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NIL Case Number 14 Digest - Bagunas

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Lenel John Giban Bagunas
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39 views1 page

NIL Case Number 14 Digest - Bagunas

Uploaded by

Lenel John Giban Bagunas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Charles A. Fossum vs.

Fernandez Hermanos et al – GR 19461


FACTS
Appellant was himself a party to the contract which supplied the
consideration for the draft, albeit he there acted in a representative capacity.
He procured the instrument to be indorsed by the bank and delivered to
himself without the payment of value, after it was overdue, and with full
notice that, as between the original parties, the consideration had
completely failed. Petitioner invoked the “shelter rule”.
 
ISSUE
Whether or not petitioner may hide under the “shelter rule”.
 
RULING
NO. While it is true that a person who is not himself a holder in due course
may yet recover against the person primarily liable where it appears that
such holder derives his title through a holder in due course, there are
exceptions. Here, the holder was party to the contract which participated to
the defect of the instrument. Hence, shelter rule finds no application here.

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