GONZALEZ v PCIB
GR 180257 February 23, 2011
J. Velasco
TOPIC: Liabilities of an Accommodation Party
DOCTRINE: The Accommodation party is immediately, equally, and
absolutely bound for the loan granted to the accommodated party
even though the former did not acquire any proceeds of loan
RECIT- READY/ SUMMARY: Gonzales acted as accommodation party
to accommodate Sps. Panlilio in obtaining loan from PCIB. Sps.
Panlilio failed to pay their obligation. Now, PCIB is demanding
payment from Gonzales since he is the accommodation party. Being
an accommodation party cannot be used as a defense to escape
liability when the accommodated party fails to pay.
FACTS
 Gonzales was a client of PCIB for 15 years before he instituted
a case against the bank. His account was handled by Edna
Ocampo until she was replaced by Roberto Noceda
 PCIB granted a credit line to Gonzales through the execution of
Credit-On-Hand Loan Agreement with PCIB served as collateral
for and his availment limit under the credit line.
 Gonzales drew from said credit line through the issuance of
check. At the institution of the instant case, Gonzales had a
Foreign Currency Deposit (FCD) of USD 8,715.72 with PCIB.
 3 loans obtained by Gonzales and Spouses Panlilio with PCIB
Promissory Note For 500,000 loan Signed by Gonzales
(PN) BD-090-1766- and his wife,
95 Jessica
PN BD-090-212-95 For 1,000,000 loan Signed by Gonzales
and Sps. Panlilio
PN BD- 090-011-96 For 300,000 loan Signed by Gonzales
and Sps. Panlilio
 To secure the abovementioned loans amounting to 1,800,000,
a Real Estate Mortgage (REM) was executed over a parcels of
land
 It is specifically provided in the PN that Gonzales and Sps.
Panlilio shall be solidary liable for the payment of the loans
although it was only Sps. Panlilio who received the whole
proceeds of the loan
 Sps. Panlilio had been diligent in paying its obligation.
However, starting July 1998, the Spouses defaulted in the
payment of the periodic interest dues
 Because of this, PCIB called the attention of Gonzales to
demand payment of interest die.
 Later on, Gonzales issued a check in favor of Unson for 250,000
drawn against the credit line. However, when it was presented
for payment, it was dishonored by PCIB due to the termination
by PCIB of the credit line.
- The termination of the credit line was due to unpaid
periodic interest due from the 3 loans obtained by them
 Due to PCIB’s act of dishonoring the checks, it prompted
Gonzales to write PCIB in order to:
a. insist that the check he issued had been fully funded,
b. demand the return of the proceeds of his FCD
c. seek damages for the unjust dishonor of the check
 Despite of repeated demands made by Gonzales, PCIB stood its
ground in freezing Gonzales accounts even though Gonzales
had reminded PCIB that the bank knew very well that the
actual borrowers were the Spouses Panlilio and Gonzales never
benefited from the proceeds of the loan
 PCIBs refusal to heed his demands compelled Gonzales to file
the herein case for damages with the RTC on ground of alleged
unjust dishonor of the check issued in favor of Unson
 RULING OF RTC: In favor of PCIB
 RULING OF CA: Affirmed RTC Decision in toto
a. CA confirmed RTC’s findings that Gonzales was indeed
solidarily liable with Sps. Panlilio for the 3 PNs executed
 b. PCIB was not at fault nor negligent in dishonoring the
check
ISSUES
 WON Gonzales is liable for the 3 PNs covering the 1,800,000
loan he made with the Sps. Panlilio despite the fact the he did
not obtain any proceeds from the loan
c. he must sign for the purpose of lending his name or credit 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, as if the
contract was not for accommodation

HELD
 Gonzales is liable for the loans covered by the 3 PNs. Reasons:
a. Based on the abovementioned PNs, the first note was
signed by Gonzales and his wife ad borrowers, while the 2
other PNs showed that Sps. Panlilio sign as borrowers.
With this, it is very evident that Gonzales signed, as
borrower, the promissory notes covering the 1.8 loan
despite not having received any of the proceeds
b. As provided by the records of PCIB, Gonzales signed as
borrower and co-borrower on the PNs with the proceeds
of the loans going to the Sps. Panlilio; with this, Gonzales
has extended an accommodation to Sps, Panlilio
c. As an accommodation party, Gonzales is solidarily liable
with the Spouses Panlilio for the loans
d. The solidary liability of Gonzales is clearly stipulated in the
promissory notes which uniformly begin,
“ For value received, the undersigned jointly and severally
promise to pay
 THUS, since Gonzales is an accommodation party, he is
immediately, equally, and absolutely bound with the Sps.
Panlilio on the promissory notes which indubitable stipulated
solidary liability for all the borrowers

GOOD TO KNOW CONCEPT

 Requisites of an accommodation party
a. he must be a party to the instrument, signing as maker, drawer,
acceptor, or indorser;
b. he must not receive value therefor; and