You are on page 1of 12

THE NEGOTIABLE INSTRUMENTS LAW (a) An indication of a particular fund out of (c) waives the benefit of any law

waives the benefit of any law intended for

I. FORM AND INTERPRETATION which reimbursement is to be made or a the advantage or protection of the obligor; or
particular account to be debited with the
Section 1. Form of negotiable instruments. - An amount; or (d) gives the holder an election to require
instrument to be negotiable must conform to something to be done in lieu of payment of
the following requirements: (a) It must be in (b) A statement of the transaction which gives money.
writing and signed by the maker or drawer; rise to the instrument. But nothing in this section shall validate any
But an order or promise to pay out of a provision or stipulation otherwise illegal.
(b) Must contain an unconditional promise or particular fund is not unconditional.
order to pay a sum certain in money; Sec. 6. Omissions; seal; particular money. - The
Sec. 4. Determinable future time; what validity and negotiable character of an
(c) Must be payable on demand, or at a fixed or constitutes. - An instrument is payable at a instrument are not affected by the fact that:
determinable future time; determinable future time, within the meaning (a) it is not dated; or
of this Act, which is expressed to be payable:
(d) Must be payable to order or to bearer; and (a) At a fixed period after date or sight; or (b) does not specify the value given, or that any
value had been given therefor; or
(e) Where the instrument is addressed to a (b) On or before a fixed or determinable future
drawee, he must be named or otherwise time specified therein; or (c) does not specify the place where it is drawn
indicated therein with reasonable certainty. or the place where it is payable; or
Sec. 2. What constitutes certainty as to sum. - (c) On or at a fixed period after the occurrence
The sum payable is a sum certain within the of a specified event which is certain to happen, (d) bears a seal; or
meaning of this Act, although it is to be paid: though the time of happening be uncertain.
An instrument payable upon a contingency is (e) designates a particular kind of current
(b) by stated installments; or not negotiable, and the happening of the event money in which payment is to be made.
does not cure the defect. But nothing in this section shall alter or repeal
(c) by stated installments, with a provision that, any statute requiring in certain cases the nature
upon default in payment of any installment or Sec. 5. Additional provisions not affecting of the consideration to be stated in the
of interest, the whole shall become due; or negotiability. - An instrument which contains an instrument.
order or promise to do any act in addition to the
(d) with exchange, whether at a fixed rate or at payment of money is not negotiable. But the Sec. 7. When payable on demand. - An
the current rate; or negotiable character of an instrument instrument is payable on
otherwise negotiable is not affected by a demand:
(e) with costs of collection or an attorney's fee, provision which: (a) When it is so expressed to be payable on
in case payment shall not be made at maturity. (a) authorizes the sale of collateral securities in demand, or at sight, or on presentation; or
case the instrument be not paid at maturity; or
Sec. 3. When promise is unconditional. - An (b) In which no time for payment is expressed.
unqualified order or promise to pay is (b) authorizes a confession of judgment if the Where an instrument is issued, accepted, or
unconditional within the meaning of this Act instrument be not paid at maturity; or indorsed when overdue, it is, as regards the
though coupled with: person so issuing, accepting, or indorsing it,
payable on demand.
Sec. 10. Terms, when sufficient. - The order that the paper may be converted into a
Sec. 8. When payable to order. - The instrument instrument need not follow the language of this negotiable instrument operates as a prima facie
is payable to order where it is drawn payable to Act, but any terms are sufficient which clearly authority to fill it up as such for any amount. In
the order of a specified person or to him or his indicate an intention to conform to the order, however, that any such instrument when
order. It may be drawn payable to the order of: requirements hereof. completed may be enforced against any person
(a) A payee who is not maker, drawer, or who became a party thereto prior to its
drawee; or Sec. 11. Date, presumption as to. - Where the completion, it must be filled up strictly in
instrument or an acceptance or any accordance with the authority given and within
(b) The drawer or maker; or indorsement thereon is dated, such date is a reasonable time. But if any such instrument,
deemed prima facie to be the true date of the after completion, is negotiated to a holder in
(c) The drawee; or making, drawing, acceptance, or indorsement, due course, it is valid and effectual for all
as the case may be. purposes in his hands, and he may enforce it as
(d) Two or more payees jointly; or if it had been filled up strictly in accordance
Sec. 12. Ante-dated and post-dated. - The with the authority given and within a
(e) One or some of several payees; or instrument is not invalid for the reason only reasonable time.
