Title II Bills of Exchange
Chapter IX FORM AND INTERPRETA INTERPRE TATION TION Sec.126 Nature of Bill of Exchange: A Bill of Exchange Exchange i a !ritten "ocu#ent !hich i "ul$ ta#pe" ta#pe" an" igne" %$ the "ra!er "ra !er car carr$i r$ing ng an unc uncon" on"itio itiona nall or" or"er er !hi !hich ch "ir "irect ect &no ¬t co# co##an #an"' "' a per peron on to pa$ a pecific a#ount to a particular peron or to the or"er of the particular peron or to the hol"er of the intru#ent( The follo!ing con"ition nee" to %e fulfille": •
The %ill houl" %e properl$ "ate"(
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It #ut contain an or"er) i(e( the "ra!er of the intru#ent "irect the "ra!ee to pa$ a certain u# to the pa$ee(
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Mut %e igne" %$ the #a*er of the %ill(
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Bill #ut %e accepte" %$ the "ra!ee(
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Or"er to pa$ #one$ onl$ a !ell a the a#ount houl" %e "efinite(
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Deli+ering the %ill to the pa$ee i a #ut(
Bill of Exchange i #a"e %$ % $ the cre"itor( It i generall$ ue" in %uine to ettle "e%t %et!een the partie(
Bill of Exchange +( Pro#ior$ Note
a(
Partie(
There are three partie to a %ill of exchange) na#el$) the "ra!er) the "ra!ee an" the pa$ee, !hile in a pro#ior$ note there are onl$ t!o partie - #a*er an" pa$ee(
b. Na Natu ture re of pa paym ymen ent. t. In a %ill of exchange) there i an uncon"itional or"er to pa$ pa$)) !hile in a pro#ior$ note there i an uncon"itional pro#ie to pa$ pa$(( c. Acc ccep epta tanc nce. e. A %ill of exchange exchange re.uire an acceptance of the "ra!ee "ra!ee %efore it i preente" for pa$#ent) !hile a pro#ior$ note "oe not re.uire an$ acceptance ince it i igne" %$ the peron !ho i lia%le to pa$( . !ia iab bil ilit ity y. The lia%ilit$ of the #a*er of a pro#ior$ note i pri#ar$ an" a%olute) !hile the lia%ilit$ of a "ra!er of %ill of exchange i econ"ar$ an" con"itional( It i onl$ !hen the "ra!ee fail to pa$ that the "ra!er !oul" %e lia%le a a uret$ uret $( e. No Noti tice ce of i ish shon onor or.. In cae of "ihonor of %ill of exchange either "ue to non/pa$#ent or non/ acceptance) notice #ut %e gi+en to all peron lia%le to pa$( But in the cae of a pro#ior$ note) notice of "ihonor to the #a*er i not necear$( necear$( f.
"a#e "a #er$ r$s s po posi siti tion on.. The "ra!er of a %ill of exchange tan" in i##e"iate relationhip !ith the acceptor an" not the pa$ee( 0hile in the cae of a pro#ior$ note) the #a*er tan" in i##e"iate relationhip !ith the pa$ee(
g. Na Natur ture e of acc accept eptanc ance. e. A pro#ior$ note can ne+er %e con"itional) !hile a %ill of exchange can %e accepte" con"itionall$ con"itionall$(( h. %opies. A %ill %ill of exchange can %e "ra!n "ra!n in et) %ut a pro#ior$ note cannot cannot %e "ra!n in et( i.
&ay ayab able le to bea earrer er.. A pro#ior$ note cannot %e #a"e pa$a%le to a %earer) !hile a %ill of exchange can %e o "ra!n pro+i"e" it i not pa$a%le to %earer on "e#an"(
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&ayable to ma#er. In a pro#ior$ note) the #a*er cannot pa$ to hi#elf( 0hile in the cae of a %ill of exchange) the "ra!er an" the pa$ee #a$ %e one peron(
#. &rotest. Foreign %ill #ut %e protete" for "ihonor !hen uch protet i re.uire" %$ the la! of the place !here the$ are "ra!n( But no uch protet i re.uire" in the cae of a pro#ior$ note( Trae Acceptance A %ill of exchange "ra!n "irectl$ upon an" accepte" %$ an i#porter or purcha er) rather thana %an*) an" "ue at a pecifie" future ti#e(
Sec. 12( 0) "ra!er) X "ra!ee) 1) pa$ee) an" 2) in"oree an" hol"er in "ue coure( X refue to accept( I X lia%le to 23 to 03 Ans)er* + is not liable to , but he is eeme liable to -. As to , as the holer in ue course the mere issuance of the bill oes not operate as an assignment of the funs in the hans of the ra)ee. /ence , has no course of action against the ra)ee but only against the ra)er. But the + )ho refuses to accept may be mae liable to -.
Sec. 120 A %ill of exchange "ra!n %$ 0) i a""ree" in the alternati+e thu: 4to X or 1(5 I thi +ali"3 0h$3 Ans)er* No. A bill cannot be aresse to t)o or more ra)ees in alternatie or in succession. Such ob'ection constitutes the existing ifficulty in etermining the exact ate of the ishonor of the bill in as much as it cannot be sai that the bill is ishonore until all of the ra)ees hae ishonore it an if the presentment ta#es place for a perio coering seeral ays )hen the last ishonor is mae.
