Santos [Negotiable Instruments]

GARCIA v. LLAMAS
Topic: Applicability of NIL
DOCTRINE:
One cannot avail himself of the NILs provisions on the liabilities and
defenses of an accommodation party if the said instrument is not a
negotiable instrument.
VOCABULARY
1. 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.
(Section 29, NIL)
ISSUE: WON the said promissory note is in accordance with Sec 1
of the NIL. And WON Garcia can use the accommodated party
defense under the NIL
HELD:
NO and NO
First and foremost, the Court herein ruled that the said
promissory note is not a negotiable instrument because the
note was made payable to a specific person rather than
to a bearer or to order.
Second, with the aforementioned ruling, Garcia cannot
invoke the liabilities and defense of accommodated party
under the NIL simply because the said promissory note is
not a negotiable instrument.

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FACTS:
Petitioner Garcia and de Jesus borrowed Php 400,000 from
respondent Llamas
On the same day, Garcia and de Jesus executed a
promissory note wherein they bound themselves jointly and
severally to pay the loan on or before 23 January 1997 with
a 5% interest per month
The loan became overdue, despite repeated demands
A case was filed against petitioner Garcia and de Jesus
Garcia argued that he assumed no liability under the
promissory note because he signed it merely as an
accommodation party
RTC ruled in favor of Llamas
CA reversed the decision of the RTC