Defenses Under Philippine Law (with drafting and litigation guidance)

For general information only; not legal advice.

1) Why this problem happens

People sign “as nominee,” “for the account of,” “as commissioner,” “as representative,” or as a “straw signatory” for many reasons—confidentiality, convenience, regulatory constraints, corporate structuring, financing, or simply because the real party can’t (or won’t) appear on paper.

The legal risk is straightforward: in Philippine contract law, the document and the parties’ manifested consent usually control. If you appear as a contracting party, the default assumption is that you are bound—even if, internally, everyone “knew” you were only a placeholder.

The defenses available depend on (a) how you signed, (b) how the contract is written, (c) whether the principal was disclosed, (d) the nature of the transaction (civil, commercial, corporate, negotiable instrument, surety), and (e) whether the other party agreed to look only to someone else.

2) Core Philippine doctrines you cannot escape

A. Privity and “who is a party”

Under the Civil Code, contracts generally take effect only between the parties, their assigns and heirs (Civil Code, Art. 1311). So the first question is always:

Are you a “party” on the face of the contract? If the contract names you as Buyer/Lessee/Client/Contractor/Guarantor, or you signed on the party line without clear representative capacity, you are typically treated as a party.

B. Consent is judged by outward acts, not secret arrangements

Philippine law heavily protects reliance on written instruments and the manifestation of consent. If a counterparty reasonably relied on your signature as personal commitment, your private nominee agreement usually won’t defeat that reliance.

C. Agency is the main legal “escape hatch,” but it has strict requirements

If you were truly acting as an agent, the Civil Code on agency (Arts. 1868 et seq.) governs. The headline rule is:

An agent who acts within authority and in the name of the principal is not personally liable—unless the agent expressly binds himself or exceeds authority without giving notice (Civil Code, commonly cited around Art. 1897; related provisions include Arts. 1317 and 1403 on authority and unenforceability).

But that protection is strongest only when:

the principal is clearly identified, and
you signed clearly in representative capacity, and
you had authority (or the principal ratified).

3) “Nominee” and “commissioner” are not magic words

A. “Nominee” is not a single legal category

In Philippine practice, “nominee” can mean any of these (with different liability results):

Agent who signs in the principal’s name (disclosed agency)
Agent who signs in his own name for the principal (undisclosed or partially disclosed principal)
Trustee / bare legal title holder (common in shares or property holding)
Accommodation party (signing to lend name/credit—common in loans/checks)
Corporate nominee director/officer (signing corporate acts)

Your defenses depend on which one you actually were.

B. “Commissioner” often points to commission agency (commercial setting)

In civil-law tradition (reflected in commercial practice and older Code of Commerce concepts), a commission agent often contracts in his own name but for another’s account—which typically makes the commission agent directly liable to the third party, with reimbursement rights against the principal. In other words: calling yourself “commissioner” can, in some contexts, increase the risk that you are treated as the contracting party.

So: labels help only if the contract text and signature block clearly allocate liability away from you.

4) The single most important fact: how you signed

A. Best-case (strong defense): you signed for a disclosed principal

Examples that usually support non-liability:

“ABC CORPORATION, by: Juan Dela Cruz, President”
“XYZ, represented by: Maria Santos, Attorney-in-Fact (SPA dated ___)”
“For and in behalf of [Principal], [Name], Authorized Representative”

What makes this defensible: the contract shows the principal as the real party, and you are only the instrument of signature.

Primary defense: I am not a contracting party; I signed only as agent/representative with authority; the party is the principal.

B. Risky (weak defense): you signed in your own name, even if the contract says “nominee”

Examples:

“Juan Dela Cruz (Nominee)” listed as Buyer/Lessee/Client
Signature: “Juan Dela Cruz” without “for and in behalf of” language
Principal not named, or named only in a side agreement

Default legal outcome: you are the contracting party vis-à-vis the counterparty; your nominee agreement is internal.

Possible defenses exist, but they become fact-intensive (interpretation, disclosure, novation, release, simulation, illegality, etc.).

C. Worst-case (near-zero defense on “nominee” theory): you signed as surety/co-maker/guarantor

If the document makes you a surety, solidary obligor, co-maker, or guarantor, then nominee arguments rarely work because the legal role is precisely to bind you personally.

Your defenses then shift away from “I was only a nominee” and toward suretyship/solidary obligation defenses (Section 10 below).

