ERNESTINA CRISOLOGO-JOSE, PETITIONER, VS. COURT OF APPEALS AND RICARDO S. SANTOS, JR. IN HIS OWN BEHALF AND AS VICE-PRESIDENT FOR SALES OF MOVER ENTERPRISES INC., RESPONDENTS.

Petitioner seeks the annulment of the decision^[1]
respondent Court of Appeals, promulgated on September 8, 1987, which reversed the decision of the
trial court^[2]
dismissing the complaint for consignation filed by therein plaintiff Ricardo S.
Santos, Jr.

The parties are substantially agreed on the following facts as
found by both lower courts:

“In 1980, 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.  On April
30, 1980, Atty. Benares, in accommodation of his
clients, the spouses Jaime and Clarita Ong, issued
Check No. 093553 drawn against Traders Royal Bank, dated June 14, 1980, in the
amount of P45,000.00 (Exh. ‘1’) 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 as an alternate signatory.  Plaintiff Ricardo S. Santos, Jr. did sign the
check.

“It appears that the check (Exh.
‘1’) 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 clients of Atty. Oscar Benares, 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.  However, since the
compromise agreement was not approved within the expected period of time, the
aforesaid check for P45,000.00 (Exh. ‘1’) was
replaced by Atty. Benares with another Traders Royal
Bank check bearing No. 379299 dated August 10, 1980, in the same amount of
P45,000.00 (Exhs. ‘A’ and ‘2’), also payable to the
defendant Jose.  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 (Exhs. ‘A’
and ‘2’) with her account at Family Savings Bank, Mayon
Branch, it was dishonored for insufficiency of funds.  A subsequent redepositing
of the said check was likewise dishonored by the bank for the same reason.  Hence, defendant through counsel was
constrained to file a criminal complaint for violation of Batas Pambansa Blg. 22 with the Quezon City Fiscal’s Office
against Atty. Oscar Z. Benares and plaintiff Ricardo
S. Santos, Jr.  The investigating
Assistant City Fiscal, Alfonso Llamas, accordingly filed an amended information
with the court charging both Oscar Benares and
Ricardo S. Santos, Jr. for violation of Batas Pambansa
Blg. 22 docketed as Criminal Case No. Q-14867 of then
Court of First Instance of Rizal, Quezon City.

“Meanwhile,  during  the preliminary investigation of the criminal
charge against Benares and the
plaintiff herein, before Assistant City Fiscal Alfonso T. Llamas, plaintiff
Ricardo S. Santos, Jr. tendered cashier’s check No. CC. 160152 for P45,000.00
dated April 10, 1981 to the
defendant Ernestina Crisologo-Jose, the complainant
in that criminal case.  The defendant refused
to receive the cashier’s check in payment of the dishonored check in the amount
of P45,000.00.  Hence, plaintiff encashed the aforesaid cashier’s check and subsequently
deposited said amount of P45,000.00 with the Clerk of Court on August 14, 1981 (Exhs.
‘D’ and ‘E’).  Incidentally, the
cashier’s check adverted to above was purchased by Atty. Oscar Z. Benares and given to the plaintiff herein to be applied in
payment of the dishonored check.”^[3]

After trial, the court a quo, holding that it was
“not persuaded to believe that consignation referred to in Article 1256 of
the Civil Code is applicable to this case,” rendered judgment dismissing
plaintiff’s complaint and defendant’s counterclaim.^[4]

As earlier stated, respondent court reversed and set aside said judgment
of dismissal and revived the complaint for consignation, directing the trial
court to give due course thereto.

Hence, the instant petition, the assignment of errors wherein are
prefatorily stated and discussed seriatim.

 1. Petitioner contends that respondent Court of Appeals erred in
holding that private respondent, one of the signatories of the check issued
under the account of Mover Enterprises, Inc., is an accommodation party under
the Negotiable Instruments Law and a debtor of petitioner to the extent of the
amount of said check.

Petitioner avers that the accommodation party in this case is
Mover Enterprises, Inc. and not private respondent if 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.

The pertinent provision of said law referred to provides:

“Sec. 29.  Liability of
accommodation party.  – An accommodation
party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value 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.”

Consequently, to be considered an accommodation party, a person
must (1) be a party to the instrument, signing as maker, drawer, acceptor, or indorser, (2) not receive value therefore, and (3) sign for
the purpose of lending his name for the credit of some other person.

