A is primarily and unconditionally liable to F as the maker of the promissory note. Section 60 provides that, by making the instrument, the maker obliges himself to pay according to the tenor of the instrument. He is liable to both payee and subsequent holder in due course. Despite the presence of the special indorsements on the note, these do not detract from the fact that a bearer instrument, like the promissory note in question, is always negotiable by mere delivery, until it is indorsed restrictively “For Deposit Only.”
B as a general indorser is secondarily liable to F. By placing his signature on the bearer instrument, he warrants that the instrument is genuine and in all respects what it purports to be; that he has good title to it; that all prior parties had capacity to contract; that he has no knowledge of any fact which would impair the validity of the instrument or render it valueless; that at the time of indorsement, the instrument is valid and subsisting; and that on due presentment, it shall be accepted or paid, or both, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay.
C, however, cannot be held liable because the signature purporting to be his is a product of forgery. C can raise the defense of forgery since it his signature that was forged.
YES, CX can recover from the bank. Under Section 23 of the NIL, forgery is a real defense. The forged check is wholly inoperative in relation to CX. CX cannot be held liable thereon by anyone, not even by a holder in due course. Under a forged signature of the drawer, there is no valid instrument that would give rise to a contract which can be the basis or source of liability on the part of the drawer. The drawee bank has no right or authority to touch the drawer’s funds deposited with the drawee bank.
When drawer’s signature is forged, drawee- bank by accepting the check cannot set up the defense of forgery because by accepting the instrument, the drawee bank admits the genuineness of the signature of the drawer. (BPI Family Bank v. Buenaventura G.R. No. 148196, Sept. 30, 2005)
When the payee’s signature is forged, the drawee-bank who pays the same must be considered as paying out of its own funds since it is the primary duty of the bank to verify the authenticity of the payee’s signature. (Traders Royal Bank v. RPN, G.R. No. 138510, Oct. 10, 2002)
When the forged signature is that of an indorsement, the drawer’s account cannot be charged, and if charged, he can recover from the drawee-bank because the liability to pay still falls on the drawee bank for having guaranteed the genuineness of all prior indorsements. However, a collecting bank is not guilty of negligence over a forged indorsement on checks for it has no way of ascertaining the authority of the indorsement unless it further indorses the forged check wherein he becomes liable upon the sameas a general indorser.
YES, Nadine should be able to recover the amount debited from her checking account from Fair and Square Bank. The Bank is supposed to know the signature of its clients. The Bank was thus negligent in not detecting the forgery of Nadine’s signature and paying the check. Under the circumstances, there was no negligence on the part of Nadine which would preclude her from invoking forgery. (Philippine National Bank v. Quimpo, 158 SCRA 582)
The 17 original checks, completed and delivered to Pua, are sufficient by themselves to prove the existence of the loan obligation of Spouses James to Pua. In Pacheco v. Court of Appeals, the Court has expressly recognized that a check “constitutes an evidence of indebtedness” and is a veritable “proof of an obligation.” Hence, it can be used “in lieu of and for the same purpose as a promissory note.” In fact, in the seminal case of Lozano v. Martinez, the Court pointed out that a check functions more than a promissory note since it not only contains an undertaking to pay an amount of money but is an “order addressed to a bank and partakes of a representation that the drawer has funds on deposit against which the check is drawn, sufficient to ensure payment upon its presentation to the bank.” The Court reiterated this rule in Lim v. Mindanao Wines and Liquour Galleriastating that “a check, the entries of which are in writing, could prove a loan transaction.” This is the very same principle underpin Section 24 of the NIL which provides that “every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party for value.” Consequently, the case should be decided in favor of Pua and against Spouses James.
NO. Eva does not have a valid defense. Her defense that there was no consideration is not available to defeat the claim of MT Investment since it is a holder in due course who holds the postdated check free from any defect of title of prior parties and from defenses available to prior parties among themselves. Eva can raise the defense of absence of consideration against MT Investment only if the latter was privy to the purpose for which the checks were issued, and therefore, not a holder in due course.
YES. Jorge is liable. By the clear mandate of Sec. 29 of the NIL, an accommodation party is "liable on the instrument to a holder for value, notwithstanding that such holder at the time of taking the instrument knew him to be only an accommodation party." It is not a valid defense that the accommodation party did not receive any valuable consideration when he executed the instrument. (Ang Tiong v. Ting, G.R. No. L- 26767, February 22, 1968)
a. NO, Saad is not liable as an accommodation party because the issue or indorsement of negotiable paper by a corporation without consideration and for the accommodation of another is ultra vires. Hence, one who has taken the instrument with knowledge of the accommodation nature thereof cannot recover against a corporation where it is only an accommodation party. While it may be legally possible for a corporation whose business is to provide financial accommodations in the ordinary course of business, such as one given by a financing company, to be an accommodation party, this situation, however, is not the case at bar.
b. Considering that both the President and the Vice- President were signatories to the accommodation, they themselves can be subject to the liabilities of accommodation parties to the instrument in their personal capacity. (Crisologo-Jose v. CA, 177 SCRA 594)
YES, Vilma may be held liable. A person who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person is liable on the instrument to a holder for value, notwithstanding the fact that such holder at the time of taking the instrument knew him to be only an accommodation party. Thus, as an accommodation maker, Vilma is primarily and unconditionally liable on the promissory note to BUR Bank, a holder for value.
a. YES. Y can recover from Pedro. Pedro is an accommodation party. Absence of consideration is in the nature of an accommodation. Defense of absence of consideration cannot be validly interposed by accommodation party against a holder in due course.
b. If Pedro pays the said P20,000 to Y, Pedro can recover the amount from X. X is the accommodated party or the party ultimately liable for the instrument. Pedro is only an accommodation party. Otherwise, it would be unjust enrichment on the part of X if he is not to pay Pedro.
