Discharge

How instrument is discharged
Sec. 115. When notice need not be given to
if it is not possible to deliver such currency,
(c) By the discharge of a prior party;
remitted to his former rights as regard all
then in the currency which is legal tender in
(d) By a valid tender or payment made by a
prior parties, and he may strike out his own
the Philippines.
prior party;
and all subsequent indorsements and against
(e) By a release of the principal debtor unless
negotiate the instrument, except:
indorser. Notice of dishonor is not required

to be given to an indorser in either of the
following cases:
The delivery of promissory notes payable to
the holder's right of recourse against the party
order, or bills of exchange or other mercantile
secondarily liable is expressly reserved;
(a) Where it is payable to the order of a third
documents
of
(f) By any agreement binding upon the holder
person and has been paid by the drawer;
(a) When the drawee is a fictitious person or
payment only when they have been cashed, or
to extend the time of payment or to postpone
and
person not having capacity to contract, and
when through the fault of the creditor they
the holder's right to enforce the instrument
(b) Where it was made or accepted for
the indorser was aware of that fact at the time
have been impaired.
unless made with the assent of the party
accommodation and has been paid by the
secondarily liable or unless the right of
party accommodated.
he
indorsed
the
the instrument is presented for payment;

Where
the
produce
the
effect
instrument;
(b) Where the indorser is the person to whom

(c)
shall
instrument
was
made
In the meantime, the action derived from the

original
or
obligation
shall
be
held
in
the
recourse against such party is expressly

reserved.
Renunciation
abeyance. (1170)
accepted for his accommodation.
Payment by person secondarily liable does not
Sec. 122. Renunciation by holder. - The
Article 1231. Obligations are extinguished:
discharge the instrument
holder may expressly renounce his rights
(1) By payment or performance;
Shelter rule
(2) By the loss of the thing due;
Sec.
original
unconditional renunciation of his rights against
(3) By the condonation or remission of the
defense. - In the hands of any holder other
the principal debtor made at or after the
debt;
than a holder in due course, a negotiable
maturity of the instrument discharges the
(b) By payment in due course by the party
(4) By the confusion or merger of the rights of
instrument is subject to the same defense as
instrument. But a renunciation does not affect
accommodated, where the instrument is made
creditor and debtor;
if it were non-negotiable. But a holder who
the rights of a holder in due course without
or
(5) By compensation;
derives his title through a holder in due
notice. A renunciation must be in writing
(6) By novation.
course, and who is not himself a party to any
unless the instrument is delivered up to the
fraud or illegality affecting the instrument, has
person
Sec.119. Instrument;
how
discharged. -
negotiable instrument is discharged:

(a) By payment in due course by or on behalf
of
the
accepted
principal
for
his
debtor;
accommodation;
(c) By the intentional cancellation thereof by

the
against any party to the instrument before, at,
holder;
58.
or
When
subject
to
after
its
maturity.
primarily
An
absolute
liable
and
thereon.
(d) By any other act which will discharge a
Other causes of extinguishment of obligations,
all the rights of such former holder in respect
simple contract for the payment of money;
such as annulment, rescission, fulfillment of a
of all parties prior to the latter
Cancellation
(e) When the principal debtor becomes the
resolutory condition, and prescription, are
holder of the instrument at or after maturity in
governed elsewhere in this Code. (1156a)
Sec. 68. Order in which indorsers are
Sec.
liable. - As respect one another, indorsers are
burden of proof. -
liable prima facie in the order in which they
unintentionally or under a mistake or without
his own right.

Discharge of Persons Secondarily Liable
Payment in due course
Sec. 88. What constitutes payment in due
123. Cancellation;
A
unintentional;
cancellation
made
indorse; but evidence is admissible to show
the authority of the holder, is inoperative but
Sec. 120. When persons secondarily liable on
that, as between or among themselves, they
where an instrument or any signature thereon
the instrument are discharged.
have agreed otherwise. Joint payees or joint
appears to have been cancelled, the burden of
indorsees who indorse are deemed to indorse
proof lies on the party who alleges that the
jointly and severally.
cancellation
course. - Payment is made in due course

when it is made at or after the maturity of the
-A
person
secondarily
liable
on
the
payment to the holder thereof in good faith
instrument is discharged:
and without notice that his title is defective.
(a) By any act which discharges the
Sec.121. Right
was
made
unintentionally
under a mistake or without authority

of
party
who
discharges
instrument;
instrument. - Where the instrument is paid by
Article 1249. The payment of debts in money
(b) By the intentional cancellation of his
a party secondarily liable thereon, it is not
shall be made in the currency stipulated, and
signature by the holder;
discharged; but the party so paying it is
or

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How instrument is discharged

Sec. 115. When notice need not be given to

if it is not possible to deliver such currency,

(c) By the discharge of a prior party;

remitted to his former rights as regard all

then in the currency which is legal tender in

(d) By a valid tender or payment made by a

prior parties, and he may strike out his own

and all subsequent indorsements and against

(e) By a release of the principal debtor unless

negotiate the instrument, except:

indorser. Notice of dishonor is not required

The delivery of promissory notes payable to

the holder's right of recourse against the party

order, or bills of exchange or other mercantile

secondarily liable is expressly reserved;

(a) Where it is payable to the order of a third

(f) By any agreement binding upon the holder

person and has been paid by the drawer;

(a) When the drawee is a fictitious person or

payment only when they have been cashed, or

to extend the time of payment or to postpone

person not having capacity to contract, and

when through the fault of the creditor they

the holder's right to enforce the instrument

(b) Where it was made or accepted for

the indorser was aware of that fact at the time

have been impaired.

unless made with the assent of the party

accommodation and has been paid by the

secondarily liable or unless the right of

the instrument is presented for payment;

(b) Where the indorser is the person to whom

In the meantime, the action derived from the

recourse against such party is expressly

accepted for his accommodation.

Payment by person secondarily liable does not

Sec. 122. Renunciation by holder. - The

Article 1231. Obligations are extinguished:

discharge the instrument

holder may expressly renounce his rights

(1) By payment or performance;

(2) By the loss of the thing due;

unconditional renunciation of his rights against

(3) By the condonation or remission of the

defense. - In the hands of any holder other

the principal debtor made at or after the

than a holder in due course, a negotiable

maturity of the instrument discharges the

(b) By payment in due course by the party

(4) By the confusion or merger of the rights of

instrument is subject to the same defense as

instrument. But a renunciation does not affect

accommodated, where the instrument is made

creditor and debtor;

if it were non-negotiable. But a holder who

the rights of a holder in due course without

derives his title through a holder in due

notice. A renunciation must be in writing