5) Main defenses when sued by the counterparty

Defense 1: You are not a party—representative capacity + disclosed principal

Use this when:

the contract names the principal as the party, and
the signature block clearly shows you signed as representative.

Key points to prove:

Authority: SPA, board resolution, secretary’s certificate, written authorization, or consistent corporate practice.
Disclosure: the other party knew the principal and intended to contract with the principal, not you.
No personal undertaking: no clause making you solidarily liable; no guaranty language.

Practical litigation posture:

Challenge cause of action against you personally.
Emphasize contract text, signature block, annexes, authority documents, and the counterparty’s own invoices/receipts/communications naming the principal.

Defense 2: The other party agreed to look only to the principal (release / novation / assumption)

Even if you initially signed in your name, you may escape liability if you can prove the counterparty later:

Released you, or
Accepted substitution of debtor/party, or
Recognized the principal as the sole obligor, in a way that legally amounts to novation or a binding assumption arrangement.

This is powerful but evidence-heavy:

written deed of assumption,
written conformity,
clear course of performance showing the counterparty treated the principal as the only party (billing, demands, receipts, delivery acceptance, etc.).

Caution: Courts generally require clear intent to novate; it is not presumed.

Defense 3: Contract interpretation—your “nominee/commissioner” status was intended to exclude personal liability

Civil Code rules on interpretation prioritize the parties’ intention and the contract’s text and context (Arts. 1370–1379).

This defense can work when the contract itself contains language like:

“Nominee signs solely for documentation; no recourse against nominee,” or
“Obligations are for the account of [Principal] exclusively,” or
“The nominee shall not be personally liable; claims shall be directed to [Principal].”

If the writing supports it, you argue:

The contract, properly construed, does not impose personal liability on the nominee.

If the contract is clear that you are the obligor, courts are less likely to accept parol explanations.

Defense 4: Lack of authority → unenforceability against the principal (but mind your own exposure)

If you signed purporting to bind the principal but lacked authority, the contract is generally unenforceable against the principal unless ratified (Civil Code Art. 1317; and provisions on unenforceable contracts around Art. 1403).

However, be careful: this defense may not absolve you. In many situations, an unauthorized “agent” can be held liable for damages for misrepresentation of authority, unless the other party knew of the lack/limits of authority or assumed the risk.

So this is a two-edged sword:

It helps you argue the principal isn’t bound (if that’s your position),
But it can increase the risk that you are treated as the one who bound himself or warranted authority.

Defense 5: Vitiated consent (fraud, mistake, intimidation, undue influence) → voidable contract

If you can credibly show you were induced to sign under recognized vices of consent, the contract may be voidable.

In nominee scenarios, this most plausibly arises when:

you were tricked into signing a document that was materially different from what you were told,
signatures were obtained through threats or coercion.

This defense is fact-driven and typically requires strong corroboration.

Defense 6: Simulation (absolute simulation) → void contract (with limits)

If the contract is absolutely simulated (no real intent to be bound; purely fictitious), it is void.

But simulation defenses are risky when the other party is not part of the simulation or is an innocent relying party. Courts are cautious about allowing a signatory to defeat written commitments by claiming “it was just for show,” especially if the other party performed or relied.

Defense 7: Illegality / void object or cause → void and unenforceable

A contract whose object or cause is contrary to law, morals, good customs, public order, or public policy can be void (Civil Code provisions on void/inexistent contracts commonly invoked around Art. 1409).

Nominee arrangements sometimes touch illegality, e.g.:

using Filipino “dummies” to evade nationality restrictions (Anti-Dummy Law, Commonwealth Act No. 108),
structures designed to conceal beneficial ownership in regulated contexts.

Important nuance:

If the illegality is only in the private nominee agreement (between you and the real principal), the main contract with the third party may remain valid, and you may still be bound to the third party.
If the very contract sued upon is illegal (its object/cause is unlawful), voidness can be a direct defense.

Also consider the doctrine of in pari delicto: courts may refuse to aid parties to an illegal scheme, which can cut both ways depending on who sues whom and what relief is sought.

Defense 8: Estoppel against the counterparty (they treated the principal as the real contracting party)

If, after signing, the counterparty:

billed only the principal,
accepted performance only from the principal,
issued receipts, delivery documents, or acknowledgments solely in the principal’s name,
corresponded treating you merely as a contact person,

you may argue the counterparty is estopped from later asserting you are the debtor/obligor—especially if you can show detrimental reliance (e.g., you refrained from securing indemnities or warranties because they recognized the principal).

