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Ateneo 2007 Commercial Law

Ateneo 2007 Commercial Law

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Published by Joseph Plazo, Ph.D

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Published by: Joseph Plazo, Ph.D on Nov 25, 2009
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A
TENEO
C
ENTRAL
B
AR
O
PERATIONS
2007
Commercial Law
SUMMER REVIEWER
 —Adviser:
Atty. Jacinto Jimenez
; Heads:
Gail Maderazo
; Volunteers:
Jojo Baetiong, Joanne Bibal, Vira Castro,Moe Villamor, Agatha Cruz
 —
 
TABLE OF CONTENTSI.Code of Commerce...............................................................................................2II.Bulk Sales Law......................................................................................................3III.Warehouse Receipts Law......................................................................................4IV.Trust Receipts Law................................................................................................6V.Negotiable Instruments Law..................................................................................8VI.Insurance Code...................................................................................................24VII.Concurrence and Preference of Credits..............................................................39VIII.Chattel Mortgage Law.........................................................................................43IX.Corporation Code................................................................................................46X.Anti-Dumping Act.................................................................................................62XI.Intellectual Property Law.....................................................................................66XII.Bank Secrecy Law...............................................................................................83XIII.Insolvency Law....................................................................................................84XIV.Corporate Suspension of Payments....................................................................89XV.Corporate Rehabilitation......................................................................................92XVI.Securities Regulation Code.................................................................................94XVII.Truth in Lending Act..........................................................................................102XVIII.Transportation Code..........................................................................................105XIX.Maritime Commerce..........................................................................................109XX.Carriage of Goods By Sea Act..........................................................................114XXI.Warsaw Convention..........................................................................................115XXII.Public Service Act..............................................................................................116XXIII.National Electrification Decree..........................................................................118XXIV.Franchise for TV and Radio Stations.................................................................118XXV.EPIRA Law........................................................................................................118XXVI.Ship Mortgage Decree.......................................................................................118XXVII.Philippine Deposit Insurance Corporation Act...................................................119XXVIII.General Bonded Warehouse Act.......................................................................121XXIX.Installments Sales Law......................................................................................123
 
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A
TENEO
C
ENTRAL
B
AR
O
PERATIONS
2007
Commercial Law
SUMMER REVIEWER
 —Adviser:
Atty. Jacinto Jimenez
; Heads:
Gail Maderazo
; Volunteers:
Jojo Baetiong, Joanne Bibal, Vira Castro,Moe Villamor, Agatha Cruz
 —
 
COMMERCIAL LAW
– that branch of private law,which regulates the juridical relations arising fromcommercial acts.
CONTRACTS BY CORRESPONDENCE
acontract entered into by correspondence like letters,telegrams, by messengers but not including thosemade by phone or through agents.
RULE ON THE PERFECTION OF CONTRACTS BYCORRESPONDENCETheory ofManifestationTheory of Cognition
Mercantile contracts areperfected from themoment the acceptanceis sent, even if it has notyet been received bythe offeror.Offeror can no longerwithdraw the offer orchange the terms andconditions.Contracts governed bycivil law such aspartnerships, agencies,deposits, loans, salesand guaranties will beperfected only uponreceipt by the offeror ofthe unconditionalacceptance by theofferee.
JOINT ACCOUNT
– is a business arrangementwhereby two or more persons interest themselves inthe business of another, making contributionsthereto, and participating in the results of thebusiness in the proportion they may determine.
FEATURES OF A JOINT ACCOUNT
1. It may be contracted orally or in writing.2. No common name can be adopted.3. Only one member is ostensible and can sueor be sued. The others are silent.4. No common fund.(Articles 240-242, Code of Commerce)
COMPARISON OF JOINT ACCOUNT WITHCOMMERCIAL PARTNERSHIP
(see Annex C)
LETTER OF CREDIT
– a letter issued by onemerchant to another for the purpose of attending to acommercial transaction. In banking practice, it is arequest by one bank to another bank to advance orgive money to a third person on the basis of the letterand on the credit of the person issuing it.
SIGNIFICANCE OF LETTERS OF CREDIT
Roughly at least 85% of importations arefinanced by letters of credit. The underlying idea of aletter of credit is to ensure certainty of payment.Seller is assured of payment because the bankintervenes and makes the commitment to pay. Theidea behind it is like your credit card. You walk into adepartment store and they sell to you on creditalthough you’re a total stranger because you showyour credit card, which means that the bank whichissued the credit card tells the seller that it will paythe goods being bought.
ESSENTIAL CONDITIONS OF A LETTER OFCREDIT
1. Issued in favor of a definite person and not toorder. In effect, it is not a negotiableinstrument governed by the NegotiableInstruments Law.2. Limited to fixed or specified amount, or toone or more amounts, but with maximumstated limit. If any circumstance is missing,the letter is a mere letter of recommendation(Article 568, Code of Commerce)
PARTIES TO A LETTER OF CREDIT
1.
Buyer
- who procures the letter of credit andobliges himself to reimburse the issuing bankupon receipt of the document’s title;2.
Issuing bank
- which undertakes to pay theseller upon receipt of the draft and properdocuments of titles and to surrender thedocuments to the buyer uponreimbursement; and3.
Seller
- who in compliance with the contractof sale ships the goods to the buyer anddelivers the documents of title and draft tothe issuing bank to recover payment.The number of the parties may be increased andmay include:1.
Advising (notifying) bank
- may be utilizedto convey to the seller the existence of thecredit.2.
Confirming bank
- which will lend credenceto the letter of credit issued by a lesserknown issuing bank; the confirming bank is
 
