24 REVIEW QUESTIONS ON NEGOTIABLE Yes.

Yes. As a general rule, the drawee is not liable Julian, in turn, may enforce the instrument
INSTRUMENTS LAW under the check because there is no privity of against Bert who, by his forgery, has rendered
contract between XYZ Marketing, as payee, and himself primarily liable.
1. Checks; Liability; Drawee Bank (1995) ABC Bank as the drawee bank. However, if the Pablo preserves his right to recover from either
Mario Guzman issued to Honesto Santos a action taken by the bank is an abuse of right Mario or Jose who remain parties juridically
check for P50th as payment for a 2nd hand car. which caused damage not only to the issuer of related to him. Mario is still considered
Without the knowledge of Mario, Honesto the check but also to the payee, the payee has primarily liable to Pablo. Pablo may, in case of
changed the amount to P150th which a cause of action under quasi-delict. dishonor, go after Jose who, by his special
alteration could not be detected by the naked indorsement, is secondarily liable.
eye. Honesto deposited the altered check with 3. Defenses; Forgery (2004)
Shure Bank which forwarded the same to CX maintained a checking account with UBANK, 5. Forgery; Liabilities; Prior & Subsequent
Progressive Bank for payment. Progressive Makati Branch. One of his checks in a stub of Parties (1995)
Bank without noticing the alteration paid the fifty was missing. Later, he discovered that Ms. Alex issued a negotiable PN (promissory note)
check, debiting P150th from the account of DY forged his signature and succeeded to payable to Benito or order in payment of
Mario. Honesto withdrew the amount of P15th encash P15,000 from another branch of the certain goods. Benito indorsed the PN to Celso
from Shure Bank and disappeared. After bank. DY was able to encash the check when in payment of an existing obligation. Later Alex
receiving his bank statement, Mario discovered ET, a friend, guaranteed due execution, saying found the goods to be defective. While in
the alteration and demanded restitution from that she was a holder in due course. Can CX Celso‘s possession the PN was stolen by Dennis
Progressive Bank. Discuss fully the rights and recover the money from the bank? Reason who forged Celso‘s signature and discounted it
the liabilities of the parties concerned. briefly. (5%) with Edgar, a money lender who did not make
inquiries about the PN. Edgar indorsed the PN
SUGGESTED ANSWER: SUGGESTED ANSWER: to Felix, a holder in due course. When Felix
The demand of Mario for restitution of the Yes, CX can recover from the bank. Under demanded payment of the PN from Alex the
amount of P150,000 to his account is tenable. Section 23 of the Negotiable Instruments Law, latter refused to pay. Dennis could no longer be
Progressive Bank has no right to deduct said forgery is a real defense. The forged check is located.
amount from Mario‘s account since the order wholly inoperative in relation to CX. CX cannot
of Mario is different. Moreover, Progressive be held liable thereon by anyone, not even by a What are the rights of Felix, if any, against Alex,
Bank is liable for the negligence of its holder in due course. Under a forged signature Benito, Celso and Edgar? Explain
employees in not noticing the alteration which, of the drawer, there is no valid instrument that Does Celso have any right against Alex, Benito
though it cannot be detected by the naked eye, would give rise to a contract which can be the and Felix? Explain.
could be detected by a magnifying instrument basis or source of liability on the part of the
used by tellers. drawer. The drawee bank has no right or SUGGESTED ANSWER:
authority to touch the drawer's funds Felix has no right to claim against Alex, Benito
As between Progressive Bank and Shure Bank, deposited with the drawee bank. and Celso who are parties prior to the forgery
it is the former that should bear the loss. of Celso‘s signature by Dennis. Parties to an
Progressive Bank failed to notify Shure Bank instrument who are such prior to the forgery
that there was something wrong with the check 4. Forgery; Liabilities; Prior & Subsequent cannot be held liable by any party who became
within the clearing hour rule of 24 hours. Parties (1990) such at or subsequent to the forgery. However,
Jose loaned Mario some money and, to Edgar, who became a party to the instrument
evidence his indebtedness, Mario executed and subsequent to the forgery and who indorsed
2. Checks; Material Alterations; Liability delivered to Jose a promissory note payable to the same to Felix, can be held liable by the
(1999) his order. Jose endorsed the note to Pablo. Bert latter.
