NEGOTIABLE INSTRUMENTS LAW

Sec. 5. Additional provisions not affecting negotiability. -

ACT NO. 2031 An instrument which contains an order or promise to do
February 03, 1911 any act in addition to the payment of money is not
negotiable. But the negotiable character of an
THE NEGOTIABLE INSTRUMENTS LAW instrument otherwise negotiable is not affected by a
I. FORM AND INTERPRETATION provision which:
(a) authorizes the sale of collateral securities in case the
Section 1. Form of negotiable instruments. - An instrument be not paid at maturity; or
instrument to be negotiable must conform to the (b) authorizes a confession of judgment if the
following requirements: instrument be not paid at maturity; or
(a) It must be in writing and signed by the maker or (c) waives the benefit of any law intended for the
drawer; advantage or protection of the obligor; or
(b) Must contain an unconditional promise or order to (d) gives the holder an election to require something to
pay a sum certain in money; be done in lieu of payment of money.
(c) Must be payable on demand, or at a fixed or But nothing in this section shall validate any provision or
determinable future time; stipulation otherwise illegal.
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he Sec. 6. Omissions; seal; particular money. - The validity
must be named or otherwise indicated therein with and negotiable character of an instrument are not
reasonable certainty. affected by the fact that:
(a) it is not dated; or
Sec. 2. What constitutes certainty as to sum. - The sum (b) does not specify the value given, or that any value
payable is a sum certain within the meaning of this Act, had been given therefor; or
although it is to be paid: (c) does not specify the place where it is drawn or the
(a) with interest; or place where it is payable; or
(b) by stated installments; or (d) bears a seal; or
(c) by stated installments, with a provision that, upon (e) designates a particular kind of current money in
default in payment of any installment or of interest, the which payment is to be made.
whole shall become due; or But nothing in this section shall alter or repeal any
(d) with exchange, whether at a fixed rate or at the statute requiring in certain cases the nature of the
current rate; or consideration to be stated in the instrument.
(e) with costs of collection or an attorney's fee, in case
payment shall not be made at maturity. Sec. 7. When payable on demand. - An instrument is
payable on demand:
Sec. 3. When promise is unconditional. - An unqualified (a) When it is so expressed to be payable on demand, or
order or promise to pay is unconditional within the at sight, or on presentation; or
meaning of this Act though coupled with: (b) In which no time for payment is expressed.
(a) An indication of a particular fund out of which Where an instrument is issued, accepted, or indorsed
reimbursement is to be made or a particular account to when overdue, it is, as regards the person so issuing,
be debited with the amount; or accepting, or indorsing it, payable on demand.
(b) A statement of the transaction which gives rise to the
instrument. Sec. 8. When payable to order. - The instrument is
But an order or promise to pay out of a particular fund is payable to order where it is drawn payable to the order
not unconditional. of a specified person or to him or his order. It may be
drawn payable to the order of:
Sec. 4. Determinable future time; what constitutes. - An (a) A payee who is not maker, drawer, or drawee; or
instrument is payable at a determinable future time, (b) The drawer or maker; or
within the meaning of this Act, which is expressed to be (c) The drawee; or
payable: (d) Two or more payees jointly; or
(a) At a fixed period after date or sight; or (e) One or some of several payees; or
(b) On or before a fixed or determinable future time (f) The holder of an office for the time being.
specified therein; or Where the instrument is payable to order, the payee
(c) On or at a fixed period after the occurrence of a must be named or otherwise indicated therein with
specified event which is certain to happen, though the reasonable certainty.
time of happening be uncertain.
An instrument payable upon a contingency is not Sec. 9. When payable to bearer. - The instrument is
negotiable, and the happening of the event does not cure payable to
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the defect. bearer:

(a) When it is expressed to be so payable; or
NEGOTIABLE INSTRUMENTS LAW
(b) When it is payable to a person named therein or Sec. 15. Incomplete instrument not delivered. - Where an
bearer; or incomplete instrument has not been delivered, it will not,
(c) When it is payable to the order of a fictitious or non- if completed and negotiated without authority, be a valid
existing person, and such fact was known to the person contract in the hands of any holder, as against any
making it so payable; or person whose signature was placed thereon before
delivery.
(d) When the name of the payee does not purport to be
the name of any person; or Sec. 16. Delivery; when effectual; when presumed. -
(e) When the only or last indorsement is an indorsement Every contract on a negotiable instrument is incomplete
in blank. and revocable until delivery of the instrument for the
purpose of giving effect thereto. As between immediate
Sec. 10. Terms, when sufficient. - The instrument need parties and as regards a remote party other than a
not follow the language of this Act, but any terms are holder in due course, the delivery, in order to be effectual,
sufficient which clearly indicate an intention to conform must be made either by or under the authority of the
to the requirements hereof. party making, drawing, accepting, or indorsing, as the
case may be; and, in such case, the delivery may be
Sec. 11. Date, presumption as to. - Where the instrument shown to have been conditional, or for a special purpose
or an acceptance or any indorsement thereon is dated, only, and not for the purpose of transferring the property
such date is deemed prima facie to be the true date of in the instrument. But where the instrument is in the
the making, drawing, acceptance, or indorsement, as the hands of a holder in due course, a valid delivery thereof
case may be. by all parties prior to him so as to make them liable to
him is conclusively presumed. And where the instrument
Sec. 12. Ante-dated and post-dated. - The instrument is is no longer in the possession of a party whose
not invalid for the reason only that it is ante-dated or signature appears thereon, a valid and intentional
post-dated, provided this is not done for an illegal or delivery by him is presumed until the contrary is proved.
fraudulent purpose. The person to whom an instrument
so dated is delivered acquires the title thereto as of the Sec. 17. Construction where instrument is ambiguous. -
date of delivery. Where the language of the instrument is ambiguous or
there are omissions therein, the following rules of
Sec. 13. When date may be inserted. - Where an construction apply:
instrument expressed to be payable at a fixed period (a) Where the sum payable is expressed in words and
after date is issued undated, or where the acceptance of also in figures and there is a discrepancy between the
an instrument payable at a fixed period after sight is two, the sum denoted by the words is the sum payable;
undated, any holder may insert therein the true date of but if the words are ambiguous or uncertain, reference
issue or acceptance, and the instrument shall be payable may be had to the figures to fix the amount;
accordingly. The insertion of a wrong date does not (b) Where the instrument provides for the payment of
avoid the instrument in the hands of a subsequent interest, without specifying the date from which interest
holder in due course; but as to him, the date so inserted is to run, the interest runs from the date of the
is to be regarded as the true date. instrument, and if the instrument is undated, from the
issue thereof;
Sec. 14. Blanks; when may be filled. - Where the (c) Where the instrument is not dated, it will be
instrument is wanting in any material particular, the considered to be dated as of the time it was issued;
person in possession thereof has a prima facie authority (d) Where there is a conflict between the written and
to complete it by filling up the blanks therein. And a printed provisions of the instrument, the written
signature on a blank paper delivered by the person provisions prevail;
making the signature in order that the paper may be (e) Where the instrument is so ambiguous that there is
converted into a negotiable instrument operates as a doubt whether it is a bill or note, the holder may treat it
prima facie authority to fill it up as such for any amount. as either at his election;
In order, however, that any such instrument when (f) Where a signature is so placed upon the instrument
completed may be enforced against any person who that it is not clear in what capacity the person making
became a party thereto prior to its completion, it must be the same intended to sign, he is to be deemed an
filled up strictly in accordance with the authority given indorser;
and within a reasonable time. But if any such instrument, (g) Where an instrument containing the word "I promise
after completion, is negotiated to a holder in due course, to pay" is signed by two or more persons, they are
it is valid and effectual for all purposes in his hands, and deemed to be jointly and severally liable thereon.
he may enforce it as if it had been filled up strictly in
accordance with the authority given and within a Sec. 18. Liability of person signing in trade or assumed
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reasonable time. name. - No person is liable on the instrument whose

