COMMERCIAL LAW REVIEW NOTES: CODE OF COMMERCE: I. General Concepts A.

Commerce Defined: = is that branch of human activity, = the purpose of which is: = to bring to the consumer by means of exchanges or operations = which tend to supply and extend them to him, habitually, = with the intent of gain, = at the proper time and place = and in good quality and quantity Commerce = is the mass of acts of human life, = which tend to the satisfaction of necessities = by means of exchange or of the rendition of services = effected with the purpose of gain = and falling within the domain of mercantile laws Acts of Commerce/Commercial Transactions = acts of commerce/commercial transactions are those contained in the Code of Commerce = and all others of analogous character (Article 2 Code of Commerce) = acts of commerce are governed by the provisions contained in the Code of Commerce; = in their absence, = by the usages of commerce generally observed in each place; = and in the absence of both rules, = by those of the civil law.
Article 2, Code of Commerce: Commercial transactions = acts covered by the Code of Commerce = and all others of analogous character Commercial transactions = whether performed by merchants or not, = and whether or not specified in the Code of Commerce = shall be governed = by the provisions of said Code = by the commercial usages generally observed in each place = in the absence of both, by the rule of the civil law

B. Commercial Law, defined = commercial law is that branch of private law = which regulates = the juridical relations arising from commercial acts. Commercial law = is that branch of private law = which regulates the juridical relations arising from commercial acts = and according to which the questions or controversies which may arise therefrom are resolved.
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Two main divisions of Commercial or Mercantile Law a. refers to the set of laws governing business transactions b. relates to business organizations Characteristics of Commercial law (UPCUE) a. it is UNIFORM = applies to all b. it is UNIVERSAL = used in all countries c. it is EQUITABLE = just and fair d. it is CUSTOMARY = evolved by the lapsed of time e. it is PROGRESSIVE = changes to meet everyday needs Fundamental Postulates in Commercial Law Habitualness in Commerce/Presumption of habituality = the legal presumption of habitually engaging in commerce shall exist = from the moment the person who intends to engage therein = announces through circulars, newspapers, handbills, posters exhibited to the public, = or in any other manner whatsoever, = an establishment which has reference for its object some commercial operation. Time is of the essence in commercial transactions = lies on the principle that the expeditious enforcement and consummation of the transactions = serve the better interest of a number of parties similarly situated. Sources of Commercial laws in the Philippines Traditionally, Commercial laws in the Philippines include laws governing the following: a. commercial documents such as: = negotiable instruments = warehouse receipts = letters of credit = and the like b. business organizations like = corporations = single proprietorship = joint accounts c. commercial contracts like = insurance = mortgage d. banking regulations e. insolvency f. securities g. intellectual properties h. public utilities j. other activities or transactions involving commerce

