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But an order or promise to pay out

FORM AND INTERPRETATION. of a particular fund is not


unconditional.
SECTION 1. Form of negotiable
instrument.—An instrument to be SEC. 4. Determinable future time;
negotiable must conform to the what constitutes.—An instrument
following requirements: is payable at a determinable future
time, within the meaning of this
(a) It must be in writing and Act, which is expressed to be
signed by the maker or drawer; payable—
(b) Must contain an unconditional
promise or order to pay a sum (a) At a fixed period after date or
certain in money; sight; or
(c) Must be payable on demand, or (b) On or before a fixed or
at a fixed or determinable future determinable future time specified
time; therein; or
(d) Must be payable to order or to (c) On or at a fixed period after the
bearer; and occurrence of a specified event,
(e) Where the instrument is which is certain to happen, though
addressed to a drawee, he must be the time of happening be
named or otherwise indicated uncertain.
therein with reasonable certainty.
An instrument payable upon a
SEC. 2. Certainly as to sum ; what contingency is not negotiable, and
constitutes.—The sum payable the happening of the event does
sum is a sum certain within the not cure the defect.
meaning of this Act, although it is
to be paid— SEC. 5. Additional provisions not
affecting negotiability.—An
(a) With interest; or instrument which contains an
(b) By stated installments^ or order or promise to do any act in f
(c) By stated installments, with a addition to the payment of money
provision that upon default in is not negotiable. But the
payment of any installment or of negotiable character of an
interest the whole shall become instrument otherwise negotiable is
due; or not affected by a provision which—
(d) With exchange, whether at a
fixed rate or at the current rate; or (a) Authorizes the sale of collateral
(e) With costs of collection or an securities in case the instrument
attorney's fee, in case payment be not paid at maturity; or
shall not be made at maturity. (b) Authorizes a confession of
judgment if the instrument be not
SEC. 3. When promise is
paid at maturity; or
unconditional.—An unqualified
(c) Waives the benefit of any law
order or promise to pay is
intended for the advantage or
unconditional within the meaning
protection of the obligor; or
of this Act, though coupled with—
(d) Gives the holder an election to
require something to be done in
(a) An indication of a particular
lieu of payment of money.
fund out of which reimbursement
is to be made, or a particular But nothing in this section shall
account to be debited with the validate any provision or
amount; or stipulation otherwise illegal.
(b) A statement of the transaction
which gives rise to the instrument. SEC. 6. Omissions; seal;
particular money.—The validity (f) The holder of an office for the
and negotiable character of an time being.
instrument are not affected by the
Where the instrument is payable
fact that—
to order the payee must be named
or otherwise indicated therein
(a) It is not dated; or
with reasonable certainty.
(b) Does not specify the value
given, or that any value has been
SEC. 9. When payable to bearer.—
given therefor; or
The instrument is payable to
(c) Does not specify the place
bearer—
where it is drawn or the place
where it is payable; or
(a) When it is expressed to be so
(d) Bears a seal; or
payable; or
(e) Designates a particular kind
(b) When it is payable to a person
of current money in which
named therein or bearer; or (c)
payment is to be made.
When it is payable to the order of a
But nothing in this section shall fictitious or person, and such fact
alter or repeal any statute was known to the person making it
requiring in certain cases the so payable; or
nature of the consideration to be (d) When the name of the payee
stated in the instrument. does not purport to be the name of
any person; or
SEC. 7. When payable on (e) When the only or last
demand.—An instrument is indorsement is an indorsement in
payable on demand— blank, sufficient terms.
SEC. 10. Terms, when sufficient.—
(a) Where it is expressed to be
The instrument need not follow
payable on demand, or at sight, or
the language of this Act, but any
on presentation; or
terms are sufficient which clearly
(b) In which no time for payment
indicate an intention to conform to
is expressed.
the requirements hereof.
Where an instrument is issued,
accepted, or indorsed when SEC. 11. Date, presumption as
overdue, it is, as regards the to.—Where the instrument or an
person so issuing, accepting, or acceptance or any indorsement
indorsing it, payable on demand. thereon is dated, such date is
deemed prima facie to be the true
SEC. 8. When payable to order.— date of the making, drawing,
The instrument is payable to order acceptance, or indorsement, as the
where it is drawn payable to the case may be.
order of a specified person or to
him or his order. It may be drawn SEC. 12. Antedated and
payable to the order of— postdated.—The instrument is not
invalid for the reason only that it is
(a) A payee who is not maker, antedated or postdated, provided
drawer, or drawee; or this is not done for an illegal or
(b) The drawer or maker; or fraudulent purpose. The person
(c) The drawee; or to whom an instrument so dated is
(d) Two or more payees jointly; delivered acquires the title thereto
or as of the date of delivery.
(e) One or some of several
payees; or SEC. 13. When date may be
inserted.—Where an instrument
expressed to be payable at a fixed placed thereon before delivery.
period after date is issued
undated, or where the acceptance SEC. 16. Delivery; when effectual:
of an instrument payable at a fixed when presumed.—Every contract
period after sight is undated, any on a negotiable instrument is
holder may insert therein the true incomplete and revocable until
date of issue or acceptance, and delivery of the instrument for the
the instrument shall be payable purpose of giving effect thereto. As
accordingly. The insertion of a between immediate parties, and as
wrong date does not avoid the regards a remote party other than
instrument in the hands of a a holder in due course, the
subsequent holder in due course; delivery, in order to be effectual,
but as to him, the date so inserted must be made either by or under
is to be regarded as the true date. the authority of the party making,
drawing, accepting, or indorsing,
SEC. 14. Blanks; when may be as the case may be; and in such
filled.—Where the instrument is case the delivery may be shown to
wanting in any material particular, have been conditional, or for a
the person in possession thereof special purpose only, and not for
has a prima facie authority to the purpose of transferring the
complete it by filling up the blanks property in the instrument. But
therein. And a signature on a where the instrument is in the
blank paper delivered by the hands of a holder in due course, a
person making the signature in valid delivery thereof by all parties
order that the paper may be prior to him so as to make them
converted into a negotiable liable to him is conclusively
instrument operates as a prima presumed. And where the
facie authority to fill it up as such instrument is no longer in the
for any amount. In order, possession of a party whose
however, that any such instrument signature appears thereon, a valid
when completed may be enforced and intentional delivery by him is
against any person who became a presumed until the contrary is
party thereto prior to its proved.
completion, it must be filled up
strictly in accordance with the SEC. 17. Construction where
authority given and within a instrument is ambiguous.—Where
reasonable time. But if any such construction. the language of the
instrument, after completion, is instrument is ambiguous or there
negotiated to a holder in due are omissions therein, the
course, it is valid and effectual for following rules of construction
all purposes in his hands, and he apply:
may enforce it as if it had been
filled up strictly in accordance (a) Where the sum payable is
with the authority given and expressed in words and also in
within a reasonable time. figures and there is a discrepancy
between the two, the sum denoted
SEC. 15. Incomplete instrument by the words is the sum payable;
not delivered.—Where an but if the words are ambiguous or
incomplete instrument has not uncertain, reference may be had to
been delivered it will not, if the figures to fix the amount;
completed and negotiated, without (b) Where the instrument
authority, be a valid contract in provides for the payment of
the hands of any holder, as against interest, without specifying the
any person whose signature was date from which interest is to run,
the interest runs from the date of signs for or on behalf of a
the instrument, and if the principal, or in a representative
instrument is undated, from the capacity, he is not liable on the
issue thereof; instrument if he was duly
(c) Where the instrument is not authorized; but the mere addition
dated, it will be considered to be of words describing him as an
dated as of the time it was issued; agent, or as filling a representative
(d) Where there is a conflict character, without disclosing
between the written and printed his"principal, does not exempt
provisions of the instrument, the him from personal liability.
