Maulini V.

Serrano (1914)

G.R. No. L-8844 December 16, 1914

Lessons Applicable: Consideration and Accommodation Party (Negotiable Instruments)

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

LAW APPLIED:
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.

HELD: Judgment reversed.

RTC ERRED

Based on parol evidence provisionally admitted on the trial - defendant was a broker doing business in
Manila and part of his business 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.,,According to his custom in transactions of this kind, and the arrangement made in this
particular case, the broker obtained compensation for his services of the borrower, the lender paying
nothing therefor. Sometimes this was a certain per cent of the sum loaned; at other times it was a part
of the interest which the borrower was to pay, the latter paying 1½ per cent and the broker ½ per
cent…the broker delivered the money personally to the borrower, took note in his own name and
immediately transferred it by indorsement to the lender. In the case at bar this was 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. This was done, the note being at once transferred to the lender.

There never was a moment when Serrano was the real owner of the note. It was always the note of the
indorsee, Maulini, he having furnished the money which was the consideration for the note directly to
the maker and being the only person who had the slightest interest therein, Serrano, the broker, acting
solely as an agent, a vehicle by which the naked title to the note passed fro the borrower to the lender.
The only payment that the broker received was for his services in negotiating the loan. He was paid
absolutely nothing for becoming responsible as an indorser on the paper, nor did the indorsee lose, pay
or forego anything, or alter his position thereby.

Nor was the defendant an accommodation indorser. The learned trial court quoted that provision of the
Negotiable Instruments Law which defines an accommodation party as "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 the same to be
only an accommodation party." (Act No. 2031, sec. 29.)

Trial court misunderstood this definition. The accommodation to which reference is made in the
section quoted is not one to the person who takes the note (payee or indorsee) the maker or indorser of
the note. In the case at bar…it was not the accommodation described in the law, but 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 lend his name to the maker, not to the
holder. Putting it in another way: An accommodation note is one to which the accommodation party
has put his name, without consideration, for the purpose of accommodating some other party who is to
use it and is expected to pay it. The credit given to the accommodation part is sufficient consideration
to bind the accommodation maker. Where, however, an indorsement is made as a favor to the
indorsee, who requests it, not the better to secure payment, but to relieve himself from a distasteful
situation, and where the only consideration for such indorsement passes from the indorser to the
indorsee, the situation does not present one creating an accommodation indorsement, nor one where
there is a consideration sufficient to sustain an action on the indorsement.

The prohibition in section 285 of the Code of Civil Procedure does not apply to a case. The purpose of
the parol evidence was to demonstrate, not that the indorser did not intend to make the particular
indorsement which he did make; not that he did not intend to make the indorsement in the terms made;
but, rather, to deny the reality of any indorsement; that a relation of any kind whatever was created or
existed between him and the indorsee by reason of the writing on the back of the instrument; that no
consideration ever passed to sustain an indorsement of any kind whatsoever.

The contention has some of the appearances of a case in which an indorser seeks prove forgery. Where
an indorser claims that his name was forged, it is clear that parol evidence is admissible to prove that
fact, and, if he proves it, it is a complete defense, the fact being that the indorser never made any such
contract, that no such relation ever existed between him and the indorsee, and that there was no
consideration whatever to sustain such a contract. In the case before us we have a condition somewhat
similar. While the indorser does not claim that his name was forged, he does claim that it was obtained
from him in a manner which, between the parties themselves, renders, the contract as completely
inoperative as if it had been forged.

Parol evidence was admissible for the purpose named.

There is no contradiction of the evidence offered by the defense and received provisionally by the
court. Accepting it as true the judgment must be reversed.

The judgment appealed from is reversed and the complaint dismissed on the merits; no special finding
as to costs.
AGLIBOT V. SANTIA (G.R. NO. 185945; DECEMBER 5, 2012)

FACTS:

Engr. Ingersol L. Santia (Santia) loaned the amount of P2,500,000.00 to Pacific Lending & Capital
Corporation (PLCC), through its Manager, petitioner Fideliza J. Aglibot (Aglibot). The loan was evidenced
by a promissory note. Allegedly as a guaranty for the payment of the note, Aglibot issued and delivered to
Santia eleven (11) post-dated personal checks drawn from her own account maintained at Metrobank. Upon
presentment of the checks for payment, they were dishonored by the bank for having been drawn against
insufficient funds or closed account. Santia thus demanded payment from PLCC and Aglibot of the face
value of the checks, but neither of them heeded his demand. Consequently, eleven (11) Informations for
violation of B.P. 22 were filed before the MTCC.

MTCC acquitted Aglibot. On appeal, the RTC rendered a decision absolving Aglibot and dismissing the
civil aspect of the case on the ground of failure to fulfill a condition precedent of exhausting all means to
collect from the principal debtor.

On appeal, the Court of Appeals ruled that the RTC erred when it dismissed the civil aspect of the case.
Hence, the CA ruled that Aglibot is personally liable for the loan.

Thus, Aglibot filed this instant petition for certiorari. She argued that she was merely a guarantor of the
obligation and therefore, entitled to the benefit of excussion under Article of the 2058 of the Civil Code.
She further posited that she is not personally liable on the checks since she merely contracted the loan in
behalf of PLCC.

ISSUES:

Is Aglibot entitled to the benefit of excussion?

Is Aglibot personally liable on the checks?
HELD: It is settled that the liability of the guarantor is only subsidiary, and all the properties of the
principal debtor, the PLCC in this case, must first be exhausted before the guarantor may be held
answerable for the debt. Thus, the creditor may hold the guarantor liable only after judgment has been
obtained against the principal debtor and the latter is unable to pay, for obviously the exhaustion of the
principals property the benefit of which the guarantor claims cannot even begin to take place before
judgment has been obtained. This rule is contained in Article 2062 of the Civil Code, which provides that
the action brought by the creditor must be filed against the principal debtor alone, except in some instances
mentioned in Article 2059 when the action may be brought against both the guarantor and the principal
debtor.

