Nego Case 7

4/11/2017 SUPREMECOURTREPORTSANNOTATEDVOLUME177
594 SUPREME COURT REPORTS ANNOTATED

CrisologoJose vs. Court of Appeals
*
G.R. No. 80599.September 15, 1989.
ERNESTINA CRISOLOGOJOSE, petitioner, vs. COURT

OF APPEALS and RICARDO S. SANTOS, JR. in his own
behalf and as VicePresident for Sales of Mover
Enterprises, Inc., respondents.
Negotiable Instruments Law Corporations Rule that an

accommodation party liable on the instrument to a holder for
value does not apply to corporations which are accommodation
parties Reasons.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. 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.
Same Same Same Same 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 accommodation only if
specifically authorized to do so Personal liability of signatories in
the instrument.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. Corollarily, corporate officers, such as the president and
vicepresident, have no power to execute for mere
http://www.central.com.ph/sfsreader/session/0000015b5b5c02061b5f1b2e003600fb002c009e/t/?o=False 1/27
_______________
* SECOND DIVISION.
595
VOL. 177, SEPTEMBER 15 ,1989 595
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.
Same Same Same Same Consignation Payment Remedy of

consignation, proper Case at bar Effects of consignation.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. Q33160, 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.
Checks B.P. 22 Presumptive rule to determine whether or not

there was insufficiency of funds in or credit with the drawee bank.
These are aside 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.
PETITION to review the decision of the Court of Appeals.

Torres, Jr., J.
The facts are stated in the opinion of the Court.

Melquiades P. de Leon for petitioner.
Rogelio A. Ajes for private respondent.
596

REGALADO, J.:
1
Petitioner seeks the annulment of the decision of
respondent Court of Appeals, promulgated on September 8,2
1987, which reversed the decision of the trial court
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 vicepresident of

Mover Enterprises, Inc. incharge 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 CrisologoJose 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
_______________
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. Q33160, Regional Trial Court of Quezon City, Branch XCVI.
597
VOL. 177, SEPTEMBER 15, 1989 597

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 Fiscals 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. Q14867 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 cashiers check No. CC 160152 for P45,000.00
dated April 10, 1981 to the defendant Ernestina CrisologoJose,
the complainant in that criminal case. The defendant refused to
receive the cashiers check in payment of the dishonored check in
the amount of P45,000.00. Hence, plaintiff encashed the aforesaid
cashiers 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 cashiers check adverted to above was
purchased by Atty. Oscar Z. Benares and given to the 3 plaintiff
herein to be applied in payment of the dishonored check.
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
4
plaintiffs complaint and defendants
counterclaim.
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 Instru
_______________
3 Rollo, 1920.
4 Rollo, 18.
598

amount of said check.

Petitioner avers that the accommodation party in this
case is Mover Enterprises, Inc. and not private respondent
who merely signed the check in question in a
representative capacity, that is, as vicepresident 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
therefor, 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

5
for value as if the contract was not for accommodation, 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, 6the accommodation party is in effect a surety for the
latter.
Assuming arguendo that Mover Enterprises, Inc. is the
accommodation party in this case, as petitioner suggests,
the inevitable question is whether or not it may be held
liable on
_______________
5 Ang Tiong vs. Ting, et al., 22 SCRA 713 (1968).

6 Philipine Bank of Commerce vs. Aruego, 102 SCRA 530 (1981).
599
VOL. 177, SEPTEMBER 15, 1989 599

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 7apply to
corporations which are accommodation parties. This is
because the issue or indorsement of negotiable paper by a
corporation without consideration 8 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,
9
he cannot recover
against the corporation thereon.
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 10 a third person only if specifically
authorized to do so. Corollarily, corporate officers, such as
the president and vicepresident, 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.
_______________
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., 2 Low. 119 Hall vs. Auburn Turnp. Co., 27
Cal. 255, cited in 14A C.J. 461.
600

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 corporations 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
petitioners claims being directed personally against Atty.
Oscar Z. Benares and respondent Ricardo S. Santos, Jr.,
president and vicepresident, 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.
Petitioners submission is that no creditordebtor

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 cosignatory
does not detract from his personal liability. A comaker or
codrawer under the circumstances in this case is as much
an accommoda
601
VOL. 177, SEPTEMBER 15, 1989 601

tion party as the other cosignatory 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 cosurety for the accommodated party with
whom he and his cosignatory, as the other cosurety,
assume solidary liabilityex 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. Q33160, 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. Q14687 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 CAG.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. Q14867, thus:
602

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
plaintiffappellant 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 plaintiffappellant receive (sic) the
notice of nonpayment, 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 plaintiffappellant when he deposited the
11
amount of P45,000.00 with the Court a quo on August 14, 1981.
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
_______________
11 Rollo, 2122.
603
VOL. 177, SEPTEMBER 15, 1989 603

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. Q14867, 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 CAG.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. Q14867 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.

