
Basis:
Sevilla
and
Sadaya
were
joint
and
several
accommodation
makers
of
the
Php15,000
PN
o Although
they
didnt
receive
any
value,
they
did
it
for
the
purpose
of
lending
their
names
to
Varona
o Their
liability
to
BPI
upon
the
explicit
terms
of
the
PN
is
joint
and
several
ISSUES:
W/N
Sadaya
has
the
right
to
be
reimbursed
by
Varona
YES
W/N
Sadaya
has
the
right
to
be
reimbursed
by
the
intestate
estate
of
Sevilla
-
NO
HELD:
CA
Judgment
hereby
AFFIRMED.
RATIO:
To
clarify:
The
relation
between
the
3
consigners
of
the
PN
and
BPI
joint
and
several
However,
what
is
important
in
this
case
is
to:
1) Determine
the
relation
of
the
3
consigners
with
respect
to
each
other
2) Determine
their
rights
against
each
other
flowing
from
this
relationship
General
Rule:
A
solidary
accommodation
maker
who
made
payment
has
the
right
to
contribution,
from
his
co-accommodation
maker,
in
the
absence
of
agreement
to
the
contrary
between
them,
and
subject
to
conditions
imposed
by
law.
Reason
This
right
springs
from
the
implied
promise
between
the
accommodation
makers
to
share
EQUALLY
the
burdens
that
may
ensue
from
their
having
consented
to
stamp
their
signatures
on
the
PN
For
having
lent
their
signatures
to
the
principal
debtor,
they
clearly
placed
themselves,
in
so
far
as
payment
made
by
one
may
create
liability
on
the
other,
as
JOINT
GUARANTORS
of
the
principal
debtor
They
all
didnt
receive
anything
so
in
misfortune,
their
burdens
should
be
equally
spread
HOWEVER,
there
are
requisites
before
an
accommodation-maker
can
seek
reimbursement
from
a
co-accommodation
maker:
Art
18
Civil
Code
in
matters
not
covered
by
the
special
laws,
their
deficiency
shall
be
supplied
by
the
provisions
of
this
Code.
There
is
nothing
in
the
Negotiable
instruments
law
pertaining
to
the
right
of
an
accommodation
maker
to
seek
reimbursement
from
another.
Hence,
Art.
2073
Civil
Code
will
apply.
Art.
2073:
Sec. 24 -50
When
there
are
two
or
more
guarantors
of
the
same
debtor
and
for
the
same
debt,
the
one
among
them
who
has
paid
may
demand
of
each
of
the
others
the
share
which
is
proportionally
owing
from
him.
If
any
of
the
guarantors
should
be
insolvent,
his
share
shall
be
borne
by
the
others,
including
the
payer,
in
the
same
proportion.
The
provisions
of
this
article
shall
NOT
be
applicable,
unless
the
payment
has
been
made
in
virtue
of
a
judicial
demand
or
unless
the
principal
debtor
is
insolvent.
From
this
provision,
the
rules
therefore
are:
2) A
joint
and
several
accommodation
maker
of
a
negotiable
PN
may
demand
from
the
principal
debtor
reimbursement
for
the
amount
he
paid
to
the
payee
3) A
joint
and
several
accommodation
maker
who
pays
the
said
PN
may
directly
demand
reimbursement
from
his
co-accommodation
maker
without
first
directing
his
action
against
the
principal
debtor,
provided
that:
a. He
made
the
payment
by
virtue
of
a
judicial
demand,
or
b. The
principal
debtor
is
insolvent
In
the
case
at
bar,
CA
found
Sadayas
payment
to
BPI
as
voluntary
and
without
any
judicial
demand.
Also,
there
is
no
showing
that
Varona
was
insovent.
Hence,
Sadaya
DOES
NOT
have
the
right
to
demand
reimbursement
from
the
share
proportionally
owing
Sevilla.
6.
REPUBLIC
BANK
V.
EBRADA
65
SCRA
680
ZEP
M. Lorenzo
Tinio
Dominguez
Ebrada
Ebrada
Dominguez
Tinio
ISSUE:
Whether
or
not
Republic
Bank
may
recover
from
Ebrada
-
YES
As
the
last
indorser,
she
warranted
the
genuineness
of
the
signatures
of
the
payee
and
the
previous
indorsers.
The
drawee
bank
is
not
duty
bound
to
ascertain
whether
or
not
the
signatures
of
the
payee
and
the
indorsers
are
genuine.
One
who
1
Drawer:
BT
Drawee:
Republic
Bank
Lorenzo,
Dominguez,
Ebrada
Indorsers: R.
RB
Sec. 24 -50
FACTS
MARTIN LORENZO;
JUSTINA TINIO;
MAURICIA T. EBRADA;
Republic
Bank
was
later
advised
by
Bureau
of
Treasury
that
the
alleged
indorsement
on
the
reverse
side
of
the
check
by
the
payee,
Martin
Lorenzo
was
a
forgery because
Martin
Lorenzo
had
allegedly
died
prior
to
the
issuance
of
the
check.
Sec. 24 -50
Ebrada
claimed
that
she
was
holder
in
due
course
or
at
the
very
least
she
has
acquired
her
rights
from
a
holder
in
due
course
and
was
entitled
to
the
proceeds
thereof.
Republic
Bank
should
suffer
the
loss
when
it
paid
the
amount
of
the
check
in
question
to
Ebrada,
but
it
has
the
remedy
to
recover
from
the
latter
the
amount
it
paid
to
her.
