\ ae cwndr ‘Ay, yo secre : oes a ik 7 (uo ane Bade ee Luce aot he ene rae a nh? 4" Jy oat pa \ | ae) Sic Branch c& humm activi bys purpose is oducts to the consumer through operations eae and wi intent of oem. 2 COMMERCIAL LAW - brand, & prvate law wie regulate, the jwidical velabins awising fam Gmmercial acts. tlt is not exsential thet af teact One party * fothe commercial Transchon be aq merchant. | _ What essentiol IS that thetranacton evidence din inbent to eye |n commerce/ trade, = # Theory of memittstation governe Contra, “Under Wee watrack is perfected at the manent w XE acceptance is declared or made by he of fereey: ; Theory of @ wihon — the aceptance Te considered te be effed W nd the offer or any fos the — li ~ now de- acne unten mmc SDCHAPTER I INTRODUCTORY CHAPTER 1. Genera! Concepts i? The “rch ge # go ed of any ivi Av on aah, fhe ty mipetalony ‘the heathy ve Henares legekparlance. pe Paver XouA Answe! Commerce is that branch of@uman acti the purpose of oducts io the consui ¥ of exchanges tend. to supply and extend_them_ to him, of gain, at the proper time and place and in tity (1 Blanco 36) ads 5 pe weducts o (1956 Bar} 4. Acts of Commerce a. Defined Bar Question: What are “acts of commerce?” (1963 Bary Bar Question: What are commercial transactions? (2003, 1956 Ser; finswer: cts of commerce/commercial transaction are those ‘contained in. the Code of Commerce%end all others of analogous character (Article 2, Code of Commerce, b. How Governed i cts of commen mercial, ctions shall be red sua pou cotinine Gade of Cone marae, in tee absence, rec ; BOG I vs. CA, 196 SCRA 576). B. Commercial Law 41. Defined Bar Question: Define commercial jaw? gommercial law? What are the principal characteristics of said law? Bee 4ransa hing ro thoce commerce or comineraal e on hace yeeids Run shaper One re24 COMMERCIAL LAW 4 Answer: Commercial jaw is that branch of \privaté” law which regulates the juridical relations arising from commercial acts. The sources of commercia: iaw are: (@) Principal: Statute ‘aw, | agreements, customs and court decisions, aad (b) Auxiliary: o law. scientific law, foreign statutory law anc judicial decisions, and opinions of authorities. The_prncipal characteristics of commercial _law_are. eit 1s \ uniform - appites to a! universal - used in ail countries oY ) itable - just is customary - evolved by the lapse id (pit Is progressive - changes to meet everyday needs. c. Commercial Laws of the Philippines 4. Code of Commerce of the Philippines of 1888 a. Origin The Code of Commerce of the Philippines was promulgated by Queen Maria Cristina on August 8, 1688, and except for differences occasioned by ‘culture and geography, was patterned after the Spanish Code of Commerce of 1885. The latter is 3 revision of the Spanish Code of 1829, which tn turn was modeled after the Code of Napoleon of 1807 .b. Portions Still in Force The Code of Commerce of 1888 has been altered, modified or amended by the passage of many special commercial iaws since the establishment of. American ‘sovereignty in the Philippines. The passage of the Civil Code-in 1950 also took away from thi application of the Code of Commerce many contracts. : Bar Question: ts the Code of Commerce still applicable to present day commercial transattions? Explain. (1969 Bar) Answer: Yes, portions of the Code of Commerce still in force, partly or in whole, are as foliows: . 1} Merchants, Books of Merchants end General Provisions on Contracis {Articles 1-63, Code of Commerce) @2) Joint Account Associations (Articles 239-243, Ibid.) 3) Commercial Barter (Article 346, ibid.) 4) Transfer’ of Non-Negotiable Credits {Articles 347-348, tbid.} 3 ae val Contracts of Overland Transportation (Articles 34" thid } : 3INTRODUCTORY CHAPTER 3 rf 2s 567-572, ibid.) time Commerce 7) Ma cles 573-869, Ibid.) Article 580 ofthe Code of Commerce, while providing for the order of payment of creditors in the event of sale of a vessel, had been repealed by the pertinent provisions of Presidential Decree (P.D.) No. 1521, otherwise known as the Ship Mortgage Decree of 1978. In particular. Articie 580 provides that in case of the judicial Sale of a vessei for the payment of creditors, the debts shall be satisfied in the order specified therein. On the other hand, Section +7 of PD. No. 1521 also pi S that in the judicial or extrajudicial sale of a vessei for the enforcement of a preferred mortgage tien constituted in accord. th Section 2. of P.D. No. 15 suct preferred mortgage len shail have priority over ail pre-existing claims. agaigst the vessel. save for those ciaims enumerated under Séction 17 which have preference over the preferred mortgage lien in the order stated therein. Since PD. . 