Scribd
Upload
148 views2 pages

Allied Banking Corp. V CA

Respondents executed letters of guaranty and surety to Allied Banking Corporation for credit accommodations extended to GG Sportswear. Allied Banking purchased an export bill from GG Sportswear but payment was refused by the bank due to discrepancies. Allied Banking demanded payment from Respondents based on their guaranty and surety agreements. Respondents refused to pay, arguing they were merely indorsers under Section 152 of the Negotiable Instruments Law so Allied Banking's failure to protest the dishonored bill discharged their liability. The court ruled Respondents were guarantors and sureties, not indorsers, so Section 152 did not apply. As guarantors and sureties, Respondents

Uploaded by

Lou
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
148 views2 pages

Allied Banking Corp. V CA

Respondents executed letters of guaranty and surety to Allied Banking Corporation for credit accommodations extended to GG Sportswear. Allied Banking purchased an export bill from GG Sportswear but payment was refused by the bank due to discrepancies. Allied Banking demanded payment from Respondents based on their guaranty and surety agreements. Respondents refused to pay, arguing they were merely indorsers under Section 152 of the Negotiable Instruments Law so Allied Banking's failure to protest the dishonored bill discharged their liability. The court ruled Respondents were guarantors and sureties, not indorsers, so Section 152 did not apply. As guarantors and sureties, Respondents

Uploaded by

Lou
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Allied Banking Corporation v.

CA and ALCRON executed their respective letters of guaranty, holding


themselves liable on the export bill in case of dishonour by drawee.
TL;DR:
Sps. De Villa and Gidwani also executed a surety in favor of petitioner,
Respondents aver that they are indorsers hence, sec. 152 of NIL is guaranteeing payment of any and all such credit accommodations which
applicable. Petitioner may extend to GGS.
152 of NIL: In what cases protest necessary. – Where a foreign bill
appearing on its face to be such is dishonored by nonacceptance, it Petitioner negotiated the export bill to Chekiang, but payment was refused by
must be duly protested for nonacceptance, by nonacceptance is Chekiang due to some discrepancies to the documents submitted by GGS.
dishonored and where such a bill which has not previously been Petitioner then demanded payment from all the respondents based on the
dishonored by nonpayment, it must be duly protested for Letters of Guaranty and Surety they executed in favor of petitioner.
nonpayment. If it is not so protested, the drawer and indorsers are
Respondents, however, refused to pay prompting petitioner to file an action
discharged. Where a bill does not appear on its face to be a foreign
bill, protest thereof in case of dishonor is unnecessary. for a sum of money.
Respondents are NOT indorsers, but guarantors and sureties. 152 of NIL not Respondents’ arguments:
applicable.
GGS and Nari Gidwani: signed blank forms of the Letters of Guaranty and
Art. 2047 is the applicable law. the Surety, and the blanks were only filled up by ALLIED after they had
Art. 2047. By guaranty a person, called the guarantor, binds himself to affixed their signatures. They also added that the documents did not cover the
the creditor to fulfill the obligation of the principal debtor in case the transaction involving the subject export bill.
latter should fail to do so.
Spouses de Villa: not aware of the existence of the export bill; they signed
If a person binds himself solidarily with the principal debtor, the
provisions of Section 4, Chapter 3, Title I of this Book shall be blank forms of the surety; and averred that the guaranty was not meant to
observed. In such case the contract is called a suretyship. secure the export bill

Alcron: foreign corporation doing business in the Philippines, its branch in


the Philippines is merely a liaison office; neither its liaison office in the
Philippines nor its then representative, Hans-Joachim Schloer, had the
authority to issue Letters of Guaranty for and in behalf of local entities and
Petitioner: Allied Banking Corp. persons
Respondents: GG Sportswear Manufacturing, Nari Gidwani, Sps. De RTC ruled in favor of Petitioner, holding all respondents liable.
Villa, ALCRON International Ltd.
Respondents appealed arguing that GGS is the only one liable, and that the
Facts:
others are indorsers. Respondents claim that the petitioner did not
Petitioner purchased an export bill from G.G. Sportswear (GGS). The bill protest upon dishonor of the export bill by Chekiang First Bank,
covered Men’s Valvoline Training Suit that was in transit to West Germany. Ltd. According to respondents, since there was no protest made upon
The export bill was issued by Chekiang First Bank Ltd. Hongkong. dishonor of the export bill, all of them, as indorsers were discharged
under Section 152 of the Negotiable Instruments Law. CA modified the
Petitioner credited to GGS the peso equivalent of the export bill amounting to ruling, holding GGS as solely liable and exonerating the others of liability.
P151, 474.52, and the receipt of which was acknowledged by GGS. Gidwani
Issue: Whether Gidwani, Alcron, Sps. De Villa are liable together with GGS
Ruling: YES
Section 152 of the Negotiable Instruments Law pertaining to indorsers, relied
on by respondents, is not pertinent to this case. 
There are well-defined distinctions between the contract of an indorser and
that of a guarantor/surety of a commercial paper, which is what is involved in
this case. 
The contract of indorsement is primarily that of transfer, while the
contract of guaranty is that of personal security. The liability of a
guarantor/surety is broader than that of an indorser. Unless the bill is
promptly presented for payment at maturity and due notice of dishonor given
to the indorser within a reasonable time, he will be discharged from liability
thereon. On the other hand, except where required by the provisions of the
contract of suretyship, a demand or notice of default is not required to
fix the surety’s liability. He cannot complain that the creditor has not
notified him in the absence of a special agreement to that effect in the
contract of suretyship. Therefore, no protest on the export bill is
necessary to charge all the respondents jointly and severally liable with
G.G. Sportswear since the respondents held themselves liable upon demand
in case the instrument was dishonored and on the surety, they even waived
notice of dishonor as stipulated in their Letters of Guarantee.
Dispositive: Petition is GRANTED.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy