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Commercial Law

What Is Commercial Law?

The question of “ What is commercial law?” canonly be answered when looking at the term from adistance. Commercial law is the broader body of lawswhich regulate the legal aspects of doing business. If one looks at ” What is commercial law?” one needs tounderstand that it mainly refers to legal aspectssurrounding the relationship between the businessand the customers, the business and anotherbusiness, and the business and its shareholders.

So what is commercial law ? It is a group of lawswhich govern the transactions and commercialaspects of the business including the selling,

distribution, and payment for goods. When answeringthe question “What is commercial law?” one is in factworking with business law. Areas covered by businesslaw range from labour relations and contracts, todirectors, shareholders, competition, credit,accounting, insolvency and financing since all of theabove are so interrelated in the day to day running of the business that overlapping of law areas isinevitable and the above forms part of business law.

What Is Commercial Law? Is it Public or CivilLaw?

Commercial law is applied within civil and public lawand not only in the citizen to citizen context, but alsoin part the transactions between the government andthe citizen. The relationships of people andbusinesses in day to day business transactions arethus governed by a set of laws.

I. Corporation Law

1.1 Corporation Defined – A Corporation is an

artificial being created by operation of law, having the

right of succession and the powers, attributes, and

properties expressly authorized by law or incident to

its existence.

A corporation is a creature of:

A general enabling statute (requirements of the

law must be complied with); and The agreement of individuals who seek to

incorporate (internal contractual arrangements:

articles of incorporation and by-laws).

1.2 Four attributes of a corporation1. A juridical person capable of having rights

and obligations, w/ a personality separate

and distinct from its members or stockholders

2. hence, stockholders are not personally

liable for corp. obligations and cannot be

held liable to third persons who have claims

against the corp. beyond their agreed

contribution to the corporate capital (paidup

capital and unpaid subscriptions) This is

known as the doctrine of limited liability.

Created by operation of law:

1. Mere consent of the parties to form a corp.

is not sufficient: the State must give itsconsent either through a special law (in the

case of a gov’t corp.) or a general law (for

a private corp.)

2. the general law under w/c a private corp.

may be formed or organized is the

Corporation Code

Has the right of succession:

1. its continued existence during the term

stated in its articles of incorp. cannot be

affected by any change in the members or

stockholders.

2. nor is it affected by the transfer of shares

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by a stockholder to a 3rd person.

Has the powers, attributes and properties expressly

authorized by law or incident to its existence: as it is

a mere creature of the law, it can exercise only such

powers as the law may choose to grant it, either

expressly or impliedly.

II. Negotiable Instruments Law

1. The Negotiable InstrumentWritten contract for the payment of money, by

its form intended as substitute for money andintended to pass from hand to hand to give theHDC the right to hold the same and collect the

sum due.Instruments are negotiable when they conform

to all the requirements prescribed by the NIL( Act 2031, 03 February 1911 ). Although considered as medium for payment of

obligations, negotiable instruments are notlegal tender.

Negotiable instruments shall produce the effectof payment only when they have been encashedor when through the fault of the creditor theyhave been impaired. BUT a CHECK which hasbeen cleared and credited to the account of thecreditor shall be equivalent to a delivery to thecreditor of cash.

2. Negotiable Instruments Lawo The NIL applies only to instruments which

conform with the requisites laid down by Sec1of the law. Should any of said requisites beabsent, the instrument would not be negotiableand would therefore not be governed by theNIL but by the general law on contracts.o TIP: It is advised that one memorizes the twomost important provisions of the NIL : Sec. 1(Forms of negotiable instruments) and Sec. 52(What constitutes a holder in due course) MICHAEL A. OSMEÑA v. CITIBANK (2004)The Negotiable Instruments Law was enacted forthe purpose of facilitating, not hindering orhampering transactions in commercial paper.Thus, the said statute should not be tamperedwith haphazardly or lightly. Nor should it bebrushed aside in order to meet the necessities ina single case.3. Life of a Negotiable Instrument1. issue2. negotiation

3. presentment for acceptance in certain bills4. acceptance5. dishonor by or acceptance6. presentment for payment7. dishonor by nonpayment8. notice of dishonor9. protest in certain cases10. discharge4. Kinds of Negotiable Instruments

4.1. Promissory note - a promise to pay moneyunconditional promise in writing made by

one person to another signed by the makerengaging to pay on demand, or at a fixed

or determinable future time a sum certainin money to order or to bearer

where a note is drawn t o the maker’s own order, not complete until indorsed by him(Sec. 184, NIL ).

4.2. Bill of exchange - an order made by oneperson to another to pay money to a third person.

unconditional order in writing addressed by

one person to another signed by theperson giving it

requiring the person to whom it isaddressed to pay on demand or at a fixedor determinable future time a sum certainin money to order or to bearer ( Sec. 126,NIL ).

Check : bill of exchange drawn on a

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bank payable on demand.