*Question during recitation: Is it true that commercial transactions are primarily governed by the Code of Commerce? = not necessarily
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General Rules on application of laws to Commercial transactions: 1. Priority in the order below is observed in the application of various sources of law: a. Constitution b. Statutes c. Executive and administrative rules and regulations d. judicial decisions e. customs and usages f. general principles of law (see Art. 18, in relation to Arts. 7-12 of the Civil Code) 2. Among the statutory enactments, Particularly the Civil Code, Code of Commerce, and special laws, unless repealed or otherwise expressly provided, the following rules are observed: a. Whenever applicable: Special laws take precedence over the two codes (Civil Code and Code of Commerce) = but the latter two apply in suppletory character Except: = that the Civil Code provisions on common carriers and on concurrence and preference of credits, subordinate special laws then in force b. The Civil Code is suppletory to the unrepealed portions of the Code of Commerce = but in cases of conflict or clear inconsistency in their general provisions, as a rule, = the Civil Code applies = both being laws of general application, the Civil Code should prevail = accordingly, = the theory of manifestation on the perfection of contracts by correspondence under Art. 54 = and the rules on default under Art. 63 = both under the Code of Commerce, which otherwise should apply commercial contracts in general = are deemed to have been superseded, respectively the theory of cognition pursuant to Art. 1319 and the moratory provisions in Art. 1169, both of the Civil Code = the Code of Commerce, however, = should still prevail at least in those instances which are specifically governed by the Code of Commerce such as: = special maritime contracts of bottomry and respondentia = thus, a contract of sale, although involving an article of commerce or entered into by a merchant (thus qualifying it as commercial transaction) = would now be perfected following the theory of cognition, = while that of the bottomry and respondetia could still be perfected under the theory of manifestation. Is the Code of Commerce still applicable to present day commercial transactions? Yes, portions of the Code of Commerce still in force, partly or in whole, are as follows: a. Merchants, Books of Merchants and General Provisions on Contracts (Arts. 1-63 of the Code of Commerce)
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b. Joint Account Associations (Arts. 239-243) c. Commercial Barter (Art. 346) d. Transfers of Non-negotiable Credits (Arts. 347-348) e. Commercial Contracts of Overland Transportation (Arts. 349-37) f. Letters of Credit (Arts. 567-572) g. Maritime Commerce (Arts. 573-869 Law on Transportation) = Book III on Maritime Commerce is still good to date, = and, unless inconsistent with the provisions of the Civil Code on Common Carriers, = it can apply extensively to maritime commerce. ***Code of Commerce consists of 4 books: a. Book I Merchants and Commerce in General = provisions that are still in force: 1. Merchants 2. Commercial Registries 3. Books of Merchants 4. General Provisions on Commercial Contracts b. Book II Special Commercial Contracts = provisions that are still in force 1. Joint account 2. Commercial Purchase and Sale and Barter and Transfers of Non-negotiable credits 3. Commercial contracts of overland transportation 4. Letters of Credit c. Book III Maritime Commerce = is still good to date, = and, unless inconsistent with the provisions of the Civil Code on Common Carriers, = it can apply extensively to maritime commerce. d. Book IV Suspension of Payments, Bankruptcies and Prescriptions = completely superseded by subsequent legislations
***asked in the recitation

The New Civil Code repealed the provisions of the Code of Commerce: 1. Sales 2. Partnership 3. Agency 4. Loan 5. Guaranty 6. Deposit = the New Civil Code now governs such contracts = it is likewise the primary governing law on common carriers Special laws embraced in the subject of Mercantile/Commercial Law 1. Corporation Code (BP Blg. 68) 2. Negotiable Instruments Law (Act No. 2031) 3. Insurance Code of the Philippines (PD 1460 as amended) 4. Financial Rehabilitation and Insolvency Act (FRIA RA No. 10142 of 2010) 5. Securities Regulation Code (RA No. 8799) 6. General Banking Law (RA No. 8791) 7. New Central Bank Act (RA No. 7653) 8. Warehouse Receipts Law (Act No. 2137) 9. Trust Receipts Law (PD 115)
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10. 11. 12. 13. = = = = = = = = =

Business Name Law (Act No. 3883) Chattel Mortgage Law (Act No. 1508) Public Service Law (CA No. 146) Intellectual Property Code (RA No. 8293) Note: May amendatory law no ito

Charter party respondentia averages bottomry bill of lading aval crossed checks arrival under stress collision

C. Commercial Contracts 1. Concept and Formalities = Commercial contracts = contracts that are governed by the Code of Commerce are called commercial contracts a. in the absence of any requirement under the Code of Commerce or Special law = that certain formalities are required, = commercial contracts are valid in whatever form they appear b. contracts that are expressly required to be in writing under the Code of Commerce a. letters of credit b. loans on bottomry and respondentia c. charter parties 2. Perfection General Rule: under the Civil Code = contracts are perfected upon the meeting of the minds = with respect to the object and the consideration a. Perfection by correspondence a.1 Cognition Theory (Civil Code Art. 1319) = this the applicable rule = the contract is perfected = the moment the offeror learns about the acceptance of his offer by the offeree = thus, this theory should apply to all consensual contracts that are governed by commercial laws.
Art. 1319 Civil Code. Consent is manifested by the meeting of the offer and the acceptance upon the thing and tha cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. Acceptance made by a letter or telegram does not bind the offerer = except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made.

