Phebean, the drawer issued a check to James. James, subsequently indorsed it to Trude. When Trude is about to encash the check, the drawee Union Bank refused to encash it due to insufficiency of funds. Trude sued James for payment of money. James alleged that the suit should be dismissed because Phebean is an indispensable party. Does James’ argument hold water?


No. There is no privity between the drawer and the holder. The drawer is merely secondarily liable. As indorser, the buyer warranted that upon due presentment, the checks were to be accepted or paid, or both, according to their tenor, and that in case they were dishonored, she would pay the corresponding amount. After an instrument is dishonored by non-­‐payment, indorsers cease to be merely secondarily liable; they become principal debtors whose liability becomes identical to that of the original obligor. (Tuazon v. Heirs of Bartolome Ramos, G.R. No. 156262, July 14, 2005).