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EN BANC

G.R. No. L-39593             November 27, 1933

WESTMINSTER BANK, LIMITED, Plaintiff-Appellee, vs. K. NASSOOR, INC., Defendant-Appellant.

Gutierrez Repide and Monzon for appellant.
Gibbs and McDonough and Roman Ozaeta for appellee.

HULL, J.:

Plaintiff brought suit in the Court of First Instance of Manila on five bills of exchange which defendant had unconditionally accepted upon presentation of the same in Manila, P.I. The main features of this case were considered by this court in G.R. No. 38139, promulgated October 27, 1932. ¹ chanrobles virtual law library

At the trial defendant contended that the Westminster Bank, Limited, is only the agent of the drawer of the bills of exchange in question, that plaintiff is not a holder in due course under the Negotiable Instruments Law, and that if the defendant has a claim for breach of a collateral contract, good as against the drawer, it could also be made available against the plaintiff.chanroblesvirtualawlibrary chanrobles virtual law library

When these bills of exchange were received by plaintiff from the drawer, the latter's current account was credited with the value of the bills of exchange and the loan account was debited. The drawer subsequently withdrew large amounts from its current account by checks. The bills of exchange were accompanied by documents showing a shipment of goods from Manchester, England, to defendant in Manila, and upon unconditional acceptance by defendant, the goods, which up to that time had been in the control of the plaintiff to its correspondents, were delivered to defendant and have presumably been sold in the due course of business.chanroblesvirtualawlibrary chanrobles virtual law library

Upon presentation of the bills of exchange at maturity payment was refused, due protest was made, and the present suit instituted.chanroblesvirtualawlibrary chanrobles virtual law library

After the trial court gave judgment for plaintiff as prayed for, and defendant brings this appeal with the following assignments of error:

The lower court erred:chanrobles virtual law library

1. In not holding that the Westminster Bank, Ltd. is the agent of N. Jureidini Ltd. for the collection of the drafts sued on marked Exhibits B, C, D, E and F.chanroblesvirtualawlibrary chanrobles virtual law library

2. In not holding that the plaintiff is a holder in due course of and with powers to sue in its own name and for its own account, on the drafts marked Exhibits B, C, D, E and F.chanroblesvirtualawlibrary chanrobles virtual law library

3. In not holding that the defense in favor of K. Nassoor Inc. and available against N. Jureidini Ltd. must also be good and available against the Westminster Bank, Ltd.chanroblesvirtualawlibrary chanrobles virtual law library

4. In declaring that 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 and not in pounds sterling as agreed upon between the parties.

The first three assignments of errors were disposed of in the certiorari proceedings above referred to, and at the trial and on this appeal no fact, convincing reason, or controlling authority was brought forward that would justify this court in charging its view relative thereto. The obligations of appellant as an unconditional acceptor, to appellee, the holder of said drafts, must be met.chanroblesvirtualawlibrary chanrobles virtual law library

The fourth assignment of error contains virtually two questions, namely, in what money should the judgment be expressed, and if expressed in pesos, what rate of exchange should be adopted.chanroblesvirtualawlibrary chanrobles virtual law library

As to the first question, the trial court properly followed the provisions of section 3 of Act No. 1045 and jurisprudence as laid down by this court in the cases of Gaspar vs. Molina (5 Phil., 197); Behn, Meyer & Co. vs. Rosatzin (5 Phil., 660); Molina vs. De la Riva (6 Phil., 12); Paterno vs. Solis (15 Phil., 153); and Lopez vs. Enriquez (16 Phil., 336).chanroblesvirtualawlibrary chanrobles virtual law library

As to the second question, the trial court adopted the rate of exchange between pesos and pounds sterling at the date of breach. As pounds sterling had depreciated in value very much between the date of breach and the date of judgment by the trial court, appellant claims that the rate of exchange at that time should apply. Since that time, pounds sterling have advanced to such a degree that if the rate were taken at the date the judgment finally becomes final, it would be to the benefit of appellee and to the serious detriment of appellant.chanroblesvirtualawlibrary chanrobles virtual law library

The English rule of the rate of exchange at the time breach is clearly established, and the notes in the case of Di Ferdinando vs. Simon Smith & Company (89 L.J.K.B.N.S., 1039), set forth in 11 American Law Resorts, Annotated, 358, show no uniformity in America on this question but indicates that the weight of American opinion follows the English rule.chanroblesvirtualawlibrary chanrobles virtual law library

It seems to us that the reasons for the rule that the plaintiff is entitled to have his damages assessed as of the date of the breach are sound. The changes in the value of the currency subsequent to the breach should no more be taken into consideration that the subsequent change in the value of the goods, the subject matter of the contract. Fixing the evidence at the date of the breach, gives neither party an incentive to gamble on the future rate of exchange and thus tends to shorten the court proceedings.chanroblesvirtualawlibrary chanrobles virtual law library

We therefore believe the trial court was correct in adopting the rule that the rate of exchange in force at the time of breach governs.chanroblesvirtualawlibrary chanrobles virtual law library

The judgment appealed from is affirmed. Costs against appellant. So ordered.chanroblesvirtualawlibrary chanrobles virtual law library

Malcolm, Villa-Real, Abad Santos, and Imperial, JJ., concur.

Endnotes:

¹ 57 Phil., 422.