As
last
indorser
of
the
check,
Ebrada
has
warranted
that
she
has
good
title
to
it
even
she
did
not
have
it
because
the
payee
of
the
check
was
already
dead
11
years
before
the
check
was
issued.
The
fact
that
immediately
after
receiving
title
cash
proceeds
of
the
check
in
question
in
the
amount
of
P1,246.08
from
the
Republic
Bank,
she
turned
over
amount
to
the
other
parties,
she
is
not
exempt
her
from
liability.
She
acted
as
an
accommodation
party
in
the
check
for
which
she
is
also
liable
under
section
29
of
NIL
.
o
ISSUE
Whether
or
not
Republic
Bank
may
recover
from
Ebrada?
Generally,
does
the
existence
of
one
forged
signature
render
void
all
the
other
negotiations
of
the
check
with
respect
to
the
other
parties
whose
signature
are
genuine?
HELD
Only
the
negotiation
based
on
the
forged
or
unauthorized
signature
is
inoperative.
Negotiation
of
the
check
from
Martin
Lorenzo,
the
original
payee,
to
the
second
indorser,
should
be
declared
of
no
affect.
But
the
negotiation
to
Adelaida
Dominguez,
the
third
indorser,
and
from
Adelaida
Dominguez
to
the
defendant-appellant
who
did
not
know
of
the
forgery,
should
be
considered
valid
and
enforceable,
barring
any
claim
of
forgery.
HELD
As
last
indorser,
Ebrada
was
supposed
to
have
warranted
that
she
has
good
title
to
said
check;
o
The
signature
of
the
original
payee
of
the
check,
Martin
Lorenzo
was
a
forgery
because
he
was
already
dead
7
almost
11
years
before
the
check
in
question
was
issued
by
the
Bureau
of
Treasury.
o
Sec. 24 -50
The
drawee
of
a
check
can
recover
from
the
holder
the
money
paid
to
him
on
a
forged
instrument.
The
reason
for
allowing
the
drawee
bank
to
recover
from
the
encasher
is:
Sec. 24 -50
Emergency
Recit:
Paler
bought
a
TV
set
from
United.
To
secure
payment
thereof,
he
issued
a
promissory
note
for
the
amount
of
P2,690
and
constituted
a
chattel
mortgage
on
said
TV.
Paler
sold
said
TV.
Pursuant
to
a
violation
of
the
chattel
mortgage,
United
filed
a
criminal
action
against
Paler
for
estafa.
Paler
and
de
la
Rama,
as
an
accommodation
party,
settled
the
criminal
case
extra-judicially
by
issuing
another
promissory
note.
United
made
repeated
demands,
but
Paler
and
de
la
Rama
failed
to
pay.
CFI
rendered
judgment
sentencing
Paler
and
de
la
Rama
to
pay
United
with
the
addition
of
interest
and
attorneys
fees.
Paler
and
de
la
Rama,
claim
in
their
appeal
that
the
complaint
should
have
been
dismissed
because
the
obligation
sought
to
be
enforced
by
United
against
them
arose
or
was
incurred
in
consideration
for
the
compounding
of
a
crime.
Under
the
law
and
jurisprudence,
there
can
be
no
recovery
against
de
la
Rama
who
incidentally
appears
to
have
been
an
accommodation
signer
only
of
the
promissory
note
which
is
vitiated
by
the
illegality
of
the
cause.
However,
the
same
cannot
be
said
against
Paler
who
had
another
obligation
to
United
aside
from
the
promissory
note.
Appeal
from
a
decision
of
the
CFI
of
Manila
Facts:
-
January
1962:
Jose
Paler
and
his
wife
(Paler)
purchased
from
United
General
Industries,
Inc.
(United)
1
Zenith
23
television
set
on
an
instalment
basis.
-
To
secure
payment
of
the
purchase
price,
Paler
issued
a
promissory
note
for
the
amount
of
P2,690
and
constituted
a
chattel
mortgage
on
said
TV
set.
-
Pursuant
to
a
violation
of
the
terms
and
conditions
of
the
chattel
mortgage
(Paler
sold
the
TV
set),
United
filed
a
criminal
action
against
Paler
for
estafa.
-
Paler
and
his
co-accused,
Jose
de
la
Rama
(de
la
Rama)
settled
the
criminal
case
extra-judicially
and
executed
in
Uniteds
favour
a
promissory
note
for
the
amount
of
P3,083.58
(issued
by
de
la
Rama
as
an
accommodation
party).
-
United
made
repeated
demands
for
payment,
Paler
and
de
la
Rama
failed
to
pay
the
aforementioned
amount
with
1%
interest
per
month
from
April
11,1964.
Paler
and
de
la
Rama
admit
the
fact
that
they
executed
a
promissory
note
dated
April
11,
1964
in
favor
of
plaintiff
in
the
amount
of
P3,083.58,
with
12%
interest
per
annum.
They
further
admit
the
fact
that
said
obligation
has
not
been
paid
the
plaintiff
notwithstanding
repeated
demands
made.
CFI
rendered
judgement,
sentencing
said
Paler
and
de
la
Rama
to
pay
United
the
sum
of
P3,083.58,
with
12%
interest
thereon
per
annum
from
the
date
the
complaint
was
filed
on
October
14,
1965
until
full
payment
is
made
and
attorney's
fees
in
the
sum
of
P250.00.
With
costs.
Issue:
W/N
the
complaint
should
be
dismissed
(only
in
relation
to
de
la
Rama
for
he
was
an
accommodation
party)
Ratio:
-
Paler
and
de
la
Rama,
claim
in
their
appeal
that
the
complaint
should
have
been
dismissed
because
the
obligation
sought
to
be
enforced
by
United
against
them
arose
or
was
incurred
in
consideration
for
the
compounding
of
a
crime.
o Arroyo
v
Berwin:
an
agreement
to
stifle
the
prosecution
of
a
crime
is
manifestly
contrary
to
public
policy
and
due
administration
of
justice
and
will
not
be
enforced
in
a
court
of
law.
