210 SCRA 51 (1992)


Stelco Marketing Corporation is engaged in the distribution and sale to the public of structural steel bars. On seven (7) different occasions in September and October, 1980, it sold to RYL Construction, Inc. quantities of steels bars of various sizes and rolls of G.I. wire. These bars and wire were delivered at different places at the indication of RYL Construction, Inc.

On April, RYL gave to Armstrong, Industries — described by STELCO as it’s “sister corporation” and “manufacturing arm” — a check drawn against Metrobank. That check was a company check of another corporation, Steelweld Corporation of the Philippines, signed by its President and its Vice-President. The check was issued by Limson at the behest of his friend, President of RYL. Romeo Lim had asked Limson, for financial assistance, and the latter had agreed to give Lim a check only by way of accommodation, “only as guaranty but not to pay for anything. When the latter deposited the check at its bank, it was dishonored because “drawn against insufficient funds.” When so deposited, the check bore two(2) endorsements, that of “RYL Construction,” followed by that of “Armstrong Industries.”

On account of the dishonor of Metrobank Check and on complaint of Armstrong Industries (through a Mr. Young), Rafael Limson and Artemio Torres were charged in the Regional Trial Court of Manila with a violation of Batas Pambansa Bilang 22. They were acquitted on the ground that the check in question was not issued by the drawer “to apply on account for value,” it being merely for accommodation purposes.


Whether the acquittal of the two (2) accused (Limson and Torres) did not operate “to release Steelweld Corporation from its liability under Sec. 29 of the Negotiable Instruments Law for having issued . . . (the check) for the accommodation of Romeo Lim.


It is noteworthy that the Trial Court’s pronouncement containing reference to said Section 29 did not specify to whom STEELWELD, as accommodation party, is supposed to be liable; and certain it is that neither said pronouncement nor any other part of the judgment of acquittal declared it liable to STELCO.

To be sure, as regards an accommodation party (such as STEELWELD), the fourth condition, i.e., lack of notice of any infirmity in the instruments or defect in title of the persons negotiating it, has no application. This is because Section 29 of the law preserves the right of recourse of a “holder for value” against the accommodation party notwithstanding that “such holder, at the time of taking the instrument, knew him to be only an accommodation party.

There is no evidence whatever that STELCO’s possession of Check ever dated back to nay time before the instrument’s presentment and dishonor. There is no evidence whatsoever that the check was ever given to it, or indorsed to it in any manner or form in payment of an obligation or as security for an obligation, or for any other purpose before it was presented for payment. On the contrary, the factual finding of the Court of Appeals, which by traditional precept is normally conclusive on this Court, is that STELCO never became a holder for value and that “(n)owhere in the check itself does the name of Stelco Marketing appear as payee, indorsee or depositor thereof.

*Case digest by Lowel Dave D. Manuel, JD-4, Andres Bonifacio Law School, S.Y. 2019-2020