Crisologo-Jose v. Court of Appeals
REITERATIONFacts
The Antecedents: Atty. Oscar Z. Benares, president of Mover Enterprises, Inc., issued a P45,000.00 check payable to Ernestina Crisologo-Jose, signed by himself and Ricardo S. Santos, Jr. (vice-president), as an accommodation for the spouses Jaime and Clarita Ong, with the understanding that it would be encashed upon GSIS approval of a compromise agreement. When the agreement was not approved, Benares replaced the check with another P45,000.00 check, also signed by Benares and Santos, Jr. This replacement check was dishonored twice for insufficiency of funds. Consequently, Crisologo-Jose filed a criminal complaint for violation of Batas Pambansa Blg. 22 against Benares and Santos, Jr. Procedural History: During the preliminary investigation, Santos, Jr. tendered a cashier's check for P45,000.00 to Crisologo-Jose, which was refused. Santos, Jr. then deposited the amount with the Clerk of Court and filed a complaint for consignation. The trial court dismissed the complaint, holding that consignation was not applicable. The Court of Appeals reversed this decision, reviving the complaint for consignation. The Supreme Court reviewed the case on petition for annulment of the Court of Appeals' decision. The Petition: Petitioner Ernestina Crisologo-Jose sought the annulment of the Court of Appeals' decision, arguing that the Court of Appeals erred in holding that Santos, Jr. was an accommodation party liable on the check and that consignation was proper.
Issue(s)
Whether Ricardo S. Santos, Jr., as a co-signatory of a corporate check for accommodation, is personally liable thereon. Whether the consignation of P45,000.00 by Ricardo S. Santos, Jr. was proper under Article 1256 of the Civil Code. Whether the Court of Appeals prejudged the criminal case for violation of Batas Pambansa Blg. 22 filed against Ricardo S. Santos, Jr.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals with modifications. It held that Ricardo S. Santos, Jr. is personally liable on the accommodation check and that the consignation was proper, but set aside the pronouncements of the Court of Appeals regarding the merits of the criminal case.
Ratio Decidendi
On the personal liability of Ricardo S. Santos, Jr. as an accommodation party: The Court reiterated that an accommodation party is liable to a holder for value, even if the holder knew of the accommodation. However, it clarified that this rule does not apply to corporations acting as accommodation parties, as such acts are ultra vires. When a corporation lacks the capacity to be an accommodation party, the signatories who executed the instrument for their personal account become personally liable, especially if the payee had knowledge of the accommodation nature. In this case, since the check was for the personal account of Atty. Benares and respondent Santos, Jr., and petitioner was aware of the arrangement, they are personally liable. The fact that Santos, Jr. was a co-signatory does not diminish his liability as an accommodation party, making him solidarily liable with Benares. On the propriety of consignation: The Court held that since a debtor-creditor relationship was established between Atty. Benares and respondent Santos, Jr. on one hand, and petitioner on the other, following the dishonor of the check, Santos, Jr. could properly resort to consignation when his tender of payment was refused. The Court emphasized that while consignation was the proper remedy, it did not rule on whether all the operative facts for consignation, which would produce the effect of payment, were present. These factual issues were left for the trial court to ascertain in the civil case for consignation. On the Court of Appeals prejudging the criminal case: The Court sustained the petitioner's argument that the Court of Appeals erred in making pronouncements on the merits of the criminal case for violation of Batas Pambansa Blg. 22. The Court found that the appellate court went beyond the scope of the civil case by delving into the elements of the criminal offense, particularly the five-banking-day period for payment to avoid criminal liability. The Court stressed that these matters, including the determination of the expiration of the period, the reckoning of notice of dishonor, and the quantum of evidence, are within the exclusive jurisdiction of the criminal trial court and should not have been preempted by the Court of Appeals. Therefore, the pronouncements of the Court of Appeals concerning the criminal case were set aside.
Main Doctrine
A corporation, lacking the capacity to be an accommodation party, is not bound by accommodation paper; however, the signatories who executed such paper for their personal account become personally liable, especially when the payee had knowledge of the accommodation nature of the transaction.