Blade International Marketing Corporation vs. Court of Appeals

A person who signs a commercial document containing a solidary liability clause is personally bound thereby, notwithstanding claims that the signature was affixed in a representative capacity or on a blank form, because an experienced businessman cannot disclaim the consequent liabilities of being a signatory to important legal papers.

Metropolitan Bank & Trust Company extended credit facilities to Blade International Marketing Corporation by opening letters of credit and paying suppliers against bills of exchange. The merchandise was delivered to the corporation under trust receipt agreements, which required the entrustees to hold the goods and their proceeds for the payment of their obligations to the bank. Without justifiable reason, the corporation and its officers failed to account for or turn over the proceeds of the sale to the bank.

• The Credit Facilities: Respondent Metropolitan Bank & Trust Company paid the suppliers of Blade International Marketing Corporation by way of letters of credit against bills of exchange, covering eight causes of action involving the delivery and shipment of merchandise and tools.
• The Trust Receipts: The merchandise was delivered to the petitioners under trust receipt conditions, which required the entrustees to hold the goods, documents, and proceeds of sale for the payment of their obligations, acceptances, indebtedness, and liabilities to the bank.
• Default: Petitioners failed and refused to account for or turn over the proceeds of sale to the respondent bank without justifiable reason.
• Defense Raised: Petitioners Blade International, Evan J. Borbon, Edgar J. Borbon, and Marcial Geronimo filed a Joint Answer with Counterclaim, asserting that the individual defendants signed the letters of credit and related documents merely in behalf of the corporation and in blank, and that the trust receipts were simulated contracts void ab initio.

• Representative Capacity: Petitioners argued that the individual defendants never signed the letters of credit and related documents in their personal capacities, nor agreed to be bound as sureties or entrustees, having acted merely for and in behalf of the defendant corporation.
• Simulated Contracts: Petitioners maintained that the trust receipts were simulated contracts prepared for convenience and not in concept of trust, rendering them void ab initio.
• Bad Faith Filing: Petitioners claimed the suit was maliciously filed in bad faith, causing undue prejudice to their business reputation and credit standing, thereby entitling them to moral damages and attorney's fees via counterclaim.

• Solidary Liability: Whether petitioners Evan J. Borbon, Edgar J. Borbon, and Marcial Geronimo are personally liable jointly and severally with Blade International for fulfillment of its obligations under the letters of credit opened with Metrobank.

• Solidary Liability: Solidary liability was properly imposed because the signed documents expressly contained petitioners' agreement to jointly and severally undertake payment of the obligations and consent to all stipulated conditions. Claims of having signed in blank or in a representative capacity do not absolve the signatories; an experienced businessman who signs important legal papers cannot disclaim the consequent liabilities arising therefrom.

• Estoppel by Signature / Liability of Signatories to Commercial Documents — An experienced businessman who signs important legal papers cannot disclaim the consequent liabilities therefor after being a signatory thereon. Applied to bind individual corporate officers solidarily with the corporation because they signed the commercial documents containing clear solidary liability clauses, notwithstanding their claim of having signed in blank or in a representative capacity.

• "An experienced businessman who signs important legal papers cannot disclaim the consequent liabilities therefor after being a signatory thereon."

• BA Finance Corporation v. Intermediate Appellate Court, 217 SCRA 261 (1993) — Followed. Cited as basis for the rule that a signatory to important legal papers cannot disclaim the consequent liabilities arising from the execution of such documents.

Davide, Jr., C.J., Puno, Kapunan, Ynares-Santiago, JJ.