This web
page
contains the full text ofAct
No. 2031February
03, 1911
THE
NEGOTIABLE INSTRUMENTS LAW
ACT NO. 2031February
03, 1911 THE
NEGOTIABLE INSTRUMENTS LAWI. FORM
AND INTERPRETATION
Section 1.
Form of negotiable instruments. - An instrument to be negotiable
must conform to the following requirements:chanroblesvirtuallawlibrary
(a) It must
be in writing and signed by the maker or drawer;
(b) Must
contain
an unconditional promise or order to pay a sum certain in money;
(c) Must be
payable on demand, or at a fixed or determinable future time;
(d) Must be
payable to order or to bearer; and
(e) Where the
instrument is addressed to a drawee, he must be named or otherwise
indicated
therein with reasonable certainty.
Sec. 2. What
constitutes certainty as to sum. - The sum payable is a sum certain
within the meaning of this Act, although it is to be paid:chanroblesvirtuallawlibrary
(a) with
interest;
or
(b) by stated
installments; or
(c) by stated
installments, with a provision that, upon default in payment of any
installment
or of interest, the whole shall become due; or
(d) with
exchange,
whether at a fixed rate or at the current rate; or
(e) with
costs
of collection or an attorney's fee, in case payment shall not be made
at
maturity.
Sec. 3. When
promise is unconditional. - An unqualified order or promise to pay
is unconditional within the meaning of this Act though coupled with:chanroblesvirtuallawlibrary
(a) An
indication
of a particular fund out of which reimbursement is to be made or a
particular
account to be debited with the amount; or
(b) A
statement
of the transaction which gives rise to the instrument.
But an order or
promise to pay out of a particular fund is not unconditional.chan
robles virtual law library
Sec. 4. Determinable
future time; what constitutes. - An instrument is payable at a
determinable
future time, within the meaning of this Act, which is expressed to be
payable:chanroblesvirtuallawlibrary
(a) At a
fixed
period after date or sight; or
(b) On or
before
a fixed or determinable future time specified therein; or
(c) On or at
a fixed period after the occurrence of a specified event which is
certain
to happen, though the time of happening be uncertain.
An instrument payable
upon a contingency is not negotiable, and the happening of the event
does
not cure the defect.
Sec. 5. Additional
provisions not affecting negotiability. - An instrument which
contains
an order or promise to do any act in addition to the payment of money
is
not negotiable. But the negotiable character of an instrument otherwise
negotiable is not affected by a provision which:chanroblesvirtuallawlibrary
(a)
authorizes
the sale of collateral securities in case the instrument be not paid at
maturity; or
(b)
authorizes
a confession of judgment if the instrument be not paid at maturity; or
(c) waives
the benefit of any law intended for the advantage or protection of the
obligor; or
(d) gives the
holder an election to require something to be done in lieu of payment
of
money.
But nothing in
this section shall validate any provision or stipulation otherwise
illegal.
Sec. 6. Omissions;
seal; particular money. - The validity and negotiable character of
an instrument are not affected by the fact that:chanroblesvirtuallawlibrary
(a) it is not
dated; or
(b) does not
specify the value given, or that any value had been given therefor; or
(c) does not
specify the place where it is drawn or the place where it is payable; or
(d) bears a
seal; or
(e)
designates
a particular kind of current money in which payment is to be made.
But nothing in
this section shall alter or repeal any statute requiring in certain
cases
the nature of the consideration to be stated in the instrument.
Sec. 7. When
payable on demand. - An instrument is payable on
demand:chanroblesvirtuallawlibrary
(a) When it
is so expressed to be payable on demand, or at sight, or on
presentation;
or
(b) In which
no time for payment is expressed.
Where an instrument
is issued, accepted, or indorsed when overdue, it is, as regards the
person
so issuing, accepting, or indorsing it, payable on demand.
Sec. 8. When
payable to order. - The instrument is payable to order where it is
drawn payable to the order of a specified person or to him or his
order.
It may be drawn payable to the order of:chanroblesvirtuallawlibrary
(a) A payee
who is not maker, drawer, or drawee; or
(b) The
drawer
or maker; or
(c) The
drawee;
or
(d) Two or
more payees jointly; or
(e) One or
some of several payees; or
(f) The
holder of an office for the time being.
Where the instrument
is payable to order, the payee must be named or otherwise indicated
therein
with reasonable certainty.
Sec. 9. When
payable to bearer. - The instrument is payable to
bearer:chanroblesvirtuallawlibrary
(a) When it
is expressed to be so payable; or
(b) When it
is payable to a person named therein or bearer; or
(c) When it
is payable to the order of a fictitious or non-existing person, and
such
fact was known to the person making it so payable; or
(d) When the
name of the payee does not purport to be the name of any
person; or
(e) When the
only or last indorsement is an indorsement in blank.
Sec. 10. Terms,
when sufficient. - The instrument need not follow the language of
this
Act, but any terms are sufficient which clearly indicate an intention
to
conform to the requirements hereof.
Sec. 11. Date,
presumption as to. - Where the instrument or an acceptance or any
indorsement
thereon is dated, such date is deemed prima facie to be the true date
of
the making, drawing, acceptance, or indorsement, as the case may
be.
chanrobles law
Sec. 12. Ante-dated
and post-dated. - The instrument is not invalid for the reason only
that it is ante-dated or post-dated, provided this is not done for an
illegal
or fraudulent purpose. The person to whom an instrument so dated is
delivered
acquires the title thereto as of the date of delivery.
Sec. 13.
When date may be inserted. - Where an instrument expressed to be
payable at a fixed period after date is issued undated, or where the
acceptance
of an instrument payable at a fixed period after sight is undated, any
holder may insert therein the true date of issue or acceptance, and the
instrument shall be payable accordingly. The insertion of a wrong date
does not avoid the instrument in the hands of a subsequent holder in
due
course; but as to him, the date so inserted is to be regarded as the
true
date.
Sec. 14. Blanks;
when may be filled. - Where the instrument is wanting in any
material
particular, the person in possession thereof has a prima facie
authority
to complete it by filling up the blanks therein. And a signature on a
blank
paper delivered by the person making the signature in order that the
paper
may be converted into a negotiable instrument operates as a prima facie
authority to fill it up as such for any amount. In order, however, that
any such instrument when completed may be enforced against any person
who
became a party thereto prior to its completion, it must be filled up
strictly
in accordance with the authority given and within a reasonable time.
But
if any such instrument, after completion, is negotiated to a holder in
due course, it is valid and effectual for all purposes in his hands,
and
he may enforce it as if it had been filled up strictly in accordance
with
the authority given and within a reasonable time.
Sec. 15. Incomplete
instrument not delivered. - Where an incomplete instrument has not
been delivered, it will not, if completed and negotiated without
authority,
be a valid contract in the hands of any holder, as against any person
whose
signature was placed thereon before delivery.
Sec. 16. Delivery;
when effectual; when presumed. - Every contract on a negotiable
instrument
is incomplete and revocable until delivery of the instrument for the
purpose
of giving effect thereto. As between immediate parties and as regards a
remote party other than a holder in due course, the delivery, in order
to be effectual, must be made either by or under the authority of the
party
making, drawing, accepting, or indorsing, as the case may be; and, in
such
case, the delivery may be shown to have been conditional, or for a
special
purpose only, and not for the purpose of transferring the property in
the
instrument. But where the instrument is in the hands of a holder in due
course, a valid delivery thereof by all parties prior to him so as to
make
them liable to him is conclusively presumed. And where the instrument
is
no longer in the possession of a party whose signature appears thereon,
a valid and intentional delivery by him is presumed until the contrary
is proved.