that it is ante-dated or post-dated, provided this
(f) The holder of an office for the time being. is not done for an illegal or fraudulent purpose. Sec. 15. Incomplete instrument not delivered. -
Where the instrument is payable to order, the The person to whom an instrument so dated is Where an incomplete instrument has not been
payee must be named or otherwise indicated delivered acquires the title thereto as of the delivered, it will not, if completed and
therein with reasonable certainty. date of delivery. negotiated without authority, be a valid
contract in the hands of any holder, as against
Sec. 9. When payable to bearer. - The Sec. 13. When date may be inserted. - Where any person whose signature was placed thereon
instrument is payable to an instrument expressed to be payable at a before delivery.
bearer: fixed period after date is issued undated, or
(a) When it is expressed to be so payable; or where the acceptance of an instrument payable Sec. 16. Delivery; when effectual; when
at a fixed period after sight is undated, any presumed. - Every contract on a negotiable
(b) When it is payable to a person named holder may insert therein the true date of issue instrument is incomplete and revocable until
therein or bearer; or or acceptance, and the instrument shall be delivery of the instrument for the purpose of
payable accordingly. The insertion of a wrong giving effect thereto. As between immediate
(c) When it is payable to the order of a fictitious date does not avoid the instrument in the hands parties and as regards a remote party other
or non-existing person, and such fact was of a subsequent holder in due course; but as to than a holder in due course, the delivery, in
known to the person making it so payable; or him, the date so inserted is to be regarded as order to be effectual, must be made either by
the true date. or under the authority of the party making,
(d) When the name of the payee does not drawing, accepting, or indorsing, as the case
purport to be the name of any Sec. 14. Blanks; when may be filled. - Where the may be; and, in such case, the delivery may be
person; or instrument is wanting in any material particular, shown to have been conditional, or for a special
the person in possession thereof has a prima purpose only, and not for the purpose of
(e) When the only or last indorsement is an facie authority to complete it by filling up the transferring the property in the instrument. But
indorsement in blank. blanks therein. And a signature on a blank paper where the instrument is in the hands of a holder
delivered by the person making the signature in in due course, a valid delivery thereof by all
parties prior to him so as to make them liable to the person making the same intended to sign,
him is conclusively presumed. And where the he is to be deemed an indorser; Sec. 22. Effect of indorsement by infant or
instrument is no longer in the possession of a corporation.- The indorsement or assignment of
party whose signature appears thereon, a valid (g) Where an instrument containing the word "I the instrument by a corporation or by an infant
and intentional delivery by him is presumed promise to pay" is signed by two or more passes the property therein, notwithstanding
until the contrary is proved. persons, they are deemed to be jointly and that from want of capacity, the corporation or
severally liable thereon. infant may incur no liability thereon.
Sec. 17. Construction where instrument is
ambiguous. - Where the language of the Sec. 18. Liability of person signing in trade or Sec. 23. Forged signature; effect of. - When a
instrument is ambiguous or there are omissions assumed name. - No person is liable on the signature is forged or made without the
therein, the following rules of construction instrument whose signature does not appear authority of the person whose signature it
apply: thereon, except as herein otherwise expressly purports to be, it is wholly inoperative, and no
provided. But one who signs in a trade or right to retain the instrument, or to give a
(a) Where the sum payable is expressed in assumed name will be liable to the same extent discharge therefor, or to enforce payment
words and also in figures and there is a as if he had signed in his own name. thereof against any party thereto, can be
discrepancy between the two, the sum denoted acquired through or under such signature,
by the words is the sum payable; but if the Sec. 19. Signature by agent; authority; how unless the party against whom it is sought to
words are ambiguous or uncertain, reference shown. - The signature of any party may be enforce such right is precluded from setting up
may be had to the figures to fix the amount; made by a duly authorized agent. No particular the forgery or want of authority.
form of appointment is necessary for this
(b) Where the instrument provides for the purpose; and the authority of the agent may be II. CONSIDERATION
payment of interest, without specifying the date established as in other cases of agency.
from which interest is to run, the interest runs Sec. 24. Presumption of consideration. - Every
from the date of the instrument, and if the Sec. 20. Liability of person signing as agent, and negotiable instrument is deemed prima facie to
instrument is undated, from the issue thereof; so forth. - Where the instrument contains or a have been issued for a valuable consideration;
person adds to his signature words indicating and every person whose signature appears
(c) Where the instrument is not dated, it will be that he signs for or on behalf of a principal or in thereon to have become a party thereto for
considered to be dated as of the time it was a representative capacity, he is not liable on the value.
issued; instrument if he was duly authorized; but the
mere addition of words describing him as an Sec. 25. Value, what constitutes. — Value is any
(d) Where there is a conflict between the agent, or as filling a representative character, consideration sufficient to support a simple
written and printed provisions of the without disclosing his principal, does not contract. An antecedent or pre-existing debt
instrument, the written provisions prevail; exempt him from personal liability. constitutes value; and is deemed such whether
the instrument is payable on demand or at a
(e) Where the instrument is so ambiguous that Sec. 21. Signature by procuration; effect of. - A future time.