MelencioHerrera J., No part. Did not participate in
deliberations.
Judgment affirmed with modifications.
Notes.In order that consignation may be effective, the

debtor must first comply with certain requirements
prescribed by law. (Soco vs. Militante, 123 SCRA 160.)
Without prior notice, consignation is void as payment.
(Soco vs. Militante, 123 SCRA 160.)
o0o
604

Guzman vs. Court of Appeals
*
G.R. No. 81949.September 15, 1989.
SPOUSES EMETERIO and LOLITA GUZMAN,

petitioners, vs. HONORABLE COURT OF APPEALS and
SPOUSES GUILLERMO and GERARDA EVANGELISTA,
respondents.
Agrarian Reform Urban Land Reform Law Right of First

Refusal Only legitimate tenants who have resided for ten years or
more on specific parcels of land in declared urban land reform
zones or urban zones, and who have built their houses thereon,
have the right of first refusal.It is clear from the language of the
law that only legitimate tenants who have resided for ten years or
more on specific parcels of land situated in declared Urban Land
Reform Zones or Urban Zones, and who have built their homes
thereon, have the right not to be dispossessed therefrom and the
right of first refusal to purchase the property under reasonable

terms and conditions to be determined by the appropriate
government agency. At the time of the sale of the subject property
to petitioners, Proclamation No. 1967 [Amending Proclamation
No. 1893 by specifying 244 sites in Metropolitan Manila as Areas
for Priority Development (APDs) and Urban Land Reform Zones],
promulgated on May 14, 1980, was the prevailing law
enumerating the parcels of land affected by Pres. Dec. Nos. 1517,
1640 and 1642, and LOI No. 935. A simple reading of the list of
244 sites described in the annex to Proclamation No. 1967 reveals
that the subject property was not among the APDs or Urban Land
Reform Zones in Navotas. Thus, when the subject property was
sold to petitioners, it was neither covered by, nor subject, to the
conditions set forth in, the Urban Land Reform Law.
Same Same Tenants, Defined Tenants, as defined in Pres.

Decree No. 1517 does not include those whose possession of the
property is under litigation.Secondly, private respondents are
not even tenants within the purview of Pres. Dec. No. 1517.
Section 3 (f) of this decree, which defines the term tenant,
provides: Tenant refers to the rightful occupant of land and its
structures, but does not include those whose presence on the land
is merely tolerated and without the benefit of contract, those who
enter the land by force or deceit, or those whose possession is
under litigation [italics supplied.] It cannot be denied that at the
time the subject property was declared an APD in December 1987,
the right of private respondents to occupy and possess the subject
property was then an issue under litigation in the action
_______________
* THIRD DIVISION.
605
VOL. 177, SEPTEMBER 15, 1989 605
for ejectment filed against them by petitioners.
Civil Law Contracts Lease Suspension of Rental Payments

Private respondents belief that the subject property should have
been sold to them, does not justify the unilateral withholding of
rental payments due the new owner.Upon the purchase of the
leased property and proper notice by the vendee to the lessee, the
latter must pay the agreed monthly rentals to the new owner
since, by virtue of the sale, the vendee steps into the shoes of the
original lessor to whom the lessee bound himself to pay [Mirasol
v. Magsuci, G.R. No. L17125, November 28, 1966, 18 SCRA 801].
In the instant case, despite their receipt of the demand letter
dated March 21, 1986 informing them of the change of property
ownership, private respondents unjustifiably failed to pay the
monthly rentals which accrued for the account of the new owner.
Their belief that the subject property should have been sold to
them does not justify the unilateral withholding of rental
payments due to Lolita Guzman as new owner of the property.
Private respondents must be reminded that Article 1658 of the
New Civil Code provides only two instances wherein the lessee
may suspend payment of rent, namely, in case the lessor fails to
make the necessary repairs or to maintain the lessee in peaceful
and adequate enjoyment of the property leased [See Reyes v.
Arca, G.R. No. L21447, November 29, 1965, 15 SCRA 442].
Same Same Same Ejectment Private respondents continued

stay in the property without having paid a single monthly rental is
a sufficient cause for ejectment.Private respondents should have
at the very least replied to Lolita Guzmans letter and tendered
payment of the monthly rentals which accrued in her favor
beginning March 1986, and if such were to be refused by her, then
private respondents should have made a consignation thereof or
deposited the rentals due pending the resolution of their alleged
claim against the administratrix of the estate of the late Mercedes
Policarpio [SeeIpapo v. IAC, G.R. No. 72740, January 27, 1987,
147 SCRA 342]. Instead, they opted to take a hardline stance in
refusing to acknowledge Lolita Guzman as owner and lessor, and,
in so doing, gave cause to be declared in default in their obligation
to pay rentals due her. [SeeLandicho v. Tensuan, G.R. No. 51216,
June 30, 1987, 151 SCRA 410]. Thus, when petitioners filed their
action for ejectment, the rentals (which were payable in advance
within the first five days of each month) corresponding to the
months of March, April and May, 1986 had not been paid. And the
glaring situation to date is that private respondents continue to
occupy the subject property without having paid a single monthly
rental which accrued pending litigation. Under these
circumstances,
606
the Court finds that sufficient cause for their ejectment under
Section 5 (b) of Batas Pambansa Blg. 877 has been established.
[SeeRoxas v. IAC, G.R. Nos. 74279 and 7480103, January 20,
1988, 157 SCRA 166].
Civil Procedure Prejudicial Question Ejectment Possession

