STELCO MARKETING V. CA

210 SCRA 51

 

FACTS:

Petitioner was engaged in the distribution and sale of structiural 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.
 

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.