G.R. 146511- September 5, 2007 ANG VS.

ASSOCIATED BANK Facts: The defendants obtained a loan which was evidenced by 2 promissory notes and was agreed that the loan would be payable jointly and severally. Even after repeated demands for payment, the defendants failed and refused to settle their obligation. Tomas, the petitioner said that the bank knew that he did not get any valuable consideration for affixing his signature on the notes but merely lent his name as an accommodation party and therefore he should not be held liable.

Issue: Whether the bank could proceed against Tomas Ang regarding the payment of the loan.

Petitioner's argument: That he should not be held liable for the obligation.

Ruling: Petition is denied for lack of merit.

Held: Yes. The accommodation party is liable on the instrument to a holder for value even though the holder, at the time of taking the instrument, knew him or her to be merely an accommodation party, as if the contract was not for accommodation. In the instant case, petitioner agreed to be jointly and severally liable under the two promissory notes that he signed with Antonio as the principal debtor. As such, it is totally immaterial if the bank would decide to proceed only against the petitioner or both of them since the law confers upon the creditor the prerogative to choose whether to enforce the entire obligation against any one, some or all of the debtors. In any case, petitioner, being an accommodation party, may seek reimbursement from Antonio being the party accommodated. In issuing the two promissory notes, petitioner as accommodating party warranted the holder in due course that he would pay the same according to its tenor. It is no defense to state on his part that he did not receive any value because the phrase used without receiving value therefore in Sec. 29 of NIL means without receiving value by virtue of the instrument and not as it is apparently supposed to mean without receiving payment for lending his name. The liability of an accommodation party remains not only primary but also unconditional to a holder for value, even if the accommodated party received an extension of the period for payment without 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 still a solidary co-debtor.

GR 141181- April 27, 2007 CHING VS. NICDAO Facts: Nicdao was charged 11 counts of violation of BP 22 and MTC found her of guilty of said offenses. RTC affirmed. Nicdao filed an appeal to the Court of Appeals. CA reversed the decision and acquitted accused. Ching is now appealing the civil aspect of the case to the SC. Ching vigorously argues that notwithstanding respondent Nicdaos acquittal by the CA, the Supreme Court has the jurisdiction and authority to resolve and rule on her civil liability. He anchors his contention on Rule 111 which is that the criminal action for violation of BP 22 shall be deemed to necessarily include the corresponding civil action, and no reservation to file such civil action separately shall be allowed or recognized. Moreover, under the above-quoted provision, the criminal action for violation of BP 22 necessarily includes the corresponding civil action, which is the recovery of the amount of the dishonored check representing the civil obligation of the drawer to the payee. Issue: Whether or not the second element which constitutes the violation of BP 22 is present with the fact that she did not personally write the payee and date on the checks based on Section 14 of the Negotiable Instruments Law. Petitioner's argument: That such fact is material. Ruling: No, it is not material. Held: The MCTC explained that the crime of violation of BP 22 has the following elements: (a) the making, drawing and issuance of any check to apply to account or for value; (b) the knowledge of the maker, drawer or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment; and (c) subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment. According to the MCTC, all the foregoing elements are present in the case of respondents issuance of the checks. On the first element, respondent Nicdao was found by the MCTC to have made, drawn and issued the checks. The fact that she did not personally write the payee and date on the checks was not material considering that under Section 14 of the Negotiable Instruments Law, "where the instrument is wanting in any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks therein. And a signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount . . . ." Respondent Nicdao admitted that she authorized her employees to provide the details on the checks after she had signed them. It also ruled that there was no evidence to show that petitioner Ching was not a holder in due course as to cause it to believe that the said check was not issued to him. Respondent Nicdao's admission of indebtedness was sufficient to prove that there was consideration for the issuance of the checks. The second element was also found by the MCTC to be present as it held that respondent Nicdao, as maker, drawer or issuer, had knowledge that at the time of issue she did not have sufficient funds in or credit with the drawee bank for the payment in full of the checks upon their presentment. As to the third element, the MCTC established that the checks were subsequently dishonored by the drawee bank and therefore, the conviction of respondent Nicdao was warranted. It stressed that the mere act of issuing a worthless check was malum prohibitum; hence, even if the checks were issued in the form of deposit or guarantee, once dishonored, the same gave rise to the prosecution for and conviction of BP 22.

GR 125851- July 11, 2006 ALLIED VS. GG SPORTSWEAR Facts: Allied Bank purchased Export Bill of $20,085 from G.G. Sportswear (GGS). When ALLIED negotiated the export bill to Chekiang, payment was refused due to some material discrepancies in the documents submitted by GGS relative to the exportation covered by the letter of credit. Allied demanded payment. GGS and Nari Gidwani signed blank forms of the Letters of Guaranty and the Surety, and the blanks were only filled up by allied after they had affixed their signatures. They also added that the documents did not cover the transaction involving the subject export bill. Spouses de Villa, not aware of the existence of the export bill, they signed blank forms of the surety; and averred that the guaranty was not meant to secure the export bill. As for Alcron which is a foreign corporation doing business in the Philippines, neither its liaison office in the Philippines nor its then representative had the authority to issue Letters of Guaranty for and in behalf of local entities and persons. RTC: in favor of Allied while CA: modified it holding GGS liable to reimburse Allied, but it exonerated the guarantors from their liabilities under the Letters of Guaranty. Issue: W/N Gidwani, Alcron and Spouses Villa can be held jointly and severally liable becuase of their capacity as guarantors and surety in the absence of protest on the bill in accordance with Section 152 of the Negotiable Instruments Law? Petitioner's argument: Petitioner contends that part of the CAs decision exonerating respondents and spouses Leon de Villa as guarantors and/or sureties. Respondents rely on Section 152 of the Negotiable Instruments Law to support their contention. Ruling: Yes. Held:

Nari Gidwani, and Spouses Leon and Leticia de Villa are jointly and severally liable together with G.G. Sportswear. Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be observed. In such case the contract is called a suretyship. Section 152 of the Negotiable Instruments Law pertaining to indorsers, relied on by respondents, is not pertinent to this case. There are well-defined distinctions between the contract of an indorser and that of a guarantor/surety of a commercial paper, which is what is involved in this case. The contract of indorsement is primarily that of transfer, while the contract of guaranty is that of personal security. The liability of a guarantor/surety is broader than that of an indorser. Unless the bill is promptly presented for payment at maturity and due notice of dishonor given to the indorser within a reasonable time, he will be discharged from liability thereon. On the other hand, except where required by the provisions of the contract of suretyship, a demand or notice of default is not required to fix the surety's liability. Therefore, no protest on the export bill is necessary to charge all the respondents jointly and severally liable having affixed their consenting signatures in several documents executed at different times, it is safe to presume that they had full knowledge of its terms and conditions, hence, they are precluded from asserting ignorance of the legal effects of the undertaking they assumed thereunder.