Westminster Bank v. Nassoor
REITERATIONFacts
The Antecedents: Plaintiff, Westminster Bank, Limited, filed suit against defendant, K. Nassoor, Inc., for five bills of exchange which the defendant had unconditionally accepted in Manila. The bills of exchange were accompanied by documents showing a shipment of goods from Manchester, England, to the defendant. Upon unconditional acceptance by the defendant, the goods were delivered. The drawer of the bills of exchange had its current account credited with the value of the bills, and subsequently withdrew large amounts via checks. Procedural History: The Court of First Instance of Manila rendered judgment for the plaintiff. The defendant appealed. The Petition: The defendant appealed, assigning errors related to the plaintiff's status as an agent, its standing as a holder in due course, the availability of defenses against the plaintiff, and the currency in which the judgment should be expressed.
Issue(s)
Whether the plaintiff is merely an agent of the drawer and not a holder in due course. Whether defenses available against the drawer are also available against the plaintiff. In what currency and at what rate of exchange should the judgment be expressed.
Ruling
The Supreme Court affirmed the judgment of the lower court. The defendant is liable to pay the value of the drafts sued on in Philippine currency at the rate of exchange prevailing on the date of their respective maturities.
Ratio Decidendi
On the plaintiff's status as agent and holder in due course: The Court reiterated its previous disposition in G.R. No. 38139, finding that the plaintiff was not merely an agent for collection. The fact that the drawer's account was credited with the value of the bills and that the drawer subsequently withdrew funds indicated that the plaintiff had acquired the bills for value. The unconditional acceptance by the defendant further solidified the plaintiff's position as a holder in due course under the Negotiable Instruments Law. The Court found no convincing reason or authority to deviate from its prior ruling on this matter. The obligations of the appellant as an unconditional acceptor to the appellee, the holder of the drafts, must be met. On the availability of defenses: Since the plaintiff was deemed a holder in due course, defenses that might be available against the drawer were not necessarily available against the plaintiff. The unconditional acceptance of the bills of exchange by the defendant created a direct obligation to the holder, Westminster Bank, Limited. The Court found that the defendant had not presented any convincing reasons or controlling authority to alter its view that the plaintiff's rights as a holder in due course were paramount. On the currency and rate of exchange for judgment: The Court affirmed the trial court's decision to express the judgment in Philippine currency, following Section 3 of Act No. 1045 and established jurisprudence. Regarding the rate of exchange, the Court held that the rate prevailing at the time of the breach governs. The Court reasoned that fixing the damages at the date of the breach, as per the English rule and the weight of American opinion, prevents parties from gambling on future exchange rates and tends to shorten court proceedings. Subsequent changes in currency value should not be considered, similar to subsequent changes in the value of goods.
Main Doctrine
The obligation of an unconditional acceptor of a bill of exchange to the holder thereof must be met. The rate of exchange for the conversion of foreign currency into local currency should be fixed at the time of the breach of contract, not at the time of judgment.