signature does not appear thereon, except as herein
NEGOTIABLE INSTRUMENTS LAW
otherwise expressly provided. But one who signs in a Sec. 27. When lien on instrument constitutes holder for
trade or assumed name will be liable to the same extent value. — Where the holder has a lien on the instrument
as if he had signed in his own name. arising either from contract or by implication of law, he is
deemed a holder for value to the extent of his lien.
Sec. 19. Signature by agent; authority; how shown. - The
signature of any party may be made by a duly authorized Sec. 28. Effect of want of consideration. - Absence or
agent. No particular form of appointment is necessary failure of consideration is a matter of defense as against
for this purpose; and the authority of the agent may be any person not a holder in due course; and partial failure
established as in other cases of agency. of consideration is a defense pro tanto, whether the
failure is an ascertained and liquidated amount or
Sec. 20. Liability of person signing as agent, and so forth. otherwise.
- Where the instrument contains or a person adds to his
signature words indicating that he signs for or on behalf Sec. 29. Liability of accommodation party. - An
of a principal or in a representative capacity, he is not accommodation party is one who has signed the
liable on the instrument if he was duly authorized; but instrument as maker, drawer, acceptor, or indorser,
the mere addition of words describing him as an agent, without receiving value therefor, and for the purpose of
or as filling a representative character, without lending his name to some other person. Such a person is
disclosing his principal, does not exempt him from liable on the instrument to a holder for value,
personal liability. notwithstanding such holder, at the time of taking the
instrument, knew him to be only an accommodation
Sec. 21. Signature by procuration; effect of. - A signature party.
by "procuration" operates as notice that the agent has
but a limited authority to sign, and the principal is bound III. NEGOTIATION
only in case the agent in so signing acted within the
actual limits of his authority. Sec. 30. What constitutes negotiation. - An instrument is
negotiated when it is transferred from one person to
Sec. 22. Effect of indorsement by infant or corporation.- another in such manner as to constitute the transferee
The indorsement or assignment of the instrument by a the holder thereof. If payable to bearer, it is negotiated
corporation or by an infant passes the property therein, by delivery; if payable to order, it is negotiated by the
notwithstanding that from want of capacity, the indorsement of the holder and completed by delivery.
corporation or infant may incur no liability thereon.
Sec. 31. Indorsement; how made. - The indorsement
Sec. 23. Forged signature; effect of. - When a signature must be written on the instrument itself or upon a paper
is forged or made without the authority of the person attached thereto. The signature of the indorser, without
whose signature it purports to be, it is wholly inoperative, additional words, is a sufficient indorsement.
and no right to retain the instrument, or to give a
discharge therefor, or to enforce payment thereof Sec. 32. Indorsement must be of entire instrument. - The
against any party thereto, can be acquired through or indorsement must be an indorsement of the entire
under such signature, unless the party against whom it is instrument. An indorsement which purports to transfer
sought to enforce such right is precluded from setting to the indorsee a part only of the amount payable, or
up the forgery or want of authority. which purports to transfer the instrument to two or more
indorsees severally, does not operate as a negotiation of
II. CONSIDERATION the instrument. But where the instrument has been paid
Sec. 24. Presumption of consideration. - Every in part, it may be indorsed as to the residue.
negotiable instrument is deemed prima facie to have
been issued for a valuable consideration; and every Sec. 33. Kinds of indorsement. - An indorsement may be
person whose signature appears thereon to have either special or in blank; and it may also be either
become a party thereto for value. restrictive or qualified or conditional.

Sec. 25. Value, what constitutes. — Value is any Sec. 34. Special indorsement; indorsement in blank. - A
consideration sufficient to support a simple contract. An special indorsement specifies the person to whom, or to
antecedent or pre-existing debt constitutes value; and is whose order, the instrument is to be payable, and the
deemed such whether the instrument is payable on indorsement of such indorsee is necessary to the further
demand or at a future time. negotiation of the instrument. An indorsement in blank
specifies no indorsee, and an instrument so indorsed is
Sec. 26. What constitutes holder for value. - Where value payable to bearer, and may be negotiated by delivery.
has at any time been given for the instrument, the holder
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is deemed a holder for value in respect to all parties who Sec. 35. Blank indorsement; how changed to special
become such prior to that time. indorsement. - The holder may convert a blank
NEGOTIABLE INSTRUMENTS LAW
indorsement into a special indorsement by writing over may be negotiated by either the indorsement of the bank
the signature of the indorser in blank any contract or corporation or the indorsement of the officer.
consistent with the character of the indorsement.
Sec. 43. Indorsement where name is misspelled, and so
Sec. 36. When indorsement restrictive. - An indorsement forth. - Where the name of a payee or indorsee is
is restrictive which either: wrongly designated or misspelled, he may indorse the
(a) Prohibits the further negotiation of the instrument; or instrument as therein described adding, if he thinks fit,
(b) Constitutes the indorsee the agent of the indorser; or his proper signature.
(c) Vests the title in the indorsee in trust for or to the use
of some other persons. Sec. 44. Indorsement in representative capacity. - Where
But the mere absence of words implying power to any person is under obligation to indorse in a
negotiate does not make an indorsement restrictive. representative capacity, he may indorse in such terms as
to negative personal liability. robles virtual law library
Sec. 37. Effect of restrictive indorsement; rights of
indorsee. - A restrictive indorsement confers upon the Sec. 45. Time of indorsement; presumption. - Except
indorsee the right: where an indorsement bears date after the maturity of
(a) to receive payment of the instrument; the instrument, every negotiation is deemed prima facie
(b) to bring any action thereon that the indorser could to have been effected before the instrument was
bring; overdue.
(c) to transfer his rights as such indorsee, where the
form of the indorsement authorizes him to do so. Sec. 46. Place of indorsement; presumption. - Except
But all subsequent indorsees acquire only the title of the where the contrary appears, every indorsement is
first indorsee under the restrictive indorsement. presumed prima facie to have been made at the place
where the instrument is dated.
Sec. 38. Qualified indorsement. - A qualified indorsement
constitutes the indorser a mere assignor of the title to Sec. 47. Continuation of negotiable character. - An
the instrument. It may be made by adding to the instrument negotiable in its origin continues to be
indorser's signature the words "without recourse" or any negotiable until it has been restrictively indorsed or
words of similar import. Such an indorsement does not discharged by payment or otherwise.
impair the negotiable character of the instrument.
Sec. 48. Striking out indorsement. - The holder may at
Sec. 39. Conditional indorsement. - Where an any time strike out any indorsement which is not
indorsement is conditional, the party required to pay the necessary to his title. The indorser whose indorsement
instrument may disregard the condition and make is struck out, and all indorsers subsequent to him, are
payment to the indorsee or his transferee whether the thereby relieved from liability on the instrument.
condition has been fulfilled or not. But any person to
whom an instrument so indorsed is negotiated will hold Sec. 49. Transfer without indorsement; effect of. - Where
the same, or the proceeds thereof, subject to the rights the holder of an instrument payable to his order
of the person indorsing conditionally. transfers it for value without indorsing it, the transfer
vests in the transferee such title as the transferor had
Sec. 40. Indorsement of instrument payable to bearer. - therein, and the transferee acquires in addition, the right
Where an instrument, payable to bearer, is indorsed to have the indorsement of the transferor. But for the
specially, it may nevertheless be further negotiated by purpose of determining whether the transferee is a
delivery; but the person indorsing specially is liable as holder in due course, the negotiation takes effect as of
indorser to only such holders as make title through his the time when the indorsement is actually made.
indorsement.
Sec. 50. When prior party may negotiate instrument. -
Sec. 41. Indorsement where payable to two or more Where an instrument is negotiated back to a prior party,
persons. - Where an instrument is payable to the order of such party may, subject to the provisions of this Act,
two or more payees or indorsees who are not partners, reissue and further negotiable the same. But he is not
all must indorse unless the one indorsing has authority entitled to enforce payment thereof against any
to indorse for the others. intervening party to whom he was personally liable.
IV. RIGHTS OF THE HOLDER
Sec. 42. Effect of instrument drawn or indorsed to a Sec. 51. Right of holder to sue; payment. - The holder of
person as a negotiable instrument may to sue thereon in his own
cashier. - Where an instrument is drawn or indorsed to a name; and payment to him in due course discharges the
person as "cashier" or other fiscal officer of a bank or instrument.
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corporation, it is deemed prima facie to be payable to

