G.R. No.
80599 September 15, 1989
ERNESTINA CRISOLOGO-JOSE, vs.
CA and RICARDO S. SANTOS, JR. in his
own behalf and as Vice-President for Sales
of Mover Enterprises, Inc
Doctrine:
This case held that accommodation contracts
on negotiable instruments executed in behalf
of the corporation would not bind the
corporation without previous board
authorization. The issuance or indorsement of
negotiable instruments in the name of the
corporation without consideration and for the
accommodation of another was deemed to be
ultra vires, and the person who takes the
instrument without knowledgeof the
accommodation nature thereof, cannot
recover against a corporation which is only an
accommodation party.
This case stands as one of the few
contemporary cases where the Court has
upheld the defense of ultra vires as validly
exempting liability on the part of the
corporation for a contract entered into its name
by an unauthorized officer. In that case, the
payee of the check issued by the corporation
as an accommodation party, was fully aware
that the corporation was not receiving any
benefit form the transaction and that the
issuance of the check was not for the benefit of
the corporation, and was therefore fully aware
that the corporate signatories to the check had
not been duly authorized by the BOD.
Therefore, the principles of ratification by
acceptance of benefits or the doctrine of
apparent authority, nor the principle of
estoppel espoused by the Court to undermine
the defense of ultra vires were inapplicable to
favor the payee as against the corporation
since in this case, estoppel could not apply
being fully aware of the lack of authority.
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.
their individual debts or transactions arising
from or in relation to matters in which the
ISSUE: corporation has no legitimate concern. Since
such accommodation paper cannot thus be
enforced against the corporation, especially
since it is not involved in any aspect of the
W/N the president is the accommodation party
corporate business or operations, the
inescapable conclusion in law and in logic is
that the signatories thereof shall be personally
RULING: liable therefor, as well as the consequences
arising from their acts in connection therewith.
Assuming arguendo that Mover Enterprises,
The instant case falls squarely within the
Inc. is the accommodation party in this case,
purview of the aforesaid decisional rules. If we
as petitioner suggests, the inevitable question
indulge petitioner in her aforesaid postulation,
is whether or not it may be held liable on the
then she is effectively barred from recovering
accommodation instrument, that is, the check
from Mover Enterprises, Inc. the value of the
issued in favor of herein petitioner.
check. Be that as it may, petitioner is not
without recourse.
We hold in the negative.
Consequently, we modify the decision of
The aforequoted provision of the Negotiable
respondent court in CA-G.R. CV No. 05464 by
Instruments Law which holds an
setting aside and declaring without force and
accommodation party liable on the instrument
effect its pronouncements
to a holder for value, although such holder at
the time of taking the instrument knew him to
be only an accommodation party, does not
include nor apply to corporations which are
accommodation parties. This is because the
issue or indorsement of negotiable paper by a
corporation without consideration and for the
accommodation 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
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.
By way of exception, an officer or agent of a
corporation shall have the power to execute or
indorse a negotiable paper in the name of the
corporation for the accommodation of a third
person only if specifically authorized to do
so. Corollarily, corporate officers, such as the
president and vice-president, have no power
to execute for mere accommodation a
negotiable instrument of the corporation for