ACTNO.2031

February03,1911

THENEGOTIABLEINSTRUMENTSLAW

I.FORMANDINTERPRETATION

Section1.Formofnegotiableinstruments.‐Aninstrumenttobenegotiablemustconformtothefollowingrequirements:

(a)Itmustbeinwritingandsignedbythemakerordrawer;

(b)Mustcontainanunconditionalpromiseorordertopayasumcertaininmoney;

(c)Mustbepayableondemand,oratafixedordeterminablefuturetime;

(d)Mustbepayabletoorderortobearer;and

(e)Wheretheinstrumentisaddressedtoadrawee,hemustbenamedorotherwiseindicatedthereinwithreasonablecertainty.

Sec.2.Whatconstitutescertaintyastosum.‐ThesumpayableisasumcertainwithinthemeaningofthisAct,althoughitistobepaid:

(a)withinterest;or

(b)bystatedinstallments;or

(c)bystatedinstallments,withaprovisionthat,upondefaultinpaymentofanyinstallmentorofinterest,thewholeshallbecomedue;or

(d)withexchange,whetheratafixedrateoratthecurrentrate;or

(e)withcostsofcollectionoranattorney'sfee,incasepaymentshallnotbemadeatmaturity.

Sec.3.Whenpromiseisunconditional.‐AnunqualifiedorderorpromisetopayisunconditionalwithinthemeaningofthisActthoughcoupledwith:

(a)Anindicationofaparticularfundoutofwhichreimbursementistobemadeoraparticularaccounttobedebitedwiththeamount;or

(b)Astatementofthetransactionwhichgivesrisetotheinstrument.

Butanorderorpromisetopayoutofaparticularfundisnotunconditional.

Sec.4.Determinablefuturetime;whatconstitutes.‐Aninstrumentispayableatadeterminablefuturetime,withinthemeaningofthisAct,whichisexpressedtobepayable:

(a)Atafixedperiodafterdateorsight;or

(b)Onorbeforeafixedordeterminablefuturetimespecifiedtherein;or

(c)Onoratafixedperiodaftertheoccurrenceofaspecifiedeventwhichiscertaintohappen,thoughthetimeofhappeningbeuncertain.

Aninstrumentpayableuponacontingencyisnotnegotiable,andthehappeningoftheeventdoesnotcurethedefect.

Sec.5.Additionalprovisionsnotaffectingnegotiability.‐Aninstrumentwhichcontainsanorderorpromisetodoanyactinadditiontothepaymentofmoneyisnotnegotiable.Butthenegotiablecharacterofaninstrumentotherwisenegotiableisnotaffectedbyaprovisionwhich:

(a)authorizesthesaleofcollateralsecuritiesincasetheinstrumentbenotpaidatmaturity;or

(b)authorizesaconfessionofjudgmentiftheinstrumentbenotpaidatmaturity;or

(c)waivesthebenefitofanylawintendedfortheadvantageorprotectionoftheobligor;or

(d)givestheholderanelectiontorequiresomethingtobedoneinlieuofpaymentofmoney.

Butnothinginthissectionshallvalidateanyprovisionorstipulationotherwiseillegal.

Sec.6.Omissions;seal;particularmoney.‐Thevalidityandnegotiablecharacterofaninstrumentarenotaffectedbythefactthat:

(a)itisnotdated;or

(b)doesnotspecifythevaluegiven,orthatanyvaluehadbeengiventherefor;or

(c)doesnotspecifytheplacewhereitisdrawnortheplacewhereitispayable;or

(d)bearsaseal;or

(e)designatesaparticularkindofcurrentmoneyinwhichpaymentistobemade.

Butnothinginthissectionshallalterorrepealanystatuterequiringincertaincasesthenatureoftheconsiderationtobestatedintheinstrument.

Sec.7.Whenpayableondemand.‐Aninstrumentispayableon

demand:

(a)Whenitissoexpressedtobepayableondemand,oratsight,oronpresentation;or

(b)Inwhichnotimeforpaymentisexpressed.

Whereaninstrumentisissued,accepted,orindorsedwhenoverdue,itis,asregardsthepersonsoissuing,accepting,orindorsingit,payableondemand.

Sec.8.Whenpayabletoorder.‐Theinstrumentispayabletoorderwhereitisdrawnpayabletotheorderofaspecifiedpersonortohimorhisorder.Itmaybedrawnpayabletotheorderof:

(a)Apayeewhoisnotmaker,drawer,ordrawee;or

(b)Thedrawerormaker;or

(c)Thedrawee;or

(d)Twoormorepayeesjointly;or

(e)Oneorsomeofseveralpayees;or

(f)Theholderofanofficeforthetimebeing.

Wheretheinstrumentispayabletoorder,thepayeemustbenamedorotherwiseindicatedthereinwithreasonablecertainty.

Sec.9.Whenpayabletobearer.‐Theinstrumentispayableto

bearer:

(a)Whenitisexpressedtobesopayable;or

(b)Whenitispayabletoapersonnamedthereinorbearer;or

(c)Whenitispayabletotheorderofafictitiousornon‐existingperson,andsuchfactwasknowntothepersonmakingitsopayable;or

(d)Whenthenameofthepayeedoesnotpurporttobethenameofany

person;or

(e)Whentheonlyorlastindorsementisanindorsementinblank.

Sec.10.Terms,whensufficient.‐TheinstrumentneednotfollowthelanguageofthisAct,butanytermsaresufficientwhichclearlyindicateanintentiontoconformtotherequirementshereof.

Sec.11.Date,presumptionasto.‐Wheretheinstrumentoranacceptanceoranyindorsementthereonisdated,suchdateisdeemedprimafacietobethetruedateofthemaking,drawing,acceptance,orindorsement,asthecasemaybe.

Sec.12.Ante‐datedandpost‐dated.‐Theinstrumentisnotinvalidforthereasononlythatitisante‐datedorpost‐dated,providedthisisnotdoneforanillegalorfraudulentpurpose.Thepersontowhomaninstrumentsodatedisdeliveredacquiresthetitletheretoasofthedateofdelivery.

Sec.13.Whendatemaybeinserted.‐Whereaninstrumentexpressedtobepayableatafixedperiodafterdateisissuedundated,orwheretheacceptanceofaninstrumentpayableatafixedperiodaftersightisundated,anyholdermayinsertthereinthetruedateofissueoracceptance,andtheinstrumentshallbepayableaccordingly.Theinsertionofawrongdatedoesnotavoidtheinstrumentinthehandsofasubsequentholderinduecourse;butastohim,thedatesoinsertedistoberegardedasthetruedate.

Sec.14.Blanks;whenmaybefilled.‐Wheretheinstrumentiswantinginanymaterialparticular,thepersoninpossessionthereofhasaprimafacieauthoritytocompleteitbyfillinguptheblankstherein.Andasignatureonablankpaperdeliveredbythepersonmakingthesignatureinorderthatthepapermaybeconvertedintoanegotiableinstrumentoperatesasaprimafacieauthoritytofillitupassuchforanyamount.Inorder,however,thatanysuchinstrumentwhencompletedmaybeenforcedagainstanypersonwhobecameapartytheretopriortoitscompletion,itmustbefilledupstrictlyinaccordancewiththeauthoritygivenandwithinareasonabletime.Butifanysuchinstrument,aftercompletion,isnegotiatedtoaholderinduecourse,itisvalidandeffectualforallpurposesinhishands,andhemayenforceitasifithadbeenfilledupstrictlyinaccordancewiththeauthoritygivenandwithinareasonabletime.

Sec.15.Incompleteinstrumentnotdelivered.‐Whereanincompleteinstrumenthasnotbeendelivered,itwillnot,ifcompletedandnegotiatedwithoutauthority,beavalidcontractinthehandsofanyholder,asagainstanypersonwhosesignaturewasplacedthereonbeforedelivery.

Sec.16.Delivery;wheneffectual;whenpresumed.‐Everycontractonanegotiableinstrumentisincompleteandrevocableuntildeliveryoftheinstrumentforthepurposeofgivingeffectthereto.Asbetweenimmediatepartiesandasregardsa

remotepartyotherthanaholderinduecourse,thedelivery,inordertobeeffectual,mustbemadeeitherbyorundertheauthorityofthepartymaking,drawing,accepting,orindorsing,asthecasemaybe;and,insuchcase,thedeliverymaybeshowntohavebeenconditional,orforaspecialpurposeonly,andnotforthepurposeoftransferringthepropertyintheinstrument.Butwheretheinstrumentisinthehandsofaholderinduecourse,avaliddeliverythereofbyallpartiespriortohimsoastomakethemliabletohimisconclusivelypresumed.Andwheretheinstrumentisnolongerinthepossessionofapartywhosesignatureappearsthereon,avalidandintentionaldeliverybyhimispresumeduntilthecontraryisproved.

