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MERCHANTS AND COMMERCIAL TRANSACTIONS (Articles 1-66)

I. DEFINITION OF MERCHANTS
A. Natural persons Those, who having legal capacity to engage in commerce, habitually devote themselves thereto (Art 1)

But if theres a special treaty, the treaty governs.

II. APPLICABLE LAWS

(whether or not executed by merchants) A. of Commerce B. provision, commercial customs Code If no

C. In the absence of these two, Civil Code

III. ABSOLUTE DISQUALIFICATION FROM TRADE

The ff cannot engage in commerce nor hold office or have any direct, administrative, or financial intervention in commercial or industrial companies: 1. Persons sentenced to the penalty of civil interdiction, while they have not served their sentence or have not been amnestied or pardoned 2. Persons who have been declared bankrupt, while they have not obtained their discharge, or been authorized by virtue of an agreement accepted at a general meeting of creditors and approved by judicial authority, to continue at the head of their establishments; the discharge being considered in such cases is limited to that expressed in the agreement 3. Persons who, on account of laws or special provisions, may not engage in commerce

Legal capacity to engage in commerce: having completed the age of 18 years1

- Having free disposition of their property (Art 4) Legal presumption of habitually engaging in commerce exists from the moment the person who intends to engage therein announces through circulars, newspapers, handbills, posters exhibited to the public, or in any manner whatsoever, an establishment which has for its object some commercial operation. (Art 3)

B. Foreign entities Foreigners and companies created abroad may engage in commerce subj to the laws of their country with respect to their capacity to contract, Code of Commerce governs: a. regards the creation of their establishments in Philippine territory, b. their mercantile operations, and c. the jurisdiction of the courts of the Philippines.

III. RELATIVE DISQUALIFICATIONS FROM TRADE

The following cannot engage in the commerce, either in person or by proxy, nor can they hold any office or have any direct, administrative or

The Code of Commerce sets it at 21 years, but RA 6809 lowered the majority age to 18 years

[Lorybeth_Baldrias.head] [Nayna_Malayang.deputy] [Dionne_Sanchez.acads] [Jam_Jacob.design] [Bobbie_StaMaria.printing] [Miles Malaya.lectures] [Japee_DeLeon.poli_law] [Ascheia_Yumul.rem_law] [Paul_Sorino/Judy_Ripol.civ_law] [Hya_Rafael/Mac_Macapagal.crim_law] [Vivian_Tan/Justin_Mendoza.labor_law] [Miguel_DeJesus.legal_ethics] [Lianne_Gervasio.comm_law] [Ces_Sicangco/Rowena_Romero.tax_law]

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financial intervention in commercial or industrial companies, within the limits of the districts, provinces or towns in which they discharge their duties: require forms or formalities necessary for their efficacy o Contracts executed in a foreign country in which the law requires certain instruments, forms or formalities for their validity, although Phil law does not require them. if these contracts do not satisfy the circumstances respectively required, it shall not give rise to obligations or causes of action 8. Perfection of Contracts Contracts entered into by correspondence shall be perfected from the moment an answer is made accepting the offer or the conditions by which the latter may be modified. (Art 54) Note that receipt of the acceptance by the offeror is immaterial, Compare with Art 1319 of the Civil Code: Perfection is only from the time the offeror has actual knowledge of acceptance. BUT diff rule when a broker or agent intervenes: perfection is when the contracting parties shall have accepted his offer. (Art 55) 9. Indemnification If the penalty for indemnification is fixed, the injured party may demand through legal means the fulfillment of the contract or the penalty stipulated. Recourse to one extinguishes the other unless the contrary is stipulated. (Art 56)

1.

