Stelco Marketing vs.

CA

GR 96160, 17 June 1992, 210 scra 51

--accommodation party

FACTS:

Stelco Marketing Corporation sold structural steel bars to RYL Construction

Inc. RYL gave Stelco’s “sister corporation,” Armstrong Industries, a MetroBank
check from Steelweld Corporation. The check was issued by Steelweld’s
President to Romeo Lim, President of RYL, by way of accommodation, as a guaranty
and not in payment of an obligation. When Armstrong deposited the check at its
bank, it was dishonored because it was drawn against insufficient funds. When so
deposited, the check bore two indorsements, i.e. RYL and Armstrong. Subsequently,
Stelco filed a civil case against RYL and Steelweld to recover the value of the steel
products.

ISSUE:

Whether Steelweld as an accommodating party can be held liable by Stelco for the
dishonored check.

RULING:

Steelweld may be held liable but not by Stelco. Under Section 29 of the NIL,
Steelweld Corp. can be held liable for having issued the subject check for the
accommodation of Romeo Lim. An accommodation party is one who has singed the
instrument as maker, drawer, acceptor, or indorser, without receiving valued therefor,
and for the purpose of lending his name to some other person. Such a person is liable
on the instrument to a holder for value, notwithstanding such holder, at the time of
taking the instrument, knew him to be only an accommodation party. Stelco
however, cannot be deemed a holder of the check for value as it does not meet two
essential requisites prescribed by statute, i.e. that it did not become “the holder of it
before it was overdue, and without notice that it had been previously dishonored,” and
that it did not take the check “in good faith and for value.
Travel-On, Inc. vs Court of Appeals
G.R. No. L-56169 June 26, 1992
-accommodation party

FACTS:
Petitioner Travel-On Inc. is a travel agency from which Arturo Miranda procured
tickets on behalf of airline passengers and derived commissions therefrom. Miranda
was sued by petitioner to collect on the six postdated checks he issued which were all
dishonored by the drawee banks. Miranda, however, claimed that he had already fully
paid and even overpaid his obligations and that refunds were in fact due to him. He
argued that he had issued the postdated checks not for the purpose of encashment to
pay his indebtedness but for purposes of accommodation, as he had in the past
accorded similar favors to petitioner. Petitioner however urges that the postdated
checks are per se evidence of liability on the part of private respondent and further
argues that even assuming that the checks were for accommodation, private
respondent is still liable thereunder considering that petitioner is a holder for value.

ISSUE:
Whether Miranda is liable on the postdated checks he issued even assuming that said
checks were issued for accommodation only.

RULING:
There was no accommodation transaction in the case at bar. In accommodation
transactions recognized by the Negotiable Instruments Law, an accommodating party
lends his credit to the accommodated party, by issuing or indorsing a check which is
held by a payee or indorsee as a holder in due course, who gave full value therefor to
the accommodated party. The latter, in other words, receives or realizes full value
which the accommodated party then must repay to the accommodating party. But the
accommodating party is bound on the check to the holder in due course who is
necessarily a third party and is not the accommodated party. In the case at bar, Travel-
On was payee of all six (6) checks, it presented these checks for payment at the
drawee bank but the checks bounced. Travel-On obviously was not an accommodated
party; it realized no value on the checks which bounced. Miranda must be held liable
on the checks involved as petitioner is entitled to the benefit of the statutory
presumption that it was a holder in due course and that the checks were supported by
valuable consideration.