Estoppel rarely defeats clear written undertakings, but it can be persuasive in close cases or where the writing is ambiguous.

Defense 9: Payment, compensation, remission, impossibility, rescission, and other standard contract defenses

Even as a nominee, you may still assert ordinary defenses available to any defendant in a contract suit:

payment or performance,
set-off/compensation,
remission/condonation,
failure of condition,
rescission due to substantial breach,
impossibility/fortuitous event (where legally applicable),
invalid penalty clauses, unconscionable stipulations (as defenses to extent/amount).

Defense 10: Prescription (statute of limitations)

Philippine prescription rules can defeat even a valid claim:

Actions upon a written contract generally prescribe in 10 years (Civil Code Art. 1144).
Actions upon an oral contract generally prescribe in 6 years (Civil Code Art. 1145). Other periods may apply depending on the nature of the action (quasi-delict, quasi-contract, etc.).

Prescription is technical: it depends on accrual, demand provisions, default clauses, and the suit’s framing.

6) Special setting: corporate signatories and “nominee directors/officers”

A. General rule: corporate obligations are corporate obligations

A corporation has a separate juridical personality. If you signed clearly as an officer/authorized representative for the corporation, liability is generally not personal.

B. When corporate officers become personally liable

Even if you sign for a corporation, personal liability can arise if:

you expressly assumed personal liability (e.g., “jointly and severally,” “solidarily,” personal guaranty),
you acted in bad faith or with gross negligence in a way that creates personal accountability,
the court pierces the corporate veil (alter ego, fraud, or use of corporate fiction to defeat public convenience or justify wrong),
you acted without authority and the counterparty reasonably relied on your representation of authority.

C. “Nominee director” does not automatically protect you

If you are a director/officer “in name only,” corporate governance and regulatory compliance risks remain. Separate from civil liability, nominee arrangements can create:

fiduciary duty exposure,
potential regulatory scrutiny (beneficial ownership disclosure regimes),
possible criminal exposure where the arrangement violates nationality or regulated-industry rules.

7) Special setting: negotiable instruments (checks, promissory notes, bills of exchange)

Nominee problems are common in lending: people sign checks/notes “for” someone else.

A. If you signed as maker/co-maker/endorser, expect personal liability

Negotiable instruments law is formal. A holder can often proceed against signatories based on the instrument itself.

B. Agent signatures must clearly show representative capacity

If the instrument does not clearly indicate you signed only as agent (and you are not duly authorized), you can be personally liable. The safest format is the principal’s name as the maker, signed “by” the agent with title, consistent with the Negotiable Instruments Law provisions on signatures by agents (commonly discussed around NIL Sec. 20).

C. “I was only a nominee” is usually not a defense against a holder in due course

If the instrument is negotiated to a holder in due course, personal defenses are limited. Your best defenses then focus on:

forgery/unauthorized signature issues,
material alteration,
absence of delivery (in some cases),
or other “real defenses” recognized in negotiable instruments doctrine.

8) Special setting: suretyship, guaranty, and solidary undertakings

Many “nominee” signers are actually made to sign a surety agreement or as solidary obligor.

A. If you signed as surety/solidary debtor, nominee defenses rarely work

Suretyship is precisely a promise that the creditor can enforce against you. Calling yourself “nominee” does not undo the legal nature of the undertaking.

B. What defenses do work for sureties (often overlooked)

Depending on the document and facts, consider:

Strict construction: suretyship is not presumed; liability must be clearly expressed.
Material changes without consent: certain alterations of the principal obligation, extensions, or restructuring without the surety’s consent may release or limit surety liability (fact- and document-dependent).
Impairment of collateral / creditor acts that materially prejudice the surety (again, dependent on stipulations and circumstances).
Payment / subrogation issues if you already paid or the creditor recovered elsewhere.
Unconscionable stipulations affecting penalties, attorney’s fees, interest (courts may moderate).

The actual text of the suretyship and the creditor’s conduct are decisive.

9) Evidence rules that make or break nominee defenses

A. The writing controls—parol evidence is constrained

If the contract is a clear written agreement naming you as obligor, courts are generally reluctant to allow “but we intended someone else” explanations.