the bank or corporation of which he is such officer, and Sec. 52. What constitutes a holder in due course. - A
NEGOTIABLE INSTRUMENTS LAW
holder in due course is a holder who has taken the burden is on the holder to prove that he or some person
instrument under the following conditions: under whom he claims acquired the title as holder in due
(a) That it is complete and regular upon its face; course. But the last-mentioned rule does not apply in
(b) That he became the holder of it before it was overdue, favor of a party who became bound on the instrument
and without notice that it has been previously prior to the acquisition of such defective title.
dishonored, if such was the fact;
(c) That he took it in good faith and for value; V. LIABILITIES OF PARTIES
(d) That at the time it was negotiated to him, he had no
notice of any infirmity in the instrument or defect in the Sec. 60. Liability of maker. - The maker of a negotiable
title of the person negotiating it. instrument, by making it, engages that he will pay it
Sec. 53. When person not deemed holder in due course. - according to its tenor, and admits the existence of the
Where an instrument payable on demand is negotiated payee and his then capacity to indorse.
on an unreasonable length of time after its issue, the
holder is not deemed a holder in due course. Sec. 61. Liability of drawer. - The drawer by drawing the
instrument admits the existence of the payee and his
Sec. 54. Notice before full amount is paid. - Where the then capacity to indorse; and engages that, on due
transferee receives notice of any infirmity in the presentment, the instrument will be accepted or paid, or
instrument or defect in the title of the person negotiating both, according to its tenor, and that if it be dishonored
the same before he has paid the full amount agreed to and the necessary proceedings on dishonor be duly
be paid therefor, he will be deemed a holder in due taken, he will pay the amount thereof to the holder or to
course only to the extent of the amount therefore paid by any subsequent indorser who may be compelled to pay it.
him. But the drawer may insert in the instrument an express
stipulation negativing or limiting his own liability to the
Sec. 55. When title defective. - The title of a person who holder.
negotiates an instrument is defective within the meaning
of this Act when he obtained the instrument, or any Sec. 62. Liability of acceptor. - The acceptor, by
signature thereto, by fraud, duress, or force and fear, or accepting the instrument, engages that he will pay it
other unlawful means, or for an illegal consideration, or according to the tenor of his acceptance and admits:
when he negotiates it in breach of faith, or under such (a) The existence of the drawer, the genuineness of his
circumstances as amount to a fraud. signature, and his capacity and authority to draw the
instrument; and
Sec. 56. What constitutes notice of defect. - To (b) The existence of the payee and his then capacity to
constitutes notice of an infirmity in the instrument or indorse.
defect in the title of the person negotiating the same, the Sec. 63. When a person deemed indorser. - A person
person to whom it is negotiated must have had actual placing his signature upon an instrument otherwise than
knowledge of the infirmity or defect, or knowledge of as maker, drawer, or acceptor, is deemed to be indorser
such facts that his action in taking the instrument unless he clearly indicates by appropriate words his
amounted to bad faith. intention to be bound in some other capacity.

Sec. 57. Rights of holder in due course. - A holder in due Sec. 64. Liability of irregular indorser. - Where a person,
course holds the instrument free from any defect of title not otherwise a party to an instrument, places thereon
of prior parties, and free from defenses available to prior his signature in blank before delivery, he is liable as
parties among themselves, and may enforce payment of indorser, in accordance with the following rules:
the instrument for the full amount thereof against all (a) If the instrument is payable to the order of a third
parties liable thereon. robles virtual law library person, he is liable to the payee and to all subsequent
parties.
Sec. 58. When subject to original defense. - In the hands (b) If the instrument is payable to the order of the maker
of any holder other than a holder in due course, a or drawer, or is payable to bearer, he is liable to all
negotiable instrument is subject to the same defenses parties subsequent to the maker or drawer.
as if it were non-negotiable. But a holder who derives his (c) If he signs for the accommodation of the payee, he is
title through a holder in due course, and who is not liable to all parties subsequent to the payee.
himself a party to any fraud or illegality affecting the
instrument, has all the rights of such former holder in Sec. 65. Warranty where negotiation by delivery and so
respect of all parties prior to the latter. forth. — Every person negotiating an instrument by
delivery or by a qualified indorsement warrants:
Sec. 59. Who is deemed holder in due course. - Every (a) That the instrument is genuine and in all respects
holder is deemed prima facie to be a holder in due what it purports to be;
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course; but when it is shown that the title of any person (b) That he has a good title to it;
who has negotiated the instrument was defective, the (c) That all prior parties had capacity to contract;
NEGOTIABLE INSTRUMENTS LAW
(d) That he has no knowledge of any fact which would a bill of exchange, presentment for payment will be
impair the validity of the instrument or render it valueless. sufficient if made within a reasonable time after the last
But when the negotiation is by delivery only, the warranty negotiation thereof.
extends in favor of no holder other than the immediate
transferee. Sec. 72. What constitutes a sufficient presentment. -
The provisions of subdivision (c) of this section do not Presentment for payment, to be sufficient, must be
apply to a person negotiating public or corporation made:
securities other than bills and notes. (a) By the holder, or by some person authorized to
receive payment on his behalf;
Sec. 66. Liability of general indorser. - Every indorser (b) At a reasonable hour on a business day;
who indorses without qualification, warrants to all (c) At a proper place as herein defined;
subsequent holders in due course: (d) To the person primarily liable on the instrument, or if
(a) The matters and things mentioned in subdivisions (a), he is absent or inaccessible, to any person found at the
(b), and (c) of the next preceding section; and place where the presentment is made.
(b) That the instrument is, at the time of his indorsement,
valid and subsisting; Sec. 73. Place of presentment. - Presentment for
And, in addition, he engages that, on due presentment, it payment is made at the proper place:
shall be accepted or paid, or both, as the case may be, (a) Where a place of payment is specified in the
according to its tenor, and that if it be dishonored and instrument and it is there presented;
the necessary proceedings on dishonor be duly taken, he (b) Where no place of payment is specified but the
will pay the amount thereof to the holder, or to any address of the person to make payment is given in the
subsequent indorser who may be compelled to pay it. instrument and it is there presented;
(c) Where no place of payment is specified and no
Sec. 67. Liability of indorser where paper negotiable by address is given and the instrument is presented at the
delivery. — Where a person places his indorsement on an usual place of business or residence of the person to
instrument negotiable by delivery, he incurs all the make payment;
liability of an indorser.
(d) In any other case if presented to the person to make
Sec. 68. Order in which indorsers are liable. - As respect payment wherever he can be found, or if presented at his
one another, indorsers are liable prima facie in the order last known place of business or residence.
in which they indorse; but evidence is admissible to
show that, as between or among themselves, they have Sec. 74. Instrument must be exhibited. - The instrument
agreed otherwise. Joint payees or joint indorsees who must be exhibited to the person from whom payment is
indorse are deemed to indorse jointly and severally. demanded, and when it is paid, must be delivered up to
robles virtual law library the party paying it.