Mere allegation of ownership by the defendant in an ejectment case
or the pendency of an action for reconveyance does not divest the
inferior court of jurisdiction over the ejectment suit Exceptions.
Finally, the Court is not unaware of Civil Case No. 957MN
pending in the Regional Trial Court of Malabon. This action was
instituted by private respondents on July 1, 1987 against
petitioners and administratrix Rufina Samaniego for the
annulment of the sale and the reconveyance of the subject
property in favor of private respondents. As correctly held by
respondent appellate court, Civil Case No. 957MN poses no
prejudicial question to the resolution of the instant petition. Well
settled is the rule that the mere allegation of ownership of the
property in dispute by the defendant in an ejectment suit or the
pendency of an action for reconveyance of title over the same
property does not divest the inferior court of its jurisdiction over
the ejectment suit [Alilaya v. Espanola, G.R. No. L36208,
September 18, 1981, 107 SCRA 564 De la Cruz v. Court of
Appeals, G.R. No. 57454, November 29, 1984, 133 SCRA 520
Drilon v. Gaurana, G.R. No. L35482, April 30, 1987, 149 SCRA
342]. The only exception to this rule is where the question of de
facto possession cannot be determined properly without settling
that of de jure possession and ownership because the latter is
inseparably linked with the former [Andres v. Soriano, 101 Phil.
848 (1957) Castro v. de los Reyes, 109 Phil. 64 (1960) Alvir v.
Vera, G.R. No. L39338, July 16, 1984, 130 SCRA 357 De la
Santa v. Court of Appeals, G.R. Nos. L30560 and L31078,
November 18, 1985, 140 SCRA 44].
Contracts Lease Right of Removal Useful Improvements

Private respondents have the right to remove their house and other
useful improvements should petitioner refuse to reimburse the
amount thereof ornamental objects may be removed if no damage
shall be caused to the principal and that the owner of the principal
do not choose to retain them by paying their value.Moreover,
since private respondents had built in good faith their house on
the leased subject property, it is appropriate to mention that
Article 1678 of the New Civil Code governs the parties rights
thereto. As the new lessors, petitioners have the option to
appropriate the house and other useful improvements made by
private respondents by paying onehalf of their value. But private
respondents do not have the right to compel petitioners to
appropriate the improvements and make reimbursement, nor to

retain possession
607
VOL. 177, SEPTEMBER 15, 1989 607
of the subject property until such reimbursement. Their right

under the law is the removal of the house and other useful
improvements in the event that petitioners refuse to reimburse
the above amount [Lapena v. Morfe, 101 Phil. 997 (1957)
Balucanag v. Francisco, G.R. No. L33422, May 30, 1983, 122
SCRA 498]. Incidentally, as regards ornamental objects, private
respondents may remove the same provided that no damage is
caused to the principal thing and petitioners do not choose to
retain them by paying their value at the time the lease is
extinguished.
PETITION for certiorari to review the decision of the Court

of Appeals.
The facts are stated in the opinion of the Court.

Eleazar S. Calasan for petitioners.
Bienvenido J. Medel for private respondents.
CORTS, J.:
This is a petition for review on certiorari which seeks the

reversal of the decision of the Court of Appeals rendered in
CAG.R. SP No. 13475 setting aside the decisions of the
Regional Trial Court and Metropolitan Trial Court, and
dismissing the complaint for ejectment filed by petitioners
against private respondents.
The facts of the case are as follows:
Since 1937, private respondents have been in possession
of a 184 sq. m. parcel of land situated at M. Policarpio
Street, Bagong Barrio, Navotas, Metro Manila by virtue of
an oral lease agreement with the late Mercedes Policarpio
whereby the former agreed to pay a monthly rental of
thirty eight pesos (P38.00), payable in advance within the
first five (5) days of each month.
Petitioner Lolita Guzman, on the other hand, is
presently the registered owner of the same property,
having acquired the same from the Estate of the late
Mercedes Policarpio by virtue of a Deed of Absolute Sale
dated March 3, 1986 executed in her favor by the
administratrix Rufina Samaniego. This sale was judicially

approved by the probate court in Special Proceedings No.
2640 entitled Testate Estate of Mercedes Policarpio.
Lolita Guzmans ownership is evidenced by TCT No. T
134078 issued by the Register of Deeds of Caloocan City on
March 17, 1986. Soon after the sale, Lolita Guzman,
through her counsel, sent
608

