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49 - Asia Banking Corp V Ten Sen Guan

Asia Banking Corporation (ABC) sued Ten Sen Guan and Yu Biao Sontua to recover the amount of a draft. Ten Sen had ordered batiste from New York but received different merchandise. ABC refused delivery until Ten Sen accepted the draft. Ten Sen conditionally accepted, believing the merchandise was what was ordered. When Ten Sen discovered it was not, it refused payment and ABC agreed to cancel the acceptance. The trial court found for Ten Sen, determining the acceptance was conditional and ABC released Ten Sen from liability. The record showed ABC held the draft for collection, not as a holder in due course, so Ten Sen could assert defenses against ABC as it could against the original holder.

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323 views2 pages

49 - Asia Banking Corp V Ten Sen Guan

Asia Banking Corporation (ABC) sued Ten Sen Guan and Yu Biao Sontua to recover the amount of a draft. Ten Sen had ordered batiste from New York but received different merchandise. ABC refused delivery until Ten Sen accepted the draft. Ten Sen conditionally accepted, believing the merchandise was what was ordered. When Ten Sen discovered it was not, it refused payment and ABC agreed to cancel the acceptance. The trial court found for Ten Sen, determining the acceptance was conditional and ABC released Ten Sen from liability. The record showed ABC held the draft for collection, not as a holder in due course, so Ten Sen could assert defenses against ABC as it could against the original holder.

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ASIA BANKING CORPORATION, plaintiff-appellant, (ABC)

vs.
TEN SEN GUAN Y SOBRINOS and YU BIAO SONTUA, defendants-appellees.

Ten Sen Guan ordered ten cases of mercerized bastite to be shipped from New York
to Manila. . Upon its arrival, a draft for the amount drawn by "Snow's Ltd." against
the defendants was presented to them through ABC as agent of "Snow's, Ltd." for
acceptance.
ABC refused the delivery of the bill of lading and other documents relating to the
merchandise until the draft was accepted by the defendants.
That the defendants, being assured by plaintiff, and believing that the merchandise
described in the bill of lading was the "batiste" ordered, accepted the draft and
received delivery of the bill of lading. But upon opening of the goods, it was found
that it was not the merchandise ordered by Ten Sen. Thus, they refused to accept the
goods and demanded from ABC the cancellation of their acceptance of the draft.
o They alleged that plaintiff accepted the return of the bill of lading and
documents, and agreed to cancel defendants' acceptance of the draft, for the
reason that it was without consideration.
ABC alleges that it is the holder of the draft for value and in due course of business
o prays for judgment against the defendants for the amount of the draft
TC: found for the defendants; the acceptance of the draft by the defendants was
conditional; that the plaintiff released and discharged the defendants from any
liability upon the draft

WN plaintiff can recover from the defendants the amount of the draft?

NO, as ABC is not a HIDC.

The record indicates that the plaintiff held that draft for collection; that relying upon the
statements and representations of the plaintiff, the defendants conditionally accepted the
draft; that immediately upon discovery of the fraud the defendants promptly notified the
bank. Its then officials recognized the fraud and the conditional acceptance of the draft, and
accepted the return of the papers and the "burlap," and agreed to release the defendants
from all liability.

Presumptions for due course holding did not apply as defendants would have a right to
make any defense to the draft which they would have a right to make against "Snow's, Ltd."

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