How instrument is discharged

Sec. 115. When notice need not be given to

if it is not possible to deliver such currency,

(c) By the discharge of a prior party;

remitted to his former rights as regard all

then in the currency which is legal tender in

(d) By a valid tender or payment made by a

prior parties, and he may strike out his own

the Philippines.

prior party;

and all subsequent indorsements and against

(e) By a release of the principal debtor unless

negotiate the instrument, except:

indorser. Notice of dishonor is not required

to be given to an indorser in either of the
following cases:

The delivery of promissory notes payable to

the holder's right of recourse against the party

order, or bills of exchange or other mercantile

secondarily liable is expressly reserved;

(a) Where it is payable to the order of a third

documents

of

(f) By any agreement binding upon the holder

person and has been paid by the drawer;

(a) When the drawee is a fictitious person or

payment only when they have been cashed, or

to extend the time of payment or to postpone

and

person not having capacity to contract, and

when through the fault of the creditor they

the holder's right to enforce the instrument

(b) Where it was made or accepted for

the indorser was aware of that fact at the time

have been impaired.

unless made with the assent of the party

accommodation and has been paid by the

secondarily liable or unless the right of

party accommodated.

he

indorsed

the

the instrument is presented for payment;

Where

the

produce

the

effect

instrument;

(b) Where the indorser is the person to whom

(c)

shall

instrument

was

made

In the meantime, the action derived from the

original

or

obligation

shall

be

held

in

the

recourse against such party is expressly

reserved.

Renunciation

abeyance. (1170)

accepted for his accommodation.

Payment by person secondarily liable does not

Sec. 122. Renunciation by holder. - The

Article 1231. Obligations are extinguished:

discharge the instrument

holder may expressly renounce his rights

(1) By payment or performance;

Shelter rule

(2) By the loss of the thing due;

Sec.

original

unconditional renunciation of his rights against

(3) By the condonation or remission of the

defense. - In the hands of any holder other

the principal debtor made at or after the

debt;

than a holder in due course, a negotiable

maturity of the instrument discharges the

(b) By payment in due course by the party

(4) By the confusion or merger of the rights of

instrument is subject to the same defense as

instrument. But a renunciation does not affect

accommodated, where the instrument is made

creditor and debtor;

if it were non-negotiable. But a holder who

the rights of a holder in due course without

or

(5) By compensation;

derives his title through a holder in due

notice. A renunciation must be in writing

(6) By novation.

course, and who is not himself a party to any

unless the instrument is delivered up to the

fraud or illegality affecting the instrument, has

person

Sec.119. Instrument;

how

discharged. -

negotiable instrument is discharged:

(a) By payment in due course by or on behalf
of

the

accepted

principal

for

his

debtor;

accommodation;

(c) By the intentional cancellation thereof by

the

against any party to the instrument before, at,

holder;

58.

or
When

subject

to

after

its

maturity.

primarily

An

absolute

liable

and

thereon.

(d) By any other act which will discharge a

Other causes of extinguishment of obligations,

all the rights of such former holder in respect

simple contract for the payment of money;

such as annulment, rescission, fulfillment of a

of all parties prior to the latter

Cancellation

(e) When the principal debtor becomes the

resolutory condition, and prescription, are

holder of the instrument at or after maturity in

governed elsewhere in this Code. (1156a)

Sec. 68. Order in which indorsers are

Sec.

liable. - As respect one another, indorsers are

burden of proof. -

liable prima facie in the order in which they

unintentionally or under a mistake or without

his own right.

Discharge of Persons Secondarily Liable
Payment in due course
Sec. 88. What constitutes payment in due

123. Cancellation;
A

unintentional;
cancellation

made

indorse; but evidence is admissible to show

the authority of the holder, is inoperative but

Sec. 120. When persons secondarily liable on

that, as between or among themselves, they

where an instrument or any signature thereon

the instrument are discharged.

have agreed otherwise. Joint payees or joint

appears to have been cancelled, the burden of

indorsees who indorse are deemed to indorse

proof lies on the party who alleges that the

jointly and severally.

cancellation

course. - Payment is made in due course

when it is made at or after the maturity of the

-A

person

secondarily

liable

on

the

payment to the holder thereof in good faith

instrument is discharged:

and without notice that his title is defective.

(a) By any act which discharges the

Sec.121. Right

was

made

unintentionally

under a mistake or without authority

of

party

who

discharges

instrument;

instrument. - Where the instrument is paid by

Article 1249. The payment of debts in money

(b) By the intentional cancellation of his

a party secondarily liable thereon, it is not

shall be made in the currency stipulated, and

signature by the holder;

discharged; but the party so paying it is

or