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    Garcia Vs Llamas

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    Kling King
    Petitioner Garcia and Eduardo De Jesus borrowed P400,000 from respondent and executed a promissory note making them jointly and severally liable. Garcia argued he signed as an accommodation party for De Jesus and was not liable since the loan was paid, but the court held that as an accommodation party under the Negotiable Instruments Law, Garcia was still liable to the holder for value even if the holder knew he was an accommodation party. The court also held that the relationship between an accommodation party and the party accommodated is one of principal and surety, with the accommodation party as the surety who is equally and absolutely liable. In a related case, Aruego signed drafts accepting costs of printing a period

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    Garcia Vs Llamas

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    Kling King
    709 views2 pages
    Petitioner Garcia and Eduardo De Jesus borrowed P400,000 from respondent and executed a promissory note making them jointly and severally liable. Garcia argued he signed as an accommodation party for De Jesus and was not liable since the loan was paid, but the court held that as an accommodation party under the Negotiable Instruments Law, Garcia was still liable to the holder for value even if the holder knew he was an accommodation party. The court also held that the relationship between an accommodation party and the party accommodated is one of principal and surety, with the accommodation party as the surety who is equally and absolutely liable. In a related case, Aruego signed drafts accepting costs of printing a period

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    Negotiable Instruments

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    Garcia vs Llamas

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    Petitioner Garcia and Eduardo De Jesus borrowed P400,000 from respondent and executed a promissory note making them jointly and severally liable. Garcia argued he signed as an accommodation party for De Jesus and was not liable since the loan was paid, but the court held that as an accommodation party under the Negotiable Instruments Law, Garcia was still liable to the holder for value even if the holder knew he was an accommodation party. The court also held that the relationship between an accommodation party and the party accommodated is one of principal and surety, with the accommodation party as the surety who is equally and absolutely liable. In a related case, Aruego signed drafts accepting costs of printing a period

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    709 views2 pages

    Garcia Vs Llamas

    Uploaded by

    Kling King
    Petitioner Garcia and Eduardo De Jesus borrowed P400,000 from respondent and executed a promissory note making them jointly and severally liable. Garcia argued he signed as an accommodation party for De Jesus and was not liable since the loan was paid, but the court held that as an accommodation party under the Negotiable Instruments Law, Garcia was still liable to the holder for value even if the holder knew he was an accommodation party. The court also held that the relationship between an accommodation party and the party accommodated is one of principal and surety, with the accommodation party as the surety who is equally and absolutely liable. In a related case, Aruego signed drafts accepting costs of printing a period

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    GARCIA vs LLAMAS

    417 SCRA 292


    Facts:
    Petitioner and Eduardo De Jesus borrowed P400,000.00 from respondent. Both executed a
    promissory note wherein they bound themselves jointly and severally to pay the loan on or
    before 23 January 1997 with a 5% interest per month. The loan has long been overdue and,
    despite repeated demands, both have failed and refused to pay it. Hence, a complaint was
    filed against both.
    Resisting the complaint, Garcia averred that he assumed no liability because he signed
    merely as an accommodation party for De Jesus; and that he is relieved from any liability
    arising from the note inasmuch as the loan had been paid by De Jesus by means of a check
    dated 17 April 1997; and that, in any event, the issuance of the check and respondents
    acceptance thereof novated or superseded the note.
    ISSUE: Whether or not petitioner is free from liability on the promissory note as an
    accommodation party.
    HELD:
    No. The note was made payable to a specific person rather than to bearer or to order
    a requisite for negotiability under the Negotiable Instruments Law (NIL). Hence, petitioner
    cannot avail himself of the NILs provisions on the liabilities and defenses of an
    accommodation party.
    Even granting arguendo that the NIL was applicable, still, petitioner would be liable for
    the promissory note. Under Article 29 of the NIL, an accommodation party is liable for the
    instrument to a holder for value even if, at the time of its taking, the latter knew the former to
    be only an accommodation party. The relation between an accommodation party and the
    party accommodated is, in effect, one of principal and surety the accommodation party
    being the surety. It is a settled rule that a surety is bound equally and absolutely with the
    principal and is deemed an original promissor and debtor from the beginning.
    Philippine Bank of Commerce vs. Aruego
    GR L-25836-37, 31 January 1981, 102 scra 530
    FACTS:
    To facilitate payment of the printing of a periodical called World Current Events., Aruego, its
    publisher, obtained a credit accommodation from the Philippine Bank of Commerce. For every
    printing of the periodical, the printer collected the cost of printing by drawing a draft against
    the bank, said draft being sent later to Aruego for acceptance. As an added security for the
    payment of the amounts advanced to the printer, the bank also required Aruego to execute a
    trust receipt in favor of the bank wherein Aruego undertook to hold in trust for the bank the
    periodicals and to sell the same with the promise to turn over to the bank the proceeds of the
    sale to answer for the payment of all obligations arising from the draft. The bank instituted an
    action against Aruego to recover the cost of printing of the latters periodical. Aruego
    however argues that he signed the supposed bills of exchange only as an agent of the
    Philippine Education Foundation Company where he is president.
    ISSUES:
    Whether Aruego can be held liable by the petitioner although he signed the supposed bills of
    exchange only as an agent of Philippine Education Foundation Company.
    RULING:
    Aruego did not disclose in any of the drafts that he accepted that he was signing as
    representative of the Philippine Education Foundation Company. For failure to disclose his
    principal, Aruego is personally liable for the drafts he accepted, pursuant to Section 20 of the
    NIL which provides that when a person adds to his signature words indicating that he signs for
    or on behalf of a principal or in a representative capacity, he is not liable on the instrument if
    he was duly authorized; but the mere addition of words describing him as an agent or as filing

    a representative character, without disclosing his principal, does not exempt him from
    personal liability.

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