Sec. 12 3oreign bill of exchange a %ill "ra!n in one tate or countr$ an" pa$a%le in another tate or countr$( Inlan bill of Exchange a %ill of exchange that i %oth "ra!n an" #a"e pa$a%le in the a#e countr$(
Sec. 145 -hen can a promissory note be treate li#e bill of exchange A* 0hen the note i in"ore" %$ the pa$ee) it %eco#e 6ut li*e a %ill( In !hich) the #a*er correpon" to the acceptor) the in"orer) to the "ra!er) an" the in"oree) to the pa$ee( Both the #a*er an" the acceptor are pri#aril$ lia%le an" %oth the in"oree in the note an" the pa$ee in the %ill are the hol"er( The hol"er i the %earer of the intru#ent if the note i in"ore" pa$a%le to %earer or if the %ill i originall$ pa$a%le to %earer( -hen can a bill of exchange be treate li#e promissory note A* After the acceptance of uch %ill) the %ill #a$ %e treate" +er$ i#ilar li*e that of a pro#ior$ note( The acceptance !ill %e contrue" a an e.ui+alent of a pro#ie to pa$) an" the poition of the acceptor i that of a pro#ior) principal "e%tor) or #a*er) !hile the "ra!er i in the poition of firt in"orer or uret$ of the acceptor(
Sec. 141 7eferee in case of nee Referee in cae of nee" i a peron !hoe na#e i a""e" in a %ill of exchange %$ the "ra!er or an$ in"orer a a peron to !ho# the hol"er #a$ "epen" in cae of nee"( For intance) !hen the %ill i "ihonore" %$ non/acceptance or nonpa$#ent the "ra!er or an$ in"oer #a$ approach the referee in cae of nee"(
0) "ra!er) X "ra!ee) 1) pa$ee) an" 2) in"oree an" hol"er in "ue coure( X refue to accept( 1 inerte" the na#e of R a the peron to !ho# the hol"er #a$ ee* pa$#ent in cae of nee"( 7tate the right of R an" 2( Ans)er* In this case )here the bill is ishonore by + , may apply to 7 for payment but before oing so he must first hae the bill proteste. But , may also loo# immeiately to 7 after ue proceeings of ishonor hae been ta#en by him. 8n the part of 7 he is not uner obligation to pay the bill but he may sub'ect himself to liability to , epening on their agreement. If 7 pays he may recoer the amount from 9 the person )ho has name him as a referee in case of nee.
%hapter + Acceptance Sec. 142 "eaning of Acceptance / /
It i the ignification %$ the "ra!ee of hi aent to the or"er of the "ra!er( An act %$ !hich the "ra!ee #anifet hi conent to co#pl$ !ith the re.uet containe" in the %ill of exchange "irecte" to hi# an" it conte#plate an engage#ent or pro#ie to pa$
8b'ect an effect of acceptance. •
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The "ra!ee i not %oun" to %e lia%le unle an" until he accept e+en if it i ho!n that he ha fun" in hi han" %elonging to the "ra!er ufficient to co+er the %ill( The o%6ect of acceptance then i to %in" the "ra!ee an" #a*e hi# an actual part$ lia%le to the intru#ent( The %ill in effect %eco#e a note after acceptance( The "ra!ee %$ then) au#e lia%ilit$ of the #a*er an" the "ra!er) that of the firt in"orer(
3ormal re:uisites of acceptance a(' It #ut %e in !riting) %(' It #ut %e igne" %$ the "ra!ee) an" c(' It #ut contain an expre or i#plie" pro#ie to pa$ #one$(
Note* It is necessary that the acceptance be delivered or made known to the holder. Sec. 144 Holder entitled to acceptance on face of bill. ; The holer of a bill presenting the same for acceptance may re:uire that the acceptance be )ritten on the bill an if such re:uest is refuse may treat the bill as ishonore. In thi ection) it i not eential or necear$ that the acceptance %e !ritten in the %ill) the hol"er ha the right to re.uire the acceptance %e #a"e on the %ill itelf( 8o!e+er) if the "ra!ee refue) the hol"er ha the option to treat the %ill a "ihonoure" an" go againt the econ"aril$ lia%le partie after gi+ing notice of "ihonor( Exa#ple: A i the hol"er of the %ill) he ha the right to re.uire acceptance %e #a"e on the %ill itelf to B &"ra!ee'( 8o!e+er if B &"ra!ee' refue) A ha the option to treat the %ill a "ihonoure" an" go againt econ"aril$ lia%le partie after gi+ing uch notice of "ihonor) in uch cae 9 &the "ra!er of the %ill an" all u%e.uent partie !ho are econ"aril$ lia%le(
Sec. 14< Acceptance by separate instrument. ; -here an acceptance is )ritten on a paper other than the bill itself it oes not bin the acceptor except in faor of a person to )hom it is sho)n an )ho on the faith thereof receies the bill for alue. 0here the acceptance i !ritten on a paper other than the %ill itelf) in or"er to %in" acceptor, it re.uire that: ( The acceptance %e ho!n to the peron to !ho# the intru#ent i negotiate", ;( 7uch peron #ut ta*e the %ill for +alue on the faith of uch acceptance( Exa#ple: A letter fro# the "ra!ee %an* to the "ra!er 2 accepting the "raft i not %in"ing in fa+our of one !ho ne+er a! the letter or a"+ance" #one$ on the faith thereof( Nota Bene: Ph$ical exhi%ition i a%ent in the a%o+e #entione" exa#ple %ecaue of the non/acceptance of non/exiting %ill( It i %elie+e" that a long a the hol"er *no! of the acceptance an" relie upon it) the acceptor #ut %e hel" to hi acceptance although it !a not actuall$ ho!n to the hol"er(
Sec. 14= Promise to accept; when equivalent to acceptance. ; An unconitional promise in )riting to accept a bill before it is ra)n is eeme an actual acceptance in faor of eery person )ho upon the faith thereof receies the bill for alue. A pro#ie to accept to an$ peron !ho 4upon the faith thereof recei+e the %ill for +alue5( In thi ection) the pro#ie to accept a future non/exiting %ill #ut %e uncon"itional an" in !riting( Exa#ple: Before a %ill i "ra!n) >)>>> to co+er the purchae price of goo" 9uentin= !ant to %u$ fro#
Sec. 146 Time allowed drawee to accept. ; The ra)ee is allo)e t)enty;four hours after presentment in )hich to ecie )hether or not he )ill accept the bill> the acceptance if gien ates as of the ay of presentation. The "ra!er ha ;? hour after preent#ent to "eci"e !hether or not he !ill accept the %ill( If gi+en) "ate a of the "a$ of preentation( Note: The "ra!ee %an* i not entitle" to ;? hour to "eci"e !hether or not to pa$ a chec* ince a chec* i preente" for pa$#ent) not acceptance(
Sec. 14( Liability of drawee returnin or destroyin bill. ; -here a ra)ee to )hom a bill is eliere for acceptance estroys the same or refuses )ithin t)enty;four hours after such eliery or )ithin such other perio as the holer may allo) to return the bill accepte or non;accepte to the holer he )ill be eeme to hae accepte the same. There i a contructi+e acceptance: a( 0here the "ra!ee to !ho# the %ill i "eli+ere" for acceptance "etro$ it,
%( 0here the "ra!ee refue) !ithin ;? hour after "eli+er$ or !ithin uch perio" a i gi+en to hi#) to return the %ill accepte" or non/accepte"( !ota "ene# there is no implied acceptance in !eotiable instruments Law$ which is acceptance inferred from any act or conduct of the drawee. !ota "ene# An accidental destruction would not constitute acceptance unless it must be wilfully done.
Sec. 140 Acceptance of incomplete bill . ; A bill may be accepte before it has been signe by the ra)er or )hile other)ise incomplete or )hen it is oerue or after it has been ishonore by a preious refusal to accept or by non; payment. But )hen a bill payable after sight is ishonore by non;acceptance an the ra)ee subse:uently accepts it the holer in the absence of any ifferent agreement is entitle to hae the bill accepte as of the ate of the first presentment. @n"er thi ection) acceptance #a$ %e: ( #a"e %efore the %ill ha %een igne", ;( after it i o+er"ue, an" ( e+en after it ha %een "ihonoure" %$ non/acceptance or non/pa$#ent( !ota "ene# The instrument does not lose its neotiability by the mere fact that it is overdue or it has been dishonoured. Sec. 14 %inds of acceptance. ; An acceptance is either general or :ualifie. A general acceptance assents )ithout :ualification to the orer of the ra)er. A :ualifie acceptance in express terms aries the effect of the bill as ra)n.
Sec. 1<5 &hat constitutes a eneral acceptance. ; An acceptance to pay at a particular place is a general acceptance unless it expressly states that the bill is to be pai there only an not else)here.
Sec 1<1 9ualifie" acceptance/ An acceptance i .ualifie" !hich i: a(' Con"itional) that i to a$) !hich #a*e pa$#ent %$ the acceptor "epen"ent on the fulfil#ent of a con"ition therein tate", %(' Partial) that i to a$) an aceeptance to pa$ part onl$ of the a#ount for !hich the %ill i "ra!n, c(' ocal) that i to a$) an acceptance to pa$ onl$ at a particular place, "(' 9ualifie" a to ti#e, e(' The acceptance of o#e one or #ore of the "ra!ee) %ut not of all( To gi+e an exa#ple of each) here i the follo!ing: ( Con"itional/ 4Recei+e" fro# X Co( An or"er fro# 1 to pa$ hi note a oon a procee" of ale of har"!are i a+aila%le !hich I !ill "o(5 ;( Partial/ A %ill for )>>>(>> i accepte") thu: 4Accepte" for >>(>> onl$5 &ee 7ection ;' ( ocal/ ee exa#ple un"er 7ection ?>( ?( 9ualifie"/ A %ill pa$a%le > "a$ after "ate i accepte") thu: 4Accepte" > "a$ fro# "ate5 ( A to "ra!ee/ A %ill a""ree" to X) 1 an" 2 i accepte" %$ X an" 1 onl$( &ee 7ection ?GaH
Sec. 1<2 Right of partie a to .ualifie" acceptance/ the hol"er #a$ refue to ta*e a .ualifie" acceptance an" if "oe not o%tain an un.ualifie" acceptance) he #a$ treat the %ill a "ihonore" %$ non/acceptance( 0here a .ualifie" acceptance i ta*en) the "ra!er an" in"orer are "icharge" fro# lia%ilit$ on the %ill) unle the$ ha+e exprel$ or i#plie"l$ authorie" the hol"er to ta*e a .ualifie" acceptance or u%e.uentl$ aent thereto( 0hen the "ra!er or an in"orer recei+e notice of a .ualifie" acceptance) he #ut) !ithin a reaona%le ti#e) expre hi "ient to the hol"er) or he !ill %e "ee#e" to ha+e aente" thereto( Thi tell u that a hol"er ha a right to re.uire a general or un.ualifie" acceptance an" if a .ualifie" acceptance ha %een #a"e) he #a$ refue it an" treat the %ill a "ihonore" %$ non/acceptance if he "oe not o%tain an un.ualifie" acceptance( Accor"ingl$) he #ut notif$ the "ra!er an" the in"orer of the "ihonour( The reon %ehin" thi i that the "ra!er an" the in"orer engage that the %ill !ill %e pai" a "ra!n or in"ore" %$ the# an" the effect of a .ualifie" acceptance !oul" %e to #a*e a contract for the# !ithout their conent(
%hapter +I &resentment for Acceptance
Sec 1<4 0hen preent#ent for acceptance #ut %e #a"e/ Preent#ent for acceptance #ut %e #a"e: a( 0here the %ill i pa$a%le after ight) or in an$ other cae) !here preent#ent for acceptance i necear$ in or"er to fix the #aturit$ of the intru#ent, or %( 0here the %ill i exprel$ tipulate that it hall %e preente" for acceptance, or c( 0here the %ill i "ra!n pa$a%le ele!here than at the rei"ence or place of %uine of the "ra!ee( In no other cae i preent#ent for acceptance necear$ in or"er to ren"er an$ part$ to the %ill lia%le( 7ection ? enu#erate the cae !hen preent#ent for acceptance i necear$( For further un"ertan"ing) exa#ple !ill %e gi+en( ( Bill pa$a%le after ight/ a %ill pa$a%le > "a$ after ight( It "ate of #aturit$ hall %e co#pute" > "a$ fro# the "ate of it preent#ent( The a#e i true !ith a %ill pa$a%le o #an$ "a$ after "e#an"( ;( Bill !ith expre tipulation/ thi i elf/explanator$( &accor"ing to the %oo*' ( Bill pa$a%le ele!here/ a %ill pa$a%le to P at P(N(B() Manila) "ra!n againt 0 rei"ing an" ha+ing hi place of %uine in 9ueon Cit$( Sec. 1<< 0hen failure to preent releae "ra!er an" in"orer/ Except a herein other!ie pro+i"e") the hol"er of a %ill !hich i re.uire" %$ the next prei"ing ection to %e preente" for acceptance #ut either preent it for acceptance or negotiate it !ithin a reaona%le ti#e( If he faile to "o o) the "ra!er an" all in"orer are "icharge"( The reaon %ehin" the three cae enu#erate" un"er 7ection ? i that the "ra!er an" in"orer ha+e a right in ha+ing the %ill accepte" i##e"iatel$ in or"er to horten the ti#e of pa$#ent an" thu put a li#it to the perio" of their lia%ilit$ an" li*e!ie to ena%le the# to protect the#el+e %$ other #ean %efore it i too late) if the %ill i not accepte" an" pai" !ithin the ti#e originall$ conte#plate" %$ the#(
