CONSIDERATION

(18) Travel On vs. CA

GR 56169, 26 June 1992

Travel On vs. CA
G.R. No. 56169. 26 June 1992
Third Division, Feliciano (J)
Doctrine:
Check which is regular on its
face is deemed prima facie to
have been issued for a
valuable
consideration and every
person whose signature
appears thereon is
deemed to have
Travel On vs. CA
G.R. No. 56169. 26 June 1992
Third Division, Feliciano (J)
Doctrine:
Check which is regular on its
face is deemed prima facie to
have been issued for a
valuable
consideration and every
person whose signature
appears thereon is
deemed to have
Travel On vs. CA
G.R. No. 56169. 26 June 1992
Third Division, Feliciano (J)
Doctrine:
Check which is regular on its
face is deemed prima facie to
have been issued for a
valuable
consideration and every
person whose signature
appears thereon is
deemed to have
FACTS:
Petitioner Travel-On Inc. is a travel agency from which Arturo Miranda procured tickets on behalf of
airline passengers and derived commissions therefrom.  Miranda was sued by petitioner to collect on the
six postdated checks he issued which were all dishonored by the drawee banks.  Miranda, however,
claimed that he had already fully paid and even overpaid his obligations and that refunds were in fact due
to him. He argued that he had issued the postdated checks not for the purpose of encashment to pay his
indebtedness but for purposes of accommodation, as he had in the past accorded similar favors to
petitioner.  Petitioner however urges that the postdated checks are per se evidence of liability on the part
of private respondent and further argues that even assuming that the checks were for accommodation,
private respondent is still liable thereunder considering that petitioner is a holder for value.

ISSUE:
Whether Miranda is liable on the postdated checks he issued even assuming that said checks were issued
for accommodation only.

RULING:
There was no accommodation transaction in the case at bar.  In accommodation transactions recognized
by the Negotiable Instruments Law, an accommodating party lends his credit to the accommodated party,
by issuing or indorsing a check which is held by a payee or indorsee as a holder in due course, who gave
full value therefor to the accommodated party.  The latter, in other words, receives or realizes full value
which the accommodated party then must repay to the accommodating party.  But the accommodating
party is bound on the check to the holder in due course who is necessarily a third party and is not the
accommodated party.  In the case at bar, Travel-On was payee of all six (6) checks, it presented these
checks for payment at the drawee bank but the checks bounced. Travel-On obviously was not an
accommodated party; it realized no value on the checks which bounced.  Miranda must be held liable on
the checks involved as petitioner is entitled to the benefit of the statutory presumption that it was a holder
in due course and that the checks were supported by valuable consideration.

**In accommodation transactions recognized by the Negotiable Instruments Law, an accommodating party lends his
credit to the accommodated party, by issuing or indorsing a check which is held by a payee or indorsee as a holder
in due course, who gave full value therefor to the accommodated party.  In the case at bar, Travel-On was the
payee of all six (6) checks, it presented these checks for payment at the drawee bank but the checks bounced.
Travel-On obviously was not an accommodated party; it realized no value on the checks which bounced.

(19) Maulini V. Serrano (1914)

FACTS:

 promissory note: 3,000. Due 5th of September, 1912.

 We jointly and severally agree to pay to the order of Don Antonio G. Serrano on or before the 5th
day of September, 1912, the sum of three thousand pesos (P3,000) for value received for commercial
operations. Notice and protest renounced. If the sum herein mentioned is not completely paid on the 5th
day of September, 1912, this instrument will draw interest at the rate of 1½ per cent per month from the
date when due until the date of its complete payment. The makers hereof agree to pay the additional sum
of P500 as attorney's fees in case of failure to pay the note.
Manila, June 5, 1912.
(Sgd.) For Padern, Moreno & Co., by F. Moreno, member of the firm. For Jose Padern, by F. Moreno.
Angel Gimenez.

 The note was indorsed on the back as follows:

Pay note to the order of Don Fernando Maulini, value received. Manila, June 5, 1912. (Sgd.) A.G.
Serrano.

 Maulini's business as a broker consisted in looking up and ascertaining persons who had money
to loan as well as those who desired to borrow money and, acting as a mediary, negotiate a loan between
the two
Method usually followed: the broker delivered the money personally to the borrower, took note in
his own name and immediately transferred it by indorsement to the lender done at the special request of
the indorsee and simply as a favor to him, the latter stating to the broker that he did not wish his name to
appear on the books of the borrowing company as a lender of money and that he desired that the broker
take the note in his own name, immediately transferring to him title thereto by indorsement

Trial Court: immaterial whether there was a consideration for the transfer or not, as the indorser, under
the evidence offered, was an accommodation indorser.