a.2 Manifestation Theory Article 54 of the Code of Commerce = under which the contract is perfected the moment
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= the acceptance of the offer is manifested or made Eg. Sending of acceptance letter = this applies to all contracts that are still governed by the Code of Commerce (eg. loan on bottomry) a.3 However, even if the contract is still governed by the Code of Commerce = neither the manifestation theory nor the cognition theory applies = if the contract is perfected by delivery = as in real contract like the contract of carriage proper = or formal contracts the perfection of the contract is through the execution of the contract
Code of Commerce Perfection Theory of Cognition Theory of Manifestation (contracts shall be perfected (acceptance made by letter or telegram does not bind from the moment an answer is made accepting the the offeror except from the time it came to his offer) knowledge and that the contract is presumed to have been entered into in the place where the offer was made) Designation of period If the obligation does not fix a period, action would Obligations which do not have a period previously have to be filed with the courts for the fixing of the fixed by the parties shall be demandable ten (10) days period after having been contracted if they give rise only to an ordinary action, and on the next day if they involve immediate action Concept of delay and default Depends on the actuations of the obligee or creditor Every debtor would be in default without need of a no demand, no liability, EXCEPT if time is of the demand (mora ex re) essence in the contract (Article 1169 of the Civil Code) Civil Law

MERCHANTS Article 1 15 Code of Commerce Article 1. For purposes of this Code (Code of Commerce), Merchants are: 1. those who, having capacity to engage in commerce = habitually devote themselves to it
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[2. the commercial or industrial companies = which may be created in accordance with existing legislation.] [Provisions of Commercial or Industrial Associations have been repealed by Corporation Law] (Per codal: commercial or industrial associations organized in accordance with the Code of Commerce) Article 3. The legal presumption of engaging habitually in commerce = shall exist from the time the person who intends to engage therein gives announcement, by means of: a. circulars b. newspapers c. handbills d. posters exhibited to the public e. or by any other manner whatsoever = of an establishment, the purpose of which is to conduct any commercial transaction. Article 4. Persons possessing the following qualifications shall have the legal capacity to habitually engage in commerce: 1. those having reached the age of 21. (this is now lowered to 18 years of age) [2. those not being subject to the authority of the father or mother nor to marital authority] [= initially repealed by Art. 117 of the Civil Code, now by Art. 73 of the Family Code] 3. those having free disposition of their property. Article 15. Companies organized in any foreign country and aliens may engaged in commerce in the Philippines, = subject to the laws of their country insofar as their capacity to contract is concerned; = and to the provisions of the Code of Commerce = in all that may refer to the creation of their establishment within the Philippine territory, = their commercial transactions, = and the jurisdiction of the courts of this nation. Those provided for in this article shall be understood to be without prejudice to what may, in particular cases, be established by treaties and conventions with other powers.

