Case Digest (G.R. No. 91958)
Facts:
In Metropol (Bacolod) Financing & Investment Corporation v. Sambok Motors Company and Ng Sambok Sons Motors Co., Ltd., decided on February 28, 1983 under the 1973 Constitution, Dr. Javier Villaruel executed on April 15, 1969 a promissory note for ₱15,939.00 in favor of Ng Sambok Sons Motors Co., Ltd., payable in twelve equal monthly installments beginning May 18, 1969, bearing interest at one percent per month and featuring an acceleration clause imposing an additional 25 % interest upon non-payment. On the same date, Sambok Motors Company (“Sambok”), a sister concern under the same management, negotiated and indorsed the note with recourse, expressly waiving notice of demand, dishonor, protest, and presentment, through its Assistant General Manager, Rodolfo G. Nonillo. After Villaruel defaulted, plaintiff presented the note for payment on October 30, 1969 and, upon dishonor, notified Sambok, which also failed to pay. On November 26, 1969, plaintiff filed a collection suit in thCase Digest (G.R. No. 91958)
Facts:
- Creation and Terms of the Note
- On April 15, 1969, Dr. Javier Villaruel executed a promissory note in favor of Ng Sambok Sons Motors Co., Ltd. for ₱15,939.00, payable in twelve equal monthly installments beginning May 18, 1969, with interest at 1% per month.
- The note contained an acceleration clause: upon non-payment of any installment, the entire unpaid principal became due and payable, plus an additional interest equal to 25% of the total amount then due.
- Indorsement, Default, and Proceedings
- On the same date, Sambok Motors Company (Bacolod), sister company under the same management, negotiated and indorsed the note to Metropol Financing & Investment Corporation with the following indorsement:
- Dr. Villaruel defaulted; the note was presented for payment on October 30, 1969, and dishonored. Plaintiff notified Sambok, which failed to pay.
- On November 26, 1969, plaintiff filed a complaint for collection before the Court of First Instance of Iloilo, Branch I. Sambok admitted liability but argued it could not be obliged to pay until Dr. Villaruel was declared insolvent.
- During pendency, Dr. Villaruel died; on October 24, 1972, the court dismissed the case against him under Section 21, Rule 3 of the Rules of Court.
- On summary judgment, the trial court on September 12, 1973 ordered Sambok to pay:
- ₱15,939.00 plus legal interest from October 30, 1969;
- 25% of ₱15,939.00 plus interest thereon;
- costs of suit.
- Sambok appealed, contending that its “with recourse” indorsement made it only a qualified indorser, secondarily liable and not subject to immediate suit.
Issues:
- Whether the indorsement “with recourse” by Sambok Motors Company constitutes a qualified indorsement limiting its liability to statutory warranties under Section 65 of the Negotiable Instruments Law.
- Whether, as a qualified indorser, Sambok can be sued only after exhausting remedies against the maker or after a declaration of the maker’s insolvency.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)