EN BANC

[G.R. No. L-26767. February 22, 1968.]

ANG TIONG , plaintiff-appellee, vs. LORENZO TING, doing business

under the name & style of PRUNES PRESERVES MFG., & FELIPE
ANG, defendants, FELIPE ANG , defendant-appellant.

Chipeco & Alcaraz, Jr. for plaintiff-appellee.

Ang, Atienza & Tabora for defendant-appellant.

SYLLABUS

1. NEGOTIABLE INSTRUMENTS LAW; CHECKS; GENERAL INDORSER,

DEFINED. — A bank check is indisputably a negotiable instrument and should be
governed solely by the Negotiable Instruments Law (see secs. 1 and 15). Section 63 of
the Negotiable Instruments Law makes "a person placing his signature upon an
instrument otherwise than as maker, drawer or acceptor" a general indorser "unless he
clearly indicates by appropriate words his intention to be bound in some other
capacity." Section 66 of the same law ordains that "every indorser who indorses without
quali cation, warrants to all subsequent holders in due course" (a) that the instrument
is genuine and in all respects what it purports to be; (b) that he has a good title to it; (c)
that all prior parties have capacity to contract; and (d) that the instrument is at the time
of his indorsement valid and subsisting. In addition "he engages that on due
presentment, it shall be accepted or paid or both, as the case may be, and if it be
dishonored, he will pay the amount thereof to the holder."
2. ID.; ID.; LIABILITIES OF AN ACCOMMODATION PARTY. — Section 29 of the
Negotiable Instruments Law by clear mandate makes the accomodation party "liable on
the instrument to a holder for value, notwithstanding that such holder at the time of
taking the instrument knew him to be only an accommodation party". It is not a valid
defense that the accommodation party did not receive any valuable consideration when
he executed the instrument. It is not correct to say that the holder for value is not a
holder in due course merely because at the time he acquired the instrument, he knew
that the indorser was only an accommodation party.

DECISION

CASTRO , J : p

On August 15, 1960 Lorenzo Ting issued Philippine Bank of Communications

check K-81618, for the sum of P4,000, payable to "cash or bearer". With Felipe Ang's
signature (indorsement in blank) at the back thereof, the instrument was received by
the plaintiff Ang Tiong who thereafter presented it to the drawee bank for payment. The
bank dishonored it. The plaintiff then made written demands on both Lorenzo Ting and
Felipe Ang that they make good the amount represented by the check. These demands
went unheeded; so he led in the municipal court of Manila an action for collection of
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 the sum of P4,000, plus P500 attorney's fees. On March 6, 1962 the municipal court
adjudged for the plaintiff against the two defendants.
Only Felipe Ang appealed to the Court of First Instance of Manila (civil case
50018), which rendered judgment on July 31, 1962, amended by an order dated August
9, 1962, directing him to pay to the plaintiff "the sum of P4,000, with interest at the legal
rate from the date of the ling of the complaint, a further sum of P400 as attorney's
fees, and costs."
Felipe Ang then elevated the case to the Court of Appeals, which certi ed it to
this Court because the issues raised are purely of law.
The appellant imputes to the court a quo three errors, namely, (1) that it refused
to apply article 2071 of the new Civil Code to the case at bar; (2) that it adjudged him a
general indorser under the Negotiable Instruments Law (Act 2031); and (3) that it held
that he "cannot obtain his release from the contract of suretyship or obtain security to
protect himself against any proceedings on the part of the creditor and against the
danger of insolvency of the principal debtor," because he is "jointly and severally liable
on the instrument."
This appeal is absolutely without merit.
1. The genuineness and due execution of the instrument are not
controverted. That the appellee is a holder thereof for value is admitted.
Having arisen from a bank check which is indisputably a negotiable instrument,
the present case is, therefore, in so far as the indorsee is concerned vis-a-vis the
indorser, governed solely by the Negotiable Instruments Law (see secs. 1 and 185).
Article 2071 of the new Civil Code, invoked by the appellant, the pertinent portion of
which states, "The guarantor, even before having paid, may proceed against the
principal debtor: (1) when he is sued for the payment; . . . the action of the guarantor is
to obtain release from the guaranty, to demand a security that shall protect him from
any proceedings by the creditor . . .," is here completely irrelevant and can have no
application whatsoever.
We are in agreement with the trial judge that nothing in the check in question
indicates that the appellant is not a general indorser within the purview of section 63 of
the Negotiable Instruments Law which makes "a person placing his signature upon an
instrument otherwise than as maker, drawer or acceptor" a general indorser, — "unless
he clearly indicates by appropriate words his intention to be bound in some other
capacity," which he did not do. And section 66 ordains that "every indorser who
indorses without quali cations, warrants to all subsequent holders in due course" (a)
that the instrument is genuine and in all respects what it purports to be; (b) that he has
a good title to it; (c) that all prior parties have capacity to contract; and (d) that the
instrument is at the time of his indorsement valid and subsisting. In addition, "he
engages that on due presentment, it shall be accepted or paid, or both, as the case may
be, and that if it be dishonored, he will pay the amount thereof to the holder." 1
2. Even on the assumption that the appellant is a mere accommodation
party, as he professes to be, he is nevertheless, by the clear mandate of section 29 of
the Negotiable Instruments Law, yet "liable on the instrument to a holder for value,
notwithstanding that such holder at the time of taking the instrument knew him to be
only an accommodation party." To paraphrase, the accommodation party is liable to a
holder for value as if the contract was not for accommodation. It is not a valid defense
that the accommodation party did not receive any valuable consideration when he
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 executed the instrument. Nor is it correct to say that the holder for value is not a holder
in due course merely because at the time he acquired the instrument he knew that the
indorser was only an accommodation party. 2
3. That the appellant, again assuming him to be an accommodation indorser,
may obtain security from the maker to protect himself against the danger of insolvency
of the latter, cannot in any manner affect his liability to the appellee, as the said remedy
is a matter of concern exclusively between accommodation indorser and
accommodated party. So that the fact that the appellant stands only as a surety in
relation to the maker, granting this to be true for the sake of argument, is immaterial to
the claim of the appellee, and does not a whit diminish nor defeat the rights of the latter
who is a holder for value. The liability of the appellant remains primary and
unconditional. To sanction the appellant's theory is to give unwarranted legal
recognition to the patent absurdity of a situation where an indorser, when sued on an
instrument by a holder in due course and for value, can escape liability on his
indorsement by the convenient expedient of interposing the defense that he is a mere
accommodation indorser.
Accordingly, the judgment a quo is affirmed in toto, at appellant's cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez,
Angeles and Fernando, JJ., concur.

Footnotes

1. See also Beutel's Brannan Negotiable Instruments Law, 7th ed., pp. 927, 956; Alvendia,
The Negotiable Instruments Law, pp. 119-120; Stuart del Rosario, Treatise on Negotiable
Instruments, 1961 ed., p. 189.
2. Beutel's, id., pp. 568-569; Stuart del Rosario, id., pp. 165, 242-243; Alvendia id., pp. 55, 57-
58; National Bank vs. Maza, et al., 48 Phil. 210.

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