Sec. 69. Liability of an agent or broker. - Where a broker Sec. 75. Presentment where instrument payable at bank.
or other agent negotiates an instrument without - Where the instrument is payable at a bank,
indorsement, he incurs all the liabilities prescribed by presentment for payment must be made during banking
Section Sixty-five of this Act, unless he discloses the hours, unless the person to make payment has no funds
name of his principal and the fact that he is acting only there to meet it at any time during the day, in which case
as agent. presentment at any hour before the bank is closed on
VI. PRESENTATION FOR PAYMENT that day is sufficient.
Sec. 70. Effect of want of demand on principal debtor. -
Presentment for payment is not necessary in order to Sec. 76. Presentment where principal debtor is dead. -
charge the person primarily liable on the instrument; but Where the person primarily liable on the instrument is
if the instrument is, by its terms, payable at a special dead and no place of payment is specified, presentment
place, and he is able and willing to pay it there at for payment must be made to his personal
maturity, such ability and willingness are equivalent to a representative, if such there be, and if, with the exercise
tender of payment upon his part. But except as herein of reasonable diligence, he can be found.
otherwise provided, presentment for payment is
necessary in order to charge the drawer and indorsers. Sec. 77. Presentment to persons liable as partners. -
Where the persons primarily liable on the instrument are
Sec. 71. Presentment where instrument is not payable liable as partners and no place of payment is specified,
on demand and where payable on demand. - Where the presentment for payment may be made to any one of
instrument is not payable on demand, presentment must them, even though there has been a dissolution of the
be made on the day it falls due. Where it is payable on firm.
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demand, presentment must be made within a

reasonable time after its issue, except that in the case of Sec. 78. Presentment to joint debtors. - Where there are
NEGOTIABLE INSTRUMENTS LAW
several persons, not partners, primarily liable on the Sec. 87. Rule where instrument payable at bank. - Where
instrument and no place of payment is specified, the instrument is made payable at a bank, it is equivalent
presentment must be made to them all. to an order to the bank to pay the same for the account
of the principal debtor thereon.
Sec. 79. When presentment not required to charge the
drawer. - Presentment for payment is not required in Sec. 88. What constitutes payment in due course. -
order to charge the drawer where he has no right to Payment is made in due course when it is made at or
expect or require that the drawee or acceptor will pay the after the maturity of the payment to the holder thereof in
instrument. good faith and without notice that his title is defective.

Sec. 80. When presentment not required to charge the VII. NOTICE OF DISHONOR
indorser. - Presentment is not required in order to charge
an indorser where the instrument was made or accepted Sec. 89. To whom notice of dishonor must be given. -
for his accommodation and he has no reason to expect Except as herein otherwise provided, when a negotiable
that the instrument will be paid if presented. instrument has been dishonored by non-acceptance or
non-payment, notice of dishonor must be given to the
Sec. 81. When delay in making presentment is excused. - drawer and to each indorser, and any drawer or indorser
Delay in making presentment for payment is excused to whom such notice is not given is discharged.
when the delay is caused by circumstances beyond the
control of the holder and not imputable to his default, Sec. 90. By whom given. - The notice may be given by or
misconduct, or negligence. When the cause of delay on behalf of the holder, or by or on behalf of any party to
ceases to operate, presentment must be made with the instrument who might be compelled to pay it to the
reasonable diligence. holder, and who, upon taking it up, would have a right to
reimbursement from the party to whom the notice is
Sec. 82. When presentment for payment is excused. - given.
Presentment for payment is excused:
(a) Where, after the exercise of reasonable diligence, Sec. 91. Notice given by agent. - Notice of dishonor may
presentment, as required by this Act, cannot be made; be given by any agent either in his own name or in the
(b) Where the drawee is a fictitious person; name of any party entitled to given notice, whether that
(c) By waiver of presentment, express or implied. party be his principal or not.
Sec. 83. When instrument dishonored by non-payment. -
The instrument is dishonored by non-payment when: Sec. 92. Effect of notice on behalf of holder. - Where
(a) It is duly presented for payment and payment is notice is given by or on behalf of the holder, it inures to
refused or cannot be obtained; or the benefit of all subsequent holders and all prior parties
(b) Presentment is excused and the instrument is who have a right of recourse against the party to whom
overdue and unpaid. it is given.

Sec. 84. Liability of person secondarily liable, when Sec. 93. Effect where notice is given by party entitled
instrument dishonored. - Subject to the provisions of this thereto. - Where notice is given by or on behalf of a party
Act, when the instrument is dishonored by non-payment, entitled to give notice, it inures to the benefit of the
an immediate right of recourse to all parties secondarily holder and all parties subsequent to the party to whom
liable thereon accrues to the holder. notice is given

Sec. 85. Time of maturity. - Every negotiable instrument Sec. 94. When agent may give notice. - Where the
is payable at the time fixed therein without grace. When instrument has been dishonored in the hands of an
the day of maturity falls upon Sunday or a holiday, the agent, he may either himself give notice to the parties
instruments falling due or becoming payable on liable thereon, or he may give notice to his principal. If he
Saturday are to be presented for payment on the next gives notice to his principal, he must do so within the
succeeding business day except that instruments same time as if he were the holder, and the principal,
payable on demand may, at the option of the holder, be upon the receipt of such notice, has himself the same
presented for payment before twelve o'clock noon on time for giving notice as if the agent had been an
Saturday when that entire day is not a holiday. independent holder.