ISSUES: W/N Serrano was an accomodation indorser

HELD: Judgment reversed.

1. No. The accommodation to which reference is made in Section 29 is not one to the person who
takes the note but one to the maker or indorser of the note. It is true, that in the case at bar, it was an
accommodation to the plaintiff, in the popular sense, to have the defendant indorse the note; but it
wasn't the accommodation described in the law but rather a mere favor to him and one which in no
way bound Serrano. In cases of accommodation indorsement, the indorser makes the
indorsement for the accommodation of the maker. Such an indorsement is generally for the purpose of
better securing the payment of the note—that is, he lends his name to the maker and not the holder.

2. Parol evidence is admissible for the purposes named. The prohibiton against parol evidence is to
prevent alteration, change, modification, or contradiction of the term of a written instrument, admittedly
existing, by the use of some parol evidence except in cases specifically named in the action. The case at
bar is not one where the evidence offered varies, alters, modifies, or contradicts the terms of the
indorsement admittedly existing. The evidence was not offered for that purpose. The purpose was to
show that the contract of indorsement ever existed; that the minds of the parties never met on the
terms of such contract; that they never mutually agreed to enter into such contract; and that there never
existed a consideration upon which such an agreement could be founded.

(20) CHAN WAN vs. TAN KIM and CHEN SO

G.R. No. L-15380 September 30, 1960

Facts: Eleven checks payable to “cash or bearer” and drawn by defendant Tan upon the Equitable
Banking Corporation, were all presented for payment by Chan Wan to the drawee bank, but they “were all
dishonored and returned to him unpaid due to insufficient funds and/or causes attributable to the
drawer.”

The drawer in drawing the check engaged that “on due presentment, the check would be paid, and that if
it be dishonored . . . he will pay the amount thereof to the holder”.
On the backs of the checks, endorsements which apparently show they had been deposited with the China
Banking Corporation and were, by the latter, presented to the drawee bank for collection.

The court declined to order payment for two principal reasons: (a) plaintiff failed to prove he was a holder
in due course, and (b) the checks being crossed checks should not have been deposited instead with the
bank mentioned in the crossing.

Issue: WON a holder who is not a holder in due course may recover on the checks?

Held: YES. The Negotiable Instruments Law does not provide that a holder who is not a holder in due
course, may not in any case, recover on the instrument. If B purchases an overdue negotiable promissory
note signed by A, he is not a holder in due course; but he may recover from A, if the latter has no valid
excuse for refusing payment. The only disadvantage of holder who is not a holder in due course is that the
negotiable instrument is subject to defense as if it were non- negotiable.

ACCOMODATION PARTY

(21) SADAYA vs. SEVILLA

19 SCRA 924

FACTS:
Sadaya, Sevilla and Varona signed solidarily a promissory note in favor of the bank. Varona was the only
one who received the proceeds of the note. Sadaya and Sevilla both signed as co-makers to accommodate
Varona. Thereafter, the bank collected from Sadaya. Varona failed to reimburse. Consequently, Sevilla
died and intestate estate proceedings were established. Sadaya filed a creditor’s claim on his estate for the
payment he made on the note. The administrator resisted the claim on the ground that Sevilla didn't
receive any proceeds of the loan. The trial court admitted the claim of Sadaya though tis was reversed by
the CA.

FACTS:
 March 28, 1949: Victor Sevilla, Oscar Varona and Simeon Sadaya executed, jointly and severally, in favor 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 was received by Oscar Varona alone. 
 Victor Sevilla and Simeon Sadaya signed the promissory note as co-makers only as a favor to Oscar
Varona. 
 June 15, 1950: outstanding balance is P4,850.00.  No payment thereafter made.
 Oct 16 1952: bank collected from Sadaya total of P5,416.12(w/ int)
 Varona failed to reimburse Sadaya despite repeated demands. V
 Victor Sevilla died Francisco Sevilla was named administrator.
 Sadaya filed a creditor's claim for the above sum of P5,746.12, plus attorneys fees in the sum of P1,500.00
 The administrator resisted the claim 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 order the administrator to pay
 CA reversed.

ISSUE:
Whether or not Sadaya can claim against the estate of Sevilla as co-accomodation party when Verona as
principal debtor is not yet insolvent

HELD:
Sadaya could have sought reimbursement from Varona, which is right and just as the latter wasthe only
one who received value for the note executed. There is an implied contract of indemnity between Sadaya
and Varona upon the former’s payment of the obligation to the bank. Surely enough, the obligations of
Varona and Sevilla to Sadaya cannot be joint and several. For indeed, had payment been made by Varona,
Varona couldn't had reason to seek reimbursement from either Sadaya or Sevilla. After all, the proceeds of
the loan went to Varona alone. On principle, a solidary accommodation maker—who made payment—has
the right to contribution, from his co-accomodation maker, in the absence of agreement to the contrary
between them, subject to conditions imposed by law. This right springs from an implied promise to share
equally the burdens they may ensue from their having consented to stamp their signatures on the
promissory note.