Sec.17.Constructionwhereinstrumentisambiguous.‐Wherethelanguageoftheinstrumentisambiguousorthereareomissionstherein,thefollowingrulesofconstructionapply:

(a)Wherethesumpayableisexpressedinwordsandalsoinfiguresandthereisadiscrepancybetweenthetwo,thesumdenotedbythewordsisthesumpayable;butifthewordsareambiguousoruncertain,referencemaybehadtothefigurestofixtheamount;

(b)Wheretheinstrumentprovidesforthepaymentofinterest,withoutspecifyingthedatefromwhichinterestistorun,theinterestrunsfromthedateoftheinstrument,andiftheinstrumentisundated,fromtheissuethereof;

(c)Wheretheinstrumentisnotdated,itwillbeconsideredtobedatedasofthetimeitwasissued;

(d)Wherethereisaconflictbetweenthewrittenandprintedprovisionsoftheinstrument,thewrittenprovisionsprevail;

(e)Wheretheinstrumentissoambiguousthatthereisdoubtwhetheritisabillornote,theholdermaytreatitaseitherathiselection;

(f)Whereasignatureissoplacedupontheinstrumentthatitisnotclearinwhatcapacitythepersonmakingthesameintendedtosign,heistobedeemedanindorser;

(g)Whereaninstrumentcontainingtheword"Ipromisetopay"issignedbytwoormorepersons,theyaredeemedtobejointlyandseverallyliablethereon.

Sec.18.Liabilityofpersonsigningintradeorassumedname.‐Nopersonisliableontheinstrumentwhosesignaturedoesnotappearthereon,exceptashereinotherwiseexpresslyprovided.Butonewhosignsinatradeorassumednamewillbeliabletothesameextentasifhehadsignedinhisownname.

Sec.19.Signaturebyagent;authority;howshown.‐Thesignatureofanypartymaybemadebyadulyauthorizedagent.Noparticularformofappointmentisnecessaryforthispurpose;andtheauthorityoftheagentmaybeestablishedasinothercasesofagency.

Sec.20.Liabilityofpersonsigningasagent,andsoforth.‐Wheretheinstrumentcontainsorapersonaddstohissignaturewordsindicatingthathesignsfororonbehalfofaprincipalorinarepresentativecapacity,heisnotliableontheinstrumentifhewasdulyauthorized;butthemereadditionofwordsdescribinghimasanagent,orasfillingarepresentativecharacter,withoutdisclosinghisprincipal,doesnotexempthimfrompersonalliability.

Sec.21.Signaturebyprocuration;effectof.‐Asignatureby"procuration"operatesasnoticethattheagenthasbutalimitedauthoritytosign,andtheprincipalisboundonlyincasetheagentinsosigningactedwithintheactuallimitsofhisauthority.

Sec.22.Effectofindorsementbyinfantorcorporation.‐Theindorsementorassignmentoftheinstrumentbyacorporationorbyaninfantpassesthepropertytherein,notwithstandingthatfromwantofcapacity,thecorporationorinfantmayincurnoliabilitythereon.

Sec.23.Forgedsignature;effectof.‐Whenasignatureisforgedormadewithouttheauthorityofthepersonwhosesignatureitpurportstobe,itiswhollyinoperative,andnorighttoretaintheinstrument,ortogiveadischargetherefor,ortoenforcepaymentthereofagainstanypartythereto,canbeacquiredthroughorundersuch

signature,unlessthepartyagainstwhomitissoughttoenforcesuchrightisprecludedfromsettinguptheforgeryorwantofauthority.

II.CONSIDERATION

Sec.24.Presumptionofconsideration.‐Everynegotiableinstrumentisdeemedprimafacietohavebeenissuedforavaluableconsideration;andeverypersonwhosesignatureappearsthereontohavebecomeapartytheretoforvalue.

Sec.25.Value,whatconstitutes.—Valueisanyconsiderationsufficienttosupportasimplecontract.Anantecedentorpre‐existingdebtconstitutesvalue;andisdeemedsuchwhethertheinstrumentispayableondemandoratafuturetime.

Sec.26.Whatconstitutesholderforvalue.‐Wherevaluehasatanytimebeengivenfortheinstrument,theholderisdeemedaholderforvalueinrespecttoallpartieswhobecomesuchpriortothattime.

Sec.27.Whenlienoninstrumentconstitutesholderforvalue.—Wheretheholderhasalienontheinstrumentarisingeitherfromcontractorbyimplicationoflaw,heisdeemedaholderforvaluetotheextentofhislien.

Sec.28.Effectofwantofconsideration.‐Absenceorfailureofconsiderationisamatterofdefenseasagainstanypersonnotaholderinduecourse;andpartialfailureofconsiderationisadefenseprotanto,whetherthefailureisanascertainedandliquidatedamountorotherwise.

Sec.29.Liabilityofaccommodationparty.‐Anaccommodationpartyisonewhohassignedtheinstrumentasmaker,drawer,acceptor,orindorser,withoutreceivingvaluetherefor,andforthepurposeoflendinghisnametosomeotherperson.Suchapersonisliableontheinstrumenttoaholderforvalue,notwithstandingsuchholder,atthetimeoftakingtheinstrument,knewhimtobeonlyanaccommodationparty.

III.NEGOTIATION

Sec.30.Whatconstitutesnegotiation.‐Aninstrumentisnegotiatedwhenitistransferredfromonepersontoanotherinsuchmannerastoconstitutethetransfereetheholderthereof.Ifpayabletobearer,itisnegotiatedbydelivery;ifpayabletoorder,itisnegotiatedbytheindorsementoftheholderandcompletedbydelivery.

Sec.31.Indorsement;howmade.‐Theindorsementmustbewrittenontheinstrumentitselforuponapaperattachedthereto.Thesignatureoftheindorser,withoutadditionalwords,isasufficientindorsement.

Sec.32.Indorsementmustbeofentireinstrument.‐Theindorsementmustbeanindorsementoftheentireinstrument.Anindorsementwhichpurportstotransfertotheindorseeapartonlyoftheamountpayable,orwhichpurportstotransfertheinstrumenttotwoormoreindorseesseverally,doesnotoperateasanegotiationoftheinstrument.Butwheretheinstrumenthasbeenpaidinpart,itmaybeindorsedastotheresidue.

Sec.33.Kindsofindorsement.‐Anindorsementmaybeeitherspecialorinblank;anditmayalsobeeitherrestrictiveorqualifiedorconditional.

Sec.34.Specialindorsement;indorsementinblank.‐Aspecialindorsementspecifiesthepersontowhom,ortowhoseorder,theinstrumentistobepayable,andtheindorsementofsuchindorseeisnecessarytothefurthernegotiationoftheinstrument.Anindorsementinblankspecifiesnoindorsee,andaninstrumentsoindorsedispayabletobearer,andmaybenegotiatedbydelivery.

Sec.35.Blankindorsement;howchangedtospecialindorsement.‐Theholdermayconvertablankindorsementintoaspecialindorsementbywritingoverthesignatureoftheindorserinblankanycontractconsistentwiththecharacteroftheindorsement.

Sec.36.Whenindorsementrestrictive.‐Anindorsementisrestrictivewhicheither:

(a)Prohibitsthefurthernegotiationoftheinstrument;or

(b)Constitutestheindorseetheagentoftheindorser;or

(c)Veststhetitleintheindorseeintrustforortotheuseofsomeotherpersons.

Butthemereabsenceofwordsimplyingpowertonegotiatedoesnotmakeanindorsementrestrictive.

Sec.37.Effectofrestrictiveindorsement;rightsofindorsee.‐Arestrictiveindorsementconfersupontheindorseetheright:

(a)toreceivepaymentoftheinstrument;

(b)tobringanyactionthereonthattheindorsercouldbring;

(c)totransferhisrightsassuchindorsee,wheretheformoftheindorsementauthorizeshimtodoso.

Butallsubsequentindorseesacquireonlythetitleofthefirstindorseeundertherestrictiveindorsement.

Sec.38.Qualifiedindorsement.‐Aqualifiedindorsementconstitutestheindorseramereassignorofthetitletotheinstrument.Itmaybemadebyaddingtotheindorser'ssignaturethewords"withoutrecourse"oranywordsofsimilarimport.Suchanindorsementdoesnotimpairthenegotiablecharacteroftheinstrument.

Sec.39.Conditionalindorsement.‐Whereanindorsementisconditional,thepartyrequiredtopaytheinstrumentmaydisregardtheconditionandmakepaymenttotheindorseeorhistransfereewhethertheconditionhasbeenfulfilledornot.Butanypersontowhomaninstrumentsoindorsedisnegotiatedwillholdthesame,ortheproceedsthereof,subjecttotherightsofthepersonindorsingconditionally.

Sec.40.Indorsementofinstrumentpayabletobearer.‐Whereaninstrument,payabletobearer,isindorsedspecially,itmayneverthelessbefurthernegotiatedbydelivery;butthepersonindorsingspeciallyisliableasindorsertoonlysuchholdersasmaketitlethroughhisindorsement.

Sec.41.Indorsementwherepayabletotwoormorepersons.‐Whereaninstrumentispayabletotheorderoftwoormorepayeesorindorseeswhoarenotpartners,allmustindorseunlesstheoneindorsinghasauthoritytoindorsefortheothers.

Sec.42.Effectofinstrumentdrawnorindorsedtoapersonas

cashier.‐Whereaninstrumentisdrawnorindorsedtoapersonas"cashier"orotherfiscalofficerofabankorcorporation,itisdeemedprimafacietobepayabletothebankorcorporationofwhichheissuchofficer,andmaybenegotiatedbyeithertheindorsementofthebankorcorporationortheindorsementoftheofficer.