written provisions prevail;
(e) Where the instrument is so SEC. 21. Signature by
ambiguous that there is doubt procuration; effect of.—A
whether it is a bill or note, the signature by uration.
holder may treat it as either at his "procuration" operates as notice
election; that the agent has but a limited
(f) Where a signature is so placed authority to sign, and the
upon the instrument that it is not principal is bound only in ease the
clear in what capacity the person agent in so signing acted within
making the same intended to sign, the actual limits of his authority.
he is to be deemed an indorser;
(g) Where an instrument SEC. 22. Effect of indorsement by
containing the words "I promise to infant or corporation.—The
pay" is signed by two or more corporation, indorsement or
persons, they are deemed to be assignment of the instrument by a
jointly and severally liable corporation or by an infant passes
thereon. the property therein,
notwithstanding that from want,
SEC. 18. Liability of person
of capacity the corporation or
signing in trade or assumed
infant may incur no liability
name.— No person is liable on the
thereon.
instrument whose signature does
not appear thereon, except as
SEC. 23. Forged signature; effect
herein otherwise expressly
of.—When a signature is forged or
provided. But one who signs in a
made without the authority of the
trade or assumed name will be
person whose signature it purports
liable to the same extent as if he
to be, it is wholly inoperative, and
had signed in his own name.
no right to retain the instrument,
or to give a discharge therefor, or
SEC. 19. Signature by agent;
to enforce payment thereof against
authority; how shown.—The
any party thereto, can be acquired
signature of any party may be
through or under such signature,
made by a duly authorized
unless the party against whom it is
agent. No particular form of
sought to enforce such right is
appointment is necessary for this
precluded from setting up the
purpose; and the authority of the
forgery or want of authority.
agent may be established as in
other cases of agency.
CHAPTER II.
SEC. 20. Liability of person
signing as agent, and so
CONSIDERATION.
forth.— Where the instrument
contains or a person adds to his
SEC. 24. Presumption of
signature words indicating that he
consideration.—Every negotiable
instrument is deemed prima facie instrument knew him to be only an
to have been issued for a valuable accommodation party.
consideration; and every person
whose signature appears thereon
to have become a party thereto for CHAPTER III.
value.
NEGOTIATION.
SEC. 25. Value, what
constitutes.—Value is any SEC. 30. What constitutes
consideration sufficient to support negotiation.— An instrument is
a simple contract. An antecedent negotiated when it is transferred
or preexisting debt constitutes from one person to another in
value; and is deemed such whether such manner as to constitute the
the instrument is payable on transferee the holder thereof. If
demand or at a future time. payable to bearer, it is negotiated
by delivery; if payable to order, it
SEC. 26. What constitutes holder is negotiated by the indorsement
for value.—Where value has at any of the holder completed by
time been given for the delivery.
instrument, the holder is deemed a
holder for value in respect to all SEC. 31. Indorsement; how
parties who became such prior to made.— The indorsment must be
that time. written on the instrument itself or
upon a paper attached
SEC. 27. When lien on instrument thereto. The signature of the
constitutes holder for value.— indorser, without additional
Where the holder has a lien on the words, is a sufficient indorsement.
instrument, arising either from
contract or by implication of law, SEC. 32. Indorsement must be of
he is deemed a holder for value to entire instrument.— The
the extent of his lien. indorsement must be an
indorsement of the entire
SEC. 28. Effect of want of instrument. An indorsement
consideration.—Absence or failure which purports to transfer to the
of consideration is matter of indorsee a part only of the amount
defense as against any person not payable, or which purports to
a holder in due course; and transfer the instrument to two or
partial failure of consideration more indorsees severally, does not
is a defense pro tanto, whether operate as a negotiation of the
the failure is an ascertained and instrument. But where the
liquidated amount or otherwise. instrument has been paid in part,
it may be indorsed as to the
SEC. 29. Liability of residue.
accommodation party.—Au
accommodation party is one who SEC. 33. Kinds of indorsement.—
has signed the instrument as An indorsement may be either
maker, drawer, acceptor, or special or in blank; and it may also
indorser, without receiving value be either restrictive or qualified, or
therefor, and for the purpose of conditional.
lending his name to some other
person. Such a person is liable on SEC. 34. Special indorsement;
the instrument to a holder for indorsement in blank.— A special
value, notwithstanding such in indorsement specifies the
holder at the time of taking the person to whom, or to whose
order, the blank' instrument is to
be payable; and the indorsement SEC. 38. Qualified indorsement.—
of such indorsee is necessary to A qualified indorsement
the further negotiation of the constitutcs the indorser a mere
instrument. An indorsement in assignor of the title to the
blank specifies no indorsee, and instrument. It may be made by
an instrument so indorsed is adding to the indorser's signature
payable to bearer, and may be the words "without recourse" or
negotiated by delivery. any words of similar
import. Such an indorsement
SEC. 35. Blank indorsement; how does not impair the negotiable
changed to special indorsement.— character of the instrument.
The holder may convert a blank
indorsement into a special SEC. 39. Conditional
indorsement by writing over the indorsement.— "Where an
signature of the indorser in blank indorsement is conditional, a party
any contract consistent with the required to pay the instrument
character of the indorsement. may disregard the condition and
make payment to the indorsee or
SEC. his transferee whether the
36. "When indorsement restricti condition has been fulfilled or not.
ve.— An indorsement is But any person to whom an
restrictive which either— instrument so indorsed is
negotiated will hold the same, or
(a) Prohibits the further the proceeds thereof, subject to
negotiation of the instrument; or the rights of the person indorsing
(b) Constitutes the indorsee the conditionally.
agent of the indorser; or
(c) Vests the title in the indorsee in SEC. 40. Indorsement of
trust for or to the use of some instrument payable to bearer.—
other person. Where instruments to an
instrument, payable to bearer, is
But the mere absence of words
indorsed specially, it may
implying power to negotiate does
nevertheless be further negotiated
not make an indorsement
by delivery; but the person
restrictive.
indorsing specially is liable as
indorser to only such holders as
SEC. 37. Effect of restricting
make title through his
indorsement; rights of indorsee.—
indorsement.
A restrictive indorsement confers
upon the indorsee the right—
SEC. 41. Indorsement where
payable to two or more persons.—
(a) To receive payment of the
Where an instrument is payable to
instrument;
the order of two or more payees
(b) To bring any action thereon
more' or indorsees who are not
that the indorser could bring;
partners, all must indorse, unless
(c) To transfer his rights as such
the one indorsing has authority to
indorsee, where the form of the
indorse for the others.
indorsement authorizes him to do
so.