1521 is a subsequent legisiation and since s: law in Se 7 thereof confers on the preferred mortgage lien on the vessel superiority over all other claims, thereby engendering an irreconcilabie conflict with the order of preference provided under Article 580 of the Code of Commerce, it follows that the Code of Commerce provision. is repealed by the provision of P.D. No. 1521, as the! iw (Poliand vs. National, 487 SCRA S00). here free Tk Coaptict been ‘Gpecial 2S ‘ Lav 4 Lave of Gen applicafey wg 2. Special CommerciaiLaws ys Le pack of lathe Chol prevail acd The special,commercial iaws may*be grouped under five “* headings: ( Private Corporations, Banking and Allied Laws; (ff, ro Negotiable Instruments, Merchants ind Allied Laws; xy Transportation afid Allied Laws: (ay“insurance Code and Allied ey ‘Laws, end (eyOther Special Commercial Laws. j s q ys Question; Mention ten special laws embraced in the subjest Ss, \/Mercantilgaw. (1965 Bar) % 4 Answer: The following are some_of the special laws embraced in the subject Mercaritile Lew: (Corporation Code; (B}-Negotiable instruments Law; ee fir Code; (%)-Public Service Lawis6)- Genera! Banking tay (6)-“Secuntias Regulations. Code; "(i~ Jasolvency Law; (Re Trade Nationalization Law; -Chattel. Mortgage Law; and Warehouse Receipts Law Phy : ()etect ofthe New civil Gods on the Code of Commnerse = neCOMMERCIAL LAW jon: What contracts formerly treated in the Code of Cor have been expressly repealed by ‘he New Civil Code of the Philippines? (1965, 1959 Bar) i ‘ # 3 f 3 j 3 : CPA LOG CHARACTERISTICS ¢ ni vereal. Uniform . eam table. Customary. VSiV | Habitual; : Rapid — if period Is Fixed clelter lndekay wi : need of demand; rf contact dues ub Aix pertody tod PRIVATE Law All that part of baw which TF aguinigered beter atari and ontzen, or Bld w concern wih Via detinhien, | eegulation, and oe of sights in ones where both | he pean in when night meres he pensm « hog “the tiger ebligeion is inarclenr one pre peod Pouce vin — AN tat pat sbranchat department: of law wich is concerned. with the state in its polihcall oy 7 oe com & wf the defimiin, veguiabon & eenent of VOW in cases whe late i ae e : one tne is of t hed as the ‘ane yt OF dbyec ay rd the law of ae Be aera th fe atl Mao privare, perlenatity in the charretr OFA § ES Th tion of by which © amcerned wih politi CONAN S5 thet 1S te Gay with the powers nghtt, dubs, ~ are” Op TnEApACA YS wll wre pewaliar to politcalCHAPTER Uf MERCHANTS AND COMMERCIAL TRANSACTIONS \. Merehants in General A. Merchants -1 widdleinm Wetween the cencuimer rvmufactaner 3 a mercywt mask dolasintst in Wiremn rive, a. Foreign Merchants 4) Engaging in Commerce 1 € | EL u jun WA revisions of this article shal! be understood to <6 withou> to what, in particular cases, may be established afies reements with other powers (Articie 15, Code of Commerce). requirements 0 eset by (Continental vs. Santiago, 172 SCRA 499). 2) Investing in the Philippines10 z COMMERCIAL LAW and withdraw the same without assistance of his yardian. if abov TaNce pro brother or sister, and he can contract for life, ¢ parenis. s now has contr wabrs tales) ab Frais welds | 0SN¢. npeety own Aerial kewl A mbrde tly Merl & mdycivink. 2 a 3) Habituality as a Requirement Bar Question: From what mom ing in commerce Answer: resumption of habitu: ghall_exist establishment vhich_has for its object some comme: (Article 3, Code of Commerce). Bar Question: A has three cars. He sells one to B, mortgages the ¢ second io Cand the third, he delivers to D for sale to other persons. (a) is Aa merchant? (b) Are the transactions civil or commercial? {c) What particular law or provision would govern such transaction? Reason out your aren TOA Capa) cz haba devokon Answer: (y¥Ro,_A is not a merchant, because even assuming that \yy be has legs!” capacity, there is no habituality yet fo engage in ars commerce. ine rhe transact ions are commercial because they are either Lover the “Code of Commerce are Zanak is fo those fommercial transactions covered by the Code of Commerce or Special commercial laws. (c) The sale to B will be governed by the few on salg bf the civit Code; the mortgage to C, by the Chattel Mortgage Law“the delivery fo D, for sale by the latter?by the law on agency of the Civil Code. 2.