Notes: Phrase Habitually devote as used in Article 1 = stresses the fundamental principle of habituality in commercial transactions = as a result of the repeal of the provision of Art. 1 on commercial and industrial associations, = only natural persons habitually devoting themselves to trade may be considered merchants governed by the Code of Commerce = however, under Article 15 not only alien individuals but also foreign entities may engage in commerce in the Philippines = to the extent that nationalization laws are not violated = and subject to applicable laws, rules and regulations
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Notes: A. Merchants in general = one whose business is buying and selling goods for profit. = a person or entity that holds itself out as having expertise peculiar to the goods in which it deals = and is therefore held by the law to a higher standard than a consumer or other non-merchant is held. The term merchant includes a. individuals habitually engaged in commerce = presumption exists upon an announcement or advertisement b. duly organized commercial and industrial associations = their due organization is enough to consider them as merchants = habitual engagement is not essential, albeit implied = except, in case of foreign corporations which must be additionally licensed to do business in the Philippines. = In line with Art. 1s definition of merchants = Art. 3 provides a presumption of individuals being merchants = when they announce through = circulars = newspapers = handbills = public posters, = or in any other manner, an establishment which has for is object some commercial operations/transactions. = such presumption can be rebutted by evidence to the contrary. (it is a disputable presumption) = Before the enactment of the Family Code = the Civil Code provided limitations on when the husband or the wife may deal with conjugal partnership property. = Under the Family Code, common provisions apply equally to both spouses = Article 73 of the FC = Either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other = the latter may object only on valid, serious and moral grounds = in case of disagreement, the court shall decide whether or not: a. the objection is proper; and b. benefit has accrued to the family prior to the objection or thereafter. = if the benefit accrued prior to the objection, the resulting obligation shall be enforced against the separate property of the spouse who has not obtained consent of the other spouse = the foregoing provisions shall not prejudice the rights of creditors who acted in good faith. = Effects of the enactment of RA 6809 = lowering the age of majority to 18 years = Article 4 is deemed to provide only 2 qualifications necessary to be a merchant : a. 18 years of age or over; and
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b. having free disposal of property = the other two requirements of not being subject to parental authority nor to marital authority under par. 2 of Art. 4 are deemed repealed = because a person 21 years of age is no longer subject to parental authority. = Under Art. 15, = the law that determines the capacity of aliens to engage in commerce, whether natural or juridical = shall be their national law, which shall govern their capacity to contract (because in this jurisdiction we use the nationality theory) = on the other hand, the Code of Commerce shall govern: a. the creation of their establishments in the Philippines; b. their mercantile operations/transactions c. the jurisdiction of the Philippine courts = in cases governed by treaties with other countries = the provisions of said treaties shall prevail = When it comes to general application to foreign corporations = Art. 15 is deemed to have been superseded by Section 68 of the Corporation Law, now Section 129 of the Corporation Code which provides: = any foreign corporation lawfully doing business in the Philippines = shall be bound by all laws, rules and regulations applicable to domestic corporations of the same class, = save, and except such only as provided for the: = creation, = formation = organization or = dissolution of corporations = or such as fix the = relations, = liabilities, = responsibilities = or duties of stockholders, members or officers of corporations to each other or to the corporation.

ACTS OF COMMERCE/COMMERCIAL TRANSACTIONS Article 2. Acts of commerce/Commercial transactions, = whether performed by merchants or not, and whether or not specified in the Code of Commerce
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= shall be governed by the provisions contained herein, = in default of such provisions, = by the commercial usages generally observed in each place = and in the absence of both, by the rules of the civil law. = Acts covered by the Code of Commerce = and all others of analogous character = shall be deemed commercial transactions 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 civil law The articles provide the hierarchical applicability of laws to commercial transactions, as follows: a. first, Code of Commerce b. second, the commercial customs (in absence of first) c. third, the Civil Code (in the absence of the above two) = Art. 2 of the Code of Commerce has lately been invoked in Transfield Philippines, Inc., vs. Luzon Hydro Corp (443 SCRA 307, 2004) = to justify the application in Philippine jurisdiction of the Uniform Customs and Practice for Documentary Credits to matters relating to letters of credit. UP Reviewer:
Art. 50. Commercial contracts. They are governed by: a) Code of Commerce b) Special law if its the appropriate law like the Insurance Code c) Civil Code to be applied in a suppletory manner to other special laws. (This is not the same as in Art. 2. If what is involved is an act of commerce, apply Art. 2. But if it is a commercial contract, apply Art. 50.)

