BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES
Page 85 of 190
BY: MA. ANGELA LEONOR C. AGUINALDO ATENEO LAW 2D BATCH 2010 On whether or not Banco Atlantico was a holder in due course, it is not. Following the decision of the Auditor General in denying the claim of the bank, the checks were demand notes. It should have been put on guard when Boncan negotiated the checks with them and subsequently deposited the same to her account. Even though it were demand notes, she instructed the bank that the same be not presented for collection till a later date. The fact that the amount was quite big and it was the payee herself who made the request that the same be not presented for collection until a fixed date in the future was proof of a glaring infirmity or defect in the instrument. It loudly proclaims Take me at your own risk. It was obvious by then that the bank had knowledge of the infirmity or defect of the checks. Furthermore, what it did when it allowed payment before clearing is beyond the normal and ordinary banking practice especially when the bank involved is a foreign bank and the amounts involved were large. Boncan wasn't even a client of the bank but was someone who had special relations with its officers.
In view of the foregoing, the embassy as the drawer of the 3 checks in question cannot be held liable. It is apparent that the said 3 checks were (fraudulently altered) by Boncan as to their accounts and therefore wholly inoperative (note: should be avoided).
Sec. 62. Liability of acceptor. - The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of his acceptance and admits:
(a) The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
ACCEPTOR PRIMARILY LIABLE Acceptor engages to pay absolutely according to the tenor of its acceptance His liability is not subject to any condition The acceptor is the drawee who accepts the bill His acceptance immediately places a legal liability on him for the payment of the bill in favor of one who became a holder thereof after acceptance, and if he wants to escape liability, it is up to him to show that he is a mere agent of the drawer, or allege and prove any other defense which he has to the liability
EFFECT OF MORTGAGE EXECUTED BY ACCEPTOR Where being unable to pay certain bills of exchange which the drawee has accepted, the latter makes a mortgage in favor of the holder of said bills upon certain merchandise the value of which is sought to be collected through said bills, in order to secure the payment of said amount if the merchandise is sold and the integrity thereof while the sale is not effected, the execution of said mortgage doesnt constitute a Novation of the obligation represented by said accepted bills unless it is expressly stated in the mortgage
ACCEPTOR TO PAY ACCORDING TO TENOR OF HIS ACCEPTANCE While the maker of a note engages to pay according to the tenor of the note, an acceptor engages to pay according to the tenor of his acceptance, not of the bill he accepts Tenor of his acceptance may be different from the tenor of the bill, as the acceptor may accept the bill with qualifications If his acceptance is general, the tenor of then bill is the same tenor as the tenor of his acceptance
WHERE ORIGINAL TENOR IS ALTERED BEFORE ACCEPTANCE Suppose the bill is originally for P1000. Before the drawee X accepts it, it is altered by the payee B to P4000. Then X accepts it. How much is X liable to a holder in due course? According to one view, X is liable for P4000 and not P1000. The reason is that the tenor of Xs acceptance is for P4000.
EFFECT OF SECTION 124 Under the first view, what is the effect of Section 124 which provides that a holder in due course can recover only the original tenor of the instrument? It seems that this refers to the original tenor of instrument taken from the standpoint of the person primarily liable, in Xs standpoint. In other words, the original tenor of the instrument is P4000, which is the tenor of Xs acceptance. If after his acceptance, a subsequent indorsee alters the bill to read P9000, then X could be liable for P4000 only, the original tenor of his acceptance, even as to a holder of due course.
ADMISSION OF DRAWERS EXISTENCE, ETC. Drawers existence The genuineness of the drawers signature The capacity and authority of the drawer to draw the instrument He doesnt admit the genuineness of the indorsers signatures