CLAUDE P.

BAUTISTA, petitioner,
vs.
AUTO PLUS TRADERS,
INCORPORATED and CA
respondents
G.R. No. 166405 August 6, 2008
FACTS:
• Petitioner Claude P. Bautista, in his capacity as
President and Presiding Officer of Cruiser Bus
Lines and Transport Corporation, purchased
various spare parts from private respondent
Auto Plus Traders, Inc. and issued two
postdated checks to cover his purchases. The
checks were subsequently dishonored. Private
respondent then executed an affidavit-complaint
for violation of Batas Pambansa Blg. 22 against
petitioner.
• A perusal of the two check return slips in
conjunction with the Current Account
Statements would show that the check
for P151,200 was drawn against the current
account of Claude Bautista while the check
for P97,500 was drawn against the current
account of Cruiser Bus Lines and Transport
Corporation.

• According to Auto Plus, Bautista, by issuing his

check to cover the obligation of the obligation
became an accommodation party.
 ISSUE:
Whether or not Bautista as an officer of the
corporation, is personally and civilly liable
for the two check?
• No
• There is no agreement that petitioner shall be
held liable for the corporation's obligations in his
personal capacity. Hence, he cannot be held
liable for the value of the 2 checks issued in
payment for the corporation's obligation.

• Section 29 of the Negotiable Instruments Law

defines an accommodation party as a person
"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.
 The Following requirements must be present.
• (1) he must be a party to the instrument, signing as maker,
drawer, acceptor, or indorser;
• (2) he must not receive value therefor; and
• (3) he must sign for the purpose of lending his name or credit
to some other person.
• There is no showing of when petitioner issued the check and
in what capacity. In the absence of concrete evidence it
cannot just be assumed that petitioner intended to lend his
name to the corporation. Hence, petitioner cannot be
considered as an accommodation party.
• Cruiser Bus Lines and Transport Corporation, however,
remains liable for the checks especially since there is no
evidence that the debts covered by the subject checks have
been paid. It’s a Corporate obligation.
 ANAMER
SALAZAR, Petitioner,
vs.
J.Y. BROTHERS MARKETING
CORPORATION, Respondent.
G.R. No. 171998 October 20, 2010
Facts:
Anamer Salazar, a freelance sales agent, was
approached by Isagani Calleja and Jess Kallos, if she
knew a supplier of rice. Answering in the positive,
Salazar accompanied the two to J.Y. Bros. As a
consequence, Salazar with Calleja and Kallos
procured from J. Y. Bros. 300 cavans of rice worth
₱214,000.00. As payment, Salazar negotiated and
indorsed to J.Y. Bros. Prudential Bank Check No.
067481 dated October 15, 1996 issued by Nena
Jaucian Timario in the amount of ₱214,000.00 with
the assurance that the check is good as cash. On that
assurance, J.Y. Bros. parted with 300 cavans of rice to
Salazar. However, upon presentment, the check was
dishonored due to "closed account."
• Calleja, Kallos and Salazar delivered to J.Y.
Bros. a replacement cross Solid Bank Check
No. PA365704 dated October 29, 1996 again
issued by Nena Jaucian Timario in the
amount of ₱214,000.00 but which, just the
same, bounced due to insufficient funds.

• Despite the demand, Salazar failed to settle

the amount due J.Y. Bros., the latter charged
Salazar and Timario with the crime of estafa
before the Regional Trial Court
The RTC acquitted Salazar for the crime but held liable
for the value of the 300 bags of rice. Salazar went up to
supreme court on Petition for review on certiorari under
Rule 45 to appeal the civil aspect of the decision. The SC
set aside the RTC Order. Thereafter, the RTC rendered a
new decision dismissing the civil aspect againt salazar
but ordering the arrest of Nena Jaucian Timario.
The RTC found that’s Salazar’s liability should be limited
to the allegation in the amended information that "she
endorsed and negotiated said check," and since she had
never been the holder of the check, petitioner's signing of
her name on the face of the dorsal side of the check did
not produce the technical effect of an indorsement
arising from negotiation. RTC also concluded that the
acceptance of the Solid Bank Check by J.Y Bros., in
replacement of the dishonored Prudential Bank Check,
amounted to novation that discharged the latter check.
• On appeal, the CA Reversed the RTC. The CA
applying Section 63, 66 and 29 of the Negotiable
Instrument Law , found that Salazar was
considered an indorser of the checks paid to
respondent and considered her as an
accommodation indorser, who was liable on the
instrument to a holder for value,
notwithstanding that such holder at the time of
the taking of the instrument knew her only to be
an accommodation party. Motion for
Reconsideration was denied. Hence, this appeal.
 Issues:
• Whether the acceptance of the Solid Bank
check by J.Y. Bros., in replacement of the
dishonored Prudential Bank check,
amounted to novation that discharged the
latter check.
• Whether Salazar is liable as an
accommodation indorser.
The obligation to pay a sum of money is not
novated by an instrument that expressly
recognizes the old, changes only the terms of
payment, adds other obligations not incompatible
with the old ones or the new contract merely
supplements the old one.
Substitution of the dishonored check with another
check did not result in a novation, the old
obligation was not extinguished.

Acceptance of crossed check affects only the mode

of payment, did not result in novation.
• Salazar is liable as accomodation indorser.

• Considering that when the Solid Bank check, which

replaced the Prudential Bank check, was presented for
payment, the same was again dishonored; thus, the
obligation which was secured by the Prudential Bank
check was not extinguished and the Prudential Bank
check was not discharged. Thus, we found no reversible
error committed by the CA in holding petitioner liable as
an accommodation indorser for the payment of the
dishonored Prudential Bank check.
 THE PHILIPPINE BANK OF
COMMERCE, plaintiff-appellee,
vs.
JOSE M. ARUEGO, defendant-
appellant.

G.R. Nos. L-25836-37

January 31, 1981
• Jose Aruego obtained a credit accommodation from
the Philippine Bank of Commerce to facilitate the
payment of printing of “World Current Events”, the
periodical he is publishing. Thus, for every printing of
the periodical, the printer, Encal Press and Photo
Engraving, collected the cost of printing by drawing a
draft against the plaintiff, said draft being sent later to
the defendant for acceptance. As an added security for
the payment of the amounts advanced to Encal Press
and Photo-Engraving, the plaintiff bank also required
defendant Aruego to execute a trust receipt in favor of
said bank wherein said defendant undertook to hold
in trust for plaintiff the periodicals and to sell the same
with the promise to turn over to the plaintiff the
proceeds of the sale of said publication to answer for
the payment of all obligations arising from the draft.
• The Philippine Bank of Commerce instituted an
action against Aruego to recover the cost of printing
of the latter’s 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.
• The defendant contends that he signed the drafts
only as an accommodation party and as such,
should be made liable only after a showing that the
drawer is incapable of paying.
 ISSUE:
• Whether or not 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.
• Yes. Aruego did not disclose in any of the drafts that he
accepted that he was signing as representative of the
Philippine Education Foundation Company. Aruego
contends that he signed the supposed bills of exchange
as an agent of the Philippine Education Foundation
Company where he is president. For failure to disclose
his principal, Aruego is personally liable for the drafts
he accepted.
• In lending his name to the accommodated party, the
accommodation party is in effect a surety for the latter.
In the instant case, the defendant signed as a
drawee/acceptor. Under the Negotiable Instrument
Law, a drawee is primarily liable