CANEDA V. CA- Accommodation Party
181 SCRA 762
FACTS:
Gueson for value received, executed a promissory note in favor of Caneda, promising to pay monthly installments with interest per annum. That to secure the obligation, he executed a chattel mortgage and used a Toyota Jiffy jeep as collateral; that it is expressly provided for in the promissory note that in case of default in any installment would deem that whole obligation demandable. This promissory note was later assigned to FNCB. Gueson then defaulted in his obligation and had an outstanding balance. Despite demands on Gueson, he failed and refused to pay. This prompted FNCB to file an action for replevin and sum of money, and in the alternative, prayed for the payment of the outstanding balance plus interest.
Gueson in his answer alleged that he was just an accommodation party in favor of Caneda. This was denied by Caneda.
The trial court held that Gueson was indeed an accommodation party in favor of Caneda; that there was a novation in the form of substitution of debtors when Caneda executed the undertaking assuming the liability of Gueson in favor of FNCB; that the phrase “with recourse to Gueson in case of default” found in the undertaking was inserted only after Caneda and FNCB had already signed the undertaking and without the knowledge of Gueson and that Caneda was in bad faith when it tried to evade payment of a justly-secured legal obligation.
HELD:
As to the merits of the case, it is undisputed that Gueson executed a promissory note in favor of Caneda, secured by a chattel mortgage on a Toyota Jiffy jeep as collateral; which promissory note and chattel mortgage was assigned by Caneda in favor of FNCB evidently to secure his obligation with said company, with the knowledge and consent of Gueson. The records also clearly established that FNCB tried to collect from Gueson, Caneda consented and affixed his signature in an undertaking thereby acknowledging indebtedness in favor of FNCB.
As between Gueson and Caneda, it is obvious that whether private agreement between them is binding on them alone and not on FNCB whose only concern in the whole transaction is the repayment of the loan it has extended.
As regards FNCB, Caneda is the real debtor of the company and Gueson is only an accommodation party of Caneda. The trial court held that there was novation as there was substitution of debtors when Caneda executed the undertaking. But the CA is correct, by saying that there was no
novation. Novation is never presumed. It must be explicitly stated. Caneda merely confirmed that he was the real debtor of FNCB in the undertaking signed, while Gueson merely accommodated Caneda in signing the promissory note and executing the chattel mortgage. Thus, it has been
ruled that one who signs as maker, drawer, acceptor or indorser, without receiving value therefore, and for the purpose of lending his name to some other person is liable to the instrument to a holder for value, notwithstanding the fact that such holder at the time of the taking the instrument knew him to be only an accommodation party. Nonetheless, after paying the holder, he is entitled to obtain reimbursement from the party accommodated.
Likewise, it is no defense to state that Caneda and Gueson didn't receive any value for the promissory note executed, both claiming to be accommodation parties. A third person advances the face value of the note to the accommodated party at the time of the creation of the note,
the consideration for the note as regards the maker is the money advanced to the accommodated party, and it cannot be said that the note is lacking in consideration as to the accommodating party just becaue he himself received some of the money. It is enough that the value given for the note
at the time of its creation.
