Phil. Commercial And International Bank v.

CA

These consolidated petitions arose from the action filed by BIR against Citibank and PCIBank for the recovery of
the amount of Citibank Check Numbers SN-10597 and 16508. Said checks, both crossed checks were alleged to
have been negotiated fraudulently by an organized syndicate between and among two employees of Ford (General
Ledger Accountant and his assistant), and PCIBank officers.
It was established that instead of paying the crossed checks, containing two diagonal lines on its upper left corner
between which were written the words payable to the payees account only, to the CIR for the settlement of the
appropriate quarterly percentage taxes of Ford, the checks were diverted and encashed for the eventual distribution
among the members of the syndicate. Citibank Check No. SN-10597 amounted to P5,851,706.37, while Citibank
Check No. SN-16508 amounted to P6,311,591.73.
It was found that the pro-manager of San Andres Branch of PCIBank, Remberto Castro, received Citibank Check
Numbers SN 10597 and 16508. He passed the checks to a co-conspirator, an Assistant Manager of PCIBanks
Meralco Branch, who helped Castro open a Checking account of a fictitious person named Reynaldo Reyes. Castro
deposited a worthless Bank of America Check in exactly the same amount of Ford checks. The syndicate tampered
with the checks and succeeded in replacing the worthless checks and the eventual encashment of Citibank Check
Nos. SN 10597 and 16508. The PCIBank Pro-manager, Castro, and his co-conspirator Assistant Manager apparently
performed their activities using facilities in their official capacity or authority but for their personal and private gain
or benefit.

Issue: W/N Ford Can Recover From Pcib [Collecting Bank] And Citibank [Drawee Bank] The Value Of The
Checks Intended As Payment To The CIR?

HELD Having established that the collecting bank’s negligence is the proximate cause of the loss, the SC concluded
that PCIB is liable in the amount corresponding to the proceeds of the Citibank checks.

However, the court also held that although a bank is liable for the wrongful acts of its officers within the course of
their employment, PCIB appears also to be the victim of the scheme hatched by the syndicate. Therefore, the
responsibility for negligence does not lie on PCIB alone.

The evidence showed that Citibank as drawee bank was likewise negligent in failing to establish that its payment of
Ford’s checks were madie in due course and legally in order. As ruled by the CA, Citibank must likewise answer for
the damages because of the contractual relationship it breached with Ford in failing to scrutinize the checks before
paying to PCIB. Citibank had failed to ensure that the amount of the checks be paid only to its designated payee, the
CIR. The fact that the drawee bank did not discover the irregularity seasonably, constitutes negligence in carrying
out the bank’s duty to its depositors. The court ruled that PCIB and Citibank must share the loss on a 50-50 ratio.

De Ocampo v. Gatchalian

Manuel Gonzales offered to sell a car to Anita Gatchalian, who was looking for a car for her
husband’s use. Manuel represent
ed that he was duly authorized by Ocampo Clinic, the car
owner, to look for buyer, negotiate and accomplish the sale of the car. Anita requested Manuel
to bring the car and Certificate of Registration for her husband to see; but Manuel said that he
can bring the car on the condition that Anita gives him a check to show to the owner as
evidence of Anita’s good faith in the intention to buy the car.

Anita gave Manuel a check in the amount of P600, on the condition that the check will only be
for safekeeping and will be returned to her the following day when the car and Certficate of
Registration will be brought by Manuel.

Manuel failed to appear the following day, so Anita issued a Stop Payment Order on the
check with the drawee bank, which was issued without previous notice to holder.
Meanwhile, Manuel delivered the check to Ocampo Clinic, in payment of the hospitalization
expenses of his wife, Matilde Gonzales. Vicente de Ocampo gave Manuel change of P158.25
difference of P600 value of check less P441.75 total hospitalization fees.
Vicente de Ocampo sued Manuel for estafa for not paying his obligations to the Ocampo Clinic
and for receiving the cash balance of the check

ISSUE Whether or not De Ocampo is a holder in due course.