Sec.43.Indorsementwherenameismisspelled,andsoforth.‐Wherethenameofapayeeorindorseeiswronglydesignatedormisspelled,hemayindorsetheinstrumentasthereindescribedadding,ifhethinksfit,hispropersignature.

Sec.44.Indorsementinrepresentativecapacity.‐Whereanypersonisunderobligationtoindorseinarepresentativecapacity,hemayindorseinsuchtermsastonegativepersonalliability.

Sec.45.Timeofindorsement;presumption.‐Exceptwhereanindorsementbearsdateafterthematurityoftheinstrument,everynegotiationisdeemedprimafacietohavebeeneffectedbeforetheinstrumentwasoverdue.

Sec.46.Placeofindorsement;presumption.‐Exceptwherethecontraryappears,everyindorsementispresumedprimafacietohavebeenmadeattheplacewheretheinstrumentisdated.

Sec.47.Continuationofnegotiablecharacter.‐Aninstrumentnegotiableinitsorigincontinuestobenegotiableuntilithasbeenrestrictivelyindorsedordischargedbypaymentorotherwise.

Sec.48.Strikingoutindorsement.‐Theholdermayatanytimestrikeoutanyindorsementwhichisnotnecessarytohistitle.Theindorserwhoseindorsementisstruckout,andallindorserssubsequenttohim,aretherebyrelievedfromliabilityontheinstrument.

Sec.49.Transferwithoutindorsement;effectof.‐Wheretheholderofaninstrumentpayabletohisordertransfersitforvaluewithoutindorsingit,thetransfervestsinthetransfereesuchtitleasthetransferorhadtherein,andthetransfereeacquiresinaddition,therighttohavetheindorsementofthetransferor.Butforthepurposeofdeterminingwhetherthetransfereeisaholderinduecourse,thenegotiationtakeseffectasofthetimewhentheindorsementisactuallymade.

Sec.50.Whenpriorpartymaynegotiateinstrument.‐Whereaninstrumentisnegotiatedbacktoapriorparty,suchpartymay,subjecttotheprovisionsofthisAct,reissueandfurthernegotiablethesame.Butheisnotentitledtoenforcepaymentthereofagainstanyinterveningpartytowhomhewaspersonallyliable.

IV.RIGHTSOFTHEHOLDER

Sec.51.Rightofholdertosue;payment.‐Theholderofanegotiableinstrumentmaytosuethereoninhisownname;andpaymenttohiminduecoursedischargestheinstrument.

Sec.52.Whatconstitutesaholderinduecourse.‐Aholderinduecourseisaholderwhohastakentheinstrumentunderthefollowingconditions:

(a)Thatitiscompleteandregularuponitsface;

(b)Thathebecametheholderofitbeforeitwasoverdue,andwithoutnoticethatithasbeenpreviouslydishonored,ifsuchwasthefact;

(c)Thathetookitingoodfaithandforvalue;

(d)Thatatthetimeitwasnegotiatedtohim,hehadnonoticeofanyinfirmityintheinstrumentordefectinthetitleofthepersonnegotiatingit.

Sec.53.Whenpersonnotdeemedholderinduecourse.‐Whereaninstrumentpayableondemandisnegotiatedonanunreasonablelengthoftimeafteritsissue,theholderisnotdeemedaholderinduecourse.

Sec.54.Noticebeforefullamountispaid.‐Wherethetransfereereceivesnoticeofanyinfirmityintheinstrumentordefectinthetitleofthepersonnegotiatingthesamebeforehehaspaidthefullamountagreedtobepaidtherefor,hewillbedeemedaholderinduecourseonlytotheextentoftheamountthereforepaidbyhim.

Sec.55.Whentitledefective.‐ThetitleofapersonwhonegotiatesaninstrumentisdefectivewithinthemeaningofthisActwhenheobtainedtheinstrument,oranysignaturethereto,byfraud,duress,orforceandfear,orotherunlawfulmeans,orforanillegalconsideration,orwhenhenegotiatesitinbreachoffaith,orundersuchcircumstancesasamounttoafraud.

Sec.56.Whatconstitutesnoticeofdefect.‐Toconstitutesnoticeofaninfirmityintheinstrumentordefectinthetitleofthepersonnegotiatingthesame,thepersontowhomitisnegotiatedmusthavehadactualknowledgeoftheinfirmityordefect,orknowledgeofsuchfactsthathisactionintakingtheinstrumentamountedtobadfaith.

Sec.57.Rightsofholderinduecourse.‐Aholderinduecourseholdstheinstrumentfreefromanydefectoftitleofpriorparties,andfreefromdefensesavailabletopriorpartiesamongthemselves,andmayenforcepaymentoftheinstrumentforthefullamountthereofagainstallpartiesliablethereon.

Sec.58.Whensubjecttooriginaldefense.‐Inthehandsofanyholderotherthanaholderinduecourse,anegotiableinstrumentissubjecttothesamedefensesasifitwerenon‐negotiable.Butaholderwhoderiveshistitlethroughaholderinduecourse,andwhoisnothimselfapartytoanyfraudorillegalityaffectingthe

instrument,hasalltherightsofsuchformerholderinrespectofallpartiespriortothelatter.

Sec.59.Whoisdeemedholderinduecourse.‐Everyholderisdeemedprimafacietobeaholderinduecourse;butwhenitisshownthatthetitleofanypersonwhohasnegotiatedtheinstrumentwasdefective,theburdenisontheholdertoprovethatheorsomepersonunderwhomheclaimsacquiredthetitleasholderinduecourse.Butthelast‐mentionedruledoesnotapplyinfavorofapartywhobecameboundontheinstrumentpriortotheacquisitionofsuchdefectivetitle.

V.LIABILITIESOFPARTIES

Sec.60.Liabilityofmaker.‐Themakerofanegotiableinstrument,bymakingit,engagesthathewillpayitaccordingtoitstenor,andadmitstheexistenceofthepayeeandhisthencapacitytoindorse.

Sec.61.Liabilityofdrawer.‐Thedrawerbydrawingtheinstrumentadmitstheexistenceofthepayeeandhisthencapacitytoindorse;andengagesthat,onduepresentment,theinstrumentwillbeacceptedorpaid,orboth,accordingtoitstenor,andthatifitbedishonoredandthenecessaryproceedingsondishonorbedulytaken,hewillpaytheamountthereoftotheholderortoanysubsequentindorserwhomaybecompelledtopayit.Butthedrawermayinsertintheinstrumentanexpressstipulationnegativingorlimitinghisownliabilitytotheholder.

Sec.62.Liabilityofacceptor.‐Theacceptor,byacceptingtheinstrument,engagesthathewillpayitaccordingtothetenorofhisacceptanceandadmits:

(a)Theexistenceofthedrawer,thegenuinenessofhissignature,andhiscapacityandauthoritytodrawtheinstrument;and

(b)Theexistenceofthepayeeandhisthencapacitytoindorse.

Sec.63.Whenapersondeemedindorser.‐Apersonplacinghissignatureuponaninstrumentotherwisethanasmaker,drawer,oracceptor,isdeemedtobeindorser

unlessheclearlyindicatesbyappropriatewordshisintentiontobeboundinsomeothercapacity.

Sec.64.Liabilityofirregularindorser.‐Whereaperson,nototherwiseapartytoaninstrument,placesthereonhissignatureinblankbeforedelivery,heisliableasindorser,inaccordancewiththefollowingrules:

(a)Iftheinstrumentispayabletotheorderofathirdperson,heisliabletothepayeeandtoallsubsequentparties.

(b)Iftheinstrumentispayabletotheorderofthemakerordrawer,orispayabletobearer,heisliabletoallpartiessubsequenttothemakerordrawer.

(c)Ifhesignsfortheaccommodationofthepayee,heisliabletoallpartiessubsequenttothepayee.

Sec.65.Warrantywherenegotiationbydeliveryandsoforth.—Everypersonnegotiatinganinstrumentbydeliveryorbyaqualifiedindorsementwarrants:

(a)Thattheinstrumentisgenuineandinallrespectswhatitpurportstobe;

(b)Thathehasagoodtitletoit;

(c)Thatallpriorpartieshadcapacitytocontract;

(d)Thathehasnoknowledgeofanyfactwhichwouldimpairthevalidityoftheinstrumentorrenderitvalueless.

Butwhenthenegotiationisbydeliveryonly,thewarrantyextendsinfavorofnoholderotherthantheimmediatetransferee.

Theprovisionsofsubdivision(c)ofthissectiondonotapplytoapersonnegotiatingpublicorcorporationsecuritiesotherthanbillsandnotes.

Sec.66.Liabilityofgeneralindorser.‐Everyindorserwhoindorseswithoutqualification,warrantstoallsubsequentholdersinduecourse:

(a)Themattersandthingsmentionedinsubdivisions(a),(b),and(c)ofthenextprecedingsection;and

(b)Thattheinstrumentis,atthetimeofhisindorsement,validandsubsisting;

And,inaddition,heengagesthat,onduepresentment,itshallbeacceptedorpaid,orboth,asthecasemaybe,accordingtoitstenor,andthatifitbedishonoredandthenecessaryproceedingsondishonorbedulytaken,hewillpaytheamountthereoftotheholder,ortoanysubsequentindorserwhomaybecompelledtopayit.

