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Pineda vs Dela Rama

FACTS:

Pineda was caught in a case again

st the NARIC for his alleged

misappropriation of many cavans of p

alay. He hired Atty. Dela Rama todelay the filing of the complaint against

him, on alleged representation of the

lawyer that he is a friend of the NARIC

administrator.

Pineda then issued a promissory note in

favor of dela Rama to pay for the

advances that the lawyer made to the

administrator to delay the filing of

the complaint. Dela Rama on the oth

er hand contended that the

promissory note was for the loan

advanced to Pineda by him. Dela Ramafiled an action against Pineda for the

collection of the amount of the note.

HELD:

The presumption that a negotiable in

strument was issued for valuable

consideration is a rebuttable

presumption. It can be rebutted by

proof to the contrary.

In the case at bar, the claims of delaRama that the promissory note was

for a loan advanced to Pineda is unb

elievable. The grant of a loan by a

lawyer to a moneyed client and whom

he has known for only 3 months can not

be relied on. Pineda had actually just

purchased numerous properties. It is

highly illogical that he would loan from

dela Rama P9500 for 5 days apart.

Furthermore, the note was void ab in

itio because the consideration givenwas to influence the administrator to

delay charges against Pineda. The

consideration was void for being against

law and public policy.

The Philippine Bank of Commerce vs

Aruego

Lessons Applicable: Liabilities of the

Parties (Negotiable Instruments Law)

FACTS:

December 1, 1959: Philippine Bankof Commerce (PBC) instituted

against Jose M. Aruego for the

recovery of the total sum of about P

35K with interest from November

17, 1959 and commission of 3/8%

for every thirty 30 days plus

attorney's fees of 10% of the total

amount due and costs

represents the cost of the printingthe periodical published by the

Aruego "World Current Events"

To facilitate the payment of theprinting, Aruego obtained a

credit accommodation from the PBC

the printer, Encal Press andPhoto Engraving, collected the cost

of every printing by drawing a draftagainst the PBC, which PBC later

accepts

As an added security for thepayment of the amounts advanced

to Encal Press and Photo-Engraving,

PBC required Aruego to execute a

trust receipt (PBC hold in trust for

Aruego the periodicals and to sell

the same with the promise to turn

over to the Aruego the proceeds forthe payment of all obligations

arising from the draft)

trial court: Aruego to pay to the PBC Aruego: signed the supposed bills of

exchange as an agent of the

Philippine Education Foundation

Company where he is president

Section 20 of the NegotiableInstruments Law

"Where the instrument contains or a

person adds to his signature words

indicating that he signs for or on behalf

of a principal or in a representative

capacity, he is not liable on the

instrument if he was duly authorized;

but the mere addition of words

describing him as an agent or as filing a

representative character, without

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disclosing his principal, does not

exempt him from personal liability."

signed the drafts only asan accommodation party and as

such, should be made liable only

after a showing that the drawer isincapable of paying

not really bills of exchange but merepieces of evidence of indebtedness

because payments were made

before acceptance

ISSUE: W/N Aruego should be

personally liable

HELD: YES. CFI AFFIRMED. nowhere has he disclosed that he

was signing as a representative of

the Philippine Education

Foundation Company

For failure to disclose his principal,Aruego is personally liable for the

drafts he accepted

An accommodation party is onewho has signed the instrument asmaker, 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 accommodationparty

he signed as a drawee/acceptor Under the Negotiable Instrument

Law, a drawee is primarily liable

As long as a commercial paperconforms with the definition of a bill

of exchange, that paper is

considered a bill of exchange

The nature of acceptance isimportant only in the determination

of the kind of liabilities of the

parties involved, but not in the

determination of whether a

commercial paper is a bill of

exchange or not

Clark vs Sellner

FACTS:

Sellner with two other persons, signed apromissory note solidarily binding

themselves to pay to the order of R.

N Clark. The note matured but the

amount wasn't paid. The defendant

alleges that he didn't receive any

amount of the debt; that the instrum

ent wasn't presented to him for

payment and being an accommodatio

n party, he is not liable unless the

note is negotiated, which wasn't done.