Sec. 1<= Preent#ent, ho! #a"e(/ Preent#ent for acceptance #ut %e #a"e %$ or on %ehalf of the hol"er at a reaona%le hour) on a %uine "a$ an" %efore the %ill i o+er"ue) to the "ra!ee or o#e peron authorie" to accept or refue acceptance on hi %ehalf: a(' 0here a %ill i a""ree" to t!o or #ore "ra!ee !ho are not partner) preent#ent #ut %e #a"e to the# all unle one ha authorit$ to accept or refue acceptance for all) in !hich cae preent#ent #a$ %e #a"e to hi# onl$, %(' 0here the "ra!ee i "ea") preent#ent #a$ %e #a"e to hi peronal repreentati+e, c(' 0here the "ra!ee ha %een a"6u"ge" a %an*rupt or an inol+ent or ha #a"e an aign#ent for the %enefit of the cre"itor) preent#ent #a$ %e #a"e to hi# or to hi trutee or aignee( Thu) !hen the pro+iion of the la! ha not %een #a"e properl$ on ho! the preent#ent #a"e) it !ill of coure %e u%6ect to the u%ection &a') &%') an" &c'(
Sec. 1<6 On !hat "a$ preent#ent #a$ %e #a"e(/ A %ill #a$ %e preente" for acceptance on an$ "a$ on !hich negotia%le intru#ent #a$ %e preente" for pa$#ent un"er the pro+iion of 7ection e+ent$/t!o an" eight/fi+e of thi act( 0hen 7atur"a$ i not other!ie holi"a$) preent#ent for acceptance #a$ %e #a"e %efore t!el+e o=cloc* noon on the "a$( Thi pro+iion focue alone on the "a$ !hen preent#ent #a$ %e #a"e( The uual "a$ i that) preent#ent #a$ %e #a"e "uring %uine "a$( Thi ho!e+er #a$ confir# to ection ; an" J of thi Co"e( Sec. 1<( Presentment where time is insufficient. ; -here the holer of a bill ra)n payable else)here than at the place of business or the resience of the ra)ee has no time )ith the exercise of reasonable iligence to present the bill for acceptance before presenting it for payment on the ay that it falls ue the elay cause by presenting the bill for acceptance before presenting it for payment is excuse an oes not ischarge the ra)ers an inorsers.
Thi ection refer to the "ela$ in preent#ent( 8ence) it hol" that !hen a "ela$ in preent#ent for pa$#ent !a caue" %$ preenting the %ill for acceptance
at a place other than the place !here the %ill i "ra!n pa$a%le) uch "ela$ i excue"( Thu) the "ra!er an" in"orer are not "icharge" in their lia%ilitie(
Sec. 1<0. &here presentment is e'cused. ( &resentment for acceptance is excuse an a bill may be treate as ishonore by non;acceptance in either of the follo)ing cases* ?a@ -here the ra)ee is ea or has abscone or is a fictitious person or a person not haing capacity to contract by bill. ?b@ -here after the exercise of reasonable iligence presentment cannot be mae. ?c@ -here although presentment has been irregular acceptance has been refuse on some other groun. Thi ection pro+i"e intance !herein preent#ent for acceptance i excue"( 7uch circu#tance are a follo!: ( 0here the "ra!ee i "ea") or ha a%an"one") fictitiou or incapacitate" to contract( ;( 0here after the exercie of reaona%le "iligence) preent#ent cannot %e #a"e( ( Acceptance ha %een refue" on o#e other groun"( It houl" %e note" that in thi ection) it i the preent#ent for acceptance i excue"(
Sec. 1<. &hen dishonored by non(acceptance. ; A bill is ishonore by non; acceptance* ?a@ -hen it is uly presente for acceptance an such an acceptance as is prescribe by this Act is refuse or cannot be obtaine> or ?b@ -hen presentment for acceptance is excuse an the bill is not accepte. Thi ection gi+e intance on ho! a %ill i %eing "ihonore" for non/ acceptance( 7uch cae are the follo!ing: ( 0hen it i "ul$ preente" %ut refue" to accept or cannot %e o%taine"( ;( An" !hen preent#ent for acceptance i excue" an" the %ill i not accepte"( Sec. 1=5. )uty of holder where bill not accepted. ( -here a bill is uly presente for acceptance an is not accepte )ithin the prescribe time the person presenting it must treat the bill as ishonore by nonacceptance or he loses the right of recourse against the ra)er an inorsers.