there is doubt whether it is a bill or note, the signature by "procuration" operates as notice
holder may treat it as either at his election; that the agent has but a limited authority to Sec. 26. What constitutes holder for value. -
sign, and the principal is bound only in case the Where value has at any time been given for the
(f) Where a signature is so placed upon the agent in so signing acted within the actual limits instrument, the holder is deemed a holder for
instrument that it is not clear in what capacity of his authority.
value in respect to all parties who become such Sec. 31. Indorsement; how made. - The Sec. 36. When indorsement restrictive. - An
prior to that time. indorsement must be written on the instrument indorsement is restrictive which either:
itself or upon a paper attached thereto. The (a) Prohibits the further negotiation of the
Sec. 27. When lien on instrument constitutes signature of the indorser, without additional instrument; or
holder for value. — Where the holder has a lien words, is a sufficient indorsement.
on the instrument arising either from contract (b) Constitutes the indorsee the agent of the
or by implication of law, he is deemed a holder Sec. 32. Indorsement must be of entire indorser; or
for value to the extent of his lien. instrument. - The indorsement must be an
indorsement of the entire instrument. An (c) Vests the title in the indorsee in trust for or
Sec. 28. Effect of want of consideration. - indorsement which purports to transfer to the to the use of some other persons.
Absence or failure of consideration is a matter indorsee a part only of the amount payable, or
of defense as against any person not a holder in which purports to transfer the instrument to But the mere absence of words implying power
due course; and partial failure of consideration two or more indorsees severally, does not to negotiate does not make an indorsement
is a defense pro tanto, whether the failure is an operate as a negotiation of the instrument. But restrictive.
ascertained and liquidated amount or where the instrument has been paid in part, it
otherwise. may be indorsed as to the residue. Sec. 37. Effect of restrictive indorsement; rights
of indorsee. - A restrictive indorsement confers
Sec. 29. Liability of accommodation party. - An Sec. 33. Kinds of indorsement. - An indorsement upon the indorsee the right:
accommodation party is one who has signed the may be either special or in blank; and it may
instrument as maker, drawer, acceptor, or also be either restrictive or qualified or (a) to receive payment of the instrument;
indorser, without receiving value therefor, and conditional.
for the purpose of lending his name to some (b) to bring any action thereon that the indorser
other person. Such a person is liable on the Sec. 34. Special indorsement; indorsement in could bring;
instrument to a holder for value, blank. - A special indorsement specifies the
notwithstanding such holder, at the time of person to whom, or to whose order, the (c) to transfer his rights as such indorsee, where
taking the instrument, knew him to be only an instrument is to be payable, and the the form of the indorsement authorizes him to
accommodation party. indorsement of such indorsee is necessary to do so.
the further negotiation of the instrument. An
III. NEGOTIATION indorsement in blank specifies no indorsee, and But all subsequent indorsees acquire only the
an instrument so indorsed is payable to bearer, title of the first indorsee under the restrictive
Sec. 30. What constitutes negotiation. - An and may be negotiated by delivery. indorsement.
instrument is negotiated when it is transferred
from one person to another in such manner as Sec. 35. Blank indorsement; how changed to Sec. 38. Qualified indorsement. - A qualified
to constitute the transferee the holder thereof. special indorsement. - The holder may convert a indorsement constitutes the indorser a mere
If payable to bearer, it is negotiated by delivery; blank indorsement into a special indorsement assignor of the title to the instrument. It may be
if payable to order, it is negotiated by the by writing over the signature of the indorser in made by adding to the indorser's signature the
indorsement of the holder and completed by blank any contract consistent with the character words "without recourse" or any words of
delivery. of the indorsement. similar import. Such an indorsement does not
impair the negotiable character of the
described adding, if he thinks fit, his proper have the indorsement of the transferor. But for
Sec. 39. Conditional indorsement. - Where an signature. the purpose of determining whether the
indorsement is conditional, the party required transferee is a holder in due course, the
to pay the instrument may disregard the Sec. 44. Indorsement in representative capacity. negotiation takes effect as of the time when the
condition and make payment to the indorsee or - Where any person is under obligation to indorsement is actually made.
