Phil. Bank of Commerce v Aruego; G.R. Nos. L-25836-37; 31 Jan 1981; 102 SCRA 530

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Defendant obtained a credit accommodation from plaintiff-bank to facilitate the payment of the printing of his periodical. As required by the bank, he executed a trust receipt in favor of said bank wherein he undertook to hold in trust for the plaintiff the periodicals and to sell the same with the promise to turn over to the plaintiff the proceeds of the sale to answer for the payment of all obligations arising from the drafts which were drawn by the printer against the bank and later sent to the defendant for acceptance.

Whether or not defendant in signing the bills of exchange acted as an agent of the Philippine Education Foundation Company.

NO. Section 20 of the Negotiable Instruments Law provides that “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 as an agent or as filing a representative character, without disclosing his principal, does not exempt him from personal liability.” For failure to disclose his principal, defendant-appellant is personally liable for the drafts he accepted.

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