A check for P50,000.00 was drawn against fraudulently obtained the note from Pablo and
drawee bank and made payable to XYZ endorsed it to Julian by forging Pablo‘s Celso has the right to collect from Alex and
Marketing or order. The check was deposited signature. Julian endorsed the note to Camilo. Benito. Celso is a party subsequent to the two.
with payee‘s account at ABC Bank which then May Camilo enforce the said promissory note However, Celso has no right to claim against
sent the check for clearing to drawee bank. against Mario and Jose? Felix who is a party subsequent to Celso (Sec 60
Drawee bank refused to honor the check on May Camilo go against Pablo? and 66 NIL)
ground that the serial number thereof had May Camilo enforce said note against Julian?
been altered. XYZ marketing sued Against whom can Julian have the right of 6. Incomplete & Delivered (2004)
drawee bank. recourse? AX, a businessman, was preparing for a
business trip abroad. As he usually did in the
Is it proper for the drawee bank to dishonor the SUGGESTED ANSWER: past, he signed several checks in blank and
check for the reason that it had been altered? Camilo may not enforce said promissory note entrusted them to his secretary with instruction
Explain (2%) against Mario and Jose. The promissory note at to safeguard them and fill them out only when
the time of forgery being payable to order, the required to pay accounts during his absence.
In instant suit, drawee bank contended that XYZ signature of Pablo was essential for the OB, his secretary, filled out one of the checks by
Marketing as payee could not sue the drawee instrument to pass title to subsequent parties. placing her name as the payee. She filled out
bank as there was no privity between then. A forged signature was inoperative (Sec 23 NIL). the amount, endorsed and delivered the check
Drawee theorized that there was no basis to to KC, who accepted it in good faith for
make it liable for the check. Is this contention Accordingly, the parties before the forgery are payment of gems that KC sold to OB. Later, OB
correct? Explain. (3%) not juridically related to parties after the told AX of what she did with regrets. AX timely
forgery to allow such enforcement. directed the bank to dishonor the check.
SUGGESTED ANSWER: Camilo may not go against Pablo, the latter not
No. The serial number is not a material having indorsed the instrument. Could AX be held liable to KC? Answer and
particular of the check. Its alteration does not Camilo may enforce the instrument against reason briefly. (5%)
constitute material alteration of the Julian because of his special indorsement to
instrument. The serial number is not material Camilo, thereby making him secondarily liable, SUGGESTED ANSWER:
to the negotiability of the instrument. both being parties after the forgery.

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Yes. AX could be held liable to KC. This is a case was prima facie authority on the part of Ruth to Yes, Reliable Finance Corporation is a holder in
of an incomplete check, which has been fill-up any of the material particulars thereof. due course given the factual settings. Said
delivered. Under Having done so, and when it is first completed corporation apparently took the promissory
Section 14 of the Negotiable Instruments Law, before it is negotiated to a holder in due course note for value, and there are no indications
KC, as a holder in due course, can enforce like Marie, it is valid for all purposes, and Marie that it acquired it in bad faith.
payment of the check as if it had been filled up may enforce it within a reasonable time, as if it
strictly in accordance with the authority given had been filled up strictly in accordance with 10. Negotiability; Requisites (2000)
by AX to OB and within a reasonable time. the authority given. MP bought a used cell phone from JR. JR
preferred cash but MP is a friend so JR
7. Incomplete and Delivered (2005) No. Even though Marie is a holder in due accepted MR‘s promissory note for P10,000. JR
Brad was in desperate need of money to pay course, this is an incomplete and undelivered thought of converting the note into cash by
his debt to Pete, a loan shark. Pete threatened instrument, covered by Section 15 of the endorsing it to his brother KR. The promissory
to take Brad‘s life if he failed to pay. Brad and Negotiable Instruments Law. Where an note is a piece of paper with the following
Pete went to see Señorita Isobel, Brad‘s rich incomplete instrument has not been delivered, hand-printed notation: ―MP WILL PAY JR TEN
cousin, and asked her if she could sign a it will not, if completed and negotiated without THOUSAND PESOS IN PAYMENT FOR HIS
promissory note in his favor in the amount of authority, be a valid contract in the hands of CELLPHONE 1 WEEK FROM TODAY.‖ Below this
P10,000.00 to pay Pete. Fearing that Pete any holder, as against any person, including notation MP‘s signature with ―8/1/00‖ next to
would kill Brad, Señorita Jun, whose signature was placed thereon it, indicating the date of the promissory note.
