SLIDE 1

Good afternoon everyone, my name is Trinity R. Labbao and I am here today with Ms. Estella Irabagon and Ms. Alesandra
Laigo to discuss the topic of business laws application for architecture. As architects, we are often focused on the
creative aspects of our work, but it is equally important to have a solid understanding of the legal framework that
governs our profession.

SLIDE 2

In this presentation, we will discuss the key legal considerations that architects need to be aware of when running their
own business, we are first going to explain what business law is and of course its significance, regulations, and its types
including topics such as contracts, intellectual property, employment, and more. By the end of this presentation, our
group hopes that everyone would have a better understanding of the legal aspect in which architects operate, and the
steps you can take to protect yourself and your business.

SLIDE 3

So first let us define what business law is.

Business law is also known as commercial law or mercantile law is a section of code for business concerns with
government agencies and individuals that will be involved in interests of the following.

• Number 1 – Protecting liberties and rights.

• Maintaining order
• Resolving dispute
• Establishing Standards

But who are these individuals? Of course us architects, our clients, prospective partners, and syempre our employees in
the future

SLIDE 4

To expound these interest further let us discuss bakit ba importaneteng malaman yung business laws? Ano ba yung
nagagawa nito sa profession natin?

SLIDE 5

Number 1 reason: It deals with the compensation issues.

• There are several laws that architects and their employers must comply with when it comes to compensation,
kasama na doon is yung minimum wage laws, overtime pay requirements, and anti-discrimination laws. In
addition, are also specific laws that apply to architects. For example, required tayong magkaroon ng license in
order to practice, and these rules often include provisions related to compensation. For instance, we are entitled
to 10% of the awarded or final Project Construction Cost as a fee for our services.

Second reason is to Safeguard the Rights of Shareholders

• Another area where business laws come into play when it comes to enforcement of contracts. Architects often
enter into contracts with clients and other parties gaya ng contractors and suppliers, and under these contracts
may include provisions related to the amount of fees to be paid, kailan magbabayad, services included, and
kasama na rin yung incentives at penalties if ma-meeting or failure to meet certain timelines.

And last is business formation.

• So, business laws provide a legal framework or guidelines for the formation and operation of an architectural
firm or any business in the Philippines. By understanding these laws and complying with their requirements, we
 can establish and ensure that our business will be operating within the bounds of the law. This will be further
discussed later.

Slide 6

Next is the types of regulation. Pero bago yon lets define first, ano ba ang REGULATION? Si according to Cornell law
school A Regulation is an official rule or requirement that is established by a government agency or regulatory body to
implement and enforce a particular law. Regulations are more specific and detailed than the underlying law para ma-
guide tayo as citizens/ business kung paano tayo makakacomply sa batas.

In the business context there are two types of regulations, one is for the commercial entities and the other is for
commercial transactions. So an oba yung kaibahan ng dalawa?

• Regulation of commercial entities refers to the rules or guidelines that govern the formation, management, and
operation ng businesses. Included dito yung business structure kung corporation ba yung gusto mong itayo or
partnership or sole proprietorship. Pati na rin yung registration ng business, tax obligations and yung iba pang
requirements na kailangan sa pag-apply ng businesses.
• Yung Regulation of commercial transactions refers to the laws and regulations that govern the various
transactions gaya ng buying and selling goods and services, rent of any property, basiacally entering into
contracts. Included dito yung contract formation, negotiation, and enforcement ng contract, as well as laws
related to the stakeholder’s protection and intellectual property

Slide 7

Now that we identified the major categories of Business Laws lets look into more specific forms that is divided into 6
parts which are.

Slide 8

1. Formation Laws
2. Employment Laws
3. Intellectual Property Law
4. Taxes
5. Contract Law
6. Bankruptcy

Slide 9

So, the first form is known as FORMATION LAWS which refer to the laws that a business must follow in order to be
recognized as an official business. Without proper legal recognition by the law, a business cannot legally conduct
activities. These requirements typically include filing of necessary documents to the appropriate government agency and
complying with other legal and administrative requirements.

Slide 10

The specifics of formation law can vary depending on the type of business entity being formed. For example if we are to
establish an architectural firm we must follow The Architecture Act of 2004 specifically Sec. 37 which defines the
Limitation to the Registration of a Firm, basically sinasabi dito na ang allowed lang mag file for registration of an
architectural firm are registered and licensed Filipino Architects the ownership has its restrictions. Kung may partners ka
sapag tayo ng firm kailangan at least 75% ay pagmamay-ari ng architects

Slide 11

For the actual registration process, here are the steps on how to sign up a company in the Philippines.
First you have to identify what business structure to register whether sa SEC or DTI and enlist your firm in PRBoa – SO
paano ba malam kung sa DTI or SEC mag paparegister?