It houl" %e note" that if a %ill i not accepte" !ithin t!ent$/four hour after preent#ent) the peron preenting it #ut treat the %ill a "ihonore"( 8ence) he houl" ta*e necear$ action %$ gi+ing the "ra!er or in"orer a notice of "ihonor to charge peron econ"aril$ lia%le( Other!ie) failure to gi+e notice !ill "icharge the# fro# their lia%ilitie( Sec. 1=1. *ihts of holder where bill not accepted. ; -hen a bill is ishonore by non;acceptance an immeiate right of recourse against the ra)er an inorsers accrues to the holer an no presentment for payment is necessary. Thi ection hol" that !hen a %ill i "ihonore" %$ non/acceptance) the hol"er after gi+ing notice to peron econ"ar$ lia%le) he #a$ ha+e an i##e"iate right of recoure againt the# !ithout !aiting for the "ate of #aturit$(
%hapter +II &78TEST Sec. 1=2. In what cases protest necessary. ; -here a foreign bill appearing on its face to be such is ishonore by nonacceptance it must be uly proteste for nonacceptance by nonacceptance is ishonore an )here such a bill )hich has not preiously been ishonore by nonpayment it must be uly proteste for nonpayment. If it is not so proteste the ra)er an inorsers are ischarge. -here a bill oes not appear on its face to be a foreign bill protest thereof in case of ishonor is unnecessary. Protet a "efine" %$ +ariou anotation) it i a for#al intru#ent #a"e %$ a notar$ pu%lic certif$ing that the fact necear$ to the "ihonor of the intru#ent ha+e ta*en place( 8ence if it in+ol+e foreign %ill) an intru#ent houl" %e protete") if not peron econ"ar$ lia%le i "icharge"( Neceit$ of a protet: ( It #a*e for unifor#it$ in international tranaction( 2. It furnihe authentic an" atifactor$ e+i"ence of "ihonor(
Sec. 1=4. Protest; how made. ( The protest must be annexe to the bill or must contain a copy thereof an must be uner the han an seal of the notary ma#ing it an must specify* ?a@ The time an place of presentment> ?b@ The fact that presentment )as mae an the manner thereof> ?c@ The cause or reason for protesting the bill> ?@ The eman mae an the ans)er gien if any or the fact that the ra)ee or acceptor coul not be foun. Thi ection gi+e the for# an" content of a protet(
A protet #ut contain the follo!ing: ( Ti#e an" place of preent#ent ;( The fact that preent#ent !a #a"e an" the #anner therof ( Caue or reaon for proteting the %ill) an" ?( De#an" #a"e an" an!er gi+en( Moreo+er) the #ain purpoe of a certificate of protet i to "o a!a$ !ith the neceit$ of pro+ing the fact of preent#ent) "e#an") "ihonor) an" notice %$ !itnee in court(
Sec. 1=<. Protest$ by whom made. ; &rotest may be mae by* a@ A notary public> or b@ By any respectable resient of the place )here the bill is ishonore in the presence of t)o or more creible )itnesses. A protet can %e #a"e %$ a notar$ pu%lic) an" if no notar$ pu%lic i o%taine") %$ an$ repecta%le rei"ent of the place !here the %ill i "ihonoure") in the preence of t!o or #ore cre"i%le !itne( 8o!e+er) protet #a"e %$ a notar$ pu%lic nee" not to ha+e a !itne( Section 1== Notar$ pu%lic nee" not #a*e the for#al certificate of protet on the a#e "a$ the intru#ent i "ihonore" %ut the noting of the #atter i re.uire" an" it houl" inclu"e the "ate of "ihonor( For exa#ple) if a %ill i "ihonore" on April ;;) ;>) the %ill nee" not %e protete" on the ai" "ate %ut it #ut atleat %e K"ul$ note"K(
Section 1=6 Leneral Rule: A %ill #ut %e protete" at the place !here it ha %een "ihonore"( Exception: If a %ill i "ihonore" %$ non/acceptance it #ut %e protete" for non/ pa$#ent at the place !here it i expree" to %e pa$a%le !here the place of the %uine or rei"ence of o#e peron other than the "ra!ee( For exa#ple) the "ra!ee rei"e in @nite" 7tate of A#erica %ut the %ill i pa$a%le at the Philippine National Ban*) Tuguegarao( The %ill i preente" for acceptance %$ the pa$ee to the "ra!ee in @nite" 7tate of A#erica %ut acceptance i refue"( On it #aturit$) the %ill i preente" for pa$#ent to the Philippine National Ban* in Tuguegarao %ut pa$)ent i refue"( The hol"er #ut protet that the %ill for non/ pa$#ent in Tuguegarao an" no further preent#ent for pa$#ent to or "e#an" on) the "ra!ee i necear$(
Section 1=(
0hen a %ill ha alrea"$ %een protete" for non/acceptance) protet for non/pa$#ent i "icretionar$ on the part of the hol"er( Note: un"er 7ection ) preent#ent for pa$#ent i not necear$ after the %ill ha "ihonore" %$ non/acceptance( Section 1=0 Protet for %etter ecurit$/ one #a"e %$ the hol"er of a %ill after it ha %een accepte" %ut %efore it #ature) againt the "ra!er an" in"orer) !here the acceptor ha %een a"6u"ge" a %an*rupt or an inol+ent) or ha #a"e an aign#ent for the %enefit of cre"itor( Note: Protet i purel$ optional an" it o#iion !ill not affect the hol"er re#e"$ againt the "ra!er an" in"orer(
Section 1= Dela$ in notice or proteting i excue" !hen "ela$ i caue" %$ circu#tance %e$on" the control of the hol"er an" not i#puta%le to hi "efault) #icon"uct or negligence( 0hen the caue of "ela$ ceae to operate) the %ill #ut %e note" or protete" !ith reaona%le "iligence(
