BLAW 2: LAW ON NEGOTIABLE INSTRUMENTS of bill of exchange.
However, section 187-198
UNIT 6: ACCEPTANCE, PRESENTMENT FOR
ACCEPTANCE AND PROTEST
LESSON 1: ACCEPTANCE
I. Overview
The topic will focus on Acceptance of negotiable
instruments, specifically understanding and
knowing: (a) its objectives, different kinds, and its
effect; (b) how acceptance being made; and (c)
rights of a holder to general acceptance.
II. Objectives
At the end of the lesson you should be able to:
• Learn the objectives, different kinds, effects of
acceptance and how it is being made.
• Analyze the rights of holder to general
acceptance.
III. Warm-Up Activity
Read again Sections 132 to 142 of The Negotiable
Instruments Law (NIL) plus whatever explanations,
annotations or descriptions you can find on the
subject.
IV. Content
ACCEPTANCE
Sec. 132. Acceptance; how made, etc. — The
acceptance of a bill is the signification by the
drawee of his assent to the order of the drawer. The
acceptance must be in writing and signed by the
drawee. It must not express that the drawee will
perform his promise by any other means than the
payment of money.
Acceptance of a bill, as stated in Section 132, is the
signification by the drawee of his assent to the order
of the drawer.
It has also been defined as "the act by which the
drawee manifests his consent to comply with the
request contained in the bill of exchange directed
to him and it contemplates an engagement or
promise to pay."
Applicability
Acceptance applies only to bills of exchange and
not to promissory notes. It may be actual or
constructive, (see Sees. 137, 191.)
In a certain sense it may be said that there can be
no "acceptance" of a check which is a demand
instrument. In the ordinary transaction there is no
occasion for acceptance of a check. Accordingly,
Section 132 has no application to that special kind
contains provisions relating to the certification of a
check, and declares that such is an acceptance or
equivalent thereto.
THE OBJECTIVES AND EFFECTS OF ACCEPTANCE
• The object of acceptance is to bind the drawee
and make him an actual party liable to the
instrument.
• By accepting a bill, the drawee admits
everything essential to its validity.
• It is the duty of the drawee to ascertain before
accepting a bill whether he owes the drawer
something which is exclusively within his
knowledge.
• Until the bill has been accepted, the drawer is
the principal debtor. Upon acceptance, the bill,
in effect, becomes a note.
FORMAL REQUISITES OF ACCEPTANCE
Actual acceptance must be in writing signed by the
drawee and must contain an express or implied
promise to pay money.
• In writing – The sound public policy requires some
substantial and tangible evidence of the
contract.
Exception: The rule does not apply to
constructive acceptance and to a foreign bill
payable in another state unless it is shown that
the law of that state requires written
acceptance.
• Signed by the drawee – Requires the signature of
the drawee.
• Express a promise to pay money – Always
express a promise to pay money ONLY.
• Delivered to the holder – The acceptance is still
incomplete until the bill has been delivered back
to the holder.
HOW ACCEPTANCE IS MADE
It is usually made by writing across the face of the bill
the word “accepted” under which the drawee signs
his name, with the date also written.
Any equivalent words such as “honored”, “seen”,
“presented”, “good”, “I would pay” are also valid.
EFFECTS OF RETAINING THE BILL
• The weight of authority inclines to the view that
mere retention without refusal to return for more
than 24 hours constitutes constructive
acceptance under Section 137.
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• But the Section 137 applies when “a bill is
delivered for acceptance”, not payment.
Sec. 135. Promise to accept; when equivalent to
acceptance. —An unconditional promise in writing
to accept a bill before it is drawn is deemed an
actual acceptance in favor of every person who,
upon the faith thereof, receives the bill for value.
WHEN PROMISE TO ACCEPT EQUIVALENT TO
ACCEPTANCE
Section 135 provides that a promise to accept is
good to any person who "upon the faith thereof
receives the bill for value."
The promise to accept a future non-existing bill must
be unconditional and in writing.
EXAMPLE:
Before the bill is drawn, P writes a letter to W asking
him if he would honor R’s draft for P1,000.00 to cover
the purchase price of goods R wants to buy from P.
P receives the reply: "YES." In view of this promise to
accept on the part of W, P sells the goods to R.
Under Section 135, W is liable to P as acceptor
because W’s promise "is deemed an actual
acceptance." But if P negotiates the bill to A and A
neither saw nor knew of W's promise to accept, W
will not be liable to A. (Sec. 134.)