private respondents a letter dated March 21, 1986

informing them that she is the new owner of the subject
property and demanding that they vacate it in view of their
failure to pay the monthly rentals since October 1983
despite previous demands by the former owner and pay the
rentals in arrears.
Due to the failure of private respondents to reply to, or
comply with, the above demand, peitioner spouses brought
their complaint before the Barangay Chairman, but no
amicable settlement was reached. Petitioners then filed on
May 7, 1986 a complaint for ejectment against private
respondents in the Metropolitan Trial Court, invoking
Section 5(b) of Batas Pambansa Blg. 877. The case was
docketed as Civil Case No. 2839.
Private respondents, in their verified answer, alleged
that they had been religiously paying their monthly rentals
for the subject property upon which they constructed their
home until the middle part of 1984 when they were advised
by the administratrix Rufina Samaniego to cease making
payments because the estate was then being partitioned
and the subdivided units were to be offered for sale to the
respective occupants at twentyfive thousand pesos
(P25,000.00). They had offered to pay the amount in cash
on the condition that a clear title would be given, but were
informed that it would be sometime before titles could be
issued for the individual units. But in violation of their
right of first refusal under Pres. Dec. No. 1517 [otherwise
known as the Urban Land Reform Law], the administratrix
executed an absolute deed of sale over the property in favor
of petitioner Lolita Guzman. They finally concluded that
petitioners had no cause of action against them in view of
the nullity of this deed of sale.
On May 5, 1987, the court rendered judgment against
private respondents ordering them to vacate the subject
property and to pay the sum of one thousand one hundred
seventyeight pesos (P1,178.00) representing unpaid

rentals from October 1983 until April 1986 and the sum of
thirtyeight pesos (P38.00) for every month thereafter until
they have completely surrendered possession of the
property to the petitioners. The court held that:
xxx
The defendant admitted in his answer (par. 3) that he received
609
VOL. 177, SEPTEMBER 15, 1989 609

the letter of demand dated March 17, 1986 (sic) sent by the
plaintiffs counsel, but there is (sic) no reply or answer was made
by the defendant to the aforesaid letter of demand, to explain why
he should not pay the rentals claimed by the plaintiffs. Thus, the
plaintiffs were constrained to file the present action under Section
5 (b) of BP 877.
The plaintiffs being the registered owner of the property in
question, as evidence (sic) by TCT No. T134078, they have the
better right of possession as adverse to the defendant. Moreover,
the defendant cannot be considered as a legitimate tenant as
contemplated by the Urban Land Reform Act, he having failed to
comply religiously with his obligation to pay the agreed rentals on
time, he became a possessor in bad faith and his ejectment from
the premises is allowed by BP 877 and therefore not entitled to
the protection of P.D. No. 1517 as amended and its implemented
(sic) proclamations of the Rental Control Law.
xxx
[MTC Decision, p. 3 Rollo, p. 52.]
On Appeal, this decision was affirmed in toto by the

Regional Trial Court on October 16, 1987 in Appealed Civil
Case No. 262MN.
Private respondents then filed on December 11, 1987 a
petition for review with the Court of Appeals. In a decision
1
promulgated on January 28, 1988, the Court of Appeals set
aside the decisions of the lower courts and dismissed for
lack of merit petitioners complaint for ejectment. The Court
of Appeals held that the ejectment of private respondents
from the subject property on the ground of nonpayment of
rentals was baseless and improper, finding that:
xxx
... [private respondents] have been leasing and actually
occupying subject lot since 1937 at a meager rental of P38.00 a
month, and did even offer to pay cash of P25,000.00 therefor, it is

simply unbelievable that they defaulted or failed to pay the
measly rental of P38.00 a month as [petitioners] would like the
court to understand. [Private respondents] theory that they were
told to stop paying their rents sometime in October 1984 is more
in accord with reason and human experience. If they were really
told by the administratrix of the estate
_______________
1 Penned by Fidel P. Purisima with Segundino G. Chua and Nicolas P. Lapena,

Jr. concurring.
610

of the deceased ownerlessor to hold or defer their rental

payments, it stands to reason that [they] never defaulted in the
payment of their rental for the lot in question. Indeed, if they
were not advised to pay their rents, why should [they] falter in
their rental payments when they have their house thereon, are
actually residing therein and have the financial capacity to buy
the lot in dispute on spot cash basis?
... If they stopped paying the monthly rental therefor since
October 1984, it was not due to inability or refusal on their part to
pay but was upon the advice of the administratrix of the estate of
the late ownerlessor Mercedes Policarpio. The latter
unequivocably [sic] told [private respondents] not to pay their
rents anymore because the area would be subdivided and sold to
the actual occupants, including the [private respondents] with
respect to the lot in question which they have been renting and
occupying for around fifty (50) years already. With the foregoing
explanation of [private respondents] for their failure to pay their
rental starting October 1984, an assertion inducing faith and
reliance and which has not been effectively controverted, [their]
ejectment on the ground of nonpayment of rental is improper and
cannot be sanctioned.
xxx
[CA Decision, pp. 56 Rollo, pp. 1819.]
Moreover, the Court of Appeals upheld private

respondents contention that they have the right of first
refusal to purchase the property pursuant to Section 6 of
Pres. Dec. No. 1517.
Hence, petitioners filed the instant petition, assigning
the following as errors:
I. THE HONORABLE COURT OF APPEALS ERRED