Section 165 o or !rong "etention of a %ill !ill not excue protet) the reaon i that) an$ of the cae "oe not affect the contract of the partie an" a protet #a$ %e #a"e on a cop$ or !ritten particular thereof( Protet an" notice of "ihonor "itinguihe": ( Protet/ a a rule) in cae of "ihonor of a foreign %ill appearing on it face to %e uch Notice of "ihonor/ an$ negotia%le intru#ent other than a foreign %ill ;( Protet/ al!a$ !ritten Notice of "ihonor/ oral or !ritten ( Protet/ inclu"e preent#ent) notice of "ihonor an" all the tep acco#pan$ing "ihonor Notice of "ihonor/ li#ite" onl$ to notice ?( Protet/ #a"e either %$ notar$ pu%lic or %$ an$ repecta%le rei"ent in the preence of the !itnee Notice of "ihonor/ %$ a part$ or agent ( Protet/ a a rule) #a"e at the place !here the %ill i "ihonore" Notice of "ihonor/ place of "ihonor i eential ( Protet/ #a"e on the "a$ of "ihonor Notice of "ihonor/ gi+ing of notice i #a"e !ithin the ti#e precri%e"
Section 161 Acceptance for honor/ an un"erta*ing %$ a tranger to a %ill after protet for the %enefit of an$ part$ lia%le thereon) or for the honor of the peron for !hoe account the %ill i "ra!n !hich acceptance inure alo to the %enefit of all partie u%e.uent to the peron for !hoe honor it i accepte") an" con"itione" to pa$ the %ill !hen it %eco#e "ue if the original "ra!ee "oe not pa$ it( / another na#e i Kacceptance upra protetK ince pre+iou protet for non/acceptance or for %etter ecurit$ i necear$(
Purpoe of an acceptance for honor i to preer+e the cre"it of the partie to the intru#ent or o#e part$ to it for !hoe honor the acceptance i #a"e( !ote# where a bill is accepted for honor$ consideration is presumed and the presumption is that the acceptor has funds or money of the party for whose honor he accepts. Re.uiite of acceptance for honor: ( The %ill #ut ha+e %een protete" for "ih or %$ non/acceptance or for %etter ecurit$ ;( The acceptor for honor #ut %e a peron not a part$ alrea"$ lia%le thereon or that i a tranger to the %ill ( The %ill #ut not %e o+er"ue at the ti#e of the acceptance for honor ?( Acceptance for honor #ut %e !ith the conent of the hol"er of the intru#ent A a rule) no one %ut the "ra!ee #a$ accept) except the acceptor for honor !ho #ut not %e part$ alrea"$ lia%le on the %ill( The conent of the hol"er i re.uire" %ecaue hi right i upen"e" until the #aturit$ of the %ill(
Sec. 162 Acceptance for honor, ho! #a"e( / An acceptance for honor upra protet #ut %e in !riting an" in"icate that it i an acceptance for honor an" #ut %e igne" %$ the acceptor for honor(
FORMA RE9@I7ITE7 OF ACCEPTANCE FOR 8ONOR: ( ;( ( ?( (
The acceptance for honor #ut %e in !riting Mut in"icate that it i an acceptance for honor Mut %e igne" %$ the acceptor for honor Mut contain an expre or i#plie" pro#ie to pa$ #one$ The acceptance %ill for honor #ut %e "eli+ere" to the hol"er(
Sec. 164
0hen "ee#e" to %e an acceptance for honor of the "ra!er( / 0here an acceptance for honor "oe not exprel$ tate for !hoe honor it i #a"e) it i "ee#e" to %e an acceptance for the honor of the "ra!er(
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0ithout pecif$ing the peron for !hoe honor it i #a"e i "ee#e" to %e an acceptance for the honor of the DRA0ER( Acceptance of the honor of the "ra!er !ill "icharge the #ot partie to the %ill(
Sec. 16< ia%ilit$ of the acceptor for honor( / The acceptor for honor i lia%le to the hol"er an" to all partie to the %ill u%e.uent to the part$ for !hoe honor he ha accepte"( IABIIT1 OF T8E ACCEPTOR FOR 8ONOR ( To the hol"er ;( To all partie u%e.uent to the part$
Sec. 16= Agree#ent of acceptor for honor( / The acceptor for honor) %$ uch acceptance) engage that he !ill) on "ue preent#ent) pa$ the %ill accor"ing to the ter# of hi acceptance pro+i"e" it hall not ha+e %een pai" %$ the "ra!ee an" pro+i"e" alo that i hall ha+e %een "ul$ preente" for pa$#ent an" protete" for non/pa$#ent an" notice of "ihonor gi+en to hi#( ALREEMENT OF ACCEPTOR FOR 8ONOR The un"erta*ing of the acceptor for honor i not an a%olute engage#ent to pa$ at all e+ent) %ut ON1 COATERA AND CONDITIONA ENLALEMENT to pa$) if "ra!ee "oe not( Sec. 166 Maturit$ of %ill pa$a%le after ight, accepte" for honor( / 0here a %ill pa$a%le after ight i accepte" for honor) it #aturit$ i calculate" fro# the "ate of the noting for non/acceptance an" not fro# the "ate of the acceptance for honor( •
The #aturit$ of a %ill pa$a%le after ight i calculate" fro# the "ate of the noting for the acceptance(
Sec. 16(
Protet of %ill accepte" for honor) an" o forth( / 0here a "ihonore" %ill ha %een accepte" for honor upra protet or contain a referee in cae of nee") it #ut %e protete" for non/pa$#ent %efore it i preente" for pa$#ent to the acceptor for honor or referee in cae of nee"(
