Salazar_v._J.Y.

_Brothers_Marketing_Corp AUTHOR: Espiritu

[G.R. No. 171998. October 20, 2010.] NOTES:
TOPIC: LIABILITIES OF PARTIES- Indorser PONENTE: PERALTA, J p:
CASE LAW/ DOCTRINE:
Under Sec 63, person placing his signature upon an instrument otherwise than as maker, drawer, or acceptor, is deemed to be indorser.
Under Sec 66, as a General Indorser, if the negotiable instrument he indorsed be dishonored and the necessary proceedings on dishonor be duly taken, he
will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it.
FACTS:
Isagani Calleja and Jess Kallos approached Petitioner Salazar if petitioner was aware of any suppliers of rice. Petitioner then accompanied both parties to
Respondent J.Y. Bros Corp which is engage in the selling sugar, rice and other commodities.
Salazar with Calleja and Kallos procured from J.Y. Bros. 300 cavans of rice and as payment Salazar negotiated and indorsed to J.Y. Bros. Prudential Bank
Check issued by maker Nena Jaucian Timario equivalent to the amount of rice of P214,000.00
Prudential Bank Check was dishonored on account of Account Closed. Calleja, Kallos and Salazar delivered to J.Y. Bros. a replacement cross Solid Bank
Check which was bounced for insufficient funds.
Estafa was charged against maker Timario and Salazar in RTC.
Initial RTC acquits Salazar but is held liable for the value of the 300 cavans of rice. On certiorari, SC set aside order and remand to different branch of RTC
RTC dismiss the civil aspect liability of Salazar (the value of the 300 cavans of rice).
o The check was drawn by Timario for the amount of P214,000.00 and was payable to the order of JY Bros Corp, and such check was a
negotiable order instrument
o On account of Salazar was not a payee but JY Bros Corp who had not indorsed the check, much less delivered it to petitioner. Since Salazar
had never been the holder of the check, petitioner's signing of her name on the face of the dorsal side of the check did not produce effect of
an indorsement.
o After Prudential Bank Check was dishonored, it was replaced by the Solid Bank Check which was crossed to deposit only to payees account
so its non-negotiable. The replacing of the negotiable instrument with the non-negotiable instrument effects to discharge prior indorser of
the negotiable check.
CA reversed and found petitioner liable as indorsed both Prudential Bank and Solid Bank Check under Sections 63, 66 and 29 of NIL.
o Found Salazar liable as an accommodation indorser, who was liable on the instrument to a holder for value
Petitioner Argue: the issuance of the Solid Bank check and the acceptance thereof by the respondent, in replacement of the dishonored Prudential Bank
check, amounted to novation that discharged the latter check.
ISSUE(S): WON J.Y. Bros. may collect from Salazar as an indorser for the checks.

HELD: Affirmed CA of Salazars liability as an accommodation indorser.

Replacing of check did not result in novation that extinguish Salazars liability with the older check. Although NIL Sec 111 (d) state a negotiable instrument can
also be discharge By any other act which will discharge a simple contract for the payment of money which includes novation, there was no express agreement
to establish that petitioner was already discharged from his liability and acceptance of Solid Bank Check did not result to any incompatibility, since the two
checks were both for purpose to pay the same debt.