Sec. 17. Construction
where instrument is ambiguous. - Where the language of the
instrument
is ambiguous or there are omissions therein, the following rules of
construction
apply:chanroblesvirtuallawlibrary
(a) Where the
sum payable is expressed in words and also in figures and there is a
discrepancy
between the two, the sum denoted by the words is the sum payable; but
if
the words are ambiguous or uncertain, reference may be had to the
figures
to fix the amount;
(b) Where the
instrument provides for the payment of interest, without specifying the
date from which interest is to run, the interest runs from the date of
the instrument, and if the instrument is undated, from the issue
thereof;
(c) Where the
instrument is not dated, it will be considered to be dated as of the
time
it was issued;
(d) Where
there
is a conflict between the written and printed provisions of the
instrument,
the written provisions prevail;
(e) Where the
instrument is so ambiguous that there is doubt whether it is a bill or
note, the holder may treat it as either at his election;
(f) Where a
signature is so placed upon the instrument that it is not clear in what
capacity the person making the same intended to sign, he is to be
deemed
an indorser;
(g) Where an
instrument containing the word "I promise to pay" is signed by
two
or more persons, they are deemed to be jointly and severally liable
thereon.
Sec. 18. Liability
of person signing in trade or assumed name. - No person is liable
on
the instrument whose signature does not appear thereon, except as
herein
otherwise expressly provided. But one who signs in a trade or assumed
name
will be liable to the same extent as if he had signed in his own name.
Sec. 19. Signature
by agent; authority; how shown. - The signature of any party may be
made by a duly authorized agent. No particular form of appointment is
necessary
for this purpose; and the authority of the agent may be established as
in other cases of agency.
Sec. 20. Liability
of person signing as agent, and so forth. - Where the instrument
contains
or a person adds to his signature words indicating that he signs for or
on behalf of a principal or in a representative capacity, he is not
liable
on the instrument if he was duly authorized; but the mere addition of
words
describing him as an agent, or as filling a representative character,
without
disclosing his principal, does not exempt him from personal liability.
Sec. 21. Signature
by procuration; effect of. - A signature by "procuration"
operates
as notice that the agent has but a limited authority to sign, and the
principal
is bound only in case the agent in so signing acted within the actual
limits
of his authority.
Sec. 22. Effect
of indorsement by infant or corporation.- The indorsement or
assignment
of the instrument by a corporation or by an infant passes the property
therein, notwithstanding that from want of capacity, the corporation or
infant may incur no liability thereon.
Sec. 23. Forged
signature; effect of. - When a signature is forged or made without
the authority of the person whose signature it purports to be, it is
wholly
inoperative, and no right to retain the instrument, or to give a
discharge
therefor, or to enforce payment thereof against any party thereto, can
be acquired through or under such signature, unless the party against
whom
it is sought to enforce such right is precluded from setting up the
forgery
or want of authority.
II.
CONSIDERATIONSec. 24. Presumption
of consideration. - Every negotiable instrument is deemed prima
facie to have been issued for a valuable consideration; and every
person
whose signature appears thereon to have become a party thereto for
value.
Sec. 25. Value,
what constitutes. — Value is any consideration sufficient to
support
a simple contract. An antecedent or pre-existing debt constitutes
value;
and is deemed such whether the instrument is payable on demand or at a
future time.
Sec. 26. What
constitutes holder for value. - Where value has at any time been
given
for the instrument, the holder is deemed a holder for value in respect
to all parties who become such prior to that time.
Sec. 27. When
lien on instrument constitutes holder for value. — Where the holder has
a lien on the instrument arising either from contract or by implication
of law, he is deemed a holder for value to the extent of his lien.
Sec. 28. Effect
of want of consideration. - Absence or failure of consideration is
a matter of defense as against any person not a holder in due course;
and
partial failure of consideration is a defense pro tanto, whether the
failure
is an ascertained and liquidated amount or otherwise.
Sec. 29. Liability
of accommodation party. - An accommodation party is one who has
signed
the instrument as maker, drawer, acceptor, or indorser, without
receiving
value therefor, and for the purpose of lending his name to some other
person.
Such a person is liable on the instrument to a holder for value,
notwithstanding
such holder, at the time of taking the instrument, knew him to be only
an accommodation party.
III.
NEGOTIATION
Sec. 30. What
constitutes negotiation. - An instrument is negotiated when it is
transferred
from one person to another in such manner as to constitute the
transferee
the holder thereof. If payable to bearer, it is negotiated by delivery;
if payable to order, it is negotiated by the indorsement of the holder
and completed by delivery.
Sec. 31. Indorsement;
how made. - The indorsement must be written on the instrument
itself
or upon a paper attached thereto. The signature of the indorser,
without
additional words, is a sufficient indorsement.
Sec. 32. Indorsement
must be of entire instrument. - The indorsement must be an
indorsement
of the entire instrument. An indorsement which purports to transfer to
the indorsee a part only of the amount payable, or which purports to
transfer
the instrument to two or more indorsees severally, does not operate as
a negotiation of the instrument. But where the instrument has been paid
in part, it may be indorsed as to the residue.
Sec. 33. Kinds
of indorsement. - An indorsement may be either special or in blank;
and it may also be either restrictive or qualified or conditional.
Sec. 34. Special
indorsement; indorsement in blank. - A special indorsement
specifies
the person to whom, or to whose order, the instrument is to be payable,
and the indorsement of such indorsee is necessary to the further
negotiation
of the instrument. An indorsement in blank specifies no indorsee, and
an
instrument so indorsed is payable to bearer, and may be negotiated by
delivery.
Sec. 35. Blank
indorsement; how changed to special indorsement. - The holder may
convert
a blank indorsement into a special indorsement by writing over the
signature
of the indorser in blank any contract consistent with the character of
the indorsement.
Sec. 36. When
indorsement restrictive. - An indorsement is restrictive which
either:chanroblesvirtuallawlibrary
(a) Prohibits
the further negotiation of the instrument; or
(b)
Constitutes
the indorsee the agent of the indorser; or
(c) Vests the
title in the indorsee in trust for or to the use of some other persons.
But the mere absence
of words implying power to negotiate does not make an indorsement
restrictive.
Sec. 37. Effect
of restrictive indorsement; rights of indorsee. - A restrictive
indorsement
confers upon the indorsee the right:chanroblesvirtuallawlibrary
(a) to
receive
payment of the instrument;
(b) to bring
any action thereon that the indorser could bring;
(c) to
transfer
his rights as such indorsee, where the form of the indorsement
authorizes
him to do so.
But all subsequent
indorsees acquire only the title of the first indorsee under the
restrictive
indorsement.
Sec. 38. Qualified
indorsement. - A qualified indorsement constitutes the indorser a
mere
assignor of the title to the instrument. It may be made by adding to
the
indorser's signature the words "without recourse" or any words of
similar
import. Such an indorsement does not impair the negotiable character of
the instrument.
Sec. 39. Conditional
indorsement. - Where an indorsement is conditional, the party
required
to pay the instrument may disregard the condition and make payment to
the
indorsee or his transferee whether the condition has been fulfilled or
not. But any person to whom an instrument so indorsed is negotiated
will
hold the same, or the proceeds thereof, subject to the rights of the
person
indorsing conditionally.
Sec. 40. Indorsement
of instrument payable to bearer. - Where an instrument, payable to
bearer, is indorsed specially, it may nevertheless be further
negotiated
by delivery; but the person indorsing specially is liable as indorser
to
only such holders as make title through his indorsement.
Sec. 41. Indorsement
where payable to two or more persons. - Where an instrument is
payable
to the order of two or more payees or indorsees who are not partners,
all
must indorse unless the one indorsing has authority to indorse for the
others.