his transferee whether the condition has been indorse in a representative capacity, he may
fulfilled or not. But any person to whom an indorse in such terms as to negative personal Sec. 50. When prior party may negotiate
instrument so indorsed is negotiated will hold liability. robles virtual law library instrument. - Where an instrument is
the same, or the proceeds thereof, subject to negotiated back to a prior party, such party
the rights of the person indorsing conditionally. Sec. 45. Time of indorsement; presumption. - may, subject to the provisions of this Act,
Except where an indorsement bears date after reissue and further negotiable the same. But he
Sec. 40. Indorsement of instrument payable to the maturity of the instrument, every is not entitled to enforce payment thereof
bearer. - Where an instrument, payable to negotiation is deemed prima facie to have been against any intervening party to whom he was
bearer, is indorsed specially, it may effected before the instrument was overdue. personally liable.
nevertheless be further negotiated by delivery;
but the person indorsing specially is liable as Sec. 46. Place of indorsement; presumption. - IV. RIGHTS OF THE HOLDER
indorser to only such holders as make title Except where the contrary appears, every
through his indorsement. indorsement is presumed prima facie to have Sec. 51. Right of holder to sue; payment. - The
been made at the place where the instrument is holder of a negotiable instrument may to sue
Sec. 41. Indorsement where payable to two or dated. thereon in his own name; and payment to him
more persons. - Where an instrument is payable in due course discharges the instrument.
to the order of two or more payees or indorsees Sec. 47. Continuation of negotiable character. -
who are not partners, all must indorse unless An instrument negotiable in its origin continues Sec. 52. What constitutes a holder in due
the one indorsing has authority to indorse for to be negotiable until it has been restrictively course. - A holder in due course is a holder who
the others. indorsed or discharged by payment or has taken the instrument under the following
otherwise. conditions:
Sec. 42. Effect of instrument drawn or indorsed (a) That it is complete and regular upon its face;
to a person as cashier. - Where an instrument is Sec. 48. Striking out indorsement. - The holder
drawn or indorsed to a person as "cashier" or may at any time strike out any indorsement (b) That he became the holder of it before it
other fiscal officer of a bank or corporation, it is which is not necessary to his title. The indorser was overdue, and without notice that it has
deemed prima facie to be payable to the bank whose indorsement is struck out, and all been previously dishonored, if such was the
or corporation of which he is such officer, and indorsers subsequent to him, are thereby fact;
may be negotiated by either the indorsement of relieved from liability on the instrument.
the bank or corporation or the indorsement of (c) That he took it in good faith and for value;
the officer. Sec. 49. Transfer without indorsement; effect
of. - Where the holder of an instrument payable (d) That at the time it was negotiated to him, he
Sec. 43. Indorsement where name is misspelled, to his order transfers it for value without had no notice of any infirmity in the instrument
and so forth. - Where the name of a payee or indorsing it, the transfer vests in the transferee or defect in the title of the person negotiating
indorsee is wrongly designated or misspelled, such title as the transferor had therein, and the it.
he may indorse the instrument as therein transferee acquires in addition, the right to
Sec. 53. When person not deemed holder in due all parties liable thereon. robles virtual law dishonored and the necessary proceedings on
course. - Where an instrument payable on library dishonor be duly taken, he will pay the amount
demand is negotiated on an unreasonable thereof to the holder or to any subsequent
length of time after its issue, the holder is not Sec. 58. When subject to original defense. - In indorser who may be compelled to pay it. But
deemed a holder in due course. the hands of any holder other than a holder in the drawer may insert in the instrument an
due course, a negotiable instrument is subject express stipulation negativing or limiting his
Sec. 54. Notice before full amount is paid. - to the same defenses as if it were non- own liability to the holder.
Where the transferee receives notice of any negotiable. But a holder who derives his title
infirmity in the instrument or defect in the title through a holder in due course, and who is not Sec. 62. Liability of acceptor. - The acceptor, by
of the person negotiating the same before he himself a party to any fraud or illegality accepting the instrument, engages that he will
has paid the full amount agreed to be paid affecting the instrument, has all the rights of pay it according to the tenor of his acceptance
therefor, he will be deemed a holder in due such former holder in respect of all parties prior and admits:
course only to the extent of the amount to the latter.
therefore paid by him. (a) The existence of the drawer, the
Sec. 59. Who is deemed holder in due course. - genuineness of his signature, and his capacity
Sec. 55. When title defective. - The title of a Every holder is deemed prima facie to be a and authority to draw the instrument; and
person who negotiates an instrument is holder in due course; but when it is shown that
defective within the meaning of this Act when the title of any person who has negotiated the (b) The existence of the payee and his then
he obtained the instrument, or any signature instrument was defective, the burden is on the capacity to indorse.
thereto, by fraud, duress, or force and fear, or holder to prove that he or some person under
other unlawful means, or for an illegal whom he claims acquired the title as holder in Sec. 63. When a person deemed indorser. - A
consideration, or when he negotiates it in due course. But the last-mentioned rule does person placing his signature upon an instrument
breach of faith, or under such circumstances as not apply in favor of a party who became bound otherwise than as maker, drawer, or acceptor,
amount to a fraud. on the instrument prior to the acquisition of is deemed to be indorser unless he clearly
such defective title. indicates by appropriate words his intention to
Sec. 56. What constitutes notice of defect. - To be bound in some other capacity.