-
Under
the
law
and
jurisprudence,
there
can
be
no
recovery
against
Jose
de
la
Rama
who
incidentally
appears
to
have
been
an
accommodation
signer
only
of
the
promissory
note
which
is
vitiated
by
the
illegality
of
the
cause.
-
But
it
is
different
with
Jose
Paler
who
did
not
pay
for
the
TV
set
and
even
sold
the
set
without
the
written
consent
of
the
mortgagee
which
accordingly
brought
about
the
filing
of
the
estafa
case.
He
has
an
obligation
independent
of
the
promissory
note
which
was
co-signed
by
Jose
de
la
Rama.
For
Paler
to
escape
payment
of
a
just
obligation
will
result
in
unjust
enrichment
at
the
expense
of
another.
-
Art
19
Civil
Code:
Every
person
must,
in
the
exercise
of
his
rights
and
in
the
performance
of
his
duties,
act
with
justice,
give
everyone
his
due,
and
observe
honesty
and
good
faith.
Art.
2208:
attorney's
fees
and
Sec. 24 -50
contemplated
in
Section
29
of
the
NIL.
This
is
because
PNB
acted
with
bad
faith
and
thus
cannot
be
considered
a
holder
in
due
course.
I.
Facts
This
is
a
petition
for
review
seeking
to
annul
the
decision
of
the
Intermediate
Appellate
Court,
affirming
the
order
of
the
trial
court
which
dismissed
the
petitioners'
complaint
for
cancellation
of
their
real
estate
mortgage
and
held
them
jointly
and
severally
liable
with
the
principal
debtors
on
a
promissory
note
which
they
signed
as
accommodation
makers.
The
Prudencios
are
the
registered
owners
of
a
parcel
of
land
located
in
Sampaloc,
Manila,
The
Concepcion
&
Tamayo
Construction
Company
(Company),
had
a
pending
contract
with
the
Bureau
of
Public
Works,
(Bureau):
o For
the
construction
of
the
municipal
building
in
Puerto
Princess,
Palawan,
o Consideration
in
the
amount
of
P36,800.00.
Since
the
Company
needed
funds
for
said
construction,
Toribio,
Prudencios
relative,
and
attorney-in-fact
of
the
Company,
approached
the
Prudencios
and
asked
them
to
mortgage
their
property
to
secure
the
loan
of
P10,000.00
with
the
PNB.
After
some
persuasion,
Prudencios
signed
the
'Amendment
of
Real
Estate
Mortgage',
o Mortgaging
their
said
property
to
the
PNB
to
guaranty
the
loan
of
P10,000.00
extended
to
the
Company.
o Registered
with
the
Register
of
Deeds
of
Manila.
The
promissory
note
covering
the
loan
of
P10,000.00
maturing
on
April
27,
1956,
was
signed
by
Toribio
and
by
the
Prudencios.
o Prudencios
also
signed
the
portion
of
the
promissory
note
indicating
that
they
are
requesting
the
PNB
to
issue
the
Check
covering
the
loan
to
the
Company.
Sec. 24 -50
On
the
same
date
(December
23,
1955)
that
the
'Amendment
of
Real
Estate
Mortgage'
was
executed,
Toribio
executed
also
the
'Deed
of
Assignment':
o Assigning
all
payments
to
be
made
by
the
Bureau
to
the
Company
on
account
of
the
contract
for
the
construction
of
the
Puerto
Princesa
building
in
favor
of
the
PNB
to
be
applied
as
payment
of
the
loan.
Despite
the
instructions
in
the
Deed
of
Assignment,
the
Bureau,
with
the
concurrence
of
the
PNB,
applied
the
payments
to
the
labor
and
materials
used
in
the
Palawan
Project.
o The
Bureau
made
three
payments
to
the
Company
on
account
of
the
contract
price
totaling
P11,234.40.
o The
Bureau's
last
request
for
P5,000.00
on
June
20,
1956,
however,
was
denied
by
the
PNB
for
the
reason
that
since
the
loan
was
already
overdue
as
of
April
28,
1956,
the
remaining
balance
of
the
contract
price
should
be
applied
to
the
loan.
The
Company
abandoned
the
work,
as
a
consequence
of
which,
the
Bureau
rescinded
the
construction
contract
and
assumed
the
work
of
completing
the
building.
Subsequently,
the
Prudencios
wrote
the
PNB
contending
that
since
the
PNB
authorized
payments
to
the
Company
instead
of
on
account
of
the
loan
guaranteed
by
the
mortgage,
there
was
a
change
in
the
conditions
of
the
contract
without
the
knowledge
of
Prudencios,
which
entitled
the
latter
to
a
cancellation
of
their
mortgage
contract.
o Failing
in
their
bid
to
have
the
real
estate
mortgage
cancelled,
the
Prudencios
filed
an
action
against
the
PNB,
the
Company,
Toribio,
and
the
District
Engineer
of
Puerto
Princesa,
Palawan,
seeking
the
cancellation
of
their
real
estate
mortgage.
TRIAL
COURT
Trial
court
rendered
judgment,
denying
the
prayer
in
the
complaint
that
the
Prudencios
be
absolved
from
their
obligation
under
the
mortgage
contract
and
that
the
said
mortgage
be
released
or
cancelled.
o Prudencios
were
ordered
to
pay
jointly
and
severally
with
their
co-makers
Ramon
C.