Sec. 42. Effect
of instrument drawn or indorsed to a person as
cashier.
- Where an instrument is drawn or indorsed to a person as "cashier"
or other fiscal officer of a bank or corporation, it is deemed
prima
facie to be payable to the bank or corporation of which he is such
officer,
and may be negotiated by either the indorsement of the bank or
corporation
or the indorsement of the officer.
Sec. 43. Indorsement
where name is misspelled, and so forth. - Where the name of a payee
or indorsee is wrongly designated or misspelled, he may indorse the
instrument
as therein described adding, if he thinks fit, his proper signature.
Sec. 44. Indorsement
in representative capacity. - Where any person is under obligation
to indorse in a representative capacity, he may indorse in such terms
as
to negative personal liability.robles virtual law library
Sec. 45. Time
of indorsement; presumption. - Except where an indorsement bears
date
after the maturity of the instrument, every negotiation is deemed prima
facie to have been effected before the instrument was overdue.
Sec. 46. Place
of indorsement; presumption. - Except where the contrary appears,
every
indorsement is presumed prima facie to have been made at the place
where
the instrument is dated.
Sec. 47. Continuation
of negotiable character. - An instrument negotiable in its origin
continues
to be negotiable until it has been restrictively indorsed or discharged
by payment or otherwise.
Sec. 48. Striking
out indorsement. - The holder may at any time strike out any
indorsement
which is not necessary to his title. The indorser whose indorsement is
struck out, and all indorsers subsequent to him, are thereby relieved
from
liability on the instrument.
Sec. 49. Transfer
without indorsement; effect of. - Where the holder of an instrument
payable to his order transfers it for value without indorsing it, the
transfer
vests in the transferee such title as the transferor had therein, and
the
transferee acquires in addition, the right to have the indorsement of
the
transferor. But for the purpose of determining whether the transferee
is
a holder in due course, the negotiation takes effect as of the time
when
the indorsement is actually made.
Sec. 50. When
prior party may negotiate instrument. - Where an instrument is
negotiated
back to a prior party, such party may, subject to the provisions of
this
Act, reissue and further negotiable the same. But he is not entitled to
enforce payment thereof against any intervening party to whom he was
personally
liable.
IV.
RIGHTS
OF THE HOLDERSec. 51. Right
of holder to sue; payment. - The holder of a negotiable instrument
may to sue thereon in his own name; and payment to him in due course
discharges
the instrument.
Sec. 52. What
constitutes a holder in due course. - A holder in due course is a
holder
who has taken the instrument under the following conditions:chanroblesvirtuallawlibrary
(a) That it
is complete and regular upon its face;
(b) That he
became the holder of it before it was overdue, and without notice that
it has been previously dishonored, if such was the fact;
(c) That he
took it in good faith and for value;
(d) That at
the time it was negotiated to him, he had no notice of any infirmity in
the instrument or defect in the title of the person negotiating it.
Sec. 53. When
person not deemed holder in due course. - Where an instrument
payable
on demand is negotiated on an unreasonable length of time after its
issue,
the holder is not deemed a holder in due course.
Sec. 54. Notice
before full amount is paid. - Where the transferee receives notice
of any infirmity in the instrument or defect in the title of the person
negotiating the same before he has paid the full amount agreed to be
paid
therefor, he will be deemed a holder in due course only to the extent
of
the amount therefore paid by him.
Sec. 55. When
title defective. - The title of a person who negotiates an
instrument
is defective within the meaning of this Act when he obtained the
instrument,
or any signature thereto, by fraud, duress, or force and fear, or other
unlawful means, or for an illegal consideration, or when he negotiates
it in breach of faith, or under such circumstances as amount to a fraud.
Sec. 56. What
constitutes notice of defect. - To constitutes notice of an
infirmity
in the instrument or defect in the title of the person negotiating the
same, the person to whom it is negotiated must have had actual
knowledge
of the infirmity or defect, or knowledge of such facts that his action
in taking the instrument amounted to bad faith.
Sec. 57. Rights
of holder in due course. - A holder in due course holds the
instrument
free from any defect of title of prior parties, and free from defenses
available to prior parties among themselves, and may enforce payment of
the instrument for the full amount thereof against all parties liable
thereon.robles virtual law library
Sec. 58. When
subject to original defense. - In the hands of any holder other
than
a holder in due course, a negotiable instrument is subject to the same
defenses as if it were non-negotiable. But a holder who derives his
title
through a holder in due course, and who is not himself a party to any
fraud
or illegality affecting the instrument, has all the rights of such
former
holder in respect of all parties prior to the latter.
Sec. 59. Who
is deemed holder in due course. - Every holder is deemed prima
facie
to be a holder in due course; but when it is shown that the title of
any
person who has negotiated the instrument was defective, the burden is
on
the holder to prove that he or some person under whom he claims
acquired
the title as holder in due course. But the last-mentioned rule does not
apply in favor of a party who became bound on the instrument prior to
the
acquisition of such defective title.
V.
LIABILITIES
OF PARTIESSec. 60. Liability
of maker. - The maker of a negotiable instrument, by making it,
engages
that he will pay it according to its tenor, and admits the existence of
the payee and his then capacity to indorse.
Sec. 61. Liability
of drawer. - The drawer by drawing the instrument admits the
existence
of the payee and his then capacity to indorse; and engages that, on due
presentment, the instrument will be accepted or paid, or both,
according
to its tenor, and that if it be dishonored and the necessary
proceedings
on dishonor be duly taken, he will pay the amount thereof to the holder
or to any subsequent indorser who may be compelled to pay it. But the
drawer
may insert in the instrument an express stipulation negativing or
limiting
his own liability to the holder.
Sec. 62. Liability
of acceptor. - The acceptor, by accepting the instrument, engages
that
he will pay it according to the tenor of his acceptance and admits:chanroblesvirtuallawlibrary
(a) The
existence
of the drawer, the genuineness of his signature, and his capacity and
authority
to draw the instrument; and
(b) The
existence
of the payee and his then capacity to indorse.
Sec. 63. When
a person deemed indorser. - A person placing his signature upon an
instrument otherwise than as maker, drawer, or acceptor, is deemed to
be
indorser unless he clearly indicates by appropriate words his intention
to be bound in some other capacity.
Sec. 64. Liability
of irregular indorser. - Where a person, not otherwise a party to
an
instrument, places thereon his signature in blank before delivery, he
is
liable as indorser, in accordance with the following rules:chanroblesvirtuallawlibrary
(a) If the
instrument is payable to the order of a third person, he is liable to
the
payee and to all subsequent parties.
(b) If the
instrument is payable to the order of the maker or drawer, or is
payable
to bearer, he is liable to all parties subsequent to the maker or
drawer.
(c) If he
signs
for the accommodation of the payee, he is liable to all parties
subsequent
to the payee.
Sec. 65. Warranty
where negotiation by delivery and so forth. — Every person
negotiating
an instrument by delivery or by a qualified indorsement warrants:chanroblesvirtuallawlibrary
(a) That the
instrument is genuine and in all respects what it purports to be;
(b) That he
has a good title to it;
(c) That all
prior parties had capacity to contract;
(d) That he
has no knowledge of any fact which would impair the validity of the
instrument
or render it valueless.
But when the negotiation
is by delivery only, the warranty extends in favor of no holder other
than
the immediate transferee.
The provisions
of subdivision (c) of this section do not apply to a person negotiating
public or corporation securities other than bills and notes.