The following are the rules:

1. A joint and several 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 and several accommodation maker who pays on the said promissory note may directly demand
reimbursement from his co-accommodation maker without first directing his action against the principal
debtor provided that
a. He made the payment by virtue of a judicial demand
b. A principal debtor is insolvent.
It was never shown that there was a judicial demand on Sadaya to pay the obligation and also, it was never
proven that Varona was insolvent. Thus, Sadaya cannot proceed against Sevilla for reimbursement.

(22) Crisologo-Jose vs. Court of Appeals

177 SCRA 594
(1989)

FACTS:
Plaintiff Ricardo S. Santos, Jr. was the vice-president of Mover Enterprises, Inc. in-charge of marketing
and sales; and the president of the said corporation was Atty. Oscar Z. Benares. Atty. Benares, in
accommodation of his clients, the spouses Jaime and Clarita Ong, issued check against Traders Royal
Bank, payable to defendant Ernestina Crisologo-Jose. Since the check was under the account of Mover
Enterprises, Inc., the same was to be signed by its president, Atty. Oscar Z. Benares, and the treasurer of
the said corporation. However, since at that time, the treasurer of Mover Enterprises was not available,
Atty. Benares prevailed upon the plaintiff, Ricardo S. Santos, Jr., to sign the aforesaid check. The check
was issued to defendant Ernestina Crisologo-Jose in consideration of the waiver or quitclaim by said
defendant over a certain property which the Government Service Insurance System (GSIS) agreed to sell
to the spouses Jaime and Clarita Ong, with the understanding that upon approval by the GSIS of the
compromise agreement with the spouses Ong, the check will be encashed accordingly. Since the
compromise agreement was not approved within the expected period of time, the aforesaid check was
replaced by Atty. Benares. This replacement check was also signed by Atty. Oscar Z. Benares and by the
plaintiff Ricardo S. Santos, Jr. When defendant deposited this replacement check with her account at
Family Savings Bank, Mayon Branch, it was dishonored for insufficiency of funds. The petitioner filed an
action against the corporation for accommodation party.

ISSUE:
WON the corporation can be held liable as accommodation party?

HELD:
No. Accommodation party liable on the instrument 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 their individual debts or transactions arising from or in relation to matters in which the
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 corporate business or operations,
the inescapable conclusion in law and in logic is that the signatories thereof shall be personally liable
therefor, as well as the consequences arising from their acts in connection therewith.

(23) STELCO MARKETING V. CA

210 SCRA 51

FACTS:
Petitioner was engaged in the distribution and sale of structural steel bars. RYL bought on several
occasion large quantities of steel bars but the same were never paid for despite several demands by
petitioner.
On a relevant date, RYL gave to Armstrong Industries a check in payment of its obligations. The check was
drawn by Steelweld Corporation—allegedly the owner of RYL persuaded the president of Steelweld to
accommodate the former in its obligation. The check, when deposited was thereafter dishonored due to
insufficient funds. A case ensued for violations of BP22 but the case was dismissed as the check was held
to be for accommodation purposes only. Thereafter a complaint was filed by petitioner against RYL and
Steelweld for the recovery of sum of money in payment of the steel bars ordered. RYL was nowhere to be
found that is why the proceedings commenced as against Steelweld only. The trial court decided in favor
of petitioner but this was reversed by the CA.

ISSUE:
Whether or not respondents is liable as an accommodation party?

HELD:
Petitioner contends that the acquittal of Lim and Tianson didn't operate to release Steelweld from its
liability as an accommodation party. Noteworthy is that neither said pronouncement nor any other part of
the judgment of acquittal declared it liable to petitioner. To be sure, as regards an accommodation party,
the condition of lack of notice of any infirmity or defect in title of the persons negotiating it is of no
application since the law preserves the right of recourse of a holder for value against an accommodation
party notwithstanding knowledge that at the time of taking the instrument, knew him only as an
accommodation party. Further, there is no evidence to show that petitioner possessed the check before
the instrument’s presentment and dishonor. In what transpired during the transactions involving the
check, evidence and facts show that there was any participation or intervention on the part of petitioner.
What the record shows is that only after the check was deposited and dishonored, petitioner came into
possession of it in some way and was able to give it in evidence at the trial of the civil case it has instituted
against the drawers of the check.