1. We must distinguish.

If Philip is a holder in due course, then both John and Peter are liable to
him solidarily for the amount of PHP 50,000.00. This is based on the premise under Section 14 of
Act 2031 that if any instrument that is incomplete and delivered is valid and effectual provided
that after completion the same is negotiated to a holder in due course. The holder in due course
may enforce it as if it had been filled up strictly in accordance with the authority given and
within a reasonable time. On the other hand, if Philip is merely a holder not in due course then
John has no liability to pay him. Philip can recover the amount from Peter. It has also been
provided under the same provision of Act 2031 that if an instrument has been filled up not in
accordance with the authority given and within reasonable time then the Drawer shall not be
held liable.
2. BDO and Alex are not liable to Edwin since the stop order was issued prior to encashment of the
check. It has been provided under Section 54 of Act 2031 that when there is no amount has not
yet been paid and a notice of infirmity or defect has been issued to the transferee, in this case
the BDO, is relieved from the obligation to make payment. If no stop order was issued by Alex
and Edwin deposited the check in his account with PNB then Edwin is presumed to be a holder
in due course and Alex can no longer recover the amount of PHP 10,000.00 from Edwin or BDO.
Bill, however, shall be held liable to Bill.
3. No, Merle is not liable to the note. In this case the instrument is incomplete and undelivered. It
has been provided under Section 15 of ACT 2031 that where in an incomplete instrument has
not been delivered, it will not, if completed and negotiated, without authority, be a valid
contract in the hands of any holder, as against any person whose signature was placed thereon
before delivery. It is a real defense that even a holder in due course cannot enforce the payment
of such instrument or note.
4. Zaldy is not liable to the blank check since the check that was stolen by Zandro is an incomplete
and undelivered instrument. . It has been provided under Section 15 of ACT 2031 that where in
an incomplete instrument has not been delivered, it will not, if completed and negotiated,
without authority, be a valid contract in the hands of any holder, as against any person whose
signature was placed thereon before delivery. It is a real defense that even a holder in due
course cannot enforce the payment of such instrument or note. On the other hand, the
indorsers, Zandro, Zenia, Zandra and Zosimo shall be held liable to Zeny for the check of PHP
100,000.00.
5. Yes, Marlo is liable because there is a presumption of delivery unless he rebuts the same that he
had no intention to deliver the same.
6. Alicia and Chelsea may be properly charged with the amount of the check. It has been provided
under Section 55 of Act 2031 that when a person has obtained an instrument by means of fraud,
duress, force, fear and other unlawful means for illegal consideration or when he negotiates it in
breach of faith, or under such circumstances as amount to fraud. In this case, Alicia committed
fraud by obtaining Betty’s signature through deceit. While Chelsea obtained the check through
unlawful means thus she has a defective title over the check. Thus, Betty may recover the
amount deducted from her account from either Alicia or Chelsea.
 7. Jona cannot enforce the instrument against Jake and Jenny because Jona’s rights against them
are cut off by the forged instrument of Joan which is wholly inoperative. Jona could acquire
rights against Jake and Joan to the instrument only through the forged signature of Joan.

Neither can Jona enforce the note against Joan because Joan’s signature is wholly inoperative.
Under section 23, Jona acquired no right to retain, discharge, or enforce payment of the note under the
forged signature of Joan.

But Jona may go against Josie whose signature is genuine and, therefore, operative. Josie is a
general indorser who warranted to Jona that the instrument is genuine and was valid and subsisting at
the time of Josie’s indorsement.

Josie, on the other hand, has a right of recourse against Faye, the forger.

8. Yes, Gabriel may be held liable. It has been provided under Section 23 of Act 2031 that when an
instrument originally payable to bearer the party whose indorsement is forged is liable to holder
of the forged instrument because the indorsement being originally payable to bearer, it can be
negotiated by mere delivery. Indorsement is not necessary to the title of the holder.
9. Yes, Jane is correct. It has been provided under Section 23 of Act 2031 that when the Depositor
seeks the return by a bank to his account of amount debited under a stolen check as his
signature on the cheque was forged it is the prime duty of the bank to ascertain the genuineness
of the signature of the drawer or depositor of the check being encashed.
Jane’s bank as well as Finna’s bank shall be held liable because of their negligence
resulting in the encashment of the forged check. In one case, the Supreme Court
allocated the loss and cost of arbitration proceedings and litigation on a 60-40 ratio
considering the comparative negligence of the two banks.