Petitioners were induced to sign a promissory note after a Deed of Assignment was executed by the Construction Company in favor of PNB. Later, PNB approved release of payments in contravention of the tenor of the said deed.
Whether or not PNB may be considered as a holder in due course after fraudulent inducement.
NO. PNB is not a holder in due course. Not only was PNB an immediate party or in privy to the promissory note – that is, it had dealt directly with the petitioners knowing fully well that the latter only signed as accommodation – but petitioners were made to believe and on that belief entered into the agreement that no other conditions would alter the terms thereof and yet, PNB altered the same.