Based on the foregoing requisites, it is not a valid defense that
the accommodation party did not receive any valuable consideration when he
executed the instrument.  From the
standpoint of contract law, he differs from the ordinary concept of a debtor
therein in the sense that he has not received any valuable consideration for
the instrument he signs.  Nevertheless,
he is liable to a holder for value as if the contract was not for accommodation,^[5]
in whatever capacity such accommodation party signed the instrument, whether
primarily or secondarily.  Thus, it has
been held that in lending his name to the accommodated party, the accommodation
party is in effect a surety for the latter.^[6]

Assuming arguendo that Mover
Enterprises, Inc. is the accommodation party in this case, as petitioner
suggests, the inevitable question whether or not it may be held liable on the
accommodation instrument, that is, the check issued in favor of herein
petitioner.

We hold in the negative.

The aforequoted provision of the
Negotiable Instruments Law which holds an 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.^[7]
This is because the issue or indorsement of
negotiable paper by a corporation without consideration and for the
accommodation of another is ultra vires.^[8]
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.^[9]

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.^[10] 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.

The instant case falls squarely within the purview of the
aforesaid decisional rules.  If we
indulge petitioner in her aforesaid postulation, then she is effectively barred
from recovering from Mover Enterprises, Inc. the value of the check.  Be that as it may, petitioner is not without
recourse.

The fact that for lack of capacity the corporation is not bound
by an accommodation paper does not thereby absolve, but should render
personally liable, the signatories of said instrument where the facts show that
the accommodation involved was for their personal account, undertaking or
purpose and the creditor was aware thereof.

Petitioner, as hereinbefore explained, was evidently charged with
the knowledge that the check was issued at the instance and for the personal
account of Atty. Benares who merely prevailed upon
respondent Santos to act as co­-signatory
in accordance with the arrangement of the corporation with its depository
bank.  That it was a personal undertaking
of said corporate officers was apparent to petitioner by reason of her personal
involvement in the financial arrangement and the fact that, while it was the
corporation’s check which was issued to her for the amount involved, she
actually had no transaction directly with said corporation.

There should be no legal obstacle, therefore, to petitioner’s
claims being directed personally against Atty. Oscar Z. Benares
and respondent Ricardo S. Santos, Jr., president and vice-president,
respectively, of Mover Enterprises, Inc.

2.  On her second assignment
of error, petitioner argues that the Court of Appeals erred in holding that the
consignation of the sum of P45,000.00, made by private respondent after his
tender of payment was refused by petitioner, was proper under Article 1256 of
the Civil Code.

Petitioner’s submission that no creditor-debtor relationship
exists between the parties, hence consignation is not proper.  Concomitantly, this argument was premised on the
assumption that private respondent Santos
is not an accommodation party.

As previously discussed, however, respondent Santos
is an accommodation party and is, therefore, liable for the value of the
check.  The fact that he was only a
co-signatory does not detract from his personal liability.  A co-maker or co-drawer under the
circumstances in this case is as much an accommodation party as the other
co-signatory or, for that matter, as a lone signatory in an accommodation
instrument.  Under the doctrine in Philippine
Bank of Commerce vs. Aruego,
supra, he is in effect a co-surety for the accommodated party with whom
he and his co-signatory, as the other co-surety, assume solidary
liability ex lege for the debt
involved.  With the dishonor of the
check, there was created a debtor-creditor relationship, as between Atty. Benares and respondent Santos,
on the one hand, and petitioner, on the other. 
This circumstance enables respondent Santos
to resort to an action of consignation where his tender of payment had been
refused by petitioner.

We interpose the caveat, however, that by holding that the
remedy of consignation is proper under the given circumstances, we do not
thereby rule that all the operative facts for consignation which would produce
the effect of payment are present in this case. 
Those are factual issues that are not clear in the records before us and
which are for the Regional Trial Court of Quezon City
to ascertain in Civil Case No. Q-33160, for which reason it has advisedly been
directed by respondent court to give due course to the complaint for
consignation, and which would be subject to such issues or claims as may be
raised by defendant and the counterclaim filed therein which is hereby ordered
similarly revived.

3.  That respondent court virtually
prejudged Criminal Case No. Q-14687 of the Regional Trial Court of Quezon City filed against private respondent for violation
of Batas Pambansa Blg. 22,
by holding that no criminal liability had yet attached to private respondent
when he deposited with the court the amount of P45,000.00 is the final plaint
of petitioner.

We sustain petitioner on this score.

