NEGOTIABLE INSTRUMENT – SECTIONS 152-189 SUMMARY

Section 152 talks about protest, it is essential to make a protest when it comes to a foreign bill of
exchange only and other negotiable instruments are not necessary to this process. Notary public or other
authorized person must execute protest when a foreign bill of exchange becomes dishonored by non-
acceptance or even if it is accepted when presented but yet it was not accepted for payment. If protest
was not done, all secondary liable persons will be free from their liability. The purpose of this protest is to
become uniform and essential to other countries. It also gives more formal facts and much advantageous
if other negotiable instruments will be protested.

Section 153 explains the necessary details that a certificate of protest must contain. Protest must
either be attached to the foreign bill of exchange or create a copy of it. The details that must be written
which strengthen the power of the protest are time and place of presentment, the fact that is presented,
reason on protesting the foreign, demand made and answer given, and where acceptor or drawee cannot
be found. The one who will execute it which is the notary public or other authorized person must create
and seal it because without their authentication, the facts evidencing the non-payment or non-acceptance
of the drawee won’t be effective. Additionally, the facts are only presented on its face and can be
countered by evidence.

Section 154 simply state that a protest must be made by either a notary public or a respectable
resident where there should be at least two likely witnesses which is not necessary for the notary public.

Section 155 simply state that protest must be made when it is dishonored on that day but if there
is a delay which beyond the fault of the holder, it is excused. It is not clearly to be protested on that day if
the bill will be duly noted. It can be adjusted from it date but it will only took effect as if it retroact to the
day of noting.

Section 156 simply states that protest must be made at the location where it is dishonored but if
the bill is dishonored by non-acceptance, the location (either place of business or residence of a person on
behalf of the drawee) where it is stated to be payable must be the location to be protested for non-
payment and presentment for payment won’t be needed.

Section 157 simply states that it is optional to protest for non-payment if the bill is already
protested for non-acceptance. Also, it is not essential to present for payment if the bill if already refused
for acceptance.

Section 158 simply states that a holder can demand for better security to the notary public
through protest if the acceptor after the acceptance will be broke and wont’ be able to pay or made an
assignment for the benefit of creditors. It is not necessary to demand for this security and excluding it
won’t have an effect to the rights of holder against person liable to him.
 Section 159 talks about dispense and delay in protesting. It is the same as for the notice of
dishonor where protest will be dispense after exercising reasonable diligence when it doesn’t reach those
parties liable. Also in delay, if it is beyond the fault of the holder like because of fortuitous event then
protest is excused.

Section 160 simply states that if the bill is ruined, nowhere to be found, or wrongfully confined to
the person entitle to have it won’t have an effect in executing protest even if it is already accepted or not
because it doesn’t affect the parties contract.

Section 161 talks about acceptance for honor, a bill of exchange after it is protested for non-
acceptance or for better security. The bill can be accepted by a stranger who is not a party to the
instrument either for the advantage of any parties liable or for the honor of a party where it will give
benefits to all parties subsequent to that party. It is done to maintain the credit of parties or for the party
whose acceptance of honor has been made. The presumption is that the stranger who accepts the bill has
money of that party for whore honor he accepts. It can be made if the bill has been protested for non-
acceptance or better security, the person accepting must not be a party to the instrument, it must not be
after the maturity date, and must have consent of the holder. If there has been acceptance for a party,
there may also be different persons to honor for another party.

Section 162 simply state that acceptance for honor must be made in writing, contains details for
acceptance of honor, signed by the stranger accepting for honor, expressly or implied promise to pay, and
once it is accepted, it must be delivered to the holder.

Section 163 simply states that an acceptance for honor to a person whose not specifically
identified or named, it is assumed to be for the honor of the drawer because it is presumed that the
drawer will be held liable to the stranger (acceptor) and will take effect for most parties to be exempted to
the liability.

Section 164 talks about the stranger (acceptor for honor) who have the liability to the holder and
all subsequent parties of the party to whom the honor was given but have a right to demand to payment
to prior parties for whose honor he accepts after paying to the holder or subsequent party.

Section 165 talks about the terms for payment of the acceptor of honor when it will be presented
to him for payment. It is said that he is only secondarily liable to the holder and subsequent parties. He
will only be bind to the agreement for acceptance given to him where the bill will be presented to him,
not paid by the drawer, protested for non-payment, and letter of notice for dishonor is given to him.

Section 166 talks about bill of exchange which will be matured on a determinable time and has
been accepted for honor. The due date of the bill must start from the date when the bill has been
dishonored by non-acceptance and not to the date when it is accepted for acceptance for honor.
 Section 167 simply states that if the bill that has been dishonored is accepted for honor or have a
referee when needed, there is a need to protest for non-payment before it will be presented by the holder
for payment to the stranger (acceptor for honor or referee when needed).

