NEGOTIABLE INSTRUMENTS NOTES

BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES

Page 162 of 190


BY: MA. ANGELA LEONOR C. AGUINALDO
ATENEO LAW 2D BATCH 2010
Paragraph 8 of the Trust Receipt which reads: "My/our liability for payment
at maturity of any accepted draft, bill of exchange or indebtedness shall
not be extinguished or modified" does not, contrary to the holding of the
public respondent, contemplate prior acceptance by Philippine Rayon, but
by the petitioner. Acceptance, however, was not even necessary in the first
place because the drafts which were eventually issued were sight drafts
And even if these were not sight drafts, thereby necessitating acceptance,
it would be the petitioner and not Philippine Rayon which had to accept the
same for the latter was not the drawee. Presentment for acceptance is
defined an the production of a bill of exchange to a drawee for acceptance.
THE TRIAL COURT AND THE PUBLIC RESPONDENT, THEREFORE, ERRED IN
RULING THAT PRESENTMENT FOR ACCEPTANCE WAS AN INDISPENSABLE
REQUISITE FOR PHILIPPINE RAYON'S LIABILITY ON THE DRAFTS TO
ATTACH. Contrary to both courts' pronouncements, Philippine Rayon
immediately became liable thereon upon petitioner's payment thereof.
Such is the essence of the letter of credit issued by the petitioner. A
different conclusion would violate the principle upon which commercial
letters of credit are founded because in such a case, both the beneficiary
and the issuer, Nissho Company Ltd. and the petitioner, respectively,
would be placed at the mercy of Philippine Rayon even if the latter had
already received the imported machinery and the petitioner had fully paid
for it.

170 PHIL. BANK OF COMMERCE V. ARUEGO
102 SCRA 530

FACTS:
Aruego, on behalf of World Current Events, entered into a Credit
Agreement with PBCom, for the publication of the companys periodicals.
At every printing endeavor by the printing press, a bill of exchange is
drawn against PBCom. The instruments are signed by Aruego, without any
indication that he is an agent of World Current Events. When he was being
held liable by PBCom, he averred that he only signed the instrument in the
capacity of agent of the company.

HELD:
An inspection of the drafts accepted by the defendant would show nowhere
that he has disclosed that he was signing in representation of the Philippine
Education Foundation Company. He merely signed his name. For failure to
disclose his principal, Aruego was personally liable for the drafts he
accepted.

Sec. 144. When failure to present releases drawer and indorser. -
Except as herein otherwise provided, the holder of a bill which is
required by the next preceding section to be presented for
acceptance must either present it for acceptance or negotiate it
within a reasonable time. If he fails to do so, the drawer and all
indorsers are discharged.

PRESENTMENT FOR PAYMENT, DEFINED
! Production of a bill of exchange to the drawee for his acceptance

GENERAL RULE AS TO PRESENTMENT FOR ACCEPTANCE
! Presentment for acceptance is not necessary for cases aside from the
three enumerated above
! In those three cases, to charge persons secondarily liable it is
necessary
o To make presentment for acceptance
o To negotiate the bill within a reasonable time

ILLUSTRATION
1. Where the bill is payable after sight. A bill is payable 30 days
after sight. The law requires the bill to be presented for
acceptance. The date of maturity will not be fixed if the bill isnt
presented.
2. Where there is express stipulation. The bill contains a stipulation
that it must be presented for acceptance. Such a bill must be
presented for acceptance.
3. Where bill is drawn elsewhere than at the residence of drawee.
The bill reads as follows
a. The bill must be presented for acceptance in order to
inform the drawee X of the existence of the bill so that he
can make arrangements for its payment at the PNB
Manila

Pay to B or order P1000 at the PNB, Manila.

Sgd. A

To X, Davao City

Sec. 145. Presentment; how made. - Presentment for acceptance
must be made by or on behalf of the holder at a reasonable hour,
on a business day and before the bill is overdue, to the drawee or
some person authorized to accept or refuse acceptance on his
behalf; and