HELD: No. Section 52 of the Negotiable Instruments Law

The Supreme Court emphasized that if one is such a holder in due course, it is immaterial that he was the payee and
an immediate party to the instrument. The Supreme Court however ruled that De Ocampo is not a holder in due
course for his lack of good faith. De Ocampo should have inquired as to the legal title of Manuel to the said check.
The fact that Gatchalian has no obligation to De Ocampo and yet he’s named as the payee in the check hould have
apprised De Ocampo; that the check did not correspond to Matilde Gonzales’ obligation with the clinic because of
the fact that it was for P600.00 – more than the indebtedness; that why was Manuel in possession of the check – all
these gave De Ocampo the duty to ascertain from the holder Manuel Gonzales what the nature of the latter’s title to
the check was or the nature of his possession.

Mesina v IAC

Jose Go maintains an account with Associated Bank. He needed to transfer P800,000.00 from Associated Bank to
another bank but he realized that he does not want to be carrying that cash so he bought a cashier’s check from
Associated Bank worth P800,000.00. Associated Bank then issued the check but Jose Go forgot to get the check so
it was left on top of the desk of the bank manager. The bank manager, when he found the check, entrusted it to
Albert Uy for the later to safe keep it. The check was however stolen from Uy by a certain Alexander Lim.
Jose Go learned that the check was stolen son he made a stop payment order against the check. Meanwhile,
Associated Bank received the subject check from Prudential Bank for clearing. Apparently, the check was presented
by a certain Marcelo Mesina for payment. Associated Bank dishonored the check.
When asked how Mesina got hold of the check, he merely stated that Alfredo Lim, who’s already at large, paid the
check to him for “a certain transaction”.
ISSUE: Whether or not Mesina is a holder in due course.
HELD: No. Admittedly, Mesina became the holder of the cashier’s check as endorsed by Alexander Lim who stole
the check. Mesina however refused to say how and why it was passed to him. Mesina had therefore notice of the
defect of his title over the check from the start. The holder of a cashier’s check who is not a holder in due course
cannot enforce such check against the issuing bank which dishonors the same. The check in question suffers from
the infirmity of not having been properly negotiated and for value by Jose Go who is the real owner of said
instrument.

Vicente R. De Ocampo V. Gatchalian

Anita Gatchalian was interested in buying a car. Manuel Gonzales offered to her a car owned by plaintiff. Gonzales
claimed that he was authorized by the plaintiff to sell the car. Gonzales order defendant to issue a cross-check to
comply on showing interest in buying the car. Gonzales promised to return the check the next day.

When Gonzales never appeared after, defendant issue a stop payment order on the check. She found out that
Gonzales used the check as payment to plaintiff's clinic for his wife's fees. Plaintiff now demands defendant for
payment of the check, in which defendant refused citing that plaintiff is a not a holder in due course.

The lower court held that defendant should pay plaintiff.

ISSUE: Whether or not De Ocampo is a holder in due cour\

Held

The SC held that plaintiff is a not a holder in due course. There were obvious instances to show that the check was
negligently acquired like plaintiff having no liability with defendant and that the check was crossed. Plaintiff failed
to exercise prudence and caution. Plaintiff should have asked questions to further inquire upon suspicion.
The presumption of good faith did not apply to plaintiff because the defect was apparent on the instruments face – it
was not payable to defendant or bearer.

State Investment House v. IAC

FACTS
Nora Moulic issued to Corazon Victoriano, as security for pieces of jewellery to be sold on commission, two
postdated checks in the amount of fifty thousand each. Thereafter, Victoriano negotiated the checks to State
Investment House, Inc. When Moulic failed to sell the jewellry, she returned it to Victoriano before the maturity of
the checks. However, the checks cannot be retrieved as they have been negotiated. Before the maturity date Moulic
withdrew her funds from the bank contesting that she incurred no obligation on the checks because the jewellery
was never sold and the checks are negotiated without her knowledge and consent. Upon presentment of for payment,
the checks were dishonoured for insufficiency of funds.

Issues:
1. Whether or not State Investment House inc. was a holder of the check in due course

Held:

Yes, Section 52 of the NIL provides what constitutes a holder in due course. The evidence shows that: on the faces
of the post dated checks were complete and regular; that State Investment House Inc. bought the checks from
Victoriano before the due dates; that it was taken in good faith and for value; and there was no knowledge with
regard that the checks were issued as security and not for value. A prima facie presumption exists that a holder of a
negotiable instrument is a holder in due course. Moulic failed to prove the contrary.
No, Moulic can only invoke this defense against the petitioner if it was a privy to the purpose for which they were
issued and therefore is not a holder in due course.

