[ACCOMMODATION PARTY]07 ERNESTINA CRISOLOGO-JOSE v. CA and RICARDO S.

SANTOS, JR.Sept. 15, 1989 | Regalado,J. |

Summary: Atty. Benares (president of Movers Enterprises), in accommodation of his clients

spouses Ong, issued a check under the account of the corporation drawn against Traders Royal
Bank payable to Ernestina Crislogo-Jose. The check was in consideration of Jose’s quitclaim
over certain property which the GSIS agreed to sell to Spouses Ong, Atty. Benares’ clients. The
check was signed by Atty. Benares and the corporation’s VP Santos Jr. Jose alleges that the
accommodation party is Mover Enterprises, Inc., and not merely Santos who signed the check in
his representative capacity as VP of the corporation.

The Court held that Mover Enterprises cannot be held liable as an accommodation party because
Sec. 29, NIL does not apply to corporations which are accommodation parties. The check was
for a personal transaction in which the corporation had no legitimate concern, therefore the
signatories shall be held personally liable as the accommodation party.

Doctrine: Rule that an accommodation party liable on the instrument to a holder for value does
not 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.