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ACT 2031: NIL
TITLE 1
CHAPTER 1:
Form and Interpretation (Sections 1-23) SECTION 1 - Form of Negotiable Instrument: ● To be negotiable, an instrument must: ○ Be in writing and signed by the maker/drawer. ○ Contain an unconditional promise/order to pay a specific sum in money. ○ Be payable on demand or at a fixed/determinable future time. ○ Be payable to order or to bearer. ○ Clearly indicate the drawee if addressed to one. SECTION 2 - Certain as to Sum: ● A sum is certain even with: ○ Interest. ○ Stated installments. ○ Provisions for default. ○ Exchange rates. ○ Collection costs or attorney's fees (if not paid at maturity). SECTION 3 - Unconditional Promise: ● An order/promise is unconditional, even with additional conditions (indication of a particular fund, and statement of the transaction), except if dependent on a particular fund. SECTION 4 - Determinable Future Time: ● Instrument is payable at determinable future time when: ● Fixed period after date/sight. ● On/before a fixed/determinable future time. ● After the occurrence of a certain event, certain to happen.
- Contingency makes instruments non-negotiable.
- Contingency fee, the lawyer only receives compensation if the lawyer has successfully represented the client SECTION 5 - Additional Provisions: ● Extra provisions don't affect negotiability. ● Except for illegal stipulations. SECTION 6 - Omissions, Seal, Money Type: ● Validity not affected by: ○ No date. ○ No specified value. ○ No place of drawing/payment. ○ Bearing a seal. ○ Designating payment in particular money. SECTION 7 - Payable on Demand: ● Payable on demand if: ○ Expressly stated. ○ No specified time. ● Overdue, payable on demand for issuer/acceptor/indorser. SECTION 8 - Payable to Order: ● Payable to order when drawn to: ○ A named payee. ○ The drawer/maker. ○ The drawee. ○ Multiple joint payees. ○ One or some several payees ○ The holder of an office for the time being ● Payee must be indicated with certainty. SECTION 9 - Payable to Bearer: ● Payable to bearer when: ○ Stated as such. ○ To a named person or bearer. ○ To a fictitious person (known) or with a blank endorsement. ○ The name of the payee does not claim to be the name of any person SECTION 10 - Terms Sufficient: ● Need not follow Act's language, but must show intent to comply. SECTION 11 - Date Presumption: ● Dated instrument's date is prima facie the true date. SECTION 12 - Antedated/Postdated: ● Valid if not for illegal/fraudulent purposes. ● Delivered date binds the holder. SECTION 13 - Inserting Date: ● Holder can insert true date for undated instruments. ● Wrong date doesn't void if in due course (holder). SECTION 14 - Filling Blanks: (Incomplete, delivered) ● Possessor may complete incomplete instruments. ● Must follow authority strictly and promptly. ● In due course, completed instrument is valid. SECTION 15 - Incomplete, Undelivered: ● Incomplete, undelivered instruments aren't valid if completed and negotiated without authority. SECTION 16 - Delivery Effect: (Complete, undelivered) ● Instrument incomplete and revocable until delivery. ● Delivery by authorized party, unless conditional, is valid. ● Holder in due course presumes valid delivery. SECTION 17 - Ambiguity: ● Rules for ambiguous instruments: ○ Words prevail over figures. ○ Interest runs from date or issuance if undated. ○ Undated is considered issuance date. ○ Written provisions prevail over printed. ○ Holder's choice for bill/note. ○ Unclear signature is an indorser. ○ Joint and several liability for multiple signatories. SECTION 18 - Liability for Trade Name:
● Signatory not liable if signature absent. ● Liability if signed under a trade/assumed name. SECTION 19 - Signature by Agent: ● Authorized agent may sign, no specific form needed. ● Agent's authority established as in general agency cases. SECTION 20 - Liability as Agent: ● If signatory indicates signing for a principal, not liable if duly authorized. ● Merely adding "agent" without disclosing principal doesn't exempt from personal liability. SECTION 21 - Signature by Procuration: ● "Procuration" notice of limited authority. ● Principal bound only within agent's actual limits. SECTION 22 - Effect of Indorsement by Corporation/Infant: ● Indorsement/assignment by corp/infant passes property despite no liability. SECTION 23 - Forged Signature: ● Forged signature is inoperative, no rights acquired unless forgery not set up by party against enforcement. CHAPTER 2: Consideration (Sections 24-29) SECTION 24 - Presumption of Consideration: ● Every negotiable instrument is presumed to be issued for valuable consideration. ● Anyone whose signature appears on the instrument is considered a party for value. SECTION 25 - Value Defined: ● Value can be any consideration supporting a simple contract. ● An existing debt, whether payable immediately or in the future, is considered value. SECTION 26 - Holder for Value: ● If value was given for the instrument at any time, the holder is a holder for value regarding all prior parties. SECTION 27 - Lien as Holder for Value: ● If the holder has a lien due to contract or law, they are considered a holder for value to the extent of their lien. SECTION 28 - Lack of Consideration: ● Absence or failure of consideration is a defense against anyone not a holder in due course. ● Partial failure of consideration is a defense pro tanto, whether it's a known amount or not. SECTION 29 - Liability of Accommodation Party: ● An accommodation party signs without receiving value, to lend their name to another. ● Such a party is liable to a holder for value, even if the holder knew them to be an accommodation party at the time of taking the instrument.