Sec. 86. Time; how computed. - When the instrument is Sec. 95. When notice sufficient. - A written notice need
payable at a fixed period after date, after sight, or after not be signed and an insufficient written notice may be
that happening of a specified event, the time of payment supplemented and validated by verbal communication. A
is determined by excluding the day from which the time misdescription of the instrument does not vitiate the
Page7

is to begin to run, and by including the date of payment. notice unless the party to whom the notice is given is in
fact misled thereby.
NEGOTIABLE INSTRUMENTS LAW
last day, by the next mail thereafter.
Sec. 96. Form of notice. - The notice may be in writing or (b) If given otherwise than through the post office, then
merely oral and may be given in any terms which within the time that notice would have been received in
sufficiently identify the instrument, and indicate that it due course of mail, if it had been deposited in the post
has been dishonored by non-acceptance or non-payment. office within the time specified in the last subdivision.
It may in all cases be given by delivering it personally or
through the mails. Sec. 105. When sender deemed to have given due notice.
- Where notice of dishonor is duly addressed and
Sec. 97. To whom notice may be given. - Notice of deposited in the post office, the sender is deemed to
dishonor may be given either to the party himself or to have given due notice, notwithstanding any miscarriage
his agent in that behalf. in the mails.

Sec. 98. Notice where party is dead. - When any party is Sec. 106. Deposit in post office; what constitutes. -
dead and his death is known to the party giving notice, Notice is deemed to have been deposited in the post-
the notice must be given to a personal representative, if office when deposited in any branch post office or in any
there be one, and if with reasonable diligence, he can be letter box under the control of the post-office
found. If there be no personal representative, notice may department.
be sent to the last residence or last place of business of
the deceased. Sec. 107. Notice to subsequent party; time of. - Where a
party receives notice of dishonor, he has, after the
Sec. 99. Notice to partners. - Where the parties to be receipt of such notice, the same time for giving notice to
notified are partners, notice to any one partner is notice antecedent parties that the holder has after the dishonor.
to the firm, even though there has been a dissolution.
Sec. 108. Where notice must be sent. - Where a party
Sec. 100. Notice to persons jointly liable. - Notice to joint has added an address to his signature, notice of
persons who are not partners must be given to each of dishonor must be sent to that address; but if he has not
them unless one of them has authority to receive such given such address, then the notice must be sent as
notice for the others. follows:
(a) Either to the post-office nearest to his place of
Sec. 101. Notice to bankrupt. - Where a party has been residence or to the post-office where he is accustomed
adjudged a bankrupt or an insolvent, or has made an to receive his letters; or
assignment for the benefit of creditors, notice may be (b) If he lives in one place and has his place of business
given either to the party himself or to his trustee or in another, notice may be sent to either place; or
assignee. (c) If he is sojourning in another place, notice may be
sent to the place where he is so sojourning.
Sec. 102. Time within which notice must be given. - But where the notice is actually received by the party
Notice may be given as soon as the instrument is within the time specified in this Act, it will be sufficient,
dishonored and, unless delay is excused as hereinafter though not sent in accordance with the requirement of
provided, must be given within the time fixed by this Act. this section.
Sec. 109. Waiver of notice. - Notice of dishonor may be
Sec. 103. Where parties reside in same place. - Where waived either before the time of giving notice has arrived
the person giving and the person to receive notice reside or after the omission to give due notice, and the waiver
in the same place, notice must be given within the may be expressed or implied.
following times:
(a) If given at the place of business of the person to Sec. 110. Whom affected by waiver. - Where the waiver
receive notice, it must be given before the close of is embodied in the instrument itself, it is binding upon all
business hours on the day following. parties; but, where it is written above the signature of an
(b) If given at his residence, it must be given before the indorser, it binds him only.
usual hours of rest on the day following.
(c) If sent by mail, it must be deposited in the post office Sec. 111. Waiver of protest. - A waiver of protest,
in time to reach him in usual course on the day following. whether in the case of a foreign bill of exchange or other
negotiable instrument, is deemed to be a waiver not only
Sec. 104. Where parties reside in different places. - of a formal protest but also of presentment and notice
Where the person giving and the person to receive notice of dishonor.
reside in different places, the notice must be given within
the following times: Sec. 112. When notice is dispensed with. - Notice of
(a) If sent by mail, it must be deposited in the post office dishonor is dispensed with when, after the exercise of
Page8

in time to go by mail the day following the day of reasonable diligence, it cannot be given to or does not
dishonor, or if there be no mail at a convenient hour on reach the parties sought to be charged.
NEGOTIABLE INSTRUMENTS LAW
(d) By any other act which will discharge a simple
Sec. 113. Delay in giving notice; how excused. - Delay in contract for the payment of money;
giving notice of dishonor is excused when the delay is (e) When the principal debtor becomes the holder of the
caused by circumstances beyond the control of the instrument at or after maturity in his own right.
holder and not imputable to his default, misconduct, or
negligence. When the cause of delay ceases to operate, Sec. 120. When persons secondarily liable on the
notice must be given with reasonable diligence. instrument are discharged. - A person secondarily liable
on the instrument is discharged:
Sec. 114. When notice need not be given to drawer. - (a) By any act which discharges the instrument;
Notice of dishonor is not required to be given to the (b) By the intentional cancellation of his signature by the
drawer in either of the following cases: holder;
(a) Where the drawer and drawee are the same person; (c) By the discharge of a prior party;
(b) When the drawee is fictitious person or a person not (d) By a valid tender or payment made by a prior party;
having capacity to contract; (e) By a release of the principal debtor unless the
(c) When the drawer is the person to whom the holder's right of recourse against the party secondarily
instrument is presented for payment; liable is expressly reserved;
(d) Where the drawer has no right to expect or require (f) By any agreement binding upon the holder to extend
that the drawee or acceptor will honor the instrument; the time of payment or to postpone the holder's right to
(e) Where the drawer has countermanded payment. enforce the instrument unless made with the assent of
the party secondarily liable or unless the right of
Sec. 115. When notice need not be given to indorser. — recourse against such party is expressly reserved.
Notice of dishonor is not required to be given to an
indorser in either of the following cases: Sec. 121. Right of party who discharges instrument. -
(a) When the drawee is a fictitious person or person not Where the instrument is paid by a party secondarily
having capacity to contract, and the indorser was aware liable thereon, it is not discharged; but the party so
of that fact at the time he indorsed the instrument; paying it is remitted to his former rights as regard all
(b) Where the indorser is the person to whom the prior parties, and he may strike out his own and all
instrument is presented for payment; subsequent indorsements and against negotiate the
(c) Where the instrument was made or accepted for his instrument, except:
accommodation. (a) Where it is payable to the order of a third person and
has been paid by the drawer; and
Sec. 116. Notice of non-payment where acceptance (b) Where it was made or accepted for accommodation
refused. - Where due notice of dishonor by non- and has been paid by the party accommodated.
acceptance has been given, notice of a subsequent
dishonor by non-payment is not necessary unless in the Sec. 122. Renunciation by holder. - The holder may
meantime the instrument has been accepted. expressly renounce his rights against any party to the
instrument before, at, or after its maturity. An absolute
Sec. 117. Effect of omission to give notice of non- and unconditional renunciation of his rights against the
acceptance. - An omission to give notice of dishonor by principal debtor made at or after the maturity of the
non-acceptance does not prejudice the rights of a holder instrument discharges the instrument. But a
in due course subsequent to the omission. renunciation does not affect the rights of a holder in due
course without notice. A renunciation must be in writing
Sec. 118. When protest need not be made; when must unless the instrument is delivered up to the person
be made. - Where any negotiable instrument has been primarily liable thereon.
dishonored, it may be protested for non-acceptance or
non-payment, as the case may be; but protest is not Sec. 123. Cancellation; unintentional; burden of proof. - A
required except in the case of foreign bills of exchange. cancellation made unintentionally or under a mistake or
robles virtual law library without the authority of the holder, is inoperative but
where an instrument or any signature thereon appears to
VIII. DISCHARGE OF NEGOTIABLE INSTRUMENTS have been cancelled, the burden of proof lies on the
party who alleges that the cancellation was made
Sec. 119. Instrument; how discharged. - A negotiable unintentionally or under a mistake or without authority.
instrument is discharged:
(a) By payment in due course by or on behalf of the Sec. 124. Alteration of instrument; effect of. - Where a
principal debtor; negotiable instrument is materially altered without the
(b) By payment in due course by the party assent of all parties liable thereon, it is avoided, except
accommodated, where the instrument is made or as against a party who has himself made, authorized, or
Page9

