Republic of the Philippines

PALAWAN STATE UNIVERSITY

Puerto Princesa City

PSU PCAT-CUYO

BAC 2
BUSINESS LAW
(INTRO TO OBLIGATION
AND CONTRACTS,
SALES, REAL STATE &
MORTGAGES)
MODULE 1

Prepared by:

Archill B. Yapparcon
Part-time Instructor
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MODULE 1 - INTRODUCTION TO BUSINESS LAW

Let‟s start with the overview

“What you think, you create. What you feel, you attract. What you imagine, you
become”

This course will give the students the ability to know their rights and duties when it
comes to legal matter. It will also provide them general knowledge and understanding of the
legal concepts to practical problem. It covers principle of law regarding obligation and
contracts, real state with micro perspective on contracts, sales and transactions regarding
transfer of ownership, mortgages, land use, developmental, rental and professional legalities.
Basic provision on the enumerated law based on the Civil Code of the Philippines will
be tackled in this course as well as cases and application related to business will also be
discussed.
This will help student familiarized with the pertinent and relevant laws and at the very
least be an expert conversant with lawyers as well as with your client as a financial
management analyst, a manager or a business owner.

COURSE LEARNING OUTCOMES

“What are expected from you?”

At the end of this chapter you will be able to:

1. Define the meaning of law and its general division;

2. Identify the characteristic, functions and sources of law;
3. Define the Civil Code and identify its sources;
4. Define Business Law and its Characteristic
5. Define law of obligations and contracts.

Let‟s check your prior knowledge.

Activity 1.1 – ONE – WORD – ONE – SENTENCE

State in One – word when you think about business law and explain in
One – sentence.

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CONTENT / TOPIC

Introduction to Business Law

What is Law?

In its widest and most comprehensive sense, the term law

means any rule of action or any system of uniformity. Thus, law, in
general, determines not only the activities of men as rational beings
but also the movements or motions of all objects of creation, whether
animate or inanimate.

In the study of ethics as defined by St. Thomas Aquinas, it is an ordinance of right

reason, promulgated for the common good and happiness, laid down by him who has the
care and welfare of the whole community, and made public by those in authority to those who
are subject to it.

General division of law

Law, as above defined, may be divided into two (2) general groups:

1) Law which is promulgated and enforced by the state; which is known as the State
Law.
2) Law which is not promulgated and enforced by the state which includes divine law,
natural law, moral law, and physical law.
Before proceeding with the discussion of state law, let us first define those laws with which
state is not directly concerned.

Divine Law is the law of religion and faith which concern itself with the concepts of sin.

Natural Law may define as the divine inspiration in man of the sense of justice, fairness, and
righteousness, not by divine revelation or formal promulgation, but by internal dictates of
reason alone.

Moral Law speaks about the totality of the norms of good and right conduct growing out of
the collective sense of right and wrong of every community.

Physical Law in the operation of nature, there are uniformities of actions and orders of
sequence which are the physical phenomena that we sense and feel.

State Law the kind of law which particularly promulgated and enforced by the state. This law
is also called Positive Law, municipal law, civil law, or imperative law.

Laws and Morals

Morals is the aggregate of all the rules of human conduct growing out
of the collective sense of right and wrong in the community. Morality is
the quality of human acts which leads us to call some of them good
and some evil. While anything legal is demandable, what is moral may
not be legally demandable.
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INTRODUCTION TO BUSINESS LAW

Laws and Customs

A custom is merely that which habitually done in the community. It is distinguished by the
element of convention. Naturally, what is usual is most likely to be thought as the right or
correct thing to do. Being another mode of regulating human conduct, it presents the same
problem in relation to law as does morals. However, what distinguishes it from morals lies in
the fact that customs are less imperative in their force for they do not ordinarily imply ethical
valuations. As it is today, customs have rapidly changed or made into laws, thus, the term
has become just a synonym for “unwritten laws.”

