G.R. No. L-36505 August 31, 1973
C. N. HODGES, plaintiff-appellant, vs. ELIEZER A. ESPAYOS, ROQUE SENINING and LOLITA SIGATON assisted by her husband ELISEO SIGATON, defendants, ROQUE SENINING, defendant-appellee.

FACTS

Plaintiff C.N. Hodges sold a jeepney to defendant Eliezer Espayos, with the balance of the purchase price secured by a promissory note signed by Espayos as principal and defendants Roque Senining and Lolita Sigaton as guarantors. Upon default, Hodges filed a complaint for recovery of the unpaid balance. The municipal court ruled in favor of Hodges. Only defendant Senining appealed to the Court of First Instance (CFI). The parties submitted a stipulation of facts where Senining admitted the execution of the note and the unpaid balance but presented evidence, including a certification from the Motor Vehicles Office, showing the jeepney was registered in the name of a third party, Manuel V. Ko, at the time of the sale. The CFI found the sale void because Hodges was not the registered owner, concluding the promissory note was likewise void for lack of consideration, and absolved Senining from liability.

ISSUE

Whether the defendant-guarantor, Roque Senining, is liable on the promissory note despite evidence suggesting the seller was not the registered owner of the vehicle sold.

RULING

Yes. The Supreme Court reversed the CFI decision and held Senining liable. The legal logic centers on the nature of accommodation contracts and the burden of proof. Senining, as an accommodation party and guarantor, signed the promissory note to lend his credit to the principal debtor, Espayos. The Court ruled that an accommodation party is liable to a holder for value, even if the holder knew of the accommodation, as per the Negotiable Instruments Law. The certification of registration alone was insufficient to conclusively prove Hodges was not the owner or that there was a total failure of consideration; ownership is not solely determined by vehicle registration. Senining failed to discharge the burden of proving the alleged nullity or failure of consideration of the note. The stipulation of facts, wherein he admitted the note’s execution and the unpaid balance, bolstered Hodges’s claim. The Court found Senining jointly liable with his co-guarantor, Lolita Sigaton, and ordered him to pay one-half of the amounts due under the note. The decision underscores that a guarantor cannot easily escape liability by challenging the underlying transaction’s validity without clear and convincing proof of nullity.