MINORS AS MERCHANT Article 5. Persons below 21 years of age (now 18) and those incapacitated = may continue, through their guardians, = the business in which their parents or predecessors in interest may have been engaged. [= If the guardians lacks legal capacity to engage in commerce = or should there exist certain incompatibility on their part, = they shall be obliged to appoint one or more factors with legal qualifications = who shall take their places in the conduct of the business.]
Note: Provisions on appointment of guardian for the continuation of business for those below 21 (now 18, minors) or those incapacitated have been repealed by the Rules of Court RA 6809 = has rendered moot the provisions of the Family Code on emancipation of minors, with the lowering of the age of majority to 18 years
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Notes: = the age of majority of person is now 18 years from which there is no exception = the exclusionary clauses in the law (Art. 236 of the FC as amended by RA 6809) does not alter that rule; = said clauses merely relate to, and are modificatory of, the persons qualifications and responsibilities =for all the acts of civil life. = hence, the phrase save the exceptions established by existing laws in special cases found in the amendatory provisions = should be understood as referring to those instances where circumstances, other than age of majority per se, may affect capacity to act. To illustrate: = a person, before attaining the age of emancipation, may already be allowed to act with civil effects in certain cases = such as a minor child maintaining a savings account with a banking institution =or, despite having attained such age, may yet be denied full capacity to act = such as by reason of incapacity = so also, while he may marry, he would still need parental consent if he does so before reaching the age of 21 years. = between those ages, the parents neither are completely absolved from possible liability under Art. 2180 of the Civil Code (vicarious liability) = these cases are not irreconcilably opposed to a persons having, or not having, attained the age of emancipation. Articles 6 to Article 10. Provisions on the capacity of wife to enter into commercial transactions and the liability of the husband therefor, = have been repealed originally by Arts. 117 and 163 of the Civil Code, and now the applicable provision is Art. 73 of the Family Code. Notes: From Villanueva Reviewer Article 11. The married woman, over 21 years of age, may likewise engage in commerce in any of the following circumstansces: a. when she lives separate from her husband by reason of final decree of (relative) divorce; b. when her husband is absent, his whereabout being unknown, and his return is not expected; c. when her husband is under guardianship; d. when her husband is serving the penalty of civil interdiction Article 12. In the cases referred to in the preceding article, = only the private property of the wife and that of the community or conjugal partnership acquired through her commercial transactions = shall be liable for the results thereof, = the wife having the power to alienate and mortgage one or the other. When the absence of the husband is legally declared, = the wife shall furthermore have the powers granted to her in such case by the civil law.

