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Meeting 6 of CommLawRev

Meeting 6 of CommLawRev

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Published by Venus Ambrona

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Published by: Venus Ambrona on Jul 05, 2012
Copyright:Attribution Non-commercial


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Code of Commerce
Natural or juridical person
Should’ve capacity to contract
Regularity engaged in commerce
Contracts of sale
At least 18 years old
means buying or selling
Partnerships and stock corporations ( cannot be non-stock bec. est for the benefit of members)
Organized accdg to law and regularly engaged in commerce
Regularly engaged
Requires habituality
Does not require big volume
Letters of Credit:
A letter correspondence addressed by a merchant to another merchant to enable the person named in theletter to attend to a commercial transaction-
3 parties: Maker, Addressee, Beneficiary-
How many merchants? At least 2. Because Beneficiary may be a merchant too.
Requirements of valid L/C 
Person to whom credit extended should be namesd2.
Max amt of credit should be stated
No L/C to bearer or order. L/C cannot be extended in negotiable form
If one or both requirements are not met, it is not L/C, it is a Letter of RecommendationWhy specify amount? Maker by writing letter, obliged to addressee. Beneficiary obliged to maker.
Kinds of L/C 
Same countryb.
Good for 6 months2.
Parties in different countriesb.
12 months (360 days)
In practice the term is “negotiate the L/C” but it actually just means to “make use
of” the L/C
L/C Nowadays, in practice
Bank credit facility to enable persons to have a commercial transaction where buyer assured of delivery andseller assured of paymentWhat banks may issue L/C?-
GR: Only commercial banks-
EXC: other banks as authorized by the Monetary BoardIllustration:DomesticBuyer goes to BPI Quezon Ave. Opens L/C. Reqd to deposit 100% marginal deposit (amount reqd by the bank forpurposes of opening L/C; not covered by the PDIC Act since this is not considered as bank transaction) BPI Colon informsdepositor SELLER that L/C opened in its favour. Tells it to ship the goods. Seller packs goods, delivers to CC. CC issues B/L.Seller gets the B/L. Bank releases 200K and recvs B/L from seller. BPI Colon transfers B/L to BPI Quezon Ave. BPI QuezonAve. Que Ave gives B/L to buyer. Buyer presents B/L to CC. CC releases goods to buyer.ForeignSeller has foreign bank. All commercial banks have tie ups in major cities of the world. Buyer opens L/C in localcorrespondent bank. Same process as above.
Bank may advance money instead of asking for 100% marginal deposit… Hence TRUST RECEIPTS.
Trust Receipts
Parties: entruster and trusteeUndertakings of the trustee:1.
Sell the goods. With the proceeds, remit the amount to the entruster within the stipulated period2.
If not remitted within that period, return all goods which have not been sold.Illustration:1.
Bought 1 ton of mangoes. Bank advances 85000. Released to me the goods after I signed trust receipt. I sell thegoods for 84K. 85K due to the bank. I sold for profit of 10K. How much do I remit? FULL AMOUNT of 85K.Because for as long as there is trust receipt, there is an obligation to remit the proceeds. What is to be remittedis the amount owing to the entruster.2.
Trustee pays the amount due. There are mangoes left. Trustee can appropriate mangoes to himself.3.
Trustee has not remitted. There are mangoes left. Trustee cannot appropriate mangoes to himself under pain of conversion. Mangoes still owned by the Entruster. Return the same to the entruster. Or ask for extension4.
Pandan asks: Can you just pay for the goods left? Yes. But if you can’t sell the goods, just return all of the goodsto the entruster. Criminal Liability is extinguished. You can’t be sued for conversion
But the civil obligation to pay the bank is not yet extinguished.6.
Sell goods
Deduct from balance due to bank
Net incurs interests.TRUST RECEIPT TRANSACTION:1.
Where goods entrusted by entruster to trustee, who must remit the proceeds to the entruster within the limitedperiod.
Entruster may not be a bank.a.
Example: Sale on consignment of goods. Seller entrusts to a buyer. Buyer sells goods undertaking toreturn the goods if not sold within the limited period.3.
Made into law to protect banking system. Comm’l banks used to be unable to collect on their transactions.
Before the law, there were 2 views regarding liability under transactions in TRs. 1. Crim (conversion) 2. Civil(payment). Trustees who only are liable for civil liability were able to abscond with the money of the bank. Bankswith low paid-up capital were prejudiced.4.
Trustee obliged to insure goods against all risks. Even fortuitous events5.
Similar to a P/N when there is an undertaking to remit the amount borrowed.6.
There may be other stipulations, but as long as the required undertakings are stated, it is a TR transaction7.
TR transactions may involve instruments of credit(e.g., negotiable instruments). But goods are more common.8.
L/C-T/R line
term for bank accommodations--- end of trust receipts
Foreign Investments Law 
To entice foreign investments2.
For foreign currency reservesHistory:1.
Uniform Currency Act
obligations cannot be payable in foreign currency or in relation to foreign currency2.
Central Bank have shortage of foreign currency. Foreign currency possession not illegal.3.
Dollars were deposited with safety deposit boxes. (robbery story)4.
Binondo Central Bank
possessed more dollars!
Hence, dollar deposits were legalized.6.
Ramos administration
UCA repealed totally.7.
Phil #2 to Japan.
Any foreign national may own 100% of any export enterprise
no need to be the manufacturer; may be a meretrader
Foreigners may own 100% of a domestic market enterprise (not for export but for Phil market) for
as long asthese activities are not covered by NEGATIVE LIST A and B.
Negative List A
activities reserved by the Consti or special law for FILIPINOS (i.e. publicservices, advertising, etc.)ii.
Negative List B
Any activity relating to ammunition and repair of armamentsa.
Except with prior approval of the Sec of DND)2.
Foreigner investing at least $200K not in areas where there are health risks (i.e.,bars,beerhouses, massage parlors, sauna baths, dancing poles)-hotels and restaurants can be foreign-owneda. Except: If less than 200K$1. The activity must be new (determined by DOST)2. There must be at least 50 employees

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