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Negotiable Instruments LawThe governing law for instruments which are negotiable is the Negotiable Instruments Law. (Section 190 of Act 2031)

Effectivity of Negotiable Instruments LawAct 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 2031The 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 ActAny 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 2012I promise to pay Federer or bearer if he will marry Sharapova Php 100,000 on demand.Sgd. Mirka

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