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As previously noted: = the provisions of Arts. 11 and 12 of the Code of Commerce are deemed modified by Art. 73 of the FC. Present rule under the Family Code = Art. 73 of the Family Code = now provides equal provisions for the power of the husband and the wife to bind properties of the marriage: Either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other, with the other spouse allowed to object on valid, serious and moral grounds. = in cases of disagreement, = the court shall decide whether or not the objection is proper, and make rulings on the benefits, = depending on whether the benefits has accrued to the family prior to the objection or thereafter = if the benefits accrued prior to the objection: = the resulting obligation shall be enforced against the community property = if the benefits accrued to the family after the objection = the resulting obligation shall be chargeable against the separate property of the spouse who has not obtained consent. = the provisions, however, shall not prejudice creditors who acted in good faith. = Under Arts. 11 and 12, where the married woman engages in trade if her is either: a. under guardianship; b. has been declared an absentee; or c. under civil interdiction = her paraphernal property shall answer for her obligations = and that portion of the conjugal property that resulted from her business transactions, shall so answer for her debts. = the absence of the husband contemplated here is the second stage of absence provided for in Art. 384 of the Civil Code: = Two years having elapsed without any news about the absentee or since the receipt of the last news, = and five years in case the absentee has left a person in charge of the administration of his property, = his absence must be declared. DISQUALIFICATIONS TO ENGAGE IN COMMERCE A. Absolute Disqualification Art. 13, Code of Commerce The following cannot engage in commerce nor hold office or have any direct, administrative, or financial intervention in commercial or industrial companies: a. Persons sentenced to the penalty of civil interdiction , = while they have not yet fully served their sentence; = or have not been amnestied or pardoned b. Person who have been declared (judicially) bankrupts, = while they have not obtained their discharge
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= or been authorized by virtue of an agreement accepted in 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 c. Persons who, on account of laws or special provisions, may not engage in commerce. B. Relative Disqualification = these apply in specified territories such as in places where they exercise their functions, or under certain circumstances or for specific activities only. Article 14, Code of Commerce The following cannot engage in commerce, either in person or in proxy, = nor can they hold any office = or have any direct, administrative, or financial intervention in commercial or industrial companies = within the limits of the districts, provinces or towns in which they discharge their duties: a. Justices of the Supreme Court, judges and officials of the department of public prosecutors in active service. = this provision shall not be applicable to the mayors, municipal judges, and municipal prosecuting attorneys = nor to those who by chance are temporarily discharging the functions of judge or prosecuting attorney. b. Administrative, financial or military chiefs of districts, provinces, or garrisons. (posts) c. Employees engaged in the collection and administration of funds by the State, appointed by the Government. = Persons who by contract, administer and collect temporarily or their representative are excepted. d. Stock and commercial brokers of whatever class; e. Those who by virtue of laws or special provisions may not engage in commerce in a determinate territory. Case in point as to relative disqualification Macariola vs. Asuncion (114 SCRA 77, 1982) =Supreme Court ruled in this case = that although Art. 14 is incorporated in the Code of Commerce which is part of the commercial laws of the Philippines = it is, however, partakes of the nature of political law = as it regulates the relationship between the government and certain public officers and employees, like justices and judges. = political law has been defined as that branch of public law which deals with the organization and operation of the governmental organs of the State and define the relations of the state with the inhabitants of its territory. = political law embraces constitutional law, law of public corporations , administrative law including the law on public officers and elections.

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= specifically, Art. 14 of the Code of Commerce partakes more of the nature of an administrative law = because it regulates the conduct of certain public officers and employees with respect to engaging in business; hence, political in essence. = upon the transfer of sovereignty from Spain to the US and later on from US to the RP, Art. 14 of the Code of Commerce must be deemed to have been abrogated because there is a change if sovereignty, = the political laws of the former sovereign, whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign = it is the general principle of the public law that on acquisition of territory the previous political relations of the ceded region are totally abrogated. = there appears no enabling or affirmative act that continued the effectivity of the aforestated provision of the Code of Commerce after the change of sovereignty from Spain to the US and then to the RP. = Art. 14 of the Code of Commerce has no legal and binding effect and cannot apply to the respondent judge. = since there has been no re-enactment by the new sovereign, the disqualification should be considered to have since lost its further legal and binding force on judges. However, in Berin vs. Judge Barte (GR NO. MTJ-02-1443, July 31, 2002) = after the decision in Macariola vs. Asuncion, the SC adopted the Code of Judicial Conduct, which took effect on October 20, 1989, the pertinent provision of which states: Rule 5.02 of the Code of Judicial Conduct: A judge shall refrain from financial and business dealings that tend to reflect adversely on the courts impartiality, interfere with the proper performance of judicial activities, or increase involvement with lawyers or persons likely to come before the court. A judge should so manage investments and other financial interests as to minimize the number of cases giving grounds for disqualification. = despite the abrogation of Art. 14 of the Code of Commerce, judges are still disqualified from engaging in commerce within their jurisdiction. = Rule 5.02 of the Code of Judicial Conduct supplies the void created by the abrogation of Art. 14 of the Code of Commerce. = Under such rule, a judge is enjoined to refrain from financial and business dealings that tend to reflect adversely on the courts impartiality, interfere with the proper performance of judicial activities or increase involvement with lawyers or persons likely to become before the court. Title II Book I, Code of Commerce Commercial Registries and Books and Bookkeeping of Commerce Article 16 to 49 = have been repealed by the National Internal Revenue Code (NIRC) and the Civil Code on partnership provisions. Under Section 232 of the NIRC, the following books must be kept: a. Gross quarterly income, earnings, receipts or a. simplified sets of bookkeeping records output is 50,000 and below b. More than P50,000 but not exceeding 150,000 b. Journals and ledgers
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per quarter c. More than P150,000

c. books, balance sheet and income statement to be audited and certified per quarter by a CPA

