EUSEBIO GONZALES vs.

PHILIPPINE COMMERCIAL BANK & INTERNATIONAL BANK

G.R. No. 180257. February 23, 2011. Velasco, Jr., J.
Facts:
Petitioner Eusebio Gonzales was a client of Philippine Commercial and International Bank (PCIB)
for 15 years. PCIB, through a Credit-On-Hand Loan Agreement (COHLA), granted the credit line of
Gonzales. Gonzales drew from said credit line through the issuance of check. At the institution of the instant
case, Gonzales had a Foreign Currency Deposit (FCD) of USD8,715.72 with PCIB. Gonzales and his wife
obtained a loan for PhP 500,000.00. Consequently, Spouses Panlilio and Spouses Gonzales obtained a
loan with PCIB in the amount of PhP 1,000,000.00 and PhP 300,000.00, respectively. The three loans were
covered by three promissory notes, and as a security, the spouses Panlilio and spouses Gonzales executed
a Real Estate Mortgage in favor of PCIB. The promissory notes specified the solidary liability of both parties.
However, it was spouses Panlilio who received the loan of PhP 1,800,000.00. The monthly interests were
paid by the spouses Panlilio, but after some time, the spouses Panililio already failed to pay their loan.
In the meantime, Gonzales issued a check in favor of Rene Unson for PhP 250,000.00 drawn
against the COHLA, but the check was dishonored due to the termination of the COHLA, and the PCIB also
froze the account of Gonzales. Gonzales, through counsel, wrote PCIB insisting that the check he issued
had been fully funded, and demanded the return of the proceeds of his FCD as well as damages for the
unjust dishonor of the check. PCIB stood its ground in freezing the account of Gonzales. Gonzales
reminded PCIB that it was the spouses Panlilio who benefited from the loans, but PCIB ignored Gonzales
contention. The refusal of PCIB prompted Gonzales to file a case against PCIB with the Regional Trial
Court (RTC). The RTC ruled in favor of PCIB and held that the spouses Panlilio and spouses Gonzales
were solidarily liable on the three promissory notes. Hence, the termination of the COHLA was just because
of the outstanding loan. Also, the dishonor of check is also proper given that the COHLA was already
terminated. The Court of Appeals affirmed in toto. CA held that the spouses Panlilio and spouses Gonzales
were indeed solidary debtors, and PCIB correctly dishonored the checks because it was only exercising its
rights under the contractual stipulations in the COHLA.
Issue:
Whether or not Gonzales is liable for the three promissory he executed with spouses Panlilio

Ruling:

YES. Gonzales is liable for the loans covered by the above promissory notes. Gonzales admitted
that he is an accommodation party which PCIB did not dispute. In his testimony, Gonzales admitted that he
merely accommodated the spouses Panlilio at the suggestion of Ocampo, who was then handling his
accounts, order to facilitate the fast release of the loan. The fact that the loans were undertaken by Gonzales
when he signed as borrower or co-borrower for the benefit of the spouses Panlilio as shown by the fact
that the proceeds went to the spouses Panlilio who were servicing or paying the monthly dues is beside
the point. For signing as borrower and co-borrower on the promissory notes with the proceeds of the loans
going to the spouses Panlilio, Gonzales has extended an accommodation to said spouses. Also, the
promissory notes specified that spouses Panlilio and spouses Gonzales were solidarily liable.

An accommodation party is a person 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.
As an accommodation party, Gonzales is solidarily liable with the spouses Panlilio for the loans. In Ang v.
Associated Bank, 532 SCRA 244 (2007), quoting the definition of an accommodation party under Section
29 of the Negotiable Instruments Law, the Court cited that an accommodation party is a person 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. Furthermore, an accommodation party is
one who meets all the three requisites, viz.: (1) he must be a party to the instrument, signing as maker,
drawer, acceptor, or indorser; (2) he must not receive value therefor; and (3) he must sign for the purpose
of lending his name or credit to some other person. An accommodation party lends his name to enable the
accommodated party to obtain credit or to raise money; he receives no part of the consideration for the
instrument but assumes liability to the other party/ies thereto.