III. Insurance CodeInsurance Code (PD 1460)

1. Laws on Insurance

1.1. Sources of Insurance Law in thePhilippines

During the Spanish period, all the provisionsconcerning insurance in the Philippines werefound in Title 7 of Book 2 and Section 3 of Title 3of Book 3 of the Code of Commerce, and inChapters 2 and 4 of Title 12 of Book 4 of the oldCivil Code of 1889.

When Act # 2427, enacted on December 11,1914, otherwise known as the Insurance Act, took effect on July 1 1915 during the American

Regime, the provisions of the Code of Commerceon insurance were expresslyrepealed.

1.2. Laws Governing InsuranceInsurance Code of 1978

The law on insurance is contained now inthe Insurance Code of 1978 (PD # 1460, asamended) and special laws and partly, inthe pertinent provisions of the Civil Code.

The Insurance Code primarily governs thedifferent types of insurance contracts andthose engaged in insurance business in thePhilippines. It took effect on June 11,1978, the date of its promulgation “without prejudice, however, to the effectivity datesof various laws, decrees and executive

orders which have so far amended theprovisions of the Insurance Code of thePhilippines (PD 612)”

Civil CodeThe provisions of the Civil Code dealing oninsurance are found in articles 739 and2012 (void donations), Article 2011(applicability of the Civil Code), Articles2021-2027 (life annuity contracts), Article2186 (compulsory motor vehicle liabilityinsurance), and Article 2207 (right of subrogation).

Special laws» The Insurance Code of 1978 (PD 1460)» The Revised Government ServiceInsurance Act of 1977 (PD 1146, asamended), with respect to insurance of government employees» The Social Security Act of 1954 (RA 1161, as amended) with respect toinsurance of employees in privateemployment

Others – insofar as the Civil Code isconcerned, the Code of Commerce isconsidered a special law» RA 656 (as amended by PD 245),known as the “Property Insurance Law,” dealing with government property» RA 4898 (as amended by RA 5756)providing life, disability and accidentinsurance coverage to barangayofficials» EO 250 (July 25, 1987) increases,integrates and rationalizes theinsurance benefits of barangay officialsunder RA 4898 and members of Sangguniang Panlalawigan,Sangguniang Panlungsod, andSangguniang Bayan under PD 1147.The insurance benefits are extended bythe GSIS.» RA 3591 (as amended) establishes thePhilippine Deposit InsuranceCorporation which insures the deposits

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of all banks which are entitled to the benefits of insurance under this Act .

IV. Transportation Law

Transportation

The movement of goods or persons from oneplace to another, by a carrier. A contract of transportation is one whereby a certain person or

association of persons obligate themselves totransport persons, things, news from one place toanother for a fixed price. It is the removal of goods or persons from one place toanother.

NOTE: Art. 1766 In all matters not regulated by thisCode, the rights and obligations of commoncarriersshall be governed by the Code of Commerce andbyspecial laws.

PUBLIC NATURE

It is for public use, which means that theuse is not confined to privileged individuals, but isinstead open to an indefinite public. It is thisindefinite or unrestricted quality that gives it itspublic character. The true criterion by which to

judge the character of the use is whether thepublicmay enjoy it by right or by permission. There

mustbe, in general, a right under the law whichcompelsthe owner to give the service for the generalpublic.

PUBLIC SERVICE ACT

THE PUBLIC SERVICE LAW (CA 146)(As amended, and as modified particularly by PDNo. 1, Integrated Reorganization Plan and EO546)

CHAPTER IORGANIZATIONSECTION 1This Act shall be known as the "Public Service

Act."

SECTION 2

There is created under the Department of Justiceacommission which shall be designated and knownas the Public Service Commission, composed of one Public Service Commissioner and five

Associate Commissioners, and which shall bevested with the powers and duties hereafter

specified. Whenever the word "Commission" isused in this Act, it shall be held to mean thePublic Service Commission, and whenever theword "Commissioner" is used in this Act it shall beheld to mean the Public Service Commissioner oranyone of the Associate Commissioners. ThePublic Service Commissioner and the AssociatePublic Service Commissioners shall be naturalborn citizens and residents of the Philippines, notunder thirty years of age; members of the Bar of the Philippines, with at least five years of lawpractice or five years of employment in thegovernment service requiring a lawyer's diploma;and shall be appointed by the President of thePhilippines, with the consent of the Commissionon Appointments of the Congress of thePhilippines: Provided, however, That the presentCommissioner and the personnel of theCommission shall continue in office without thenecessity of re-appointment. The Commissionersshall have the rank and privilege of retirement of Judges of the Courts of First Instance. (Asamended by Republic Act Nos.

178 and 2677)

V. Code of Commerce

Code of business of the Philippines. Definecommerce and that’s it.

VI. Banking Law·

The banking sector of the economy can be viewedbottom-up or top-down. The top-down view

shows central banks overseeing financial activitiesfor the entire nation. Beneath them full-servicenational commercial banks conduct business. Atthe bottom of the system are small full-servicecommunity banks and specialized savings andloan institutions. Other specialized institutions,some regional, some local, fill in the fabric of banking. These include trusts and credit unions.Of greatest interest to the small business is the

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local community bank or the local branch of anational commercial bank.

