Essentials of Philippine Business Law

Expanded Course Syllabus

Week 1 Welcome / Introduction to Law
I. Introduction to course, overview of subject, explanation of policies and
grading system
I. Introduction to Law
- Not Divine Law, law of religion and faith
- Not Natural Law, justice, fairness and righteousness
- Not Moral Law, norms of good and right conduct
- Not Physical Law, order or regularity in nature
a. Sources of Law
i) Constitution Fundamental Law of the land
ii) Legislations Passed by Senate and House of Representatives
iii) Administrative issuances Quasi Legislative Functions
iv) Jurisprudence Decisions of the Supreme Court (SCRA) Stare decisis
v) Treaties and Generally accepted principles of International Law - Art II Sec
2, Pacta sund servanda
vi) Customs habits and practices through long and accepted usage have become bin
ding rules of conduct
vii) Principles of Justice and Equity common law jurisdiction
b. Characteristics of Law
- Rule of Conduct
- Obligatory
- Promulgated by legitimate authority
- Of common observance and benefit
c. Organization of courts
- Supreme Court
- Court of Appeals, Sandiganbayan, Court of Tax Appeals
- Regional Trial Court
- Metropolitan Trial Court, Municipal Trial Court
- Quasi Judicial Bodies
1. Comelec
2. NLRC
3. LTFRC
4. ERB
d. Quantum of Evidence
- Criminal cases: Proof Beyond Reasonable Doubt
- Civil cases: Preponderance of Evidence- greater weight of all the evidence whi
ch as a whole shows that the act sought to be proved is more probable than not.
- Administrative cases: Substantial Evidence Such evidence that a reasonable min
d might accept as adequate to support a conclusion
e. Effects and Applications of law
- Requirement for publication
1. 15 days after publication in OG or newspaper
2. Ignorance of the law excuses no one from compliance
3. Due Process
- Law is prospective except:
1. If the law provides for retroactivity
2. Penal law insofar as it favors the accused
3. Remedial or curative law
- Computing time
1. Year is 12 calendar months
2. Month is 30 days, except when it refers to a calendar month
3. First day excluded, last day included
- Conflict of Laws Provisions
i. Penal laws apply to all who sojourn to Phils
ii. Family Law and inheritance based on national law of the party regardless of
where he lives
iii. Forms and solemnities of contracts and other instrument based on the place
where it is executed
f. Obligations and Contracts Defined
The body of rules which deals with the nature and sources of obligations and the
rights and duties arising from agreements and the particular contracts.
Obligation A Juridical relation whereby a person may demand from another the obs
ervance of a determinative conduct (giving, doing, not doing), and in case of br
each, may demand satisfaction from the assets of the latter.
Contract Meeting of the mind between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.
A contract necessarily gives rise to an obligation but an obligation does not al
ways need to have a contract.
g. Corporation and Partnership Defined
Partnership Two or more persons bind themselves to contribute money, property, o
r industry to a common fund, with the intention of dividing the profits among th
emselves.
Corporation Artificial being created by operation of law, having right of succes
sion and the powers, attributes, properties expressly authorized by law or incid
ent to its existence.

Weeks 2 to 4 Obligations
I. General Provisions, Nature and Effects of Obligations
a. General Provision
- Juridical Necessity enforce compliance; seek damages
- To give, to do, and not to do Examples
- Four essential requisites of an obligation
(i) A passive subject (Debtor to give; Obligor to do)
(ii) An active subject (Creditor/Obligee)
(iii) Object (Prestation) subject matter
(iv) Juridical tie (Vinculum) Source of Obligation
- Form as a manifestation of intent; but no specific form unless required by law
(b) Kinds of Obligations
1. According to subject matter
a. Real Obligation to give
b. Personal Obligation to do
i. Positive to give or do
ii. Negative - not to do or not to give
A borrower agreed to pay his debt in 60 days, and in case of non-payment to rend
er free service as driver/servant. When due date came, borrower refused to rende
r free service. Decide.
2. According to person obliged
a. Unilateral
b. Bilateral (Reciprocal or non-reciprocal)
(c) Sources of Obligation
1. LAW Imposed by law
- A wife was about to deliver a child. Her neighbor brought her to hospital. Who
should pay the hospital bill Husband or Neighbor?
- P.D. 1517 grants the right of first refusal to person who has leased for more
than 10 years an urban land and who construct his house thereon. Lessee of a Con
do in Manila now claims his right of first refusal because he has been living in
the unit for almost 15 years. Decide.
Obligations derived from law are not presumed.
- In a newspaper ad, there was an offer to replace 30 sachets of Tide for one Ve
netian cut Glass until the end of the year. At the end of the year, you present
your tide sachets, but Tide refused to honor it anymore since the ad was posted
more than half a year ago. Decide. 657
a. Quasi-contracts Juridical relations based on the principle that no one shall
be unjustly enriched or benefited at the expense of another.
i. Negotiorum Gestio When a person voluntarily takes charge of the management of
a business or property of another that has been neglected or abandoned, without
any power from the latter, as a consequence of which, he is obliged to continue
the same until the termination of the affair or to require the owner to substit
ute him. Ex. NPA infested area Fishpond
ii. Solutio indebiti When a person unduly delivers a thing through mistake to an
other who has no right to demand it. (melon bank v. Javier)

b. Crimes (acts or omission punished by law)

