Monday, February 27, 2012

Tuazon vs. Buenaventura [G.R. No. 156262 July 14, 2005]

Facts: The present case involves the collection of a sum of money. Specifically, this case arose from the failure of petitioners to pay respondents’ predecessor-in-interest. This fact was shown by the non-encashment of checks issued by a third person, but indorsed by herein Petitioner Maria Tuazon in favor of the said predecessor. Under these circumstances, to enable respondents to collect on the indebtedness, the check drawer need not be impleaded in the Complaint. Thus, the suit is directed, not against the drawer, but against the debtor who indorsed the checks in payment of the obligation. 

Between the period of May 2, 1988 and June 5, 1988, spouses Tuazon purchased a total of 8,326 cavans of rice from Ramos, predecessor-in-interest of respondents. Only 4,437 cavans have been paid for so far] leaving unpaid 3,889 cavans valued at P1,211,919.00. In payment therefor, the spouses Tuazon issued Traders Royal Bank checks. But when these checks were encashed, all of the checks bounced due to insufficiency of funds. Respondents advanced that before issuing said checks, spouses Tuazon already knew that they had no available fund to support the checks, and they failed to provide for the payment of these despite repeated demands made on them. 

The corresponding civil and criminal cases were filed by respondents against Spouses Tuazon. Those cases were later consolidated and amended to include Spouses Anastacio and Mary Buenaventura, with Alejandro Tuazon and Melecio Tuazon as additional defendants. Having passed away before the pretrial, Bartolome Ramos was substituted by his heirs, herein respondents. 

Contending that Evangeline Santos was an indispensable party in the case, petitioners moved to file a third-party complaint against her. Allegedly, she was primarily liable to respondents, because she was the one who had purchased the merchandise from their predecessor, as evidenced by the fact that the checks had been drawn in her name. The RTC, however, denied petitioners’ Motion. 

Sustaining the RTC, the CA held that petitioners had failed to prove the existence of an agency between respondents and Spouses Tuazon. The appellate court disbelieved petitioners’ contention that Evangeline Santos should have been impleaded as an indispensable party. Inasmuch as all the checks had been indorsed by Maria Tuazon, who thereby became liable to subsequent holders for the amounts stated in those checks, there was no need to implead Santos. 

Issue: Whether or not the Honorable Court of Appeals erred in rendering judgment against the petitioners despite the failure of the respondents to include in their action Evangeline Santos, an indispensable party to the suit. 

Held: Respondents’ cause of action is clearly founded on petitioners’ failure to pay the purchase price of the rice. The trial court held that Petitioner Maria Tuazon had indorsed the questioned checks in favor of respondents, in accordance with Sections 31 and 63 of the Negotiable Instruments Law. That Santos was the drawer of the checks is thus immaterial to the respondents’ cause of action. 

As indorser, Petitioner Maria Tuazon 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 nonpayment, indorsers cease to be merely secondarily liable; they become principal debtors whose liability becomes identical to that of the original obligor. The holder of a negotiable instrument need not even proceed against the maker before suing the indorser. Clearly, Evangeline Santos -- as the drawer of the checks -- is not an indispensable party in an action against Maria Tuazon, the indorser of the checks. 

Indispensable parties are defined as “parties in interest without whom no final determination can be had.” The instant case was originally one for the collection of the purchase price of the rice bought by Maria Tuazon from respondents’ predecessor. In this case, it is clear that there is no privity of contract between respondents and Santos. Hence, a final determination of the rights and interest of the parties may be made without any need to implead her.

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