CHAPTER 3:
Negotiation (Sections 30-50) SECTION 30 - What Constitutes Negotiation: ● An instrument is negotiated when transferred to make the transferee the holder. ● Payable to bearer: negotiation by delivery. ● Payable to order: negotiation by completed indorsement and delivery. SECTION 31 - Indorsement: How Made: ● Indorsement must be on the instrument or attached paper. ● Signature alone is sufficient. SECTION 32 - Indorsement of Entire Instrument: ● Indorsement must be of the whole instrument. ● Partial transfer allowed if the instrument has been partially paid. SECTION 33 - Kinds of Indorsement: ● Indorsement can be special, blank, restrictive, qualified, or conditional. SECTION 34 - Special and Blank Indorsement: ● Special specifies a specific payee, needed for further negotiation. ● Blank specifies no payee, payable to bearer, negotiable by delivery. SECTION 35 - Changing Blank to Special: ● Holder can convert a blank indorsement into a special one by adding a consistent contract. SECTION 36 - Restrictive Indorsement: ● Restrictive indorsement limits further negotiation. ● Can prohibit transfer, make the indorsee an agent, or create a trust. ● Absence of negotiability words doesn't make it restrictive. SECTION 37 - Rights of Restrictive Indorsee: ● Restrictive indorsee has rights to receive payment, bring actions, and transfer rights as authorized. ● Subsequent indorsees inherit only the first indorsee's rights. SECTION 38 - Qualified Indorsement: ● Qualified indorsement makes the indorser an assignor, with phrases like "without recourse." ● Doesn't affect negotiability. SECTION 39 - Conditional Indorsement: ● Conditional indorsement allows the payer to ignore the condition. ● Person who takes such an instrument holds it subject to the condition. SECTION 40 - Indorsement of Bearer Instrument:
● The maker of a negotiable instrument engages to pay it according to its terms. ● Acknowledges the existence of the payee and their capacity to endorse. SECTION 61 - Liability of Drawer: ● The drawer, by drawing the instrument, admits the existence of the payee and their capacity to endorse. ● Engages that on due presentment, it will be accepted or paid according to its terms. ● Promises to pay if the instrument is dishonored, and the necessary proceedings on dishonor are taken. ● The drawer may limit or negate their own liability by express stipulation. SECTION 62 - Liability of Acceptor: ● The acceptor, by accepting the instrument, engages to pay it according to the terms of the acceptance. ● Acknowledges the existence of the drawer, genuineness of their signature, and their capacity and authority to draw. ● Acknowledges the existence of the payee and their capacity to endorse. SECTION 63 - Person Deemed Indorser: ● A person signing an instrument as other than maker, drawer, or acceptor is deemed an indorser unless their intent to be bound in another capacity is clear. SECTION 64 - Liability of Irregular Indorser: ● A person not party to an instrument who signs it in blank before delivery: ○ If payable to a third person, is liable to the payee and all subsequent parties. ○ If payable to the maker/drawer or bearer, is liable to all subsequent parties. ○ If signed for the payee's accommodation, is liable to all parties subsequent to the payee. SECTION 65 - Warranty in Negotiation by Delivery: ● Those who negotiate an instrument by delivery or qualified indorsement warrant: ○ The instrument's genuineness and accuracy. ○ Their good title to it. ○ The capacity of all prior parties to contract. ○ Lack of knowledge of any fact rendering the instrument invalid. ● Warranty, in the case of delivery only, extends to the immediate transferee. SECTION 66 - Liability of General Indorser : ● An indorser without qualification warrants to subsequent holders: ○ The matters mentioned in Section 65(a), (b), and (c). ○ That the instrument is valid at the time of indorsement. ● Additionally, the indorser promises that the instrument will be accepted or paid upon due presentment and agrees to pay the holder or subsequent indorsers if it is dishonored. SECTION 67 - Liability of Indorser for Negotiation by Delivery: ● Indorsing an instrument negotiable by delivery incurs the same liabilities as an indorser. SECTION 68 - Order of Liability Among Endorsers: ● Endorsers are liable in the order they indorse, but they may agree otherwise among themselves. ● Joint payees or indorsees are jointly and severally liable. SECTION 69 - Liability of Agent or Broker: ● A broker or agent who negotiates an instrument without indorsement incurs liabilities unless they disclose the name of their principal and their agency role. CHAPTER 6: Presentment for Payment (Sections 70-88) SECTION 70 - Effect of Want of Demand on Principal Debtor: ● Presentment for payment is not required to charge the person primarily liable on the instrument. ● If the