In a promissory note signed by A, B, and C payable to D and E for P60,000, at maturity D endorsed the note back to A. How much is extinguished and by what mode?

In a promissory note signed by A, B, and C payable to D and E for P60,000, at maturity D endorsed the note back to A. How much is extinguished and by what mode?

• A. P60,000 by compensation
• B. P20,000 by confusion
• C. P30,000 by remission
• D. P10,000 by merger

Answer: (C)

The key idea here is extinction of part of a debt by remission when a claim is forgiven by the creditor. A promissory note payable to two payees represents a single debt divided between them. If one payee endorses the instrument back to a maker, that act can be read as relinquishing (remitting) the portion of the debt that corresponds to that payee’s share. Since the total amount is 60,000 and there are two payees, each has a stake of 30,000. D’s endorsement back to A effectively forgives D’s claim to that 30,000 portion, extinguishing it by remission. The remaining 30,000 remains due. Other modes don’t fit as cleanly here. Compensation requires mutual debts between the same two parties with opposite interests; merger or confusion involve the same person holding both the creditor and debtor roles, which isn’t established in this scenario.

The key idea here is extinction of part of a debt by remission when a claim is forgiven by the creditor. A promissory note payable to two payees represents a single debt divided between them. If one payee endorses the instrument back to a maker, that act can be read as relinquishing (remitting) the portion of the debt that corresponds to that payee’s share.

Since the total amount is 60,000 and there are two payees, each has a stake of 30,000. D’s endorsement back to A effectively forgives D’s claim to that 30,000 portion, extinguishing it by remission. The remaining 30,000 remains due.

Other modes don’t fit as cleanly here. Compensation requires mutual debts between the same two parties with opposite interests; merger or confusion involve the same person holding both the creditor and debtor roles, which isn’t established in this scenario.