Sec. 160 PRE7ENTMENT FOR PA1MENT TO ACCEPTOR FOR 8ONOR ( If it i to %e preente" in the place !here the protet for non/pa$#ent !a #a"e) it #ut %e preente" not later than the "a$ follo!ing it #aturit$ ;( If it i to %e preente" in o#e other place than the place !here it !a protete") then it #ut %e for!ar"e" !ithin the ti#e pecifie" in 7ection >? 7ection >?( Where parties reside in different places. 0here the peron gi+ing an" the peron to recei+e notice rei"e in "ifferent place) the notice #ut %e gi+en !ithin the follo!ing ti#e: a. If ent %$ #ail) it #ut %e "epoite" in the pot office in ti#e to go %$ #ail the "a$ follo!ing the "a$ of "ihonour) or if there %e no #ail at a con+enient hour on that "a$) %$ the next #ail thereafter b. If gi+en other!ie than through the pot office) then !ithin the ti#e that notice !oul" ha+e %een recei+e" in "ue coure of #ail) if it ha %een "epoite" in the pot office !ithin the ti#e pecifie" in the lat u%"i+iion( Section 16 Thi 7ection tal* a%out !hen "ela$ in #a*ing preent#ent i excue"( Appl$ing ec(J of a! on Negotia%le Intru#ent it houl" %e note" that onl$ the "ela$ in #a*ing of preent#ent i excue" not the #a*ing of the preent#ent itelf( 0hen the "ela$ i caue" %$ circu#tance %e$on" the control of the hol"er an" not i#puta%le to hi "efault) #icon"uct or negligence) the "ela$ in #a*ing preent#ent for pa$#ent i excue"( An" preent#ent #ut %e #a"e !ith reaona%le "iligence( Section 1(5 Dihonor of %ill %$ acceptor for honor #ut %e protete" for non/pa$#ent( There are protet on ai" %ill, t protet for "ihonour %$ non/acceptance or for %etter ecurit$( ;n") protet for non/pa$#ent %$ the "ra!ee in or"er to hol" the acceptor for honor lia%le, an" lat protet for non/pa$#ent %$ the acceptor for honor in or"er to hol" the "ra!er an" in"orer !hoe lia%ilitie ha+e not $et %eco#e fixe" %ecaue of the acceptance for honor( Section 1(1
Pa$#ent for honor i pa$#ent #a"e %$ a peron) !hether a part$ to the %ill or not) after it ha %een protete" for non/pa$#ent) for the %enefit of an$ part$ lia%le thereon or for the %enefit of the peron for !hoe account it !a "ra!n( Another ter#) pa$#ent upra protet %ecaue prior protet for non/pa$#ent i re.uire"( It i not applica%le to pro#ior$ note( An" un"er thi ection) pa$#ent for honor #a$ %e #a"e %$ a part$ to the %ill or %$ a tranger( 8ence) it #a$ %e #a"e %$ the "ra!ee after he ha refue" to accept the %ill(it ha %een hel" that the "ra!er of chec* !hich ha %een "ihonore" an" protete" ha a right to inter+ene an" pa$ it to protet hi honor( Note) the purpoe an" function of pa$#ent for honor #a$ %e a+aile" of !hen the hol"er *no!ing that the %ill ha alrea"$ %een "ihonore" for non/pa$#ent) "oe not !ant to in"ore the %ill an" incur the ia%ilitie of an in"orer pecifie" un"er ec( or of one negotiating %$ #ere "eli+er$ un"er ec(
Section 1(2 an 1(4 are the re.uiite of +ali" pa$#ent for honor(
Section 1(2 The pa$#ent for honor upra protet in or"er to operate an" not a #ere +oluntar$ pa$#ent) #ut %e attete" %$ a notarial act of honor !hich #a$ %e appen"e" to the protet or for# an extenion to it(
Section 1(4 7tate that) the "eclaration #a"e #ut in notarial act %$ the pa$er for honor or %$ hi agent in %ehalf "eclaring hi intention to pa$ the %ill for honor an" for !hoe honor he pa$( Re.uiite of +ali" pa$#ent for honor: ( ;( ( ?(
The %ill ha %een "ihonore" %$ non/pa$#ent, It ha %een protete" for non/pa$#ent, Pa$#ent upra protet i #a"e %$ an$ peron) e+en a part$, The pa$#ent i attete" %$ a notarial act of honor !hich #ut %e appen"e" to the protet or for# an extenion to it an", ( Notarial act #ut %e %ae" on the "eclaration #a"e %$ the pa$er for honor or hi agent of hi intention to pa$ the %ill an" for !hoe honor he pa$( An" !hen the afore#entione" for#alitie are not follo!e") the pa$#ent !ill operate a a #ere +oluntar$ pa$#ent an" the pa$er ac.uire no right to full rei#%ure#ent againt the part$ for !hoe honor he pa$( Section 1(<
Preference of partie offering to pa$ for honor) in pa$#ent for honor) the peron !hoe pa$#ent !ill "icharge the greatet nu#%er of partie to the %ill i gi+en the preference( The rule i "ifferent in acceptance for honor(
Section 1(= +ffect on subsequent parties where bill is paid for honor ( / 0here a %ill ha %een pai" for honor) all partie u%e.uent to the part$ for !hoe honor it i pai" are "icharge" %ut the pa$er for honor i u%rogate" for) an" uccee" to) %oth the right an" "utie of the hol"er a regar" the part$ for !hoe honor he pa$ an" all partie lia%le to the latter( Effect !here %ill i pai" for honor: ( All partie u%e.uent to the part$ for !hoe honor it i pai" are "icharge" ;( Pa$er for honor i u%rogate" for an" uccee" %oth the right an" "utie of the hol"er a regar" the part$ for !hoe honor he pa$ an" all partie lia%le to the latter !ota "ete# If the payment is made for the honor of all parties to the bill$ the payer for honor may have recourse aainst them all.