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Commercial Law Summer Reviewer
 
A
TENEO
C
ENTRAL
B
AR
O
PERATIONS
2007
 
Page 3 of 124directly liable to pay the seller-beneficiary;3.
Paying bank
- which undertakes to encashthe drafts drawn by the exporter/seller4. Instead of going to the place of the issuingbank to claim payment, the buyer mayapproach another bank, termed thenegotiating bank to have the draft discounted(Charles Lee v. CA, GR No. 117913February 1, 2002)
LIABILITIES OF PARTIES
1. Drawer liable to person on whom it wasissued provided identity proven, for theamount paid within fixed maximum.2. Bearer has no right of action if not paid byperson who issued it.3. Drawer may annul the letter of credit,informing the bearer and to whom it isaddressed.4. Bearer shall pay the amount received todrawer, otherwise action for execution maybe filed with interest and current exchange inplace where payment made on place whererepaid.5. If a bearer does not make use of letter ofcredit within agreed period, or if none, within6 months from date if in the Philippines, and12 months if outside the Philippines, it shallbe void. (Articles 569-572, Code ofCommerce)
INDEPENDENCE PRINCIPLE
– in a letter of credittransaction means that a bank, in determiningcompliance with the terms of a letter of credit isrequired to examine only the shipping documentspresented by the seller and is precluded fromdetermining whether or not the main contract isactually accomplished or not.
RULE OF STRICT COMPLIANCE
– in a letter ofcredit transaction means that the documentstendered by the seller or beneficiary must strictlyconform to the terms of the letters of credit, i.e., theymust include all documents required by the letter ofcredit. Thus, a correspondent bank which departsfrom what has been stipulated under the letter ofcredit, as when it accepts a faulty tender, acts on itsown risk and may not thereafter be able to recoverfrom the buyer or the issuing bank, as the case maybe, the money thus paid to the beneficiary (FeatiBank vs. CA, G.R. No. 94209, April 30, 1991)
COMMON TYPES OF LETTERS OF CREDIT
(seeAnnex D)
BULK SALES LAW
PURPOSE OF THE LAW
1. To prevent the defrauding of creditors by thesecret sale or disposal or mortgage in bulk ofall or substantially all of a merchant’s stock ofgoods.2. To prevent secret or fraudulent sale ormortgage of goods in bulk until the creditor ofthe seller shall have been paid in full.
IMPORTANT
: The law covers all transactions,
whether done in good faith or not, or whether theseller is in a state of insolvency or not
, as long asthe transaction falls within the description of what is a“bulk sale.”
TRANSACTIONS CONSIDERED AS “BULK SALE”
  – sale, transfer, mortgage or assignment of1. a stock of goods, wares, merchandise,provisions, or materials otherwise than in theordinary course of trade2. all, or substantially all, of the business of thevendor, mortgagor, transferor, or assignor3. all, or substantially all, of the fixtures andequipment used in the business of thevendor, mortgagor, transferor, or assignor.
EXEMPTED TRANSACTIONS
1. When accompanied with a written waiver byall the seller/mortgagor’s creditors2. The law does not apply to executors,administrators, receivers, assignees ininsolvency, or public officers, acting underlegal process3. Sale or mortgage is made in the ordinarycourse of business4. Sale by assignee in insolvency or thosebeyond the right of creditors5. Sale of properties exempt from attachment orexecution
VENDOR BUYER, ASSIGNEE,MORTGAGEE,TRANSFEROR
Has obligations andliabilities under the BulkSales Law.No direct liability nor anyobligation under the BulkSales Law

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