instrument is payable at a specified place, the debtor's ability and willingness to pay there at maturity are equivalent to a tender. SECTION 71 - Presentment Where Not Payable on Demand: ● For non-demand instruments, presentment must be on the day it falls due. ● For instruments payable on demand, presentment must occur within a reasonable time after issuance, or within a reasonable time after the last negotiation for bills of exchange. SECTION 72 - What Constitutes Sufficient Presentment: ● Sufficient presentment must be made by the holder or an authorized representative. ● Presentment must be at a reasonable hour on a business day and at a proper place. ● It should be made to the person primarily liable, or if they are absent or inaccessible, to anyone found at the presentment location. SECTION 73 - Place of Presentment: ● Presentment is made at the proper place if: ○ The place of payment is specified in the instrument. ○ The address of the person to make payment is given. ○ It is presented at the person's usual place of business or residence. ○ It is presented where the person can be found or at their last known place of business or residence. SECTION 74 - Instrument Must Be Exhibited: ● The instrument must be shown to the person from whom payment is demanded, and it must be delivered to the payer when payment is made. SECTION 75 - Presentment Where Payable at Bank:
● If the instrument is payable at a bank, presentment must be during banking hours unless the payer has no funds there to meet it, in which case any time before the bank closes is sufficient. SECTION 76 - Presentment Where Principal Debtor Is Dead: ● When the person primarily liable is deceased, and no place of payment is specified, presentment must be made to their personal representative if reasonably findable. SECTION 77 - Presentment to Persons Liable as Partners: ● If those primarily liable on the instrument are partners and no place of payment is specified, presentment can be made to any one of them, even after the firm has dissolved. SECTION 78 - Presentment to Joint Debtors: ● When multiple persons, not partners, are primarily liable, presentment must be made to all of them. SECTION 79 - When Presentment Not Required to Charge the Drawer: ● Presentment is not needed to charge the drawer if they have no right to expect payment from the drawee or acceptor. SECTION 80 - When Presentment Not Required to Charge the Indorser: ● Presentment is not required to charge an indorser when the instrument was made for their accommodation, and they have no expectation of payment upon presentment. SECTION 81 - When Delay in Making Presentment Is Excused: ● Delay in presentment is excused if caused by circumstances beyond the holder's control and not due to their fault, misconduct, or negligence. ● Presentment must be made with reasonable diligence once the cause of delay no longer applies. SECTION 82 - When Presentment May Be Dispensed With: ● Presentment for payment is not necessary if it can't be made with reasonable diligence, if the drawee is fictitious, or if there's a waiver, express or implied. SECTION 83 - Instrument Dishonored by Nonpayment: ● The instrument is dishonored by nonpayment if duly presented for payment, and payment is refused or cannot be obtained, or if presentment is excused, and the instrument is overdue and unpaid. SECTION 84 - Liability of Person Secondarily Liable When Instrument Dishonored: ● Upon dishonor of the instrument by nonpayment, the holder has an immediate right of recourse to all parties secondarily liable. SECTION 85 - Time of Maturity: ● Negotiable instruments are payable on the date specified without grace. If the due date falls on a Sunday or holiday, payment is due on the next business day. Instruments due on Saturdays can be presented on the next business day unless payable on demand, in which case they can be presented on Saturday before noon if it's not a holiday. SECTION 86 - Time; How Computed: ● When the instrument is payable after a fixed period from a specific date, time is calculated by excluding the day from which the period begins and including the date of payment. SECTION 87 - Rule Where Instrument Payable at Bank: ● An instrument payable at a bank is equivalent to an order to the bank to pay on behalf of the principal debtor. SECTION 88 - What Constitutes Payment in Due Course: ● Payment is considered made in due course when it's made after the instrument's maturity to the holder in good faith without notice of a defective title. CHAPTER 7: Notice of Dishonor (Sections 89-118) SECTION 89 - To Whom Notice of Dishonor Must Be Given: ● Notice of dishonor must be given to the drawer and each indorser when an instrument is dishonored. ● Failure to give notice discharges any party not notified. SECTION 90 - By Whom Given: ● Notice can be given by the holder or any party who might be compelled to pay and