Metropol Financing & Investment Corp. v. Sambok Motors Co.

& Ng Sambok Sons

Motors Co.
Topic: Kinds of indorsement
Instrument: PN, OI (15,939 pesos, 12 installments + 1% interest per month w/ acceleration
clause = 25%)
Maker: Dr. Villaruel
Payee: Ng Sambok Sons
Sambok Motors (sister company)--- Metropol Financing
(with recourse)
Facts:
 Dr. Villaruel executed a PN in favor of Ng Sambok Sons Motor Corp. for the amount of
15, 939 in 12 installments + 1% per month and an acceleration clause which provides for
a 25% interest
 On the same date, Sambok Motors. Co., sister company of Ng Sambok Sons indorsed the
note to Metropol Financing & Investment Corp.
 The instrument is worded as “Pay to the order of Metropol Financing & Investment Corp.
with recourse. Notice of Demand, Presentment, Dishonor and Protest are all waived.”
 Dr. Villaurel defaulted on Oct. 30, 1969 when Metropol presented it for payment.
Metropol then notified Sambok of the dishonor and demanded payment for the same.
 Sambok failed to pay which lead to a filing of a complaint on Nov. 1969 before CFI,
Iloilo Branch I.
 Sambok didn’t deny liability but claimed that it can only be liable after Dr. Villaruel has
been declared insolvent.
 During the pendency of the case, Dr. Villaruel died; Court dismissed the case against
him.
 CFI: ordered Sambok to pay the amount due.
 On appeal, Sambok argues that it is a mere assignor and qualified indorser. Sec. 65
should be applied and therefore, it shall not be liable for the dishonor of the instrument.
Issue: Whether Sambok Motors Corp. is a mere assignor and qualified indorser and as such,
cannot be held liable.
Ruling:
 The contention is without merit.
 Under the NIL, qualified indorsement is made by adding the words “without recourse,”
“sans recourse,” and other words of similar import.
 The effect of qualified indorsement is that indorser will be a mere assignor of the title.
Therefore, relieved of the general obligation to pay in case of dishonor but not of the
liability arising from his warranties as a qualified indorser as provided in Sec. 65 of the
NIL.
 The effect of Sambok indorsing the note as “with recourse” is rendering the indorsement
without qualification.
 Recourse by definition is resort to a person who is secondarily liable after the default of
the person who is primarily liable.
 Having waived notice of demand, dishonor, protest and presentment, Sambok confirms
his status as a general indorser of the instrument and therefore, rightfully liable.