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Whether Sambok Motors Co is a qualified indorser, thus it is not liable upon the failure of
payment of the maker.
HELD:
NO
RATIO:
No. A qualified indorserment constitutes the indorser a mere assignor of the title to the
instrument. It may be made by adding to the indorsers signature the words without recourse or
any words of similar import. Such indorsement relieves the indorser of the general obligation to
pay if the instrument is dishonored but not of the liability arising from warranties on the
instrument as provided by section 65 of NIL. However, Sambok indorsed the note with
recourse and even waived the notice of demand, dishonor, protest and presentment.
Recourse means resort to a person who is secondarily liable after the default of the person who
is primarily liable. Sambok by indorsing the note with recourse does not make itself a qualified
indorser but a general indorser who is secondarily liable, because by such indorsement, it
agreed that if Villaruel fails to pay the note, the plaintiff-appellee could go after it. The effect of
such indorsement is that the note was indorsed without qualification. A person who indorses
without qualification engages that on due presentment, the note shall be accepted or paid, or
both as the case maybe, and that if it be dishonored, he will pay the amount thereof to the
De Ocampo v. Gatchalian
L-15126, 30 November 1961
FACTS:
Anita Gatchalian was interested in buying a car. Manuel Gonzales offered to her a car owned by
plaintiff. Gonzales claimed that he was authorized by the plaintiff to sell the car. Gonzales order
defendant to issue a check to comply on showing interest in buying the car. Gonzales promised
to return the check the next day.
When Gonzales never appeared after, defendant issues a stop payment order on the check.
She found out that Gonzales used the check as payment to plaintiff's clinic for his wife's fees.
Plaintiff now demands defendant for payment of the check, in which defendant refused citing
that plaintiff is a not a holder in due course.
The lower court held that defendant should pay plaintiff.
ISSUE:
Whether De Ocampo is a holder in due course.
HELD:
NO
RATIO:
The SC held that plaintiff is a not a holder in due course. There were obvious instances to show
that the check was negligently acquired like plaintiff having no liability with defendant and that
the check was crossed. Plaintiff failed to exercise prudence and caution. Plaintiff should have
asked questions to further inquire upon suspicion.
The presumption of good faith did not apply to plaintiff because the defect was apparent on the
instruments face it was not payable to defendant or bearer.
Cely Yang and Prem Chandiramani agreed to exchange the latter's manager's check to two of
Yang's checks both payable to the order of Fernando David. They also agreed that Yang would
secure a dollar draft in exchange for Chandiramani's dollar draft.
At the time of exchange, Yang gave the checks to Danilo Ranigo. Ranigo said that
Chandaramani did not appear the rendezvous and that he lost the checks and draft, but in fact,
the exchange transpired.
Yang requested the respective banks to stop payment on the instruments but was subsequently
denied. Yang filed a complaint for the return of the checks and for damages against
Chandaramani and David.
The lower court sided with David and was held as holder in due course. The checks were
complete in its face when they were negotiated and that he had no notice that the checks were
dishonored and took the checks in good faith. The lower courts also said that David had taken
the necessary precautions to verify the genuineness of the checks.
ISSUE:
YES
RATIO:
The SC held that David was a holder in due course and Yang's petition is denied. Yang has the
burden of proof to prove that David was not a holder in due course, which she failed to do so. It
was noted that David exchanged the checks for money when petitioner averred otherwise.
The SC also agreed with the findings of the lower court. In relation to the checks being crossed,
the SC said that in Bataan Cigar v. CA, the checks were negotiated while in this case it was only
deposited.
Mesina v. IAC
No. L-70145, 13 November 1986
FACTS:
Jose Go maintains an account with Associated Bank. He needed to transfer P800,000.00 from
Associated Bank to another bank but he realized that he does not want to be carrying that cash
so he bought a cashiers check from Associated Bank worth P800,000.00. Associated Bank
then issued the check but Jose Go forgot to get the check so it was left on top of the desk of the
bank manager. The bank manager, when he found the check, entrusted it to Albert Uy for the
later to safe keep it. The check was however stolen from Uy by a certain Alexander Lim.
Jose Go learned that the check was stolen so he made a stop payment order against the check.
Meanwhile, Associated Bank received the subject check from Prudential Bank for clearing.
Apparently, the check was presented by a certain Marcelo Mesina for payment. Associated
Bank dishonored the check.
NO
RATIO:
Admittedly, Mesina became the holder of the cashiers check as endorsed by Alexander Lim
who stole the check. Mesina however refused to say how and why it was passed to him. Mesina
had therefore notice of the defect of his title over the check from the start. The holder of a
cashiers check who is not a holder in due course cannot enforce such check against the issuing
bank, which dishonors the same. The check in question suffers from the infirmity of not having
been properly negotiated and for value by Jose Go who is the real owner of said instrument.
NO
RATIO:
The SC ruled that a corporation couldnt be an accommodation party. The law on
accommodation parties does not include corporation because it is ultra vires on their part.
Thus, if one knows and takes an instrument that was accommodated by a corporation cannot
recover against the corporation.
Sadaya v. Sevilla
NO
RATIO:
A solidary accommodation maker who made payment has the right to contribution, from his co
accommodation maker, in the absence of agreement to the contrary between them, subject to
conditions imposed by law. This right springs from an implied promise to share equally the
burdens that may ensue from their having consented to stamp their signatures on the
promissory note.