Consolidated Plywood Industries Inc v IFC Leasing and Acceptance Corp

FACTS:
Petitioner bought from Atlantic Gulf and Pacific Company, through its sister company Industrial Products
Marketing, two used tractors. Petitioner was
issued a sales invoice for the two used tractors. At the same time, the
deed of sale with chattel mortgage with promissory note was issued.
Simultaneously, the seller assigned the deed of sale with chattel mortgage and promissory note to respondent. The
used tractors were then delivered but barely 14 days after, the tractors broke down. The seller sent
mechanics but the tractors were not repaired accordingly as they were no
longer serviceable. Petitioner would delay the payments on the promissory notes until the seller completes its
obligation under the warranty.
Thereafter, a collection suit was filed against petitioner for the payment of the promissory note.

ISSUE – Whether or not it constitutes a promissory note

HELD:
It is patent that the seller is liable for the breach in warranty against the
petitioner. This liability as a general rule extends to the corporation to whom it assigned its rights and
interests unless the assignee is a holder in due course of the promissory note in question, assuming the note is
negotiable, in which case, the latter’s rights are based on a negotiable
instrument and assuming further that the petitioner’s defense may not prevail against it.

The promissory note in question is not a negotiable instrument. The promissory note in question lacks the so-
called words of negotiability. And as such, it follows that the respondent can never be a holder in due course
but remains merely an assignee of the note in question. Thus, the
petitioner may raise against the respondents all defenses available to it against the seller.

Salas v. CA, Filinvest Finance & Leasing Corp

Juanita Salas bought a motor vehicle from the Violago Motor Sales Corporation as
evidenced by a promissory note. This note was subsequently endorsed to Filinvest
Finance & Leasing Corporation which financed the purchase. Petitioner defaulted in her
installments allegedly due to a discrepancy in the engine and chassis numbers of the
vehicle delivered to her and those indicated in the sales invoice, certificate of registration
and deed of chattel mortgage, which fact she discovered when the vehicle figured in an
accident on 9 May 1980. This failure to pay prompted Filinvest Finance to initiate a civil
action for a sum of money against petitioner before the RTC-San Fernando, Pampanga.
The trial court favored petitioner and ordered Salas to pay the amount; the CA affirmed
the decision. On this petition, imputing fraud, bad faith and misrepresentation against
VMS for having delivered a different vehicle to petitioner, she prayed for a reversal of the
trial court's decision so that she may be absolved from the obligation under the contract
on the ground that the provision of the law on sales by description is applicable here;
hence, no contract ever existed between her and VMS and therefore none had been
assigned in favor of private respondent.

Issue:
Whether the promissory note in question is a negotiable instrument which will bar
completely all the available defenses of the petitioner against private respondent.

HELD:
No. Petitioner cannot set up against respondent the defense of nullity of the
contract of sale between her and VMS. A careful study of the questioned promissory note
shows that it is a negotiable instrument, having complied with the requisites under the
law as follows: [a] it is in writing and signed by the maker Juanita Salas; [b] it contains an
unconditional promise to pay the amount of P58,138.20; [c] it is payable at a fixed or
determinable future time which is "P1,614.95 monthly for 36 months due and payable on
the 21 st day of each month starting March 21, 1980 thru and inclusive of Feb. 21, 1983;"
[d] it is payable to Violago Motor Sales Corporation, or order and as such, [e] the drawee is named or indicated with
certainty. It was negotiated by indorsement in writing on the instrument itself payable to the Order of Filinvest
Finance and Leasing Corporation and it is an indorsement of the entire instrument. Under the circumstances, there
appears to be no question that Filinvest is a holder in due course Accordingly, respondent corporation holds the
instrument free from any defect of title of prior parties, and free from defenses available to prior parties among
themselves, and may enforce payment of the instrument for the full amount thereof.

