CD: Philippine National Bank v. Picornell

September 21, 2010 at 6:42 pm (1922, Case Digests) (, , )

PHILIPPINE NATIONAL BANK v. PICORNELL
G.R. No. L-18751 September 26, 1922
Romualdez, J.

Doctrine:
The payee holds a different relation: he is a stranger to the transaction between the drawer and the acceptor, and is, therefore, in a legal sense a remote party. Hence, the drawee, by accepting the instrument, cannot escape liability.

Facts:
A bill of exchange was drawn by defendant Picornell in favor of the plaintiff, against the firm of Hyndman, Tavera & Ventura.

Pardo de Tavera, successor to Hyndman, Tavera & Ventura, accepted the drawn instrument initially but denied payment upon maturity thereof, alleging that the tobacco sold by Picornell was of inferior quality.

Issue:
Whether or not de Tavera can decline payment

Held:
No. The bank was a holder in due course, and was such for value full and complete. The Hyndman, Tavera & Ventura company cannot escape liability in view of section 28 of the Negotiable Instruments Law:

. . . The drawee by acceptance becomes liable to the payee or his indorsee, and also to the drawer himself. But the drawer and acceptor are the immediate parties to the consideration, and if the acceptance be without consideration, the drawer cannot recover of the acceptor. The payee holds a different relation; he is a stranger to the transaction between the drawer and the acceptor, and is, therefore, in a legal sense a remote party. In a suit by him against the acceptor, the question as to the consideration between the drawer and the acceptor cannot be inquired into. The payee or holder gives value to the drawer, and if he is ignorant of the equities between the drawer and the acceptor, he is in the position on a bona fide indorsee. Hence, it is no defense to a suit against the acceptor of a draft which has been discounted, and upon which money has been advance by the plaintiff, that the draft was accepted or the accommodation of the drawer. . . . (3 R. C. L., pp. 1143, 1144, par, 358.)

The drawee, the Hyndman, Tavera & Ventura company, or its successors, J. Pardo de Tavera, accepted the bill and is primarily liable for the value of the negotiable instrument, while the drawer, Bartolome Picornell, is secondarily liable.

Upon the non-payment of the bill by the drawee-acceptor, the bank had the right of recourse, which it exercised by selling the tobacco products, against the drawer (Sec. 84, Negotiable Instruments Law).

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