Negotiable Instruments; Nature of the relationship between the accommodation party and the accommodated party

       “[T]he relation between an accommodation party and the accommodated party is one of principal and surety—the accommodation party being the surety.[1]  As such, he is deemed an original promissor and debtor from the beginning,[2] he is considered in law as the same party as the debtor in relation to whatever is adjudged touching the obligation of the latter since their liabilities are interwoven as to be inseparable.[3]  Although a contract of suretyship is in essence accessory or collateral to a valid principal obligation, the surety’s liability to the creditor is immediate, primary and absolute; he is directly and equally bound with the principal.[4]  As an equivalent of a regular party to the undertaking, a surety becomes liable to the debt and duty of the principal obligor even without possessing a direct or personal interest in the obligations nor does he receive any benefit therefrom.[5] (Eusebio Gonzales vs. Philippine Commercial and International Bank, et. al., G.R. No. 180257, February 23, 2011, [Velasco, J.:])

            An accommodation bill or note is not considered a real security, but a mere blank, until it has been negotiated, and it then becomes binding upon all of the accommodation indorsers in like manner and to the like effect as if they were successive indorsers,[6] but until it has been negotiated any party may withdraw his indorsement, acceptance, or other liability upon it, and rescind his engagement;[7] and that right is not impaired by the circumstance that he may be indemnified by an assignment, or other security.[8] (Daniel, Elements on the Law of Negotiable Instruments, page 59)

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[1] Garcia v. Llamas, supra at 305; Agro Conglomerates, Inc. v. Court of Appeals, 401 Phil. 644, 654- 655 (2000); Spouses Gardose v. Tarroza, supra at 807; Caneda, Jr. v. Court of Appeals, G.R. No. 81322, February 5, 1990, 181 SCRA 762, 772; Crisologo-Jose v. Court of Appeals, supra at 598; Prudencio v. Court of Appeals, 227 Phil. 7, 12 (1986); and Philippine Bank of Commerce v. Aruego, supra at 539

[2] Garcia v. Llamas, supra at 305

[3] Trade & Investment Development Corp. v. Roblett Industrial Construction Corp., G.R. No. 139290, November 11, 2005, 474 SCRA 510, 531

[4] International Finance Corporation v. Imperial Textile Mills, Inc., G.R. No. 160324, November 15, 2005, 475 SCRA 149, 160; Trade & Investment Development Corp. v. Roblett Industrial Construction Corp., id. at 531; Garcia v. Llamas, supra at 305; Agro Conglomerates, Inc. v. Court of Appeals, supra at 655; and Philippine Bank of Commerce v. Aruego, supra at 540

[5] International Finance Corporation v. Imperial Textile Mills, Inc., id. at 160-161 and Trade & Investment Development Corp. v. Roblett Industrial Construction Corp., id. at 531

[6] Withworth v. Adams, 5 Rand. 342; May v. Boisseau, 8 Leigh, 164

[7] Second Nat. Bank v. Howe, 40 Minn, 390

[8] May v. Boisseau, 8 Leight, 164