Sec. 136. Time allowed drawee to accept—The
drawee is allowed twenty-four hours after
presentment in which to decide whether or not he
will accept the bill; but the acceptance, if given,
dates as of the day of presentation.
TIME ALLOWED DRAWEE TO ACCEPT
Since the drawee by accepting the instrument
becomes liable on the bill as an acceptor, the law
gives him time to make up his mind whether to
accept or reject the bill.
Under this section, the drawee has 24 hours after
presentment for acceptance within which to act
upon the bill. However, should he decide to accept
the bill, the acceptance shall be dated as of the day
of presentation or the date when he first saw the bill.
Sec. 137. Liability of drawee retaining or destroying
bill. — Where the drawee to whom the bill is
delivered for acceptance destroys the same, or
refuses within twenty- four hours after such delivery,
or within such other period as the holder may allow,
to return the bill accepted or non- accepted to the
holder, he will be deemed to have accepted the
same.
CONSTRUCTIVE ACCEPTANCE
This section treats of constructive acceptance by
operation of law. It should not be confused with
implied acceptance which is acceptance inferred
from any act or conduct of the drawee. There is no
implied acceptance, however, under the
Negotiable Instruments Law in view of Sections 132
and 137, there is constructive acceptance: (1)
where the drawee to whom a bill is delivered for
acceptance destroys it; or (2) where the drawee
refuses, within 24 hours after delivery or within such
period as is given to him, to return the bill, accepted
or non- accepted. The doctrine of constructive
acceptance is based on the general principle of
estoppel.
An accidental destruction would not be an
acceptance. It must be willfully done.
EFFECT OF RETENTION OF BILL
There is a conflict of authority as to whether the word
"refusal" includes mere retention of the bill by the
drawee.
(1) The weight of authority inclines to the view that
mere retention without refusal to return for more
than 24 hours constitutes constructive
acceptance under Section 137.
The reasons given for this view are stated in a
case. They may be summarized as follows:
"Under Section 136, 24 hours is sufficient time
for the drawee to decide whether or not he
will accept the bill, and Section 137, having
allowed this time, requires him to return the
bill accepted or non-accepted. If a demand
and a refusal are conditions precedent to an
acceptance, then the holder must not only
present the bill for acceptance, but he must
make a demand for its acceptance and
wait for a specific refusal before the drawee
is deemed an acceptor. It is obvious that
such a demand is wholly unnecessary. The
presentation of a bill for acceptance is a
demand for its acceptance, which, if the bill
is retained by the drawee, implies a demand
for its return if acceptance is declined. The
manifest purpose in requiring the prompt
return of the bill is for the protection of the
holder. It is immaterial to the drawer when
the bill is returned as he is protected by
notice of dishonor." (Wisner v. First Nat. Bank
of Gallitzin, 68 Atl. 955.)
(2) The above interpretation, however, seems to run
counter to Section 150 which declares that if a
bill is not accepted Within the prescribed time,
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 the holder must treat it as dishonored to preserve
his right of recourse against secondary parties.
The rule deducible from Section 150, it is
believed, refers to something of wrongful
character amounting to an unauthorized
conversion of the bill by the drawee. The word
"refuses" implies that a demand for the return of
the bill has been made but such a demand was
refused.
It will be noted that Section 137 applies when "a
bill is delivered for acceptance," not payment. It
has been held that since presentment for
payment (supra.) and presentment for
acceptance (infra.) are two different acts,
“Section 137 has no application where a check
was presented for payment and not for
acceptance.
Sec. 138. Acceptance of Incomplete bill. — A bill
may be accepted before it has been signed by the
drawer, or while otherwise incomplete, or when it is
overdue, or after it has been dishonored by a
previous refusal to accept, or by non-payment. But
when a bill payable after sight is dishonored by non-
acceptance and the drawee subsequently accepts
it, the holder, in the absence of any different
agreement, is entitled to have the bill accepted as
of the date of the first presentment.
WHEN ACCEPTANCE MAY BE MADE
Under this section, acceptance may be made
before the bill has been signed by the drawer or
while otherwise incomplete; even after it is overdue;
and even after it has been dishonored by non-
acceptance or non-payment.
(1) Where bill still incomplete. — Although a bill is
usually accepted within a reasonable time after
execution, Section 138 allows acceptance to be
made even while the bill is still incomplete. It does
not mean, however, that the one to whom the
bill is transferred while incomplete may become
a holder in due course.
