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Commercial Paper Law: Indonesia - Philippines
Commercial Paper Law: Indonesia - Philippines
In the other hand The Philippines has their own legal basis on the commercial
paper, which is the ACT NO. 2031 year 1911 which is The Negotiable Instrument
Law of The Philippines (NIL). However, the definition of commercial paper in
Indonesia is shared in the Philippines, but there is no classification of what type
of object is a commercial paper pursuant to NIL of The Philippines as in
Indonesia a commercial paper is classified as intangible movable goods. The
types of object will eventually affecting the negotiation process of the
commercial paper.
Mahendra Danny Setyoko Commercial Paper Law
1506790002 Comparative Study:Indonesia–Philippines
Faculty of Law Negotiation of Commercial Paper
KKI
By that there are different process of negotiation for each type of commercial
paper, on name commercial paper needs to be assigned in Indonesia there is a
process called cessie. Cessie is the process of transfer of commercial paper on
name. Article 613 paragraph (1) and (2) of BW mention that transfer of accounts
receivable on name shall be done by making authentic or under-hand deeds
delegating rights to those goods to others and the transfer shall have no effect on
the debtor before the transfer is acknowledged by the debtor, assignment of
commercial paper is recognized in the NIL of the Philippines but there is no
specific regulation regarding the issue.
For on order paper the process is endorsement, this is the same regulation
between Indonesia and The Philippines, In Indonesia endorsement is stipulated
under article 613 point 3 BW in conjunction with article 110 to 116 WvK and in
NIL of the Philippines section 30 to 50. In both law, endorsement is the signature
of the payee, which is the original party at the back of the commercial paper with
the purpose of transferring the rights embedded in the commercial paper to
endorse. The types of endorsement include blank endorsement, special
endorsement, qualified endorsement, and restrictive endorsement. A blank
endorsement specifies to no endorsee, basically it is the conversion of on order
commercial paper to on bearer commercial paper as the bearer shall be entitled
to receive payment as payee unless otherwise agreed, any endorser shall have
the same liability as an acceptor of the commercial paper, and such liability for
payment. Therefore, when an instrument has been endorsed in blank, any holder
may convert it into special endorsement. By that moving on to the special
endorsement, special endorsement specifies the person to whom, or to whose
the instrument is to be payable, it designated the person to whom the instrument
is being transferred, for instance “payable to A or order” this special
endorsement has caused the instrument to be payable only to special endorsee.
Mahendra Danny Setyoko Commercial Paper Law
1506790002 Comparative Study:Indonesia–Philippines
Faculty of Law Negotiation of Commercial Paper
KKI
While the qualified endorsement is an endorsement that includes the clause
“without recourse” or in other word the endorser disclaims liability of the
endorser. The phrase “without recourse” means that if there is an event of
dishonor, the endorser do not have to pay the cost. Moreover, restrictive
endorsement is an endorsement with restriction notation in which it restricts
the further negotiation of the instrument, for instance “pay A only” it secures
payment only to it gives the endorsee the right to receive payment and to sue
any party thereto that the endorser could have sued, but gives the endorsee no
power to transfer the right to other people. Those are the types of endorsement,
however there is one more condition. There is possibility that an endorsement
contain conditions, t became a conditional endorsement as section 39 NIL of the
Philippines explained that in a case where an endorsement is conditional, the
party required to pay the instrument may disregard the condition and make
payment to the endorsee or his transferee whether the condition has been
fulfilled or not. But any person to whom an instrument so indorsed is negotiated
will hold the same, or the proceeds thereof, subject to the rights of the person
indorsing conditionally. Therefore the condition does not apply to the issuer or
the drawee, but is applied to the endorsement parties. This is the same
stipulation of conditional endorsement in Indonesia.