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Use your yellow pad paper in answering the questions below. Limit your answer to not more than three (3)
sentences. A mere YES or NO answer, as applicable, will not be given any credit.
A. A fan of Ramon “Bong” Buduts King asked him to sign a blank paper. Later on, that fan added on top of
the signature the following:
(1) Is the instrument negotiable in that the fan can now negotiate it to another person?
(2) What if the instrument is not just a blank paper, it was filled out but it is still wanting in any material
particular, how to make it a negotiable instrument?
B. D drew a bill against B and in favor of P or order. D authorizes P to write the amount of P10k but P wrote
P100k instead. The same was dishonored by B when presented for payment.
(2) What if instead of asking payment from D, P indorses it to A, who took the instrument in good faith and
for value. The instrument was again dishonored when presented to B, to whom now can A ask for
payment?
(3) Assuming A went to D to ask for payment, can D validly refuse payment?
(4) What if A went to P to ask for payment, can P validly refuse payment?
(5) If A asked payment from D or P, how much can A ask from them?
C. A signed a blank check which was drawn against B but X stole it, named himself or order as payee then
filled it out with the amount of P50k. X indorsed it to C, C to D, D to E, then E to F, who took it in good faith
and for value,
(1) Assuming B dishonored it, can F ask payment from A, the drawer?
(3) In your answer to the foregoing, can they also refuse payment by raising the real defense of incomplete
and undelivered?
D. A signed a complete check payable to the order of cash. It was drawn against X Bank. A had no intention of
negotiating it but Y, his driver, stole it then delivered it to his best friend Z. Z in turn delivered it to G, and
G delivered it to his creditor H, who had no knowledge being stolen.
(1) Assuming X Bank dishonored the check, can H validly enforce payment against drawer A? Why or why
not?
(2) Assuming this time H is a non-holder in due course, can A validly refuse payment?
(3) If your answer to the foregoing is yes, to whom now can H ask for payment?
(4) Based your answer in item (3), can he/they raise the defense of complete but undelivered?
E. X forged the signature of A, making it appear that A drew a bill payable to himself (X) or order and drawn
against drawee bank B. X indorsed the said instrument to C, C to D, then D to E, the current holder who
took it in good faith and for value.
(1) Assuming drawee B accepted the bill and paid, can B ask reimbursement from A by debiting the account
of A for the amount it paid? Why or why not?
(3) Assuming B dishonored the instrument, can E, holder, hold drawer A liable?
(4) If your answer to the foregoing is No, to whom now should E enforce payment?
(5) Based your answer in item (4), can he/they not raise the real defense of forgery?
F. X, driver of A, bought supplies from B and thereafter executed a note making it appear that it was A who
signed it and made payable to B or bearer. B delivered the note to C, C to D, D to E, E to F, F to G, then G to
H who has no knowledge of such forgery.
(2) If A dishonored the instrument, to whom now should H ask for payment?
(3) Based your answer to the foregoing, can he/they validly refuse payment by raising the real defense of
forgery?
G. A makes a note payable to B or order. B indorsed the instrument to C, in whose hands it is stolen by X. X
forged C’s signature and indorsed it to E. E indorsed the instrument to F, who took it in good faith and for
value.
(3) If your answer to the foregoing is No, did he not warrant that the instrument is genuine?
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When an Indorser’s signature is forged and the instrument is payable to bearer
H. A drew a bill payable to the order of cash and drawn against Y Bank. A, then, delivers the bill to B, B delivers
it to C. Thereafter, X obtains possession of the note fraudulently. He indorsed the note to D by forging the
signature of C. D indorsed the instrument as well to E, then E indorsed it to F, the current holder who took
it in good faith and for value.
(1) Can drawer A, a party prior to the forgery, be covered by the cut-off rule and hence not liable to holder F?
(2) If your answer in the foregoing is in the negative, can A not raise the defense of complete but delivered
considering that the delivery to E was not authorized?
(6) If your answer in the foregoing includes D, should it not be X and E only, being the immediate transferor
of a bearer note?
(7) Assuming this time F is not a holder in due course, can he still enforce payment against drawer A?
I. D draws a bill payable to the order of P and it is drawn against X drawee Bank. But before delivery to P, the
bill was stolen by T. T then forged the signature of P, went to Y bank thereafter and deposited the check wit
it. After inspecting the check, Y Bank forwarded the check to X Bank for clearing. Check was cleared by X
Bank and paid it to Y Bank. T then withdrew the entire amount from Y Bank and disappeared in a blink of
an eye.
(1) Can drawee X debit the amount it paid against the account of D?
(2) To whom can drawee X ask reimbursement for the amount it paid?
-0ooo0-
“For I know the plans I have for you declares the Lord, plans to prosper you and not to harm you, plans to give you hope and a future.” –
Jeremiah 29:11
#nopressure #makemeproud
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