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Aruego (1961)
G.R. Nos. L-25836-37 January 31, 1981
Lessons Applicable: Liabilities of the Parties (Negotiable Instruments Law)
FACTS:
the printer, Encal Press and Photo Engraving, collected the cost of every
printing by drawing a draft against the PBC, which PBC later accepts
As an added security for the payment of the amounts advanced to
Encal Press and Photo-Engraving, PBC required Aruego to execute a trust receipt
(PBC hold in trust for Aruego the periodicals and to sell the same with the promise
to turn over to the Aruego the proceeds for the payment of all obligations arising
from the draft)
"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
For failure to disclose his principal, Aruego is personally liable for the
drafts he accepted
An accommodation party is one who has signed the instrument as maker, drawer,
indorser, without receiving value therefor and for the purpose of lending his name to
some other person. 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
he signed as a drawee/acceptor
Under the Negotiable Instrument Law, a drawee is primarily liable
As long as a commercial paper conforms with the definition of a bill of exchange,
that paper is considered a bill of exchange