Section 1(6 &here holder refuses to receive payment supra protest. If hol"er refue to recei+e pa$#ent) he loe hi right of recoure againt an$ part$ !ho !oul" ha+e %een "icharge" %$ the pa$#ent for honor( Effect of hol"er= refual to recei+e In pa$#ent for honor) the hol"er cannot refue the pa$#ent( If he refue) he then cannot reco+er fro# the partie !ho !oul" ha+e %een "icharge" ha" he accepte" the a#e(
Section 1(( *ihts of payer for honor ( @pon pa$#ent) pa$er for honor i entitle" %oth the %ill itelf an" the protet( Thi i to ena%le hi# to enforce hi right againt the partie !ho are lia%le to hi# un"er 7ection ( Pa$#ent for honor "itinguihe" fro# Acceptance for honor:
Pa$#ent for honor •
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Protet #ut %e pa$#ent The %ill i o+er"ue
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Acceptance for honor non/
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The conent of the hol"er i not re.uire" nor can the hol"er refue The acceptor i econ"aril$ lia%le A notarial act of honor i necear$ There can onl$ %e one pa$er for honor The effect of pa$#ent for honor are thoe pro+i"e" for in 7ection an"
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For non/acceptance or %etter ecurit$ It #ut not %e o+er"ue
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The conent of the hol"er i re.uire"
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The acceptor i pri#aril$ lia%le
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It i not necear$
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Ther #a$ %e e+eral acceptor for honor The effect of acceptance for honor are thoe pro+i"e" for in 7ection ? an"
%hapter + Bill in Set
Section 1(0 "ills in set constitute one bill. / 0here a %ill i "ra!n in a et) each part of the et %eing nu#%ere" an" containing a reference to the other part) the !hole of the part contitute one %ill( !ota "ene# "ILL I! ,+T is one composed of various parts$ each part bein numbered$ and containin a reference to the other parts$ all of which parts constitute one bill P-*P,+ / "ILL I! ,+T •
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Section 1(
Bill in et are for the purpoe of increaing the pro%a%ilit$ of the %ill reaching it "etination For thi reaon) each part i ent %$ "ifferent con+e$ance To a+oi" the "ifficultie !hich !oul" arie in cae of l o or #icarriage on the !a$ of the %ill
*iht of holders where different parts are neotiated. / 0here t!o or #ore part of a et are negotiate" to "ifferent hol"er in "ue coure) the hol"er !hoe title firt accrue i) a %et!een uch hol"er) the true o!ner of the %ill( But nothing in thi ection affect the right of a peron !ho) in "ue coure) accept or pa$ the part firt preente" to hi#(
Section 105 Liability of holder who indorses two or more parts of a set to different persons. / 0here the hol"er of a et in"ore t!o or #ore part to "ifferent peron he i lia%le on e+er$ uch part) an" e+er$ in"orer u%e.uent to hi# i lia%le on the part he ha hi#elf in"ore") a if uch part !ere eparate %ill(
Section 101 Acceptance of bill drawn in sets. / The acceptance #a$ %e !ritten on an$ part an" it #ut %e !ritten on one part onl$( If the "ra!ee accept #ore than one part an" uch accepte" part negotiate" to "ifferent hol"er in "ue coure) he i lia%le on e+er$ uch part a if it !ere a eparate %ill( Nota Bene* ra)ee must accept only one part of a bill ra)n in a set an the acceptance may be )ritten on any part
Section 102 Payment by acceptor of bills drawn in sets. / 0hen the acceptor of a %ill "ra!n in a et pa$ it !ithout re.uiring the part %earing hi acceptance to %e "eli+ere" up to hi#) an" the part at #aturit$ i outtan"ing in the han" of a hol"er in "ue coure) he i lia%le to the hol"er thereon(
Section 104 +ffect of discharin one of a set ( / Except a herein other!ie pro+i"e") !here an$ one part of a %ill "ra!n in a et i "icharge" %$ pa$#ent or other!ie) the !hole %ill i "icharge"(
E33E%T 83 IS%/A7CE 8N 8NE &A7T:
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7u%6ect to the exception in 7ection J>) J) an" J;) if one part i "icharge") the !hole %ill i "icharge" The reaon i that the %ill contitute onl$ one %ill Thu) uppoe that in the illutration) X the acceptor pa$ the firt part !hich he accepte"( The econ" an" thir" part are alo "icharge"