IN APPLYING SECTION 6 OF PRESIDENTIAL
DECREE NO. 1517, OTHERWISE KNOWN AS
URBAN LAND REFORM LAW IN FAVOR OF
PRIVATE RESPONDENTS IN UTTER
DISREGARD OF THE EXPRESS PROVISIONS OF
PROCLAMATION NO. 1967 WHICH SPECIFIES
THE AREAS OF APPLICABILITY OF THE
URBAN ZONES MENTIONED IN SAID
SECTION 6 OF P.D. NO. 1517
II. THE HONORABLE COURT OF APPEALS ERRED
IN HOLDING THAT PRIVATE RESPONDENTS
WERE NOT GUILTY OF NONPAYMENT OF
RENTALS [Petition, p. 5 Rollo, p. 6.]
After a careful consideration of the issues raised in the

pleadings and the various laws applicable to the case at
hand, this Court finds merit in the instant petition.
611
VOL. 177, SEPTEMBER 15, 1989 611

I.
The Court holds that there is no basis to the claim that the
sale of the subject property between the estate of the late
Mercedes Policarpio and petitioner Lolita Guzman is null
and void for being violative of the right of first refusal
granted to tenants under Section 6 of Pres. Dec. No. 1517.
Section 6 of Pres. Dec. No. 1517 reads as follows:
SECTION 6. Land Tenancy in Urban Land Reform Areas.

Within the Urban Zones, legitimate tenants who have resided on
the land for ten years or more, who have built their homes on the
land, and residents who have legally occupied the lands by
contract continuously for the last ten years shall not be
dispossessed of the land and shall be allowed the right of first
refusal to purchase the same within a reasonable time and at
reasonable prices, under terms and conditions to be determined
by the Urban Zone Expropriation and Land Management
Committee created by Section 8 of this Decree.
It is clear from the language of the law that only legitimate

tenants who have resided for ten years or more on specific
parcels of land situated in declared Urban Land Reform
Zones or Urban Zones, and who have built their homes
thereon, have the right not to be dispossessed therefrom

and the right of first refusal to purchase the property
under reasonable terms and conditions to be determined by
the appropriate government agency.
At the time of the sale of the subject property to
petitioners, Proclamation No. 1967 [Amending
Proclamation No. 1893 by specifying 244 sites in
Metropolitan Manila as Areas for Priority Development
(APDs) and Urban Land Reform Zones], promulgated on
May 14, 1980, was the prevailing law enumerating2 the
parcels
3
of land affected by Pres. Dec. Nos. 1517, 1640 and
1642, and LOI No. 935. A simple reading of the list of 244
sites described in the annex to Proclamation No. 1967
reveals that
_______________
2 Freezing the prices of land in Metropolitan Manila at current value.

(1979)
3 Freezing the rates of rental, above three hundred pesos a month, of
residential and commercial buildings, houses, apartments, and dwelling
units in Metropolitan Manila at current levels. (1979)
612

Reform Zones in Navotas. Thus, when the subject property

was sold to petitioners, it was neither covered by, nor
subject, to the conditions set forth in, the Urban Land
Reform Law.
This is made all the more obvious by the fact that
Resolution No. 1369 of the National Housing Authority
Board of Directors which proclaimed the Estate of the late
Mercedes Policarpio in Navotas an APD was passed only on
December 18, 1987 [Rollo, p. 81], long after the sale was
executed between administratrix Rufina Samaniego and
petitioners and judicially approved by the probate court.
Private respondents, therefore, have no basis in claiming
that the sale violated the right of first refusal granted to
tenants by Pres. Dec. No. 1517.
Furthermore, notwithstanding the fact that, as provided
by the above resolution, the subject property is presently
an APD or Urban Land Reform Zone, private respondents
still do not enjoy the protective mantle of Pres. Dec. No.
1517.
In the first place, petitioners cause of action to evict

private respondents accrued, and the complaint on the
basis thereof was filed, while the subject property had not
yet been declared an APD and subject to Pres. Dec. No.
1517. In addition, prior to the issuance of Resolution No.
1369, the Metropolitan Trial Court in Civil Case No. 2839
had already rendered a decision in favor of petitioners
ordering private respondents to vacate the property for
nonpayment of rentals pursuant to Section 5 (b) of Batas
Pambansa Blg. 877.
Secondly, private respondents are not even tenants
within the purview of Pres. Dec. No. 1517, Section 3 (f) of
this decree, which defines the term tenant, provides:
Tenant refers to the rightful occupant of land and its structures,

but does not include those whose presence on the land is merely
tolerated and without the benefit of contract, those who enter the
land by force or deceit, or those whose possession is under
litigation [Italics supplied.]
It cannot be denied that at the time the subject property

was declared an APD in December 1987, the right of
private respondents to occupy and possess the subject
property was then an issue under litigation in the action
for ejectment filed against them by petitioners.
613
VOL. 177, SEPTEMBER 15, 1989 613