Justices of the Supreme Court, judges2 and officials of the department of public prosecutors in active service. This provision shall not be applicable to the municipal mayors, judges or prosecuting attorneys, nor to those who by chance are temporarily discharging the functions of judges or prosecuting attorneys. Administrative, economic or military heads of districts, provinces or posts Employees engaged in the collection and administration of funds of the State, appointed by the Government. Persons who by contract administer and collect temporarily or their representatives are exempted. Stock and commercial brokers of whatever class they may be. Those who by virtue of laws or special provisions, may not engage in commerce in a determinate territory. Enforceability of Contracts Commercial contracts shall be valid, whatever the from and language, provided their existence is shown by any means established by the civil law. EXCEPT when the contract exceeds P300 (the equivalent of 1,500 pesetas), it cannot be proved by the testimony of a witness alone. There must be some other evidence.

2. 3.

4. 5.

6.

10. Interpretation Interpretation and compliance in good faith and full enforceability of their provisions in their plain, usual and proper meanings (Art 57) In case of conflicts between copies of the contract, and an agent intervened in the negotiation, that which appears

7.

Efficacy of Contracts General Rule: Commercial contracts are consensual, so a written instrument is not necessary. EXCEPT in the ff cases in Art 52

o
2

Contracts stated in the Code3 or in special laws 4which must be reduced to writing or
Judges are no longer disqualified, as per Macariola vs. Asuncion (114 SCRA 77, 1982). Since the relative disqualification of judges is political in nature, this was deemed abrogated by change in sovereignty from Spain to the United States.

The Code requires specific forms for charter parties and loans on bottomry and respondentia (Arts 267, 578, 652 and 720). 4 Negotiable Instruments Law requires negotiable instruments to be in writing. Insurance Code requires payment of premium for a fire insurance contract to exist.

[Lorybeth_Baldrias.head] [Nayna_Malayang.deputy] [Dionne_Sanchez.acads] [Jam_Jacob.design] [Bobbie_StaMaria.printing] [Miles Malaya.lectures] [Japee_DeLeon.poli_law] [Ascheia_Yumul.rem_law] [Paul_Sorino/Judy_Ripol.civ_law] [Hya_Rafael/Mac_Macapagal.crim_law] [Vivian_Tan/Justin_Mendoza.labor_law] [Miguel_DeJesus.legal_ethics] [Lianne_Gervasio.comm_law] [Ces_Sicangco/Rowena_Romero.tax_law]

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in the agents book shall prevail (Art 58) In case of doubt, and the rules cannot resolve the conflict, issues shall be decided in favor of the debtor (Art 59) other persons interested, and the latter, on the other hand, shall have no right of action against the third person who contracted with the manager unless such manager formally transfers his right to them. (Art 242 of the code Of Commerce.) (Bourns vs Carman ; 1906)

11. Miscellaneous provisions Days of grace, courtesy or others which under any name whatsoever defer the fulfillment of commercial obligations, shall not be recognized, except those in which the parties may have previously fixed in contract or which are based on a definite provision of law. (Art 61). Ratio: Time is of the essence in commercial contracts, so days of grace are prohibited. EXCEPTION: 30 day grace period in the Insurance Code to pay premiums Debtor is in delay when: o If day of performance is fixed by the parties or by law, debtor is in default on the day following the day fixed (art 63)

o If no period is fixed, 10 days from

execution of contract and on 11th day, debtor in delay without need of demand (Art 62)

o Potestative period (when debtor desires), debtor is in delay from demand 12. Cuentas en participacion A partnership the existence of which was only known to those who had an interest in the same, being no mutual agreements between the partners and without a corporate name indicating to the public in some way that there were other people besides the one who ostensibly managed and conducted the business, is exactly the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce. Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted, shall have only a right of action against such person and not against the

[Lorybeth_Baldrias.head] [Nayna_Malayang.deputy] [Dionne_Sanchez.acads] [Jam_Jacob.design] [Bobbie_StaMaria.printing] [Miles Malaya.lectures] [Japee_DeLeon.poli_law] [Ascheia_Yumul.rem_law] [Paul_Sorino/Judy_Ripol.civ_law] [Hya_Rafael/Mac_Macapagal.crim_law] [Vivian_Tan/Justin_Mendoza.labor_law] [Miguel_DeJesus.legal_ethics] [Lianne_Gervasio.comm_law] [Ces_Sicangco/Rowena_Romero.tax_law]