PBCom vs. ARUEGO - G.R. Nos. L-25836-37

THE PHILIPPINE BANK OF COMMERCE vs. JOSE M. ARUEGO

G.R. Nos. L-25836-37              January 31, 1981

Jose Aruego publishes a periodical called “World Current Events.” To facilitate payment of the printing, Aruego obtained a credit accommodation from the Philippine Bank of Commerce. For every printing of the periodical, the printer (Encal Press and Photo-Engraving) collected the cost of printing by drawing a draft against the bank, said draft being sent later to Aruego for acceptance. As an added security for the payment of the amounts advanced to the printer, the bank also required Aruego to execute a trust receipt in favor of the bank wherein Aruego undertook to hold in trust for the bank the periodicals and to sell the same with the promise to turn over to the bank the proceeds of the sale to answer for the payment of all obligations arising from the draft. The bank instituted an action against Aruego to recover the cost of printing of the latter’s periodical for the period of 28 August 1950 to 14 March 1951.

Issue : Whether or not the drafts were bills of exchange or mere pieces of evidence of indebtedness.

Held : 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 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.