Thirdly, private respondents are not the legitimate

tenants envisaged in Section 6 of Pres. Dec. No. 1517
considering that their possession of the subject property
has been rendered illegal by their stubborn and
unjustifiable refusal to comply with4 their obligation to pay
their monthly rentals to petitioners.
Consequently, the Court holds that respondent appellate
court committed a reversible error in applying the
provisions of Pres. Dec. No. 1517 to sustain private
respondents defense in the action for ejectment.
II.
Anent the second error raised, the record of the case does
not support respondent appellate courts conclusion that
private respondents were not in default in the payment of
their monthly rentals due to petitioners.
While discussion was made concerning private

respondents explanation for nonpayment of the rentals
due to the estate of the late Mercedes Policarpio, this is
irrelevant to the issue at hand. What is palpably clear from
the record of the case is the fact that private respondents
had failed to pay the monthly rentals which accrued from
the time petitioner Lolita Guzman acquired ownership of
the subject property in March 1986.
Upon the purchase of the leased property and proper
notice by the vendee to the lessee, the latter must pay the
agreed monthly rentals to the new owner since, by virtue of
the sale, the vendee steps into the shoes of the original
lessor to whom the lessee bound himself to pay [Mirasol v.
Magsuci, G.R. No. L17125, November 28, 1966, 18 SCRA
801]. In the instant case, despite their receipt of the
demand letter dated March 21, 1986 informing them of the
change of property ownership, private respondents
unjustifiably failed to pay the monthly rentals which
accrued for the account of the new owner. Their belief that
the subject property should have been sold to them does not
justify the unilateral withholding of rental payments due to
Lolita Guzman as new owner of the property. Private
respondents
_______________
4 This point will be discussed in length in the following section of this

decision.
614

provides only two instances wherein the lessee may

suspend payment of rent, namely, in case the lessor fails to
make the necessary repairs or to maintain the lessee in
peaceful and adequate enjoyment of the property leased
[See Reyes v. Arca, G.R. No. L21447, November 29, 1965,
15 SCRA 442].
Private respondents should have, at the very least,
replied to Lolita Guzmans letter and tendered payment of
the monthly rentals which accrued in her favor beginning
March 1986, and if such were to be refused by her, then
private respondents should have made a consignation
thereof or deposited the rentals due pending the resolution
of their alleged claim against the administratrix of the
estate of the late Mercedes Policarpio [See Ipapo v. IAC,
G.R. No. 72740, January 27, 1987, 147 SCRA 342]. Instead,
they opted to take a hardline stance in refusing to
acknowledge Lolita Guzman as owner and lessor, and, in so
doing, gave cause to be declared in default in their
obligation to pay rentals due her. [See Landicho v.
Tensuan, G.R. No. 51216, June 30, 1987, 151 SCRA 410].
Thus, when petitioners filed their action for ejectment, the
rentals (which were payable in advance within the first five
days of each month) corresponding to the months of March,
April and May, 1986 had not been paid. And the glaring
situation to date is that private respondents continue to
occupy the subject property without having paid a single
monthly rental which accrued pending litigation. Under
these circumstances, the Court finds that sufficient cause
for their5 ejectment under Section 5 (b) of Batas Pambansa
Blg. 877
_______________
5 SEC. 5. Grounds For Judicial Ejectment.Ejectment shall be allowed

on the following grounds:
xxx
(b) Arrears in payment of rent for a total of three (3) months: Provided,
That in case of refusal by the lessor to accept payment of the rental agreed
upon, the lessee may either deposit, by way of consignation, the amount in
court, or with the city or municipal treasurer, as the case may be, or in a
bank in the name of and with notice to the lessor, within one month after
the refusal of the lessor to accept payment.
The lessee shall thereafter deposit the rental within ten days of every
current month. Failure to deposit rentals for three months shall constitute
a ground for ejectment. x x x
615
VOL. 177, SEPTEMBER 15, 1989 615

has been established. [See Roxas v. IAC, G.R. Nos. 74279

and 7480103, January 20, 1988, 157 SCRA 166].
It might be argued that petitioners action for ejectment
was prematurely filed on May 7, 1986 because less than
three (3) months had elapsed since private respondents
failed to tender payment of the March 1986 rental in favor
of the new lessor Lolita Guzman.
However, this point was never raised as an issue in the
proceedings below by private respondents, and, therefore,
cannot be passed upon for the first time on appeal
[Matienzo v. Servidad, G.R. No. L28135, September 10,
1981, 107 SCRA 276 Dulos Realty & Development

