ALFA ZARAH ANG

JD 2-1
TOMAS ANG v. ASSOCIATED BANK and ANTONIO ANG ENG LIONG
G.R. NO. 146511 September 5, 2007

AZCUNA, J.:

PRINCIPLE
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
On August 28, 1990, respondent Associated Bank filed a collection suit against Antonio Ang Eng
Liong and petitioner Tomas Ang for the two (2) promissory notes that they executed as principal debtor and
co-maker. Respondent Bank alleged that on October 3 and 9, 1978, the defendants obtained a loan of
P50,000 and P30,000 both evidenced by a promissory note. As agreed, the loan would be payable, jointly
and severally, on January 31, 1979 and December 8, 1978, respectively. Despite repeated demands for
payment, Antonio Ang Eng Liong and Tomas Ang failed and refused to settle their obligation, resulting in a
total indebtedness of P539,638.96.
In their respective defenses, Antonio Ang Eng Liong only admitted to have secured a loan
amounting to P80,000. He pleaded that the bank "be ordered to submit a more reasonable computation"
considering that there had been "no correct and reasonable statement of account" sent to him which was
allegedly collecting excessive interest, penalty charges, and attorney's fees despite knowledge that his
business was destroyed by fire, hence, he had no source of income for several years; while Tomas Ang
interposed that:
(a) the 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;
(b) 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 and he accepted the promissory notes in
blank, with only the printed provisions and the signature of Antonio Ang Eng Liong appearing therein;
(c) it was the bank which completed the notes upon the orders, instructions, or representations of
his co-defendant and was completed in excess of or contrary to the authority given by him and his signature
was procured through fraudulent means when his co-defendant claimed that his first loan did not push
through;
(d) the promissory notes did not indicate in what capacity he was intended to be bound;
(e) the bank granted his co-defendant successive extensions of time within which to pay, without
his (Tomas Ang) knowledge and consent and imposed new and additional stipulations on interest,
penalties, services charges and attorney's fees more onerous than the terms of the notes.
Tomas Ang further alleged that by reason of the bank's acts or omissions, it should be held liable
for the amount of P50,000 for attorney's fees and expenses of litigation while Antonio Ang Eng Liong,
should reimburse him any and all sums that he may be adjudged liable to pay.

LOWER COURT RULING

RTC rendered judgment in favor of Tomas Ang, as against his co-defendant Antonio Ang Eng Liong
ordering him to pay; and against Associated Bank, dismissing the complaint for lack of cause of action.
CA reversed and set aside RTCs ruling and rendered judgment against Tomas Ang, ordering him
to pay Associated Bank.

ISSUE
Whether or Not Tomas Ang is liable as an accommodation party even without consideration and
even if his co-defendant received an extension of the period of payment without his knowledge and consent.

RATIO
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,
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ALFA ZARAH ANG
JD 2-1
notwithstanding such holder, at the time of taking the instrument, knew him to be only an accommodation
party.
As petitioner acknowledged it to be, the relation between an accommodation party and the
accommodated party is one of principal and surety the accommodation party being the surety. As such,
he is deemed an original promisor and debtor from the beginning; he is considered in law as the same party
as the debtor in relation to whatever is adjudged touching the obligation of the latter since their liabilities
are interwoven as to be inseparable. Although a contract of suretyship is in essence accessory or collateral
to a valid principal obligation, the surety's liability to the creditor is immediate, primary and absolute; he is
directly and equally bound with the principal. Further, petitioner agreed to be "jointly and severally" liable
under the two promissory notes that he co-signed with Antonio Ang Eng Liong as the principal debtor. This
being so, it is completely immaterial if the bank would opt to proceed only against petitioner or Antonio Ang
Eng Liong or both of them since the law confers upon the creditor the prerogative to choose whether to
enforce the entire obligation against any one, some or all of the debtors. Nonetheless, petitioner, as an
accommodation party, may seek reimbursement from Antonio Ang Eng Liong, being the party
accommodated. It is no defense to state on his part that he did not receive any value therefor because the
phrase "without receiving value therefor" used in Sec. 29 of the NIL means "without receiving value by
virtue of the instrument" and not as it is apparently supposed to mean "without receiving payment for lending
his name."
As regards the issue on the extension granted to Antonio Ang Eng Liong, 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.

DISPOSITIVE PORTION
WHEREFORE, the October 9, 2000 Decision and December 26, 2000 Resolution of the Court of
Appeals in CA-G.R. CV No. 53413 are AFFIRMED. The petition is DENIED for lack of merit.

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