If you commit a crime, you are liable both criminally and civilly for the conseq
uence of your acts or omissions such as restitution, reparation for damages caus
ed and indemnification for consequential damages.
Ex. Support for impregnated rape victim; loss of earning capacity of murder vict
im
c. Quasi delict or Torts The fault or negligence of a person who, by his act or
omission, independent from any contractual relation, causes damage to another pe
rson
* A 3-year-old child was bitten by a dog of her neighbor. As a result, she got i
nfected by rabies and died. Can the neighbor be held liable for the acts of the
dog?
* A signboard of hanging out of a building dropped on a car resulting in total w
reck of the car. The car owner sues the building owner and demand to replace the
car. Building owner cites the strong wind as force majeure condition indicating
no fault on his part. Decide.
2. Contracts
* Have the force of law between the contracting parties and should be complied w
ith in good faith.
* Sincerity and Honesty

II. Nature and Effect of Obligations

(a) Specific v. Generic Thing
1. Specific is designated or physically segregated from others of the same class
.
2. Generic refers to a class or genus and cannot be determined with particularit
y.
(b) Duties of debtor in delivery of generic thing
1. To delivery a thing which must neither be of superior nor inferior quality (1
246)
2. To pay damages in case of breach (1170)
(c) Duties of debtor in delivery of specific thing
1. To deliver the thing which he has obligated himself to give
2. To take care of the thing with the proper diligence of a good father of a fam
ily
* The ordinary care that an average or reasonably prudent person exercises over
his property
* Another standard of c are may be required by law or by stipulation of the part
ies
3. To deliver all the accessions and accessories
4. To pay damages in case of breach
(d) Remedies of Creditors in breach of obligation
1. To Give Determinate Thing
a. To compel specific performance
b. To recover damages
2. To Give Indeterminate Thing
a. To ask for performance of the obligation
b. To ask that obligation be complied with by another at expense of debtor
c. To recover damages
3. To Do
a. To have the obligation performed at debtor s expense
b. To recover damages
4. Not to Do
a. Undone at his expense
b. To recover damages
(e) Rules on Fruits
1. Kinds of fruits
a. Natural product of the soil, young and other products of animals
b. Industrial produced thru cultivation or labor
c. Civil derived by juridical relations
2. Creditor has rights to the fruits from the time the obligation to deliver ari
ses
3. Real rights acquired only when delivered to him
a. Real rights - right over a specific thing without any passive subject, direct
ed against the whole word.
b. Personal rights right to demand from another debtor the fulfillment of the la
tter s obligation
(f) Accessions and accessories
* Accessions fruits of a thing or additions to or improvement upon a thing
* Accessories joined to or included with the principal thing for better use or c
ompletion.
1. Even if not mentioned, accessories follow the principal
2. But obligation to deliver accessions or accessories does not include the prin
cipal
(g) Legal Delay
1. From the time obligee judicially or extra-judicially demand fulfillment; not
mere notice
2. No demand from creditor necessary in following cases:
a. When obligation or law expressly so declares
b. Time is of the essence (controlling motive)
c. When demand would be useless
3. In reciprocal obligation, from the moment one party fulfills his obligation,
delay by the other begins.
4. Kinds of Delay
a. Mora solvendi delay on the part of debtor
b. Mora acccipiendi delay of creditor
c. Compensatio more delay in reciprocal obligation
5. Effects of Delay
a. Liable for interest and damages
b. Liable even for fortuitous event when the obligation is to delivery a determi
nate thing
(h) Fortuitous Events
1. Any event which cannot be foreseen or which though foreseen is inevitable, in
dependent of the will or from aggravation of the debtor, render impossible the f
ulfillment of obligation
2. No person shall be responsible for fortuitous events, except:
a. Where expressly specified by law or stipulated in contract
b. When nature of the obligation requires assumption of risk
c. When debtor incurs delay
d. When debtor promises to deliver same thing to two or more persons
e. When obligation to deliver arises from criminal offense
f. When obligation is generic
(i) Fraud (deceit or dolo) Deliberate or intentional evasion of the normal fulfi
llment of an obligation;
1. Dolo incidente (Incidental Fraud) - committed in the performance of pre-exist
ing obligation, remedy is damages
2. Dolo causante (Causal Fraud) Fraud employed at the time of the execution of a
contract in order to secure consent, remedy is annulment bec of vitiation of co
nsent
3. Demandable in all obligations
4. Waiver of future fraud is void
(j) Negligence (culpa) Omission of that diligence which is required by the natur
e of the obligation, but no malice
1. Culpa contractual Negligence in the performance of contractual obligation,
a. Pre-existing contract
b. Liable for damages based on breach of contract
c. Proof of contract and breach is enough for recovery of damage
d. Negligence of employee conclusive presumption of employer s negligence
e. Proof of due diligence in the selection of employee not a defense
2. Culpa aquiliana Negligence between parties not so related by any pre-existing
contract,
a. Obligation for damages based on quasi delict
b. No pre existing contract
c. Negligence must be proved for recovery of damage
d. Negligence of employee prima facie presumption of employer s negligence
e. Due diligence in the selection and supervision of employee is a valid defense
3. Can be regulated by the Court depending on circumstance
4. Waiver of future negligence allowed
(k) Presumptions
1. Receipt of principal without reservation as to interest = presumption of inte
rest paid
2. Receipt of later installment of debt without reservation of prior ones = pres
umption that prior ones paid
(l) Remedies to satisfy claim
1. Exhaust property of debtor
2. Subrogated to rights and actions of debtors, except those inherent to person
3. Impugn all of acts by debtor done to defraud creditor