Corporation v. Court of Appeals, G.R. No. 76668, January
28, 1988, 157 SCRA 425]. And, even assuming that the
action for ejectment was indeed prematurely filed in the
court a quo, such will not in anyway change the conclusion
reached by this Court that petitioners have established a
right to evict private respondents from the subject property
for nonpayment of rentals. For if the Court were to dismiss
petitioners complaint based on this point, there would be
more than sufficient basis for petitioners to file another
complaint for ejectment against private respondents as
delinquent lessees under Section 5(b) Batas Pambansa Blg.
877 in view of the latters inexcusable failure to pay,
deposit or consign for the account of petitioners monthly
rentals since March 1986 up to the present. It must be
borne in mind that ejectment cases must be expeditiously
resolved and terminated. Certainly, it will serve the ends of
justice for the Court to promptly settle the issue of non
payment of rentals in the case at bar, rather than to
require the parties to litigate anew. Otherwise, as the
Court has had occasion to state, further proceedings will
undoubtedly be only a waste of effort and time and to the
continuing, prejudice of the petitioners. It will only prolong
the already unjustified stay of the private respondent[s]
and provide [them] an unwarranted excuse to remain in
the leased premises, notwithstanding her nonpayment of
the corresponding rentals for the past several years [Ipapo
v. IAC, supra].
Finally, the Court is not unaware of Civil Case No. 957
MN pending in the Regional Trial Court of Malabon. This
action was instituted by private respondents on July 1,
1987 against petitioners and administratrix Rufina
Samaniego for the annul
616

favor of private respondents.

As correctly held by respondent appellate court, Civil
Case No. 957MN poses no prejudicial question to the
resolution of the instant petition. Well settled is the rule
that the mere allegation of ownership of the property in
dispute by the defendant in an ejectment suit or the
pendency of an action for reconveyance of title over the
same property does not divest the inferior court of its
jurisdiction over the ejectment suit [Alilaya v. Espanola,
G.R. No. L36208, September 18, 1981, 107 SCRA 564 De

la Cruz v. Court of Appeals, G.R. No. 57454, November 29,
1984, 133 SCRA 520 Drilon v. Gaurana, G.R. No. L35482,
April 30, 1987, 149 SCRA 342]. The only exception to this
rule is where the question of de facto possession cannot be
determined properly without settling that of de jure
possession and ownership because the latter is inseparably
linked with the former [Andres v. Soriano, 101 Phil. 848
(1957) Castro v. de los Reyes, 109 Phil. 64 (1960) Alvir v.
Vera, G.R. No. L39338, July 16, 1984, 130 SCRA 357 De
la Santa v. Court of Appeals, G.R. Nos. L30560 and L
31078, November 18, 1985, 140 SCRA 44].
Such exception is unavailing in the case at bar.
Petitioner Lolita Guzman was at the time of the institution
of the ejectment suit the titled owner of the property,
having acquired the same by absolute deed of sale which
was judicially approved by the probate court. Private
respondents claim of preference, on the other hand, rests
on the mere allegation that an agreement to purchase and
sell existed between them and the administratrix Rufina
Samaniego. Yet, no written document evidencing this
agreement has been presented by them to enforce, much
less support, their claim. From the facts thus presented,
the claim of preference is without concrete basis in fact and
in law and does not preclude the courts from assuming, and
continuing to exercise, jurisdiction over the ejectment suit
[De la Cruz v. Court of Appeals, supra].
Premises considered, the Court finds that petitioners
have established a cause of action for the ejectment of
private respondents for nonpayment of rentals pursuant to
Section 5(b) of Batas Pambansa Blg. 877.
But inasmuch as no evidence has been presented by
petitioners to the effect that the original owner or vendor of
the subject
617
VOL. 177, SEPTEMBER 15, 1989 617

property had assigned to them her rights under the lease

agreement with the lessees, i.e. the collection of rentals in
arrears, there is no legal basis for ordering private
respondents to pay monthly rentals which accrued prior to
March 1986.
Moreover, since private respondents had built in good
faith their house on the leased subject property, it is
appropriate to mention that Article 1678 of the New Civil
6
Code governs the parties rights thereto. As the new
6
Code governs the parties rights thereto. As the new
lessors, petitioners have the option to appropriate the
house and other useful improvements made by private
respondents by paying onehalf of their value. But private
respondents do not have the right to compel petitioners to
appropriate the improvements and make reimbursement,
nor to retain possession of the subject property until such
reimbursement. Their right under the law is the removal of
the house and other useful improvements in the event that
petitioners refuse to reimburse the above amount [Lapena
v. Morfe, 101 Phil. 997 (1957) Balucanag v. Francisco, G.R.
No. L33422, May 30, 1983, 122 SCRA 498]. Incidentally,
as regards ornamental objects, private respondents may
remove the same provided that no damage is caused to the
principal thing and petitioners do not choose to retain them
by paying their value at the time the lease is extinguished.
WHEREFORE, the judgment of respondent appellate
court rendered in CAG.R. SP No. 13475 is REVERSED.
Private respondents and all persons claiming rights under
them are hereby ordered to immediately vacate the subject
property and
_______________
6 ARTICLE 1678. If the lessee makes, in good faith, useful

improvements which are suitable to the use for which the lease is
intended, without altering the form or substance of the property leased,
the lessor upon the termination of the lease shall pay the lessee onehalf of
the value of the improvements at that time. Should the lessor refuse to
reimburse said amount, the lessee may remove the improvements, even
though the principal thing may suffer damage thereby. He shall not,
however, cause any more impairment upon the property leased than is
necessary.
With regard to ornamental expenses, the lessee shall not be entitled to
any reimbursement, but he may remove the ornamental objects, provided
no damage is caused to the principal thing, and the lessor does not choose
to retain them by paying their value at the time the lease is extinguished.
618