Concepcion
and
Manuel
M.
Tamayo
(partners
of
the
now
defunct
Company)
the
sum
of
P11,900.19
with
legal
interest
CA
The
CA
affirmed
the
trial
court's
decision
in
toto
stating
that,
o As
accommodation
makers,
the
Prudencios
liability
is
that
of
solidary
co-makers,
and
o That
since
"the
amounts
released
to
the
construction
company
were
used
therein
and,
therefore,
were
spent
for
the
successful
accomplishment
of
the
work
constructed
for,
the
authorization
made
by
the
PNB
of
partial
payments
to
the
Company
which
was
also
one
of
the
solidary
debtors
cannot
constitute
a
valid
defense
on
the
part
of
the
other
solidary
debtors.
o Moreover,
those
who
rendered
services
and
furnished
materials
in
the
construction
are
preferred
creditors
and
have
a
lien
on
the
price
of
the
contract."
o Further,
PNB
had
no
obligation
whatsoever
to
notify
the
Prudencios
of
its
authorizing
the
three
payments
in
the
total
amount
of
P11,234.00
in
favor
of
the
Company
because
aside
from
the
fact
that
the
Prudencios
were
not
parties
to
the
deed
of
assignment,
there
was
no
stipulation
in
said
deed
making
it
obligatory
on
the
part
of
the
PNB
to
notify
the
Prudencios
every
time
it
authorizes
payment
to
the
Company.
o CA
ruled
that
the
Prudencios
cannot
ask
to
be
released
from
the
REM.
II.
Issues
III.
Sec. 24 -50
IV.
Ratio
SC
Addresses
Both
Contentions
Section
29
of
the
Negotiable
Instrument
Law:
Liability
of
accommodation
party.
An
accommodation
party
is
one
who
has
signed
the
instrument
as
maker,
drawer,
acceptor,
or
indorser,
without
receiving
value
therefor,
and
for
the
purpose
of
lending
his
name
to
some
other
person.
Such
a
person
is
liable
on
the
instrument
to
a
holder
for
value,
notwithstanding
such
holder
at
the
time
of
taking
the
instrument
knew
him
to
be
only
an
accommodation
party.
Sec. 24 -50
In
the
case
at
bar,
can
PNB,
the
payee
of
the
promissory
note
be
considered
a
holder
in
due
course?
Sec. 24 -50
9.
CRISOLOGO
V.
SANTOS
and
CA
NORBY
Emergeny
Recit:
A
check
was
issued
by
ATTY.
BENARES,
in
accommodation
of
his
(personal)
CLIENTS,
to
JOSE.
The
check
used
was
one
of
Mover
Enterprises,
of
which
BENARES
is
a
President
of,
and
SANTOS
is
the
VP.
This
check
was
eventually
dishonored
for
lack
of
funds.
JOSE
refused
a
check
issued
to
replace
the
dishonored
check,
and
so
these
funds
were
consigned
to
the
court.
JOSE
avers
the
SANTOS
is
not
the
accommodation
party
here,
but
it
is
actually
Mover
Enterprises.
Court
ruled
that
it
is
indeed
SANTOS
who
is
the
accommodation
party,
given
that
he
co-signed
(with
BENARES)
the
check
as
maker.
Assuming
arguendo
that
Mover
is
the
accommodation
party,
no
recourse
against
it
can
be
had
because
the
act
of
a
corporation
in
signing
as
an
accommodation
party
is
null
and
void,
these
being
ultra
vires.
In
other
words,
Sec.
29
of
the
NIL
does
not
apply
to
corporations.
Facts:
The
parties
are
substantially
agreed
on
the
following
facts
as
found
by
both
lower
courts:
In
1980,
plaintiff
Ricardo
S.
Santos,
Jr.
was
the
vice-president
of
Mover
Enterprises,
Inc.
in-charge
of
marketing
and
sales;
President
of
the
said
corporation
was
Atty.
Oscar
Z.
Benares
(BENARES).
On
April
30,
1980,
ATTY.
BENARES,
in
accommodation
of
his
clients,
the
spouses
Jaime
and
Clarita
Ong
(CLIENTS),
issued
a
Check
drawn
against
Traders
Royal
Bank,
dated
June
14,
1980,
in
the
amount
of
P45,000.00.
Check
was
payable
to
defendant
Ernestina
Crisologo-Jose
(JOSE).
Since
the
check
was
under
the
account
of
Mover
Enterprises,
Inc.,
the
same
was
to
be
signed
by
its
president,
BENARES,
and
the
treasurer
of
the
said
corporation.
However,
since
at
that
time,
the
treasurer
of
Mover
Enterprises
was
not
available,
Atty.
Benares
prevailed
upon
the
plaintiff,
Ricardo
S.
Santos,
Jr.
(SANTOS),
to
sign
the
aforesaid
check
as
an
alternate
story.
This
he
did.
It
appears
this
check
was
issued
to
Jose
in
consideration
of
a
waiver
by
Jose
over
a
property
which
the
GSIS
agreed
to
sell
to
the
clients
of
Benares.
Upon
approval
of
the
GSIS
of
a
certain
compromise
with
the
Clients,
the
check
can
be
encashed.
However,
since
the
compromise
agreement
was
not
approved
on
time,
so
Benares
signed
and
issued
a
replacement
check.
This
was
for
the
same
amount,
same
payee
(Jose),
and
signed
also
by
VP
Santos.
When
Jose
deposited
this,
it
was
dishonored
for
insufficiency
of
funds.
