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Question VI

2009 Bar · Mercantile Law · 1 sub-question

VI. Lorenzo drew a bill of exchange in the amount of P100,000.00 payable to Barbara or order, with his wife, Diana, as drawee. At the time the bill was drawn, Diana was unaware that Barbara is Lorenzo’s paramour. Barbara then negotiated the bill to her sister, Elena, who paid for it for value, and who did not know who Lorenzo was. On due date, Elena presented the bill to Diana for payment, but the latter promptly dishonored the instrument because, by then, Diana had already learned of her husband’s dalliance. Was the bill lawfully dishonored by Diana? Explain. (3%) Does the illicit cause or consideration adversely affect the negotiability of the bill? Explain. (3%)

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