Metropol
vs. Sambok
L-39641 February 28, 1983
De
Castro, J.:
Facts:
Dr. Javier Villaruel executed a
promissory note in favor of Ng Sambok Sons Motors Co., Ltd. Payable in 12 equal
monthly installments with interest. It is further provided that in case on non-payment of any of the installments,
the total principal sum then remaining unpaid shall become due and payable with
an additional interest. Sambok Motors co., a sister company of Ng Sambok Sons
negotiated and indorsed the note in favor of Metropol Financing & investment
Corporation. Villaruel defaulted in the payment, upon presentment of the
promissory note he failed to pay the promissory note as demanded, hence Ng
Sambok Sons Motors Co., Ltd. notified Sambok as indorsee that the promissory
note has been dishonored and demanded payment. Sambok failed to pay. Ng Sambok Sons
filed a complaint for the collection of sum of money. During the pendency of
the case Villaruel died. Sambok argues that by adding the words “with recourse”
in the indorsement of the note, it becomes a qualified indorser, thus, it does
not warrant that in case that the maker failed to pay upon presentment it will
pay the amount to the holder.
Issue:
Whether or not Sambok Motors Co is a
qualified indorser, thus it is not liable upon the failure of payment of the
maker.
Held:
No. A qualified indorserment
constitutes the indorser a mere assignor of the title to the instrument. It may
be made by adding to the indorser’s 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 not the holder can go
after it. The effect of such indorsement is that the note was indorsed witout
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 holder. The
words added by Sambok do not limit his liability, but rather confirm his
obligation as general indorser.
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