Sec.67.Liabilityofindorserwherepapernegotiablebydelivery.—Whereapersonplaceshisindorsementonaninstrumentnegotiablebydelivery,heincursalltheliabilityofanindorser.

Sec.68.Orderinwhichindorsersareliable.‐Asrespectoneanother,indorsersareliableprimafacieintheorderinwhichtheyindorse;butevidenceisadmissibletoshowthat,asbetweenoramongthemselves,theyhaveagreedotherwise.Jointpayeesorjointindorseeswhoindorsearedeemedtoindorsejointlyandseverally.

Sec.69.Liabilityofanagentorbroker.‐Whereabrokerorotheragentnegotiatesaninstrumentwithoutindorsement,heincursalltheliabilitiesprescribedbySectionSixty‐fiveofthisAct,unlesshedisclosesthenameofhisprincipalandthefactthatheisactingonlyasagent.

VI.PRESENTATIONFORPAYMENT

Sec.70.Effectofwantofdemandonprincipaldebtor.‐Presentmentforpaymentisnotnecessaryinordertochargethepersonprimarilyliableontheinstrument;butiftheinstrumentis,byitsterms,payableataspecialplace,andheisableandwillingtopayitthereatmaturity,suchabilityandwillingnessareequivalenttoatenderofpaymentuponhispart.Butexceptashereinotherwiseprovided,presentmentforpaymentisnecessaryinordertochargethedrawerandindorsers.

Sec.71.Presentmentwhereinstrumentisnotpayableondemandandwherepayableondemand.‐Wheretheinstrumentisnotpayableondemand,presentmentmustbemadeonthedayitfallsdue.Whereitispayableondemand,presentmentmustbemadewithinareasonabletimeafteritsissue,exceptthatinthecaseofabillofexchange,presentmentforpaymentwillbesufficientifmadewithinareasonabletimeafterthelastnegotiationthereof.

Sec.72.Whatconstitutesasufficientpresentment.‐Presentmentforpayment,tobesufficient,mustbemade:

(a)Bytheholder,orbysomepersonauthorizedtoreceivepaymentonhisbehalf;

(b)Atareasonablehouronabusinessday;

(c)Ataproperplaceashereindefined;

(d)Tothepersonprimarilyliableontheinstrument,orifheisabsentorinaccessible,toanypersonfoundattheplacewherethepresentmentismade.

Sec.73.Placeofpresentment.‐Presentmentforpaymentismadeattheproperplace:

(a)Whereaplaceofpaymentisspecifiedintheinstrumentanditistherepresented;

(b)Wherenoplaceofpaymentisspecifiedbuttheaddressofthepersontomakepaymentisgivenintheinstrumentanditistherepresented;

(c)Wherenoplaceofpaymentisspecifiedandnoaddressisgivenandtheinstrumentispresentedattheusualplaceofbusinessorresidenceofthepersontomakepayment;

(d)Inanyothercaseifpresentedtothepersontomakepaymentwhereverhecanbefound,orifpresentedathislastknownplaceofbusinessorresidence.

Sec.74.Instrumentmustbeexhibited.‐Theinstrumentmustbeexhibitedtothepersonfromwhompaymentisdemanded,andwhenitispaid,mustbedelivereduptothepartypayingit.

Sec.75.Presentmentwhereinstrumentpayableatbank.‐Wheretheinstrumentispayableatabank,presentmentforpaymentmustbemadeduringbankinghours,unlessthepersontomakepaymenthasnofundstheretomeetitatanytimeduringtheday,inwhichcasepresentmentatanyhourbeforethebankisclosedonthatdayissufficient.

Sec.76.Presentmentwhereprincipaldebtorisdead.‐Wherethepersonprimarilyliableontheinstrumentisdeadandnoplaceofpaymentisspecified,presentmentforpaymentmustbemadetohispersonalrepresentative,ifsuchtherebe,andif,withtheexerciseofreasonablediligence,hecanbefound.

Sec.77.Presentmenttopersonsliableaspartners.‐Wherethepersonsprimarilyliableontheinstrumentareliableaspartnersandnoplaceofpaymentisspecified,presentmentforpaymentmaybemadetoanyoneofthem,eventhoughtherehasbeenadissolutionofthefirm.

Sec.78.Presentmenttojointdebtors.‐Wherethereareseveralpersons,notpartners,primarilyliableontheinstrumentandnoplaceofpaymentisspecified,presentmentmustbemadetothemall.

Sec.79.Whenpresentmentnotrequiredtochargethedrawer.‐Presentmentforpaymentisnotrequiredinordertochargethedrawerwherehehasnorighttoexpectorrequirethatthedraweeoracceptorwillpaytheinstrument.

Sec.80.Whenpresentmentnotrequiredtochargetheindorser.‐Presentmentisnotrequiredinordertochargeanindorserwheretheinstrumentwasmadeoracceptedforhisaccommodationandhehasnoreasontoexpectthattheinstrumentwillbepaidifpresented.

Sec.81.Whendelayinmakingpresentmentisexcused.‐Delayinmakingpresentmentforpaymentisexcusedwhenthedelayiscausedbycircumstancesbeyondthecontroloftheholderandnotimputabletohisdefault,misconduct,ornegligence.Whenthecauseofdelayceasestooperate,presentmentmustbemadewithreasonablediligence.

Sec.82.Whenpresentmentforpaymentisexcused.‐Presentmentforpaymentisexcused:

(a)Where,aftertheexerciseofreasonablediligence,presentment,asrequiredbythisAct,cannotbemade;

(b)Wherethedraweeisafictitiousperson;

(c)Bywaiverofpresentment,expressorimplied.

Sec.83.Wheninstrumentdishonoredbynon‐payment.‐Theinstrumentisdishonoredbynon‐paymentwhen:

(a)Itisdulypresentedforpaymentandpaymentisrefusedorcannotbeobtained;or

(b)Presentmentisexcusedandtheinstrumentisoverdueandunpaid.

Sec.84.Liabilityofpersonsecondarilyliable,wheninstrumentdishonored.‐SubjecttotheprovisionsofthisAct,whentheinstrumentisdishonoredbynon‐payment,animmediaterightofrecoursetoallpartiessecondarilyliablethereonaccruestotheholder.

Sec.85.Timeofmaturity.‐Everynegotiableinstrumentispayableatthetimefixedthereinwithoutgrace.WhenthedayofmaturityfallsuponSundayoraholiday,theinstrumentsfallingdueorbecomingpayableonSaturdayaretobepresentedforpaymentonthenextsucceedingbusinessdayexceptthatinstrumentspayableondemandmay,attheoptionoftheholder,bepresentedforpaymentbeforetwelveo'clocknoononSaturdaywhenthatentiredayisnotaholiday.

Sec.86.Time;howcomputed.‐Whentheinstrumentispayableatafixedperiodafterdate,aftersight,orafterthathappeningofaspecifiedevent,thetimeofpaymentisdeterminedbyexcludingthedayfromwhichthetimeistobegintorun,andbyincludingthedateofpayment.

Sec.87.Rulewhereinstrumentpayableatbank.‐Wheretheinstrumentismadepayableatabank,itisequivalenttoanordertothebanktopaythesamefortheaccountoftheprincipaldebtorthereon.

Sec.88.Whatconstitutespaymentinduecourse.‐Paymentismadeinduecoursewhenitismadeatorafterthematurityofthepaymenttotheholderthereofingoodfaithandwithoutnoticethathistitleisdefective.

VII.NOTICEOFDISHONOR

Sec.89.Towhomnoticeofdishonormustbegiven.‐Exceptashereinotherwiseprovided,whenanegotiableinstrumenthasbeendishonoredbynon‐acceptanceornon‐payment,noticeofdishonormustbegiventothedrawerandtoeachindorser,andanydrawerorindorsertowhomsuchnoticeisnotgivenisdischarged.

Sec.90.Bywhomgiven.‐Thenoticemaybegivenbyoronbehalfoftheholder,orbyoronbehalfofanypartytotheinstrumentwhomightbecompelledtopayitto

theholder,andwho,upontakingitup,wouldhavearighttoreimbursementfromthepartytowhomthenoticeisgiven.

Sec.91.Noticegivenbyagent.‐Noticeofdishonormaybegivenbyanyagenteitherinhisownnameorinthenameofanypartyentitledtogivennotice,whetherthatpartybehisprincipalornot.

Sec.92.Effectofnoticeonbehalfofholder.‐Wherenoticeisgivenbyoronbehalfoftheholder,itinurestothebenefitofallsubsequentholdersandallpriorpartieswhohavearightofrecourseagainstthepartytowhomitisgiven.

Sec.93.Effectwherenoticeisgivenbypartyentitledthereto.‐Wherenoticeisgivenbyoronbehalfofapartyentitledtogivenotice,itinurestothebenefitoftheholderandallpartiessubsequenttothepartytowhomnoticeisgiven.

