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Negotiable Instruments Law

The governing law for instruments which are negotiable is the
Negotiable Instruments Law. (Section 190 of Act 2031)
Effectivity of Negotiable Instruments Law
Act 2031, the Negotiable Instruments Law, was enacted on February 3, 1911.
Section 198 of the said Act provides that:
Time when Act takes effect.--- this Act shall take effect ninety days after its
publication in the Official Gazette of the Philippine Islands shall have been
completed
As such this Act took effect on June 2, 1911
Applicability of the Law
I.
Application of Act 2031
The provisions of this Act do not apply to negotiable instruments made
and delivered prior
to the taking of effect hereof. (Section 195)
II.

Non-negotiable instruments or cases not provided for in the Act

Any case not provided for in Act 2031 shall be governed by the provisions
of existing legislation or in default thereof, by the rules of the law on
merchant. (Sec 196)
Simply put, Act 2031: The Negotiable Instruments Law is applicable only
to instruments which are negotiable or instruments which are substantial
compliance or in conformity with Section 1.
If it is NOT Negotiable, it is governed by existing legislation or rules of
law on merchant. And since commercial instruments are generally
presupposed by existing debts or contracts, then the civil code will govern
particularly the law on contracts.
The Negotiable Instrument Law was enacted for the purpose of
facilitating, not hampering, or hindering transactions in
commercial paper. (Statement Investment House, Inc. v. CA. GR No.
101163 [1993])
Illustration:
24 July 2012
I promise to pay Federer or bearer if he will marry Sharapova Php 100,000
on demand.
Sgd. Mirka

NEGO-ISV NOTES-ASSOC

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While there is a promise to pay by the maker, Mirka to Federer the payee,
the amount of Php 100,000 on demand, the instrument is

NEGO-ISV NOTES-ASSOC