Pennoyer v. Dubois State Bank

This is an action by the Dubois State Bank as endorsee against the defendant as maker of two promissory notes. The
notes were dated July 21, 1920, signed by defendant and payable 6 months after date to Wyoming Livestock Loan
Company. They were given in payment for capital stock of Wyoming Livestock Loan Company. The defendant
bought the stock at the solicitation of G.O. Roy and A.K. Jones, to whom the notes were delivered. On July 22,
1920, the plaintiff purchased the notes. The plaintiff gave for the notes its negotiable certificates of deposit payable
to the order of the Wyoming Livestock Loan Company, for the full amount of the notes.

Issue: W/N the plaintiff was a holder in due course of the notes.

Held:
There can be no doubt that when the plaintiff gave the certificates of deposit for the notes it took the notes for
"value" within the meaning of sections 52 and 25 of the Negotiable Instruments Law — the other conditions
necessary to make it a holder in due course being present. We think the finding of the trial court that the plaintiff
was a holder in due course of the notes was supported by the evidence, and cannot be disturbed.

If the plaintiff was entitled to the benefit of the presumptions declared by these statutes particularly the presumption
stated in the first clause of section 59 of the Negotiable Instruments Law, there can be no doubt that proof that the
First National Bank of Cody was the endorsee and holder of the certificates of deposit was a prima facie showing
that it was a holder in due course, and sufficient to justify a finding of that fact, there being no other evidence to
require a different finding. The fact that the notes in suit had been procured by fraud, when established, or assumed,
as it must be in this case, destroyed the presumption that plaintiff was a holder in due course of the notes (Glendo
State Bank v. Abbott, 30 Wyo. 98, 105), but we cannot believe that it had the effect of destroying presumptions in
favor of the First National Bank of Cody as the holder of the certificates of deposit.

Town Savings and Loan Bank Inc. v CA

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-in-
interest 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.

ISSUE: Whether they were liable as accommodation parties

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.

Prudencio v. CA
FACTS:
Appellants are the owners of a property, which they mortgaged to help secure a loan of a certain Domingo
Prudencio. On a later date, they were approached by their relative who was the attorney-in-fact of a construction
company, which was in dire need of funds for the completion of a municipal
building. After some persuasion, the appellants amended the mortgage
wherein the terms and conditions of the original mortgage was made an
integral part of the new mortgage. The promissory note covering the
“second loan” was signed by their relative. It was also signed by them, indicating the request that the check
be released by the bank.
After the amendment of the mortgage was executed, a deed of assignment
was made by Toribio, assigning all the payments to the Bureau to the construction company. This
notwithstanding, the Bureau with approval of the bank, conditioned however that they should be for labor and
materials,
made three payments to the company. The last request was denied by the bank, averring that the account was long
overdue, the remaining balance of the contract price should be applied to the loan.

The company abandoned the work and as consequence, the Bureau

rescinded the contract and assumed the work. Later on, the appellants
wrote to the PNB that since the latter has 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 appellants, which entitled the latter to cancel the mortgage contract.
Issue: whether they were accommodation party

Held
There is no question that as accommodation makers, petitioners would be primarily and unconditionally liable on the
promissory note to a holder for value, regardless of whether they stand as sureties or solidary co-debtors since such
distinction would be entirely immaterial and inconsequential as
far as a holder for value is concerned. Consequently, the petitioners cannot claim to have been released from
their obligation simply because at the time of payment of such obligation was temporarily deferred by the
PNB without their knowledge and consent. There has to be another basis
for their claim of having been freed from their obligation. It has to be determined if PNB was a holder for
value.

People v Maniego
Facts:
Julia Maniego was an indorser of several checks drawn by her sister, Milagros Pamintuan, which were
dishonored after they had been exchange with cash belonging to the Government, then in the official custody
of Lt. Rizalino Ubay. Ubay, Pamintuan and Maniego were indicted for the crime of malversation. Ubay and
Maniego were arraigned, while Pamintuan fled to the United States. Ubay was found guilty while Maniego
was acquitted. Both, however, were ordered to pay in solidum the amount of P57,434.50 to the government.
Maniego appealed.
Issue:
Whether Maniego is liable even if she is a mere indorser.
Held:
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. Such an indorser who indorses without qualification, inter alia, engaged that on
due presentment, the instrument shall be accepted or paid, or both, 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. Maniego may also be deemed an
“accommodation party” in the light of the facts (i.e. without receiving value for the same). As such, she is
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.
Crisologo Jose v. CA
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 cashier’s 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.
ISSUE: Whether they were an accommodation party
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.
Caneda Jr. v. CA