CHARACTERISTIC OF LAW

1) A rule of conduct. Tell us what shall be done and what shall not be done and what
shall not be done.
2) It is Obligatory – Law is considered a positive command imposing a duty to obey and
involving a sanction which forces obedience.
3) It is promulgated by legitimate authority – In a democratic country, like the Philippines,
the legitimate or competent authority is the legislature. Under the Constitution, laws
called ”statutes” are enacted by congress which is the name of the legislative branch
of our government; local government units (LGU) also empowered to enact
ordinances which have the binding force of laws.
4) It is of common observance and benefit – Law is intended by man to serve man. It
regulates the relation of men to maintain harmony in society and to make order and
co-existence possible. Law must, therefore, be observed by all for the benefit of all.

NECESSITY AND FUNCTIONS OF LAW

1) What would life be without law? If life without law would be the same as it is now,
obviously law is not necessary. Society comes into existence because its members
could not live without it. No society can be stable if law doesn‟t exist.
2) What does law do? It has been said law secures justice, resolves social conflict,
orders society, protects interests, controls social relations. Life without basic laws
against theft, violence, and destruction would be solitary, nasty, brutish, and short.
3) What is our duty as members of society? No society can last and continue without
means of social control, without rules of social order binding on its members.

SOURCES OF LAW
Principal sources of law in the Philippines are the Constitution, legislation,
administrative rules and regulations, judicial decisions, and customs.

1) Constitution – With particular reference to the Constitution of the Philippines, it may be

defined as “the written instrument by which the fundamental powers of the government
are established, limited, defined, and by which these powers are distributed among the
several departments for their safe and useful exercise for the benefit of the people” (see
Malcolm & Laurel, Phil. Constitutional Law, 1936 ed., p.6)

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INTRODUCTION TO BUSINESS LAW

Sources of law
2) Legislation – It consists in the declaration of legal rules by a competent authority.
(Jalmond, Jurispundence 9th ed., p. 209).it is the preponderant source of law in the
Philippines. Act pass by legislation are called enacted law or statute law.
3) Administrative or executive orders, regulations, and rulings – They are those issued by
administrative officials under legislative authority. Administrative acts are valid when they
are not contrary to the laws and Constitution. (Art. 7, Civil Code)
4) Judicial, decisions and jurispundence – The decisions of the courts, Particularly the
Supreme Court

What is a Civil Code?

It is a collection of laws which regulates the private

relations of members of civil society, determining their respective
rights and obligations, with reference to persons, things, and civil
acts. (Tolentino, Civil code, p.10)

What are the sources of Civil Code of the Philippines?

1. Civil Code of Spain;

2. Codes and Laws of other countries, such as Spain, various states of United States of
America (California and Louisiana), France, Argentina, Germany, Mexico, Switzerland,
England and Italy;
3. Judicial Decisions of the Supreme Courts of the Philippines, various states of United
States of Spain and of other countries;
4. Philippine Laws or Statutes, such as the Philippine Constitution, Code of Civil
procedure (Act. No. 190), the Rules of Court, the Marriage law (Act. No. 3613), and
the Divorce Law (Act 2710);
5. Foreign Rules of Court;
6. Works of jurists and commentators of various nations;
7. General Principles on law and equity;
8. Filipino Customs and traditions;
9. The Code Commission itself.

Business and the Law

It is often said that anyone who want to stay rich must always have in his employ a
very good banker and a skilful lawyer. The need for a successful collaboration between the
one who provides the ways and means of making more money and the one who insulates
the entity from losing all the money gained, in some instances, in just a fraction of the time
used in accumulating the same could not be overemphasized. Hence, anyone who sees the
wisdom behind prevention rather than cure would easily see the importance of acquiring a
sound understanding of the laws regulating the juridical relations arising from acts of
commerce in addition to just learning business skills and acumen.

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INTRODUCTION TO BUSINESS LAW

What is Business law?

It is the branch of law which is concerned with

business entities like companies and partnership. Business
entities plays an important role in the society and
significantly impact the economy of a country.

Characteristic of Business Law

Law therefore steps in to define their rights and obligations with a view to protecting
their interest, and of those deal with them. In fact the very creation of business is governed
by business law.

