SECTION 16

COMPLETE and UNDELIVERED

PERSONAL DEFENSE

EFFECTS OF DEFENSES
SECTION 14
INCOMPLETE but DELIVERED
PERSONAL DEFENSE

SECTION 15
INCOMPLETE AND UNDELIVERED
REAL DEFENSE

as between immediate parties and as regards a

remote party other than a holder in due course,
the delivery must be authorized in order to be
effectual

where the instrument is wanting in any material

particular, the person in possession thereof has
a prima facie authority to complete it by filling up
the blanks therein.

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.

where the instrument is in the hands of a holder it must be filled up strictly in accordance with the
in due course, a valid delivery thereof by all authority given and within a reasonable time
parties prior to him so as to make them liable to
him is conclusively presumed
where the instrument is no longer in the
possession of a party whose signature appears
thereon, a valid and intentional delivery by him is
presumed until the contrary is proved

if any such instrument, after completion, is

negotiated to a holder in due course, it is valid
and effectual for all purposes in his hands, and
he may enforce it as if it had been filled up
strictly in accordance with the authority given
and within a reasonable time.

However, subsequent indorsers are liable.

RULES ON FORGERY
PROMISSORY NOTE
MAKER'S SIGNATURE
ORDER

BEARER

PAYEE'S SIGNATURE FORGED

ORDER

BEARER

INDORSER'S SIGNATURE FORGED

ORDER

BEARER

Maker is not liable

because he never
became a party to the
instrument.

Maker is not liable.

Maker and payee not

liable

Maker is liable.
Indorsement is not
necessary to title and
the maker engages to
pay holder.

Maker, payee, and

indorser who signature
was forged is not liable..

Maker is liable.
Indorsement is not
necessary to title and
the maker engages to
pay holder.

Indorsers subsequent to
forgery are liable
because of their
warranties.

Indorsers may be made

liable to those persons
who obtain title through
their indorsements.

Indorsers subsequent to
the forgery is liable.

Party who made the

forgery is liable

Indorsers subsequent to
forgery are liable
because of their
warranties.

Indorser whose
signature was forged is
not liable

Party who made the

forgery is liable.

Party who made the

forgery is liable.

Party who made the

forgery is liable

Party who made the

forgery is liable

Party who made the

forgery is liable.

BILL OF EXCHANGE
DRAWER'S SIGNATURE FORGE

PAYEE'S SIGNATURE FORGED

ORDER

ORDER

BEARER

Drawer is not liable.

Drawer is not liable

Drawee is liable if it paid

(nor recourse to drawer)
because he admitted
the genuineness of the
drawers signature.
Drawee cannot recover
from the collecting bank
because there is no
privity between the
collecting bank and the
drawer. There is no
warranty as to the
signature of the drawer.
(Associated Bank v. CA)

Drawee is liable if it
paid. Drawee cannot
recover from the
collecting bank because
it is bound to known the
drawers signature since
the latter is its depositor.

Drawer, drawee and

payee not liable. Cut-off
rule applies.

BEARER

INDORSER'S SIGNATURE FORGED

ORDER

BEARER

Drawer is liable. His

indorsement is not
necessary to pass title.

Drawer, payee and

indorser whose
signature was forged
are not liable.

Drawer is liable.
Indorsement is not
necessary to pass title.

Drawee is liable. No
privity between drawer
and payee because
indorsement of payee is
not necessary (Ang Tek
Lian case, 87 SCRA
383)

Drawee is liable if it
paid.

Drawee is liable.

Indorsers subsequent to
forgery are liable.

Party who made the

forgery is liable.

Party who made the

forgery is liable.

Indorsers subsequent to
forgery are liable.

Payee is not liable.

Collecting bank is liable
because of warranty.

Indorsers subsequent to
forgery are liable.

Indorser whose
signature was forged is
liable because
indorsement is not
necessary to pass title.

Party who made the

forgery is liable

Party who made the

forgery is liable.

Party who made the

forgery is liable.

Party who made the

forgery is liable.