Crisologo vs CA (177 SCRA 594, 15 Sept 1989)

Crisologo vs CA (177 SCRA 594, 15 Sept 1989)

Facts:
Respondent 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. Atty. Benares, in accommodation of his clients, issued Check payable to petitioner. 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. When petitioner deposited this check it was dishonored for insufficiency of funds. Hence, petitioner filed a criminal complaint against Respondent. Respondent tendered cashier’s check to the petitioner who refused to receive the cashier’s check in payment of the dishonoured. Hence, plaintiff deposited said amount with the Clerk of Court. 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 respondent complaint and petitioner’s counterclaim. CA 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.

Issue:
Whether the corporation is liable to the petitioner as an accommodation party when the corporate officer issued a corporation’s check in their personal capacity.

​Held:
No, The 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. 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.