Professional Documents
Culture Documents
Sec. 41. Indorsement where payable to two Sec. 47. Continuation of negotiable
or more persons. - Where an instrument is character. - An instrument negotiable in its
payable to the order of two or more payees origin continues to be negotiable until it has
or indorsees who are not partners, all must been restrictively indorsed or discharged by
indorse unless the one indorsing has payment or otherwise.
authority to indorse for the others.
Sec. 48. Striking out indorsement. - The
Sec. 42. Effect of instrument drawn or holder may at any time strike out any
indorsed to a person as indorsement which is not necessary to his
cashier. - Where an instrument is drawn or title. The indorser whose indorsement is
indorsed to a person as "cashier" or other struck out, and all indorsers subsequent to
fiscal officer of a bank or corporation, it is him, are thereby relieved from liability on
deemed prima facie to be payable to the the instrument.
bank or corporation of which he is such
officer, and may be negotiated by either the Sec. 49. Transfer without indorsement;
indorsement of the bank or corporation or effect of. - Where the holder of an
the indorsement of the officer. instrument payable to his order transfers it
for value without indorsing it, the transfer
Sec. 43. Indorsement where name is vests in the transferee such title as the
misspelled, and so forth. - Where the name transferor had therein, and the transferee
of a payee or indorsee is wrongly acquires in addition, the right to have the
designated or misspelled, he may indorse indorsement of the transferor. But for the
the instrument as therein described adding, purpose of determining whether the
if he thinks fit, his proper signature. transferee is a holder in due course, the
negotiation takes effect as of the time when
Sec. 44. Indorsement in representative the indorsement is actually made.
capacity. - Where any person is under
obligation to indorse in a representative Sec. 50. When prior party may negotiate
capacity, he may indorse in such terms as instrument. - Where an instrument is
to negative personal liability. robles virtual negotiated back to a prior party, such party
may, subject to the provisions of this Act, infirmity in the instrument or defect in the
reissue and further negotiable the same. title of the person negotiating the same
But he is not entitled to enforce payment before he has paid the full amount agreed
thereof against any intervening party to to be paid therefor, he will be deemed a
whom he was personally liable. holder in due course only to the extent of
the amount therefore paid by him.
IV. RIGHTS OF THE HOLDER Sec. 55. When title defective. - The title of a
person who negotiates an instrument is
Sec. 51. Right of holder to sue; payment. - defective within the meaning of this Act
The holder of a negotiable instrument may when he obtained the instrument, or any
to sue thereon in his own name; and signature thereto, by fraud, duress, or force
payment to him in due course discharges and fear, or other unlawful means, or for an
the instrument. illegal consideration, or when he negotiates
it in breach of faith, or under such
Sec. 52. What constitutes a holder in due circumstances as amount to a fraud.
course. - A holder in due course is a holder
who has taken the instrument under the Sec. 56. What constitutes notice of defect. -
following To constitutes notice of an infirmity in the
conditions:chanroblesvirtuallawlibrary instrument or defect in the title of the
(a) That it is complete and regular upon its person negotiating the same, the person to
face; whom it is negotiated must have had actual
knowledge of the infirmity or defect, or
(b) That he became the holder of it before knowledge of such facts that his action in
it was overdue, and without notice that it taking the instrument amounted to bad
has been previously dishonored, if such was faith.
the fact;
Sec. 57. Rights of holder in due course. - A
(c) That he took it in good faith and for holder in due course holds the instrument
value; free from any defect of title of prior parties,
and free from defenses available to prior
(d) That at the time it was negotiated to parties among themselves, and may enforce
him, he had no notice of any infirmity in the payment of the instrument for the full
instrument or defect in the title of the amount thereof against all parties liable
person negotiating it. thereon. robles virtual law library
Sec. 53. When person not deemed holder in Sec. 58. When subject to original defense. -
due course. - Where an instrument payable In the hands of any holder other than a
on demand is negotiated on an holder in due course, a negotiable
unreasonable length of time after its issue, instrument is subject to the same defenses
the holder is not deemed a holder in due as if it were non-negotiable. But a holder
course. who derives his title through a holder in due
course, and who is not himself a party to
Sec. 54. Notice before full amount is paid. - any fraud or illegality affecting the
Where the transferee receives notice of any instrument, has all the rights of such former
holder in respect of all parties prior to the (a) The existence of the drawer, the
latter. genuineness of his signature, and his
capacity and authority to draw the
Sec. 59. Who is deemed holder in due instrument; and
course. - Every holder is deemed prima
facie to be a holder in due course; but when (b) The existence of the payee and his then
it is shown that the title of any person who capacity to indorse.
has negotiated the instrument was
Sec. 63. When a person deemed indorser. -
defective, the burden is on the holder to
A person placing his signature upon an
prove that he or some person under whom
instrument otherwise than as maker,
he claims acquired the title as holder in due
drawer, or acceptor, is deemed to be
course. But the last-mentioned rule does
indorser unless he clearly indicates by
not apply in favor of a party who became
appropriate words his intention to be bound
bound on the instrument prior to the
in some other capacity.
acquisition of such defective title.