A
subsequent
redepositing
of
the
said
check
was
likewise
dishonored
by
the
bank
for
the
same
reason.
Hence,
defendant
through
counsel
was
constrained
to
file
a
criminal
complaint
for
violation
of
Batas
Pambansa
Blg.
22
with
the
Quezon
City
Fiscal's
Office
against
Atty.
Oscar
Z.
Benares
and
plaintiff
Ricardo
S.
Santos,
Jr.
Meanwhile,
during
the
preliminary
investigation
of
the
criminal
charge
against
Benares
and
Santos,
Santos
tendered
cashier's
check
for
P45,000.00
dated
April
10,
1981
to
the
defendant
Jose.
This
cashiers
check
was
purchased
by
Benares
and
given
to
Santos
to
be
applied
as
payment
of
the
dishonored
check.
The
defendant
refused
to
receive
the
cashier's
check
in
payment
of
the
dishonored
check
in
the
amount
of
P45,000.00.
Hence,
plaintiff
encashed
the
aforesaid
cashier's
check
and
subsequently
deposited
(consigned)
said
amount
of
P45,000.00
with
the
Clerk
of
Court.
Trial
Court
said
consignation
here
is
not
proper.
Court
of
Appeals
reversed
and
set
aside
said
judgment
of
dismissal
and
revived
the
complaint
for
consignation,
directing
the
trial
court
to
give
due
course
thereto.
Issues:
Sec. 24 -50
1. W/N
Court
of
Appeals
erred
in
holding
that
SANTOS,
one
of
the
signatories
of
the
check
issued
under
the
account
of
Mover
Enterprises,
Inc.,
is
an
accommodation
party
under
the
Negotiable
Instruments
Law
and
a
debtor
of
JOSE
to
the
extent
of
the
amount
of
said
check.
(i.e.
whether
the
accommodation
party
is
Mover
Enterprises
or
Santos)
-
SANTOS
IS
ACCOMMODATION
PARTY
2. W/N
the
CA
erred
in
ruling
that
the
consignation
done
by
Santos
was
proper.
-
YES
3. W/N
the
CA
virtually
prejudged
the
criminal
aspects
of
this
case
in
this
civil
suit
and
is
incorrect
in
doing
so.
-
YES
Ratio:
The
pertinent
provision
of
said
law
referred
to
provides:
Sec.
29.
Liability
of
accommodation
party
--
an
accommodation
party
is
one
who
has
signed
the
instrument
as
maker,
drawer,
acceptor,
or
indorser,
without
receiving
value
therefor,
and
for
the
purpose
of
lending
his
name
to
some
other
person.
Such
a
person
is
liable
on
the
instrument
to
a
holder
for
value,
notwithstanding
such
holder,
at
the
time
of
taking
the
instrument,
knew
him
to
be
only
an
accommodation
party.
Consequently,
to
be
considered
an
accommodation
party,
a
person
must
(1)
be
a
party
to
the
instrument,
signing
as
maker,
drawer,
acceptor,
or
indorser,
(2)
not
receive
value
therefor,
and
(3)
sign
for
the
purpose
of
lending
his
name
for
the
credit
of
some
other
person.
Based
on
the
foregoing
requisites,
it
is
not
a
valid
defense
that
the
accommodation
party
did
not
receive
any
valuable
consideration
when
he
executed
the
instrument.
From
the
standpoint
of
contract
law,
accommodation
party
differs
from
the
ordinary
concept
of
a
debtor
therein
in
the
sense
that
he
has
not
received
any
valuable
consideration
for
the
instrument
he
signs.
Nevertheless,
he
is
liable
to
a
holder
for
value
as
if
the
contract
was
not
for
accommodation
in
whatever
capacity
such
accommodation
party
signed
the
instrument,
whether
primarily
or
secondarily.
Thus,
it
has
been
Sec. 24 -50
therefrom.
Travel-On
delivered
to
Miranda
various
tickets,
which
were
paid
for
by
Miranda
using
6
post
dated
checks.
The
checks
were
dishonored
by
drawee
banks.
Miranda
claims
that
the
checks
were
just
were
issued
for
accommodation
(check
below)
and
only
for
show,
and
he
had
already
fulfilled
his
obligationand
in
fact
had
overpaid.
Travel-On
meanwhile
alleges
that
the
postdated
checks
are
evidence
that
Miranda
still
has
a
standing
obligation
to
them.
Trial
court
and
CA
ruled
for
Miranda.
Issue:
W/N
the
postdated
checks
are
per
se
evidence
of
liability
on
the
part
of
Miranda
to
Travel-On?
Held:
Yes.
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.
Miranda
has
the
burden
to
prove
that
he
has
no
obligation
under
the
checks.
SC
rules
for
Travel-On.
I.
FACTS
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
travel-
on.
o He
procured
tickets
from
petitioner
on
behalf
of
airline
passengers
and
derived
commissions
therefrom.
Travel-On
filed
suit
before
the
CFI
of
Manila
to
collect
on
6
checks
issued
by
Miranda
with
a
total
face
amount
of
P115,000.00.
The
complaint
averred
that
Travel-On
sold
and
delivered
various
airline
tickets
to
Miranda
at
a
total
price
of
P278,201.57;
o Miranda
paid
some
in
cash,
and
further
issued
6
postdated
checks
amounting
to
P115,000.00
which
were
all
dishonored
by
the
drawee
banks.
Miranda,
claimed
that
he
had
already
fully
paid
and
even
overpaid
his
Sec. 24 -50
CFI:
Ruled
in
favor
of
Miranda,
ordering
Travel-On
to
pay
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.
