120 SCRA 864



Dr.  Villareal  issued  a  promissory  note  in  favor  of  Sambok,  which  was payable in monthly installments.  The promissory note was then indorsed to  Metropol.    Villareal  defaulted  payment  and  this  prompted  Metropol  to run  after  Sampol.    Sampol  alleged  that  it  is  not  liable  since  it  was  a qualified indorser through the wordings it inserted in its indorsement—with recourse.   


A qualified indorsement constitutes the indorser a mere assignor of the title to  the  instrument.  It  may  be  made  by  adding  to  the  indorser's  signature the  words  "without  recourse"  or  any  words  of  similar  import.    Such  an indorsement  relieves  the  indorser  of  the  general  obligation  to  pay  if  the
instrument is dishonored but not of the liability arising from warranties on the  instrument  as  provided  in  Section  65  of  the  Negotiable  Instruments Law  already  mentioned  herein.  However,  appellant  Sambok  indorsed  the note  "with  recourse"  and  even  waived  the  notice  of  demand,  dishonor,
protest and presentment.
"Recourse"  means  resort  to  a  person  who  is  secondarily  liable  after  the default of the person who is primarily liable. 3 Appellant, by indorsing the note "with recourse" does not make itself a qualified indorser but a general indorser who is secondarily liable, because by such indorsement, it agreed that if Dr. Villaruel fails to pay the note, plaintiff-appellee can go after said appellant.  The  effect  of  such  indorsement  is  that  the  note  was  indorsed without qualification. A person who indorses without qualification engages that on due presentment, the note 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. 4 Appellant Sambok's intention of indorsing the note without qualification  is  made  even  more  apparent  by  the  fact  that  the  notice  of demand,  dishonor,  protest  and  presentment  were  an  waived.  The  words added  by  said  appellant  do  not  limit  his  liability,  but  rather  confirm  his obligation as a general indorser.