Section 168 talks about on how the holder will present the bill for payment to the acceptor for
honor. The presentment may be made in the location where the protest for non-payment was made and it
should be exceed from the day (not later than the day following the due date) which it is supposed to be
presented. It can also be made in the location other the first one or in different places then it must be
presented as per conditions in Section 104.

Section 169 simply talks about the delay in presenting for payment which is to be excused if the
delay is beyond the fault of the holder like the happening of fortuitous event.

Section 170 talks about when the stranger or acceptor of the bill dishonored it after acceptance. It
will reflect to be protested in three ways, protested for non-payment to him as an acceptor for honor,
protest for non-payment of the drawee, and protest for dishonor by non-acceptance or for better security.

Section 171 talks about payment for honor where the payment can be done by either a party of
the instrument or not unlike in acceptance of honor. It is to be done after the protest for non-payment and
inures the advantages for the liable parties or to person for whose liability it was drawn. The reason for
this payment for honor is for the holder who has been dishonored for non-payment doesn’t want to
indorse the bill of exchange and sustain the liabilities of an indorser defined in Section 66 or by bearer in
Section 65.

Section 172 and Section 173 talks about how payment of honor will be created to employ. It must
be testify through the notarial act of honor which will be attached to the protest as a part like an extension
to it. This will be made by the announcement of the person who is in payment for honor or on behalf of
him which have his intention to do his obligation to pay the bill for honor and for whose person he
honors to pay. Additionally, it must also be dishonored and protested by non-payment. If any of these
doesn’t operate for valid payment of honor, it will be just viewed as a mere voluntary payment and the
payer won’t have the right to demand for payment to prior parties of the person whose honor will be
paid.

Section 174 simply talks about some cases where there are several people who wanted to become
a payer of the bill after it is protested for non-payment. The person who will have the biggest number of
subsequent parties in accordance to the party who will they choose to honor will be the one to become the
payer for payment of honor.

Section 175 talks about effect of payment by the payer to subsequent and prior parties of the
party chosen to be honor for payment. It will release all subsequent parties and the payer will have the
advantages of the holder to demand for payment to prior parties for the amount paid by him. Also, if the
payer pays for the honor of all parties then he can demand for payment to all of them.

Section 176 simply talks about the turning down for payment by the holder against the payer. In
effect, the holder will lessen his rights as to demand for payment to the subsequent parties of the party
that the payer choose to honor. These subsequent parties are likely to be released to the right of the holder
and their liability to the instrument.

Section 177 simply talks about the right of payer in payment for honor, after paying the holder of
the instrument. He will have the right to obtain the instrument itself and its certificate of protest to
strengthen his rights to demand payment to prior parties of the party to whom he choose to honor for the
certain amount he paid to the holder.

Section 178 simply talks about the bills of exchange in set, meaning it contains different parts but
each expressing as one bill which are said to have certain details to be distinguished. It consists of
numbering and reference which will give an idea that there are other parts existed. These bills in set are
being sent to farther places where there would be a possibility that each of these parts can reach their
destination.

Section 179 talks about the right of those holders who have the different parts of the instrument
negotiated to them by the payee. The payee is doesn’t need to negotiate all bills in set if all of these has
reached to him. If he do negotiate all of these bills then he will only be liable to on each bill that he
negotiated. The real owner of the bill is the first holder to whom the part is first negotiated which is a
holder in due course. If the drawee gave acceptance to the first bill presented to him (not the first part) in
good faith or pays it then he will have the right to secure himself to avoid in paying the first holder
(which is the one he supposed to accept or pay only) who became the owner which is even in due course.

Section 180 talks about the holder who indorses the bills in set to different indorsees where in
effect will make him liable to each of them. If these indorsees again indorse it another then each of them
would be liable to their own indorsees as if it is a unrelated bill. Now in this case, the drawer is only
obliged to pay the real amount stated in one part of the instrument and not on the sum of amount which
has been negotiates to other person by the payee or holder.

Section 181 simply talks about the acceptance of bills in sets where if the drawee can accept any
of the part of the bill in set but the acceptance must be made and written only to one part of it. If the
drawee accepts each part greater than one then this holder if in due course can present to him for further
payment and he will be liable as their acceptor as if he accepts these bills in unrelated bill.

Section 182 in connection to Section 181 the drawee can withdraw his acceptance to these holders
in different parts of bills in set because if he refuse to do it then he will still be liable for payment to each
of them. Still if he doesn’t need to accept all bills which are indorse and must need to accept only one part
to avoid taking obligation to all bills.

Section 183 simply talks about the discharged on bill like from payment which discharges the
whole bill in set because a bill in set is considered to be one bill and if one of these parts are discharged
then the whole is also discharged.