-Qis qualifications There gre,two classes of persons disqualified to become merchant he lute and the relative. is ified Des": BER {hose sentenced to the penaity of civil interdiction, =instances wherein a person cannot ‘sé any direct administration in jes? (1953 Bar) Bar Question: Give tre: ea Answer: The three instances are (af persons sentenced io the penalty of crvil interdiction We they have not served their sentence or have not been amnestied or pardoned, (y those declared bankrupt. while they have not obtained their discharge, and (by those who cannot trade under special laws or provisions (Article 13, Code of Commerce). . B. Commerciai Registries 4. Under the Code of Commerce a. Classes nb h- There arg three commercial registries provided for by the Code of Commerce: the registry for individual merchants, kept by the Bureau gf Domestic Trade forindividual merchants in Metro Maniia, and by the Registgr of Deeds for individual merchants in the provinces; the. registry fof furidics! persons*kept by the Securities end Excha: commission and also by the same office! for. partnerships with a capital of P3,000 or more of contributions consisting of rea! estate; the Fe eee ee ees eee a cena ~ b. oe CD MERCHANTS AND COMMERCIAL TRANS ACTIONS i‘MERCIAL LAW eal ae mission for parinersh:os with & cap! O00 or he contributions consist of real estate properties is Civil Code), out failure to register has no bility of the partnership or of the partners to third ‘ation of all other pai ships is optional. ragistration is compulsory for It ts optional for vessels with ¢ registration, and the véssel is 5 tons gross, a certificate of Philippine registry shail be issued. The taking of that certificate for vessels 15 tons or !ess is optional gr of more advantage of its effects (Art. 18, Code of Commerce) Ane to reaister the articles of incorporation of a corporation wi S Failure to register a partnership does not i al it ether or_not it ha in contributions by the 2. Commercial Registries Under Other Laws - There are many commercial registries under other laws. Some of them are: ’ 2. Intellectual Property Office - patents, trademarks, tradenames, and service marks; . Bureau of Domestic Trade - business names; - Register of Deeds - chattel’ mortgages, Natonal Food Authority - persons engaged in the rice and com industry, The National Library - copyrights; e Land Transportation Franchising and Regulatory Board, Maritime industry Authority, National Telecommunications Commission and aeg ~eMERCHANTS AND COMMERCIAL TRANSACTIONS a3 : tes of Public Convenience and E C. Books of Merchants 1. Required Books a. Under the Code of Commerce @ b. Under special laws ¢. Under the National | al Revenue Code Bar Gurestion: What pgoks mys: a merchant keep? (1953 Bar) Cll] = ‘ jAnswer: Under the Code of Comaercs, a —— = p the following books. book of inventories and valences containing @ statement of nis assets, a statement of his iabimes and a statement of the difference between the two, which constitutes his capital: <-@A journal containing his day-to-day. operations: OPE ager containing the accounts ciass:fied as to objects or persogs, transferred from the journal: -"€A book for letters and telegrams sent out, ther books required. by specia! iaws (Articles 33, et Seg., Code of Commerce). in case of furidical Lf resolutions passed shall | be Kegs ff the juridical person is e-corporetion, should be kept (Section 74, Corporation Code a Under the’ National intemal Revenue Code, fatural or Luridice has gross-austtary sales. eaming earnings. output merchant ma, ed bookkeepit the Finance ost {he gross quarterly sales, eam SOF butare below P25.0G0. then the merchant oa anes seca and a ledger or heir squivaients, (Section 232, "Nationa ftemet Reveras ods). a ee ee20 COMMERCIAL LAW ne intenged 2 fe equipmen®Rot in the ord AY Crossroads must demand that Stanrus ply with the merits to make the sale valid. namely, Stanrus must execute vit listing the names of its creditors and the nature and amount of its obligations to them: prepare an inventory of siocks to notify all of its creditors at feast 70 cays in ‘ance, of the 1 bulk: and registration of the documents with the Bureau of Dor tic Trade. Bar’ Question: Company X, engaged in the bust jufacturing car parts and accessories, operates a factory with Ty and tools for this purpose. The manufactured are sold wholesale to disifibutars and dealers throughout tne ioines, Company X was among the business entities adversely the 1997 Asian business cnsis. its saies dropped with the ne in car sales and its operating costs escalated, while its creaiter banks and. other financial institutions tightened their loan