(2) Where bill already overdue or has been
dishonored. — An instrument does not lose its
negotiable character by the mere fact that it is
already overdue or it has been dishonored. A bill
may still be accepted after 24 hours (Sec. 136.)
or after there has been a refusal to accept or to
pay.
The last sentence is similar to the provision
contained in the last part of Section 136. While
Section 138 applies only where the bill has been
previously dishonored either by non-
acceptance or non-payment, Section 136 refers
to a bill which has not been previously
dishonored.
KINDS OF ACCEPTANCE
Sec. 140. What constitutes a general acceptance. —
An acceptance to pay at a particular place is a
general acceptance, unless it expressly states that
the bill is to be paid there only and not elsewhere.
Sec. 141. Qualified acceptance. — An acceptance
is qualified, which is —
(a) Conditional; that Is to say, which makes payment
by the acceptor dependent on the fulfillment of
a condition therein stated;
(b) Partial; that is to say, an acceptance to pay part
only of the amount for which the bill is drawn;
(c) Local; that is to say, an acceptance to pay only
at a particular place;
(d) Qualified as to time;
(e) The acceptance of someone or more of the
drawees, but not of all.
An acceptance is either General or Qualified.
• General Acceptance – An acceptance to
pay at a particular place unless it expressly
states that the bill is to be paid there only and
not elsewhere.
• Qualified Acceptance
o Conditional – makes payment by the
acceptor dependent on the fulfilment of
a condition therein stated
o Partial – an acceptance to pay part only
of the amount for which the bill is drawn.
o Local – an acceptance to pay only at a
particular place
o Qualified as to time
o The acceptance of someone or more of
the drawees, but not of all.
RIGHTS OF HOLDER TO QUALIFIED/GENERAL
ACCEPTANCE
• Right to require a general or unqualified
acceptance
• May refuse the qualified acceptance and treat
the bill as dishonored by non-acceptance if he
does not obtain an unqualified acceptance
• If the holder agrees to a qualified acceptance,
he must give notice to the drawer and the
indorsers.
LESSON 2: PRESENTMENT FOR ACCEPTANCE
I. Overview
The topic will focus on Presentment for Acceptance
of negotiable instruments, specifically understanding
and knowing: (a) how presentment for acceptance
being made; (b) what constitute non-acceptance;
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and (c) the duties and rights of a holder in case of
non-acceptance.
II. Objectives
At the end of the lesson the students should be able
to:
• Define and analyze the presentment for
acceptance and how presentment being
made.
• Know the duties of holder in case of non-
acceptance and his rights where bill is not
accepted.
III. Warm-Up Activity
Read again Sections 143 to 151 of The Negotiable
Instruments Law (NIL) plus whatever explanations,
annotations or descriptions you can find on the
subject.
IV. Content
PRESENTMENT FOR ACCEPTANCE
Sec. 143. When presentment for acceptance must
be made.— Presentment for acceptance must be
made —
(a) Where the bill is payable after sight, or in any
other case, where presentment for acceptance
is necessary in order to fix the maturity of the
instrument; or
(b) Where the bill expressly stipulates that it shall be
presented for acceptance; or
(c) Where the bill is drawn payable elsewhere than
at the residence or place of business of the
drawee.
In no other case is presentment for acceptance
necessary in order to render any party to the bill
liable.
Presentment for acceptance is the production or
exhibition of a bill of exchange to die drawee for his
acceptance or payment.
The words "presentment for acceptance" includes
presentment for payment also. While there is a
conflict of authority, the cases maintaining this view
represent die overwhelming weight of authority.
WHEN PRESENTMENT FOR ACCEPTANCE NECESSARY
Section 143 enumerates the cases when
presentment for acceptance is necessary. Under
subsection (a), it is essential to fix the maturity date
of the instrument; under subsection (b), to comply
with the express stipulation of the parties in the bill
itself; and under subsection (c), to inform the drawee
of the existence of the bill so that he can make
arrangements for its payment on the date of
maturity at the place designated therein.
EXAMPLES:
(1) Bill payable after sight. — A bill payable 30 days
after sight. Its date of maturity shall be computed
30 days from the date of its presentment. The
same is true with a bill payable so many days
after demand.
(2) Bill with express stipulation. — This is self-
explanatory.