Gueson for value received, executed a promissory note in favor of Caneda,

promising to pay monthly installments with interest per annum. That to secure the obligation, he executed a
chattel mortgage and used a Toyota Jiffy jeep as collateral; that it is expressly provided for in the promissory
note that in case of default in any installment would deem that whole obligation demandable. This
promissory note was later assigned to
FNCB. Gueson then defaulted in his obligation and had an outstanding balance. Despite demands on
Gueson, he failed and refused to pay. This prompted
FNCB to file an action for replevin and sum of money, and in the
alternative, prayed for the payment of the outstanding balance plus interest.
Gueson in his answer alleged that he was just an accommodation party in favor of Caneda. This was denied by
Caneda.

The trial court held that Gueson was indeed an accommodation party in favor of Caneda; that there was
a novation in the form of substitution of
debtors when Caneda executed the undertaking assuming the liability of Gueson in favor of FNCB; that the
phrase “with recourse to Gueson in case
of default” found in the undertaking was inserted only after Caneda and
FNCB had already signed the undertaking and without the knowledge of Gueson and that Caneda was in bad
faith when it tried to evade payment of a justly-secured legal obligation.
Issue: Whether Gueson was a mere accommodation party to Caneda who is the real debtor
HELD:
Caneda merely confirmed that he was the real debtor of FNCB in the undertaking signed, while Gueson
merely accommodated Caneda in signing the promissory note and executing the chattel mortgage. Thus, it has been
ruled that one who signs as maker, drawer, acceptor or indorser, without receiving value therefore, and for the
purpose of lending his name to some other person is liable to the instrument to a holder for value,
notwithstanding the fact that such holder at the time of the taking the
instrument knew him to be only an accommodation party. Nonetheless,
after paying the holder, he is entitled to obtain reimbursement from the party accommodated. Whatever
agreement Gueson and Caneda had is binding only as between them. FNCB’s only concern is the payment of
the loan. It may go after either Gueson or Caneda – in this case, it sought to go after Caneda. Even if Gueson
was a mere accommodation party, he is still liable to FNCB as a holder for value w/ a right to be reimbursed by the
accommodated party; only in this case, FNCB chose to go after Caneda. In signing the undertaking, Caneda
confirmed that he was indeed the true debtor.

Agro Conglomerates v Soriano

FACTS:
Petitioner sold to Wonderland Food Industries two parcels of land. They stipulated under a Memorandum of
Agreement that the terms of payment would be P1,000,000 in cash, P2,000,000 in shares of stock, and the
balance would be payable in monthly installments. Thereafter, an
addendum was executed between them, qualifying the cash payment. Instead of cash payment, the vendee
authorized the vendor to obtain a loan from the financier on which the vendee bound itself to pay for. This loan
was to cover for the payment of P1,000,000. This addendum was not notarized.

Petitioner Soriano signed as maker the promissory notes payable to the bank. However, the petitioners failed
to pay the obligations as they were due. During that time, the bank was in financial distress and this
prompted it to endorse the promissory notes for collection. The bank gave ample time to petitioners then to satisfy
their obligations.

The trial court held in favor of the bank. It didn't find merit to the
contention that Wonderland was the one to be held liable for the promissory notes.
Issue: whether petitioners are accommodation parties

HELD:
Yes. They have the right after paying the instrument to seek reimbursement from the party accommodated,
since the relation between them has in effect became one of principal and surety.

Furthermore, as it turned out, the contract of surety between Woodland and petitioner was extinguished by the
rescission of the contract of sale of the farmland. With the rescission, there was confusion in the persons of
the principal debtor and surety. The addendum thereon likewise lost its
efficacy.

Ang v. Associated Bank

Facts
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. 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.
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
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.
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.

Bautista V. Auto Plus Traders Inc

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

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.