GR L 26767; (February, 1968) (Digest)
G.R. No. L-26767; February 22, 1968
Ang Tiong, plaintiff-appellee, vs. Lorenzo Ting, doing business under the name and style of Prunes Preserved Mfg., and Felipe Ang, defendants. Felipe Ang, defendant-appellant.
FACTS
On August 15, 1960, Lorenzo Ting issued a Philippine Bank of Communications check for P4,000, payable to “cash or bearer.” Felipe Ang placed his signature in blank on the back of the check. The plaintiff, Ang Tiong, received the instrument and presented it to the drawee bank for payment, but it was dishonored. After written demands on both Lorenzo Ting and Felipe Ang went unheeded, Ang Tiong filed an action for collection in the municipal court of Manila. The municipal court ruled in favor of the plaintiff against both defendants. Only Felipe Ang appealed to the Court of First Instance of Manila, which rendered judgment against him, ordering him to pay the plaintiff P4,000 with legal interest, P400 as attorney’s fees, and costs. Felipe Ang then appealed to the Court of Appeals, which certified the case to the Supreme Court as the issues raised are purely of law.
ISSUE
The main issues are: (1) Whether Article 2071 of the new Civil Code applies to the case; (2) Whether Felipe Ang is liable as a general indorser under the Negotiable Instruments Law; and (3) Whether Felipe Ang, assuming he is an accommodation party, can obtain release from liability or demand security from the principal debtor.
RULING
The Supreme Court affirmed the judgment of the lower court, holding Felipe Ang liable.
1. The case is governed solely by the Negotiable Instruments Law, not by Article 2071 of the Civil Code, as it arises from a negotiable instrument (a bank check). Article 2071 is irrelevant.
2. Felipe Ang is a general indorser under the Negotiable Instruments Law. By placing his signature on the instrument without indicating any other capacity, he is deemed a general indorser under Section 63. As such, under Section 66, he warrants the instrument’s genuineness, his good title, the capacity of prior parties, and the instrument’s validity, and engages to pay the holder if the instrument is dishonored.
3. Even assuming Felipe Ang is an accommodation party, he is still liable to a holder for value under Section 29 of the Negotiable Instruments Law. His liability to the holder, Ang Tiong, is primary and unconditional. Any right he may have to obtain security from the principal debtor, Lorenzo Ting, is a matter exclusively between them and does not affect his liability to the holder.