CA:
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.
Issue:
W/N
the
postdated
checks
are
per
se
evidence
of
liability
on
the
part
of
Miranda
to
Travel-On?
Held:
YES
Ratio:
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
Travel-On
did
not
show
that
Miranda
had
an
outstanding
balance
of
P115,000.00
which
is
the
total
amount
of
the
checks
he
issued.
The
lower
courts
ruled
against
Travel-On
because
the
figures
representing
private
respondent's
unpaid
accounts
found
in
the
"Schedule
of
Outstanding
Account"
did
not
tally
with
the
figures
found
in
the
statement
which
showed
Mirandas
indebtedness.
o SC
however
said
that
it
was
simply
not
updated
and
that
a
simple
examination
would
lead
one
to
the
correct
figure.
The
fact
alone
that
the
various
statements
of
account
had
variances
in
figures,
simply
did
not
mean
that
private
Miranda
had
no
more
financial
obligations
to
Travel-on.
It
must
be
stressed
that
Mirandas
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.
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.
o The
mere
introduction
of
the
instrument
sued
on
in
evidence
prima
facie
entitles
the
Travel-On
to
recovery.
o 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.
Sec. 24 -50
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.
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,
that
the
checks
were
supported
by
valuable
consideration.
o Private
respondent
maker
of
the
checks
did
not
successfully
rebut
these
presumptions.
o The
only
evidence
aliunde
that
private
respondent
offered
was
his
own
self-serving
uncorroborated
testimony.
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.
o 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.
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
Miranda
who
issued
bad
checks
and
then
pretended
to
have
"accommodated"
petitioner's
Sec. 24 -50
P1,392,
600.00
CA
Reversed
the
decision
of
RTC.
Hipolitos
did
not
accommodate
Pilarita
but
the
TSLB,
whose
lending
authority
was
restricted
by
the
size
of
its
loan
portfolio.
The
Hipolitos
were
relieved
from
any
liability
to
TSLB
ISSUE/HELD
Sec. 24 -50
W/N
the
Hipolitos
are
liable
on
the
promissory
note
which
they
executed
in
favor
of
the
petitioner.
YES.
RATIO:
An
accommodation
party
is
one
who
has
signed
the
instrument
as
marker,
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.
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.
(The
Phil.
Bank
of
Commerce
vs.
Aruego,
102
SCRA
530,
539,
540.)
Hipolitos
signed
the
promissory
note
in
order
to
enable
Reyesto
borrow
the
total
sum
of
P1.4
million
from
TSLB.
The
actual
beneficiary
of
the
loan
was
Reyes
and
no
other.
The
Hipolitos
accommodated
her
by
signing
a
promissory
note
for
half
of
the
loan
that
she
applied
for
because
TSLB
may
not
lend
any
single
borrower
more
than
the
authorized
limit
of
its
loan
portfilio.
Under
Section
29
of
the
Negotiable
Instruments
Law,
the
Hipolitos
are
liable
to
the
bank
on
the
promissory
note
that
they
signed
to
accommodate
Pilarita.
Hipolitos
allegation
that
it
was
the
banks
president
who
induced
him
to
sign
the
PN
was
uncorroborated
by
any
evidence
on
record.
Their
intention
in
signing
was
for
Reyes
to
be
able
to
obtain
the
full
amount
of
the
loan
that
she
needed.
No
agreement
here,
written
or
verbal,
that
in
signing
the
promissory
note,
Hipolitos
were
acting
as
agents
for
the
money
lender
the
Bank.
The
consideration
of
the
note
signed
by
the
Hipolitos
was
received
by
them
through
Pilarita.
They
acted
as
agents
of
Pilarita,
not
of
the
bank.
They
signed
the
promissory
note
as
favor
to
Pilarita,
to
help
her
raise
the
funds
that
she
needed.
It
was
Pilarita
whom
they
accommodated,
not
the
bank,
contrary
to
the
erroneous
finding
of
the
appellate
court.
WHEREFORE,
the
petition
for
review
is
GRANTED.
The
appealed
decision
of
the
Court
of
Appeals
is
hereby
REVERSED
and
that
of
the
trial
court
is
REINSTATED.
Costs
against
the
private
respondents.
SO
ORDERED.
Cruz,
Bellosillo
and
Quiason,
JJ.,
concur.
Doctrines:
o An
accommodation
party
is
one
who
has
signed
the
instrument
as
marker,
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.
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.
o Under
Section
29
of
the
Negotiable
Instruments
Law,
the
Hipolitos
are
liable
to
the
bank
on
the
promissory
note
that
they
signed
to
accommodate
Pilarita.
12.
CLAUDE
P.
BAUTISTA
V.
AUTO
PLUS
TRADERS
2008
GR
166405
LEX
Emergency
Recit:
Bautista,
as
President
and
Presiding
Officer
of
Cruiser
Bus
Lines
and
Transport
Corporation,
purchased
various
spare
parts
from
Auto
Plus
Traders,
Inc.
and
issued
2
postdated
checks
to
cover
his
purchases.
The
checks
were
subsequently
dishonored.
Bautista
was
charged
for
violation
of
BP22.
According
to
Auto
Plus,
Sec. 24 -50
Bautista,
by
issuing
his
check
to
cover
the
obligation
of
the
corporation,
became
an
accommodation
party.
The
Court
held
that
there
is
no
agreement
that
Bautista
shall
be
held
liable
for
the
corporation's
obligations
in
his
personal
capacity.
The
third
requisite
in
Sec.29
of
NIL
is
lacking
in
this
case.