SEC. 42. Effect of instrument
But all subsequent indorsees drawn or indorsed to a person
acquire only the title of the first as — Where an instrument is
indorsee under the restrictive drawn or indorsed to a person as
indorsement. "cashier" or other fiscal officer of a
bank or corporation, it is deemed indorsement which is not;
prima facie to be payable to the necessary to Ids title. The indorser
bank or corporation of which he is whose indorsement is struck out,
such officer; and may be and all indorsers subsequent to
negotiated by either the him, are thereby relieved from
indorsement of the bank or liability on the instrument.
corporation, or the indorsement of
the officer. SEC. 49. Transfer without
indorsement: effect of.— Where
SEC. 43. Indorsement where the holder of an instrument
name in misspelled, and so payable to his order transfers it for
forth.— Where the name of a value without indorsing it, the
payee or indorsee is wrongly transfer vests in the transferee
designated or misspelled, he may such title as the transferor had
indorse the instrument as therein therein, and the transferee
described, adding, if he think fit, acquires, in addition, the right to
his proper signature. have the indorsement of the
transferor. But for the purpose of
SEC. 44. Indorsement in determining whether the
representative capacity.— Where transferee is a holder in due
any person is under obligation to course, the negotiation takes effect
indorse in a representative as of the time when the
capacity, he may indorse in such indorsement is actually made.
terms as to negative personal
liability. SEC. 50. When prior party may
negotiate instrument.—Where an
SEC. 45. Time of indorsement; instrument is negotiated back to a
presumption.— Except where an prior party, such party may,
indorsement bears date after the subject to the provisions of this
maturity of the instrument, every Act, reissue and further negotiate
negotiation is deemed prima facie the same. But he is not entitled to
to have been effected before the enforce payment thereof against
instrument was overdue. any intervening party to whom ho
was personally liable.
SEC. 46. Place of indorsement;
presumption.—Except where the
contrary appears, every CHAPTER IV.
indorsement is presumed prima
facie to have been made at the RIGHTS OF THE HOLDER.
place where the instrument is
dated. SEC. 51. Bight of holder to sue;
payment.— The holder of a
SEC. 47. Continuation of negotiable instrument may sue
negotiable; presumption.— An thereon in his own name; and
instrument negotiable character. payment to him in due course
negOyable in its origin continues discharges the instrument.
to be negotiable until it has been'
restrictively indorsed or SEC. 52. What constitutes a
discharged by payment or holder in due course.— A holder in
otherwise. due course is a holder who has
taken the instrument under the
SEC. 48. Striking out following conditions:
indorsement.— The holder may at
any time strike out any
(a) That it is complete and regular of such facts that his action in
upon its face; taking the instrument amounted
(b) That he became the holder of it to had faith.
before it was overdue, and without
notice that it had been previously SEC. 57. Rights of holder in due
dishonored, if such was the fact; course.— A holder in due course
(c) That he took it in good faith holds the instrument free from any
and for value; defect of title of prior parties, and
(d) That at the time it was payee from defenses available to
negotiated to him he had no notice prior parties among themselves.
of any infirmity in the instrument and may enforce payment of the
or defect in the title of the person instrument for the full amount
negotiating it. thereof against all parties liable
thereon.
SEC. 53. When person not deemed
holder in due course.— Where
SEC. 58. When subject to original
course an instrument payable on
defenses.— In the hands of any
demand is negotiated an
holder other than a holder in due
unreasonable length of time after
course, a negotiable instrument is
its issue, the holder is not deemed
subject to the same defenses as if it
a holder in due course.
were nonnegotiable. But a holder
who derives his title through a
SEC. 54. Notice before full amount
holder in due course, and who is
paid.— Where the transferee
not himself a party to any fraud or
receives notice of any infirmity in
illegality affecting the instrument,
the instrument or defect in the
has all the rights of such former
title of the person negotiating the
holder in respect of all parties
same before he has paid the full
prior to the latter.
amount agreed to be paid therefor,
he will be deemed a holder in due
SEC. 59. Who deemed holder in
course only to the extent of the
due course.— Every holder is
amount theretofore paid by him.
deemed prima facie to be a holder
in due course; but when it
SEC. 55. When title defective.—
iacourse' shown that the title of
The title of a person who
any person who has negotiated the
negotiates an instrument is
instrument was defective, the
defective within the meaning of
burden is on the holder to prove
this Act when he obtained the
that he or some person under
instrument, or any signature
whom he claims acquired the title
thereto, by fraud, duress, or force
as holder in due course. But the
and fear, or other unlawful means,
last-mentioned rule does not apply
or for an illegal consideration, or
in favor of a party who became
when he negotiates it in breach of
bound on the instrument prior to
faith, or under such circumstances
the acquisition of srich defective
as amount to a fraud.
title.
SEC. 56. What constitutes notice
of defect.— To constitute notice of
CHAPTER V.
an infirmity in. the instrument or
defect in the title of the person
LIABILITIES
negotiating the same, the person
to whom it is negotiated must have
SEC. 60. Liability of maker.— The
had actual knowledge of the
maker of a negotiable instrument
infirmity or defect, or knowledge
by making it engages that he will
pay it according to its tenor, and rules:
admits the existence of the payee
and his then capacity to indorse. (a) If the instrument is payable to
the order of a third person, he is
SEC. 61. Liability of drawer.— liable to the payee and to all
The drawer by drawing the instru- subsequent parties.
ment admits the existence of the (b) If the instrument is payable to
payee and his then capacity to the order of the maker or drawer,
indorse; and engages that on due or is payable to bearer, he is liable
presentment the instrument will to all parties subsequent to the
be accepted or paid, or both, maker or drawer.
according to its tenor, and that if it (c) If he signs for the
be dishonored, and the necessary accommodation of the payee, he is
proceedings on dishonor be duly liable to all parties subsequent to
taken, he will pay the amount the payee.
thereof to the holder, or to any
SEC 65. Warranty where
subsequent indorser who may be
negotiation by delivery, and so
compelled to pay it. But the
forth.—
drawer may insert in the
instrument an express stipulation
Every person negotiating an
negativing or limiting his own
instrument by delivery or by a
liability to the holder.
qualified indorsement warrants—
SEC. 62. Liability of acceptor.—
(a) That the instrument is genuine
The acceptor by accepting the
and in all respects what it purports
instrument engages that he will
to be;
pay it according to the tenor of his
(b) That he has a good title to it;
acceptance; and admits—
(c) That all prior parties had
capacity to contract;
(a) The existence of the drawer,
(d) That he has no knowledge of
the genuineness of his signature,
any fact which would impair the
and his capacity and authority to
validity of the instrument or
draw the instrument; and
render it valueless.
(b) The existence of the payee
and his then capacity to indorse. But when the negotiation is by
delivery only, the warranty
SEC. 63. When person deemed
extends in favor of no holder other
indorser.— A person placing his
than the immediate transferee.
signature upon an instrument
otherwise than as maker, drawer,
The provisions of subdivision (c)
or acceptor is deemed to be an
of this section do not apply to
indorser, unless he clearly
persons negotiating public or
indicates by appropriate words his
corporation securities, other than
intention to be bound in some
bills and notes.
other capacity.