Sec. 66. Liability
of general indorser. - Every indorser who indorses without
qualification,
warrants to all subsequent holders in due course:chanroblesvirtuallawlibrary
(a) The
matters
and things mentioned in subdivisions (a), (b), and (c) of the next
preceding
section; and
(b) That the
instrument is, at the time of his indorsement, valid and subsisting;
And, in addition,
he engages that, on due presentment, it shall be accepted or paid, or
both,
as the case may be, according to its tenor, and that if it be
dishonored
and the necessary proceedings on dishonor be duly taken, he will pay
the
amount thereof to the holder, or to any subsequent indorser who may be
compelled to pay it.
Sec. 67. Liability
of indorser where paper negotiable by delivery. — Where a person
places
his indorsement on an instrument negotiable by delivery, he incurs all
the liability of an indorser.
Sec. 68. Order
in which indorsers are liable. - As respect one another, indorsers
are liable prima facie in the order in which they indorse; but
evidence
is admissible to show that, as between or among themselves, they have
agreed
otherwise. Joint payees or joint indorsees who indorse are deemed
to indorse jointly and severally.robles virtual law library
Sec. 69. Liability
of an agent or broker. - Where a broker or other agent negotiates
an
instrument without indorsement, he incurs all the liabilities
prescribed
by Section Sixty-five of this Act, unless he discloses the name of his
principal and the fact that he is acting only as agent.
VI.
PRESENTATION
FOR PAYMENTSec. 70. Effect
of want of demand on principal debtor. - Presentment for payment is
not necessary in order to charge the person primarily liable on the
instrument;
but if the instrument is, by its terms, payable at a special place, and
he is able and willing to pay it there at maturity, such ability and
willingness
are equivalent to a tender of payment upon his part. But except as
herein
otherwise provided, presentment for payment is necessary in order to
charge
the drawer and indorsers.
Sec. 71. Presentment
where instrument is not payable on demand and where payable on demand.
- Where the instrument is not payable on demand, presentment must
be
made on the day it falls due. Where it is payable on demand,
presentment
must be made within a reasonable time after its issue, except that in
the
case of a bill of exchange, presentment for payment will be sufficient
if made within a reasonable time after the last negotiation thereof.
Sec. 72. What
constitutes a sufficient presentment. - Presentment for payment, to
be sufficient, must be made:chanroblesvirtuallawlibrary
(a) By the
holder, or by some person authorized to receive payment on his behalf;
(b) At a
reasonable
hour on a business day;
(c) At a
proper
place as herein defined;
(d) To the
person primarily liable on the instrument, or if he is absent or
inaccessible,
to any person found at the place where the presentment is made.
Sec. 73. Place
of presentment. - Presentment for payment is made at the proper
place:chanroblesvirtuallawlibrary
(a) Where a
place of payment is specified in the instrument and it is there
presented;
(b) Where no
place of payment is specified but the address of the person to make
payment
is given in the instrument and it is there presented;
(c) Where no
place of payment is specified and no address is given and the
instrument
is presented at the usual place of business or residence of the person
to make payment;
(d) In any
other case if presented to the person to make payment wherever he can
be
found, or if presented at his last known place of business or residence.
Sec. 74. Instrument
must be exhibited. - The instrument must be exhibited to the person
from whom payment is demanded, and when it is paid, must be delivered
up
to the party paying it.
Sec. 75. Presentment
where instrument payable at bank. - Where the instrument is payable
at a bank, presentment for payment must be made during banking hours,
unless
the person to make payment has no funds there to meet it at any time
during
the day, in which case presentment at any hour before the bank is
closed
on that day is sufficient.
Sec. 76. Presentment
where principal debtor is dead. - Where the person primarily liable
on the instrument is dead and no place of payment is specified,
presentment
for payment must be made to his personal representative, if such there
be, and if, with the exercise of reasonable diligence, he can be found.
Sec. 77. Presentment
to persons liable as partners. - Where the persons primarily liable
on the instrument are liable as partners and no place of payment is
specified,
presentment for payment may be made to any one of them, even though
there
has been a dissolution of the firm.
Sec. 78. Presentment
to joint debtors. - Where there are several persons, not partners,
primarily liable on the instrument and no place of payment is
specified,
presentment must be made to them all.
Sec. 79. When
presentment not required to charge the drawer. - Presentment for
payment
is not required in order to charge the drawer where he has no right to
expect or require that the drawee or acceptor will pay the instrument.
Sec. 80. When
presentment not required to charge the indorser. - Presentment is
not
required in order to charge an indorser where the instrument was made
or
accepted for his accommodation and he has no reason to expect that the
instrument will be paid if presented.
Sec. 81. When
delay in making presentment is excused. - Delay in making
presentment
for payment is excused when the delay is caused by circumstances beyond
the control of the holder and not imputable to his default, misconduct,
or negligence. When the cause of delay ceases to operate, presentment
must
be made with reasonable diligence.
Sec. 82. When
presentment for payment is excused. - Presentment for payment is
excused:chanroblesvirtuallawlibrary
(a) Where,
after the exercise of reasonable diligence, presentment, as required by
this Act, cannot be made;
(b) Where the
drawee is a fictitious person;
(c) By waiver
of presentment, express or implied.
Sec. 83. When
instrument dishonored by non-payment. - The instrument is
dishonored
by non-payment when:chanroblesvirtuallawlibrary
(a) It is
duly
presented for payment and payment is refused or cannot be obtained; or
(b)
Presentment
is excused and the instrument is overdue and unpaid.
Sec. 84. Liability
of person secondarily liable, when instrument dishonored. - Subject
to the provisions of this Act, when the instrument is dishonored by
non-payment,
an immediate right of recourse to all parties secondarily liable
thereon
accrues to the holder.robles virtual law library
Sec. 85. Time
of maturity. - Every negotiable instrument is payable at the time
fixed
therein without grace. When the day of maturity falls upon Sunday or a
holiday, the instruments falling due or becoming payable on Saturday
are
to be presented for payment on the next succeeding business day except
that instruments payable on demand may, at the option of the holder, be
presented for payment before twelve o'clock noon on Saturday when that
entire day is not a holiday.
Sec. 86. Time;
how computed. - When the instrument is payable at a fixed period
after
date, after sight, or after that happening of a specified event, the
time
of payment is determined by excluding the day from which the time is to
begin to run, and by including the date of payment.
Sec. 87. Rule
where instrument payable at bank. - Where the instrument is made
payable
at a bank, it is equivalent to an order to the bank to pay the same for
the account of the principal debtor thereon.
Sec. 88. What
constitutes payment in due course. - Payment is made in due course
when it is made at or after the maturity of the payment to the holder
thereof
in good faith and without notice that his title is defective.
VII.
NOTICE
OF DISHONOR Sec. 89. To
whom notice of dishonor must be given. - Except as herein otherwise
provided, when a negotiable instrument has been dishonored by
non-acceptance
or non-payment, notice of dishonor must be given to the drawer and to
each
indorser, and any drawer or indorser to whom such notice is not given
is
discharged.
Sec. 90. By
whom given. - The notice may be given by or on behalf of the
holder,
or by or on behalf of any party to the instrument who might be
compelled
to pay it to the holder, and who, upon taking it up, would have a right
to reimbursement from the party to whom the notice is given.
Sec. 91. Notice
given by agent. - Notice of dishonor may be given by any agent
either
in his own name or in the name of any party entitled to given notice,
whether
that party be his principal or not.
Sec. 92. Effect
of notice on behalf of holder. - Where notice is given by or on
behalf
of the holder, it inures to the benefit of all subsequent holders and
all
prior parties who have a right of recourse against the party to whom it
is given.