accepted for his accommodation; assented to the alteration and subsequent indorsers.
(c) By the intentional cancellation thereof by the holder;
NEGOTIABLE INSTRUMENTS LAW
But when an instrument has been materially altered and referee in case of need. It is in the option of the holder to
is in the hands of a holder in due course not a party to resort to the referee in case of need or not as he may
the alteration, he may enforce payment thereof see fit.
according to its original tenor.
X. ACCEPTANCE
Sec. 125. What constitutes a material alteration. - Any
alteration which changes: Sec. 132. Acceptance; how made, by and so forth. - The
(a) The date; acceptance of a bill is the signification by the drawee of
(b) The sum payable, either for principal or interest; his assent to the order of the drawer. The acceptance
(c) The time or place of must be in writing and signed by the drawee. It must not
payment:chanroblesvirtuallawlibrary express that the drawee will perform his promise by any
(d) The number or the relations of the parties; other means than the payment of money.
(e) The medium or currency in which payment is to be
made; Sec. 133. Holder entitled to acceptance on face of bill. -
(f) Or which adds a place of payment where no place of The holder of a bill presenting the same for acceptance
payment is specified, or any other change or addition may require that the acceptance be written on the bill,
which alters the effect of the instrument in any respect, and, if such request is refused, may treat the bill as
is a material alteration. dishonored.

BILLS OF EXCHANGE Sec. 134. Acceptance by separate instrument. - Where

IX. FORM AND INTERPRETATION an acceptance is written on a paper other than the bill
itself, it does not bind the acceptor except in favor of a
Sec. 126. Bill of exchange, defined. - A bill of exchange is person to whom it is shown and who, on the faith thereof,
an unconditional order in writing addressed by one receives the bill for value.
person to another, signed by the person giving it,
requiring the person to whom it is addressed to pay on Sec. 135. Promise to accept; when equivalent to
demand or at a fixed or determinable future time a sum acceptance. - An unconditional promise in writing to
certain in money to order or to bearer. accept a bill before it is drawn is deemed an actual
acceptance in favor of every person who, upon the faith
Sec. 127. Bill not an assignment of funds in hands of thereof, receives the bill for value.
drawee. - A bill of itself does not operate as an
assignment of the funds in the hands of the drawee Sec. 136. Time allowed drawee to accept. - The drawee
available for the payment thereof, and the drawee is not is allowed twenty-four hours after presentment in which
liable on the bill unless and until he accepts the same. to decide whether or not he will accept the bill; the
acceptance, if given, dates as of the day of presentation.
Sec. 128. Bill addressed to more than one drawee. - A bill
may be addressed to two or more drawees jointly, Sec. 137. Liability of drawee returning or destroying bill. -
whether they are partners or not; but not to two or more Where a drawee to whom a bill is delivered for
drawees in the alternative or in succession. acceptance destroys the same, or refuses within twenty-
four hours after such delivery or within such other period
Sec. 129. Inland and foreign bills of exchange. - An as the holder may allow, to return the bill accepted or
inland bill of exchange is a bill which is, or on its face non-accepted to the holder, he will be deemed to have
purports to be, both drawn and payable within the accepted the same.
Philippines. Any other bill is a foreign bill. Unless the
contrary appears on the face of the bill, the holder may Sec. 138. Acceptance of incomplete bill. - A bill may be
treat it as an inland bill. accepted before it has been signed by the drawer, or
while otherwise incomplete, or when it is overdue, or
Sec. 130. When bill may be treated as promissory note. - after it has been dishonored by a previous refusal to
Where in a bill the drawer and drawee are the same accept, or by non payment. But when a bill payable after
person or where the drawee is a fictitious person or a sight is dishonored by non-acceptance and the drawee
person not having capacity to contract, the holder may subsequently accepts it, the holder, in the absence of
treat the instrument at his option either as a bill of any different agreement, is entitled to have the bill
exchange or as a promissory note. accepted as of the date of the first presentment.