SEC. 66. Liability of general
SEC. 64. Liability of irregular
indorser.—Every indorser who
indorser.— Where a person, not
indorses without qualification,
otherwise a party to an
warrants to all subsequent holders
instrument, places thereon his
in due course—
signature in blank before delivery,
he is liable as indorsee in
(a) The matters and things
accordance with the following
mentioned in subdivisions (a), (&),
and (c) of the next preceding
section; and on principal debtor.—
(b) That the instrument is at the Presentment for payment is not
time of his indorsement valid and necessary in order to charge the
subsisting. person primarily liable on the
instrument; but if the instrument
And, in addition, he engages that
is, by its terms, payable at a special
on due presentment, it shall be
place, and he is able and willing to
accepted or paid, or both, as the
pay it there at maturity, such
case may be, according to its
ability and willingness are
tenor, and that if it be dishonored,
equivalent to a tender of payment
and the necessary proceedings on
upon his part. But, except as
dishonor be duly taken, he will pay
herein otherwise provided,
the amount thereof to the holder,
presentment for payment is
or to any subsequent indorser who
necessary in order to charge the
may be compelled to Pay it.
drawer and indorsers.
SEC. 67. Liability of indorser
SEC. 71. Presentment where
where paper negotiable by
instrument is not payable on
delivery.— Where a person
demand and where payable on
places his indorsement on an in
demand.— Where the instrument
strument negotiable by delivery he
is not payable on demand,
incurs all the liabilities of an
presentment must be made on the
indorser.
day it falls due. Where it is payable
on demand, presentment must be
SEC. 68. Order in which
made within a reasonable time
endorsers are liable.— As respects
after its issue, except that in the
one another, indorsers are liable
case of a bill of exchange,
prim a facie in the order in which
presentment for payment will be
they indorse; but evidence is
sufficient if made within a
admissible to show that as
reasonable time after the last
between or among themselves
negotiation thereof.
they have
agreed otherwise. Joint
SEC. 72. What constitutes a
payees or joint indorsees
sufficient presentment.—
who indorse are deemed to indo
Presentment for payment, to be
rse jointly and severally.
sufficient, must be made—
SEC. 69. Liability of an agent or
(a) By the holder, or by some
broker.— Where a broker or other
person authorized to receive
agent negotiates an instrument
payment on his behalf;
without indorsement, he incurs all
(b) At a reasonable hour on a
the liabilities prescribed by section
business day;
sixty-five of this Act, unless he
(c) At a proper place as herein
discloses the name of his principal
defined;
and the fact that he is acting only
(d) To the person primarily liable
as agent.
on the instrument, or if he is
absent or inaccessible, to any
person found at the place where
CHAPTER VI.
the presentment is made.
PRESENTMENT FOR PAYMENT SEC. 73. Place of presentment.—
. Presentment for payment is made
at the proper place,—
SEC. 70. Effect of want of demand
(a) Where a place of payment is persons primarily liable on the
specified in the instrument and it instrument are liable as partners,
is there presented; and no place of payment is
(b) Where no place of payment is specified, presentment for
specified, but the address of the payment may be made to any one
person to make payment is given of them, even though there has
in the instrument and it is there been a dissolution of the firm.
presented;
(c) Where no place of payment is SEC. 78. Presentment to joint
specified and no address is given debtors.— Where there are several
and the instrument is presented at persons, not partners, primarily
the usual place of business or liable on the instrument, and no
residence of the person to make place of payment is specified,
payment; presentment must be made to
(d) In any other case if presented them all.
to the person to make payment
wherever he can be found, or if Sec. 79. When presentment not
presented at his last known place required to charge the drawer.—
of business or residence. Presentment for payment is not
required in order to charge the
SEC. 74. Instrument must he
require drawer whereas he has no
exhibited.— The instrument must
right to expect or require that the
be exhibited to the person from
drawee or acceptor will pay the
whom payment is demanded, and
instrument.
when it is paid must be delivered
up to the party paying it.
SEC. 80. When presentment not
required to charge the indorser.—
SEC. 75. Presentment where
Presentment for payment is not
instrument payable at bank.—
required in order to charge an
Where Payable at bank. the
indorser where the instrument was
instrument is payable at a bank,
made or accepted for his
presentment for payment must be
accommodation and he has no
made during banking hours,
reason to expect that the
unless the person to make
instrument will be paid if
payment has no funds there to
presented.
meet it at any time during the day,
in which case presentment at any
SEC. 81. When delay in making
hour before the bank is closed on
presentment is excused.— Delay in
that day is sufficient.
making presentment for payment
is excused when the delay is
SEC. 76. Presentment where
caused by circumstances beyond
principal debtor is dead.— Where
the control of the holder, and not
the person primarily liable on the
imputable to his default,
instrument is dead, and no place
misconduct, or negligence. When
of payment is specified,
the cause of delay ceases to
presentment for payment must be
operate, presentment must be
made to his personal
made with reasonable diligence.
representative, if such there be,
and if, with the exercise of
SEC. 82. When presentment may
reasonable diligence, he can be
he dispensed with.—Presentment
found.
for payment is dispensed with—
SEC. 77. Presentment to persons
(a) Where after the exercise of
liable as partners.— Where the
reasonable diligence presentment
as required by this Act can not be including the date of payment.
made;
(b) Where the drawee is a fictitious SEC. 87. Rule where instrument
person; payable at bank.— Where the
(c) By waiver of presentment, instrument is made payable at a
express or implied. bank it is equivalent to an order to
the bank to pay the same for the
SEC. 83. When instrument
account of the principal debtor
dishonored by nonpayment.— The
thereon.
instrument is dishonored by
nonpayment when—
SEC. 88. What constitutes
payment in due course.—
(a) It is duly presented for
Payment is made in due course
payment and payment is refused
when it is made at or after the
or can not be obtained; or
maturity of the instrument to the
(b) Presentment is excused and
holder thereof in good faith and
the instrument is overdue and
without notice that his title is
unpaid.
defective.
SEC. 84. Liability of person
secondarily liable, when
instrument dishonored.— Subject CHAPTER VII.
to the provisions of this Act, when
the instrument is dishonored by NOTICE OF DISHONOR.
nonpayment, an immediate right
of recourse to all parties SEC. 89. To whom notice of
secondarily liable thereon accrues dishonor must be given.— Except
to the holder. as herein otherwise provided,
when a negotiable instrument has
SEC. 85. Time of maturity.— been dishonored by
Every negotiable instrument is nonacceptance or nonpayment,
payable at the time fixed therein notice of dishonor must be given
without grace. When the day of to the drawer and to each
maturity falls upon Sunday, or a indorser, and any drawer or
holiday, the instrument is payable indorser to whom such notice is
on the next succeeding business not given is discharged.
day. Instruments falling due or
becoming payable on Saturday are SEC. 90. By whom given.—The
to be presented for payment on notice may be given by or on
the next succeeding business day, behalf of the holder, or by or on
except that instruments payable behalf of any party to the
on demand may, at the option of instrument who might be
the holder, be presented for compelled to pay it to the holder,
payment before twelve o'clock and who, upon taking it up, would
noon on Saturday when that entire have a right to reimbursement
day is not a holiday. from the party to whom the notice
is given.
