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Author: Patrick V.

Arcellana

Phil bank of Commerce v Aruego

Petition: Petition for relief of judgment
Plaintiff: Philippine Bank of Commerce
Defendant: Jose M. Aruego
Ponencia: Fernandez, J

DOCTRINE: A party who signs a bill of exchange as an agent, but fails to
disclose his principal, becomes principally liable for the drafts he accepted.

FACTS:
1. PBC instituted a case against Aruego for the sum of 35,000 pesos with
daily interest containing 22 causes of action for 22 transactions that they
engaged with.

2. The sum represents the cost of printing of "World Current events", a
periodical published by defendant. The payment of the printing was done by
obtaining a credit accommodation from the bank.

3. The printer (drawer), Encal Press and Photo-engraving, collected the cost
of printing by drawing a draft against the bank and sending it later to Aruego
for acceptance.

4. An added security, bank required the defendant to execute trust receipts if
favor of the bank wherein defendant undertook to hold in trust for the bank
the periodicals and to sell them to turn over the proceeds to the bank and
payments of obligations from the draft.

5. Several motions were filed by both parties, together with defenses,
alleging Aruego in default in filing motions. Thus, 2 appeals reached the CA.

ISSUE:
1. WON the defendant was in default
2. WON Aruego signed the bills of exchange in a representative capacity

PROVISIONS:
Section 20 of the Negotiable Instruments Law
Liability of person signing as agent, and so forth. - 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 filling a representative character, without disclosing his
principal, does not exempt him from personal liability.


RULING + RATIO:
1. NO.
For the court to set aside an order of default, the defendant must
show that his failure to answer was due to fraud, accident, mistake or
excusable negligence and that he has a meritorious defense. In this case,
the delay was excusable, given that he only received the order at 5:00pm of
March 11, and submitted an answer the following day. This is because there
is no way that he could submit an answer on the last day of the reglementary
period, which is March 11, because the courts also held office up to 5:00pm.
However, he failed to show that he has a meritorious defense.

2. NO.

Upon further inspection, it was shown that he was not signing as a
representative of the Philippine Education Foundation Company. He merely
signed as "JOSE ARUEGO (Acceptor) (SGD) JOSE ARUEGO. By not
disclosing his principal, as stated by Sec. 20 of NIL, he is personally liable for
the drafts he accepted. Also, he cannot say that he signed as an
accommodation party, because in this case, he signed as a drawee/acceptor
and as such, he became primarily and personally liable for the drafts.

DISPOSITION:
WHEREFORE the order appealed from in Civil Case 42066 of the CFI of
Manila denying the petition for relief of judgment in this case is hereby
affirmed, without pronouncement to costs.

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