(c) At a proper place as herein defined; Sec. 76. Presentment where principal
debtor is dead. - Where the person
(d) To the person primarily liable on the primarily liable on the instrument is dead
instrument, or if he is absent or and no place of payment is specified,
inaccessible, to any person found at the presentment for payment must be made to
place where the presentment is made. his personal representative, if such there
be, and if, with the exercise of reasonable
Sec. 73. Place of presentment. -
diligence, he can be found.
Presentment for payment is made at the
proper place:chanroblesvirtuallawlibrary
Sec. 77. Presentment to persons liable as
(a) Where a place of payment is specified in partners. - Where the persons primarily
the instrument and it is there presented; liable on the instrument are liable as
partners and no place of payment is
(b) Where no place of payment is specified specified, presentment for payment may be
but the address of the person to make made to any one of them, even though
payment is given in the instrument and it is there has been a dissolution of the firm.
there presented;
Sec. 78. Presentment to joint debtors. -
(c) Where no place of payment is specified Where there are several persons, not
and no address is given and the instrument partners, primarily liable on the instrument
is presented at the usual place of business and no place of payment is specified,
or residence of the person to make presentment must be made to them all.
payment;
Sec. 79. When presentment not required to
(d) In any other case if presented to the charge the drawer. - Presentment for
person to make payment wherever he can payment is not required in order to charge
be found, or if presented at his last known the drawer where he has no right to expect
place of business or residence. or require that the drawee or acceptor will
pay the instrument.
Sec. 74. Instrument must be exhibited. -
The instrument must be exhibited to the Sec. 80. When presentment not required to
person from whom payment is demanded, charge the indorser. - Presentment is not
and when it is paid, must be delivered up to required in order to charge an indorser
the party paying it. where the instrument was made or
accepted for his accommodation and he has
Sec. 75. Presentment where instrument no reason to expect that the instrument will
payable at bank. - Where the instrument is be paid if presented.
payable at a bank, presentment for
payment must be made during banking Sec. 81. When delay in making presentment
is excused. - Delay in making presentment payable on Saturday are to be presented for
for payment is excused when the delay is payment on the next succeeding business
caused by circumstances beyond the control day except that instruments payable on
of the holder and not imputable to his demand may, at the option of the holder,
default, misconduct, or negligence. When be presented for payment before twelve
the cause of delay ceases to operate, o'clock noon on Saturday when that entire
presentment must be made with reasonable day is not a holiday.
diligence.
Sec. 86. Time; how computed. - When the
Sec. 82. When presentment for payment is instrument is payable at a fixed period after
excused. - Presentment for payment is date, after sight, or after that happening of
excused:chanroblesvirtuallawlibrary a specified event, the time of payment is
determined by excluding the day from
(a) Where, after the exercise of reasonable
which the time is to begin to run, and by
diligence, presentment, as required by this
including the date of payment.
Act, cannot be made;
Sec. 87. Rule where instrument payable at
(b) Where the drawee is a fictitious person;
bank. - Where the instrument is made
payable at a bank, it is equivalent to an
(c) By waiver of presentment, express or
order to the bank to pay the same for the
implied.
account of the principal debtor thereon.
Sec. 83. When instrument dishonored by
non-payment. - The instrument is Sec. 88. What constitutes payment in due
dishonored by non-payment course. - Payment is made in due course
when:chanroblesvirtuallawlibrary when it is made at or after the maturity of
the payment to the holder thereof in good
(a) It is duly presented for payment and faith and without notice that his title is
payment is refused or cannot be obtained; defective.
or
(a) If sent by mail, it must be deposited in (b) If he lives in one place and has his place
the post office in time to go by mail the day of business in another, notice may be sent
following the day of dishonor, or if there be to either place; or
no mail at a convenient hour on last day, by
the next mail thereafter. (c) If he is sojourning in another place,
notice may be sent to the place where he is
(b) If given otherwise than through the post so sojourning.
office, then within the time that notice
But where the notice is actually received by
would have been received in due course of
the party within the time specified in this
mail, if it had been deposited in the post
Act, it will be sufficient, though not sent in
office within the time specified in the last
accordance with the requirement of this
subdivision.
section.
Sec. 105. When sender deemed to have
given due notice. - Where notice of Sec. 109. Waiver of notice. - Notice of
dishonor is duly addressed and deposited in dishonor may be waived either before the
the post office, the sender is deemed to time of giving notice has arrived or after the
have given due notice, notwithstanding any omission to give due notice, and the waiver
may be expressed or implied. or require that the drawee or acceptor will
honor the instrument;
Sec. 110. Whom affected by waiver. -
Where the waiver is embodied in the (e) Where the drawer has countermanded
instrument itself, it is binding upon all payment.
parties; but, where it is written above the
Sec. 115. When notice need not be given to
signature of an indorser, it binds him only.
indorser. — Notice of dishonor is not
required to be given to an indorser in either
Sec. 111. Waiver of protest. - A waiver of
of the following
protest, whether in the case of a foreign bill
cases:chanroblesvirtuallawlibrary
of exchange or other negotiable instrument,
is deemed to be a waiver not only of a (a) When the drawee is a fictitious person
formal protest but also of presentment and or person not having capacity to contract,
notice of dishonor. and the indorser was aware of that fact at
the time he indorsed the instrument;
Sec. 112. When notice is dispensed with. -
Notice of dishonor is dispensed with when, (b) Where the indorser is the person to
after the exercise of reasonable diligence, it whom the instrument is presented for
cannot be given to or does not reach the payment;
parties sought to be charged.