Hence,
without
clear
proof,
Bautista
cannot
be
held
liable
for
the
value
of
the
two
checks
issued.
August
06,
2008
QUISUMBING,
J.:
I.
FACTS
Bautista,
as
President
and
Presiding
Officer
of
Cruiser
Bus
Lines
and
Transport
Corporation,
purchased
various
spare
parts
from
Auto
Plus
Traders,
Inc.
and
issued
2
postdated
checks
to
cover
his
purchases.
The
checks
were
subsequently
dishonored.
Auto
Plus
then
executed
an
affidavit-complaint
for
violation
of
BP.22.
Information
states
that
Bautista:
xxx
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.
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
xxx
Bautista
pleaded
not
guilty.
MTC:
Bautista
guilty.
Ordered
to
pay
Auto
Plus
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.
RTC:
Modified
decision.
Bautista
directed
to
pay
the
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.
Issue
Whether
the
CA
erred
in
upholding
the
RTC's
ruling
that
Bautista,
as
an
officer
of
the
corporation,
is
personally
and
civilly
liable
to
Auto
Plus
for
the
value
of
the
two
checks.
Held:
Bautista
is
not
liable,
Cruiser
Bus
Lines
and
Transport
Corporation
is.
Sec. 24 -50
Ratio:
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.
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. 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
Bautista
shall
be
held
liable
for
the
corporation's
obligations
in
his
personal
capacity.
Hence,
he
cannot
be
held
liable
for
the
value
of
the
two
checks
issued.
Bautista
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.
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. 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
Bautista
signed
Check
No.
58832,
which
is
drawn
against
his
personal
account.
There
is
no
showing
in
what
capacity
Bautista
issued
the
check.
In
the
absence
of
concrete
evidence
it
cannot
just
be
assumed
that
he
intended
to
lend
his
name
to
the
corporation.
Hence,
Bautista
cannot
be
considered
as
an
accommodation
party.
13.
SIAIN
ENTERPRISES
INC.
V
CUPERTINO
REALTY
GR
170782
20091
GEORGINA
EMERGENCY
RECIT
Siain
and
Cupertino
entered
into
a
contract
of
loan
for
35M
secured
by
a
PN
and
a
REM
to
be
used
as
payment
for
Siain's
obligations
to
DBP.
They
later
on
amended
the
PN
by
adding
a
17%
interest
per
annum.
After
a
while,
Siain
signed
another
PN
for
160M
with
a
30%/annum
compounding
interest
in
favour
of
Cupertino,
with
Siain's
president
Cue
Le
Leng
signing
in
behalf
of
Siain
and
as
a
co-maker.
Then,
they
amended
the
REM
to
reflect
the
additional
160M
loan.
thus,
197M
was
annotated.
However,
Siain
demanded
from
Cupertino
to
release
the
160M,
but
Cupertino
said
that
it
had
already
done
so,
even
before
Siain
signed
the
2nd
PN.
Cupertino
foreclosed
the
REM
and
Siain
filed
for
a
restraining
order.
Siain
contends
that
the
PN
was
made
without
a
consideration
since
Cupertino
failed
to
release
the
160M.
Thus,
the
PN
and
foreclosure
of
the
REM
was
void.
However,
SC
ruled
that
the
PN
on
its
face
is
presumed
to
be
for
a
valuable
consideration,
and
he
that
declares
otherwise
has
the
burden
of
proof.
Moreover,
between
the
verbal
denial
of
Siain
and
the
evidence
of
Cupertino
(which
is
the
series
of
transaction),
the
latter
has
more
bearing.
(Corp)
The
160M
was
received
by
Siain
through
its
affiliate
companies
(Siain
Transport
Inc
and
Yuyek
Manufacturing),
they
have
the
same
incorporators
and
board
of
Sec. 24 -50
-made
payments
of
7.9M
as
initial
payment
and
29M
as
balance,
but
Cupertino
refused,
saying
7.9M
only
applies
to
the
interest
-amended
REM,
for
the
additional
loan
of
160M,
however,
even
after
registration
of
REM,
Cupertino
still
did
not
release
said
amount.
-Cupertino:
-there
was
a
stipulated
interest
of
17%
-
no
payment
was
ever
made
-Siain
has
already
received
the
amount
of
prior
to
the
execution
PN
and
amendment
of
REM
-Pre-trial
was
conducted
but
no
agreement
was
reached.
TC
and
COA
=
foreclosure
was
valid,
amended
REM
had
a
consideration,
Siain
received
the
160M
ISSUE
WON
there
was
a
valuable
consideration
given
for
the
PN-yes
RATIO:
All
the
loan
documents,
on
their
face,
unequivocally
declare
petitioners
indebtedness
to
Cupertino:
1.
Promissory
Note
dated
April
10,
1995,
prefaced
with
a
[f]or
value
received,
and
the
escrow
arrangement
for
the
release
of
the
P37,000,000.00
obligation
in
favor
of
DBP,
another
creditor
of
petitioner.
2.
Mortgage
likewise
dated
April
10,
1995
executed
by
petitioner
to
secure
its
P37,000,000.00
loan
obligation
with
Cupertino.
3.
Amendment
to
Promissory
Note
for
P37,000,000.00
dated
April
12,
1995
which
tentatively
sets
the
interest
rate
at
seventeen
percent
(17%)
per
annum.
Sec. 24 -50
Loan
proceeds
were
used
by
Siain
affiliate
companies
(Siain
Transport
Inc
and
Yuyek
Manufacturing)
even
some
of
the
items
under
the
mortgages
were
properties
of
its
affiliate
companies
SIAIN
ENTERPRISES,
INC.
v.