Sec. 131. Referee in case of need. - The drawer of a bill Sec. 139. Kinds of acceptance. - An acceptance is either
and any indorser may insert thereon the name of a general or qualified. A general acceptance assents
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person to whom the holder may resort in case of need; without qualification to the order of the drawer. A
that is to say, in case the bill is dishonored by non- qualified acceptance in express terms varies the effect
acceptance or non-payment. Such person is called a of the bill as drawn.
NEGOTIABLE INSTRUMENTS LAW
(a) Where a bill is addressed to two or more drawees
Sec. 140. What constitutes a general acceptance. - An who are not partners, presentment must be made to
acceptance to pay at a particular place is a general them all unless one has authority to accept or refuse
acceptance unless it expressly states that the bill is to acceptance for all, in which case presentment may be
be paid there only and not elsewhere. made to him only;
(b) Where the drawee is dead, presentment may be
Sec. 141. Qualified acceptance. - An acceptance is made to his personal representative;
qualified which is: (c) Where the drawee has been adjudged a bankrupt or
(a) Conditional; that is to say, which makes payment by an insolvent or has made an assignment for the benefit
the acceptor dependent on the fulfillment of a condition of creditors, presentment may be made to him or to his
therein stated; trustee or assignee.
(b) Partial; that is to say, an acceptance to pay part only
of the amount for which the bill is drawn; Sec. 146. On what days presentment may be made. - A
(c) Local; that is to say, an acceptance to pay only at a bill may be presented for acceptance on any day on
particular place; which negotiable instruments may be presented for
(d) Qualified as to time; payment under the provisions of Sections seventy-two
(e) The acceptance of some, one or more of the drawees and eighty-five of this Act. When Saturday is not
but not of all. otherwise a holiday, presentment for acceptance may be
made before twelve o'clock noon on that day.
Sec. 142. Rights of parties as to qualified acceptance. -
The holder may refuse to take a qualified acceptance Sec. 147. Presentment where time is insufficient. -
and if he does not obtain an unqualified acceptance, he Where the holder of a bill drawn payable elsewhere than
may treat the bill as dishonored by non-acceptance. at the place of business or the residence of the drawee
Where a qualified acceptance is taken, the drawer and has no time, with the exercise of reasonable diligence, to
indorsers are discharged from liability on the bill unless present the bill for acceptance before presenting it for
they have expressly or impliedly authorized the holder to payment on the day that it falls due, the delay caused by
take a qualified acceptance, or subsequently assent presenting the bill for acceptance before presenting it
thereto. When the drawer or an indorser receives notice for payment is excused and does not discharge the
of a qualified acceptance, he must, within a reasonable drawers and indorsers.
time, express his dissent to the holder or he will be
deemed to have assented thereto. Sec. 148. Where presentment is excused. - Presentment
for acceptance is excused and a bill may be treated as
XI. PRESENTMENT FOR ACCEPTANCE dishonored by non-acceptance in either of the following
cases:
Sec. 143. When presentment for acceptance must be (a) Where the drawee is dead, or has absconded, or is a
made. - Presentment for acceptance must be made: fictitious person or a person not having capacity to
(a) Where the bill is payable after sight, or in any other contract by bill.
case, where presentment for acceptance is necessary in (b) Where, after the exercise of reasonable diligence,
order to fix the maturity of the instrument; or presentment can not be made.
(b) Where the bill expressly stipulates that it shall be (c) Where, although presentment has been irregular,
presented for acceptance; or acceptance has been refused on some other ground.
(c) Where the bill is drawn payable elsewhere than at the
residence or place of business of the drawee. Sec. 149. When dishonored by nonacceptance. - A bill is
In no other case is presentment for acceptance dishonored by non-
necessary in order to render any party to the bill liable. acceptance:chanroblesvirtuallawlibrary
(a) When it is duly presented for acceptance and such an
Sec. 144. When failure to present releases drawer and acceptance as is prescribed by this Act is refused or can
indorser. - Except as herein otherwise provided, the not be obtained; or
holder of a bill which is required by the next preceding
section to be presented for acceptance must either (b) When presentment for acceptance is excused and
present it for acceptance or negotiate it within a the bill is not accepted.
reasonable time. If he fails to do so, the drawer and all
indorsers are discharged. Sec. 150. Duty of holder where bill not accepted. - Where
a bill is duly presented for acceptance and is not
Sec. 145. Presentment; how made. - Presentment for accepted within the prescribed time, the person
acceptance must be made by or on behalf of the holder presenting it must treat the bill as dishonored by
Page11

at a reasonable hour, on a business day and before the nonacceptance or he loses the right of recourse against
bill is overdue, to the drawee or some person authorized the drawer and indorsers.
to accept or refuse acceptance on his behalf; and
NEGOTIABLE INSTRUMENTS LAW
Sec. 151. Rights of holder where bill not accepted. - holder may cause the bill to be protested for better
When a bill is dishonored by nonacceptance, an security against the drawer and indorsers. robles virtual
immediate right of recourse against the drawer and law library
indorsers accrues to the holder and no presentment for
payment is necessary. Sec. 159. When protest dispensed with. - Protest is
dispensed with by any circumstances which would
XII. PROTEST dispense with notice of dishonor. Delay in noting or
protesting is excused when delay is caused by
Sec. 152. In what cases protest necessary. - Where a circumstances beyond the control of the holder and not
foreign bill appearing on its face to be such is imputable to his default, misconduct, or negligence.
dishonored by nonacceptance, it must be duly protested When the cause of delay ceases to operate, the bill must
for nonacceptance, by nonacceptance is dishonored and be noted or protested with reasonable diligence.
where such a bill which has not previously been
dishonored by nonpayment, it must be duly protested for Sec. 160. Protest where bill is lost and so forth. - When a
nonpayment. If it is not so protested, the drawer and bill is lost or destroyed or is wrongly detained from the
indorsers are discharged. Where a bill does not appear person entitled to hold it, protest may be made on a copy
on its face to be a foreign bill, protest thereof in case of or written particulars thereof.
dishonor is unnecessary.
XIII. ACCEPTANCE FOR HONOR
Sec. 153. Protest; how made. - The protest must be
annexed to the bill or must contain a copy thereof, and Sec. 161. When bill may be accepted for honor. - When a
must be under the hand and seal of the notary making it bill of exchange has been protested for dishonor by non-
and must specify: acceptance or protested for better security and is not
(a) The time and place of presentment; overdue, any person not being a party already liable
(b) The fact that presentment was made and the manner thereon may, with the consent of the holder, intervene
thereof; and accept the bill supra protest for the honor of any
(c) The cause or reason for protesting the bill; party liable thereon or for the honor of the person for
(d) The demand made and the answer given, if any, or whose account the bill is drawn. The acceptance for
the fact that the drawee or acceptor could not be found. honor may be for part only of the sum for which the bill
Sec. 154. Protest, by whom made. - Protest may be is drawn; and where there has been an acceptance for
made by: honor for one party, there may be a further acceptance
(a) A notary public; or by a different person for the honor of another party.
(b) By any respectable resident of the place where the
bill is dishonored, in the presence of two or more Sec. 162. Acceptance for honor; how made. - An
credible witnesses. acceptance for honor supra protest must be in writing
Sec. 155. Protest; when to be made. - When a bill is and indicate that it is an acceptance for honor and must
protested, such protest must be made on the day of its be signed by the acceptor for honor.
dishonor unless delay is excused as herein provided.
When a bill has been duly noted, the protest may be Sec. 163. When deemed to be an acceptance for honor
subsequently extended as of the date of the noting. of the drawer. - Where an acceptance for honor does not
expressly state for whose honor it is made, it is deemed
Sec. 156. Protest; where made. - A bill must be protested to be an acceptance for the honor of the drawer.
at the place where it is dishonored, except that when a
bill drawn payable at the place of business or residence Sec. 164. Liability of the acceptor for honor. - The
of some person other than the drawee has been acceptor for honor is liable to the holder and to all
dishonored by nonacceptance, it must be protested for parties to the bill subsequent to the party for whose
non-payment at the place where it is expressed to be honor he has accepted.
payable, and no further presentment for payment to, or
demand on, the drawee is necessary. Sec. 165. Agreement of acceptor for honor. - The
acceptor for honor, by such acceptance, engages that he
Sec. 157. Protest both for non-acceptance and non- will, on due presentment, pay the bill according to the
payment. - A bill which has been protested for non- terms of his acceptance provided it shall not have been
acceptance may be subsequently protested for non- paid by the drawee and provided also that is shall have
payment. been duly presented for payment and protested for non-
payment and notice of dishonor given to him.
Sec. 158. Protest before maturity where acceptor
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insolvent. - Where the acceptor has been adjudged a Sec. 166. Maturity of bill payable after sight; accepted
bankrupt or an insolvent or has made an assignment for for honor. - Where a bill payable after sight is accepted
the benefit of creditors before the bill matures, the for honor, its maturity is calculated from the date of the
NEGOTIABLE INSTRUMENTS LAW
noting for non-acceptance and not from the date of the paid are discharged but the payer for honor is
acceptance for honor. subrogated for, and succeeds to, both the rights and
duties of the holder as regards the party for whose
Sec. 167. Protest of bill accepted for honor, and so forth. honor he pays and all parties liable to the latter.
- Where a dishonored bill has been accepted for honor
supra protest or contains a referee in case of need, it Sec. 176. Where holder refuses to receive payment
must be protested for non-payment before it is supra protest. - Where the holder of a bill refuses to
presented for payment to the acceptor for honor or receive payment supra protest, he loses his right of
referee in case of need. recourse against any party who would have been
discharged by such payment.
Sec. 168. Presentment for payment to acceptor for
honor, how made. - Presentment for payment to the Sec. 177. Rights of payer for honor. - The payer for honor,
acceptor for honor must be made as follows: on paying to the holder the amount of the bill and the
(a) If it is to be presented in the place where the protest notarial expenses incidental to its dishonor, is entitled to
for non-payment was made, it must be presented not receive both the bill itself and the protest.
later than the day following its maturity.
XV. BILLS IN SET
(b) If it is to be presented in some other place than the
place where it was protested, then it must be forwarded Sec. 178. Bills in set constitute one bill. - Where a bill is
within the time specified in Section one hundred and drawn in a set, each part of the set being numbered and
four. containing a reference to the other parts, the whole of
Sec. 169. When delay in making presentment is excused. the parts constitutes one bill.
- The provisions of Section eighty-one apply where there
is delay in making presentment to the acceptor for honor Sec. 179. Right of holders where different parts are
or referee in case of need. negotiated. - Where two or more parts of a set are
negotiated to different holders in due course, the holder
Sec. 170. Dishonor of bill by acceptor for honor. - When whose title first accrues is, as between such holders, the
the bill is dishonored by the acceptor for honor, it must true owner of the bill. But nothing in this section affects
be protested for non-payment by him. the right of a person who, in due course, accepts or pays
the parts first presented to him.
XIV. PAYMENT FOR HONOR
Sec. 180. Liability of holder who indorses two or more
Sec. 171. Who may make payment for honor. - Where a parts of a set to different persons. - Where the holder of
bill has been protested for non-payment, any person may a set indorses two or more parts to different persons he
intervene and pay it supra protest for the honor of any is liable on every such part, and every indorser
person liable thereon or for the honor of the person for subsequent to him is liable on the part he has himself
whose account it was drawn. indorsed, as if such parts were separate bills.