constitutes notice of an infirmity in the V. LIABILITIES OF PARTIES
instrument or defect in the title of the person Sec. 64. Liability of irregular indorser. - Where a
negotiating the same, the person to whom it is Sec. 60. Liability of maker. - The maker of a person, not otherwise a party to an instrument,
negotiated must have had actual knowledge of negotiable instrument, by making it, engages places thereon his signature in blank before
the infirmity or defect, or knowledge of such that he will pay it according to its tenor, and delivery, he is liable as indorser, in accordance
facts that his action in taking the instrument admits the existence of the payee and his then with the following rules:
amounted to bad faith. capacity to indorse.
(a) If the instrument is payable to the order of a
Sec. 57. Rights of holder in due course. - A Sec. 61. Liability of drawer. - The drawer by third person, he is liable to the payee and to all
holder in due course holds the instrument free drawing the instrument admits the existence of subsequent parties.
from any defect of title of prior parties, and free the payee and his then capacity to indorse; and
from defenses available to prior parties among engages that, on due presentment, the (b) If the instrument is payable to the order of
themselves and may enforce payment of the instrument will be accepted or paid, or both, the maker or drawer, or is payable to bearer, he
instrument for the full amount thereof against according to its tenor, and that if it be
is liable to all parties subsequent to the maker primarily liable on the instrument; but if the
or drawer. (b) That the instrument is, at the time of his instrument is, by its terms, payable at a special
indorsement, valid and subsisting; place, and he is able and willing to pay it there
(c) If he signs for the accommodation of the And, in addition, he engages that, on due at maturity, such ability and willingness are
payee, he is liable to all parties subsequent to presentment, it shall be accepted or paid, or equivalent to a tender of payment upon his
the payee. both, as the case may be, according to its tenor, part. But except as herein otherwise provided,
and that if it be dishonored and the necessary presentment for payment is necessary in order
Sec. 65. Warranty where negotiation by delivery proceedings on dishonor be duly taken, he will to charge the drawer and indorsers.
and so forth. — Every person negotiating an pay the amount thereof to the holder, or to any
instrument by delivery or by a qualified subsequent indorser who may be compelled to Sec. 71. Presentment where instrument is not
indorsement warrants: pay it. payable on demand and where payable on
demand. - Where the instrument is not payable
(a) That the instrument is genuine and in all Sec. 67. Liability of indorser where paper on demand, presentment must be made on the
respects what it purports to be; negotiable by delivery. — Where a person day it falls due. Where it is payable on demand,
places his indorsement on an instrument presentment must be made within a reasonable
(b) That he has a good title to it; negotiable by delivery, he incurs all the liability time after its issue, except that in the case of a
of an indorser. bill of exchange, presentment for payment will
(c) That all prior parties had capacity to be sufficient if made within a reasonable time
contract; Sec. 68. Order in which indorsers are liable. - As after the last negotiation thereof.
respect one another, indorsers are liable prima
(d) That he has no knowledge of any fact which facie in the order in which they indorse; but Sec. 72. What constitutes a sufficient
would impair the validity of the instrument or evidence is admissible to show that, as between presentment. - Presentment for payment, to be
render it valueless. or among themselves, they have agreed sufficient, must be made:
But when the negotiation is by delivery only, otherwise. Joint payees or joint indorsees who
the warranty extends in favor of no holder indorse are deemed to indorse jointly and (a) By the holder, or by some person authorized
other than the immediate transferee. severally. robles virtual law library to receive payment on his behalf;

The provisions of subdivision (c) of this section Sec. 69. Liability of an agent or broker. - Where (b) At a reasonable hour on a business day;
do not apply to a person negotiating public or a broker or other agent negotiates an
corporation securities other than bills and instrument without indorsement, he incurs all (c) At a proper place as herein defined;
notes. the liabilities prescribed by Section Sixty-five of
this Act, unless he discloses the name of his (d) To the person primarily liable on the
Sec. 66. Liability of general indorser. - Every principal and the fact that he is acting only as instrument, or if he is absent or inaccessible, to
indorser who indorses without qualification, agent. any person found at the place where the
warrants to all subsequent holders in due presentment is made.