HELD:

On the first issue, the liability of Sellneras one of the signers of the note, is not

dependent on whether he has or has

not, received any part of the

debt. The defendant is really and ex

pressly one of the joint and several

debtors of the note and as such he is

liable under the provisions of Section 60

of the Negotiable Instruments Law.

As to the presentment for payment,

such action is not necessary in order tocharge the person primarily liable, as is

the defendant Sellner.

As to whether or not Sellner is an

accommodation party, it should be

taken into account that by putting his

signature to the note, he lent his name,

not to the creditor, but to those who

signed with him placing him in the same

position and with the same liability as

the said signers. It should be noted

that the phrasewithout receiving value therefore as used in section 29

means without receiving value byvirtue of the instrument and not, as it

apparently is supposed to mean,

without receiving payment for lendinghis name. It is immaterial as far as the

creditor is concerned, whether one of

the signers has or has not received

anything in payment for the use of his

name. In this case, the legal situation of

Sellner is that of a joint surety

who upon the maturity of the note, p

ay the debt, demand the collateral

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security and dispose of it to his

benefit. As to the plaintiff, he is a holder

for value.

PNB vs Maza and Macenas

FACTS:Maza and Macenas executed a total of

five promissory notes. These were not

paid at maturity. And to recover the

amounts stated on the face of the

promissory notes, PNB initiated an ac

tion against the two. The special

defense posed by the two is that the

promissory notes were delivered to

them in blank by a certain Enchaus a

nd were made to sign the notes so

that the latter could secure a loan from

the bank. They also alleged that theynever negotiated the notes with the

bank nor have they received any

value thereof. They also prayed that

Enchaus be impleaded in the

complaint but such was denied. The

trial court then held in favor of the

bank.

HELD:

The defendants attested to the genuineness of the instruments sued on. Nei

ther did they point out any mistake i

n regard to the amount and

interest that the lower court sentence

d them to pay. Given such, the

defendants are liable. They appear as

the makers of the promissory notes

and as such, they must keep their

engagement and pay as promised.

And assuming that they are

accommodation parties, the defendants

having signed the instruments withoutreceiving value thereof, for the purpose

of lending their names to some other

person, are still liable for the

promissory notes. The law now is such

that an accommodation party cannot

claim no

benefit as such, but he is liable accor

ding to the face of his undertaking,

the same as he himself financially

interest in the transaction. It is also no

defense to say that they didn't receive

the value of the notes. To fasten

liability however to an accommodation

maker, it is not necessary that any

consideration should move to him. The

accommodation which supports the

promise of the accommodation maker

is that parted with by the person

taking the note and received by theperson accommodated.

Sadaya vs Sevilla

Lessons Applicable: Consideration

and Accommodation Party

(Negotiable Instruments)

FACTS:

March 28, 1949: Victor Sevilla,Oscar Varona and Simeon Sadaya

executed, jointly and severally, infavor of the BPI, or its order, a

promissory note for P15,000.00

with interest at 8% per annum,

payable on demand.

The P15,000.00 proceeds wasreceived by Oscar Varona alone.

Victor Sevilla and Simeon Sadayasigned the promissory note as co-

makers only as a favor to Oscar

Varona.

June 15, 1950: outstanding balanceis

P4,850.00. No payment thereafter

made.

Oct 16 1952: bank collected fromSadaya total of P5,416.12(w/ int)

Varona failed to reimburse Sadayadespite repeated demands. V

Victor Sevilla died Francisco Sevillawas named administrator.

Sadaya filed a creditor's claim forthe above sum of P5,746.12,

plus attorneys fees in the sum ofP1,500.00

The administrator resisted theclaim upon the averment that the

deceased Victor Sevilla "did not

receive any amount as

consideration for the promissory

note," but signed it only "as surety

for Oscar Varona

June 5, 1957: Trial court orderthe administrator to pay

CA reversed.ISSUE: W/N Sadaya can claim against

the estate of Sevilla as co-accomodation

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party when Verona as principal debtor

is not yet insolvent

HELD: NO. Affirmed

Varona is bound by the obligation toreimburse Sadaya

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

requisites beforeone accommodation maker can seek

reimbursement from a co-

accommodation maker.

