Great Asian Sales Center Corporation v.

Court of Appeals
G.R. No.105774, 25 April 2002
CARPIO, J.
FACTS:
Great Asian bought and sold household appliances. Its board of
approved a resolutions authorizing its Treasurer and GM, Arsenio Lim Piat, Jr.
to secure a 1,000,000 loan from Bancasia and a 2,000,000 a discounting line
with Bancasia, to sign all notes necessary to secure the loan. Tan Chong Lin
then signed 2 Surety Agreements in favor of Bancasia to guarantee,
solidarily, the debts of Great Asian to Bancasia.
Great Asian, through Piat, signed 4 Deeds of Assignment of
Receivables, assigning to Bancasia 15 postdated checks issued by various
customers in payment for appliances and other merchandise.
The drawee banks dishonored the fifteen checks due to “account
closed”, “payment stopped”, “account under garnishment”, and
“insufficiency of funds”. After notice, Bancasia notified Tan Chong Lin and
demanded payment. Neither Great Asian nor Tan Chong Lin paid Bancasia
the dishonored checks. GA filed for insolvency but Bancasia still persued a
suit against them.
RTC ruled in favor of Bancasia and CA later sustained.
ISSUE: Is Great Asian still liable to Bancasia despite not receiving a notice
of dishonor from the later?
HELD:
Yes, the explicit with recourse stipulation which states that the
dishonored checks were sold to Bancasia with recourse against Great Asian
effectively enlarges, by agreement of the parties, the liability of Great Asian
beyond that of a mere endorser of a negotiable instrument. Thus, whether
Bancasia gives notice of dishonor to Great Asian, the latter remains liable to
Bancasia because of the with recourse stipulation which is independent of
the warranties of an endorser under the Negotiable Instruments Law.