Title I

Merchants and Commercial Transactions

Article 1
The following are merchants for the purposes of this Code:
1. Those who, having legal capacity to trade, customarily devote themselves thereto.
2. Commercial or industrial associations which are formed in accordance with this
Code.
Article 2
Commercial transactions, be they performed by merchants or not, whether they are
specified in this Code or not, shall be governed by the provisions contained in the same;
in the absence of such provisions, by the commercial customs generally observed in each
place; and in the absence of both, by those of the common law.
Commercial transactions shall be considered those enumerated in this Code and any
others of a similar character.
Article 3
The legal presumption of a customary engagement in commerce exists from the time the
person who desires to trade gives notice through circulars, newspapers, handbills,
posters exhibited to the public, or in any other manner whatsoever, of an establishment,
the purpose of which is to conduct any commercial transaction.
Article 4
Persons possessing the following conditions shall have legal capacity to customarily
engage in commerce:
1. Those who have reached the age of twenty-one years.
2. Those who are not subject to the authority of a father or mother nor to marital
authority.
3. Those who have the free disposition of their property.
Article 5
Persons under twenty-one years of age and incapacitated persons may continue,
through their guardians, the commerce in which their parents or persons from whom
the right is derived may have been engaged. If the guardians do not have legal capacity
to trade, or have some incompatibility, they shall be under the obligation to appoint one
or more factors who possess the legal qualifications, and who shall take their places in
the business.
Article 13
The following can not engage in commerce nor exercise any direct administrative or
economic representation in commercial or industrial companies:
1. Persons sentenced to civil interdiction, until they have served their sentence or
have been amnestied or pardoned.
2. Persons who have been declared bankrupts, until they have obtained their
discharge, or have been authorized, by virtue of an agreement accepted at a
general meeting of creditors and approved by the judicial authority, to continue
at the head of their establishments, the discharge being considered in such cases
as limited to the provisions of the agreement.
3. Those who on account of laws or special provisions can not trade.
Article 14
The following can not engage in the commercial profession, either in person or by proxy,
nor can they hold any direct administrative or economic position in commercial or
industrial associations within the limits of the districts, provinces, or towns in which
they discharge their duties:
1. Associate justices, judges, and officials of the department of public prosecution
(ministerio fiscal) in active service.
This provision shall not be applicable to mayors (alcaldes), municipal judges, and
municipal prosecuting attorneys, nor to those who by chance are discharging
judicial or prosecuting functions.
2. Administrative, economic, or military chiefs of districts, provinces, or garrisons.
3. Employees engaged in the collection and administration of public funds of the
State appointed by the Government.
Persons who administer and collect temporarily or their representatives are
excepted.
4. Money and commercial brokers of any class whatsoever.
5. Those who by virtue of laws or special provisions can not trade in certain
territory.
Article 15
Foreigners and companies created in a foreign country may engage in commerce in the
Philippine Islands, subject to the laws of their country, in so far as their capacity to
contract is concerned; and in all that refers to the creation of their establishments within
the Philippine territory, their commercial transactions, and the jurisdiction of the courts
of this country, the provisions of this Code govern.
The provisions contained in this article shall be construed without prejudice to what
may, in particular cases, be established by treaties and conventions with other powers.
Article 50
Commercial contracts in all that relates to their requisites, modifications, exceptions,
interpretations, and extinction and to the capacity of the contracting parties shall be
governed, in all that is not expressly established in this Code or in special laws, by the
general rules of common law.
Article 51
Commercial contracts shall be valid and create an obligation and cause of action in suits,
whatever may be the form or in whatever language they may be executed, the class to
which they correspond, and the amount involved, provided their existence is proved by
some of the means established by the civil law. However, the testimony of witnesses
shall not in itself be sufficient to prove the existence of a contract wherein the amount
involved exceeds 1,500 pesetas unless supported by other evidence.
Telegraphic correspondence shall only be the basis of an obligation between contracting
parties who have previously admitted this medium in a written contract, and provided
the telegrams fulfill the conventional conditions or conventional signs which may have
been previously fixed and agreed to by the contracting parties.
Article 52
From the provisions of the foregoing article the following are excepted:
1. Contracts which, in accordance with this Code or special laws, must be reduced to
writing or for which certain methods or formalities are necessary to their validity.
2. Contracts executed in a foreign country in which the law requires certain
instruments, methods or formalities for their validity, although not required by
the Spanish law.
In either case contracts which do not fulfill the requisites respectively demanded can not
serve as the basis for any obligation or cause of action in suits.
Article 53
Unlawful agreements can not serve as the basis for any obligation or cause of action,
even where they involve commercial transactions.
Article 54
Contracts entered into through correspondence shall be perfected from the time an
answer is made accepting the proposition or the conditions by which the latter may be
modified.
Article 55
Contracts in which an agent or broker mediates shall be perfected when the contracting
parties shall have agreed to his offer.
Article 56
In a commercial contract containing an indemnification clause against the person who
fails to comply therewith, the party aggrieved may take legal steps to demand the
fulfillment of the contract or the indemnity stipulated; but in resorting to either of these
two actions the other one shall be annulled unless there is an agreement to the contrary.
Article 57
Commercial contracts shall be executed and complied with in good faith according to
the terms in which they were made and drafted, without evading the honest, proper, and
usual meaning of written or spoken words with arbitrary interpretations, nor limiting
the effects which are naturally derived from the manner in which the contractors may
have explained their wishes and contracted their obligations.
Article 58
Should any difference appear between the copies of a contract presented by the
contracting parties and an agent or broker having mediated in the execution thereof,
what appears in the books of the latter shall govern, provided they are kept in
accordance with law.
Article 59
Should any doubts arise which can not be decided in accordance with the provisions of
Article 2 of this Code, the question shall be decided in favor of the debtor.
Article 60
In all computations of days, months, and years, the following shall be understood. A day
shall comprise twenty-four hours; the months according to the manner they are
designated in the Gregorian calendar, and a year shall embrace three hundred and sixty-
five days.
Bills of exchange, promissory notes, and loans are excepted, with regard to which the
special provisions established by this Code shall be observed.
Article 61
Days of grace, courtesy, and others, which under any designation whatsoever defer the
fulfillment of commercial obligations, shall not be recognized, but only those which the
parties may have previously fixed in the contract, or which are founded on a definite
provision of law.
Article 62
Obligations which do not have a period previously fixed by the parties, or by the
provisions of this Code, shall be demandable ten days after having been contracted, if
they can only be the basis for an ordinary action, and on the next day if execution lies.
Article 63
The effects of default in the compliance with commercial obligations shall begin:
1. In contracts in which a day is fixed for their compliance by the will of the parties
or by law, on the day following the one they fall due.
2. In contracts in which no such day is fixed, from the day on which the creditor
legally makes demand upon the debtor or notifies him of the protest of loss and
damage made against him before a justice, notary, or other public official
authorized to admit the same.