Professional Documents
Culture Documents
II.
A. Where must the payee present the bill for acceptance? Briefly explain.
B must present the bill for acceptance to X in Tokyo, Japan, which is the residence or
place of business of the drawee where acceptance must be made in case the bill was drawn
payable elsewhere.
B. Due to distance involved, B will be delayed in making presentment for payment. Will
the drawer and indorsers be discharged? Why?
The drawer and indorsers will not be discharged. According to Section 147 of the
Negotiable Instruments Law, where the holder of the bill drawn payable elsewhere than at the
place of business or the residence of the drawee, has no time, with the exercise of reasonable
diligence, to present the bill for acceptance before presenting it for payment on the day that it
falls due, the delay caused by presenting the bill for acceptance before presenting it for payment
is excused and does not discharge the drawers and indorsers.
III.
A. Can C enforce the note against M? If so, how much can C collect from M?
No, C cannot collect from M. This is a case wherein the instrument is a note payable to
order, and the signature of one of the indorsers is forged. When this happens, all parties prior to
the party whose signature was forged, based on the “cut-off rule,” are not liable to any holder,
whether that be a holder in due course or not. Since M is the maker of the note, and a party prior
to the forgery, M is not liable to C.
B. Can C enforce the note against B? If yes, how much can he collect from B?
Yes, C can collect from B the amount of P70,000. B is a party who is subsequent to the
forgery, and thus he is liable to C. Given that B is a general indorser, he warrants that the
instrument is genuine and in all respects what it purports to be. Thus, he warrants that the
instrument is indeed for the consideration of P70,000. This is why C can collect from him the
said amount.
IV.
A. Is Alvin liable?
No, Alvin is not liable. This is an actual case that occurred regarding Alvin Patrimonio
vs. Napoleon Gutierrez and Octavio Marasigan III. The Supreme Court ruled that Gutierrez was
only authorized to use the check for business expenditures, and thus exceeded his authority when
he used the check to pay the loan he supposedly contracted for the construction of Alvin’s house.
This is a clear violation of Alvin’s instructions to use the checks for the expenses of Slam Dunk.
Additionally, a Marasigan is not a holder in due course (as explained below), Alvin can set up
the personal defense that the blanks were not filled up in accordance with the authority he gave,
Thus, Marasigan has no right to enforce payment against Alvin, and the latter cannot be obliged
to pay the value of the check.
V.
A. From M?
It depends if H is a holder in due course or not. This falls under Section 14 of the
Negotiable Instruments Law, involving an incomplete but delivered negotiable instrument. If H
is a holder not in due course, then he cannot collect from M, as this involves only a personal
defense. Only in the case that H is a holder in due course can he collect from M the amount that
is written on the instrument, which is P120,000.
B. From A and B?
Yes, H can collect from A and B, regardless of whether H is a holder in due course or
not. A and B, as general indorsers, warrant that the instrument is genuine, valid, and subsisting.
Thus, they warrant to H that what is written on the note is what it purports to be. They are liable
to H for the amount of P120,000, the consideration written on the face of the note when they
indorsed it.
C. Will your answer be the same in b) if A and B are aware of the wrongful completion?
Yes, the answer would still be the same. H can still collect from A and B, regardless if A
and B are holders in due course. As mentioned, A and B, as general indorsers, warrant that the
instrument is genuine, valid, and subsisting. Thus, they warrant to H that what is written on the
note is what it purports to be. They are liable to H for the amount of P120,000, the consideration
written on the face of the note when they indorsed it.
D. From P?
Yes, H can collect from P. As the guilty party to the fraud, and as an indorser, P is liable
to H for the amount that is written on the instrument of P120,000.
VI.
A. Is Excel a holder in due course?
No, Excel is not a holder in due course. When issuing a crossed check, effectively it
serves as a warning that the check has been issued for a definite purpose. Excel should have
inquired if he had received the check pursuant to that purpose. Otherwise, he is not a holder in
due course. Since Excel did not inquire Jose as to the purpose of crossing the check, he is not a
holder in due course.
IX. Supposing Devi indorses the note to Baby for value but who has knowledge of the
infirmity, can the latter enforce the note against Larry?
Yes. Baby, who is a holder through a holder in due course, can enforce the note against
Larry. Even if Larry can set up the defense that the instrument had not been filled up in
accordance with the authority given and within a reasonable time, such would not defeat the
rights of Baby, who is protected in accordance to The Shelter Rule.
X. May E immediately proceed against B, C and D? Explain
No. E cannot proceed against B and D. Given that the promissory note is dishonored by
A for non-payment, notice must be given to persons secondarily liable, which includes B and D.
Failure of E to give notice to B and D discharges them from liability. On the other hand, E can
still proceed against C, to whom notice has been given, and therefore against whom E has a right
of recourse.
XVI. At maturity, how much may H (not a holder in due course), collect from M?
H may collect from M, but only for an amount of P7,000, since there would be a partial
failure of consideration, a defense that can be put up against H, a holder not in due course, which
bar recovery only pro tanto.
XVIII. On due date, how much, if any, may Hanna collect from Meldy?
It depends. If Hannah is a holder in due course, she may recover the full amount of
P10,000.00 from Meldy, given that the case is a personal defense that cannot be set up against a
holder in due course. However, if Hannah is not a holder in due course, she cannot recover any
amount since Meldy can put up the defense against her.
Bonus
A. May Yvette hold Yolanda liable on the PN?
No. Yvette cannot hold Yolanda liable because the law is specific that the incomplete
promissory note not delivered, but completed and negotiated without authority, is not a valid
contract in the hands of any holder. This is a real defense that can be set up even against a holder
in due course, and may constitute a forgery since both the two steps in the execution (mechanical
act of writing and delivery) are not complied with.
B. Would your answer be the same if the PN was completed by Yolanda (including the
amount of P10 million), but stolen from her desk by Yohann? Can Yvette enforce the
note against Yolanda?
Yes. Yvette can enforce the note against Yolanda, where the instrument, if completely
written by Yolanda, even if undelivered, but at the hands of Yvette, a holder in due course,
delivery is conclusively presumed. The defense therefore, is only a personal defense.