Andres vs. Manufacturers Hanover & Trust Corporation
surrender possession thereof to petitioners, and to pay

petitioners rentals in arrears in the monthly sum of thirty
eight pesos (P38.00) to be computed only from March 1986
until they have completely vacated the subject property,
the further sum of two thousand pesos (P2,000.00) as
attorneys fees, and costs of the suit. This case is

REMANDED to the Regional Trial Court for the
determination of the value of the improvements made by
private respondents on the subject property, in accordance
with Article 1678 of the New Civil Code.
SO ORDERED.
Fernan, (C.J.), Gutierrez, Jr., and Bidin, JJ.,

concur. Feliciano, J., on leave.
Judgment reversed. Case remanded to trial court for

determination of the value of improvements made by private
respondents on the subject property.
Note.Persons who are not tenants on the property are

not covered by Pres. Decree No. 316 which prohibits the
ejectment of tenant farmers in agricultural lands primarily
devoted to rice and corn. (Geronimo vs. Court of Appeals,
121 SCRA 859.)
o0o
Copyright2017CentralBookSupply,Inc.Allrightsreserved.

Nego Case 7

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Nego Case 7

Загружено:

Авторское право:

Доступные форматы

4/11/2017 SUPREMECOURTREPORTSANNOTATEDVOLUME177

594 SUPREME COURT REPORTS ANNOTATED

ERNESTINA CRISOLOGOJOSE, petitioner, vs. COURT

Negotiable Instruments Law Corporations Rule that an

Same Same Same Same Exception An officer or agent of a

VOL. 177, SEPTEMBER 15 ,1989 595

CrisologoJose vs. Court of Appeals

accommodation a negotiable instrument of the corporation for

Same Same Same Same Consignation Payment Remedy of

Checks B.P. 22 Presumptive rule to determine whether or not

PETITION to review the decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

596 SUPREME COURT REPORTS ANNOTATED

In 1980, plaintiff Ricardo S. Santos, Jr. was the vicepresident of

(Exhs. A and 2), also payable to the defendant Jose. This

1 Penned by Justice Justo P. Torres, Jr. and concurred in by Associate Justices

VOL. 177, SEPTEMBER 15, 1989 597

by the plaintiff Ricardo S. Santos, Jr. When defendant deposited

After trial, the court a quo, holding that it was not

for consignation, directing the trial court to give due course

598 SUPREME COURT REPORTS ANNOTATED

amount of said check.

Sec. 29. Liability of accommodation party.An accommodation

Consequently, to be considered an accommodation party, a

instrument he signs. Nevertheless, he is liable to a holder

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

VOL. 177, SEPTEMBER 15, 1989 599

the accommodation instrument, that is, the check issued in

for mere accommodation a negotiable instrument of the

600 SUPREME COURT REPORTS ANNOTATED

The instant case falls squarely within the purview of the

to her for the amount involved, she actually had no

2. On her second assignment of error, petitioner

Petitioners submission is that no creditordebtor

VOL. 177, SEPTEMBER 15, 1989 601

tion party as the other cosignatory or, for that matter, as a

payment are present in this case. Those are factual issues

602 SUPREME COURT REPORTS ANNOTATED

Section 2 of B.P. 22 establishes the prima facie evidence of

consigned the amount of P45,000.00 on August 14, 1981, between

VOL. 177, SEPTEMBER 15, 1989 603

period involved in the criminal case is only a presumptive

case, much less preempted by the inappropriate and

Paras, Padilla and Sarmiento, JJ., concur.

Judgment affirmed with modifications.

Notes.In order that consignation may be effective, the

604 SUPREME COURT REPORTS ANNOTATED

SPOUSES EMETERIO and LOLITA GUZMAN,

Agrarian Reform Urban Land Reform Law Right of First

right of first refusal to purchase the property under reasonable

Same Same Tenants, Defined Tenants, as defined in Pres.

VOL. 177, SEPTEMBER 15, 1989 605

Guzman vs. Court of Appeals

for ejectment filed against them by petitioners.

Civil Law Contracts Lease Suspension of Rental Payments

Same Same Same Ejectment Private respondents continued

606 SUPREME COURT REPORTS ANNOTATED

Guzman vs. Court of Appeals

Civil Procedure Prejudicial Question Ejectment Possession

Contracts Lease Right of Removal Useful Improvements

appropriate the improvements and make reimbursement, nor to

VOL. 177, SEPTEMBER 15, 1989 607

Guzman vs. Court of Appeals