Sec. 93. Effect
where notice is given by party entitled thereto. - Where notice is
given by or on behalf of a party entitled to give notice, it inures to
the benefit of the holder and all parties subsequent to the party to
whom
notice is given.
chanrobles law
Sec. 94. When
agent may give notice. - Where the instrument has been dishonored
in
the hands of an agent, he may either himself give notice to the parties
liable thereon, or he may give notice to his principal. If he gives
notice
to his principal, he must do so within the same time as if he were the
holder, and the principal, upon the receipt of such notice, has himself
the same time for giving notice as if the agent had been an independent
holder.
Sec. 95. When
notice sufficient. - A written notice need not be signed and an
insufficient
written notice may be supplemented and validated by verbal
communication.
A misdescription of the instrument does not vitiate the notice unless
the
party to whom the notice is given is in fact misled thereby.
Sec. 96. Form
of notice. - The notice may be in writing or merely oral and may be
given in any terms which sufficiently identify the instrument, and
indicate
that it has been dishonored by non-acceptance or non-payment. It may in
all cases be given by delivering it personally or through the mails.
Sec. 97. To
whom notice may be given. - Notice of dishonor may be given either
to the party himself or to his agent in that behalf.
Sec. 98. Notice
where party is dead. - When any party is dead and his death is
known
to the party giving notice, the notice must be given to a personal
representative,
if there be one, and if with reasonable diligence, he can be found. If
there be no personal representative, notice may be sent to the last
residence
or last place of business of the deceased.
Sec. 99. Notice
to partners. - Where the parties to be notified are partners,
notice
to any one partner is notice to the firm, even though there has been a
dissolution.
Sec. 100. Notice
to persons jointly liable. - Notice to joint persons who are not
partners
must be given to each of them unless one of them has authority to
receive
such notice for the others.
Sec. 101. Notice
to bankrupt. - Where a party has been adjudged a bankrupt or an
insolvent,
or has made an assignment for the benefit of creditors, notice may be
given
either to the party himself or to his trustee or assignee.
Sec. 102. Time
within which notice must be given. - Notice may be given as soon as
the instrument is dishonored and, unless delay is excused as
hereinafter
provided, must be given within the time fixed by this Act.
Sec. 103. Where
parties reside in same place. - Where the person giving and the
person
to receive notice reside in the same place, notice must be given within
the following times:chanroblesvirtuallawlibrary
(a) If given
at the place of business of the person to receive notice, it must be
given
before the close of business hours on the day following.
(b) If given
at his residence, it must be given before the usual hours of rest on
the
day following.
(c) If sent
by mail, it must be deposited in the post office in time to reach him
in
usual course on the day following.
Sec. 104. Where
parties reside in different places. - Where the person giving and
the
person to receive notice reside in different places, the notice must be
given within the following times:chanroblesvirtuallawlibrary
(a) If sent
by mail, it must be deposited in the post office in time to go by mail
the day following the day of dishonor, or if there be no mail at a
convenient
hour on last day, by the next mail thereafter.
(b) If given
otherwise than through the post office, then within the time that
notice
would have been received in due course of mail, if it had been
deposited
in the post office within the time specified in the last subdivision.
Sec. 105. When
sender deemed to have given due notice. - Where notice of dishonor
is duly addressed and deposited in the post office, the sender is
deemed
to have given due notice, notwithstanding any miscarriage in the mails.
Sec. 106. Deposit
in post office; what constitutes. - Notice is deemed to have been
deposited
in the post-office when deposited in any branch post office or in any
letter
box under the control of the post-office department.
Sec. 107. Notice
to subsequent party; time of. - Where a party receives notice of
dishonor,
he has, after the receipt of such notice, the same time for giving
notice
to antecedent parties that the holder has after the dishonor.
Sec. 108. Where
notice must be sent. - Where a party has added an address to his
signature,
notice of dishonor must be sent to that address; but if he has not
given
such address, then the notice must be sent as follows:chanroblesvirtuallawlibrary
(a) Either
to the post-office nearest to his place of residence or to the
post-office
where he is accustomed to receive his letters; or
(b) If he
lives
in one place and has his place of business in another, notice may be
sent
to either place; or
(c) If he is
sojourning in another place, notice may be sent to the place where he
is
so sojourning.
But where the notice
is actually received by the party within the time specified in this
Act,
it will be sufficient, though not sent in accordance with the
requirement
of this section.
Sec. 109. Waiver
of notice. - Notice of dishonor may be waived either before the
time
of giving notice has arrived or after the omission to give due notice,
and the waiver may be expressed or implied.
Sec. 110. Whom
affected by waiver. - Where the waiver is embodied in the
instrument
itself, it is binding upon all parties; but, where it is written above
the signature of an indorser, it binds him only.
Sec. 111. Waiver
of protest. - A waiver of protest, whether in the case of a foreign
bill of exchange or other negotiable instrument, is deemed to be a
waiver
not only of a formal protest but also of presentment and notice of
dishonor.
Sec. 112. When
notice is dispensed with. - Notice of dishonor is dispensed with
when,
after the exercise of reasonable diligence, it cannot be given to or
does
not reach the parties sought to be charged.
Sec. 113. Delay
in giving notice; how excused. - Delay in giving notice of dishonor
is excused when the delay is caused by circumstances beyond the control
of the holder and not imputable to his default, misconduct, or
negligence.
When the cause of delay ceases to operate, notice must be given with
reasonable
diligence.
Sec. 114. When
notice need not be given to drawer. - Notice of dishonor is not
required
to be given to the drawer in either of the following cases:chanroblesvirtuallawlibrary
(a) Where the
drawer and drawee are the same person;
(b) When the
drawee is fictitious person or a person not having capacity to contract;
(c) When the
drawer is the person to whom the instrument is presented for payment;
(d) Where the
drawer has no right to expect or require that the drawee or acceptor
will
honor the instrument;
(e) Where the
drawer has countermanded payment.
Sec. 115. When
notice need not be given to indorser. — Notice of dishonor is not
required
to be given to an indorser in either of the following cases:chanroblesvirtuallawlibrary
(a) When the
drawee is a fictitious person or person not having capacity to
contract,
and the indorser was aware of that fact at the time he indorsed the
instrument;
(b) Where the
indorser is the person to whom the instrument is presented for payment;
(c) Where the
instrument was made or accepted for his accommodation.
Sec. 116. Notice
of non-payment where acceptance refused. - Where due notice of
dishonor
by non-acceptance has been given, notice of a subsequent dishonor by
non-payment
is not necessary unless in the meantime the instrument has been
accepted.
Sec. 117. Effect
of omission to give notice of non-acceptance. - An omission to give
notice of dishonor by non-acceptance does not prejudice the rights of a
holder in due course subsequent to the omission.
Sec. 118. When
protest need not be made; when must be made. - Where any negotiable
instrument has been dishonored, it may be protested for non-acceptance
or non-payment, as the case may be; but protest is not required except
in the case of foreign bills of exchange.robles virtual law library
VIII.
DISCHARGE
OF NEGOTIABLEINSTRUMENTS
Sec. 119. Instrument;
how discharged. - A negotiable instrument is discharged:chanroblesvirtuallawlibrary
(a) By
payment
in due course by or on behalf of the principal debtor;
(b) By
payment
in due course by the party accommodated, where the instrument is made
or
accepted for his accommodation;
(c) By the
intentional cancellation thereof by the holder;
(d) By any
other act which will discharge a simple contract for the payment of
money;
(e) When the
principal debtor becomes the holder of the instrument at or after
maturity
in his own right.