portfolios. Company X was faced with the dismal choice of either Suspending its operations or selling its business it chose the latter. Having struck a deal with Company Z, a more viable entity engaged in the same business, Company X sold its entire business to the former without much fanfare or any form of publicity. In fact, evidence exists that the transaction was furtively entered into to avoid the prying eyes of Company X's creditors. The creditor banks and other financial institutions sued Company X for violation of the 8ulk Sales Law. Decide (2000 Bar) tAnswer: There was a violation of the Bulk Sales Law by Company x 4, + The sale in this case is considered a bulk sale since the sale is of Sl of the business of Company X. Company X should have complied with the provisions of the Bulk Sales Law, which are: (1) a verified list of aif its ‘creditors, their addresses, the amount of the obligation owing to each and their due dates and a verified inventory of all its assets, both of which must be submitted with the Bureau of Domestic Trade, and (2) a notification to all creditors at least ten days before the sale. Failure to comply with any of these fequirements renders the sais void. Sar Question: "A" is a merchant engaged in the sale of a variety of goods and merchandise. Because of the economic crisis, he incurred in’ tedness to “X", “Y" and ‘Z*. Thereafter, “A” sold to “B” all the s* f good and merchandise.BULK SALES LAW 2 *3 to effect a valid sale in bulk sé statement on the schedule of ct of such false statement as to " submit nb 4 aWhat is the Vendee * a. _&: What is the right of creditors “x”, “Y” and “Z” if “A® failed fo comply with the procedure/steps required by law under question letter (a) nerec?? (2001, 1992 Bar) a Answer: (a}“A" must somely wip the following requirements to efe d sale in bulk to “B*: (iva verified list of all his creditors, address: as. the amount of the obligation owing. io each and sgeir s. {(Z} a S. n 0°61 his creditors at least én days before the sale. ~~ je_shall be void, in which tase oes not become the owner of the goods and merchancise sold lnsiead he merely becomes a trustee of such goods in behalf of the creditors, without prejudice to “B” reimbursing the consideration paid to “A” and to any action he may have against “A”. (oy The creditors "xX, "Y" and “Z” may nullify the sale and demand for the retum of the goods constituting the buik, _If “B° has already disposed of the goods, "8" shali be made liable for the vaiue of those disposed by him forming part of the bulk, Bar Question: Divine Corporation is engaged in the business of garments for export. in the course of its business, it was able to obtain loans from individuals and financing institutions. However, due to the drop in the demands for garments in the international market, Divine Corporation could not meet its obligations. It decided to sell all its equipment such as sewing machines, perma-press _ machines, high speed sewers, cutting tables, ironing tables, eic., ps well as its supplies and materials to Top Grade Fashion Corporation, its competitor. ‘ } a. How would you classify the transaction? ¥ a b How would you pred the interests of the creditors cf Divine Corporation? * ¢. In case Divine Corporation violated the law, what remedies are available to Top Grade: feshion Corporation against Divine Corporation? (2005 Bar) 1k ‘ inswer: a. The sale is considered a sale in bulk, because it consists of the sale of al of the business of the vendor, = b. To protect the interest of the creditors, {will require the solter to prepare an. affidavit stating te _names of all #s creditors,2 COMMERCIAL LAW credits and their respective vit to the buyer who, in tum, 12 transaction he is about to cover the amount paid if Damages may also be pained i. Purpose and General Scheme to Achieve Purpose Bar Question: What is the main purpose of the Bulk Sales Act? What is its genera’ scheme? (1969, 1958,1954, 1949 Bar). 