Sec.94.Whenagentmaygivenotice.‐Wheretheinstrumenthasbeendishonoredinthehandsofanagent,hemayeitherhimselfgivenoticetothepartiesliablethereon,orhemaygivenoticetohisprincipal.Ifhegivesnoticetohisprincipal,hemustdosowithinthesametimeasifheweretheholder,andtheprincipal,uponthereceiptofsuchnotice,hashimselfthesametimeforgivingnoticeasiftheagenthadbeenanindependentholder.

Sec.95.Whennoticesufficient.‐Awrittennoticeneednotbesignedandaninsufficientwrittennoticemaybesupplementedandvalidatedbyverbalcommunication.Amisdescriptionoftheinstrumentdoesnotvitiatethenoticeunlessthepartytowhomthenoticeisgivenisinfactmisledthereby.

Sec.96.Formofnotice.‐Thenoticemaybeinwritingormerelyoralandmaybegiveninanytermswhichsufficientlyidentifytheinstrument,andindicatethatithasbeendishonoredbynon‐acceptanceornon‐payment.Itmayinallcasesbegivenbydeliveringitpersonallyorthroughthemails.

Sec.97.Towhomnoticemaybegiven.‐Noticeofdishonormaybegiveneithertothepartyhimselfortohisagentinthatbehalf.

Sec.98.Noticewherepartyisdead.‐Whenanypartyisdeadandhisdeathisknowntothepartygivingnotice,thenoticemustbegiventoapersonalrepresentative,iftherebeone,andifwithreasonablediligence,hecanbefound.Iftherebenopersonalrepresentative,noticemaybesenttothelastresidenceorlastplaceofbusinessofthedeceased.

Sec.99.Noticetopartners.‐Wherethepartiestobenotifiedarepartners,noticetoanyonepartnerisnoticetothefirm,eventhoughtherehasbeenadissolution.

Sec.100.Noticetopersonsjointlyliable.‐Noticetojointpersonswhoarenotpartnersmustbegiventoeachofthemunlessoneofthemhasauthoritytoreceivesuchnoticefortheothers.

Sec.101.Noticetobankrupt.‐Whereapartyhasbeenadjudgedabankruptoraninsolvent,orhasmadeanassignmentforthebenefitofcreditors,noticemaybegiveneithertothepartyhimselfortohistrusteeorassignee.

Sec.102.Timewithinwhichnoticemustbegiven.‐Noticemaybegivenassoonastheinstrumentisdishonoredand,unlessdelayisexcusedashereinafterprovided,mustbegivenwithinthetimefixedbythisAct.

Sec.103.Wherepartiesresideinsameplace.‐Wherethepersongivingandthepersontoreceivenoticeresideinthesameplace,noticemustbegivenwithinthefollowingtimes:

(a)Ifgivenattheplaceofbusinessofthepersontoreceivenotice,itmustbegivenbeforethecloseofbusinesshoursonthedayfollowing.

(b)Ifgivenathisresidence,itmustbegivenbeforetheusualhoursofrestonthedayfollowing.

(c)Ifsentbymail,itmustbedepositedinthepostofficeintimetoreachhiminusualcourseonthedayfollowing.

Sec.104.Wherepartiesresideindifferentplaces.‐Wherethepersongivingandthepersontoreceivenoticeresideindifferentplaces,thenoticemustbegivenwithinthefollowingtimes:

(a)Ifsentbymail,itmustbedepositedinthepostofficeintimetogobymailthedayfollowingthedayofdishonor,oriftherebenomailataconvenienthouronlastday,bythenextmailthereafter.

(b)Ifgivenotherwisethanthroughthepostoffice,thenwithinthetimethatnoticewouldhavebeenreceivedinduecourseofmail,ifithadbeendepositedinthepostofficewithinthetimespecifiedinthelastsubdivision.

Sec.105.Whensenderdeemedtohavegivenduenotice.‐Wherenoticeofdishonorisdulyaddressedanddepositedinthepostoffice,thesenderisdeemedtohavegivenduenotice,notwithstandinganymiscarriageinthemails.

Sec.106.Depositinpostoffice;whatconstitutes.‐Noticeisdeemedtohavebeendepositedinthepost‐officewhendepositedinanybranchpostofficeorinanyletterboxunderthecontrolofthepost‐officedepartment.

Sec.107.Noticetosubsequentparty;timeof.‐Whereapartyreceivesnoticeofdishonor,hehas,afterthereceiptofsuchnotice,thesametimeforgivingnoticetoantecedentpartiesthattheholderhasafterthedishonor.

Sec.108.Wherenoticemustbesent.‐Whereapartyhasaddedanaddresstohissignature,noticeofdishonormustbesenttothataddress;butifhehasnotgivensuchaddress,thenthenoticemustbesentasfollows:

(a)Eithertothepost‐officenearesttohisplaceofresidenceortothepost‐officewhereheisaccustomedtoreceivehisletters;or

(b)Ifhelivesinoneplaceandhashisplaceofbusinessinanother,noticemaybesenttoeitherplace;or

(c)Ifheissojourninginanotherplace,noticemaybesenttotheplacewhereheissosojourning.

ButwherethenoticeisactuallyreceivedbythepartywithinthetimespecifiedinthisAct,itwillbesufficient,thoughnotsentinaccordancewiththerequirementofthissection.

Sec.109.Waiverofnotice.‐Noticeofdishonormaybewaivedeitherbeforethetimeofgivingnoticehasarrivedoraftertheomissiontogiveduenotice,andthewaivermaybeexpressedorimplied.

Sec.110.Whomaffectedbywaiver.‐Wherethewaiverisembodiedintheinstrumentitself,itisbindinguponallparties;but,whereitiswrittenabovethesignatureofanindorser,itbindshimonly.

Sec.111.Waiverofprotest.‐Awaiverofprotest,whetherinthecaseofaforeignbillofexchangeorothernegotiableinstrument,isdeemedtobeawaivernotonlyofaformalprotestbutalsoofpresentmentandnoticeofdishonor.

Sec.112.Whennoticeisdispensedwith.‐Noticeofdishonorisdispensedwithwhen,aftertheexerciseofreasonablediligence,itcannotbegiventoordoesnotreachthepartiessoughttobecharged.

Sec.113.Delayingivingnotice;howexcused.‐Delayingivingnoticeofdishonorisexcusedwhenthedelayiscausedbycircumstancesbeyondthecontroloftheholderandnotimputabletohisdefault,misconduct,ornegligence.Whenthecauseofdelayceasestooperate,noticemustbegivenwithreasonablediligence.

Sec.114.Whennoticeneednotbegiventodrawer.‐Noticeofdishonorisnotrequiredtobegiventothedrawerineitherofthefollowingcases:

(a)Wherethedraweranddraweearethesameperson;

(b)Whenthedraweeisfictitiouspersonorapersonnothavingcapacitytocontract;

(c)Whenthedraweristhepersontowhomtheinstrumentispresentedforpayment;

(d)Wherethedrawerhasnorighttoexpectorrequirethatthedraweeoracceptorwillhonortheinstrument;

(e)Wherethedrawerhascountermandedpayment.

Sec.115.Whennoticeneednotbegiventoindorser.—Noticeofdishonorisnotrequiredtobegiventoanindorserineitherofthefollowingcases:

(a)Whenthedraweeisafictitiouspersonorpersonnothavingcapacitytocontract,andtheindorserwasawareofthatfactatthetimeheindorsedtheinstrument;

(b)Wheretheindorseristhepersontowhomtheinstrumentispresentedforpayment;

(c)Wheretheinstrumentwasmadeoracceptedforhisaccommodation.

Sec.116.Noticeofnon‐paymentwhereacceptancerefused.‐Whereduenoticeofdishonorbynon‐acceptancehasbeengiven,noticeofasubsequentdishonorbynon‐paymentisnotnecessaryunlessinthemeantimetheinstrumenthasbeenaccepted.

Sec.117.Effectofomissiontogivenoticeofnon‐acceptance.‐Anomissiontogivenoticeofdishonorbynon‐acceptancedoesnotprejudicetherightsofaholderinduecoursesubsequenttotheomission.

Sec.118.Whenprotestneednotbemade;whenmustbemade.‐Whereanynegotiableinstrumenthasbeendishonored,itmaybeprotestedfornon‐acceptanceornon‐payment,asthecasemaybe;butprotestisnotrequiredexceptinthecaseofforeignbillsofexchange.

VIII.DISCHARGEOFNEGOTIABLEINSTRUMENTS

Sec.119.Instrument;howdischarged.‐Anegotiableinstrumentisdischarged:

(a)Bypaymentinduecoursebyoronbehalfoftheprincipaldebtor;

(b)Bypaymentinduecoursebythepartyaccommodated,wheretheinstrumentismadeoracceptedforhisaccommodation;

(c)Bytheintentionalcancellationthereofbytheholder;

(d)Byanyotheractwhichwilldischargeasimplecontractforthepaymentofmoney;

(e)Whentheprincipaldebtorbecomestheholderoftheinstrumentatoraftermaturityinhisownright.