Sec. 120. When
persons secondarily liable on the instrument are discharged. - A
person
secondarily liable on the instrument is discharged:chanroblesvirtuallawlibrary
(a) By any
act which discharges the instrument;
(b) By the
intentional cancellation of his signature by the holder;
(c) By the
discharge of a prior party;
(d) By a
valid
tender or payment made by a prior party;
(e) By a
release
of the principal debtor unless the holder's right of recourse against
the
party secondarily liable is expressly reserved;
(f) By any
agreement binding upon the holder to extend the time of payment or to
postpone
the holder's right to enforce the instrument unless made with the
assent
of the party secondarily liable or unless the right of recourse against
such party is expressly reserved.
Sec. 121. Right
of party who discharges instrument. - Where the instrument is paid
by a party secondarily liable thereon, it is not discharged; but the
party
so paying it is remitted to his former rights as regard all prior
parties,
and he may strike out his own and all subsequent indorsements and
against
negotiate the instrument, except:chanroblesvirtuallawlibrary
(a) Where it
is payable to the order of a third person and has been paid by the
drawer;
and
(b) Where it
was made or accepted for accommodation and has been paid by the party
accommodated.
Sec. 122. Renunciation
by holder. - The holder may expressly renounce his rights against
any
party to the instrument before, at, or after its maturity. An absolute
and unconditional renunciation of his rights against the principal
debtor
made at or after the maturity of the instrument discharges the
instrument.
But a renunciation does not affect the rights of a holder in due course
without notice. A renunciation must be in writing unless the instrument
is delivered up to the person primarily liable thereon.
Sec. 123. Cancellation;
unintentional; burden of proof. - A cancellation made
unintentionally
or under a mistake or without the authority of the holder, is
inoperative
but where an instrument or any signature thereon appears to have been
cancelled,
the burden of proof lies on the party who alleges that the cancellation
was made unintentionally or under a mistake or without authority.
Sec. 124. Alteration
of instrument; effect of. - Where a negotiable instrument is
materially
altered without the assent of all parties liable thereon, it is
avoided,
except as against a party who has himself made, authorized, or assented
to the alteration and subsequent indorsers.
But when an
instrument has been materially altered and is in the hands of a holder
in due course not a party to the alteration, he may enforce payment
thereof
according to its original tenor.
Sec. 125. What
constitutes a material alteration. - Any alteration which changes:chanroblesvirtuallawlibrary
(a) The date;
(b) The sum
payable, either for principal or interest;
(c) The time
or place of payment:chanroblesvirtuallawlibrary
(d) The
number
or the relations of the parties;
(e) The
medium
or currency in which payment is to be made;
(f) Or which
adds a place of payment where no place of payment is specified, or any
other change or addition which alters the effect of the instrument in
any
respect, is a material alteration.
BILLS
OF
EXCHANGE IX.
FORM
AND INTERPRETATION Sec. 126. Bill
of exchange, defined. - A bill of exchange is an unconditional
order
in writing addressed by one person to another, signed by the person
giving
it, requiring the person to whom it is addressed to pay on demand or at
a fixed or determinable future time a sum certain in money to order or
to bearer.
Sec. 127. Bill
not an assignment of funds in hands of drawee. - A bill of itself
does
not operate as an assignment of the funds in the hands of the drawee
available
for the payment thereof, and the drawee is not liable on the bill
unless
and until he accepts the same.
Sec. 128. Bill
addressed to more than one drawee. - A bill may be addressed to two
or more drawees jointly, whether they are partners or not; but not to
two
or more drawees in the alternative or in succession.
Sec. 129. Inland
and foreign bills of exchange. - An inland bill of exchange is a
bill
which is, or on its face purports to be, both drawn and payable within
the Philippines. Any other bill is a foreign bill. Unless the contrary
appears on the face of the bill, the holder may treat it as an inland
bill.
Sec. 130. When
bill may be treated as promissory note. - Where in a bill the
drawer
and drawee are the same person or where the drawee is a fictitious
person
or a person not having capacity to contract, the holder may treat the
instrument
at his option either as a bill of exchange or as a promissory note.
Sec. 131. Referee
in case of need. - The drawer of a bill and any indorser may insert
thereon the name of a person to whom the holder may resort in case of
need;
that is to say, in case the bill is dishonored by non-acceptance or
non-payment.
Such person is called a referee in case of need. It is in the option of
the holder to resort to the referee in case of need or not as he may
see
fit.
X.
ACCEPTANCE Sec. 132. Acceptance;
how made, by and so forth. - The acceptance of a bill is the
signification
by the drawee of his assent to the order of the drawer. The acceptance
must be in writing and signed by the drawee. It must not express that
the
drawee will perform his promise by any other means than the payment of
money.
Sec. 133. Holder
entitled to acceptance on face of bill. - The holder of a bill
presenting
the same for acceptance may require that the acceptance be written on
the
bill, and, if such request is refused, may treat the bill as dishonored.
Sec. 134. Acceptance
by separate instrument. - Where an acceptance is written on a paper
other than the bill itself, it does not bind the acceptor except in
favor
of a person to whom it is shown and who, on the faith thereof, receives
the bill for value.
Sec. 135. Promise
to accept; when equivalent to acceptance. - An unconditional
promise
in writing to accept a bill before it is drawn is deemed an actual
acceptance
in favor of every person who, upon the faith thereof, receives the bill
for value.
Sec. 136. Time
allowed drawee to accept. - The drawee is allowed twenty-four hours
after presentment in which to decide whether or not he will accept the
bill; the acceptance, if given, dates as of the day of presentation.
Sec. 137. Liability
of drawee returning or destroying bill. - Where a drawee to whom a
bill is delivered for acceptance destroys the same, or refuses within
twenty-four
hours after such delivery or within such other period as the holder may
allow, to return the bill accepted or non-accepted to the holder, he
will
be deemed to have accepted the same.
Sec. 138. Acceptance
of incomplete bill. - A bill may be accepted before it has been
signed
by the drawer, or while otherwise incomplete, or when it is overdue, or
after it has been dishonored by a previous refusal to accept, or by non
payment. But when a bill payable after sight is dishonored by
non-acceptance
and the drawee subsequently accepts it, the holder, in the absence of
any
different agreement, is entitled to have the bill accepted as of the
date
of the first presentment.
Sec. 139. Kinds
of acceptance. - An acceptance is either general or qualified. A
general
acceptance assents without qualification to the order of the drawer. A
qualified acceptance in express terms varies the effect of the bill as
drawn.
Sec. 140. What
constitutes a general acceptance. - An acceptance to pay at a
particular
place is a general acceptance unless it expressly states that the bill
is to be paid there only and not elsewhere.
Sec. 141. Qualified
acceptance. - An acceptance is qualified which is:chanroblesvirtuallawlibrary
(a)
Conditional;
that is to say, which makes payment by the acceptor dependent on the
fulfillment
of a condition therein stated;
(b) Partial;
that is to say, an acceptance to pay part only of the amount for which
the bill is drawn;
(c) Local;
that is to say, an acceptance to pay only at a particular place;
(d) Qualified
as to time;
(e) The
acceptance
of some, one or more of the drawees but not of all.
Sec. 142. Rights
of parties as to qualified acceptance. - The holder may refuse to
take
a qualified acceptance and if he does not obtain an unqualified
acceptance,
he may treat the bill as dishonored by non-acceptance. Where a
qualified
acceptance is taken, the drawer and indorsers are discharged from
liability
on the bill unless they have expressly or impliedly authorized the
holder
to take a qualified acceptance, or subsequently assent thereto. When
the
drawer or an indorser receives notice of a qualified acceptance, he
must,
within a reasonable time, express his dissent to the holder or he will
be deemed to have assented thereto.
XI.
