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    Philippine Bank of Commerce v. Aruego (G.R. Nos. L-25836-37. January 31, 1981)

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    This case involves Jose Aruego signing drafts as an acceptor to facilitate the printing of a periodical by Encal Press. Philippine Bank of Commerce filed a case against Aruego to recover the costs of printing. Aruego claims he signed only as an accommodation party. The Supreme Court ruled that (1) the drafts were negotiable bills of exchange as they conformed to the legal definition; (2) Aruego is personally liable for failing to disclose his principal; and (3) as an accommodation party, Aruego is liable to the holder for value even if the holder knew he was only an accommodation party.

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    Philippine Bank of Commerce v. Aruego (G.R. Nos. L-25836-37. January 31, 1981)

    Uploaded by

    Thoughts and More Thoughts
    40 views2 pages
    This case involves Jose Aruego signing drafts as an acceptor to facilitate the printing of a periodical by Encal Press. Philippine Bank of Commerce filed a case against Aruego to recover the costs of printing. Aruego claims he signed only as an accommodation party. The Supreme Court ruled that (1) the drafts were negotiable bills of exchange as they conformed to the legal definition; (2) Aruego is personally liable for failing to disclose his principal; and (3) as an accommodation party, Aruego is liable to the holder for value even if the holder knew he was only an accommodation party.

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    (210) Philippine Bank of Commerce v. Aruego [G.R. Nos. L-25836-37. January 31, 1981]

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    This case involves Jose Aruego signing drafts as an acceptor to facilitate the printing of a periodical by Encal Press. Philippine Bank of Commerce filed a case against Aruego to recover the costs of printing. Aruego claims he signed only as an accommodation party. The Supreme Court ruled that (1) the drafts were negotiable bills of exchange as they conformed to the legal definition; (2) Aruego is personally liable for failing to disclose his principal; and (3) as an accommodation party, Aruego is liable to the holder for value even if the holder knew he was only an accommodation party.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    40 views2 pages

    Philippine Bank of Commerce v. Aruego (G.R. Nos. L-25836-37. January 31, 1981)

    Uploaded by

    Thoughts and More Thoughts
    This case involves Jose Aruego signing drafts as an acceptor to facilitate the printing of a periodical by Encal Press. Philippine Bank of Commerce filed a case against Aruego to recover the costs of printing. Aruego claims he signed only as an accommodation party. The Supreme Court ruled that (1) the drafts were negotiable bills of exchange as they conformed to the legal definition; (2) Aruego is personally liable for failing to disclose his principal; and (3) as an accommodation party, Aruego is liable to the holder for value even if the holder knew he was only an accommodation party.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Philippine Bank of Commerce v. Aruego [G.R. Nos. L-25836-37.

    January 31, 1981]

    FACTS

    Aruego signed instruments, labeled bills of exchange, as follows:

    “JOSE ARUEGO (Acceptor) (SGD) JOSE ARGUEGO”

    Philippine Bank of Commerce filed an action against Aruego. The sum sought to be recovered represents
    the cost of the printing of “World Current Events,” a periodical published by the latter. To facilitate the
    payment of the printing Aruego obtained a credit accommodation from the plaintiff. Thus, for every
    printing of the “World Current Events,” the printer, Encal Press and Photo Engraving, collected the cost
    of printing by drawing a draft against Philippine Bank of Commerce, said draft being sent later to the
    Aruego for acceptance. Aruego contends that he signed the drafts only as an accommodation party and
    as such, should be made liable only after a showing that the drawer is incapable of paying. He also
    contends that the drafts signed by him were not really bills of exchange but mere pieces of evidence of
    indebtedness because payments were made before acceptance.

    ISSUES:

    (a) Whether or not the drafts may be considered negotiable bills of exchange.

    (b) Whether or not Aruego may be held liable only as an agent.

    (c) Whether or not an accommodation party is liable.

    RULING

    (a) YES. Under the Negotiable Instruments Law, a bill of exchange is an unconditional order in writting
    addressed by one person to another, signed by the person giving it, requiring the person to whom it is
    addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order
    or to bearer. As long as a commercial paper conforms with the definition of a bill of exchange, that
    paper is considered a bill of exchange. The nature of acceptance is important only in the determination
    of the kind of liabilities of the parties involved, but not in the determination of whether a commercial
    paper is a bill of exchange or not.

    (b) NO. For failure to disclose his principal, Aruego is personally liable for the drafts he accepted. Section
    20 of the Negotiable Instruments Law provides that “Where the instrument contains or a person adds to
    his signature words indicating that he signs for or on behalf of a principal or in a representative capacity,
    he is not liable on the instrument if he was duly authorized; but the mere addition of words describing
    him as an agent or as filing a representative character, without disclosing his principal, does not exempt
    him from personal liability.”

    (c) YES. Such person is liable on the instrument to a holder for value, notwithstanding such holder, at the
    time of the taking of the instrument knew him to be only an accommodation party. In lending his name
    to the accommodated party, the accommodation party is in effect a surety for the latter. He lends his
    name to enable the accommodated party to obtain credit or to raise money. He receives no part of the
    consideration for the instrument but assumes liability to the other parties thereto because he wants to
    accommodate another. In the instant case, Aruego signed as a drawee/acceptor. Under the Negotiable
    Instrument Law, a drawee is primarily liable. Thus, he should not have signed as an acceptor/drawee
    because in doing so, he became primarily and personally liable for the drafts.

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