SEC. 86. Time; how computed.—
Where the instrument is payable SEC. 91. Notice given by agent.—
at a fixed period after date, after Notice of dishonor may be given
sight, or after the happening of a by an agent either in his own name
specified event, the time of or in the name of any party
payment is determined by entitled to give notice, whether
excluding the day from which the that party be his principal or not.
time is to begin to run, and by
SEC. 92. Effect of notice given on SEC. 97. To whom notice may be
behalf of holder.— Where notice is given.— Notice of dishonor may
given by or on behalf of the holder, be given either to the party himself
it inures for the benefit of all or to his agent in that behalf.
subsequent holders and all prior
parties who have a right of SEC. 98. Notice where party is
recourse against the party to dead.— When any party is dead,
whom it is given. and his death is known to the
party giving notice, the notice
SEC. 93. Effect where notice is must be given to a personal
given by party entitled thereto.— representative, if there be one, and
Where notice is given by or on if with reasonable diligence he can
behalf of a party entitled to give be found. If there be no personal
notice, it inures for the benefit of representative, notice may be sent
the holder and all parties to the last residence or last place
subsequent to the party to whom of business of the deceased.
notice is given.
SEC. 99. Notice to partners.—
SEC. 94. When agent may give Where the parties to be notified
notice.— Where the instrument are partners, notice to any one
has been dishonored in the hands partner is notice to the firm even
of an agent, he may either himself though there has been a
give notice to the parties liable dissolution.
thereon, or he may give notice to
his principal. If he give notice to SEC. 100. Notice to persons jointly
his principal, he must do so within liable.—Notice to joint parties who
the same time as if he were the are not partners must be given to
holder, and the principal upon the each of them, unless one of them
receipt of such notice has himself has authority to receive such
the same time for giving notice as notice for the others.
if the agent had been an
independent holder. SEC. 101. Notice to bankrupt.—
Where a party has been adjudged
SEC. 95. When notice sufficient.— bankrupt or an insolvent, or has
A written notice need not be and made an assignment for the
an insufficient written notice may benefit of creditors, notice may be
be supplemented and validated by given either to the party himself or
verbal communication. A to his trustee or assignee.
misdescription of the instrument
does not vitiate the notice unless SEC. 102. Time within which
the party to whom the notice is notice must be given.— Notice
given is in fact misled thereby. may be given as soon as the
instrument is dishonored; and
SEC. 96. Form of notice.— The unless delay is excused as
notice may be in writing hereinafter provided, must be
or oral and may be given given within the times fixed by this
in any terms which sufficiently Act.
identify the instrument and
indicate that it has been SEC. 103. Where parties reside in
dishonored by nonacceptance or same place.— Where the person
nonpayment. It may in all cases giving and the person to receive
be given by delivering it personally notice reside in the same place,
or through the mails. notice must be given within the
following times: receives notice of dishonor, he has,
after the receipt of such notice, the
(a) If given at the place of business same time for giving notice to
of the person to receive notice, it antecedent parties that the holder
must be given before the close of has after the dishonor.
business hours on the day
following. SEC. 108. Where notice must be
(b) If given at his residence, it sent.— Where a party has added
must be given before the usual an address to his signature, notice
hours of rest on the day following. of dishonor must be sent to that
(c) If sent by mail, it must be address; but if he has not given
deposited in the post-office in time such address, then the notice must
to reach him in usual course on be sent as follows:
the day following.
(a) Either to the post-office
SEC. 104. Where parties reside in
nearest to his place of residence or
different places.— Where the
to the post-office where he is
person giving and the person to
accustomed to receive his letters;
receive notice reside in different
or
places, the notice must be given
(b) If he live in one place, and have
within the following times:
his place of business in another,
notice may be sent to either place;
(a) If sent by mail, it must be
or
deposited in the post-office in time
(c) If he is sojourning in another
to go by mail the day following the
place, notice may be sent to the
day of dishonor, or if there be no
place where he is so sojourning.
mail at a convenient hour on that
day, by the next mail thereafter. But where the notice is actually
(b) If given otherwise than received by the party within the
through the post-office, then time specified in this Act, it will be
within the time that notice would sufficient, though not sent in
have been received in due course accordance with the requirements
of mail, if it had been deposited in of this section.
the post-office within the time
specified in the last subdivision. SEC. 109. Waiver of notice.—
Notice of dishonor may be waived,
SEC. 105. When sender deemed to
either before the time of giving
have given due notice.— Where
notice has arrived or after the
notice of dishonor is duly
omission to give clue notice, and
addressed and deposited in the
the waiver may be express
post-office, the sender is deemed
or implied.
to have given due notice,
notwithstanding any miscarriage
SEC. 110. Whom affected by
in the mails.
waiver.— Where the waiver is
bodied in the instrument itself, it
SEC. 106. Deposit in post-office;
is binding upon all parties;
what constitutes.— Notice is
but where it is written above the
deemed to have been deposited in
signature of an indorser, it binds
the post-office when deposited in
him only.
any branch post-office or in any
letter box under the control of the
SEC. 111. Waiver of protest.— A
post-office department.
waiver of protest, whether in the
case of a foreign bill of exchange
SEC. 107. Notice to subsequent
or other negotiable instrument, is
party; time of.— Where a party
deemed to be a waiver not only of capacity to contract, and the
a formal protest, but also of indorser was aware of the fact at
presentment and notice of the time he indorsed the
dishonor. instrument;
(b) Where the indorser is the
SEC. 112. When notice is person to whom the instrument is
dispensed with.— Notice of presented for payment;
dishonor is dispensed with when, (c) Where the instrument was
after the exercise of reasonable made or accepted for his
diligence, it can not be given to or accommodation.
does not reach the parties sought
SEC. 116. Notice of
to be charged.
nonpayment where acceptance
refused.— Where due notice ot
SEC. 113. Delay in giving notice;
dishonor by nonacceptance has
how excused.— Delay in giving
been given, notice of a subsequent
notice of dishonor is excused when
dishonor by nonpayment is not
the delay is caused by
necessary, unless in the meantime
circumstances beyond the control
the instrument has been accepted.
of the holder, and not imputable to
his default, misconduct, or
SEC. 117. Effect of omission to give
negligence. When the cause of
notice of nonacceptance.— An
delay ceases to operate, notice
omission to give.notice of
must be given with reasonable
dishonor by nonacceptance does
diligence.
not prejudice the rights of a holder
in due course subsequent to the
SEC. 114. When notice need not be
omission.
given to drawer.— Notice of
dishonor is not required to be
SEC. 118. When protest need not
given to the drawer in either of the
be made; when must be
drawee following cases:
made.— Where any negotiable
instrument has been dishonored it
(a) Where the drawer and drawee
may be protested for
are the same person.
nonacceptance or nonpayment, as
(b) When the drawee is a fictitious
the case may be; but protest is not
person or a person not having
required except in the case of
capacity to contract.
foreign bills of exchange.
(c) When the drawer is the
person to whom the instrument is
presented for payment.
CHAPTER VIII.
(d) Where the drawer has no
right to expect or require that the
DISCHARGE OF NEGOTIABLE
drawee or acceptor will honor the
INSTRUMENTS.
instrument.
(e) Where the drawer has
SEC. 119.
countermanded payment.
Instrument; how discharged.—
SEC. 115. When notice need not be A negotiable instrument is
given to indorser.— Notice of discharged—
dishonor is not required to be
given to an indorser in either of (a) By payment in due course by or
the following cases: on behalf of the principal debtor;
(b) By payment in due course by
(a) Where the drawee is a fictitious the party accommodated, where
person or a person not having the instrument is made or
accepted for accommodation; (b) Where it was made or accepted
(c) By the intentional cancellation for accommodation, and has been
thereof by the holder; paid by the party accommodated.
