CRISOLOGO JOSE V. CA - Accommodation Party

177 SCRA 594

FACTS:

The  president  of  Movers  Enterprises,  to  accommodate  its  clients  Spouses Ong,  issued  a  check  in  favor  of  petitioner  Crisologo-Jose.    This  was  in consideration of a quitclaim by petitioner over a parcel of land, which the GSIS  agreed  to  sell  to  spouses  Ong,  with  the  understanding  that  upon approval  of  the  compromise  agreement,  the  check  will  be  encashed accordingly.    As  the  compromise agreement  wasn't  approved  during  the expected period of time, the aforesaid check was replaced with another one for  the  same  value.    Upon  deposit  though  of  the  checks  by  petitioner,  it was dishonored.  This prompted the petitioner to file a case against Atty. Bernares  and  Santos  for  violation  of  BP22.    Meanwhile,  during  the preliminary  investigation,  Santos  tried  to  tender  a  cashier’s  check  for  the value of the dishonored check but petitioner refused to accept such.  This was consigned by Santos with the clerk of court and he instituted charges against petitioner.  The trial court held that consignation wasn't applicable to the case at bar but was reversed by the CA.

HELD:

Petitioner averred that it is not Santos who is the accommodation party to the instrument but the corporation itself.  But assuming arguendo that the corporation  is  the  accommodation  party,  it  cannot  be  held  liable  to  the check  issued  in  favor  of  petitioner.    The  rule  on  accommodation  party
doesn't include or apply to corporations which are accommodation parties.  This is because the issue or indorsement 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 the 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  party  only  is  specifically authorized  to  do  so.    Corollarily,  corporate  officers  have  no  power  to execute   for   mere   accommodation   a   negotiable   instrument   of   the corporation  for  their  individual  debts  and  transactions  arising  from  or  in relation  to  matters  in  which  the  corporation  has  no  legitimate  concern.  Since   such   accommodation   paper   cannot   be   enforced   against   the corporation, the signatories thereof shall be personally liable therefore, as well as the consequences arising from their acts in connection therewith.