Isobel acceded to the request. She affixed her before delivery. Such defense is a real defense When JR presented MP‘s note to KR, the latter
signature on a piece of paper with the even against a holder in due course, available said it was not a negotiable instrument under
assurance of Brad that he will just fill it up later. to a party like Jun whose signature appeared the law and so could not be a valid substitute
Brad then filled up the blank paper, making a prior to delivery. for cash. JR took the opposite view, insisting on
promissory note for the amount of the note‘s negotiability. You are asked to
P100,000.00. He then indorsed and delivered 9. Negotiability; Holder in Due Course referee. Which of the opposing views is
the same to Pete, who accepted the note as (1992) correct?
payment of the debt. Perla brought a motor car payable on
installments from Automotive Company for SUGGESTED ANSWER:
What defense or defenses can Señorita Isobel P250th. She made a down payment of P50th KR is right. The promissory note is not
set up against Pete? Explain. (3%) and executed a promissory note for the negotiable. It is not issued to order or bearer.
balance. The company subsequently indorsed There is no word of negotiability containing
SUGGESTED ANSWER: the note to Reliable Finance Corporation which therein. It is not issued in accordance with
The defense (personal defense) which Señorita financed the purchase. The promissory note Section 1 of the Negotiable Instruments Law.
Isobel can set up against Pete is that the read: ―For value received, I promised to pay
amount of P100,000.00 is not in accordance Automotive Company or order at its office in 11. TH is an indorsee of a promissory note
with the authority given to her to Brad (in the Legaspi City, the sum of P200,000.00 with that simply states: ―PAY TO JUAN TAN
presence of Pete) and that Pete was not a interest at twelve (12%) percent per annum, OR ORDER 400 PESOS.‖
holder in due course for acting in bad faith payable in equal installments of P20,000.00
when accepted the note as payment despite his monthly for ten (10) months starting October The note has no date, no place of payment and
knowledge that it was only 10,000.00 that was 21, 1991. no consideration mentioned. It was signed by
allowed by Señorita Isobel during their meeting MK and written under his letterhead specifying
with Brad. Manila September 21, 1991. the address, which happens to be his residence.
(sgd) Perla TH accepted the promissory note as payment
for services rendered to SH, who in turn
8. Incomplete Instruments; Incomplete Pay to the order of Reliable Finance received the note from Juan Tan as payment
Delivered Instruments vs. Incomplete Corporation. Automotive Company for a prepaid cell phone card worth 450 pesos.
Undelivered Instrument (2006) By: (Sgd) Manager The payee acknowledged having received the
Jun was about to leave for a business trip. As note on August 1, 2000. A Bar reviewee had
his usual practice, he signed several blank Because Perla defaulted in the payment of her told TH, who happens to be your friend, that TH
checks. He instructed Ruth, his secretary, to fill installments, Reliable Finance Corporation is not a holder in due course under Article 52 of
them as payment for his obligations. Ruth filled initiated a case against her for a sum of money. the Negotiable Instruments Law (Act 2031) and
one check with her name as payee, placed Perla argued that the promissory note is merely therefore does not enjoy the rights and
P30,000.00 thereon, endorsed and delivered it an assignment of credit, a non-negotiable protection under the statute. TH asks for our
to Marie. She accepted the check in good faith instrument open to all defenses available to the advice specifically in connection with the note
as payment for goods she delivered to Ruth. assignor and, therefore, Reliable Finance being undated and not mentioning a place of
Eventually, Ruth regretted what she did and Corporation is not a holder in due course. payment and any consideration. What would
apologized to Jun. Immediately he directed the Is the promissory note a mere assignment of your advice be? (2%).
drawee bank to dishonor the check. When credit or a negotiable instrument? Why?
Marie encashed the check, it was dishonored. Is Reliable Finance Corp a holder in due course? SUGGESTED ANSWER:
Explain briefly. The fact that the instrument is undated and
Is Jun liable to Marie? (5%) does not mention the place of payment does
Supposing the check was stolen while in Ruth's not militate against its being negotiable. The
possession and a thief filled the blank check, SUGGESTED ANSWER: date and place of payment are not material
endorsed and delivered it to Marie in payment The promissory note in the problem is a particulars required to make an instrument
for the goods he purchased from her, is Jun negotiable instrument, being in compliance negotiable.
liable to Marie if the check is dishonored? (5%) with the provisions of Sec 1 NIL. Neither the
fact that the payable sum is to be paid with The fact that no mention is made of any
SUGGESTED ANSWER interest nor that the maturities are in stated consideration is not material. Consideration is
Yes. This covers the delivery of an incomplete installments renders uncertain the amount presumed.
instrument, under Section 14 of the Negotiable payable (Sec 2 NIL).