Sec.120.Whenpersonssecondarilyliableontheinstrumentaredischarged.‐Apersonsecondarilyliableontheinstrumentisdischarged:

(a)Byanyactwhichdischargestheinstrument;

(b)Bytheintentionalcancellationofhissignaturebytheholder;

(c)Bythedischargeofapriorparty;

(d)Byavalidtenderorpaymentmadebyapriorparty;

(e)Byareleaseoftheprincipaldebtorunlesstheholder'srightofrecourseagainstthepartysecondarilyliableisexpresslyreserved;

(f)Byanyagreementbindingupontheholdertoextendthetimeofpaymentortopostponetheholder'srighttoenforcetheinstrumentunlessmadewiththeassentofthepartysecondarilyliableorunlesstherightofrecourseagainstsuchpartyisexpresslyreserved.

Sec.121.Rightofpartywhodischargesinstrument.‐Wheretheinstrumentispaidbyapartysecondarilyliablethereon,itisnotdischarged;butthepartysopayingitisremittedtohisformerrightsasregardallpriorparties,andhemaystrikeouthisownandallsubsequentindorsementsandagainstnegotiatetheinstrument,except:

(a)Whereitispayabletotheorderofathirdpersonandhasbeenpaidbythedrawer;and

(b)Whereitwasmadeoracceptedforaccommodationandhasbeenpaidbythepartyaccommodated.

Sec.122.Renunciationbyholder.‐Theholdermayexpresslyrenouncehisrightsagainstanypartytotheinstrumentbefore,at,orafteritsmaturity.Anabsoluteandunconditionalrenunciationofhisrightsagainsttheprincipaldebtormadeatorafterthematurityoftheinstrumentdischargestheinstrument.Butarenunciationdoesnotaffecttherightsofaholderinduecoursewithoutnotice.Arenunciationmustbeinwritingunlesstheinstrumentisdelivereduptothepersonprimarilyliablethereon.

Sec.123.Cancellation;unintentional;burdenofproof.‐Acancellationmadeunintentionallyorunderamistakeorwithouttheauthorityoftheholder,isinoperativebutwhereaninstrumentoranysignaturethereonappearstohavebeencancelled,theburdenofproofliesonthepartywhoallegesthatthecancellationwasmadeunintentionallyorunderamistakeorwithoutauthority.

Sec.124.Alterationofinstrument;effectof.‐Whereanegotiableinstrumentismateriallyalteredwithouttheassentofallpartiesliablethereon,itisavoided,exceptasagainstapartywhohashimselfmade,authorized,orassentedtothealterationandsubsequentindorsers.

Butwhenaninstrumenthasbeenmateriallyalteredandisinthehandsofaholderinduecoursenotapartytothealteration,hemayenforcepaymentthereofaccordingtoitsoriginaltenor.

Sec.125.Whatconstitutesamaterialalteration.‐Anyalterationwhichchanges:

(a)Thedate;

(b)Thesumpayable,eitherforprincipalorinterest;

(c)Thetimeorplaceofpayment:

(d)Thenumberortherelationsoftheparties;

(e)Themediumorcurrencyinwhichpaymentistobemade;

(f)Orwhichaddsaplaceofpaymentwherenoplaceofpaymentisspecified,oranyotherchangeoradditionwhichalterstheeffectoftheinstrumentinanyrespect,isamaterialalteration.

BILLSOFEXCHANGE

IX.FORMANDINTERPRETATION

Sec.126.Billofexchange,defined.‐Abillofexchangeisanunconditionalorderinwritingaddressedbyonepersontoanother,signedbythepersongivingit,requiringthepersontowhomitisaddressedtopayondemandoratafixedordeterminablefuturetimeasumcertaininmoneytoorderortobearer.

Sec.127.Billnotanassignmentoffundsinhandsofdrawee.‐Abillofitselfdoesnotoperateasanassignmentofthefundsinthehandsofthedraweeavailableforthepaymentthereof,andthedraweeisnotliableonthebillunlessanduntilheacceptsthesame.

Sec.128.Billaddressedtomorethanonedrawee.‐Abillmaybeaddressedtotwoormoredraweesjointly,whethertheyarepartnersornot;butnottotwoormoredraweesinthealternativeorinsuccession.

Sec.129.Inlandandforeignbillsofexchange.‐Aninlandbillofexchangeisabillwhichis,oronitsfacepurportstobe,bothdrawnandpayablewithinthePhilippines.Anyotherbillisaforeignbill.Unlessthecontraryappearsonthefaceofthebill,theholdermaytreatitasaninlandbill.

Sec.130.Whenbillmaybetreatedaspromissorynote.‐Whereinabillthedraweranddraweearethesamepersonorwherethedraweeisafictitiouspersonorapersonnothavingcapacitytocontract,theholdermaytreattheinstrumentathisoptioneitherasabillofexchangeorasapromissorynote.

Sec.131.Refereeincaseofneed.‐Thedrawerofabillandanyindorsermayinsertthereonthenameofapersontowhomtheholdermayresortincaseofneed;thatistosay,incasethebillisdishonoredbynon‐acceptanceornon‐payment.Suchpersoniscalledarefereeincaseofneed.Itisintheoptionoftheholdertoresorttotherefereeincaseofneedornotashemayseefit.

X.ACCEPTANCE

Sec.132.Acceptance;howmade,byandsoforth.‐Theacceptanceofabillisthesignificationbythedraweeofhisassenttotheorderofthedrawer.Theacceptancemustbeinwritingandsignedbythedrawee.Itmustnotexpressthatthedraweewillperformhispromisebyanyothermeansthanthepaymentofmoney.

Sec.133.Holderentitledtoacceptanceonfaceofbill.‐Theholderofabillpresentingthesameforacceptancemayrequirethattheacceptancebewrittenonthebill,and,ifsuchrequestisrefused,maytreatthebillasdishonored.

Sec.134.Acceptancebyseparateinstrument.‐Whereanacceptanceiswrittenonapaperotherthanthebillitself,itdoesnotbindtheacceptorexceptinfavorofapersontowhomitisshownandwho,onthefaiththereof,receivesthebillforvalue.

Sec.135.Promisetoaccept;whenequivalenttoacceptance.‐Anunconditionalpromiseinwritingtoacceptabillbeforeitisdrawnisdeemedanactualacceptanceinfavorofeverypersonwho,uponthefaiththereof,receivesthebillforvalue.

Sec.136.Timealloweddraweetoaccept.‐Thedraweeisallowedtwenty‐fourhoursafterpresentmentinwhichtodecidewhetherornothewillacceptthebill;theacceptance,ifgiven,datesasofthedayofpresentation.

Sec.137.Liabilityofdraweereturningordestroyingbill.‐Whereadraweetowhomabillisdeliveredforacceptancedestroysthesame,orrefuseswithintwenty‐fourhoursaftersuchdeliveryorwithinsuchotherperiodastheholdermayallow,toreturnthebillacceptedornon‐acceptedtotheholder,hewillbedeemedtohaveacceptedthesame.

Sec.138.Acceptanceofincompletebill.‐Abillmaybeacceptedbeforeithasbeensignedbythedrawer,orwhileotherwiseincomplete,orwhenitisoverdue,orafterithasbeendishonoredbyapreviousrefusaltoaccept,orbynonpayment.Butwhenabillpayableaftersightisdishonoredbynon‐acceptanceandthedraweesubsequentlyacceptsit,theholder,intheabsenceofanydifferentagreement,isentitledtohavethebillacceptedasofthedateofthefirstpresentment.

Sec.139.Kindsofacceptance.‐Anacceptanceiseithergeneralorqualified.Ageneralacceptanceassentswithoutqualificationtotheorderofthedrawer.Aqualifiedacceptanceinexpresstermsvariestheeffectofthebillasdrawn.

Sec.140.Whatconstitutesageneralacceptance.‐Anacceptancetopayataparticularplaceisageneralacceptanceunlessitexpresslystatesthatthebillistobepaidthereonlyandnotelsewhere.

Sec.141.Qualifiedacceptance.‐Anacceptanceisqualifiedwhichis:

(a)Conditional;thatistosay,whichmakespaymentbytheacceptordependentonthefulfillmentofaconditionthereinstated;

(b)Partial;thatistosay,anacceptancetopaypartonlyoftheamountforwhichthebillisdrawn;

(c)Local;thatistosay,anacceptancetopayonlyataparticularplace;

(d)Qualifiedastotime;

(e)Theacceptanceofsome,oneormoreofthedraweesbutnotofall.

Sec.142.Rightsofpartiesastoqualifiedacceptance.‐Theholdermayrefusetotakeaqualifiedacceptanceandifhedoesnotobtainanunqualifiedacceptance,hemaytreatthebillasdishonoredbynon‐acceptance.Whereaqualifiedacceptanceistaken,thedrawerandindorsersaredischargedfromliabilityonthebillunlesstheyhaveexpresslyorimpliedlyauthorizedtheholdertotakeaqualifiedacceptance,orsubsequentlyassentthereto.Whenthedraweroranindorserreceivesnoticeofaqualifiedacceptance,hemust,withinareasonabletime,expresshisdissenttotheholderorhewillbedeemedtohaveassentedthereto.

