Case Doctrines for Negotiable Instruments THE PHILIPPINE BANK OF COMMERCE vs. JOSE M. ARUEGO [G.R. Nos. L-25836-37.

January 31, 1981.]

Plaintiff bank instituted an action against defendant Jose M. Aruego for recovery of money it had paid on various drafts drawn against it and signed by defendant as follows: "JOSE ARUEGO (Acceptor) (SGD) JOSE ARUEGO". The complaint was dismissed upon motion of defendant filed on the last day for filing his answer. The court, however, reconsidered its dismissal order and defendant received the order setting it aside at 5:00 o'clock in the afternoon on March 11, 1960, he filed his answer on March 12, 1960 interposing as defenses that he signed the drafts in a representative capacity, that he signed only as accommodation party, and that the drafts were really no bills of exchange. Declared in default for having filed his answer one day late, defendant moved to set the order aside alleging that it could not have been possible for him to file his answer on March 11, 1960, and that he had good and substantial defenses. The court denied the motion and rendered judgment by default. Defendant appealed from both the orders denying his motions to set aside the default order and the judgment by default, which appeals were consolidated and certified to the Supreme Court by the Court of Appeals. COMMERCIAL LAW; NEGOTIABLE INSTRUMENTS LAW; BILLS OF EXCHANGE; PERSONS SIGNING IN REPRESENTATIVE CAPACITY SHOULD DISCLOSE PRINCIPAL. Where an inspection of the drafts accepted by the defendant shows that nowhere has he disclosed that he was signing as a representative of the Philippine Education Foundation Company, and he merely signed as follows: "JOSE ARUEGO (Acceptor) (SGD) JOSE ARUEGO", he is personally liable for the drafts accepted by him and he may not interpose as a defense that he signed the drafts merely as an agent of the Philippines Education Foundation Company of which he is president. ID.; ID.; ID.; NATURE OF ACCEPTANCE NOT DETERMINATE AS TO WHETHER COMMERCIAL PAPER IS BILL OF EXCHANGE OR NOT. Under the Negotiable Instruments Law, a bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to party 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 determination of whether a commercial paper is a bill of exchange or not. Thus, in the case at bar, defendant's contentions 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, is not meritorious.