Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS
Second Regular Session 
HOUSE BILL NO. 9564 
____________________________________________________________________ 
Introduced by HON. GUS S. TAMBUNTING 
EXPLANATORY NOTE 
AN ACT TO AMEND THE NEGOTIABLE INSTRUMENTS LAW BY RECOGNIZING 
ELECTRONIC NEGOTIABLE INSTRUMENTS FOLLOWING STANDARDS AND 
SECURITY FEATURES OF ELECTRONIC TRANSFERABLE RECORDS 
In an increasingly digital world, the legal framework governing negotiable instruments, 
such as promissory notes and bills of exchange, under Act No. 2031 or the Negotiable 
Instruments Law, needs to evolve to keep pace with technological advancements. The 
existing Negotiable Instruments Law lacks clarity regarding the use of electronic forms 
for these instruments. While Republic Act No. 8792 or the Electronic Commerce Act of 
2000 provides a functional equivalence principle in that any law requiring a text to be in 
“writing” to include the electronic form, the same does not address the specific 
challenges and intricacies related to electronic negotiable instruments, such as 
indorsements, delivery, and transfer of possession. 
The United Nations Commission on International Trade Law (UNCITRAL) Model Law 
on Electronic Transferable Records (MLETR), endorsed in 2017, offers a valuable 
opportunity for the Philippines to modernize its approach to negotiable instruments. This 
model law provides a standardized framework for the creation and use of electronic 
transferable documents and instruments, encompassing various financial instruments 
like bills of exchange, promissory notes, and checks. 
One of the key challenges in transitioning to electronic transferable documents is the 
preservation of the concept of possession, which is inherent in traditional paper 
instruments. Tangible paper documents provide a clear representation of ownership 
and control over financial obligations. However, replicating this concept in the digital 
realm is a complex endeavor. The MLETR addresses this legal gap by establishing a 
robust legal framework for electronic possession, enabling businesses and individuals 
to engage in secure transactions involving electronic transferable records. 
The proposed bill seeks to integrate the principles of the MLETR into the Philippine 
legal framework, particularly in the realm of negotiable instruments. By doing so, it aims 
to provide legal clarity and certainty, facilitate secure electronic transactions, and 
ensure the Philippines remains at the forefront of legal developments in the digital age. 
This legislative initiative is crucial to modernizing our legal system, enhancing the 
November 20, 2023
9:10 am


 
efficiency of commerce, and fostering economic growth in an increasingly technology-
driven world. 
 
REP. GUS S. TAMBUNTING 
2nd District, Parañaque City 


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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
Second Regular Session 
HOUSE BILL NO. 9564 
______________________________________________________________________ 
Introduced by HON. GUS S. TAMBUNTING 
______________________________________________________________________ 
AN ACT TO AMEND THE NEGOTIABLE INSTRUMENTS LAW BY RECOGNIZING 
ELECTRONIC NEGOTIABLE INSTRUMENTS FOLLOWING STANDARDS AND 
SECURITY FEATURES OF ELECTRONIC TRANSFERABLE RECORDS 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
Section 1. Short Title. – This law shall be known as “An Act to Recognize Electronic 
Negotiable Instruments Following the Standards and Features of Electronic Transferable 
Records.” 
Section 2. Declaration of Policy. – It is hereby declared the policy of the State to promote the 
efficient and secure conduct of electronic commerce, enhance the use of electronic negotiable 
instruments, and align the legal framework with international standards to facilitate electronic 
transactions in a globally interconnected economy. 
Section 3. Insertion of Section 1-A to Act No. 2031 or the Negotiable Instruments Law. – Act 
No. 2031 or the Negotiable Instruments Law is hereby amended to include the following new 
section: 
Section 1-A. Recognition of Electronic Negotiable Instruments in 
the Form of Electronic Transferable Records. – (a) Electronic 
negotiable instruments are hereby recognized as valid and 
enforceable instruments under this Act. Such instruments shall 
possess the characteristics of being negotiable (when compliant 
with Section 1), capable of being indorsed, transferred, and 
delivered, and may be executed through electronic means, 
including through electronic signatures. 
(b) The issuance, negotiation, indorsement, signing or execution,
transfer, and delivery of electronic negotiable instruments shall
adhere to the principles, standards, and security features set forth
in the United Nations Commission on International Trade Law
(UNCITRAL) Model Law on Electronic Transferable Records
(MLETR). “Electronic transferable records” for the purpose of this
Act shall have the same definition as provided in MLETR.


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(c) An electronic negotiable instrument, whether issued, indorsed,
negotiated, or delivered, shall be deemed consistent with this
section when it complies with the provisions of the MLETR.
Instruments that purport to be electronic negotiable instruments, but
are not compliant with the MLETR, shall not be recognized as
negotiable instruments under this Act.
(d) The Bangko Sentral ng Pilipinas (BSP) shall promulgate
implementing rules and regulations to govern the issuance, use,
and management of electronic negotiable instruments, including the
establishment of necessary safeguards to ensure their security,
integrity, and authenticity, consistent with the MLETR.
(e) The BSP shall also prescribe guidelines for the recognition and
supervision of qualified service providers engaged in the creation,
maintenance, and transfer of electronic negotiable instruments,
consistent with the MLETR and other relevant laws and regulations.
(f) Nothing in this section shall preclude the use of traditional
negotiable 
instruments 
or 
affect 
their 
legal 
validity 
and
enforceability.
Section 4. Separability Clause. – If any provision of this Act is declared invalid or 
unconstitutional, the other provisions not affected thereby shall remain in full force and effect. 
Section 5. Repealing Clause. – All laws, decrees, executive orders, rules, and regulations or 
parts thereof which are inconsistent with the provisions of this Act are hereby repealed or 
modified accordingly. 
Section 6. Effectivity. – This Act shall take effect fifteen (15) days after its publication in at 
least two (2) national newspapers of general circulation. 
Approved,