G.R. No. 18751 & 18915. September 26, 1922.
THE PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs. BARTOLOME PICORNELL, ET AL., defendants. BARTOLOME PICORNELL and JOAQUIN PARDO DE TAVERA, appellants.

FACTS

Bartolome Picornell, acting on instructions from the firm Hyndman, Tavera & Ventura, purchased tobacco in Cebu. He obtained the purchase price plus his commission from the Cebu branch of the Philippine National Bank (PNB). In consideration, Picornell drew a 30-day sight draft (bill of exchange) on Hyndman, Tavera & Ventura in favor of PNB. The draft, along with the invoice and bill of lading for the shipped tobacco, was delivered to PNB Cebu with the condition “D/P” (documents against payment). The Manila office of PNB presented the draft for acceptance, and Joaquin Pardo de Tavera, representing Hyndman, Tavera & Ventura, accepted it. Despite PNB retaining the shipping documents, the consignee firm took possession of the tobacco upon its arrival. The firm later complained about the quality of the tobacco. Upon the draft’s maturity, Hyndman, Tavera & Ventura (with Pardo de Tavera as successor) refused payment. PNB then took possession of the tobacco, sold part of it, and applied the proceeds. PNB sued Picornell (the drawer) and Pardo de Tavera (the acceptor) for the unpaid balance.

ISSUE

1. Whether the acceptor (Pardo de Tavera) and the drawer (Picornell) are liable to PNB on the dishonored bill of exchange.
2. Whether PNB violated the “D/P” condition by allowing the consignee to take possession of the goods.
3. Whether PNB was authorized to sell the tobacco without notice.
4. Whether Picornell was properly notified of the dishonor.

RULING

1. YES. The acceptor, Pardo de Tavera (as successor to Hyndman, Tavera & Ventura), is primarily liable on the accepted bill. The drawer, Picornell, is secondarily liable. The defense of lack of consideration is unavailing as the draft was drawn against the value of the tobacco advanced by the bank.
2. NO. The “D/P” condition was not violated. PNB retained the documents of title (invoice and bill of lading). The consignee’s possession of the goods did not affect the bank’s rights as a pledgee or the liability of the parties on the instrument. Picornell was aware of this possession through correspondence.
3. YES. Under the circumstances, PNB’s sale of the tobacco without prior notice was justified. The law (Act No. 2938) allowed such sale in certain cases, and there was no question that the best possible price was obtained.
4. YES. The notarial protest for non-payment, a copy of which was mailed to Picornell, raises a conclusive presumption of notice under the Negotiable Instruments Law. Picornell failed to rebut this presumption.
The appealed judgment, ordering the defendants to pay solidarily the value of the draft minus the proceeds from the tobacco sale, is AFFIRMED.