Proposiciones no urgentes o mociones ordinarias:

stated in the instrument, a negotiable promissory note implied prima facie valuable consideration moving to the maker whether the words "value received" appear in it or not.

An accommodation note showing on its face in express terms that it had been issued for no consideration would be of little or no use to the payee, and for that reason, if for no other, practically all accommodation notes are so drawn as to either express or imply a valuable consideration prima facie. There is therefore nothing in the note here in question to distinguish it from an ordinary accommodation note. This being so and the guarantee of the Fidelity & Surety Company by its terms being in favor of the maker of the note, there is at least a possibility that the Fidelity, if called upon to do so, might have been able to prove that the note was given as an accommodation to the Vegetable Oil Company. This possibility existing, the court was not justified in virtually reforming the document by mere construction without proper pleadings. In this connection it should be borne in mind that contracts of suretyship and guarantee are strictly construed in favor of the surety or guarantor.

75 TRAVEL ON V. CA 210 SCRA 351

FACTS:

Petitioner was a travel agency involved in ticket sales on a commission basis for and on behalf of different airline companies. Miranda has a revolving credit line with the company. He procured tickets on behalf of others and derived commissions from it.

Petitioner filed a collection suit against Miranda for the unpaid amount of six checks. Petitioner alleged that Miranda procured tickets from them which he paid with cash and checks but the checks were dishonored upon presentment to the bank. This was being refuted by Miranda by saying that he actually paid for his obligations, even in the excess. He argued that the checks were for accommodation purposes only. The company needed to show to its Board of Directors that its accounts receivable was in good standing. The RTC and CA held Miranda not to be liable.

HELD:

Reliance by the lower and appellate court on the company’s financial statements were wrong, to see if Miranda was liable or not. This financial statements were actually not updated to show that there was indebtedness on the part of Miranda. The best evidence that the courts should have looked at were the checks itself. There is a prima facie presumption that a check was issued for valuable consideration and the provision puts the burden upon the drawer to disprove this presumption. Miranda was unable to relieve himself of this burden.

Only clear and convincing evidence and not mere self-serving evidence of drawer can rebut this presumption. The company was entitled to the benefit conferred by the statutory provision. Miranda failed to show that the checks weren’t issued for any valuable consideration. The checks were clear by stating that the company was the payee and not a mere accommodated party. And also, notice was given to the fact that the checks were issued after a written demand by the company regarding Miranda’s unpaid liabilities.

76 PINEDA V. DELA RAMA

121 SCRA 671 FACTS:

Pineda was caught in a case against the NARIC for his alleged misappropriation of many cavans of palay. He hired Atty. Dela Rama to delay the filing of the complaint against him, on alleged representation of the lawyer that he is a friend of the NARIC administrator.

Pineda then issued a promissory note in favor of dela Rama to pay for the advances that the lawyer made to the administrator to delay the filing of the complaint. Dela Rama on the other hand contended that the promissory note was for the loan advanced to Pineda by him. Dela Rama filed an action against Pineda for the collection of the amount of the note. HELD:

The presumption that a negotiable instrument was issued for valuable consideration is a rebuttable presumption. It can be rebutted by proof to the contrary.

In the case at bar, the claims of dela Rama that the promissory note was for a loan advanced to Pineda is unbelievable. The grant of a loan by a lawyer to a moneyed client and whom he has known for only 3 months can not be relied on. Pineda had actually just purchased numerous properties. It is highly illogical that he would loan from dela Rama P9500 for 5 days apart.

Furthermore, the note was void ab initio because the consideration given was to influence the administrator to delay charges against Pineda. The consideration was void for being against law and public policy.

Sec. 25. Value, what constitutes. — Value is any consideration sufficient to support a simple contract. An antecedent or pre- existing debt constitutes value; and is deemed such whether the instrument is payable on demand or at a future time.

VALUABLE CONSIDERATION, IN GENERAL

• Consideration is the inducement—cause or impelling influence which induces a contracting party to enter into the contract

• Valuable consideration may in general terms be said to consist either in some right, interest, profit or benefit accruing to the party who makes the contract, or some forbearance, detriment, loss or some responsibility to act, or labor, or service given, suffered, or undertaken by the other side

Sec. 26. What constitutes holder for value. - Where value has at any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who become such prior to that time.

MEANING OF A HOLDER FOR VALUE

• One who gives valuable consideration for an instrument issued or negotiated to him is a holder for value

• Not limited to one who is known to have given valuable consideration for the instrument he holds—it refers to any holder of an instrument for which value has been given at any time Sec. 27. When lien on instrument constitutes holder for value. — Where the holder has a lien on the instrument arising either from contract or by implication of law, he is deemed a holder for value to the extent of his lien.