PRESENTMENT
FOR ACCEPTANCE
Sec. 143. When
presentment for acceptance must be made. - Presentment for
acceptance
must be made:chanroblesvirtuallawlibrary
(a) Where the
bill is payable after sight, or in any other case, where presentment
for
acceptance is necessary in order to fix the maturity of the instrument;
or
(b) Where the
bill expressly stipulates that it shall be presented for acceptance; or
(c) Where the
bill is drawn payable elsewhere than at the residence or place of
business
of the drawee.
In no other case
is presentment for acceptance necessary in order to render any party to
the bill liable.
Sec. 144. When
failure to present releases drawer and indorser. - Except as herein
otherwise provided, the holder of a bill which is required by the next
preceding section to be presented for acceptance must either present it
for acceptance or negotiate it within a reasonable time. If he fails to
do so, the drawer and all indorsers are discharged.
Sec. 145. Presentment;
how made. - Presentment for acceptance must be made by or on behalf
of the holder at a reasonable hour, on a business day and before the
bill
is overdue, to the drawee or some person authorized to accept or refuse
acceptance on his behalf; and
(a) Where a
bill is addressed to two or more drawees who are not partners,
presentment
must be made to them all unless one has authority to accept or refuse
acceptance
for all, in which case presentment may be made to him only;
(b) Where the
drawee is dead, presentment may be made to his personal representative;
(c) Where the
drawee has been adjudged a bankrupt or an insolvent or has made an
assignment
for the benefit of creditors, presentment may be made to him or to his
trustee or assignee.
Sec. 146. On
what days presentment may be made. - A bill may be presented for
acceptance
on any day on which negotiable instruments may be presented for payment
under the provisions of Sections seventy-two and eighty-five of this
Act.
When Saturday is not otherwise a holiday, presentment for acceptance
may
be made before twelve o'clock noon on that day.
Sec. 147. Presentment
where time is insufficient. - Where the holder of a bill drawn
payable
elsewhere than at the place of business or the residence of the drawee
has no time, with the exercise of reasonable diligence, to present the
bill for acceptance before presenting it for payment on the day that it
falls due, the delay caused by presenting the bill for acceptance
before
presenting it for payment is excused and does not discharge the drawers
and indorsers.
Sec. 148. Where
presentment is excused. - Presentment for acceptance is excused and
a bill may be treated as dishonored by non-acceptance in either of the
following cases:chanroblesvirtuallawlibrary
(a) Where the
drawee is dead, or has absconded, or is a fictitious person or a person
not having capacity to contract by bill.
(b) Where,
after the exercise of reasonable diligence, presentment can not be made.
(c) Where,
although presentment has been irregular, acceptance has been refused on
some other ground.
Sec. 149. When
dishonored by nonacceptance. - A bill is dishonored by
non-acceptance:chanroblesvirtuallawlibrary
(a) When it
is duly presented for acceptance and such an acceptance as is
prescribed
by this Act is refused or can not be obtained; or
(b) When
presentment
for acceptance is excused and the bill is not accepted.
Sec. 150. Duty
of holder where bill not accepted. - Where a bill is duly presented
for acceptance and is not accepted within the prescribed time, the
person
presenting it must treat the bill as dishonored by nonacceptance or he
loses the right of recourse against the drawer and indorsers.
Sec. 151. Rights
of holder where bill not accepted. - When a bill is dishonored by
nonacceptance,
an immediate right of recourse against the drawer and indorsers accrues
to the holder and no presentment for payment is necessary.
XII.
PROTEST Sec. 152. In
what cases protest necessary. - Where a foreign bill appearing on
its
face to be such is dishonored by nonacceptance, it must be duly
protested
for nonacceptance, by nonacceptance is dishonored and where such a bill
which has not previously been dishonored by nonpayment, it must be duly
protested for nonpayment. If it is not so protested, the drawer and
indorsers
are discharged. Where a bill does not appear on its face to be a
foreign
bill, protest thereof in case of dishonor is unnecessary.
Sec. 153. Protest;
how made. - The protest must be annexed to the bill or must contain
a copy thereof, and must be under the hand and seal of the notary
making
it and must specify:chanroblesvirtuallawlibrary
(a) The time
and place of presentment;
(b) The fact
that presentment was made and the manner thereof;
(c) The cause
or reason for protesting the bill;
(d) The
demand
made and the answer given, if any, or the fact that the drawee or
acceptor
could not be found.
Sec. 154. Protest,
by whom made. - Protest may be made by:chanroblesvirtuallawlibrary
(a) A notary
public; or
(b) By any
respectable resident of the place where the bill is dishonored, in the
presence of two or more credible witnesses.
Sec. 155. Protest;
when to be made. - When a bill is protested, such protest must be
made
on the day of its dishonor unless delay is excused as herein provided.
When a bill has been duly noted, the protest may be subsequently
extended
as of the date of the noting.
Sec. 156. Protest;
where made. - A bill must be protested at the place where it is
dishonored,
except that when a bill drawn payable at the place of business or
residence
of some person other than the drawee has been dishonored by
nonacceptance,
it must be protested for non-payment at the place where it is expressed
to be payable, and no further presentment for payment to, or demand on,
the drawee is necessary.
Sec. 157. Protest
both for non-acceptance and non-payment. - A bill which has been
protested
for non-acceptance may be subsequently protested for non-payment.
Sec. 158. Protest
before maturity where acceptor insolvent. - Where the acceptor has
been adjudged a bankrupt or an insolvent or has made an assignment for
the benefit of creditors before the bill matures, the holder may cause
the bill to be protested for better security against the drawer and
indorsers.robles virtual law library
Sec. 159. When
protest dispensed with. - Protest is dispensed with by any
circumstances
which would dispense with notice of dishonor. Delay in noting or
protesting
is excused when delay is caused by circumstances beyond the control of
the holder and not imputable to his default, misconduct, or negligence.
When the cause of delay ceases to operate, the bill must be noted or
protested
with reasonable diligence.
Sec. 160. Protest
where bill is lost and so forth. - When a bill is lost or destroyed
or is wrongly detained from the person entitled to hold it, protest may
be made on a copy or written particulars thereof.
XIII.
ACCEPTANCE
FOR HONOR
Sec. 161. When
bill may be accepted for honor. - When a bill of exchange has been
protested for dishonor by non-acceptance or protested for better
security
and is not overdue, any person not being a party already liable thereon
may, with the consent of the holder, intervene and accept the bill supra
protest for the honor of any party liable thereon or for the honor of
the
person for whose account the bill is drawn. The acceptance for honor
may
be for part only of the sum for which the bill is drawn; and where
there
has been an acceptance for honor for one party, there may be a further
acceptance by a different person for the honor of another party.
Sec. 162. Acceptance
for honor; how made. - An acceptance for honor supra protest must
be
in writing and indicate that it is an acceptance for honor and must be
signed by the acceptor for honor.chanrobles
law
Sec. 163. When
deemed to be an acceptance for honor of the drawer. - Where an
acceptance
for honor does not expressly state for whose honor it is made, it is
deemed
to be an acceptance for the honor of the drawer.
Sec. 164. Liability
of the acceptor for honor. - The acceptor for honor is liable to
the
holder and to all parties to the bill subsequent to the party for whose
honor he has accepted.
Sec. 165. Agreement
of acceptor for honor. - The acceptor for honor, by such
acceptance,
engages that he will, on due presentment, pay the bill according to the
terms of his acceptance provided it shall not have been paid by the
drawee
and provided also that is shall have been duly presented for payment
and
protested for non-payment and notice of dishonor given to him.
Sec. 166. Maturity
of bill payable after sight; accepted for honor. - Where a bill
payable
after sight is accepted for honor, its maturity is calculated from the
date of the noting for non-acceptance and not from the date of the
acceptance
for honor.