would have a right to reimbursement. SECTION 91 - Notice Given by Agent: ● Notice may be given by an agent, either in their name or in the name of any party entitled to give notice, whether or not that party is their principal. SECTION 92 - Effect of Notice Given on Behalf of Holder: ● Notice given by or on behalf of the holder benefits all subsequent holders and prior parties with recourse against the notified party. SECTION 93 - Effect Where Notice Is Given by Party Entitled Thereto: ● Notice given by or on behalf of a party entitled to give notice benefits the holder and all parties subsequent to the party to whom notice is given. SECTION 94 - When Agent May Give Notice: ● An agent holding a dishonored instrument can either give notice to parties liable on it or notify their principal. If the agent notifies the principal, they must do so within the same time as if they were the holder. SECTION 95 - When Notice Sufficient: ● Written notice is not required and an insufficient written notice can be supplemented by verbal communication. ● Misdescription in the notice does not invalidate it unless it actually misleads the recipient.
CHAPTER 8:
Discharge of Negotiable Instruments (Sections 119-125) SECTION 119 - Instrument; How Discharged: ● A negotiable instrument can be discharged by: (a) Payment in due course by or on behalf of the principal debtor. (b) Payment in due course by the accommodated party when the instrument is made or accepted for accommodation. (c) Intentional cancellation by the holder. (d) Any act that would discharge a simple contract for money payment. (e) When the principal debtor becomes the holder of the instrument at or after maturity. SECTION 120 - When Persons Secondarily Liable On Discharged: ● A person secondarily liable on the instrument can be discharged by: (a) Any act that discharges the instrument. (b) The intentional cancellation of their signature by the holder. (c) The discharge of a prior party. (d) A valid tender of payment made by a prior party. (e) The release of the principal debtor unless the holder reserves the right of recourse against the secondary party. (f) Any agreement binding on the holder to extend the payment time or postpone the holder's enforcement rights unless the secondary party agrees or the right of recourse is expressly reserved. SECTION 121 - Right of Party Who Discharges Instrument: ● If a party secondarily liable pays the instrument, it's not discharged. The paying party is remitted to their former rights regarding all prior parties, and they can strike out their own and subsequent endorsements, except when it's payable to the order of a third person and paid by the drawer or when it was made or accepted for accommodation and paid by the party accommodated. SECTION 122 - Renunciation by Holder: ● The holder can expressly renounce their rights against any party to the instrument before, at, or after maturity. An absolute and unconditional renunciation of rights against the principal debtor at or after maturity discharges the instrument. Renunciation must be in writing unless the instrument is delivered up to the person primarily liable. SECTION 123 - Cancellation; Unintentional; Burden of Proof: ● Unintentional or unauthorized cancellations are inoperative. The burden of proof rests on the party alleging that the cancellation was unintentional, a mistake, or without authority. SECTION 124 - Alteration of Instrument; Effect Of: ● A materially altered instrument without the assent of all parties liable is voided, except for a party who authorized or assented to the alteration and subsequent indorsers. ● If an altered instrument is in the hands of a holder in due course (not a party to the alteration), they can enforce payment according to its original terms. SECTION 125 - What Constitutes a Material Alteration: ● A material alteration is any change that affects: (a) The date. (b) The sum payable (principal or interest). (c) The time or place of payment. (d) The number or relationships of the parties. (e) The medium or currency of payment. ● Adding a place of payment where none was specified or any other change that alters the instrument's effect is also a material alteration. CHAPTER 9: Bills of Exchange: Form and Interpretation (Sections 126-131) SECTION 126 - Bill of Exchange Defined: ● A bill of exchange is an unconditional written order, signed by one person, directed to another person, requiring the recipient to pay a specified sum of money to the order or to the bearer on demand or at a fixed future time. SECTION 127 - Bill Not an Assignment of Funds: ● A bill of exchange does not automatically transfer or assign the funds in the drawee's possession for payment, and the drawee is not liable on the bill until they accept it. SECTION 128 - Bill Addressed to More Than One Drawee: ● A bill can be addressed to two or more drawees jointly, whether