THE NEGOTIABLE INSTRUMENTS LAW

THE NEGOTIABLE INSTRUMENTS LAW

Historical background of our Negotiable Instruments Law

One. U.S. Uniform Negotiable Instruments Act. - Our law is patterned with very slight modifications after the Uniform Negotiable Instruments Act of the United States of eighteen ninety-six drafted by the National Conference of Commissioners on Uniform State Laws.

The Conference was appointed in eighteen ninety-five to revise and codify the law merchant in the United States as there was much confusion and lack of uniformity then in the court decisions on the subject resulting from the variety of statutes pertaining to commercial paper enacted by various state legislatures. This law, in turn, is based upon and largely copied from the English Bill of Exchange Act of eighteen eighty-two, a codification of the laws in England governing bills of exchange, promissory notes and checks. Most state legislatures adopted the Act as the main law for regulating commercial paper.

Two. U.S. Uniform Commercial Code. - The Uniform Negotiable Instruments Act has been replaced in part by Article three and in part by other articles of the Uniform Commercial Code prepared under the auspices of the National Conference of Commissioners on Uniform State Law and the American Law Institute. Proposed for adoption by the legislatures of the states, the first draft of the Code was finished in nineteen fifty-two although the Code is revised periodically. The Code seeks to simplify and modernize the law of commercial transactions. Each state has adopted part or all of the Code.

Three. Act Number two thousand thirty-one. - Our Negotiable Instruments Law was enacted as Act Number two thousand thirty-one on February third, nineteen eleven. It took effect ninety days after its publication on March fourth, nineteen eleven in the Official Gazette of the Philippine Islands was completed. The Act, therefore, took effect on June second, nineteen eleven. Since then, our Congress has not seen fit to amend any of its provisions.

The evident purpose of the Act is to facilitate transactions in commercial paper and to promote free flow of credit. Since then, our Congress has not seen fit to amend any of its provisions.

Four. Code of Commerce. - Prior to the passage of Act Number two thousand thirty-one, the law then existing and in force as to negotiable instruments could be found in Book two of the Code of

Commerce, from Articles four hundred forty-three to five hundred fifty-six. All these articles, with the exception of those on crossed checks, have been repealed.

Application and purpose of the Negotiable Instruments Law

One. The Act applies only to negotiable instruments or to those instruments which meet the requirements laid down in Section one of the law. It is designed to describe fully the law of negotiable instruments. It "covers the entire subject of negotiable instruments and must be treated as a complete body of law upon the subject and controlling in all cases to which it is applicable." It is decisive as to all matters comprehended within its terms.

Two. Any case not provided for by the Act shall be governed by the provisions of existing legislation or in default thereof, by the rules of the law merchant. The Civil Code has no effect on its provisions except to supply any deficiency in cases not covered by the Act.

Three. The law was enacted for the purpose of facilitating, not hindering or hampering transactions in commercial paper. Thus, the said statute should not be tampered with haphazardly or lightly nor should it be brushed aside in order to meet the necessities in a single case.