(3) Bill payable elsewhere. — A bill payable to P at
P.N.B, Manila, drawn against W, residing and
having his place of business in Quezon City.
WHEN PRESENTMENT FOR ACCEPTANCE NOT
NECESSARY
Bills payable on demand (e.g., checks) or on sight
and time bills or bills payable at a day certain, or at
a fixed time after its date, or upon other certain
event which does not fall under Section 143(b) and
(c), need not be presented for acceptance but only
for payment in order to charge the drawer or
indorsers.
However, it is to the holder's interest that the bill
should be accepted as only by accepting it does
the drawee become bound to pay it and until such
acceptance, the holder has for his debtor only the
drawer, and the step is one which a prudent man of
business ordinarily careful of his interest, would take
for his protection; and if the drawee refuses to
accept, the bill will be deemed dishonored by non-
acceptance and the holder then must proceed in
the same manner as if the bill required acceptance.
Necessity for presentment for acceptance or
negotiation within a reasonable time. In the three
cases provided in Section 143, it is necessary: (1) to
present the bill for acceptance; or (2) to negotiate it
(even without presentment for acceptance) within
a reasonable time to charge the drawer and all
indorsers.
The reason is that the drawer and indorsers have a
right in having the bills accepted immediately in
order to shorten the time of payment and thus put a
limit to the period of their liability and likewise to
enable them to protect themselves by other means
before it is too late, if the bill is not accepted and
paid within the time originally contemplated by
them. And this is true even if it is shown that the
drawee is perfectly solvent and no damage is
caused to the drawer and indorsers by the delay.
Sec. 145. Presentment; how made. — Presentment
for acceptance must be made by or on behalf of
the holder at a reasonable hour, on a business day
and before the bill is overdue, to the drawee or some
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person authorized to accept or refuse acceptance
on his behalf; and
(a) Where a bill is addressed to two or more drawees
who are not partners, presentment must be
made to them all, unless one has authority to
accept or refuse acceptance for all, in which
case presentment may be made to him only;
(b) Where the drawee is dead, presentment may be
made to his personal representative;
(c) Where the drawee has been adjudged a
bankrupt or an insolvent or has made an
assignment for the benefit of creditors,
presentment may be made to him or to his
trustee or assignee.
Sec. 146. On what days presentment maybe made.
—A bill may be presented for acceptance on any
day on which negotiable instruments may be
presented for payment under the provisions of
Sections seventy-two and eighty- five of this Act.
When Saturday is not otherwise a holiday,
presentment for acceptance may be made before
twelve o'clock noon, on that day.
Sec. 147. Presentment where time is insufficient —
Where the holder of a bill drawn payable elsewhere
than at the place of business or the residence of the
drawee has no time with the exercise of reasonable
diligence to present the bill for acceptance before
presenting it for payment on the day that it falls due,
the delay caused by presenting the bill for
acceptance before presenting it for payment is
excused, and does not discharge the drawers and
indorsers.
WHERE TIME FOR PRESENTMENT FOR ACCEPTANCE
INSUFFICIENT
Section 147 excuses delay in making presentment for
payment when such delay is caused by presenting
the bill for acceptance at a place other than the
place where the bill is drawn payable, (see Sec. 81.)
Such delay does not discharge the drawer and
indorsers if the holder has no time even with the
exercise of reasonable diligence to present the bill
for acceptance before presenting it for payment on
the date it falls due.
Sec. 149. When dishonored by non-acceptance. —
A bill is dishonored by non-acceptance —
(a) When it is duly presented for acceptance and
such an acceptance as is prescribed by this Act
is refused or cannot be obtained; or
(b) When presentment for acceptance is excused,
and the bill is not accepted.
Sec. 150. Duty of holder where bill not accepted. —
Where a bill is duly presented for acceptance and is
not accepted within the prescribed time, the person
presenting it must treat the bill as dishonored by non-
acceptance or he loses the right to recourse against
the drawer and indorsers.
DUTY OF HOLDER IN CASE OF NON-ACCEPTANCE
If, within twenty-four (24) hours after presentment as
provided for in Section 136, the bill is not accepted,
"the person presenting it must treat the bill as
dishonored." This means that the holder must take
the necessary proceedings against the drawer and
each indorser, that is, have the bill protested in those
cases when required (Sec. 152.) and give notice of
dishonor (Sec. 89.) in other cases.