(d) By any other act which will
SEC. 122. Renunciation by
discharge a simple contract for the
holder.— The holder may
payment of money;
expressly renounce his rights
(e) When the principal debtor
against any party to the
becomes the holder of the
instrument before, at, or after its
instrument at or after maturity in
maturity. An absolute and
his own right.
unconditional renunciation of his
SEC. 120. When persons rights against the principal debtor
secondarily liable on, made at or after the maturity of
discharged.—A person secondarily the instrument discharges the
liable on the instrument is instrument. But a renunciation
discharged— does not affect the rights of a
holder in due course without
(a) By any act which discharges notice. A renunciation must be in
the instrument; writing, unless the instrument is
(b) By the intentional cancellation delivered up to the person
of his signature by the holder; primarily liable thereon.
(c) By the discharge of a prior
party; SEC 123. Cancellation;
(d) By a valid tender of payment unintentional; burden of proof.—
made by a prior party; A cancellation made
(c) By a release of the principal unintentionally, or under a
debtor, unless the holder's right of mistake or without the authority of
recourse against the party the holder, is inoperative; but
secondarily liable is expressly where an instrument or any
reserved; signature thereon appears to have
(f) By any agreement binding upon been canceled the burden of proof
the holder to extend the time of lies on the party who alleges that
payment, or to postpone the the cancellation was made
holder's right to enforce the unintentionally, or under a
instrument, unless made with the mistake or without authority.
assent of the party secondarily
liable, or unless the right of SEC. 124. Alteration of
recourse against such party is instrument; effect of.— Where a
expressly reserved. instrument is materially altered
without the assent of all parties
SEC. 121. Eight of party who
liable thereon, it is avoided, except
discharges instrument.—Where
as against a party who has himself
charging instrument is paid by a
made, authorized, or assented to
party secondarily liable thereon, it
the alteration, and subsequent
is not discharged; but the party so
indorsers.
paying it is remitted to his former
rights as regards all prior parties,
But when an instrument has been
and he may strike out his own and
materially altered and is in the
all subsequent indorsements, and
hands of a holder in due course,
again negotiate the instrument,
not a party to the alteration, he
except—
may enforce payment thereof
according to its original tenor.
(a) Where it is payable to the order
of a third person, and has been
SEC 125. What constitutes a
paid by the drawer; and
material alteration.— Any or not; but not to two or more
alteration which changes— drawees in the alternative or in
succession.
(a) The date;
(b) The sum payable, either for SEC. 129. Inland and foreign bills
principal or interest; of exchange.— An inland bill and
(c) The time or place of payment; foreign, of exchange is a bill which
(d) The number or the relations is, or on its face purports to be,
of the parties; both drawn and payable within the
(e) The medium or currency in Philippine Islands. Any other bill
which payment is to be made; Or is a foreign bill. Unless the
which adds a place of payment contrary appears on the face of the
where no place of payment is bill, the holder may treat it as an
specified, or any other change or inland bill.
addition which alters the effect of
the instrument in any respect, is a SEC. 130. When bill may be
material alteration. treated as promissory note.—
Where in a bill drawer and drawee
are the same person, or where the
drawee is a fictitious person, or a
TITLE II.
person not having capacity to
contract, the holder may treat the
BILLS OF EXCHANGE.
instrument, at his option, either as
a bill of exchange or a promissory
CHAPTER IX.
note.
FORM AND INTERPRETATION.
SEC. 131. Referee in case of
need.— The drawer of a bill and
SEC. 126. Bill of exchange
any indorser may insert thereon
defined.— A bill of exchange is an
the name of a person to whom the
unconditional order in writing
holder may resort in case of need;
addressed by one person to
that is to say, in case the bill is
another, signed by the person
dishonored by nonacceptance or
giving it, requiring the person to
nonpayment. Such person is called
whom it is addressed to pay on
the referee in case of need. It is in
demand or at a fixed or
the option of the holder to resort
determinable future time a sum
to the referee in case of need or
certain in money to order or to
not, as he may see fit.
bearer.

SEC. 127. Bill not an assignment


CHAPTER X.
of funds in hands of drawee.— A
bill of itself does not operate as an
ACCEPTANCE.
assignment of the funds in the
hands of the drawee available for
SEC. 132. Acceptance; how made,
the payment thereof, and the
and so forth.— The acceptance of
drawee is not liable on the bill
a bill is the signification by the
unless and until he accepts the
drawee of his assent to the order of
same.
the drawer. The acceptance must
be in writing and signed by the
SEC. 128. Bill addressed to more
drawee. It must not express that
than one drawee.— A bill may be
the drawee will perform his
addressed to two or more drawees
promise by any other means than
jointly, whether they are partners
the payment of money.
by the drawer, or while otherwise
SEC. 133. Holder entitled to incomplete, or when it is overdue,
acceptance on face of bill.— The or after it has been dishonored by
holder of a bill presenting the a previous refusal to accept, or by
same for acceptance may require nonpayment. But when a bill
that the acceptance be written on payable after sight is dishonored
the bill, and, if such request is by nonacceptance and the drawee
refused, may treat the bill as subsequently accepts it, the
dishonored. holder, in the absence of any
different agreement, is entitled to
SEC. have the bill accepted as of the
134. Acceptance by separate date of the first presentment.
instrument.—
Where an acceptance is written SEC. 139. Kinds of acceptances.—
on a paper other than the bill An acceptance is either general or
itself, it does not instrument-bind qualified. A general acceptance
the acceptor except in favor of a assents without qualification to
person to whom it is shown and the order of the drawer. A
who, on the faith thereof, receives qualified acceptance in express
the bill for value. terms varies the effect of the bill as
drawn.
SEC. 135. Promise to accept; when
equivalent to acceptance.— An SEC. 140. What constitutes a
unconditional promise in writing general acceptance.— An
to accept a bill before it is drawn is acceptance to pay at a particular
deemed an actual acceptance in place is a general acceptance,
favor of every person who, upon unless it expressly states that the
the faith thereof, receives the bill bill is to be paid there only and not
for value. elsewhere.

SEC. 136. Time allowed drawee to SEC. 141. Qualified acceptance.—


accept.—The drawee is An acceptance is qualified which
allowed twenty-four hours after is—
presentment in which to decide
whether or not he will accept the (a) Conditional; that is to say,
bill; but the acceptance, if given, which makes payment by the
dates as of the day of presentation. acceptor dependent on the
fulfillment of a condition therein
SEC. stated;
137. Liability of drawee retainin (b) Partial; that is to say, an
g or destroying bill.— Where a acceptance to pay part only of the
drawee to when a bill is delivered amount for which the bill is
for acceptance destroys the same, drawn;
or refuses within twenty-four (c) Local; that is to say, an
hours after such delivery, or acceptance to pay only at a
within such other period as the particular place;
holder may allow, to return the bill (d) Qualified as to time;
accepted or nonaccepted to the (e) The acceptance of some one or
holder, he will be deemed to have more of the drawees, but not of all.
accepted the same.