ART. 2073. When there are two ormore 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 beinsolvent, his share shall be borne

by the others, including the payer,

in the same proportion.

(1) A joint andseveral accommodation maker of a

negotiable promissory note may

demand from the principal debtor

reimbursement for the amount that

he paid to the payee;

(2) a joint andseveral accommodation maker who

pays on the said promissory note

may directly demand

reimbursement from his co-

accommodation maker without first

directing his action against theprincipal debtor provided that

(a) he made the payment by virtueof a judicial demand, or -no judicial

demand just voluntarily

(b) a principal debtor is insolvent. -Varona is not insolvent

Republic Bank vs Ebrada

Lessons Applicable: Forgery (Negotiable

Instruments Law)

FACTS:

February 27, 1963: Mauricia T.Ebrada, encashed Back Pay

Check dated January 15, 1963 for

P1,246.08 at Republic Bank

check was issued by the Bureau ofTreasury

Bureau advised Republic Bank thatthe indorsement on the reverse side

of the check by the payee, "Martin

Lorenzo" was a forgery because

he died as of July 14, 1952 and

requested a refund

July 11, 1966: Ebrada filed a Third-Party complaint against Adelaida

Dominguez who, in turn, filed on

September 14, 1966 a Fourth-Party

complaint against Justina Tinio.

March 21, 1967: City Court ofManila favored Republic against

Ebrada, for Third-Party plaintiffagainst Adelaida Dominguez, and

for Fourth-Party plaintiff against

Justina Tinio

CA: reversed Mauricia T. Ebradaclaim against Adelaida Dominguez

and Domiguez against Justina Tinio

W/N: Ebrada should be held liable.

HELD: YES. Affirmed in toto. under Section 65 of the Negotiable

Instruments Law:

Every person negotiating an instrument

by delivery or by qualified indorsement,

warrants:

(a) That the instrument is genuine and

in all respects what it purports to be.

(b) That she has good title to it.

xxx xxx xxx

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Every indorser who indorses

without qualification warrants to all

subsequent holders in due course:

(a) The matters and things mentioned

in subdivisions (a), (b), and (c) of the

next preceding sections;(b) That the instrument is at the time of

his indorsement valid and subsisting.

Under action 23 of the NegotiableInstruments Law (Act 2031):

When a signature is forged or made

without the authority of the person

whose signature it purports to be, it is

wholly inoperative, and no right to

retain the instruments, or to give a

discharge thereof against any partythereto, can be acquired through or

under such signature unless the party

against whom it is sought to enforce

such right is precluded from setting up

the forgery or want of authority.

Martin Lorenzo (forged as originalpayee) > Ramon R. Lorenzo (2nd

indorser) = NO EFFECT

Ramon R. Lorenzo(2ndindorser)> Adelaida Dominguez

(third indorser)>Adelaida

Dominguez to Ebrada who did not

know of the forgery = valid and

enforceable barring any claim of

forgery

drawee of a check can recover fromthe holder the money paid to him on

a forged instrument

not its duty to ascertain whether thesignatures of the payee or indorsers

are genuine or not

indorser is supposed to warrant tothe drawee that the signatures of

the payee and previous indorsers

(NOT only holders in due course)

are genuine

RATIONALE: . indorsers owncredulity or recklessness, or

misplaced confidence was the sole

cause of the loss. Why should he be

permitted to shift the loss due to his

own fault in assuming the risk, uponthe drawee, simply because of the

accidental circumstance that the

drawee afterwards failed to detect

the forgery when the check was

presented

Ebrada , upon receiving the check inquestion from Adelaida Dominguez,

was duty-bound to ascertain

whether the check in question was

genuine before presenting it toplaintiff Bank for payment

Based on the doctrine fromGreatEastern Life Ins. Co. v. Hongkong

Shanghai Bank (1922), 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 Ebrada the

amount it paid

Ebrada immediately turning over toAdelaida Dominguez (Third-Party

defendant and the Fourth-Party

plaintiff) who in turn handed the

amount to Justina Tinio on the same

date would not exempt her from

liability because by doing so, she

acted as an accommodation party in

the check for which she is also liable

under Section 29 of theNegotiableInstruments Law (Act 2031):