Note that Section 150 does not declare that the bill
dishonored by non-acceptance is a dishonored bill.
The reason is that a holder in due course takes the
bill not as a dishonored bill, (see Sees. 52[b], 117.)
Sec. 151. Rights of holder where bill not accepted. —
When a bill is dishonored by non-acceptance, an
immediate right of recourse against the drawer and
indorsers accrues to the holder and no presentment
for payment is necessary.
RIGHTS OF HOLDER WHERE BILL NOT ACCEPTED
When a bill is dishonored by non-acceptance, the
holder, after giving notice of dishonor and protesting
when required (see Sees. 152,157.), may
immediately proceed against the drawer and
indorsers for the value of the bill without waiting for
the date of maturity. Since payment cannot be
expected after acceptance has been refused,
there is no point waiting for the date of maturity to
present the bill for payment. But if the bill is
subsequently accepted, presentment for payment is
necessary. (Sec. 116.)
LESSON 3: PROTEST
I. Overview
The topic will focus on Protest in negotiable
instruments, specifically understanding and
knowing: (a) when protest is necessary; (b) how to
protest; and (c) the difference of protest from
dishonor.
II. Objectives
At the end of the lesson you should be able to:
• Explain protest and analyze the reasons for
requiring protest.
• Familiarize with the process of protest and
understand protest for better security before
maturity
III. Warm-Up Activity
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Read again Sections 151 to 160 of The Negotiable
Instruments Law (NIL) plus whatever explanations,
annotations or descriptions you can find on the
subject.
IV. Content
PROTEST
Sec. 152. In what cases protest necessary. — Where
a foreign bill appearing on its face to be such is
dishonored by non-acceptance, it must be duly
protested for non-acceptance, and where such a
bill which has not been previously been dishonored
by non-acceptance is dishonored by non-payment,
it must be duly protested for non-payment. If it is not
so protested, the drawer and indorsers are
discharged. Where a bill does not appear on its face
to be a foreign bill, protest thereof in case of dishonor
is unnecessary.
MEANING OF PROTEST
(1) By protest is meant the formal instrument
executed by a notary public or other competent
person certifying that the facts necessary to the
dishonor of the instrument by non-acceptance
or non-payment have taken place. (Norton, op.
cit., pp. 517-518.)
(2) Technically speaking, the word "protest" means
only the formal declaration of the fact of non-
payment executed by the proper person usually
a notary public. (Maury v. Winlock, etc., Logging,
Co., 269 Pac. 815.)
(3) In its popular sense, it includes all the steps or acts
accompanying dishonor of a bill taken to fix the
Iiability of the drawer and indorsers. (see Ogden,
op. cit., p. 432; 8 C.J. 662.)
NECESSITY OF PROTEST
Protest is required only in case of dishonor either by
non- acceptance or non-payment of foreign bills
(see Sec. 129.) which appear on the face to be such.
If not duly protested, the drawer and indorsers are
discharged.
The discharge refers only to liability under the
instrument but not with respect to liability under a
separate contract or undertaking which gave rise to
the instrument. Protest of inland bills, except in
certain instances (Secs 158,161, and 171.), and
promissory notes is not required although they may
be protested if desired. (Sec. 118.)
In the following cases, protest is absolutely required:
(1) Upon dishonor by non-acceptance of a
foreign bill appearing on its face to be such
(Sec. 152.);
(2) Upon dishonor by non-payment of a foreign
bill appearing on its face to be such, it not
having been previously dishonored by non-
acceptance (ibid.);
(3) Before a bill can be accepted for honor, it
must be protested for dishonor by non-
acceptance or protested for better security
(Sec. 161.);
(4) Before a bill can be presented for payment
to the acceptor for honor or the referee in
case of need, it must be protested by the
holder for non-payment by any party liable
thereon (Sec. 167.);
(5) Upon dishonor of the bill by the acceptor for
honor, it must be protested by the holder for
non-payment by the acceptor for honor
(Sec. 170.); and
(6) Before a bill can be paid for honor, it must be
protested by the holder for non-payment by
any party liable thereon. (Sec. 171.)
REASONS FOR REQUIRING PROTEST IN CASE OF
FOREIGN BILLS
Protest is required for two good reasons:
(1) It makes for uniformity in international
transactions because most countries require it;
and
(2) It furnishes authentic and satisfactory evidence
of the dishonor to the drawer, who, from his
residence abroad, would experience difficulty in
verifying the matter and thus be compelled to
rely on the representations of the holder. Thus,
the failure to pay and the reason therefore shall
not rest on uncertainty or parol, but shall be
authenticated under a solemn instrument by a
public official which establish the rights and
obligations of the parties.