Section 184 talks about one of the forms of negotiable instrument which is the promissory note
and its special types. A promissory note is signed by the maker and payable to his order, without
indorsing and delivering it, the instrument is not complete and in any case that the instrument has been
received because of unlawful action then the maker is not liable on this case. The usage of promissory
note is mainly for their promise to pay to that certain person the sum certain in money and it is widely
use to credit transactions. There are nine special types of promissory note, first is the certificate of deposit
which is done by a bank, it is their written acknowledgement in promise to pay the depositors, bearer or
other person. Depending upon its detail or terms, it can either be negotiable or non-negotiable. The
second is the bond; it is done by Public or Private Corporation for their evidence to debt and promise to
pay. There are two identity of bonds, the registered bonds which is payable only to persons on its face so
it is non-negotiable but transferable by registration of transferee’s name and the coupon bond which are
attached coupons that took the holder to be interested when due. Third is the bank note which is done by
a bank which is payable to bearer so it can operate in different parties. Fourth is the due bill, from the
word due where this word is used and shown in the face of the instrument by a person to acknowledge
his debt. Fifth is the mortgage note which is the chattel mortgage note which is secured by personal
property and real estate mortgage notes which is by real property. It can foreclose note which is not yet
done to be paid when it reaches it maturity. Sixth, the title-retaining note (conditional sale contract) which
gives protection to payee’s name that the title of goods will remain to him until the note is fully paid.
Seventh is the collateral note, it is created for better security to pay the note and gain the trust of the
payee through collateral security of one’s property or any like shares. Eight is the judgment note, it
consist of attorney’s power which make the payee to take legal actions in case that the maker won’t be
able to pay. Lastly, the installment note that consists stated periods for installment for the payment in
determinable time.

Section 185 talks about the special form of bill of exchange which is the check that orders a bank
that have the funds of the drawer to pay the amount to be presented by the holder. It is a written
negotiable instrument where it is only drawn by bank, payable on demand, doesn’t need to present for
acceptance, and usually given to immediate parties. There are six special type of checks aside from the
personal and check drawn by depositor, first is the memorandum check have written words
memorandum, mem, or memo indicating the drawer to pay the holder. Second is the cashier’s check that
is drawn by the cashier of a bank and it is the bank’s own check. Third, the manager’s check same as the
cashier’s check but here, the manager of the bank drawn the check. Fourth is the traveler’s check to
ensure the protection of the traveler or holder who will transact in different places to make him safe in
getting funds. The signature f holder must be seen twice, one for the time of issuance and one for
countersign, if any of these are not seen then the bank issuing it can refuse to pay. Fifth is the certified
check where it is stamped as certified and its face indicates terms that drawee bank will pay the check
when presented. Lastly, crossed-check where a two parallel lines drawn diagonally on upper left side, it
can be distinguish as cross specially where the name of the bank or company is located on between the
parallel lines indicating that it will only be paid on presentment and crossed generally where in between
the lines the word and Co. is written or nothing indicating that it must be paid by involvement of a bank
or banker. Additionally, the stales check where the check is not deposited in a reasonable time making it
to be not paid by the bank or banker like for more than six months.

Section 186 talks about the presentment of check which must be presented in reasonable time
after the issuance. The holder must present it on time and must give notice for the dishonored check in
order to not release the drawer. He, the drawer can also be release from the liability if he will incur loss
on to the delay happened because of the reason that the bank doesn’t have enough funds (the drawer has
no funds in the bank) to give to the holder when presented. As the drawer is will only liable to the
remaining extent of loss, the indorser is totally discharged when there is a delay in presentment without
the fault of the holder and except dispensed.

Section 187 simply talks about the effect of certification of check which also reflects to the
acceptance through stamping the word certified. Its effect can also release of persons secondarily liable
when holder persuade to certification because once it is certified it cannot be stop for payment and when
the holder or payer will become a depositor of the check, funds that constitute an assignment by the
drawer of it to the drawee bank who will deposit it to the holder or payee.

Section 188 in connection to Section 187 where is the certification of check is done and it is
persuade by the holder to take effect then the secondary liable parties are release to the instrument but if
the holder hasn’t received the payment then these parties won’t be released.

Section 189 talks about the function of check before and after it is accepted or stamped with
certification. The drawee bank cannot be oblige for payment if the check is not certified or accepted, the
check serve as written terms to persuade the drawee to pay the certain amount of money when presented
by the holder. Check includes the process of assignment of funds by the drawer to the drawee but it
doesn’t mean to say that a check is as mere assignment upon negotiating. Once it is certified, the drawer
will released all his rights upon the amount of money certified in the check and it will be in the hands of
the drawee bank that will pay it to the holder. A bank can also avoid from paying the check if the drawer
is insolvent and have no funds in the bank or it is insufficient or drawer died or drawer demand to stop
payment where these notice has delivered to the bank. Also, if the holder is anonymous (doesn’t want to
specify his identity), there is a detection of fraud or any unlawful actions, or if the check is not deposited
in reasonable time (beyond the time to be encash the money) or date is later than the true date.