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FIDELIZA J. AGLIBOT v. INGERSOL L. SANTIA

FACTS:

Engr. Santia loaned P2,500,000 to Pacific Lending & Capital Corporation (PLCC) through its Manager, Fideliza Aglibot. The loan was secured by eleven post-dated personal checks issued by Aglibot. However, when the checks were presented for payment, they bounced due to insufficient funds. Santia demanded payment from PLCC and Aglibot, but they refused. Aglibot was charged with violation of Batas Pambansa Bilang 22 (B.P. 22), but was acquitted by the Municipal Trial Court. The court ordered Aglibot to pay Santia P3,000,000 plus interest and other costs. The Regional Trial Court reversed the civil aspect of the case, but the Court of Appeals held Aglibot liable for civil indemnity. Aglibot appealed to the Supreme Court, arguing that she should not be personally liable for the checks issued on behalf of PLCC.

ISSUES:

  1. Whether or not Aglibot can be held personally liable for the debt she guaranteed.

  2. Whether Aglibot is personally liable to Santia for the loan

  3. Whether Aglibot is an accommodation party

  4. Whether or not the Petitioner is entitled to the writ of certiorari.

RULING:

  1. The court held that the petition is bereft of merit. Aglibot cannot invoke the benefit of excussion because she signed the promissory note on behalf of PLCC and there is no indication that she signed as an accommodation party. As an accommodation party, she should be held personally liable for the debt she guaranteed. Aglibot's claim as a mere guarantor is rejected due to lack of proof in compliance with the Statute of Frauds.

  2. Yes, Aglibot is personally liable to Santia for the loan. The Court of Appeals (CA) ruled that by issuing her own post-dated checks, Aglibot bound herself personally and solidarily to pay Santia. The CA noted that she could have issued PLCC's checks but chose to issue her own checks drawn against her personal account. Aglibot's claim that she issued her checks to guarantee the loan was dismissed by the CA for lack of proof. Aglibot's admission that she was personally indebted to Santia also supports her personal liability for the loan.

  3. Yes, Aglibot is an accommodation party. The CA considered Aglibot as an accommodation party since she signed the checks without receiving value and for the purpose of lending her name to PLCC. The Negotiable Instruments Law defines an accommodation party as someone who signs the instrument without receiving value and for the purpose of lending their name to someone else. The liability of an accommodation party is immediate, direct, and unconditional. It is not a valid defense for Aglibot to claim that she did not receive valuable consideration and that the holder knew she was an accommodation party. The relationship between an accommodation party and the party accommodated is that of principal and surety, where the accommodation party is considered the surety. The liability of the accommodation party remains primary and unconditional to the holder for value, even if the accommodated party receives an extension of the payment period without the consent of the accommodation party.

  4. The Court denied the petition for certiorari and affirmed the decision of the Court of Appeals.

PRINCIPLES:

  • The liability of a guarantor is only subsidiary and all the properties of the principal debtor must first be exhausted before the guarantor may be held liable for the debt.

  • The action brought by the creditor must be filed against the principal debtor alone, except in instances mentioned where the action may be brought against both the guarantor and the principal debtor.

  • An agreement to guarantee the debt or default of another must be in writing in order to be enforceable. However, the form required under the Statute of Frauds is for evidentiary purposes only and does not render the contract invalid if not reduced to writing.

  • An accommodation party is one who signs the instrument without receiving value and for the purpose of lending their name to another person. The liability of an accommodation party is immediate, direct, and unconditional to the holder for value. The relation between an accommodation party and the party accommodated is that of principal and surety.

  • The liability of an accommodation party remains primary and unconditional, even if the accommodated party receives an extension of the payment period without the consent of the accommodation party.

  • The fact that an accommodation party issues their own checks makes them personally liable to the holder for value without the need to first go after the party accommodated.

  • Certiorari - A writ of certiorari is a remedy to correct errors of jurisdiction, such as when a tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion.

  • Affirmance of Decision - When the Court affirms a decision, it means that the decision of the lower court or tribunal is upheld and remains in force.