XI.PRESENTMENTFORACCEPTANCE

Sec.143.Whenpresentmentforacceptancemustbemade.‐Presentmentforacceptancemustbemade:

(a)Wherethebillispayableaftersight,orinanyothercase,wherepresentmentforacceptanceisnecessaryinordertofixthematurityoftheinstrument;or

(b)Wherethebillexpresslystipulatesthatitshallbepresentedforacceptance;or

(c)Wherethebillisdrawnpayableelsewherethanattheresidenceorplaceofbusinessofthedrawee.

Innoothercaseispresentmentforacceptancenecessaryinordertorenderanypartytothebillliable.

Sec.144.Whenfailuretopresentreleasesdrawerandindorser.‐Exceptashereinotherwiseprovided,theholderofabillwhichisrequiredbythenextprecedingsectiontobepresentedforacceptancemusteitherpresentitforacceptanceornegotiateitwithinareasonabletime.Ifhefailstodoso,thedrawerandallindorsersaredischarged.

Sec.145.Presentment;howmade.‐Presentmentforacceptancemustbemadebyoronbehalfoftheholderatareasonablehour,onabusinessdayandbeforethebillisoverdue,tothedraweeorsomepersonauthorizedtoacceptorrefuseacceptanceonhisbehalf;and

(a)Whereabillisaddressedtotwoormoredraweeswhoarenotpartners,presentmentmustbemadetothemallunlessonehasauthoritytoacceptorrefuseacceptanceforall,inwhichcasepresentmentmaybemadetohimonly;

(b)Wherethedraweeisdead,presentmentmaybemadetohispersonalrepresentative;

(c)Wherethedraweehasbeenadjudgedabankruptoraninsolventorhasmadeanassignmentforthebenefitofcreditors,presentmentmaybemadetohimortohistrusteeorassignee.

Sec.146.Onwhatdayspresentmentmaybemade.‐AbillmaybepresentedforacceptanceonanydayonwhichnegotiableinstrumentsmaybepresentedforpaymentundertheprovisionsofSectionsseventy‐twoandeighty‐fiveofthisAct.WhenSaturdayisnototherwiseaholiday,presentmentforacceptancemaybemadebeforetwelveo'clocknoononthatday.

Sec.147.Presentmentwheretimeisinsufficient.‐Wheretheholderofabilldrawnpayableelsewherethanattheplaceofbusinessortheresidenceofthedraweehasnotime,withtheexerciseofreasonablediligence,topresentthebillforacceptancebeforepresentingitforpaymentonthedaythatitfallsdue,thedelaycausedbypresentingthebillforacceptancebeforepresentingitforpaymentisexcusedanddoesnotdischargethedrawersandindorsers.

Sec.148.Wherepresentmentisexcused.‐Presentmentforacceptanceisexcusedandabillmaybetreatedasdishonoredbynon‐acceptanceineitherofthefollowingcases:

(a)Wherethedraweeisdead,orhasabsconded,orisafictitiouspersonorapersonnothavingcapacitytocontractbybill.

(b)Where,aftertheexerciseofreasonablediligence,presentmentcannotbemade.

(c)Where,althoughpresentmenthasbeenirregular,acceptancehasbeenrefusedonsomeotherground.

Sec.149.Whendishonoredbynonacceptance.‐Abillisdishonoredbynon‐acceptance:

(a)WhenitisdulypresentedforacceptanceandsuchanacceptanceasisprescribedbythisActisrefusedorcannotbeobtained;or

(b)Whenpresentmentforacceptanceisexcusedandthebillisnotaccepted.

Sec.150.Dutyofholderwherebillnotaccepted.‐Whereabillisdulypresentedforacceptanceandisnotacceptedwithintheprescribedtime,thepersonpresentingitmusttreatthebillasdishonoredbynonacceptanceorhelosestherightofrecourseagainstthedrawerandindorsers.

Sec.151.Rightsofholderwherebillnotaccepted.‐Whenabillisdishonoredbynonacceptance,animmediaterightofrecourseagainstthedrawerandindorsersaccruestotheholderandnopresentmentforpaymentisnecessary.

XII.PROTEST

Sec.152.Inwhatcasesprotestnecessary.‐Whereaforeignbillappearingonitsfacetobesuchisdishonoredbynonacceptance,itmustbedulyprotestedfornonacceptance,bynonacceptanceisdishonoredandwheresuchabillwhichhasnotpreviouslybeendishonoredbynonpayment,itmustbedulyprotestedfornonpayment.Ifitisnotsoprotested,thedrawerandindorsersaredischarged.Whereabilldoesnotappearonitsfacetobeaforeignbill,protestthereofincaseofdishonorisunnecessary.

Sec.153.Protest;howmade.‐Theprotestmustbeannexedtothebillormustcontainacopythereof,andmustbeunderthehandandsealofthenotarymakingitandmustspecify:

(a)Thetimeandplaceofpresentment;

(b)Thefactthatpresentmentwasmadeandthemannerthereof;

(c)Thecauseorreasonforprotestingthebill;

(d)Thedemandmadeandtheanswergiven,ifany,orthefactthatthedraweeoracceptorcouldnotbefound.

Sec.154.Protest,bywhommade.‐Protestmaybemadeby:

(a)Anotarypublic;or

(b)Byanyrespectableresidentoftheplacewherethebillisdishonored,inthepresenceoftwoormorecrediblewitnesses.

Sec.155.Protest;whentobemade.‐Whenabillisprotested,suchprotestmustbemadeonthedayofitsdishonorunlessdelayisexcusedashereinprovided.Whenabillhasbeendulynoted,theprotestmaybesubsequentlyextendedasofthedateofthenoting.

Sec.156.Protest;wheremade.‐Abillmustbeprotestedattheplacewhereitisdishonored,exceptthatwhenabilldrawnpayableattheplaceofbusinessorresidenceofsomepersonotherthanthedraweehasbeendishonoredbynonacceptance,itmustbeprotestedfornon‐paymentattheplacewhereitisexpressedtobepayable,andnofurtherpresentmentforpaymentto,ordemandon,thedraweeisnecessary.

Sec.157.Protestbothfornon‐acceptanceandnon‐payment.‐Abillwhichhasbeenprotestedfornon‐acceptancemaybesubsequentlyprotestedfornon‐payment.

Sec.158.Protestbeforematuritywhereacceptorinsolvent.‐Wheretheacceptorhasbeenadjudgedabankruptoraninsolventorhasmadeanassignmentforthebenefitofcreditorsbeforethebillmatures,theholdermaycausethebilltobeprotestedforbettersecurityagainstthedrawerandindorsers.

Sec.159.Whenprotestdispensedwith.‐Protestisdispensedwithbyanycircumstanceswhichwoulddispensewithnoticeofdishonor.Delayinnotingor

protestingisexcusedwhendelayiscausedbycircumstancesbeyondthecontroloftheholderandnotimputabletohisdefault,misconduct,ornegligence.Whenthecauseofdelayceasestooperate,thebillmustbenotedorprotestedwithreasonablediligence.

Sec.160.Protestwherebillislostandsoforth.‐Whenabillislostordestroyedoriswronglydetainedfromthepersonentitledtoholdit,protestmaybemadeonacopyorwrittenparticularsthereof.

XIII.ACCEPTANCEFORHONOR

Sec.161.Whenbillmaybeacceptedforhonor.‐Whenabillofexchangehasbeenprotestedfordishonorbynon‐acceptanceorprotestedforbettersecurityandisnotoverdue,anypersonnotbeingapartyalreadyliablethereonmay,withtheconsentoftheholder,interveneandacceptthebillsupraprotestforthehonorofanypartyliablethereonorforthehonorofthepersonforwhoseaccountthebillisdrawn.Theacceptanceforhonormaybeforpartonlyofthesumforwhichthebillisdrawn;andwheretherehasbeenanacceptanceforhonorforoneparty,theremaybeafurtheracceptancebyadifferentpersonforthehonorofanotherparty.

Sec.162.Acceptanceforhonor;howmade.‐Anacceptanceforhonorsupraprotestmustbeinwritingandindicatethatitisanacceptanceforhonorandmustbesignedbytheacceptorforhonor.

Sec.163.Whendeemedtobeanacceptanceforhonorofthedrawer.‐Whereanacceptanceforhonordoesnotexpresslystateforwhosehonoritismade,itisdeemedtobeanacceptanceforthehonorofthedrawer.

Sec.164.Liabilityoftheacceptorforhonor.‐Theacceptorforhonorisliabletotheholderandtoallpartiestothebillsubsequenttothepartyforwhosehonorhehasaccepted.

Sec.165.Agreementofacceptorforhonor.‐Theacceptorforhonor,bysuchacceptance,engagesthathewill,onduepresentment,paythebillaccordingtothetermsofhisacceptanceprovideditshallnothavebeenpaidbythedraweeand

providedalsothatisshallhavebeendulypresentedforpaymentandprotestedfornon‐paymentandnoticeofdishonorgiventohim.

Sec.166.Maturityofbillpayableaftersight;acceptedforhonor.‐Whereabillpayableaftersightisacceptedforhonor,itsmaturityiscalculatedfromthedateofthenotingfornon‐acceptanceandnotfromthedateoftheacceptanceforhonor.