Parol evidence can become admissible in recognized situations (e.g., ambiguity, mistake, fraud), but you should assume you must win from the four corners of the document plus admissible surrounding evidence.

B. The most persuasive evidence that you are not the real obligor

Contract identifies the principal as party; you are merely signatory.
Authority documents attached or referenced (SPA, board resolution).
Invoices, receipts, delivery/acceptance documents in principal’s name.
Demand letters addressed to the principal, not you.
Proof that consideration flowed from principal (payments, bank records).
Counterparty communications acknowledging principal as the true party.

C. The most damaging evidence against you

You are named as Buyer/Lessee/Borrower/Contractor personally.
You signed without titles/representative wording.
You issued personal checks or provided personal IDs/addresses as contracting party.
You signed separate personal guaranties, suretyships, or “joint and several” clauses.
The principal is nowhere in the contract, or appears only in a side nominee agreement not acknowledged by the counterparty.

10) Your internal remedies against the real principal (even if you lose to the third party)

Even when you remain liable to the counterparty, Philippine law often gives you recourse against the principal/beneficial owner, depending on your internal relationship:

A. If you are an agent: reimbursement and indemnity

An agent who acted within authority for the principal generally has rights to be reimbursed for advances and indemnified for liabilities incurred in the course of agency (Civil Code agency principles).

B. If you are a surety/accommodation party: reimbursement and subrogation

If you paid the creditor, you may seek:

reimbursement from the principal debtor,
subrogation to the creditor’s rights (to the extent recognized and not waived).

C. If you are a trustee/nominee title holder: trust enforcement

Where the arrangement is a trust or similar fiduciary holding, you may enforce the internal agreement—unless the arrangement is illegal or void as against public policy (which can bar judicial relief).

D. Contractual indemnity clauses

Well-drafted nominee agreements include:

indemnity,
attorney’s fees,
control of litigation,
security/collateral from the principal,
escrow arrangements.

These do not automatically defeat third-party claims, but they can shift the economic burden back to the principal.

11) Drafting practices that prevent liability (Philippine-context checklist)

A. Make the principal the contracting party—always

The “Party” line should be the principal, not you.
If confidentiality is needed, consider lawful alternatives (e.g., holding company, assignment structures) rather than inserting a nominee as named obligor.

B. Make representative capacity unmistakable

Signature block: principal name first, then “By:” agent name + title.
Add a representation: “Signatory warrants authority under [SPA/Board Resolution].”
Attach authority document and have it acknowledged/initialed.

C. Add a non-recourse clause (if the counterparty will agree)

“No personal liability shall attach to the signatory acting solely as authorized representative.”
“All claims shall be enforceable only against [Principal].”

D. Avoid accidental suretyship

Watch for clauses like:

“jointly and severally,” “solidarily,” “co-maker,” “guarantor,” “surety,” “personal undertaking,”
“continuing guaranty,” “hold the signatory liable,”
broad “undertakings” hidden in boilerplate.

E. If you must sign first, secure assumption/release later

If urgency forces you to sign, prioritize a follow-up:

deed of assumption by the principal,
creditor conformity,
express release of nominee.

Without creditor conformity, substitution is often incomplete.

12) Regulatory and criminal risk (often ignored until it’s too late)

Nominee arrangements can trigger exposure beyond civil liability:

Anti-Dummy Law (CA 108): using a Filipino to evade nationality restrictions can expose both parties to criminal penalties and collateral consequences.
Falsification / perjury risks: signing sworn corporate filings that conceal beneficial ownership or misstate control can create criminal exposure depending on the document and intent.
Regulatory scrutiny: corporate beneficial ownership disclosures and compliance regimes can treat “nominee” structures as red flags.

These issues can also affect civil defenses: courts are less receptive to nominee arguments where the arrangement appears designed to evade the law.

13) Practical bottom line (how courts tend to see it)

If you signed clearly as an authorized representative of a disclosed principal, you have a strong defense against personal liability.
If you signed in your own name as the named party, nominee/commissioner explanations usually do not defeat liability to the counterparty—your remedy is often against the principal, not the third party.
If you signed a surety/solidary undertaking or negotiable instrument as maker/co-maker/endorser, expect personal exposure, and pivot to specialized defenses (suretyship/NIL), not “nominee” rhetoric.
The best “defense” is preventive drafting: make the principal the party, make your capacity explicit, and avoid hidden personal undertakings.