The Court must, however, reject Aglibots claim as a mere guarantor of the indebtedness of PLCC to Santia
for want of proof, in view of Article 1403(2) of the Civil Code, embodying the Statute of Frauds. Under the
above provision, concerning a guaranty agreement, which is a promise to answer for the debt or default of
another, the law clearly requires that it, or some note or memorandum thereof, be in writing. Otherwise, it
would be unenforceable unless ratified, although under Article 1358 of the Civil Code, a contract of
guaranty does not have to appear in a public document. Contracts are generally obligatory in whatever form
they may have been entered into, provided all the essential requisites for their validity are present, and the
Statute of Frauds simply provides the method by which the contracts enumerated in Article 1403(2) may be
proved, but it does not declare them invalid just because they are not reduced to writing. Thus, the form
required under the Statute is for convenience or evidentiary purposes only.

On the other hand, Article 2055 of the Civil Code also provides that a guaranty is not presumed, but must
be express, and cannot extend to more than what is stipulated therein. This is the obvious rationale why a
contract of guarantee is unenforceable unless made in writing or evidenced by some writing.

***
The appellate court ruled that by issuing her own post-dated checks, Aglibot thereby bound herself
personally and solidarily to pay Santia, and dismissed her claim that she issued her said checks in her
official capacity as PLCCs manager merely to guarantee the investment of Santia. The facts present a clear
situation where Aglibot, as the manager of PLCC, agreed to accommodate its loan to Santia by issuing her
own post-dated checks in payment thereof. She is what the Negotiable Instruments Law calls an
accommodation party.

The relation between an accommodation party and the party accommodated is, in effect, one of principal
and surety the accommodation party being the surety. It is a settled rule that a surety is bound equally and
absolutely with the principal and is deemed an original promisor and debtor from the beginning. The
liability is immediate and direct. It is not a valid defense that the accommodation party did not receive any
valuable consideration when he executed the instrument; nor is it correct to say that the holder for value is
not a holder in due course merely because at the time he acquired the instrument, he knew that the indorser
was only an accommodation party. Unlike in a contract of suretyship, the liability of the accommodation
party remains not only primary but also unconditional to a holder for value, such that 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.

DENIED
PHILIPPINE NATIONAL BANK v. RAMON MAZA

FACTS:
PNB is suing Maza and Mecenas on 5 promissory notes of P10,000 each.
Maza and Mecenas executed two of the promissory notes on January 20, 1921, due three months after date.
The three other notes due four months after date were executed by the same parties on January 21, 1921.
The notes were not taken up by Maza and Mecenas at maturity. The obligations with accumulated interest
totaled P65,207.73 on September 22, 1924.
PNB filed a case against defendants in CFI Iloilo. The special defense by defendants was - promissory
notes were sent in blank to them by Enrique Echaus with the request that they sign them so Echaus, might
negotiate them with PNB in case of need; that defendants have not negotiated PNs with PNB, nor have they
received value thereof, or delivered them to the bank in payment of any preexisting debt; and that it was
Enrique Echaus who negotiated the notes with the bank and who is the real party in interest and the party
liable for the payment of the notes. Defendants moved that Echaus be ordered included as one of the
defendants. The CFI denied the motion. Judgment rendered in favor of PNB and defendants are jointly and
severally for a total of P65,207.73, with interest at 9 per cent on twenty thousand pesos (P20,000) from
September 23, 1924, or at the rate of five pesos (P5) a day, and with interest at 9 per cent on thirty thousand
pesos (P30,000) from September 23, 1924, or at the rate of P7.50 a day, and with costs.
ISSUE: WON Defendants are liable?
It is deduced that the defendants admit the genuineness and due execution of the instruments sued on (Code
of Civil Procedure, secs. 103, 285)
Neither do the appellants point out any mistake in regard to the amount and interest that the lower court
sentenced them to pay to the plaintiff bank. Predicated on these premises, from whatever point of view we
look at the case, we arrive at the same conclusion that the defendants are liable.
On the first assumption that Maza and Mecenas were the principals and Echaus the agent, as argued by
counsel for the appellee, the principals must fulfill their obligations (Civil Code, art. 1727). On another
assumption, which is a fact, that the defendants are exactly what they appear to be, the makers of the
negotiable instruments, then they must keep their engagement and must pay as promised. Their liability on
the instruments is primary and unconditional. (Negotiable Instruments Law, Act No. 2031, sec. 60.)
The most plausible and reasonable stand for the defendants is that they are accommodation parties. But as
accommodation parties, the defendants having signed the instruments without receiving value therefor and
for the purpose of lending their names to some other person, are still liable on the instruments. The law now
is that the accommodation party can claim no benefit as such, but he is liable according to the face of his
undertaking, the same as if he were himself financially interested in the transaction. (Negotiable
Instruments Law, Act No. 2031, sec. 29)
The defense is made to the action that the defendants never received the value of the promissory notes. It is,
of course, fundamental that an instrument given without consideration does not create any obligation at law
or in equity in favor of the payee. However, to fasten liability upon an accommodation maker, it is not
necessary that any consideration should move to him. The consideration which supports the promise of the
accommodation maker is that parted with by the person taking the note and received by the person
accommodated
While perhaps unnecessary to this decision, it may properly be remarked that when the accommodation
parties make payment to the holder of the notes, they have the right to sue the accommodated party for
reimbursement, since the relation between them is in effect that of principal and sureties, the
accommodation parties being the sureties.
Judgment affirmed with costs.