Sec. 153. Protest; how made. — The protest must be
annexed to the bill, or must contain a copy thereof,
and must be under the hand and seal of the notary
making it, and must specify—
(a) The time and place of presentment;
(b) The fact that presentment was made and the
manner thereof;
(c) The cause or reason for protesting the bill;
(d) The demand made and the answer given, if any,
or the fact that the drawee or acceptor could
not be found.
PROCEDURE FOR PROTEST
The following are the steps to be taken by the holder
in making a protest:
(1) After the instrument is dishonored by non-
acceptance or non-payment, as the case may
be, the holder takes it to a notary public;
(2) The notary public himself presents the instrument
again to the party who previously dishonored it,
and demands its acceptance or payment;
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(3) If the acceptance or payment is refused, the
notary public on the day of dishonor then makes
a minute of the dishonor on the instrument or on
his notarial register, the minute consisting of his
initials, the year, the month, and day of dishonor,
and his charges. This act is called "noting";
(4) On the same day or afterwards, the notary
public extends the protest thus noted by
embodying in a certificate the fact of the protest
and his acts in making presentment, demand
and in giving notice of dishonor. To the
certificate, the notary public affixes his notarial
seal; and
(5) After the notary public protests the instrument, he
sends notice of dishonor to all the parties to the
instrument.
FORM AND CONTENTS OF CERTIFICATE OF PROTEST
Under Section 153, the protest: (1) must be annexed
to the bill or must contain a copy thereof; (2) must
be under the hand and seal of the notary making it;
and (3) must specify the matters enumerated from
subsections (a) to (b).
Without the authentication of the notary public, the
certificate of protest of a foreign bill is no proof of the
drawee's refusal to accept or pay the bill.
PURPOSE OF CERTIFICATE OF PROTEST
The main purpose of the certificate of protest is to do
away with the necessity of proving the fact of
presentment, demand, non-payment, and notice of
dishonor by witnesses in court. However, the
certificate of protest is merely prima facie evidence
of the facts therein stated. They may be disproved
by competent evidence to the contrary.
Sec. 154. Protest; by whom mode. — Protest may be
made by —
(a) A notary public; or
(b) By any respectable resident of the place where
the bill is dishonored, in the presence of two or
more credible witnesses.
BY WHOM PROTEST MADE
A foreign bill must be protested by a notary public
because from the needs of the case, the
intervention of a universally recognized authority is
called for. Where a notary public cannot be
obtained, however, protest may be made by any
respectable resident where the bill is dishonored in
the presence of at least two credible witnesses.
Witnesses are not required if the protest is made by
a notary public. The notarial protest is to be
evidence of the facts stated in it of which the notary
public is supposed to have personal knowledge, and
credit is given to his official statements by the
commercial world on the faith of his public and
official character.
Sec. 155. Protest; when to be made. — When a bill is
protested, such protest must be made on the day of
its dishonor, unless delay is excused as herein
provided. When a bill has been duly noted, the
protest may be subsequently extended as of the
date of the noting.
The notary public need not make the formal
certificate of protest on the same day the instrument
is dishonored. But the noting of the matters required
to be stated in Section 153 including the date of
dishonor must be made on the date of dishonor
while they are still fresh in the mind of the notary
public.
The formal certificate of protest may be drawn up
and completed at any time before bringing an
action against the secondary parties and even
during the trial (Daniel on Neg. Inst., par. 939.) but it
should be dated as of the date of noting.
Thus, a bill dishonored on October 25, 2004 need not
be protested on the same date but it must at least
be "duly noted." If the formal protest is made
subsequently, their effects will retroact to the day of
the noting. But the notice of dishonor must be given
within the prescribed time (Secs. 102,103,104, 107.),
otherwise, the parties secondarily liable will be
discharged. (Sec. 89.)
Sec. 156. Protest; where made. — A bill must be
protested at the place where it is dishonored, except
that when a bill drawn payable at the place of
business or residence of some person other than the
drawee, has been dishonored by non-acceptance,
it must be protested for non-payment at the place
where it is expressed to be payable, and no further
presentment for payment to, or demand on, the
drawee is necessary.