Sec. 73. Place of presentment. - Presentment
(a) The matters and things mentioned in Sec. 70. Effect of want of demand on principal for payment is made at the proper place:
subdivisions (a), (b), and (c) of the next debtor. - Presentment for payment is not
preceding section; and necessary in order to charge the person
(a) Where a place of payment is specified in the (a) Where, after the exercise of reasonable
instrument and it is there presented; Sec. 77. Presentment to persons liable as diligence, presentment, as required by this Act,
partners. - Where the persons primarily liable cannot be made;
(b) Where no place of payment is specified but on the instrument are liable as partners and no
the address of the person to make payment is place of payment is specified, presentment for (b) Where the drawee is a fictitious person;
given in the instrument and it is there payment may be made to any one of them,
presented; even though there has been a dissolution of the (c) By waiver of presentment, express or
firm. implied.
(c) Where no place of payment is specified and Sec. 83. When instrument dishonored by non-
no address is given and the instrument is Sec. 78. Presentment to joint debtors. - Where payment. - The instrument is dishonored by
presented at the usual place of business or there are several persons, not partners, non-payment when:
residence of the person to make payment; primarily liable on the instrument and no place (a) It is duly presented for payment and
of payment is specified, presentment must be payment is refused or cannot be obtained; or
(d) In any other case if presented to the person made to them all.
to make payment wherever he can be found, or (b) Presentment is excused and the instrument
if presented at his last known place of business Sec. 79. When presentment not required to is overdue and unpaid.
or residence. charge the drawer. - Presentment for payment
is not required in order to charge the drawer Sec. 84. Liability of person secondarily liable,
Sec. 74. Instrument must be exhibited. - The where he has no right to expect or require that when instrument dishonored. - Subject to the
instrument must be exhibited to the person the drawee or acceptor will pay the instrument. provisions of this Act, when the instrument is
from whom payment is demanded, and when it dishonored by non-payment, an immediate
is paid, must be delivered up to the party paying Sec. 80. When presentment not required to right of recourse to all parties secondarily liable
it. charge the indorser. - Presentment is not thereon accrues to the holder. robles virtual law
required in order to charge an indorser where library
Sec. 75. Presentment where instrument payable the instrument was made or accepted for his
at bank. - Where the instrument is payable at a accommodation and he has no reason to expect Sec. 85. Time of maturity. - Every negotiable
bank, presentment for payment must be made that the instrument will be paid if presented. instrument is payable at the time fixed therein
during banking hours, unless the person to without grace. When the day of maturity falls
make payment has no funds there to meet it at Sec. 81. When delay in making presentment is upon Sunday or a holiday, the instruments
any time during the day, in which case excused. - Delay in making presentment for falling due or becoming payable on Saturday are
presentment at any hour before the bank is payment is excused when the delay is caused by to be presented for payment on the next
closed on that day is sufficient. circumstances beyond the control of the holder succeeding business day except that
and not imputable to his default, misconduct, or instruments payable on demand may, at the
Sec. 76. Presentment where principal debtor is negligence. When the cause of delay ceases to option of the holder, be presented for payment
dead. - Where the person primarily liable on the operate, presentment must be made with before twelve o'clock noon on Saturday when
instrument is dead and no place of payment is reasonable diligence. that entire day is not a holiday.
specified, presentment for payment must be
made to his personal representative, if such Sec. 82. When presentment for payment is Sec. 86. Time; how computed. - When the
there be, and if, with the exercise of reasonable excused. - Presentment for payment is excused: instrument is payable at a fixed period after
diligence, he can be found. date, after sight, or after that happening of a
specified event, the time of payment is to given notice, whether that party be his cases be given by delivering it personally or
determined by excluding the day from which principal or not. through the mails.
the time is to begin to run, and by including the
date of payment. Sec. 92. Effect of notice on behalf of holder. - Sec. 97. To whom notice may be given. - Notice
Where notice is given by or on behalf of the of dishonor may be given either to the party
Sec. 87. Rule where instrument payable at bank. holder, it inures to the benefit of all subsequent himself or to his agent in that behalf.
- Where the instrument is made payable at a holders and all prior parties who have a right of
bank, it is equivalent to an order to the bank to recourse against the party to whom it is given. Sec. 98. Notice where party is dead. - When any
pay the same for the account of the principal party is dead and his death is known to the
debtor thereon. Sec. 93. Effect where notice is given by party party giving notice, the notice must be given to
entitled thereto. - Where notice is given by or a personal representative, if there be one, and if
Sec. 88. What constitutes payment in due on behalf of a party entitled to give notice, it with reasonable diligence, he can be found. If
course. - Payment is made in due course when inures to the benefit of the holder and all there be no personal representative, notice may
it is made at or after the maturity of the parties subsequent to the party to whom notice be sent to the last residence or last place of
payment to the holder thereof in good faith and is given. business of the deceased.
without notice that his title is defective.