Instruments Law, which provides that there

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12. Negotiable Instruments; Bearer dishonour be duly taken, he will pay the When C encashes the check, it is dishonored.
Instruments (1997) amount thereof to the holder, or to any Can A be held liable to C?
A delivers a bearer instrument to B. B then subsequent indorser who may be compelled to
specially indorses it to C and C later indorses it pay. SUGGESTED ANSWER:
in blank to D. E steals the instrument from D Yes, A can be held liable to C, assuming that the
and, forging the signature of D, succeeds in C is not liable to F since the latter cannot trace latter gave notice of dishonor to A. This is a
―negotiating‖ it to F who acquires the his title to the former. The signature of C in the case of an incomplete instrument but delivered
instrument in good faith and for value. supposed indorsement by him to D was forged as it was entrusted to B, the secretary of A.
If, for any reason, the drawee bank refuses to by X. C can raise the defense of forgery since it Moreover, under the doctrine of comparative
honor the check, can F enforce the instrument was his signature that was forged. negligence, as between A and C, both innocent
against the drawer? parties, it was the negligence of A in entrusting
In case of the dishonor of the check by both the 14. Negotiable Instruments; incomplete and the check to B which is the proximate cause of
drawee and the drawer, can F hold any of B, C undelivered instruments; holder in due the loss.
and D liable secondarily on the instrument? course (2000)
PN makes a promissory note for P5,000.00, but 16. Parties; Accommodation Party (1990)
SUGGESTED ANSWER: leaves the name of the payee in blank because To accommodate Carmen, maker of a
Yes. The instrument was payable to bearer as it he wanted to verify its correct spelling first. He promissory note, Jorge signed as indorser
was a bearer instrument. It could be negotiated mindlessly left the note on top of his desk at thereon, and the instrument was negotiated to
by mere delivery despite the presence of the end of the workday. When he returned the Raffy, a holder for value. At the time Raffy took
special indorsements. The forged signature is following morning, the note was missing. It the instrument, he knew Jorge to be an
unnecessary to presume the juridical relation turned up later when X presented it to PN for accommodation party only. When the
between or among the parties prior to the payment. Before X, T, who turned out to have promissory note was not paid, and Raffy
forgery and the parties after the forgery. The filched the note from PN‘s office, had endorsed discovered that Carmen had no funds, he sued
only party who can raise the defense of forgery the note after inserting his own name in the Jorge.
against a holder in due course is the person blank space as the payee. PN dishonored the Jorge pleads in defense the fact that he had
whose signature is forged. note, contending that he did not authorize its endorsed the instrument without receiving
completion and delivery. But X said he had no value therefor, and the further fact that Raffy
Only B and C can be held liable by F. The participation in, or knowledge about, the knew that at the time he took the instrument
instrument at the time of the forgery was pilferage and alteration of the note and Jorge had not received any value or
payable to bearer, being a bearer instrument. therefore he enjoys the rights of a holder in consideration of any kind for his indorsement.
Moreover, the instrument was indorsed in due course under the Negotiable Instruments Is Jorge liable? Discuss.
blank by C to D. D, whose signature was forged Law.
by E cannot be held liable by F. SUGGESTED ANSWER:
Who is correct and why? (3%) Yes. Jorge is liable. Sec 29 of the NIL provides
13. Negotiable Instruments; bearer Can the payee in a promissory note be a that an accommodation party is liable on the
instruments; liabilities of maker and ―holder in due course within the meaning of instrument to a holder for value,
indorsers (2001) the Negotiable Instruments Law (Act 2031)? notwithstanding the holder at the time of
A issued a promissory note payable to B or Explain your answer. (2%) taking said instrument knew him to be only an
bearer. A delivered the note to B. B indorsed accommodation party.
the note to C. C placed the note in his drawer, SUGGESTED ANSWER:
which was stolen by the janitor X. X indorsed PN is right. The instrument is incomplete and This is the nature or the essence of
the note to D by forging C‘s signature. D undelivered. It did not create any contract that accommodation.