R.A. No. Date Description

P.D. 11429Jan

1973

Regulating theestablishment and

operation of pawnshops

P.D. 12915

Feb1973

Governing theestablishment, operation

and regulation of Investment Houses

P.D.1034

30Sep

1976

Authorizing theestablishment of an

offshore banking systemin the Philippines

R.A.3591, asamended

An act establishing thePhilippine Deposit

Insurance Corporation

(PDIC Charter)

R.A.735302

April1992

An Act Providing for theCreation, Organization andOperation of Rural Banks,and For Other Purposes

R.A.7653

10Jun

1993The New Central Bank Act

R.A.

7721

18May1994

An Act liberalizing theentry and scope of

operations of foreignbanks in the Philippinesand for other purposes

R.A.7906

23Feb

1995

An Act providing for theregulation of the

organization and operationof Thrift Banks, and for

other purposes

R.A.8367

21Oct

1997

Revised Non-Stock Savings and Loan

Association Act of 1997

R.A.8556

26Feb

1998

An Act amending R.A.5980, as amended,

otherwise known as theFinancing Companu Act

R.A.8791

12 Apr2000

General Banking Law of 2000, an act providing for

the regulation of theorganization and

operations of banks,quasi-banks, trust entities

and for other purposes

R.A.9160

29Sep

2001

Anti-Money Laundering Act of 2001

R.A.9178

13Nov2002

An Act to promote theestablishment of BarangayMicro Business Enterprises

(BMBEs), providingincentives and benefitstherefor, and for other

purposes

R.A.9182

18Dec

2002

An act granting taxexemptions and feeprivileges to special

purpose vehicles whichacquire or invest in non-

performing assets, settingthe regulatory framework therefore, and for other

purposes

R.A.9182IRR

19Mar

2003

Implementing Rules andRegulations of R.A. 9182

R.A.9194

07Mar

2003

An act amending Republic Act No. 9160, otherwiseknown as the "Anti-MoneyLaundering Act of 2001"

R.A.9194IRR

06 Aug2003

Implementing Rules andRegulations of R.A. 9194

R.A.

9238

5Feb

2004

An Act amending certainsections of the National

Internal Revenue Code of 1997, as amended, by

excluding several servicesfrom the coverage of thevalue-added tax and re-

imposing the gross

receipts tax on banks andnon-bank financialintermediaries performingquasi-banking functions

and other non-bank financial intermediariesbeginning January 01,

2004

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R.A.9294

28 Apr2004

An Act restoring the taxexemption of OBUs and

FCDUs, amending for thepurpose Section 27 (D)

and Section 28,Paragraphs (A) (4) and

(A) (7) (b) of the NationalInternal Revenue Code as

amended.

R.A.9505

22 Aug2008

An Act Establishing aProvident Personal

Savings Plan, known asthe Personal Equity and

Retirement Account(PERA)

R.A.9505IRR

21Oct

2009

Implementing Rules andRegulations of R.A. 9505

R.A.10000

23Feb

2010

An Act Providing for an Agriculture and Agrarian

Reform Credit andFinancing System Through

Banking Institutions

R.A.10000

IRR

14July2011

Implementing Rules andRegulations of R.A. 10000

FAQ onBSP Circ.

736

Mandatory Agri-AgraCredit Under RA No.

10000

VII. Intellectual Property Law

The Intellectual Property Code splits works thatmay be copyrighted into 17 classes, listed from A to Q. While all the classes listed are specifically forcopyrighted material, trademarks and other formsof intellectual property, depending on what it is,are covered as well. Patents do not have acategory.

A: Literature (books, pamphlets, etc.) B: Periodicals (newspapers, tabloids,

magazines, etc.) C: Public speeches and other public speaking

works (speeches, lectures, sermons, etc.) D: Letters E: Television or movie scripts, choreography,

and entertainment in shows

F: Musical works (lyrics, songs, songarrangements, etc.)

G: Art products (drawings, paintings.sculptures, etc.)

H: Ornamental designs and other forms of applied art (not necessarily industrial designs)

I: Geographical, topographical, architectural,and scientific works (maps, charts, plans, etc.)

J: Scientific and technical drawings K: Photographs and cinematographic worksmade in a process similar to photography

L: Audio-visual works and cinematographicworks made in a process similar to makingaudio-visual works

M: Pictures used in advertising (includeslogos)

N: Computer programs O: Other works not covered in classes A-N of

a literary, scholarly, scientific, or artistic

nature P: Sound recordings Q: Broadcasts

Patent

The term patent usually refers to an exclusiveright granted to anyone who invents any new,useful, and non-obvious process, machine, articleof manufacture, or composition of matter, or anynew and useful improvement thereof, and claimsthat right in a formal patent application. Theadditional qualification utility patent is used in theUnited States to distinguish it from other types of patents (e.g. design patents) but should not beconfused with utility models granted by othercountries. Examples of particular species of patents for inventions include biologicalpatents, business method patents, chemicalpatents and software patents.