People vs Maniego

People vs Maniego 

Facts:
Maniego was an indorser of several checks drawn by her sister, which were dishonored after they had been exchanged with cash belonging to the Government, then in the official custody of Lt. Ubay. She was also found by court as an "accommodation party"who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person.
Later, Maniego, was acquitted on the crime of malversation of public fund due to reasonable doubt. The judgement however still found the Maniego civilly liable for the amount malversed. Maniego appealed the said judgement, contending that she was just a mere indorser of the said checks issued against the funds of the government. The CA certified the this said case to the SC as it was purely a question of law.

Issue:
Whether the indorser who is merely an accommodation party is liable for the negotiable instrument.

​Held:
Yes, the indorser who is merely an accommodation party is liable for the negotiable instrument.
Under the NIL, among the "parties liable thereon" is an indorser "who indorses without qualification," inter alia "engages that on due presentment, the instrument shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it 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." Here, Maniego is "liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew her to be only an accommodation party,". After paying the holder, Maniego has the right to obtain reimbursement from the party accommodated, "since the relation between them is in effect that of principal and surety, the accommodation party being the surety."