SEC. 142. Rights of parties as to
qualified acceptance.— The holder
SEC. 138. Acceptance of
may refuse to take a qualified
incomplete bill.—A bill may be
acceptance, and if he does not
accepted before it has been signed
obtain an unqualified acceptance, fail to do so, the drawer and all
lie may treat the bill as dishonored indorsers are discharged.
by nonacceptance. Where a
qualified acceptance is taken, the SEC. 145. Presentment; how
drawer and indorsers are made.— Presentment for
discharged from liability on the acceptance must be made by or on
bill, unless they have expressly or behalf of the holder at a
impliedly authorized the holder to reasonable hour, on a business day
take a qualified acceptance, or and before the bill is overdue, to
subsequently assent the drawee or some person
thereto. When the drawer or an authorized to accept or refuse
indorser receives notice of a acceptance on his behalf; and
qualified acceptance, he must,
within a reasonable time, express (a) Where a bill is addressed to
his dissent to the holder, or he will two or more drawees who are not
be deemed to have assented partners, presentment must be
thereto. made to them all, unless one has
authority to accept or refuse
acceptance for all, in which case
CHAPTER XL presentment may be made to him
only;
PRESENTMENT TOR ACCEPTA (b) Where the drawee is dead,
NCE. presentment may be made to his
personal representative;
SEC. 143. When presentment for (c) Where the drawee has been
acceptance must be made.— adjudged a bankrupt or an
Presentment for acceptance must insolvent or has made an
be made— assignment for the benefit of
creditors presentment may be
(a) Where the bill is payable after made to him or to his trustee or
sight, or in any other case, where assignee.
presentment for acceptance is
SEC. 146. On what days
necessary in order to fix the
presentment may be made.— A
maturity of the instrument; or
bill may be presented for
(b) Where the bill expressly
acceptance on any day on which
stipulates that it shall be presented
negotiable instruments may be
for acceptance; or
presented for payment under the
(c) Where the bill is drawn payable
provisions of sections seventy-two
elsewhere than at the residence or
and eighty-five of this Act. When
place of business of the drawee.
Saturday is not otherwise a
In no other case is presentment for holiday, presentment for
acceptance necessary in order to acceptance may be made before
render any party to the bill liable. twelve o'clock, noon, on that day.

SEC. 144. When failure to present SEC. 147. Presentment where time
releases drawer and indorser.— is insufficient.— Where the holder
Except as herein otherwise of a bill drawn payable elsewhere
provided, the holder of a bill which than at the place of business or the
is required by the next preceding residence of the drawee has not
section to be presented for time with the exercise of
acceptance must either present it reasonable diligence to present the
for acceptance or negotiate it bill for acceptance before
within a reasonable time. If he presenting it for payment on the
day that it falls due, the delay presentment for payment is
caused by presenting the bill for necessary.
acceptance before presenting it for
payment is excused, and does not
discharge the drawers and CHAPTER XII.
indorsers.
PROTEST.
SEC. 148. Where presentment is
excused.— Presentment for SEC. 152. In what cases protest
acceptance is excused, and a bill necessary.— Where a foreign bill
may be treated as dishonored by appearing on its face to be such is
nonacceptanee, in either of the dishonored by nonaceeptance, it
following cases: must be duly protested for
nonacceptanee, and where such a
(a) Where the drawee is dead, or bill which has not previously been
has absconded, or is a fictitious dishonored by nonacceptanee is
person or a person not having dishonored by nonpayment, it
capacity to contract by bill. must be duly protested for
(b) Where, after the exercise of nonpayment. If it is not so
reasonable diligence, presentment protested, the drawer and
can not be made. indorsers are discharged. Where a
(c) Where, although presentment bill does not appear on its face to
has been irregular, acceptance has be a foreign bill, protest thereof in
been refused on some other case of dishonor is unnecessary.
ground.
SEC. 153. Protest; how made.—
SEC. 149. When dishonored by
The protest must be annexed to
nonacceptanee.— A bill is
the bill, or must contain a copy
dishonored by nonacceptanee—
thereof, and must be under the
hand and seal of the notary
(a) When it
making it, and must specify—
is duly presented for acceptance
and such an acceptance as is
(a) The time and place of
prescribed by this Act is refused or
presentment;
can not be obtained; or
(b) The fact that presentment was
(b) When presentment for
made and the manner thereof;
acceptance is excused, and the bill
(c) The cause or reason for
is not accepted.
protesting the bill;
SEC. 150. Duty of holder where (d) The demand made and the
bill not accepted.— Where a bill is answer given, if any, or the fact
duly presented for acceptance and that the drawee or acceptor could
is not accepted within the not be found.
prescribed time, the person
SEC 154. Protest; by whom
presenting it must treat the bill as
made.— Protest may be made by—
dishonored by nonacceptanee or
he loses the right of recourse
(a) A notary public; or
against the drawer and indorsers.
(b) By any respectable resident of
the place where the bill is
SEC. 151. Rights of holder where
dishonored, in the presence of two
bill not accepted.— When a bill is
or more credible witnesses.
dishonored by nonacceptanee, an
immediate right of recourse SEC. 155. Protest; when to be
against the drawers and indorsers made.— When a bill is protested,
accrues to the holder and no such protest must be made on the
day of its dishonor, unless delay is reasonable diligence.
excused as herein
provided. When a bill has been SEC. 160. Protest where bill is
duly noted, the protest may be lost, and so forth.— When a bill is
subsequently extended as of the lost or destroyed or is wrongly
date of the noting. detained from the person entitled
to hold it, protest may be made on
SEC. 156. Protest; where made.— a copy or written particulars
A bill must be protested at the thereof.
place where it is dishonored,
except that when a bill drawn
payable at the place of business or CHAPTER XIII.
residence of some person other
than the drawee has been ACCEPTANCE FOR HONOR.
dishonored by nonacceptance, it
must be protested for nonpayment SEC. 161. When bill may be
at the place where it is expressed accepted for honor.— Where a bill
to be payable, and no further of exchange has been protested for
presentment for payment to, or dishonor by nonacceptance or
demand on, the drawee is protested for better security, and
necessary. is not overdue, any person not
being a party already liable
SEC. 157. Protest both for thereon may, with the consent of
nonacceptance and the holder, intervene and accept
nonpayment.— A bill which has the bill supra protest for the honor
been protested for nonacceptance of any party liable thereon, or for
may be subsequently protested for the honor of the person for whose
nonpayment. account the bill is drawn. The
acceptance for honor may be for
SEC. part only of the sum for which the
158. Protest before maturity bill is drawn; and where there has
where acceptor insolvent.— been an acceptance for honor for
Where the acceptor lias been one party, there may be a further
adjudged a bankrupt or an acceptance by a different person
insolvent, or has made an for the honor of another party.
assignment for the benefit of
creditors, before the bill matures, SEC. 162. Acceptance for honor;
the holder may cause the bill to be how made.— An acceptance for
protested for better security honor supra protest must be in
against the drawer and indorse. writing, and indicate that it is an
acceptance for honor, and must be
SEC. 159. When signed by the acceptor for honor.
protest dispensed with.— Protest
is dispensed with by any SEC. 163. When deemed to be an
circumstances which would acceptance for honor of the
dispense with notice of dishonor. drawer.— Where an acceptance
Delay in noting or protesting is for honor does not expressly state
excused when delay is caused by for whose honor it is made, it is
circumstances beyond the control deemed to be an acceptance for
of the holder and not imputable to the honor of the drawer.
his default, misconduct, or
negligence. When the cause of SEC. 164. Liability of the acceptor
delay ceases to operate, the bill for honor.— The acceptor for
must be noted or protested with honor is liable to the holder and to
all parties to the bill subsequent to SEC. 169. When delay in making
the party for whose honor he has presentment is excused.— The
accepted. provisions of section eighty-one
apply where there is delay in
SEC. 165. Agreement of acceptor making presentment to the
for honor.— The acceptor for acceptor for honor or referee in
honor, by such acceptance engages case of need.
that he will on due
presentment pay the bill SEC. 170. Dishonor of bill by
according to the terms of his acceptor for honor.—When the
acceptance, provided it shall not bill is dishonored by the acceptor
have been paid by the drawee, and for honor it must be protested for
provided also that it shall have nonpayment by him.
been duly presented for payment
and protested for nonpayment and
notice of dishonor given to him. CHAPTER XIV.