 Any transaction or phenomenon that may affect the activities of businesses is a part of
business law.
 Business law is a vast legal discipline and encompasses within its ambit a large
variety of laws like: contract law, intellectual property law, securities law, employment
law, and to name a few.
 While term „business law‟ are often used interchangeably, certain jurisdictions do
consider the two to be somewhat distinct areas of law, but nevertheless intricately
connected.
 Every aspect of a business is associated with legal consequences. Right from the
creation to the dissolution of the business, nothing can be done in disregard of the
legal principles enshrined under the area of business law.
 With the ever increasing focus on the growth of the economy
 Particularly given the current economic scenario
 Business laws have come to play a uniquely significant role in the
significant role in the contemporary times

 A business entity cannot hope to be successful without keeping itself updated with the
various business laws.
 It also makes businesses responsible towards and accountable to the nation at large.
(Locus Rags/ Slide share, Characteristic of the Business Law,
http://www.lawassignmenthelp.com/)

Civil Code provisions on obligations and contracts

Book IV of the Civil Code deals with obligations and contracts. The general provisions
on obligations are contained in Title I, Articles 1156-1304, while those on contracts, in Title II,
Articles 1305-1422. The general rules of law governing contracts are also applicable to the
particular kinds of contracts (like sale, agency, partnership, barter, etc.). Book IV also
contains new provisions dealing with natural obligations which are found in Title III, Articles
1423-1430.

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INTRODUCTION TO BUSINESS LAW

Law on Obligation and contracts defined

“The law of obligations and contract is the body of rules which deals with the nature and
sources of obligations and the rights and duties arising from agreement and the particular
contracts

Before discussing the particular concepts on the Law on Obligations and

Contracts, it is important to know that in every obligation, one must always observe the
general principles on human relations, to wit:
“ART. 19. Every person must, in the exercise of his rights and in the performance of
his duties, act with justice, give everyone his due, and observe honesty and good
faith.” (Civil Code of the Philippines)

Failure to observe the above principle makes a person civilly liable.

Conclusive presumption of knowledge of law.

Ignorance of the law excuses no one from compliance therewith. (Art. 3, civil Code.)

“Everyone, therefore, is conclusively presumed to know the law.” This presumption is

far from reality but it has been established because of the obligatory force of law.

The following reasons have been advances for this presumption:

1) If laws will not be binding until they are actually known, then social life will be
impossible, because most laws cannot be enforced due to their being unknown to
many;
2) It is impossible to prove the contrary when a person claims ignorance of the law;
3) It is absurd to absolve those who do not know the law and increase the obligations of
those who know it;
4) In our conscience, we carry norms of right and wrong, and a sense of duty, so that our
reason indicates many times what we have to do and in more complicated juridical
relations, there are lawyers who should be consulted (A. Tolentino, op.cit., pp. 18-19)
5) “Evasion of the law would be facilitated and the administration of justice would be
defeated if persons could successfully plead ignorance of the law to escape the legal
consequences of their acts, or to excuse non-performance of their legal duties. The
role, therefore, is dictated not only by expediency but also by necessity.” (Ibid., p. 7;
Zulueta vs. Zulueta, 1 Phil.254)

Thus, ignorance of the provisions of the law imposing a penalty of illegal possession of
firearms, or punishing the possession of prohibited drugs, does not constitute a valid excuse
for their violation.

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INTRODUCTION TO BUSINESS LAW

ABSTRACTION / GENERALIZATION
 Law as defined in general as any rule of action or norm of conduct applicable to all
objects of creation is divided into two general groups: (1) Law (in the strict legal sense)
which is promulgated and enforced by the state, known as the state law; (2)Law (in
the non-legal sense) which is not promulgated and enforce y the state, include divine
law, natural law, moral law, and physical law.
 The characteristic of law in specific sense are: (1) a rule of conduct; (2) It is obligatory;
(3) Promulgated by legitimate authority; lastly (4) It is of common observance and
benefit. In the necessity of Law, Society comes into existence because its members
could not live without it. It secures justice, resolves social conflicts, bring orders to the
society, protects interest, controls social relations. As member of the society we
should have some understanding of law and observe it for the common good. As Art.
3, of the Civil Code of the Philippines state that “Ignorance of the law excuses no one
from compliance therewith.”
 Business law is the branch of law which is concerned with business entities like
companies and partnership. These are evidences that business law exist in a certain
company: They have transactions that affect business activities is a part of business
law; there is a vast legal discipline; it is mostly used interchangeably; every aspect of
business is associated with legal consequences. Its makes businesses responsible
towards and accountable to the nation at large.
 The law on Obligations and contract is the body of rules which deals with the human
nature and sources of obligations.