Sec. 94. When agent may give notice. - Where Sec. 99. Notice to partners. - Where the parties
VII. NOTICE OF DISHONOR the instrument has been dishonored in the to be notified are partners, notice to any one
hands of an agent, he may either himself give partner is notice to the firm, even though there
Sec. 89. To whom notice of dishonor must be notice to the parties liable thereon, or he may has been a dissolution.
given. - Except as herein otherwise provided, give notice to his principal. If he gives notice to
when a negotiable instrument has been his principal, he must do so within the same Sec. 100. Notice to persons jointly liable. -
dishonored by non-acceptance or non-payment, time as if he were the holder, and the principal, Notice to joint persons who are not partners
notice of dishonor must be given to the drawer upon the receipt of such notice, has himself the must be given to each of them unless one of
and to each indorser, and any drawer or same time for giving notice as if the agent had them has authority to receive such notice for
indorser to whom such notice is not given is been an independent holder. the others.
Sec. 95. When notice sufficient. - A written Sec. 101. Notice to bankrupt. - Where a party
Sec. 90. By whom given. - The notice may be notice need not be signed and an insufficient has been adjudged a bankrupt or an insolvent,
given by or on behalf of the holder, or by or on written notice may be supplemented and or has made an assignment for the benefit of
behalf of any party to the instrument who might validated by verbal communication. A creditors, notice may be given either to the
be compelled to pay it to the holder, and who, misdescription of the instrument does not party himself or to his trustee or assignee.
upon taking it up, would have a right to vitiate the notice unless the party to whom the
reimbursement from the party to whom the notice is given is in fact misled thereby. Sec. 102. Time within which notice must be
notice is given. given. - Notice may be given as soon as the
Sec. 96. Form of notice. - The notice may be in instrument is dishonored and, unless delay is
Sec. 91. Notice given by agent. - Notice of writing or merely oral and may be given in any excused as hereinafter provided, must be given
dishonor may be given by any agent either in his terms which sufficiently identify the instrument, within the time fixed by this Act.
own name or in the name of any party entitled and indicate that it has been dishonored by
non-acceptance or non-payment. It may in all
Sec. 103. Where parties reside in same place. - sender is deemed to have given due notice, due notice, and the waiver may be expressed or
Where the person giving and the person to notwithstanding any miscarriage in the mails. implied.
receive notice reside in the same place, notice
must be given within the following times: Sec. 106. Deposit in post office; what Sec. 110. Whom affected by waiver. - Where
constitutes. - Notice is deemed to have been the waiver is embodied in the instrument itself,
(a) If given at the place of business of the deposited in the post-office when deposited in it is binding upon all parties; but, where it is
person to receive notice, it must be given any branch post office or in any letter box under written above the signature of an indorser, it
before the close of business hours on the day the control of the post-office department. binds him only.
Sec. 107. Notice to subsequent party; time of. - Sec. 111. Waiver of protest. - A waiver of
(b) If given at his residence, it must be given Where a party receives notice of dishonor, he protest, whether in the case of a foreign bill of
before the usual hours of rest on the day has, after the receipt of such notice, the same exchange or other negotiable instrument, is
following. time for giving notice to antecedent parties that deemed to be a waiver not only of a formal
the holder has after the dishonor. protest but also of presentment and notice of
(c) If sent by mail, it must be deposited in the dishonor.
post office in time to reach him in usual course Sec. 108. Where notice must be sent. - Where a
on the day following. party has added an address to his signature, Sec. 112. When notice is dispensed with. -
notice of dishonor must be sent to that address; Notice of dishonor is dispensed with when,
Sec. 104. Where parties reside in different but if he has not given such address, then the after the exercise of reasonable diligence, it
places. - Where the person giving and the notice must be sent as follows: cannot be given to or does not reach the parties
person to receive notice reside in different (a) Either to the post-office nearest to his place sought to be charged.
places, the notice must be given within the of residence or to the post-office where he is
following times: accustomed to receive his letters; or Sec. 113. Delay in giving notice; how excused. -
Delay in giving notice of dishonor is excused
(a) If sent by mail, it must be deposited in the (b) If he lives in one place and has his place of when the delay is caused by circumstances
post office in time to go by mail the day business in another, notice may be sent to beyond the control of the holder and not
following the day of dishonor, or if there be no either place; or imputable to his default, misconduct, or
mail at a convenient hour on last day, by the negligence. When the cause of delay ceases to
next mail thereafter. (c) If he is sojourning in another place, notice operate, notice must be given with reasonable
may be sent to the place where he is so diligence.
(b) If given otherwise than through the post sojourning.
office, then within the time that notice would Sec. 114. When notice need not be given to
have been received in due course of mail, if it But where the notice is actually received by the drawer. - Notice of dishonor is not required to
had been deposited in the post office within the party within the time specified in this Act, it will be given to the drawer in either of the following
time specified in the last subdivision. be sufficient, though not sent in accordance cases:
with the requirement of this section.