they are partners or not. However, it cannot be addressed to two or more drawees in the alternative or in succession. SECTION 129 - Inland and Foreign Bills of Exchange: ● An inland bill of exchange is one that is drawn and payable within the Philippine Islands, or it appears as such on its face. Any other bill is considered a foreign bill unless stated otherwise on the bill. The holder may choose to treat it as an inland bill unless indicated otherwise. SECTION 130 - When Bill May Be Treated as Promissory Note: ● When the drawer and drawee are the same person, or when the drawee is a fictitious person or lacks the capacity to contract, the holder has the option to treat the instrument as either a bill of exchange or a promissory note. SECTION 131 - Referee in Case of Need: ● The drawer or any indorser of a bill may specify the name of a person to whom the holder can turn to in case the bill is dishonored by nonacceptance or nonpayment. This person is called the "referee in case of need," and the
holder can choose whether or not to resort to this referee when the need arises. CHAPTER 10: Acceptance (Sections 132-142) SECTION 132 - Acceptance; How Made: ● Acceptance of a bill is the drawee's written assent to the drawer's order, and it must be signed by the drawee. The acceptance should not state any means of payment other than money. SECTION 133 - Holder Entitled to Acceptance on Face of Bill: ● The holder presenting a bill for acceptance may request that the acceptance be written on the bill itself. If this request is refused, the bill can be considered dishonored. SECTION 134 - Acceptance by Separate Instrument: ● When acceptance is written on a document other than the bill itself, it only binds the acceptor if the bill is presented and received by a person based on the faith of that acceptance. SECTION 135 - Promise to Accept: When Equivalent to Acceptance: ● An unconditional written promise to accept a bill before it's drawn is considered an actual acceptance. This acceptance benefits anyone who receives the bill in reliance on the promise. SECTION 136 - Time Allowed Drawee to Accept: ● The drawee has 24 hours after presentation to decide whether to accept the bill. The acceptance, if given, is dated on the day of presentation. SECTION 137 - Liability of Drawee Retaining or Destroying Bill: ● If a drawee who receives a bill for acceptance destroys it, refuses to return it within 24 hours (or within an agreed-upon time), or returns it after such a period, they will be deemed to have accepted the bill. SECTION 138 - Acceptance of Incomplete Bill: ● A bill can be accepted before it's signed by the drawer, when it's incomplete, overdue, or after it has been previously dishonored by nonacceptance or nonpayment. However, if a bill payable after sight is dishonored by nonacceptance and is subsequently accepted, it's accepted as of the date of the first presentment, unless there's a different agreement. SECTION 139 - Kinds of Acceptances: ● Acceptances are either general or qualified. A general acceptance agrees without qualification to the order of the drawer. A qualified acceptance expressly alters the effect of the bill as originally drawn. SECTION 140 - What Constitutes a General Acceptance: ● An acceptance to pay at a particular place is considered general unless it explicitly states that payment is to be made only there and nowhere else. SECTION 141 - Qualified Acceptance: ● An acceptance is qualified if it is conditional (payment depends on a specified condition), partial (agrees to pay only part of the bill), local (agrees to pay only at a particular place), qualified as to time, or if it's the acceptance of some but not all of the drawees. SECTION 142 - Rights of Parties as to Qualified Acceptance: ● The holder can refuse a qualified acceptance, and if an unqualified acceptance isn't obtained, the bill can be treated as dishonored by nonacceptance. Drawer and indorsers are discharged from liability unless they authorized or later agreed to the qualified acceptance. If any of them receives notice of a qualified acceptance, they must express their dissent to the holder within a reasonable time or be deemed to have assented. CHAPTER 11: Presentment for Acceptance (Sections 143-151) SECTION 143 - When Presentment for Acceptance Must Be Made: ● Presentment for acceptance must be made in cases where it is necessary to fix the maturity of the instrument, when expressly stipulated in the bill, or when the bill is payable elsewhere than at the drawee's residence or place of business. In other cases, presentment for acceptance is not required to render any party liable. SECTION 144 - When Failure to Present Releases Drawer and Indorser: ● When a bill must be presented for acceptance, the holder must either do so or negotiate it within a reasonable time. Failure to do this releases the drawer and all indorsers