APPLICATION

Activity 1.2

Make a short case study on the scenario below.

What would be your own opinion about the case?
(Case study should be encoded and submitted in short white folder)

Case: Anabel was crossing the street coming from the hotel to the nearby shopping
mall. She was accidentally hit by a hotel car driven by Leandro, a driver employed by the
hotel. Can Anabel sue the driver? Can she sue the hotel?

ASSESSMENT

REVIEW QUESTIONS: (Write your answer on yellow sheet of paper)

1. Why it is necessary to have laws in our society?

2. Enumerate and define the two general groups of law?
3. What is our duty and responsibilities as the member of the society?
4. Define Business law and its characteristic.
5. In what ways do you expect this subject to be of value to you?

Submission: Sept. 30, 2021 / Thursday

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INTRODUCTION TO BUSINESS LAW

EVALUATION

Name: Score:
COURSE / YEAR Date:

Part 1. True or False. Write true on the blank provided if the statement is correct and false if
the statement is not correct.

1. _______________________ Society needs lawyers as a means of social control.

2. _______________________ Statutes are example of Divine Law.

3. _______________________ Divine laws are Positive Laws.

4. _______________________ Anything legal is moral.

5. _______________________ Morality is that quality of human acts which leads us to

call some of them good and some evil.
6. _______________________ Law is obligatory and promulgated by illegitimate
authority.
7. _______________________ Civil law or Imperative law are State Law.

8. _______________________ Legislation consists in the declaration of legal rules by

a competent authority.
9. _______________________ Civil Code is an illustration of laws which regulates the
private relations of members of civil society.
10. ______________________ Life without basic laws against theft, violence, and
destruction would be melancholy, nasty, cruel, and
short.
11. ______________________ A custom is that which is habitually done in the community.

12. ______________________ What is moral may not be legally demandable.

13. _____________________ Anything moral is demandable.

14. _____________________ Law must be observed by all for the benefit of everyone.

15. _____________________ All society can be stable if law doesn‟t exist.

Part 2. Identification. Write your answer on the blank provided.

1. _______________________ Any rule of action or norm of conduct applicable to all

objects of creation.
2. _______________________ One of the characteristic of law which is considered a
positive command imposing a duty to obey.
3. ______________________ Tell us what shall be done and what shall not be done.

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INTRODUCTION TO BUSINESS LAW

Part 2. Identification

4. _______________________ The written instrument by which the fundamental powers of

the government are established, limited, defined, and by
which these powers are distributed among the several
departments for their safe and useful exercise for the
benefit of the people.
5. _______________________ The body of rules which deals with the nature and sources
of accountability and the rights and duties arising from
agreement and the particular contracts.

Part 3. Essay.

1. How would you relate laws of customs and laws of morals? (5pts.)

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

2. What characteristic of business law interest you most and why? (5pts.)

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

“Don’t worry about anything. But pray and ask God for everything you need”
(Philippians 4:6)
God bless.

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INTRODUCTION TO BUSINESS LAW

References and Supplementary Materials:

Books & Journals:

Hector S. De Leon, Hector M. De Leon, The Law on Obligations and Contracts, 2014 Edition.
Susan Ballada, Atty. Don James C. Mendoza, Simplified Law on Obligations and Contracts,
2007 Issue – 2nd Edition.

Online Supplementary Reading Materials

Locus Rags/ Slide share, Characteristic of the Business Law,

http://www.lawassignmenthelp.com/
Atty. Christine P. Carpio – Aldequer, Law on Obligations and Contracts in the Philippines, An
overview, downloaded from Academia.edu.com.

Prepared by:

Archill B. Yapparcon
Part-time Instructor

CP no: 09175986021 - Globe

09185062276 - Smart
Email add: [email protected]

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