Notes: Miravite COMMERCIAL REGISTRIES 1. Under the Code of Commerce a. Classes of Commercial Registries a.1 the registry for individual merchants = kept by the Bureau of Domestic Trade for individual merchants in Metro Manila = and by the Registry of Deeds for individual merchants in the provinces a.2 the registry for juridical persons = kept by the SEC for corporations = also by SEC for partnerships with a capital of P3000 or more or contributions consisting of real estate a.3 the registry of vessels = kept by the Bureau of Coast Guard at the various ports of entry in the Philippines. b. Nature of Registration = Optional = registration by individual = Compulsory = registration by corporations = as it is the fact of registration which creates the corporation = Compulsory = registration with SEC for partnerships with a capital of P3000 or more = or where the contributions consist of real estate properties is compulsory (Art. 1772, Civil Code) = but failure to register has no effect on the liability of the partnership or of the partners to third persons. = Optional = registration for all other partnerships = Philippine vessels = registration is compulsory = for vessels with more than 3 tons gross. = registration is optional = for vessels with gross tonnage of 3 tons or less = after registration, and the vessel is of more than 15 tons gross, = a certificate of Philippine registry shall be issued = the taking of that certificate for vessels 15 tons or less is optional c. Effect of failure to Register = an individual merchant who fails to register cannot request the inscription of any document in the mercantile registry, nor take advantage of its effects (Art. 18 Code of Commerce) = failure to register the Articles of Incorporation of a corporation = will not create the corporation = failure to register a partnership = does not affect the existence of juridical personality = whether or not it has P3000 or more or real estate properties in contributions by the partners
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2. Commercial Registries Under Other Laws a. Intellectual Property Office = patents, trademarks, tradenames and service marks b. DTI = business names c. Register of Deeds = chattel mortgages d. National Food Authority = persons engaged in rice and corn industry e. National Library = copyrights f. Land Transportation Franchising and Regulatory Board (LTFRB), Maritime Industry Authority (MARINA), NTC, NEA = Certificates of Public Convenience and Necessity g. Cooperatives Development Authority cooperatives h. Air Transportation Office (now CAAP) airplanes and pilots i. Municipal Treasurer large cattles BOOKS OF MERCHANTS 1. Required books a. Under the Code of Commerce b. Under special laws c. Under the NIRC A. Under the Code of Commerce, a merchant must keep = a book of inventories = and balances containing a statement of his assets, liabilities and capital = journal containing his day to day operations = ledger containing the accounts classified as to objects or persons, transferred from the journal = a book of telegrams and letters sent out = other books required by special laws B. In case of juridical person = a book of minutes containing the resolutions passed shall be kept = if it is a corporation = a stock and transfer book should be kept C. Under the NIRC = If the merchant either natural or juridical = Under Section 232 of the NIRC, the following books must be kept: a. Gross quarterly income, earnings, receipts or a. simplified sets of bookkeeping records output is 50,000 and below b. More than P50,000 but not exceeding 150,000 b. Journals and ledgers per quarter c. More than P150,000 c. books, balance sheet and income statement to be audited and certified per quarter by a CPA 2. Probative value of Merchants Books Rules: a. Books of merchants shall be evidence against the merchants themselves b. if the books of two merchants conflict, = those kept properly shall prevail c. if one keeps books, the other does not and cannot explain their absence,
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= the books of the former shall be admitted against the latter d. if both keep their books properly, but the entries conflict = the court shall accept other proofs

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