from liability, except as otherwise provided. SECTION 145 - Presentment; How Made: ● Presentment for acceptance must be made by or on behalf of the holder at a reasonable hour, on a business day, and before the bill is overdue. It should be made to the drawee or someone authorized to accept or refuse acceptance on their behalf. Different rules apply in cases involving multiple drawees, the death of the drawee, or bankruptcy or insolvency of the drawee. SECTION 146 - On What Days Presentment May Be Made: ● A bill may be presented for acceptance on any day when negotiable instruments can be presented for payment, as per the relevant sections. On Saturdays, when not a holiday, presentment can be made before noon. SECTION 147 - Presentment Where Time Is Insufficient: ● If the holder doesn't have enough time to present the bill for acceptance before presenting it for payment on the due date, due to the bill being payable elsewhere than the drawee's place of business or residence, the delay
● The acceptor for honor is liable to the holder and all parties to the bill subsequent to the party for whose honor they accepted. SECTION 165 - Agreement of Acceptor for Honor: ● The acceptor for honor agrees to pay the bill according to their acceptance terms if it hasn't been paid by the drawee and has been duly presented and protested for nonpayment, with notice given to the acceptor for honor. SECTION 166 - Maturity of Bill Payable After Sight; Accepted for Honor: ● When a bill payable after sight is accepted for honor, its maturity is calculated from the date of noting for nonacceptance, not from the date of acceptance for honor. SECTION 167 - Protest of Bill Accepted for Honor, and So Forth: ● A dishonored bill accepted for honor or containing a reference in case of need must be protested for nonpayment before being presented for payment to the acceptor for honor or referee in case of need. SECTION 168 - Presentment for Payment to Acceptor for Honor; How Made: ● Presentment for payment to the acceptor for honor must be made as follows: (a) In the place where the protest for nonpayment was made, not later than the day following maturity. (b) In any other place, it must be forwarded within the time specified in Section 104. SECTION 169 - When Delay in Making Presentment Is Excused: ● Section 81 provisions apply when there is a delay in presenting the bill to the acceptor for honor or referee in case of need. SECTION 170 - Dishonor of Bill by Acceptor for Honor: ● When the bill is dishonored by the acceptor for honor, it must be protested for nonpayment by the acceptor for honor. CHAPTER 14: Payment for Honor (Sections 171-177) SECTION 171 - Who May Make Payment for Honor: ● If a bill has been protested for nonpayment, any person can intervene and make a payment for honor to honor any person liable on the bill or for the person for whom it was drawn. SECTION 172 - Payment for Honor; How Made: ● Payment for honor, to be effective as such and not just as a voluntary payment, must be attested by a notarial act of honor, which can be appended to or extend the protest. SECTION 173 - Declaration Before Payment for Honor: ● The notarial act of honor must be based on a declaration made by the payer for honor or their agent, stating their intention to pay the bill for honor and for whose honor they are paying. SECTION 174 - Preference of Parties Offering to Pay for Honor: ● If multiple people offer to pay a bill for the honor of different parties, the preference is given to the person whose payment would discharge the most parties to the bill. SECTION 175 - Effect on Subsequent Parties Where Bill Is Paid for Honor: ● When a bill is paid for honor, all parties after the one for whose honor it is paid are discharged. However, the payer for honor takes on both the rights and duties of the holder regarding the party for whose honor they paid and all parties liable to that party. SECTION 176 - Where Holder Refuses to Receive Payment Supra Protest: ● If the holder of a bill refuses to accept payment supra protest, they lose their right of recourse against any party who would have been discharged by such payment. SECTION 177 - Rights of Payer for Honor: ● The payer for honor, upon paying the amount of the bill and the notarial expenses related to its dishonor to the holder, is entitled to receive both the bill itself and the protest. CHAPTER 15: Bills in a Set (Sections 178-183) SECTION 178 - Bills in Sets Constitute One Bill: ● When a bill is drawn in a set, with each part numbered and referencing the others, all the parts together constitute one bill. SECTION 179 - Right of Holders Where Different Parts Are Negotiated: ● When different parts of a set are negotiated to different holders in due course, the holder whose title first accrues becomes the true owner of the bill, but this doesn't affect the rights of someone who accepts or pays the first part presented to them in due course. SECTION 180 - Liability of Holder Who Indorses Two or More Parts: ● If the holder of a set indorses two or more parts to different persons, they are liable on every such part, and subsequent indorsers are liable on the parts they individually indorsed as if each part were a separate bill. SECTION 181 - Acceptance of Bills Drawn in Sets: ● Acceptance may be written on any part of the set, but it must be written on only one part. If the drawee accepts multiple parts, and those accepted parts are later negotiated to different holders in due course, the drawee