12. Sua Sales Law is SWE I 5g BE event secrelor Auduient by amerchant unul Ms-oredtors are furs pang. ought to 62 achieved by a general scheme Cea ww wherein for the saie im bulk to be vaiid, the seller is required FS lexscuste an affidavit listing the names of his credigrs and the nature and amount of his obligations to them; the selle“Drepares an inventory of the stocks to be sold and notifies ali of hus cred 0 days before the sale of the projected sale in bulk. These two documents: have to be registered with the Bureau of Commerce (now Department of Trade and Industry). il, Instances When Bulk Sales Law Not Applicable to a Vendor bor Question: in what instances will the Bulk Sales Law not apply t 3, 1964, . . ' 19 a vendor? (1993, 1964, 1954 Bar) whos vind of ypover? : 7 at, : Ber Question: Pursuant to a writ of execution issued by the Regional.Trial Court in “Express Bank vs. Don Rubio,” the sheriff levied and sold at public auction 8 photocopying mactiines of Don . Rudio. Is the sheriffs sala covered pee the Bulk Sales Law? (2006BULK SALES LAW 23 _-WV. Consequences of a Sale in Bulk Violating the Law Bar Question: Mr. merchant in his early forties, was @ defendant in a. lawsut could subject him to substantial damages. A year before the court rendered judgment, Mr. Pablo on how to plan his estate to avoid taxes. should form a corporation with himself, His lawyer sug his wife, and his cl stockholders and th: corporation. Mr, Pabio One (1) year later, and the plaintiff sought to however. could not locate therefore retuned the w any,iS availabie to the pi: of his lawyer. dgme gainst Mr. Pablo this judgment. The sheriff, e of Mr. Pablo and What remeay, if en Answer: As this act of Mr. Fabio Should avail of remedies all id law. Where a merchant or disposes all or substantially all of his assets, the disposition is 2 buik sale. For the transfer to be valid, the ‘merchant should prepare 8 verified list of his creditors, their addresses, the amount of the obligation to each, and their due dates; and also a verified inventory of all of his assets. Both sislements should be submitted to the Bureau of Domestic Trade. At least ten days before the projected, disposition, all of hig creditors should be formalty notified by him. if a merchant fails to comply with the requirements, the disposition in bulk is invalid, and the buyer does not become owner of what he bought, but merely serves as a trustee for these- properties, in behalf of the oreditors of the merchant. 1 As the dispositions are invalid, the merchant retains Gwhership of - ail of the goods sold by him in violation of the Bulk Sales Law. plaintiff in the problem above may therefore now execute on these © assets of Mr. Pabio. SA gee we Faye th ae Bar Question: The Board of Directors of Union Corporation, with the unanimous authority of its stockholders in a meeting duly called for the purpose, sold to “Victory Comoration for’ P&60-grilfion substantially il of the company’s assets consisting of iS of machinery, fixtures, and equipment used alcoholic beverages — business of ihe company. Acme Bottles, ing., creditor-supplier of the bottle requirements of Union Corporetion, now questioned the sale! ted th@Buik Sales Law, heERCIAL LAW ull and v contending that it fearr nn of Leticia Locsin at the Daity Globe. correct in alleging that the said sale is sand lab! Sd ies of Victory Corporation? 995. 1988 1982, “1980, 1959 Bar) fa) Yes, Acme Battlers is correct in alleging that the sale void. The sale to Victory Corporation, being a sale by ostantially afi of the ipany'’s asses, is @ the sale in bulk to be valid, the Bulk Sales Law execute a sworm waiten st. ent including the adaresses of the sellers creaitors. the count of eS. iver this eS any 2 part or the p further requ be sold, with the cost pnce of each and to n creditor at least 10 days be inditions, of the sale n Corporation has not compiled with these requirements is-fiull i and void. propeties invcived nm the ‘sale and sti? in the posses: ion of aah Comporat it «s liable to the sellers creditors for properties forming kK. but already disposed of by it poration can however make Union Corporation return to it the price of the bulk saie with damages. Ge poh uw inal, He bugiy fete hot becne Uo Beanie Ee wha ae berghet | bern poet ae fer “the piper hha Cudrtore ge te jaubry.we on CHAPTER V WAREHOUSE RECEIPTS LAW {Act 2137) eral Prineiptes fier “w due couse Under Av Bese We woirtrmdaks a) Ss ee A. Warehouse Receipts Law Differentiated from: ayes Cale Vw 4. General Bonded Warehouse Law ward, ~ wet 3893. as amended by R.A. 247, the Generali Bonded se Law, reguiates and supervises warehouses which put up 2. Documents of Title under the Civil Code @ Warehouse Receipis Law Ged to warehouse receipts sued by a warehouseman. Documents of title under the Civil Code refer to other ¢EceintDor documents issued in bailmest contracts other than warehouse receipts. B. Definition of Terms t/Warenouse Receipt = ce i Bar Question: What.is a warehouse receipt? (1967, 1954, 199 @/Wiarehouseman ce sr : 4 A warehousstiali is a pArson lawiully engaged in the business of ; storing goods for oroftt.