Crisologo-Jose vs Court of Appeals (1989)

February 14, 2013 markerwins Corporation Law, Mercantile

Lawcorpo, merc
Facts: Plaintiff Ricardo S. Santos, Jr. was the vice-president of 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. Since the check was under the account of Mover
Enterprises, Inc., the same was to be signed by its president, Atty. Oscar Z.
Benares, and the treasurer of the said corporation. However, since at that
time, the treasurer of Mover Enterprises was not available, Atty. Benares
prevailed upon the plaintiff, Ricardo S. Santos, Jr., to sign the aforesaid
check. The check was issued to defendant Ernestina Crisologo-Jose in
consideration of the waiver or quitclaim by said defendant over a certain
property which the Government Service Insurance System (GSIS) agreed to
sell to the spouses Jaime and Clarita Ong, with the understanding that
upon approval by the GSIS of the compromise agreement with the spouses
Ong, the check will be encashed accordingly. Since the compromise
agreement was not approved within the expected period of time, the
aforesaid check was replaced by Atty. Benares. This replacement check was
also signed by Atty. Oscar Z. Benares and by the plaintiff Ricardo S. Santos,
Jr. When defendant deposited this replacement check with her account at
Family Savings Bank, Mayon Branch, it was dishonored for insufficiency of
funds. The petitioner filed an action against the corporation for
accommodation party.
Issue:
+ WON the corporation can be held liable as accommodation party?
Held: No. Accommodation party liable on the instrument to a holder for
value, although such holder at the time of taking the instrument knew him
to be only an accommodation party, does not include nor apply to
corporations which are accommodation parties. This is because the issue
or indorsement of negotiable paper by a corporation without consideration
and for the accommodation 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 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 person only if specifically authorized to do so. Corollarily, corporate
officers, such as the president and vice-president, have no power to execute
for mere accommodation a negotiable instrument of the corporation for
their individual debts or transactions arising from or in relation to matters
in which the corporation has no legitimate concern. Since such
accommodation paper cannot thus be enforced against the corporation,
especially 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.

No. L-24224. November 3, 1925] →

Crisologo-Jose v. Court of Appeals [G.R. No. 80599. September 15, 1989]

30JUL

FACTS

Petitioner avers that the accommodation party in this case is Mover Enterprises,
Inc. and not private respondent who merely signed the check in question in a
representative capacity, that is, as vice-president of said corporation, hence he is
not liable thereon under the Negotiable Instruments Law.

ISSUE

Whether or not petitioner is not liable on the ground that he is simply acting as an
agent of a corporation.
RULING

NO. An accommodation party is liable on the instrument to a holder for value,

although such holder at the time of taking the instrument knew him to be only an
accommodation party, does not include nor apply to corporations which are
accommodation parties. This is because the issue or indorsement of negotiable
paper by a corporation without consideration and for the accommodation of
another is ultra vires.

FACTS:

Boncan was the Finance Officer of the Philippine Embassy in Madrid who on many
occasions negotiated with Banco Atlantico checks, allegedly endorsed to her by
the embassy. On these occasions, the bank allowed the payment of the checks,
notwithstanding the fact that the drawee bank has not yet cleared the checks
for collection. This was premised on the finding that Boncan had special
relations with the employees of the bank. And that upon presentment to
the drawee bank, the checks were dishonored due to non-acceptance allegedly
on the ground that the drawer has ordered the
stoppage of payment. This prompted Banco Atlantico to collect from the
Philippine Embassy for the funds released to Boncan but the latter refused. This
eventually led to filing of money claim of the bank with the Auditor
General.
HELD:

On whether or not Banco Atlantico was a holder in due course, it is not.

Following the decision of the Auditor General in denying the claim of the
bank, the checks were demand notes. It should have been put on guard when
Boncan negotiated the checks with them and subsequently deposited
the same to her account. Even though it were demand notes, she
instructed the bank that the same be not presented for collection till a later date.
The fact that the amount was quite big and it was the payee herself who made
the request that the same be not presented for collection until a fixed date in
the future was proof of a glaring infirmity or defect in the instrument. It
loudly proclaims “Take me at your own risk.” It was obvious by then that
the bank had knowledge of the infirmity or defect of the checks. Furthermore,
what it did when it allowed payment before clearing is beyond the normal
and ordinary banking practice especially when the bank involved is a foreign
bank and the amounts involved were large. Boncan wasn't even a client of the
bank but was someone who had special relations with its officers.

BANCO ATLANTICO vs. AUDITOR GENERALG.R. No. L-33549 January 31,

1978 FACTS:Boncan was the Finance Officer of the Philippine Embassy in Madrid who on
many occasions negotiated with Banco Atlantico checks,allegedly endorsed to her by
the embassy. On these occasions, thebank made the payment of the checks, notwithstanding
the fact that thedrawee bank has not yet cleared the checks for collection. Thiswas premised
on the finding that Boncan had special relationswith the employees of the bank. And
that upon presentment to thedrawee bank, the checks were dishonored due to non-
acceptanceallegedly on the ground that the drawer has ordered
thestoppage of payment. This prompted Banco Atlantico to collect from the Philippine
Embassy for the funds released to Boncan but thelatter refused. This eventually led to
filing of money claim of thebank with the Auditor General

.Issue: WON Banco Atlantico was a holder in due course.

NO.HELD:

All four conditions enumerated under Sec. 52, NIL must concur before a holder can be
considered as a holder in due course. Theabsence or failure to comply with any of the
conditions set forthunder this section will make one's title to the instrument
defective.
o

The check for US$90,000.00 was a demand note. When Miss Boncanthe payee of this check,
negotiated the same by depositing it in her account, at the same time informing the
bank in writing that it be not presented for collection until a later date.
o

Banco Atlantico through its agent teller or cashier should have beenput on guard that there
was something wrong with the check.
o

The fact that the amount involved was quite big and it was the payeeherself who made the
request that the same not be presented for collection until a fixed date in the future was proof
of a glaringinfirmity or defect in the instrument.
o

It loudly proclaims, "Take me at your risk." The interest of the payeewas the immediate
punishment of the check of which she was thebeneficiary and not the deferment of the
presentment for collectionof the same to the drawee bank.
o

This being the case, Banco Atlantico was not a holder in due courseas defined by Section 52 of
the N.I.L., because it was obvious that it had knowledge of the infirmity or defect of the check.
The fact that the check was honored by claimant bank was proof not only of their gross
negligence but a further manifestation of the special treatment they were according Miss
Boncan.
o

In view of the foregoing, the embassy as the drawer of the 3checks in question cannot be held
liable. It is apparent that the said 3 checks were (fraudulently altered) by Boncan as to their
accountsand therefore wholly inoperative (note: should be ³avoided´)