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Loyola Grand Villas Homeowners (South) Association vs Facts: Plaintiff Ricardo S. Santos, Jr. was the vice-president of
Court of Appeals (1997) 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.
Facts: LGVHAI was organized as the association of
Since the check was under the account of Mover Enterprises,
homeowners and residents of the Loyola Grand Villas. It was
Inc., the same was to be signed by its president, Atty. Oscar Z.
organized by the developer of the subdivision and its first
Benares, and the treasurer of the said corporation. However,
president was Victorio V. Soliven, himself the owner of the
since at that time, the treasurer of Mover Enterprises was not
available, Atty. Benares prevailed upon the plaintiff, Ricardo S. Ramirez vs Orientalist Co. (1918)
Santos, Jr., to sign the aforesaid check. The check was issued
to defendant Ernestina Crisologo-Jose in consideration of the Facts: Orientalist Company was engaged in the business of
waiver or quitclaim by said defendant over a certain property maintaining and conducting a theatre in the city of Manila for
which the Government Service Insurance System (GSIS) agreed the exhibition of cinematographic films. engaged in the
to sell to the spouses Jaime and Clarita Ong, with the business of marketing films for a manufacturer or
understanding that upon approval by the GSIS of the manufacturers, there engaged in the production or distribution
compromise agreement with the spouses Ong, the check will of cinematographic material. In this enterprise the plaintiff was
be encashed accordingly. Since the compromise agreement represented in the city of Manila by his son, Jose Ramirez. The
was not approved within the expected period of time, the directors of the Orientalist Company became apprised of the
aforesaid check was replaced by Atty. Benares. This fact that the plaintiff in Paris had control of the agencies for
replacement check was also signed by Atty. Oscar Z. Benares two different marks of films, namely, the Eclair Films and the
and by the plaintiff Ricardo S. Santos, Jr. When defendant Milano Films; and negotiations were begun with said officials
deposited this replacement check with her account at Family of the Orientalist Company by Jose Ramirez, as agent of the
Savings Bank, Mayon Branch, it was dishonored for plaintiff. The defendant Ramon J. Fernandez, one of the
insufficiency of funds. The petitioner filed an action against the directors of the Orientalist Company and also its treasure, was
corporation for accommodation party. chiefly active in this matter. Ramon J. Fernandez had an
informal conference with all the members of the companys
Issue: WON the corporation can be held liable as board of directors except one, and with approval of those with
accommodation party? whom he had communicated, addressed a letter to Jose
Ramirez, in Manila, accepting the offer contained in the
Held: No. Accommodation party liable on the instrument to a holder for memorandum the exclusive agency of the Eclair films and
value, although such holder at the time of taking the instrument knew Milano films. In due time the films began to arrive in Manila, it
him to be only an accommodation party, does not include nor apply to appears that the Orientalist Company was without funds to
corporations which are accommodation parties. This is because the meet these obligations. Action was instituted by the plaintiff to
issue or indorsement of negotiable paper by a corporation without Orientalist Company, and Ramon J. Fernandez for sum of
consideration and for the accommodation of another is ultra money.
vires. Hence, one who has taken the instrument with knowledge of the
accommodation nature thereof cannot recover against a corporation Issue: WON the Orientalist Co. is liable for the acts of its
where it is only an accommodation party. If the form of the instrument, treasurer, Fernandez?
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 Held: Yes. It will be observed that Ramon J. Fernandez was the
corporation is for the accommodation of another, he cannot recover particular officer and member of the board of directors who
against the corporation thereon. By way of exception, an officer or was most active in the effort to secure the films for the
agent of a corporation shall have the power to execute or indorse a corporation. The negotiations were conducted by him with the
negotiable paper in the name of the corporation for the knowledge and consent of other members of the board; and
accommodation of a third person only if specifically authorized to do the contract was made with their prior approval. In the light of
so. Corollarily, corporate officers, such as the president and vice- all the circumstances of the case, we are of the opinion that
president, have no power to execute for mere accommodation a the contracts in question were thus inferentially approved by
negotiable instrument of the corporation for their individual debts or the companys board of directors and that the company is
transactions arising from or in relation to matters in which the bound unless the subsequent failure of the stockholders to
corporation has no legitimate concern. Since such accommodation approve said contracts had the effect of abrogating the liability
paper cannot thus be enforced against the corporation, especially thus created.
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.