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.

http://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.htmlhttp://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.htmlhttp://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.htmlhttp://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.htmlhttp://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.htmlhttp://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.htmlhttp://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.htmlhttp://www.philippinelegalguide.com/2011/08/negotiable-instruments-case-digest_8090.html

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Prudencio vs CA

FACTS:

Appellants are the owners of a prope

rty, which they mortgaged to help

secure a loan of a certain DomingoPrudencio. 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. T

he 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 th

e payments to the Bureau to the

construction company. This

notwithstanding, the Bureau with

approval of the bank, conditioned

however that they should be for laborand 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 an

d as consequence, the Bureau

rescinded the contract and assumed t

he work. Later on, the appellantswrote to the PNB that since the latte

r 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.

The trial court held them still liable

together with their co-makers. It has

also been held that if the judgment is

not satisfied within a period of time, the

mortgaged properties would be

foreclosed and sold in public auction.

In their appeal, petitioners contend t

hat as accommodation makers, the

nature of their liability is only that of

mere sureties instead of solidary co-debtors such that a material alteration

in the principal contract, effected by the

creditor without the knowledge and

consent of the sureties, completely

discharges the sureties from all

liabilities on the contract of suretyship.

HELD:

There is no question that as

accommodation makers, petitioners

would be primarily and unconditionally

liable on the promissory note to aholder 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 obligatio

n was temporarily deferred by thePNB without their knowledge and

consent. There has to be another basis

for their claim of having been freed f

rom their obligation. It has to be

determined if PNB was a holder for

value.

A holder for value is one who meets the

requirement of being a holder in due

course except the notice for want of

consideration. In the case at bar,

PNB may notbe considered as a holder

for value. Not only was PNB an

immediate party or privy to the pro

missory note, knowing fully well that

petitioners only signed as

accommodation parties, but more

importantly it

was the Deed of Assignment which m

oved the petitioners to sign the

promissory note. Petitioners also relied

on the belief that there will be no

alterations to the terms of the

agreement. The deed provided that

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there will no further conditions which

could possibly alter the agreement

without

the consent of the petitioner such as

the grant of greater priority to

obligations other than the payment ofthe loan. This notwithstanding, the

bank approved the release of paymen

ts to the Company instead of the

same to the bank. This was in violat

ion of the deed of assignment and

prejudiced the rights of petitioners.

The bank was not in good faitha

requisite for a holder to be one in due

course.

Crisologo Jose vs CA

FACTS:The president of Movers Enterprises,

to accommodate its clients Spouses

Ong, issued a check in favor of petiti

oner 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, w

ith the understanding that upon

approval of the compromise agreeme

nt, the check will be encashedaccordingly. As the compromise

agreement wasn't approved during th

e expected period of time, the aforesaid

check was replaced with another one

for the same value. Upon deposit th

ough of the checks by petitioner, it

was dishonored. This prompted the

petitioner to file a case against Atty.

Bernares and Santos for violation of

BP22. Meanwhile, during the

preliminary investigation, Santos tried

to tender a cashiers check for thevalue of the dishonored check but

petitioner refused to accept such. This

was consigned by Santos with the clerk

of court and he instituted charges

against petitioner. The trial court held

that consignation wasn't applicable to

the case at bar but was reversed by the

CA.

HELD:

Petitioner averred that it is not Santos

who is the accommodation party to the

instrument but the corporation

itself. But assuming arguendo that the

corporation is the accommodation par

ty, it cannot be held liable to the

check issued in favor of petitioner. T

he rule on accommodation party

doesn't include or apply to corporations

which are accommodation parties. Thisis 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 instrume

nt by the corporation is for theaccommodation of another, he cannot

recover against the corporation

thereon.