Sec. 105. When sender deemed to have given (a) Where the drawer and drawee are the same
due notice. - Where notice of dishonor is duly Sec. 109. Waiver of notice. - Notice of dishonor person;
addressed and deposited in the post office, the may be waived either before the time of giving
notice has arrived or after the omission to give
(b) When the drawee is fictitious person or a the rights of a holder in due course subsequent (b) By the intentional cancellation of his
person not having capacity to contract; to the omission. signature by the holder;

(c) When the drawer is the person to whom the Sec. 118. When protest need not be made; (c) By the discharge of a prior party;
instrument is presented for payment; when must be made. - Where any negotiable
instrument has been dishonored, it may be (d) By a valid tender or payment made by a
(d) Where the drawer has no right to expect or protested for non-acceptance or non-payment, prior party;
require that the drawee or acceptor will honor as the case may be; but protest is not required
the instrument; except in the case of foreign bills of exchange. (e) By a release of the principal debtor unless
robles virtual law library the holder's right of recourse against the party
(e) Where the drawer has countermanded secondarily liable is expressly reserved;
INSTRUMENTS (f) By any agreement binding upon the holder to
Sec. 115. When notice need not be given to extend the time of payment or to postpone the
indorser. — Notice of dishonor is not required Sec. 119. Instrument; how discharged. - A holder's right to enforce the instrument unless
to be given to an indorser in either of the negotiable instrument is discharged: made with the assent of the party secondarily
following cases: liable or unless the right of recourse against
(a) By payment in due course by or on behalf of such party is expressly reserved.
(a) When the drawee is a fictitious person or the principal debtor;
person not having capacity to contract, and the Sec. 121. Right of party who discharges
indorser was aware of that fact at the time he (b) By payment in due course by the party instrument. - Where the instrument is paid by a
indorsed the instrument; accommodated, where the instrument is made party secondarily liable thereon, it is not
or accepted for his accommodation; discharged; but the party so paying it is
(b) Where the indorser is the person to whom remitted to his former rights as regard all prior
the instrument is presented for payment; (c) By the intentional cancellation thereof by parties, and he may strike out his own and all
the holder; subsequent indorsements and against negotiate
(c) Where the instrument was made or the instrument, except:
accepted for his accommodation. (d) By any other act which will discharge a
simple contract for the payment of money; (a) Where it is payable to the order of a third
Sec. 116. Notice of non-payment where person and has been paid by the drawer; and
acceptance refused. - Where due notice of (e) When the principal debtor becomes the
dishonor by non-acceptance has been given, holder of the instrument at or after maturity in (b) Where it was made or accepted for
notice of a subsequent dishonor by non- his own right. accommodation and has been paid by the party
payment is not necessary unless in the Sec. 120. When persons secondarily liable on accommodated.
meantime the instrument has been accepted. the instrument are discharged. - A person Sec. 122. Renunciation by holder. - The holder
secondarily liable on the instrument is may expressly renounce his rights against any
Sec. 117. Effect of omission to give notice of discharged: party to the instrument before, at, or after its
non-acceptance. - An omission to give notice of maturity. An absolute and unconditional
dishonor by non-acceptance does not prejudice (a) By any act which discharges the instrument; renunciation of his rights against the principal
debtor made at or after the maturity of the
instrument discharges the instrument. But a (c) The time or place of payment:
renunciation does not affect the rights of a (d) The number or the relations of the parties;
holder in due course without notice. A
renunciation must be in writing unless the (e) The medium or currency in which payment is
instrument is delivered up to the person to be made;
primarily liable thereon.
(f) Or which adds a place of payment where no
Sec. 123. Cancellation; unintentional; burden of place of payment is specified, or any other
proof. - A cancellation made unintentionally or change or addition which alters the effect of the
under a mistake or without the authority of the instrument in any respect, is a material
holder, is inoperative but where an instrument alteration.
or any signature thereon appears to have been
cancelled, the burden of proof lies on the party
who alleges that the cancellation was made
unintentionally or under a mistake or without

Sec. 124. Alteration of instrument; effect of. -

Where a negotiable instrument is materially
altered without the assent of all parties liable
thereon, it is avoided, except as against a party
who has himself made, authorized, or assented
to the alteration and subsequent indorsers.
But when an instrument has been materially
altered and is in the hands of a holder in due
course not a party to the alteration, he may
enforce payment thereof according to its
original tenor.

Sec. 125. What constitutes a material alteration.

- Any alteration which changes:
(a) The date;

(b) The sum payable, either for principal or