APPLICATION OF SECTION 27

• Suppose that A makes a note in the sum of P1000 payable to the order of B. B owes C P600. C is said to have a lien on the note to the extent of P600 only, and to that extent, he is a holder for value. • Can C as indorsee collect the whole amount of P1000 from A, or only

P600? It depends. If A maker, has defenses against B indorser, such as absence of consideration, C, even if a holder in due course can collect only P600 from A, the extent of his lien.

• Reason for the rule: C is actually a holder in due course for P600 only. He is a holder in due course for such as he is a holder for value for only P600. For the balance of P400 he is not a holder for value, and since being a holder for value is one of the requisites of a holder in due course, he cannot be a holder in due course as far as the P400 is concerned.

• If A has personal defenses, he cannot use such as far as the P600 is concerned.

• If A on the other hand has real defenses, C cannot collect anything. • But if A maker doesn't have any defenses at all against B indorser,

then C can collect the whole amount of P1000 and hold the P400 for the benefit of B.

NOTES FOR WEEK #6: NOTES FOR WEEK #6: JULY 16

JULY 16 --JULY 20, 2007JULY 20, 2007

Sec. 28. Effect of want of consideration. - Absence or failure of consideration is a matter of defense as against any person not a holder in due course; and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise.

ABSENCE OF CONSIDERATION

• It is total lack of any valid consideration

• Examples—note for future illicit cohabitation; note of husband to wife, upon promise of wife to withdraw all opposition to proceedings of

divorce instituted by him; a note given in consideration of an agreement to stifle or hinder a public prosecution for a felony; consideration for commercial paper is clearly fraudulent

• Embraces transactions where no consideration was intended to pass FAILURE OF CONSIDERATION

• It is the neglect or failure of one of the parties to give, to do or perform the consideration agreed upon

• Implies that the giving of valuable consideration was contemplated but that it failed to pass

ABSENCE AND FAILURE OF CONSIDERATION AS DEFENSES

• Matter of defense against persons who are not holders in due course • They are personal defenses

EFFECT OF WANT OF CONSIDERATION BETWEEN THE DRAWER AND ACCEPTOR AS TO HOLDER

• The drawee, by accepting unconditionally the bill, becomes liable to the holder, and cannot allege want of consideration between him and drawer

• Holder is a stranger to the transaction between the drawer and drawee 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.

ACCOMODATION PARTY: REQUISITES

• One who has signed the instrument as maker, drawer, indorser, acceptor, without receiving any value therefore and for the purpose of lending his name to some other person

• Requisites:

1. He must be a party to the instrument, signing as maker, acceptor, indorser, or drawer

2. He must not receive any value therefore

3. He must sign for the purpose of lending his name or credit RIGHTS AND LEGAL POSITION OF AN ACCOMODATION PARTY

• The accommodation party is generally regarded as a surety for the party accommodated

• When the accommodation parties make payment to the holder of the notes, they have the right to sue the accommodated party for reimbursement since the relation between them is in effect that of a principal and sureties, the accommodation parties being the sureties ACCOMODATED PARTY CANNOT RECOVER FROM ACCOMODATION PARTY • Absence of consideration is a defense

• In fact as between them, the understanding is that the accommodated party either is to

1. To reimburse the amount which the accommodation party may be obliged to pay

2. To pay the instrument directly to the holder LIABILITY OF THE ACCOMODATION PARTY

• The accommodation party is liable on the instrument to a holder in value, notwithstanding such holder at any time of the taking of the instrument knew him to be only an accommodation party

• The accommodation party doesn't receive any valuable consideration for the instrument he signs but he is liable to a holder for value as if the contract wasn't for accommodation

CORPORATIONS ARE NOT LIABLE AS ACCOMODATION PARTIES EVEN TO HOLDERS FOR VALUE

OFFICERS SIGNING FOR CORPORATION AS ACCOMODATION PARTY WITHOUT AUTHORITY TO DO SO FOR THEIR INDIVIDUAL DEBTS OR TRANSACTIONS ARE PERSONALLY LIABLE THEREON

HOLDER MUST OTHERWISE BE A HOLDER IN DUE COURSE

ACCOMODATION PARTY MAY ACCOMMODATE ONE WHO IS NOT A PARTY TO THE INSTRUMENT

ACCOMMODATION PARTY CAN INTERPOSE DEFENSE OF WANT OF CONSIDERATION AGAINST ONE NOT HOLDER IN DUE COURSE.

CASE DIGESTS: SECTION 29