Sec. 167. Protest
of bill accepted for honor, and so forth. - Where a dishonored bill
has been accepted for honor supra protest or contains a referee in case
of need, it must be protested for non-payment before it is presented
for
payment to the acceptor for honor or referee in case of need.
Sec. 168. Presentment
for payment to acceptor for honor, how
made.
- Presentment for payment to the acceptor for honor must be made as
follows:chanroblesvirtuallawlibrary
(a) If it is
to be presented in the place where the protest for non-payment was
made,
it must be presented not later than the day following its maturity.
(b) If it is
to be presented in some other place than the place where it was
protested,
then it must be forwarded within the time specified in Section one
hundred
and four.
Sec. 169. When
delay in making presentment is excused. - The provisions of Section
eighty-one apply where there is delay in making presentment to the
acceptor
for honor or referee in case of need.
Sec. 170. Dishonor
of bill by acceptor for honor. - When the bill is dishonored by the
acceptor for honor, it must be protested for non-payment by him.
XIV.
PAYMENT
FOR HONOR Sec. 171.
Who
may make payment for honor. - Where a bill has been protested for
non-payment,
any person may intervene and pay it supra protest for the honor
of any person liable thereon or for the honor of the person for whose
account
it was drawn.
Sec. 172. Payment
for honor; how made. - The payment for honor supra
protest,
in order to operate as such and not as a mere voluntary payment, must
be
attested by a notarial act of honor which may be appended to the
protest
or form an extension to it.
Sec. 173. Declaration
before payment for honor. - The notarial act of honor must be
founded
on a declaration made by the payer for honor or by his agent in that
behalf
declaring his intention to pay the bill for honor and for whose honor
he
pays.
Sec. 174. Preference
of parties offering to pay for honor. - Where two or more persons
offer
to pay a bill for the honor of different parties, the person whose
payment
will discharge most parties to the bill is to be given the preference.
Sec. 175. Effect
on subsequent parties where bill is paid for
honor.
- Where a bill has been paid for honor, all parties subsequent to the
party
for whose honor it is paid are discharged but the payer for honor is
subrogated
for, and succeeds to, both the rights and duties of the holder as
regards
the party for whose honor he pays and all parties liable to the latter.
Sec. 176. Where
holder refuses to receive payment supra protest. - Where the holder
of a bill refuses to receive payment supra protest, he loses
his
right of recourse against any party who would have been discharged by
such
payment.
Sec. 177. Rights
of payer for honor. - The payer for honor, on paying to the holder
the amount of the bill and the notarial expenses incidental to its
dishonor,
is entitled to receive both the bill itself and the protest.
XV.
BILLS
IN SET
Sec. 178. Bills
in set constitute one bill. - Where a bill is drawn in a set, each
part of the set being numbered and containing a reference to the other
parts, the whole of the parts constitutes one bill.
Sec. 179. Right
of holders where different parts are negotiated. - Where two or
more
parts of a set are negotiated to different holders in due course, the
holder
whose title first accrues is, as between such holders, the true owner
of
the bill. But nothing in this section affects the right of a
person
who, in due course, accepts or pays the parts first presented to him.
Sec. 180. Liability
of holder who indorses two or more parts of a set to different persons.
- Where the holder of a set indorses two or more parts to different
persons
he is liable on every such part, and every indorser subsequent to him
is
liable on the part he has himself indorsed, as if such parts were
separate
bills.
Sec. 181. Acceptance
of bill drawn in sets. - The acceptance may be written on any part
and it must be written on one part only. If the drawee accepts more
than
one part and such accepted parts negotiated to different holders in due
course, he is liable on every such part as if it were a separate bill.
Sec. 182. Payment
by acceptor of bills drawn in sets. - When the acceptor of a bill
drawn
in a set pays it without requiring the part bearing his acceptance to
be
delivered 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 thereon.
Sec. 183. Effect
of discharging one of a set. - Except as herein otherwise provided,
where any one part of a bill drawn in a set is discharged by payment or
otherwise, the whole bill is discharged.
XVI.
PROMISSORY
NOTES AND CHECKS Sec. 184. Promissory
note, defined. - A negotiable promissory note within the meaning of
this Act is an unconditional promise in writing made by one person to
another,
signed by the maker, engaging to pay on demand, or at a fixed or
determinable
future time, a sum certain in money to order or to bearer. Where a note
is drawn to the maker's own order, it is not complete until indorsed by
him.
Sec. 185. Check,
defined. - A check is a bill of exchange drawn on a bank payable on
demand. Except as herein otherwise provided, the provisions of this Act
applicable to a bill of exchange payable on demand apply to a check.
Sec. 186. Within
what time a check must be presented. - A check must be presented
for
payment within a reasonable time after its issue or the drawer will be
discharged from liability thereon to the extent of the loss caused by
the
delay.
Sec. 187. Certification
of check; effect of. - Where a check is certified by the bank on
which
it is drawn, the certification is equivalent to an acceptance.
Sec. 188. Effect
where the holder of check procures it to be certified. - Where the
holder of a check procures it to be accepted or certified, the drawer
and
all indorsers are discharged from liability thereon.
Sec. 189. When
check operates as an assignment. - A check of itself does not
operate
as an assignment of any part of the funds to the credit of the drawer
with
the bank, and the bank is not liable to the holder unless and until it
accepts or certifies the check.
XVII.
GENERAL
PROVISIONS Sec. 190. Short
title. - This Act shall be known as the Negotiable Instruments Law.
Sec. 191. Definition
and meaning of terms. - In this Act, unless the contract otherwise
requires:chanroblesvirtuallawlibrary
"Acceptance"
means an acceptance completed by delivery or notification;
"Action" includes
counterclaim and set-off;
"Bank" includes
any person or association of persons carrying on the business of
banking,
whether incorporated or not;
"Bearer"
means the person in possession of a bill or note which is payable to
bearer;
"Bill"
means bill of exchange, and "note" means negotiable promissory note;
"Delivery"
means transfer of possession, actual or constructive, from one person
to
another;
"Holder" means
the payee or indorsee of a bill or note who is in
possession
of it, or the bearer thereof;
"Indorsement"
means an indorsement completed by delivery;
"Instrument"
means negotiable instrument;
"Issue" means
the first delivery of the instrument, complete in form, to
a
person who takes it as a holder;
"Person" includes
a body of persons, whether incorporated or not;
"Value"
means valuable consideration;
"Written" includes
printed, and "writing" includes print.
Sec. 192. Persons
primarily liable on instrument. - The person "primarily"
liable
on an instrument is the person who, by the terms of the instrument, is
absolutely required to pay the same. All other parties are "secondarily"
liable.
Sec. 193. Reasonable
time, what constitutes. - In determining what is a "reasonable
time"
regard is to be had to the nature of the instrument, the usage of trade
or business with respect to such instruments, and the facts of the
particular
case.
Sec. 194. Time,
how computed; when last day falls on holiday. - Where the day, or
the
last day for doing any act herein required or permitted to be done
falls
on a Sunday or on a holiday, the act may be done on the next succeeding
secular or business day.
Sec. 195. Application
of Act. - The provisions of this Act do not apply to negotiable
instruments
made and delivered prior to the taking effect hereof.
chanrobles law
Sec. 196. Cases
not provided for in Act. - Any case not provided for in this Act
shall
be governed by the provisions of existing legislation or in default
thereof,
by the rules of the law merchant.
Sec. 197. Repeals.
- All acts and laws and parts thereof inconsistent with this Act are
hereby
repealed.
Sec. 198. Time
when Act takes effect. - This Act shall take effect ninety days
after
its publication in the Official Gazette of the Philippine Islands shall
have been completed.
Enacted:
February 3, 1911
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