indorsed the note to E who in turn delivered would bind PN to an obligation to pay the
the note to F, a holder in due course, without amount thereof. 17. Parties; Accommodation Party (1991)
indorsement. Discuss the individual liabilities to On June 1, 1990, A obtained a loan of P100th
F of A, B and C. (5%) A payee in a promissory note cannot be a from B, payable not later than 20Dec1990. B
―holder in due course‖ within the meaning of required A to issue him a check for that amount
SUGGESTED ANSWER: the Negotiable Instruments Law, because a to be dated 20Dec1990. Since he does not have
A is liable to F. As the maker of the promissory payee is an immediate party in relation to the any checking account, A, with the knowledge of
note, A is directly or primarily liable to F, who is maker. The payee is subject to whatever B, requested his friend, C, President of Saad
a holder in due course. Despite the presence of defenses, real of personal, available to the Banking Corp (Saad) to accommodate him. C
the special indorsements on the note, these do maker of the promissory note. agreed, he signed a check for the aforesaid
not detract from the fact that a bearer amount dated 20Dec 1990, drawn against
instrument, like the promissory note in 15. Negotiable Instruments; Incomplete Saad’s account with the ABC Commercial
question, is always negotiable by mere delivery, DeliveredInstruments; Comparative Banking Co. The By-laws of Saad requires that
until it is indorsed restrictively ―For Deposit Negligence (1997) checks issued by it must be signed by the
Only. President and the Treasurer or the Vice-
A, single proprietor of a business concern, is President. Since the Treasurer was absent, C
B, as a general indorser, is liable to F about to leave for a business trip and, as he so requested the Vice-President to co-sign the
secondarily, and warrants that the instrument often does on these occasions, signs several check, which the latter reluctantly did. The
is genuine and in all respects what it purports checks in blank. He instructs B, his secretary, to check was delivered to B. The check was
to be; that he has good title to it; that all prior safekeep the checks and fill them out when and dishonored upon presentment on due date for
parties had capacity to contract; that he has no as required to pay accounts during his absence. insufficiency of funds.
knowledge of any fact which would impair the B fills out one of the checks by placing her Is Saad liable on the check as an
validity of the instrument or render it valueless; name as payee, fills in the amount, endorses accommodation party?
that at the time of his indorsement, the and delivers the check to C who accepts it in If it is not, who then, under the above facts,
instrument is valid and subsisting; and that on good faith as payment for goods sold to B. B is/are the accommodation party?
due presentment, it shall be accepted or paid, regrets her action and tells A what she did. A
or both, according to its tenor, and that if it be directs the Bank in time to dishonor the check. SUGGESTED ANSWER:
dishonoured and the necessary proceedings on

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Saad is not liable on the check as an Reyes who did not receive any amount from
accommodation party. The act of the the bank, to execute a promissory note payable 23. Parties; Holder in Due Course;
corporation in accommodating a friend of the to the bank, or its order on stated maturities. Indorsement in blank (2002)
President, is ultra vires (Crisologo-Jose v CA GR The note was executed as so agreed. What kind
80599, 15Sep1989). While it may be legally of liability was incurred by Rose, that of an
possible for the corporation, whose business is accommodation party or that of a solidary AB issued a promissory note for P1,000 payable
to provide financial accommodations in the debtor? Explain. (4%) to CD or his order on September 15, 2002. CD
ordinary course of business, such as one given indorsed the note in blank and delivered the
by a financing company to be an SUGGESTED ANSWER: same to EF. GH stole the note from EF and on
accommodation party, this situation, however, Rose may be held liable. Rose is an September 14, 2002 presented it to AB for
is not the case in the bar problem. accommodation party. Absence of payment. When asked by AB, GH said CD gave
consideration is in the nature of an him the note in payment for two cavans of rice.
Considering that both the President and Vice- accommodation. Defense of absence of AB therefore paid GH P1,00 on the same date.