WHERE PROTEST TO BE MADE
By the provisions of the foregoing section, a bill must
be protested at the place where it has been
dishonored.
The exception is that a bill dishonored by non-
acceptance must be protested for non-payment at
the place where it is expressed to be payable if that
place is the place of business or residence of some
person other than the drawee.
EXAMPLE:
Suppose the drawee resides in Tokyo but the bill is
payable at the Philippine National Bank, Manila. The
bill is presented for acceptance by the payee to the
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drawee in Tokyo but acceptance is refused. On its
maturity, the bill is presented for payment to the
Philippine National Bank in Manila. Payment is
refused.
The holder must protest the bill for non-payment in
Manila and no further presentment for payment to,
or demand on, the drawee is necessary.
Sec. 157. Protest both for non-acceptance and non-
payment —A bill which has been protested for non-
acceptance may be subsequently protested for
non-payment.
PROTEST BOTH FOR NON-ACCEPTANCE AND NON-
PAYMENT
Where a bill has already been protested for non-
acceptance, protest for non-payment is
discretionary on the part of the holder. Under Section
151, presentment for payment is not necessary after
the bill has been dishonored by non-acceptance.
Sec. 158. Protest before maturity where acceptor
insolvent — Where the acceptor has been
adjudged a bankrupt or an insolvent, or has made
an assignment for the benefit of creditors, before the
bill matures, the holder may cause the bill to be
protested for better security against the drawer and
indorsers.
PROTEST FOR BETTER SECURITY BEFORE MATURITY
Protest for better security is one made by the holder
of a bill after it has been accepted but before it
matures, against the drawer and indorsers, where
the acceptor has been adjudged a bankrupt or an
insolvent or has made an assignment for the benefit
of creditors.
Such a protest is purely optional and its omission will
not affect the holder’s remedy against the drawer
and indorsers. Its purpose must, therefore, be merely
to apprise the persons secondarily liable of the
situation of the acceptor by reason of which it has
become improbable that the instrument will be paid
upon its maturity and thus enable the former to
arrange for the payment of the bill at maturity.
Sec. 159. When protest dispensed with. — Protest is
dispensed with by any circumstances which would
dispense with notice of dishonor. Delay in noting or
protesting is excused when delay is caused by
circumstances beyond the control of the holder and
not imputable to his default, misconduct, or
negligence. When the cause of delay ceases to
operate, the bill must be noted or protested with
reasonable diligence.
WHEN PROTEST DISPENSED WITH
The circumstances in which protest is dispensed with
and the excuses for delay in making protest are the
same as those in notice of dishonor, (see Sees. 109-
118.)
Sec. 160. Protest where bill is lost, and so forth. —
When bill is lost or destroyed or is wrongly detained
from the person entitled to hold it, protest may be
made on a copy or written particulars thereof.
PROTEST AND NOTICE OF DISHONOR DISTINGUISHED
The differences are:
(1) Protest is required only, as a rule, in case of
dishonor of a foreign bill appearing on its face to
be such (Sec. 152.), while notice of dishonor, in
any negotiable instrument, other than a foreign
bill (Sees. 89,118.);
(2) Protest is always written (Sec. 153.), while notice
of dishonor may be oral or written (Sec. 96.);
(3) Protest includes presentment, notice of dishonor,
and all the steps accompanying dishonor (see
Sees. 152 and 153.), while notice of dishonor is
limited only to such notice (see Sec. 89.);
(4) Protest is made either by a notary public, or by
any respectable resident in the presence of
witnesses (Sec. 154.), while notice of dishonor, by
a party or his agent (Sec. 91.);
(5) Protest is made, as a ride, at the place where the
bill is dishonored (Sec. 156.), while in notice of
dishonor, the place of dishonor is not essential
(Sees. 103,104.); and
(6) Protest is made on the day of dishonor (Sec.
155.), while in notice of dishonor, the giving of
notice is made within die times prescribed. (Secs.
102,103,104,107.)
1. Act No. 2031, The Negotiable Instruments
Primary Law.
References 2. De Leon, Hector S & De Leon Hecotr Jr, M.
The Philippine Negotiable Instruments
Law (and Allied Laws) Annotated.
Manila: REX Book Store, 2004.
Other 1. Sundiang, Jose R. & Aquino, Timoteo B.
References Reviewer on Commercial Law. Manila:
REX Book Store, 2011.
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