Sec.167.Protestofbillacceptedforhonor,andsoforth.‐Whereadishonoredbillhasbeenacceptedforhonorsupraprotestorcontainsarefereeincaseofneed,itmustbeprotestedfornon‐paymentbeforeitispresentedforpaymenttotheacceptorforhonororrefereeincaseofneed.

Sec.168.Presentmentforpaymenttoacceptorforhonor,howmade.‐Presentmentforpaymenttotheacceptorforhonormustbemadeasfollows:

(a)Ifitistobepresentedintheplacewheretheprotestfornon‐paymentwasmade,itmustbepresentednotlaterthanthedayfollowingitsmaturity.

(b)Ifitistobepresentedinsomeotherplacethantheplacewhereitwasprotested,thenitmustbeforwardedwithinthetimespecifiedinSectiononehundredandfour.

Sec.169.Whendelayinmakingpresentmentisexcused.‐TheprovisionsofSectioneighty‐oneapplywherethereisdelayinmakingpresentmenttotheacceptorforhonororrefereeincaseofneed.

Sec.170.Dishonorofbillbyacceptorforhonor.‐Whenthebillisdishonoredbytheacceptorforhonor,itmustbeprotestedfornon‐paymentbyhim.

XIV.PAYMENTFORHONOR

Sec.171.Whomaymakepaymentforhonor.‐Whereabillhasbeenprotestedfornon‐payment,anypersonmayinterveneandpayitsupraprotestforthehonorof

anypersonliablethereonorforthehonorofthepersonforwhoseaccountitwasdrawn.

Sec.172.Paymentforhonor;howmade.‐Thepaymentforhonorsupraprotest,inordertooperateassuchandnotasamerevoluntarypayment,mustbeattestedbyanotarialactofhonorwhichmaybeappendedtotheprotestorformanextensiontoit.

Sec.173.Declarationbeforepaymentforhonor.‐Thenotarialactofhonormustbefoundedonadeclarationmadebythepayerforhonororbyhisagentinthatbehalfdeclaringhisintentiontopaythebillforhonorandforwhosehonorhepays.

Sec.174.Preferenceofpartiesofferingtopayforhonor.‐Wheretwoormorepersonsoffertopayabillforthehonorofdifferentparties,thepersonwhosepaymentwilldischargemostpartiestothebillistobegiventhepreference.

Sec.175.Effectonsubsequentpartieswherebillispaidforhonor.‐Whereabillhasbeenpaidforhonor,allpartiessubsequenttothepartyforwhosehonoritispaidaredischargedbutthepayerforhonorissubrogatedfor,andsucceedsto,boththerightsanddutiesoftheholderasregardsthepartyforwhosehonorhepaysandallpartiesliabletothelatter.

Sec.176.Whereholderrefusestoreceivepaymentsupraprotest.‐Wheretheholderofabillrefusestoreceivepaymentsupraprotest,heloseshisrightofrecourseagainstanypartywhowouldhavebeendischargedbysuchpayment.

Sec.177.Rightsofpayerforhonor.‐Thepayerforhonor,onpayingtotheholdertheamountofthebillandthenotarialexpensesincidentaltoitsdishonor,isentitledtoreceiveboththebillitselfandtheprotest.

XV.BILLSINSET

Sec.178.Billsinsetconstituteonebill.‐Whereabillisdrawninaset,eachpartofthesetbeingnumberedandcontainingareferencetotheotherparts,thewholeofthepartsconstitutesonebill.

Sec.179.Rightofholderswheredifferentpartsarenegotiated.‐Wheretwoormorepartsofasetarenegotiatedtodifferentholdersinduecourse,theholderwhosetitlefirstaccruesis,asbetweensuchholders,thetrueownerofthebill.Butnothinginthissectionaffectstherightofapersonwho,induecourse,acceptsorpaysthepartsfirstpresentedtohim.

Sec.180.Liabilityofholderwhoindorsestwoormorepartsofasettodifferentpersons.‐Wheretheholderofasetindorsestwoormorepartstodifferentpersonsheisliableoneverysuchpart,andeveryindorsersubsequenttohimisliableontheparthehashimselfindorsed,asifsuchpartswereseparatebills.

Sec.181.Acceptanceofbilldrawninsets.‐Theacceptancemaybewrittenonanypartanditmustbewrittenononepartonly.Ifthedraweeacceptsmorethanonepartandsuchacceptedpartsnegotiatedtodifferentholdersinduecourse,heisliableoneverysuchpartasifitwereaseparatebill.

Sec.182.Paymentbyacceptorofbillsdrawninsets.‐Whentheacceptorofabilldrawninasetpaysitwithoutrequiringthepartbearinghisacceptancetobedelivereduptohim,andthepartatmaturityisoutstandinginthehandsofaholderinduecourse,heisliabletotheholderthereon.

Sec.183.Effectofdischargingoneofaset.‐Exceptashereinotherwiseprovided,whereanyonepartofabilldrawninasetisdischargedbypaymentorotherwise,thewholebillisdischarged.

XVI.PROMISSORYNOTESANDCHECKS

Sec.184.Promissorynote,defined.‐AnegotiablepromissorynotewithinthemeaningofthisActisanunconditionalpromiseinwritingmadebyonepersontoanother,signedbythemaker,engagingtopayondemand,oratafixedordeterminablefuturetime,asumcertaininmoneytoorderortobearer.Whereanoteisdrawntothemaker'sownorder,itisnotcompleteuntilindorsedbyhim.

Sec.185.Check,defined.‐Acheckisabillofexchangedrawnonabankpayableondemand.Exceptashereinotherwiseprovided,theprovisionsofthisActapplicabletoabillofexchangepayableondemandapplytoacheck.

Sec.186.Withinwhattimeacheckmustbepresented.‐Acheckmustbepresentedforpaymentwithinareasonabletimeafteritsissueorthedrawerwillbedischargedfromliabilitythereontotheextentofthelosscausedbythedelay.

Sec.187.Certificationofcheck;effectof.‐Whereacheckiscertifiedbythebankonwhichitisdrawn,thecertificationisequivalenttoanacceptance.

Sec.188.Effectwheretheholderofcheckprocuresittobecertified.‐Wheretheholderofacheckprocuresittobeacceptedorcertified,thedrawerandallindorsersaredischargedfromliabilitythereon.

Sec.189.Whencheckoperatesasanassignment.‐Acheckofitselfdoesnotoperateasanassignmentofanypartofthefundstothecreditofthedrawerwiththebank,andthebankisnotliabletotheholderunlessanduntilitacceptsorcertifiesthecheck.

XVII.GENERALPROVISIONS

Sec.190.Shorttitle.‐ThisActshallbeknownastheNegotiableInstrumentsLaw.

Sec.191.Definitionandmeaningofterms.‐InthisAct,unlessthecontractotherwiserequires:

"Acceptance"meansanacceptancecompletedbydeliveryornotification;

"Action"includescounterclaimandset‐off;

"Bank"includesanypersonorassociationofpersonscarryingonthebusinessofbanking,whetherincorporatedornot;

"Bearer"meansthepersoninpossessionofabillornotewhichispayabletobearer;

"Bill"meansbillofexchange,and"note"meansnegotiablepromissorynote;

"Delivery"meanstransferofpossession,actualorconstructive,fromonepersontoanother;

"Holder"meansthepayeeorindorseeofabillornotewhoisinpossessionofit,orthebearerthereof;

"Indorsement"meansanindorsementcompletedbydelivery;

"Instrument"meansnegotiableinstrument;

"Issue"meansthefirstdeliveryoftheinstrument,completeinform,toapersonwhotakesitasaholder;

"Person"includesabodyofpersons,whetherincorporatedornot;

"Value"meansvaluableconsideration;

"Written"includesprinted,and"writing"includesprint.

Sec.192.Personsprimarilyliableoninstrument.‐Theperson"primarily"liableonaninstrumentisthepersonwho,bythetermsoftheinstrument,isabsolutelyrequiredtopaythesame.Allotherpartiesare"secondarily"liable.

Sec.193.Reasonabletime,whatconstitutes.‐Indeterminingwhatisa"reasonabletime"regardistobehadtothenatureoftheinstrument,theusageoftradeorbusinesswithrespecttosuchinstruments,andthefactsoftheparticularcase.

Sec.194.Time,howcomputed;whenlastdayfallsonholiday.‐Wheretheday,orthelastdayfordoinganyacthereinrequiredorpermittedtobedonefallsonaSundayoronaholiday,theactmaybedoneonthenextsucceedingsecularorbusinessday.

Sec.195.ApplicationofAct.‐TheprovisionsofthisActdonotapplytonegotiableinstrumentsmadeanddeliveredpriortothetakingeffecthereof.

Sec.196.CasesnotprovidedforinAct.‐AnycasenotprovidedforinthisActshallbegovernedbytheprovisionsofexistinglegislationorindefaultthereof,bytherulesofthelawmerchant.

Sec.197.Repeals.‐AllactsandlawsandpartsthereofinconsistentwiththisActareherebyrepealed.

Sec.198.TimewhenActtakeseffect.‐ThisActshalltakeeffectninetydaysafteritspublicationintheOfficialGazetteofthePhilippineIslandsshallhavebeencompleted.

Enacted:February3,1911