President were signatories to the consideration cannot be validly interposed by On September 15, 2002, EF discovered that the
accommodation, they themselves can be accommodation party against a holder in due note of AB was not in his possession and he
subject to the liabilities of accommodation course. went to AB. It was then that EF found out that
parties to the instrument in their personal AB had already made payment on the note. Can
capacity. 21. Parties; Holder in Due Course (1993) EF still claim payment from AB? Why? (3%)
Larry issued a negotiable promissory note to
18. Parties; Accommodation Party (1996) Evelyn and authorized the latter to fill up the As a sequel to the same facts narrated above,
Nora applied for a loan of P100th with BUR amount in blank with his loan account in the EF, out of pity for AB who had already paid
Bank. By way of accommodation, Nora‘s sister, sum of P1,000. However, Evelyn inserted P1,000.00 to GH, decided to forgive AB and
Vilma, executed a promissory note in favor of P5,000 in violation of the instruction. She instead go after CD who indorsed the note in
BUR Bank. When Nora defaulted, BUR Bank negotiated the note to Julie who had blank to him. Is CD still liable to EF by virtue of
sued Vilma, despite its knowledge that Vilma knowledge of the infirmity. Julie in turn the indorsement in blank? Why? (2%)
received no part of the loan. May Vilma be held negotiated said note to Devi for value and who
liable? Explain. had no knowledge of the infirmity. SUGGESTED ANSWER:
Can Devi enforce the note against Larry and if No. EF cannot claim payment from AB. EF is not
SUGGESTED ANSWER: she can, for how much? Explain. a holder of the promissory note. To make the
Yes, Vilma may be held liable. Vilma is an Supposing Devi endorses the note to Baby for presentment for payment, it is necessary to
accommodation party. As such, she is liable on value but who has knowledge of the infirmity, exhibit the instrument, which EF cannot do
the instrument to a holder for value such as can the latter enforce the note against Larry? because he is not in possession thereof.
BUR Bank. This is true even if BUR Bank was
aware at the time it took the instrument that SUGGESTED ANSWER: No, because CD negotiated the instrument by
Vilma is merely an accommodation party and Yes, Devi can enforce the negotiable delivery.
received no part of the loan. promissory note against Larry in the amount of
P5,000. Devi is a holder in due course and the 24. Place of Payment (2000)
19. Parties; Accommodation Party (1998) breach of trust committed by Evelyn cannot be PN is the holder of a negotiable promissory
For the purpose of lending his name without set up by Larry against Devi because it is a note within the meaning of the Negotiable
receiving value therefore, Pedro makes a note personal defense. As a holder in due course, Instruments Law (Act 2031). The note was
for P20,000 payable to the order of X who in Devi is not subject to such personal defense. originally issued by RP to XL as payee. XL
turn negotiates it to Y, the latter knowing that indorsed the note to PN for goods bought by
Pedro is not a party for value. Yes. Baby is not a holder in due course because XL. The note mentions the place of payment on
she has knowledge of the breach of trust the specified maturity date as the office of the
May Y recover from Pedro if the latter committed by Evelyn against Larry which is just corporate secretary of PX Bank during banking
interposes the absence of consideration? (3%) a personal defense. But having taken the hours. ON maturity date, RP was at the
Supposing under the same facts, Pedro pays instrument from Devi, a holder in due course, aforesaid office ready to pay the note but PN
the said P20,000 may he recover the same Baby has all the rights of a holder in due course. did not show up. What PN later did was to sue
amount from X? (2%) Baby did not participate in the breach of trust XL for the face value of the note, plus interest
committed by Evelyn who filled the blank but and costs. Will the suit prosper? Explain. (5%)
SUGGESTED ANSWER: filled up the instrument with P5,000 instead of
Yes. Y can recover from Pedro. Pedro is an P1,000 as instructed by Larry (Sec 58 NIL). SUGGESTED ANSWER:
accommodation party. Absence of Yes. The suit will prosper as far as the face
consideration is in the nature of an 22. Parties; Holder in Due Course (1998) value of the note is concerned, but not with
accommodation. Defense of absence of X makes a promissory note for P10,000 payable respect to the interest due subsequent to the
consideration cannot be validly interposed by to A, a minor, to help him buy school books. A maturity of the note and the costs of collection.
accommodation party against a holder in due endorses the note to B for value, who in turn RP was ready and willing to pay the note at the
course. endorses the note to C. C knows A is a minor. If specified place of payment on the specified
C sues X on the note, can X set up the defenses maturity date, but PN did not show up. PN lost
If Pedro pays the said P20,000 to Y, Pedro can of minority and lack of consideration? (3%) his right to recover the interest due subsequent
recover the amount from X. X is the to the maturity of the note and the costs of
accommodated party or the party ultimately SUGGESTED ANSWER: collection.
liable for the instrument. Pedro is only an Yes. C is not a holder in due course. The
accommodation party. Otherwise, it would be promissory note is not a negotiable instrument
unjust enrichment on the part of X if he is not as it does not contain any word of negotiability,
to pay Pedro. that is, order or bear, or words of similar
meaning or import. Not being a holder in due
20. Parties; Accommodation Party (2003) course, C is to subject such personal defenses
Susan Kawada borrowed P500,000 from XYZ of minority and lack of consideration. C is a
Bank which required her, together with Rose mere assignee who is subject to all defenses.

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