Sec. 172. Payment for honor; how made. - The payment Sec. 181. Acceptance of bill drawn in sets. - The
for honor supra protest, in order to operate as such and acceptance may be written on any part and it must be
not as a mere voluntary payment, must be attested by a written on one part only. If the drawee accepts more
notarial act of honor which may be appended to the than one part and such accepted parts negotiated to
protest or form an extension to it. different holders in due course, he is liable on every such
part as if it were a separate bill.
Sec. 173. Declaration before payment for honor. - The
notarial act of honor must be founded on a declaration Sec. 182. Payment by acceptor of bills drawn in sets. -
made by the payer for honor or by his agent in that When the acceptor of a bill drawn in a set pays it without
behalf declaring his intention to pay the bill for honor and requiring the part bearing his acceptance to be delivered
for whose honor he pays. up to him, and the part at maturity is outstanding in the
hands of a holder in due course, he is liable to the holder
Sec. 174. Preference of parties offering to pay for honor. thereon.
- Where two or more persons offer to pay a bill for the
honor of different parties, the person whose payment Sec. 183. Effect of discharging one of a set. - Except as
will discharge most parties to the bill is to be given the herein otherwise provided, where any one part of a bill
preference. drawn in a set is discharged by payment or otherwise,
the whole bill is discharged.
Page13

Sec. 175. Effect on subsequent parties where bill is paid

for honor. - Where a bill has been paid for honor, all XVI. PROMISSORY NOTES AND CHECKS
parties subsequent to the party for whose honor it is
NEGOTIABLE INSTRUMENTS LAW
Sec. 184. Promissory note, defined. - A negotiable constructive, from one person to another;
promissory note within the meaning of this Act is an
unconditional promise in writing made by one person to "Holder" means the payee or indorsee of a bill or note
another, signed by the maker, engaging to pay on who is in possession of it, or the bearer thereof;
demand, or at a fixed or determinable future time, a sum
certain in money to order or to bearer. Where a note is "Indorsement" means an indorsement completed by
drawn to the maker's own order, it is not complete until delivery;
indorsed by him.
"Instrument" means negotiable instrument;
Sec. 185. Check, defined. - A check is a bill of exchange
drawn on a bank payable on demand. Except as herein "Issue" means the first delivery of the instrument,
otherwise provided, the provisions of this Act applicable complete in form, to a person who takes it as a holder;
to a bill of exchange payable on demand apply to a
check. "Person" includes a body of persons, whether
incorporated or not;
Sec. 186. Within what time a check must be presented. -
A check must be presented for payment within a "Value" means valuable consideration;
reasonable time after its issue or the drawer will be
discharged from liability thereon to the extent of the loss "Written" includes printed, and "writing" includes print.
caused by the delay. Sec. 192. Persons primarily liable on instrument. - The
person "primarily" liable on an instrument is the person
Sec. 187. Certification of check; effect of. - Where a who, by the terms of the instrument, is absolutely
check is certified by the bank on which it is drawn, the required to pay the same. All other parties are
certification is equivalent to an acceptance. "secondarily" liable.

Sec. 188. Effect where the holder of check procures it to Sec. 193. Reasonable time, what constitutes. - In
be certified. - Where the holder of a check procures it to determining what is a "reasonable time" regard is to be
be accepted or certified, the drawer and all indorsers are had to the nature of the instrument, the usage of trade or
discharged from liability thereon. business with respect to such instruments, and the facts
of the particular case.
Sec. 189. When check operates as an assignment. - A
check of itself does not operate as an assignment of any Sec. 194. Time, how computed; when last day falls on
part of the funds to the credit of the drawer with the holiday. - Where the day, or the last day for doing any act
bank, and the bank is not liable to the holder unless and herein required or permitted to be done falls on a Sunday
until it accepts or certifies the check. or on a holiday, the act may be done on the next
succeeding secular or business day.
XVII. GENERAL PROVISIONS
Sec. 195. Application of Act. - The provisions of this Act
Sec. 190. Short title. - This Act shall be known as the do not apply to negotiable instruments made and
Negotiable Instruments Law. delivered prior to the taking effect hereof.

Sec. 191. Definition and meaning of terms. - In this Act, Sec. 196. Cases not provided for in Act. - Any case not
unless the contract otherwise requires: provided for in this Act shall be governed by the
"Acceptance" means an acceptance completed by provisions of existing legislation or in default thereof, by
delivery or notification; the rules of the law merchant.

"Action" includes counterclaim and set-off; Sec. 197. Repeals. - All acts and laws and parts thereof
inconsistent with this Act are hereby repealed.
"Bank" includes any person or association of persons
carrying on the business of banking, whether Sec. 198. Time when Act takes effect. - This Act shall
incorporated or not; take effect ninety days after its publication in the Official
Gazette of the Philippine Islands shall have been
"Bearer" means the person in possession of a bill or note completed.
which is payable to bearer;
Enacted: February 3, 1911
"Bill" means bill of exchange, and "note" means
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negotiable promissory note;

"Delivery" means transfer of possession, actual or