YES
RATIO:
There was no accommodation transaction in the case at bar. In accommodation transactions
recognized by the Negotiable Instruments Law, an accommodating party lends his credit to the
accommodated party, by issuing or indorsing a check which is held by a payee or indorsee as a
holder in due course, who gave full value therefor to the accommodated party. The latter, in
other words, receives or realizes full value, which the accommodated party then must repay to
the accommodating party. But the accommodating party is bound on the check to the holder in
due course who is necessarily a third party and is not the accommodated party. In the case at
bar, Travel-On was payee of all six (6) checks; it presented these checks for payment at the
drawee bank but the checks bounced. Travel-On obviously was not an accommodated party; it
FACTS:
Petitioner Agro-Conglomerates, Inc. as vendor, sold two parcels of land to Wonderland Food
Industries, Inc. The vendor, the vendee, and the respondent bank Regent Savings & Loan Bank,
executed an Addendum4 to the previous Memorandum of Agreement. It provided, among
others, that the vendee undertakes to pay the loan procured in the name of the VENDOR, the
VENDEE will be the one liable to pay the entire precedes thereof including interest and other
charges. Consequently, petitioner Mario Soriano signed as maker several promissory notes, 6
payable to the respondent bank.
Thereafter, the bank released the proceeds of the loan to petitioners. However, petitioners failed
to meet their obligations as they fell due, Mario Soriano manifested his intention to re-structure
the loan, yet did not show up nor submit his formal written request
ISSUE:
Whether petitioner is liable as an accommodation party.
HELD:
RATIO:
YES
Gonzales v. RCBC
GR No. 138074, 15 August 2003
FACTS:
A foreign check worth $7500 was drawn in favor of Gonzales' mother, Eva Alviar. Gonzales is an
employee of RCBC and because of this, the check is allowed to be encashed without the
necessary clearing period. Olivia Gomez, head of RCBC's retail banking acquiesced the early
encashment and signed the check but only up to PhP17500. The check was presented to
another RCBC employee, Carlos Ramos, and signed it with an "OK" annotation. In turn, the
check was presented to Rolando Zornosa, supervisor of the remittance section who authorized
its encashment to its peso equivalent of PhP155,270.85. However, when RCBC wanted to
collect from the foreign drawee bank, it was dishonored because of irregular indorsement and
ultimately, because the account was closed. RCBC demanded to get the money back from
Gonzales who settled the matter thru salary deduction where RCBC got 12,000+. RCBC filed a
case against the other parties, namely Alviar, Alviar-GOnzales and Gonzales in the RTC which
held that Alviar and Alviar-Gonzales liable. The CA affirmed.
NO
RATIO:
The SC found that the irregular indorsement is due to the qualified indorsement made by Olivia
Gomez. The defect was introduced by RCBC; hence it should be the one liable for their own
fault. Gonzales et al's liability should only be up to the time they made their endorsement and
any subsequent endorsement by RCBC should bind them.
YES
RATIO:
The relation between an accommodation party and the accommodated party is one of principal
and surety the accommodation party being the surety. Tomas is deemed an original promisor
and debtor from the beginning. As surety, he is directly and equally bound with the principal.
Tomas agreed to be "jointly and severally" liable under the two promissory notes that he cosigned with Antonio Ang Eng Liong as the principal debtor. This being so, it is completely
immaterial if the bank would opt to proceed only against petitioner or Antonio Ang Eng Liong or
both of them since the law confers upon the creditor the prerogative to choose whether to
enforce the entire obligation against any one, some or all of the debtors. Nonetheless, Tomas,
as an accommodation party, may seek reimbursement from Antonio, being the party
accommodated. Neither was petitioner's right of reimbursement barred nor was the bank's right
to proceed against Antonio Ang Eng Liong expressly renounced by the omission to serve notice
of appeal and appellant's brief to a party already declared in default (Antonio).
NO
RATIO:
The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of
his acceptance. This provision applies with equal force in case the drawee pays a bill without
having previously accepted it. His actual payment of the amount in the check implies not only his
assent to the order of the drawer and a recognition of his corresponding obligation to pay the
aforementioned sum, but also, his clear compliance with that obligation. Actual payment by the
drawee is greater than his acceptance, which is merely a promise in writing to pay. The payment
of a check includes its acceptance.
Unmistakable herein is the fact that the drawee bank cleared and paid the subject foreign draft
and forwarded the amount thereof to the collecting bank. LBP was liable on its payment of the
check according to the tenor of the check at the time of payment, which was the raised amount.
Thus, LBP could no longer repudiate the payment it erroneously made to a due course holder.
Gold Palace was not a participant in the alteration of the draft, was not negligent, and was a
holder in due courseit received the draft complete and regular on its face, before it became
overdue and without notice of any dishonor, in good faith and for value, and absent any
knowledge of any infirmity in the instrument or defect in the title of the person negotiating it.
This construction and application of the law is in line with the sound principle that where one of
two innocent parties must suffer a loss, the law will leave the loss where it finds it. It further
reasserts the usefulness; stability and currency of negotiable paper without seriously
endangering accepted banking practices. Banking institutions can readily protect themselves
against liability on altered instruments either by qualifying their acceptance or certification, or by
relying on forgery insurance and special paper, which will make alterations obvious. The drawee
bank, in most cases, is in a better position, compared to the holder, to verify with the drawer the
matters stated in the instrument.
Thus, considering that, in this case, Gold Palace is protected by Section 62 of the NIL, its
collecting agent, Far East, should not have debited the money paid by the drawee bank from
respondent companys account. When Gold Palace deposited the check with Far East, the latter,
under the terms of the deposit and the provisions of the NIL, became an agent of the former for
the collection of the amount in the draft. The subsequent payment by the drawee bank and the