(c) Where the instrument was made or
Sec. 113. Delay in giving notice; how accepted for his accommodation.
excused. - Delay in giving notice of dishonor
is excused when the delay is caused by Sec. 116. Notice of non-payment where
circumstances beyond the control of the acceptance refused. - Where due notice of
holder and not imputable to his default, dishonor by non-acceptance has been
misconduct, or negligence. When the cause given, notice of a subsequent dishonor by
of delay ceases to operate, notice must be non-payment is not necessary unless in the
given with reasonable diligence. meantime the instrument has been
accepted.
Sec. 114. When notice need not be given to
drawer. - Notice of dishonor is not required Sec. 117. Effect of omission to give notice
to be given to the drawer in either of the of non-acceptance. - An omission to give
following cases:chanroblesvirtuallawlibrary notice of dishonor by non-acceptance does
not prejudice the rights of a holder in due
(a) Where the drawer and drawee are the course subsequent to the omission.
same person;
Sec. 118. When protest need not be made;
(b) When the drawee is fictitious person or when must be made. - Where any
a person not having capacity to contract; negotiable instrument has been dishonored,
it may be protested for non-acceptance or
(c) When the drawer is the person to whom non-payment, as the case may be; but
the instrument is presented for payment; protest is not required except in the case of
foreign bills of exchange. robles virtual law
(d) Where the drawer has no right to expect library
VIII. DISCHARGE OF NEGOTIABLE holder to extend the time of payment or to
INSTRUMENTS postpone the holder's right to enforce the
instrument unless made with the assent of
the party secondarily liable or unless the
Sec. 119. Instrument; how discharged. - A
right of recourse against such party is
negotiable instrument is
expressly reserved.
discharged:chanroblesvirtuallawlibrary
Sec. 121. Right of party who discharges
(a) By payment in due course by or on
instrument. - Where the instrument is paid
behalf of the principal debtor;
by a party secondarily liable thereon, it is
not discharged; but the party so paying it is
(b) By payment in due course by the party
remitted to his former rights as regard all
accommodated, where the instrument is
prior parties, and he may strike out his own
made or accepted for his accommodation;
and all subsequent indorsements and
against negotiate the instrument,
(c) By the intentional cancellation thereof by
except:chanroblesvirtuallawlibrary
the holder;
(a) Where it is payable to the order of a
(d) By any other act which will discharge a third person and has been paid by the
simple contract for the payment of money; drawer; and
(e) When the principal debtor becomes the (b) Where it was made or accepted for
holder of the instrument at or after maturity accommodation and has been paid by the
in his own right. party accommodated.
Sec. 120. When persons secondarily liable Sec. 122. Renunciation by holder. - The
on the instrument are discharged. - A holder may expressly renounce his rights
person secondarily liable on the instrument against any party to the instrument before,
is discharged:chanroblesvirtuallawlibrary at, or after its maturity. An absolute and
unconditional renunciation of his rights
(a) By any act which discharges the
against the principal debtor made at or after
instrument;
the maturity of the instrument discharges
the instrument. But a renunciation does not
(b) By the intentional cancellation of his
affect the rights of a holder in due course
signature by the holder;
without notice. A renunciation must be in
writing unless the instrument is delivered up
(c) By the discharge of a prior party;
to the person primarily liable thereon.
Sec. 186. Within what time a check must be "Bearer" means the person in possession of
presented. - A check must be presented for a bill or note which is payable to bearer;
payment within a reasonable time after its
issue or the drawer will be discharged from "Bill" means bill of exchange, and "note"
liability thereon to the extent of the loss means negotiable promissory note;
caused by the delay.
"Delivery" means transfer of possession,
Sec. 187. Certification of check; effect of. - actual or constructive, from one person to
Where a check is certified by the bank on another;
which it is drawn, the certification is
equivalent to an acceptance. "Holder" means the payee or indorsee of a
bill or note who is in possession of it, or the
Sec. 188. Effect where the holder of check bearer thereof;
procures it to be certified. - Where the
holder of a check procures it to be accepted "Indorsement" means an indorsement
or certified, the drawer and all indorsers are completed by delivery;
discharged from liability thereon.
"Instrument" means negotiable instrument;
Sec. 189. When check operates as an
assignment. - A check of itself does not "Issue" means the first delivery of the
operate as an assignment of any part of the instrument, complete in form, to a person
funds to the credit of the drawer with the who takes it as a holder;
bank, and the bank is not liable to the
holder unless and until it accepts or certifies "Person" includes a body of persons,
whether incorporated or not; Sec. 198. Time when Act takes effect. - This
Act shall take effect ninety days after its
"Value" means valuable consideration; publication in the Official Gazette of the
Philippine Islands shall have been
"Written" includes printed, and "writing" completed.
includes print.