is liable on every such part as if each were a separate bill. SECTION 182 - Payment by Acceptor of Bills Drawn in Sets: ● If the acceptor of a bill drawn in a set pays it without requiring the part with his acceptance to be delivered to him, and that part is still held by a holder in due course at maturity, the acceptor is liable to that holder. SECTION 183 - Effect of Discharging One of a Set: ● Unless otherwise provided, discharging one part of a bill drawn in a set, either through payment or other means, discharges the whole bill. CHAPTER 16: Promissory Notes and Checks (Sections 184-189) SECTION 184 - Promissory Note Defined: ● A negotiable promissory note is an unconditional written promise made by one person to another, signed by the maker, to pay a certain sum of money on demand or at a fixed future time to order or bearer. If a note is drawn to the maker's own order, it's not complete until indorsed by the maker. SECTION 185 - Check Defined: ● A check is a bill of exchange drawn on a bank and payable on demand. The provisions of this Act that apply to bills of exchange payable on demand also apply to checks, unless otherwise provided. SECTION 186 - Time Limit for Presenting a Check: ● A check must be presented for payment within a reasonable time after its issuance, or the drawer will be released from liability to the extent of any loss caused by the delay. SECTION 187 - Certification of Check and Its Effect: ● When a bank certifies a check drawn on it, this certification is treated as an acceptance of the check. SECTION 188 - Effect of Holder Procuring Certification of a Check: ● If the holder of a check arranges for it to be accepted or certified, the drawer and all subsequent indorsers are relieved of liability on the check. SECTION 189 - When a Check Acts as an Assignment: ● A check by itself does not act as an assignment of any part of the drawer's funds with the bank, and the bank is not liable to the holder of the check unless it accepts or certifies the check. CHAPTER 17: General Provisions (Sections 190-198) SECTION 190 - Short Title: ● This Act is known as the Negotiable Instruments Law. SECTION 191 - Definitions and Meaning of Terms: ● In this Act: ○ "Acceptance" refers to an acceptance completed by delivery or notification. ○ "Action" includes counterclaim and set-off. ○ "Bank" includes any entity engaged in banking, whether incorporated or not. ○ "Bearer" means the person possessing a bill or note payable to bearer. ○ "Bill" refers to a bill of exchange, and "note" means a negotiable promissory note. ○ "Delivery" means transferring possession, whether actual or constructive, from one person to another. ○ "Holder" is the payee or indorsee of a bill or note in possession or the bearer. ○ "Indorsement" refers to an indorsement completed by delivery. ○ "Instrument" means a negotiable instrument. ○ "Issue" refers to the first delivery of a complete instrument to a person who takes it as a holder. ○ "Person" includes individuals and associations of individuals, whether incorporated or not. ○ "Value" means valuable consideration. ○ "Written" includes printed, and "writing" includes print. SECTION 192 - Person Primarily Liable on Instrument: ● The person "primarily" liable on an instrument is the one required by its terms to pay it, while all other parties are "secondarily" liable. SECTION 193 - Reasonable Time, What Constitutes: ● "Reasonable time" or "unreasonable time" depends on the instrument's nature, trade or business customs (if any), and specific case facts. SECTION 194 - Time, How Computed; When Last Day Falls on Holiday: ● If a required or permitted act falls on Sunday or a holiday, it may be done on the next secular or business day. SECTION 195 - Application of Act: ● This Act doesn't apply to negotiable instruments made and delivered before its effective date. SECTION 196 - Cases Not Provided for in Act: ● Cases not covered in this Act shall follow existing laws or, if not available, the rules of the law merchant. SECTION 197 - Repeals: ● All laws, acts, or parts thereof inconsistent with this Act are repealed. SECTION 198 - Time When Act Takes Effect: ● This Act becomes effective ninety days after its publication in the Official Gazette of the Philippine Islands is complete.