By way of exception, an officer or ag

ent of a corporation shall have the

power to execute or indorse a negoti

able paper in the name of the

corporation for the accommodation of

a third party only is specifically

authorized to do so. Corollarily, corporate officers have no power to

execute for mere accommodation a

negotiable instrument of the

corporation for their individual debts

and transactions arising from or in

relation to matters in which the corp

oration has no legitimate concern. Sin

ce such accommodation paper cann

ot be enforced against the

corporation, the signatories thereof

shall be personally liable therefore, as

well as the consequences arising fromtheir acts in connection therewith.

Travel On Inc vs Ca

FACTS:

Petitioner was a travel agency involv

ed in ticket sales on a commission

basis for and on behalf of different ai

rline companies. Miranda has a

revolving credit line with the compan

y. He procured tickets on behalf of

others and derived commissions from

it.

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Petitioner filed a collection suit again

st Miranda for the unpaid amount of

six checks. Petitioner alleged that Mi

randa procured tickets from them

which he paid with cash and checks but

the checks were dishonored uponpresentment to the bank. This was b

eing refuted by Miranda by saying

that he actually paid for his obligatio

ns, even in the excess. He argued

that the checks were for accommodat

ion purposes only. The company

needed to show to its Board of Directors

that its accounts receivable was in good

standing. The RTC and CA held Miranda

not to be liable.

HELD:

Reliance by the lower and appellate c

ourt on the companys financial

statements were wrong, to see if

Miranda was liable or not. This

financial statements were actually not

updated to show that there was

indebtedness

on the part of Miranda. The best evi

dence that the courts should have

looked at were the checks itself. Thereis a prima facie presumption that a

check was issued for valuable conside

ration and the provision puts the

burden upon the drawer to disprove

this presumption. Miranda was unable

to relieve himself of this burden.

Only clear and convincing evidence and

not mere self-serving evidence of

drawer can rebut this presumption.

The company was entitled to the

benefit conferred by the statutory provision. Miranda failed to show that

the checks werent issued for anyvaluable consideration. The checks

were

clear by stating that the company wa

s the payee and not a mere

accommodated party. And also, notic

e was given to the fact that the

checks were issued after a written de

mand by the company regarding

Mirandas unpaid liabilities.

Town Savings and Loan Bank vs 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 thelitigation.

The trial court held that they were liable

as accommodation parties to the

promissory note. This was reversed by

the Court of Appeals.

HELD:

An accommodation party is one who

has signed the instrument as maker,

drawer, indorser, without receiving

value therefore and for the purpose oflending his name to some other pers

on. 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. H

e lends his name to enable the

accommodated party to obtain creditor to raise money. He receives no

part of the consideration for the instr

ument 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.

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Bautista vs Auto Plus Trders Inc

Lessons Applicable: Consideration

and Accommodation Party (NegotiableInstruments Law)

FACTS:

Claude P. Bautista, in his capacity asPresident and Presiding Officer of

Cruiser Bus Linesand Transport

Corporation (Cruiser), purchased

various spare parts from Auto Plus

Traders, Inc. (Auto Plus) and issued

2 postdated checks

The checks were subsequentlydishonored

2 Informations for violation ofBPBlg. 22 were filed with the MTCC

MTCC: Cruiser directed to pay theAuto Plus

CA Affirmed RTC: Bautistapersonally issued the check

According to Auto Plus, Bautista, byissuing 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. CriminalCase DISMISSED

Section 29 of the NegotiableInstruments Law

accommodation party is liable onthe 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 petitionfor review on certiorari under Rule

45 of the Rules of Court, has no

jurisdiction over questions of facts.

But, considering that the findings ofthe MTCC and the RTC are at

variance, we are compelled to settle

this issue.

2 check return slips in conjunctionwith 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 ofCruiser 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 andTransport Corporation should be

held liable.

There is no agreement thatpetitioner 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 NegotiableInstruments 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

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he must be a party to theinstrument, signing as maker,

drawer, acceptor, or indorser -

present

he must not receive valuetherefor - present

he must sign for the purposeof lending his name or credit

to some other person - lacking

Cruiser Bus Lines and TransportCorporation, however, remains

liable for the checks especially since

there is no evidence that the

debts covered by the subject checkshave been paid.