YES. C is not a holder in due course. The promissory note is not a negotiable instrument, as it does not contain any word of negotiability, that is, order or bearer, or words of similar meaning or import. Accordingly, the transferee merely steps into the shoes of the transferor and, being merely a successor-in- interest, has no right greater than that of the transferor. Not being a holder in due course, C is to subject such personal defenses of minority and lack of consideration.
On the assumption that Bert made a blank endorsement, thereby rendering the instrument payable to bearer in the hands of Cora, the latter’s signature would be unnecessary so as to preserve the juridical relation between parties prior to the forgery and parties after the forgery. On the further assumption that Felix had acquired the instrument for value, thus making him holder in due course, he may accordingly hold Adam, Bert and Douglas liable. The liability of Adam, as maker, and Douglas, as forger, is primary and that of Bert, as blank indorser, secondary. If, however, Felix did not acquire it for value and is not thus a holder in due course, he then acquires no right greater than that of the immediate transferor and Adam, Bert and Cora would be without any liability in favor of Felix.
On the assumption that Bert made a special indorsement, the signature of Cora would be essential to pass title to the instrument. Her signature, forged by Douglas would be inoperative, and Elvin, whether a holder in due course which is forged is required to pass title, all parties prior to the forgery may raise the real defense of forgery against all parties subsequent thereto.
a. “A” can compel Citibank to re-credit to his account the amount of the forged check, he being not a party to the instrument. Forgery renders the forged signature totally inoperative. Additionally, the drawee bank is charged with knowledge of the drawer’s signature.
b. Citibank has no right of recourse against Bank of P.I. having gone through “the normal course of clearing”,the latter can assume that the check was properly drawn by the drawer. The drawee bank is charged with knowledge of the drawer’s signature. The negligence, if at all, is attributed more to Citibank than with the bank of P.I.
c. Recourse may be had by either against “C” as indorser because of his warranty. In the case particularly of Bank of P.I., its right of recourse may be based likewise on the agency rule that puts the risk of loss on the principal (Bank of P.I.)
The demand of Mario for restitution of the amount of P150,000 to his account is tenable. Progressive Bank has no right to deduct said amount from Mario’s account since the order of Mario is different. Moreover, Progressive Bank is liable for the negligence of its employees in not noticing the alteration which, though it cannot be detected by the naked eye, could be detected by a magnifying instrument used by tellers.
As between Progressive Bank and Shure Bank, it is the former that should bear the loss. Progressive Bank failed to notify Shure Bank that there was something wrong with the check within the clearing hour rule of 24 hours.
False. In cases of forgery, the forger may not necessarily be a depositor of the bank, especially in the case of a drawee bank. Yet in many cases of forgery, it is the drawee that is held liable for the loss.
a. Felix has no right to claim against Alex, Benito and Celso who are parties prior to the forgery of Celso’s signature by Dennis. Parties to an instrument who are such prior to the forgery cannot be held liable by any party who became such at or subsequent to the forgery. However, Edgar, who became a party to the instrument subsequent to the forgery and who indorsed the same to Felix, can be held liable by the latter.
b. Celso has the right to collect from Alex and Benito. Celso is a party subsequent to the two. However, Celso has no right to claim against Felix who is a party subsequent to Celso.
The bank should bear the loss. A drawee bank must exercise the highest diligence in safeguarding the accounts of its client- depositors. The bank is also charged with genuineness of the signatures of its current account holders. But what can be more striking is that there were marked differences between Placido’s signature and the one in the check forged by the visitor. Certainly, Placido was not negligent in leaving his checkbook on his desk.
a. Camilo may not enforce said promissory note against Mario and Jose. The promissory note at the time of forgery being payable to order, the signature of Pablo was essential for the instrument to pass title to subsequent parties. A forged signature is inoperative. Accordingly, the parties after the forgery are not juridically related to parties after the forgery to allow such enforcement.
b. Camilo may not go against Pablo, the latter not having indorsed the instrument.
c. Camilo may enforce the instrument against Julian because of his special indorsement to Camilo, thereby making him secondarily liable, both being parties after the forgery.
d. Julian, in turn, may enforce the instrument against Bert who, by his forgery, has rendered himself primarily liable.
e. Pablo preserves his right to recover from either Marion or Jose who remain parties juridically related to him. Mario is still considered primarily liable to Pablo. Pablo may, in case of dishonor, go after Jose who, by his special indorsement, is secondarily liable.
a. YES, F can proceed against the drawer, A, in case of dishonor by the drawee bank. Section 61 of the NIL provides that by drawing the instrument, the drawer engages that the instrument will be accepted or paid or both according to its tenor. Not only is the drawer obliged to pay the amount of the instrument to the holder, but he shall likewise be liable to the subsequent indorser who was compelled to pay it. The forged signature is unnecessary to presume the juridical relation between or among the parties prior to the forgery and the parties after the forgery. Moreover, the only party who can raise the defense of forgery against a holder in due course is the person whose signature is forged.
b. Only B and C can be held liable by F. According to Section 67, when a person puts his signature on a bearer instrument as a form of indorsement, he becomes subject to all liabilities of an indorser. D cannot be held liable as an indorser because his signature is forged by E – hence, there was no consent from D. The forged signature is deemed inoperative and no right can arise out of it. However, the effect of being inoperative affects only the signature which is the product of forgery. It will not deem to affect other signatures subscribed with knowledge and voluntariness. Therefore, B and C are liable as indorsers.