CUPERTINO
REALTY
CORP.
and
EDWIN
CATACUTAN
Version
2
DOCTRINE:
Every
negotiable
instrument
is
deemed
prima
facie
to
have
been
issued
for
a
valuable
consideration;
and
every
person
whose
signature
appears
thereon
to
have
become
a
party
thereto
for
value.
(Sec.
24
of
the
NIL)
Disputable
presumptions
are
satisfactory
if
uncontradicted
and
not
overcome
by
other
evidence
(1)
That
there
was
sufficient
consideration
for
a
contract
and
(2)
That
a
negotiable
instrument
was
given
or
indorsed
for
a
sufficient
consideration
are
disputable
presumptions
(Rule
131,
Sec.3
of
Rules
of
Court)
FACTS:
Siain
Enterprises,
Inc.
(SIAIN)
is
engaged
in
the
manufacturing
and
retailing/wholesaling
business.
Cupertino
Realty
Corp.
(CUPERTINO)
is
engaged
in
the
realty
business.
Siain
obtained
a
loan
of
P37M
from
Cupertino
covered
by
a
promissory
note
signed
by
their
presidents,
Cua
Le
Leng
(Siain)
and
Wilfredo
Lua
(Cupertino).
o The
promissory
note
authorizes
Cupertino,
as
the
creditor,
to
place
in
escrow
the
loan
proceeds
of
P37M
with
Metropolitan
Bank
and
Trust
Company
to
pay
off
Siains
loan
obligation
with
Development
Bank
of
the
Philippines.
This
promissory
note
indicated
the
words
for
valued
received
and
the
unconditional
promise
to
pay
P37M.
o The
promissory
note
evidencing
their
loan
agreement
did
not
provide
any
stipulation
with
respect
to
interest.
o To
secure
the
loan,
Siasi
executed
a
Real
Estate
Mortgage
(2
parcels
of
land
and
other
immovables)
in
favor
of
Cupertino.
Sec. 24 -50
held
that
Siain
failed
to
overcome
and
debunk
Cupertinos
evidence
that
the
amended
real
estate
mortgage
had
a
consideration,
and
that
Siain
did
receive
the
amount
of
P160M
representing
its
incurred
obligation
to
Cupertino.
Between
bare
denial
and
negative
evidence
of
non-receipt
of
the
P160M
and
Cupertinos
affirmative
evidence
on
the
existence
of
the
consideration,
the
latter
must
be
given
more
weight
and
value.
ISSUES:
W/N
the
amended
real
estate
mortgage
is
void
as
Siain
alleges
that
they
did
not
receive
the
agreed
consideration
of
P160M.
HELD:
The
amended
real
estate
mortgage
is
valid.
RATIO:
1. All
the
loan
documents
declare
Siains
indebtedness
to
Cupertino.
These
loan
documents
presented
were:
(1)
Promissory
note
covering
P37M
prefaced
with
for
valued
received
(2)
Mortgage
executed
to
secure
the
P37M
loan
(3)
Amended
Promissory
Note
for
P37M
setting
an
interest
rate
of
17%
per
annum
(4)
Promissory
note
covering
P160M
prefaced
with
for
valued
received
(5)
Amendment
of
Real
estate
mortgage
2. From
the
chain
of
transactions,
a
presumption
has
arisen
that
the
loan
documents
were
supported
by
a
consideration.
a. Section
24
of
the
Negotiable
Instruments
Law
indicates
that
every
negotiable
instrument
is
deemed
prima
facie
to
have
been
issued
for
a
valuable
consideration;
and
every
person
whose
signature
appears
thereon
have
become
a
party
thereto
for
value.
b. Rule
131,
Section
3
of
the
Rules
of
Court
states
that
a
disputable
presumption
is
satisfactory
if
uncontradicted
and
not
overcome
by
other
evidence
i. The
disputable
presumptions
that
arose
from
the
case
are
(1)
that
there
was
sufficient
consideration
for
a
contract
and
(2)
that
a
negotiable
instrument
was
given
or
indorsed
for
a
sufficient
consideration.
c. Siain
was
not
able
to
contradict
these
presumptions.
They
failed
to
substantiate
its
claim
of
non-receipt
of
the
proceeds
of
the
P160M
loan
increase
despite
the
allowance
given
by
the
3.
Sec. 24 -50
(OTHER
ALLEGATIONS
OF
SIAIN)
1. Siain
vaguely
drew
a
theory
that
in
their
previous
loan
transaction
with
Cupertino
covered
by
the
first
promissory
note,
it
did
not
receive
the
proceeds
of
the
P37M.
a. The
court
held
that
in
this
theory,
Siain
conveniently
ignored
the
fact
that
the
first
promissory
note
secured
by
the
real
estate
mortgage
was
under
an
escrow
arrangement
and
taken
out
to
pay
its
obligation
to
DBP.
Obviously,
they
would
not
be
in
possession
of
the
proceeds
of
the
loan
for
it
was
under
such
escrow
arrangement.
b. Hence,
there
was
no
precedent
to
explain
its
stance
that
Cupertino
undertook
to
release
the
P160M
loan
only
after
it
had
first
signed
the
Amended
Real
Estate
Mortgage.
(NOT
CONNECTED
TO
NEGO)
ISSUE:
W/N
the
doctrine
of
piercing
the
veil
of
corporate
fiction
should
be
applied
in
this
case
HELD:
Yes,
it
should
be
applied.
RATIO:
A
corporations
separate
and
distinct
legal
personality
may
be
disregarded
and
the
veil
of
corporate
fiction
pierced
when
the
notion
of
legal
entity
is