SEC. 166. Maturity of bill payable PAYMENT FOR HONOR.


after sight; accepted for honor.—
Where a bill payable after sight is SEC. 171. Who may make payment
accepted for honor, its maturity is for honor.— Where a bill has been
calculated from the date of the protested for nonpayment, any
noting for non-acceptance and not person may intervene and pay it
from the date of the acceptance for supra protest for the honor of any
honor. person liable thereon or for the
honor of the person for whose
SEC. 167. Protest of bill accepted account it was drawn.
for honor, and so forth.— Where a
dishonored bill has been accepted SEC. 172. Payment for honor;
for honor supra protest or how made.— The payment for
contains a reference in case of honor supra protest in order to
need, it must be protested for operate as such and not as a mere
nonpayment before it is presented voluntary payment must be
for payment to the acceptor for attested by a notarial act of honor
honor or referee in case of need. which may be appended to the
protest or form an extension to it.
SEC. 168. Presentment for
payment to acceptor for honor, SEC. 173. Declaration before
how made.— Presentment for payment for honor.— The notarial
payment to the acceptor for honor act of honor must be founded on a
must paymen be made as follows: declaration made by the payer for
honor or by his agent in that
(a) If it is to be presented in the behalf declaring his intention to
place where the protest for pay the bill for honor and for
nonpayment was made, it must be whose honor he pays.
presented not later than the day
following its maturity. SEC. 174. Preference of
(b) If it is to be presented in some parties offering to pay for
other place than the place where it honor.— Where two or more
was protested, then it must be persons offer to pay a bill for the
forwarded within the time honor of different parties, the
specified in section one hundred person whose payment will
and four. discharge most parties to the bill is
to be given the preference.
SEC. 175. Effect on subsequent SEC. 180. Liability of holder who
parties where bill is paid for indorses two or more parts of a
honor.— Where a bill has been set to different persons.— Where
paid for honor, all parties the holder of a set indorses two or
subsequent to the party for whose more parts to different persons he
honor it is paid are discharged, hut is liable on every such part, and
the payer for honor is subrogated every indorser subsequent to him
for, and succeeds to, both the is liable on the part he has himself
rights and duties of the holder as indorsed, as if such parts were
regards the party for whose honor separate bills.
he pays and all parties liable to the
latter. SEC. 181. Acceptance of bills
drawn in sets.— The acceptance
SEC. 176. Where holder refuses to may be written on any part and it
receive payment supra protest.— must be written on one part only.
Where the holder of a bill refuses If the drawee accepts more than
to receive payment supra protest, one part, and such accepted parts
he loses his right of recourse are negotiated to different holders
against any party who would have in due course, he is liable on every
been discharged by such payment. such part as if it were a separate
bill.
SEC. 177. Rights of payer for
honor.— The payer for honor, on SEC. 182. Payment by acceptor of
paying to the holder the amount of bills drawn in sets.—When the
the bill and the notarial expenses acceptor of a bill drawn in a set
incidental to its dishonor, is pays it without requiring the part
entitled to receive both the bill bearing his acceptance to be
itself and the protest. delivered up to him, and that part
at maturity is outstanding in the
hands of a holder in due course, he
CHAPTER XV. is liable to the holder thereon.

BILLS IN A SET. SEC. 183. Effect of discharging


one of a set.—Except as herein
SEC. 178. Bills in sets constitute otherwise provided, where any one
one bill.— Where a bill is drawn in part of a bill drawn in a set is
a set, each part of the set being discharged by payment or
numbered and containing a otherwise the whole bill is
reference to the other parts, the discharged.
whole of the parts constitutes one
bill.
TITLE III.
SEC. 179. Right of holders where
different parts are negotiated.— PROMISSORY NOTES AND
Where two or more parts of a set CHECKS.
are negotiated to different holders
in due course, the holder whose CHAPTER XVI.
title first accrues is as between
such holders the true owner of the SEC. 184. Promissory note
bill. But nothing in this section defined.— A negotiable promissory
affects the rights of a person who note within the meaning of this
in due course accepts or pays the Act is an unconditional premise in
part first presented to him. writing made by one person to
another, signed by the maker,
engaging to pay on demand, or at CHAPTER XVII.
a fixed or determinable future
time, a sum certain in money to SEC. 190. Short title.— This Act
order or to bearer. Where a note is shall be known as the Negotiable
drawn to the maker's own order, it Instruments Law.
is not complete until indorsed by
him. SEC. 191. Definitions and
meaning of terms.— In this Act,
SEC. 185. Chech defined.— A unless the context otherwise
check is a bill of exchange drawn requires—
on a bank payable on
demand. Except as herein "Acceptance" means an acceptance
otherwise provided, the provisions completed by delivery or
of this Act applicable to a bill of notification;
exchange payable on demand "Action" includes counterclaim
apply to a check. and set-off;
"Bank" includes any person or
SEC. 186. Within what time a association of persons carrying on
check must be presented.— A the business of banking, whether
check must be presented for incorporated or not;
payment within a reasonable time "Bearer" means the person in
after its issue or the drawer will be possession of a bill or note which
discharged from liability thereon is payable to bearer ;
to the extent of the loss caused by "Bill" means bill of exchange, and
the delay. "note" means negotiable
promissory note;
SEC. 187. Certification of check; "Delivery" means transfer of
effect of.— Where a check is possession, actual or constructive,
certified by the bank on which it is from one person to another;
drawn, the certification is "Holder" means the payee or
equivalent to an acceptance. indorsee of a bill or note, who is in
possession of it, or the bearer
SEC. 188. Effect where the holder thereof;
of check procures it to be "Indorsement" means an
certified.— Where the holder of a indorsement completed by
check procures it to be accepted or delivery;
certified, the drawer and all "Instrument" means negotiable
indorsers are discharged from instrument;
liability thereon. "Issue" means the first delivery of
the instrument, complete in form,
SEC. 189. When check operates as to a person who takes it as a
an assignment.— A check of itself holder;
does not operate as an assignment "Person" includes a body of
of any part of the funds to the persons, whether incorporated or
credit of the drawer with the bank, not;
and the bank is not liable to the "Value" means valuable
holder, unless and until it accepts consideration;
or certifies the check. "Written" includes printed, and
"writing" includes print.
SEC. 192. Person primarily liable
TITLE IV.
on instrument.— The person
"primarily" liable on an
GENERAL PROVISIONS.
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" or an
"unreasonable time," regard is to
be had to the nature of the
instrument, the usage of trade or
business (if any) 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
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.

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.