Indeed, respondent court went beyond the ratiocination called for
in the appeal to it in CA-G.R. CV. No. 05464. 
In its own decision therein, it declared that “(t)he lone issue
dwells in the question of whether an accommodation party can validly consign
the amount of the debt due with the court after his tender of payment was
refused by the creditor.” Yet, from the commercial and civil law aspects
determinative of said issue, it digressed into the merits of the aforesaid
Criminal Case No. Q-14867, thus:

“Section 2 of B.P. 22 establishes the prima facie evidence of
knowledge of such insufficiency of funds or credit.  Thus, the making, drawing and issuance of a
check, payment of which is refused by the drawee
because of insufficient funds in or credit with such bank is prima facie
evidence of knowledge of insufficiency of funds or credit, when the check is
presented within 90 days from the date of the check.

“It will be noted that the last part of Section 2 of B.P. 22
provides that the element of knowledge of insufficiency of funds or credit is
not present and, therefore, the crime does not exist, when the drawer pays the
holder the amount due or makes arrangements for payment in full by the drawee of such check within five (5) banking days
after receiving notice that such check has not been paid by the drawee.

“Based on the foregoing consideration, this Court finds that
the plaintiff-appellant acted within his legal rights when he consigned the
amount of P45,000.00 on August 14, 1981, between August 7, 1981, the date when
plaintiff-appellant receive (sic) the notice of non-payment, and August 14,
1981, the date when the debt due was deposited with the Clerk of Court (a
Saturday and a Sunday which are not banking days) intervened.  The fifth banking day fell on August 14, 1981.  Hence, no criminal liability has yet attached
to plaintiff-appellant when he deposited the amount of P45,000.00 with the
Court a quo on August
14, 1981.”^[11]

That said observations made in the civil case at bar and the
intrusion into the merits of the criminal case pending in another court are
improper do not have to be belabored.  In
the latter case, the criminal trial court has to grapple with such factual
issues as, for instance, whether or not the period of five banking days had
expired, in the process determining whether notice of dishonor should be
reckoned from any prior notice if any has been given or from receipt by private
respondents of the subpoena therein with supporting affidavits, if any, or from
the first day of actual preliminary investigation; and whether there was a
justification for not making the requisite arrangements for payment in full of
such check by the drawee bank within the said
period.  These are matters alien to the
present controversy on tender and consignation of payment, where no such period
and its legal effects are involved.

These are aside from the considerations that the disputed period
involved in the criminal case is only a presumptive rule, juris
tantum at that, to determine whether or not
there was knowledge of insufficiency of funds in or credit with the drawee bank; that payment of civil liability is not a mode
for extinguishment of criminal liability; and that the requisite quantum of
evidence in the two types of cases are not the same.

To repeat, the foregoing matters are properly addressed to the
trial court in Criminal Case No. Q-14867, the resolution of which should not be
interfered with by respondent Court of Appeals at the present posture of said
case, much less preempted by the inappropriate and unnecessary holdings in the aforequoted portion of the decision of said respondent
court.  Consequently, we modify the
decision of respondent court in CA-G.R. CV No. 05464 by setting aside and
declaring without force and effect its pronouncements and findings insofar as
the merits of Criminal Case No. Q-14867 and the liability of the accused
therein are concerned.

WHEREFORE, subject to the aforesaid modifications, the
judgment of respondent Court of Appeals is AFFIRMED.

SO ORDERED.

Paras, Padilla, and Sarmiento, JJ., concur.

Melencio-Herrera, J., (Chairman), no part. Did 
not participate in the deliberation.

^[1]
Penned by Justice Justo P. Torres, Jr. and concurred
in by Associate Justices Leonor Ines
Luciano and Oscar M. Herrera; Rollo,
18.

^[2]
Civil Case No. Q-33160, Regional Trial Court of Quezon City, Branch XCVI.

^[3] Rollo, 19-20.

^[4] Rollo, 18.

^[5] Ang Tiong vs. Ting, et
al., 22 SCRA 713 (1968).

^[6]
Philippine Bank of Commerce vs. Aruego, 102
SCRA 530 (1981).

^[7]
11 C.J.S. 309.

^[8]
14A C.J. 732.

^[9] Oppenheim vs. Simon Reigel
Cigar Co., 90 N.Y.S. 355, cited in 11 C.J.S. 309.

^[10]
In re Wrentham Mfg. Co., Low. 119; Hall vs. Auburn
Turnp. Co., 27 Cal.
255, cited in 14A C.J. 461.

^[11] Rollo, 21-22.