If you are doing business using a name none other than your true name, then you are required to register that business
with the Department of Trade and Industry. SOLE PROPRIETORESHIP

But if you have partners, or you are registering as a corporation then you will register your business under Security and
exchange commission.

After that you have to acquire certain permits such as barangay clearance and business permit from the mayor’s office
another registration process with Bureau of internal revenue for tax declarations and such that will be discussed later.
And lastly is to register your self or the owners as the Employers.

For the next slides, we gathered the general requirements for SEC Registration.

Slide 12

• They want you to Secure an original business name.

• Three accomplished and notarized SEC Form 39 that can be downloaded from their website

• Copies of identity cards of the major stockholders or someone who control more than ten percent 10% of the
company.

• Drafts of compulsory papers required for the specific business entity such as

o Articles of Incorporation and By-laws

▪ The Articles of Incorporation states the name, mission, vision, place of office, owners, capital
stock, and kailan nabuo yung Company.

▪ By-Laws is outline ng rules company mo when it comes to annual and special meetings, voting,
minimum number, notice of meeting and auditors and inspectors of election.

o Treasurer’s Affidavit

▪ Yung Treasurer's Affidavit is a support for the applicant's claim that the required capital stock has
been paid. This will be used by the SEC to verify the existence of the declared funds.

▪ CAPITAL STOCK - Capital stock refers to the total amount of money and assets that a company
has available to finance its operations and investments. In simpler terms, it's the money and
other resources that a company has available to use for its business activities. This can include
things like cash, equipment, buildings, and investments.

o Organizational chart

o Detailed Business Plan

Slide 22

The fifth form of business law is about Contracts which governs the formation and enforcement of contracts, including
their terms, conditions, and resolutions for violation. It provides a framework for businesses and individuals to enter into
agreements. The principles of contract law are generally based on common law, which means that they are derived from
judicial decisions and legal precedents. Contract law covers a wide range of commercial and personal transactions,
including employment contracts, lease agreements, sale of goods contracts, and construction contracts.

• Contract with clients

 Architects typically enter contracts with their clients, which set out the scope of work, the fees and payment
terms, and other important details of the project. These contracts are important because they establish the legal
obligations and expectations of both parties.
• Contract with subcons
In addition, architects may also be involved in contracts with contractors and subcontractors, which set out the
terms and conditions of the construction work to be performed. These contracts may include provisions for
payment, timelines, warranties, and other important details that are essential to the successful completion of
the project.

Slide 23

If two people are engaged in a contract, and one of the parties failed to fulfill their obligation, entitled yung other side of
the party to be compensated due to Damages which is defined as money or compensation given to the non-breaching
party of a contract. It is a legal remedy. There are six common types of damages a person can recover — compensatory,
incidental, consequential, nominal, liquidated, and punitive. Let’s explore each damage type in greater detail.

1. Compensatory damages are money paid directly to the non-breaching party to compensate for the worth of
what was left incomplete or performed incorrectly. As an example, let’s say you hired employees to work under
your firm and you have a signed contract na magtatrabaho siya sayo for a year for 400,000 thousand but biglang
nagbago isip mo and you don’t want that employee on that project. What ever it is left sa 400k kailangan niyang
matanggap kasi nawalan siya ng trabaho. Pero kung nakahanap siya ng trabaho na ang sweldo a year is 350k, 50
k na lang yung Compensatory damages na kailangan mong bayaran.
2. Incidental refers to something that happens by chance. It was not intended. Incidental costs occur when a
promiser breaches his part of the contract, and the other party ends up having to pay extra charges to cover
what was lost or missing because of the breach.
3. Consequential damages can be considered special damages because they don’t happen directly from the breach
of contract but are consequences that occurred because of the breach.
a. So what is the difference between incidental and consequential damages?
i. Yung incidental damages happen as a direct result of the breach of contract.
ii. Consequential damages are encountered not because of the broken contract but it is the result
of the broken contract.
b. A tile company made a contract with a subcon to deliver 800 boxes of tiles by the end of November, na
gagamitin ng subcon sa project nila. However, noong dumating yung deadline, the subcon discovered
that the tile company failed produced the 800 boxes of tiles.
Therefore, the tile company has breached the contract it entered with the subcon. Ngayon problemado
yung subcon because nabayaran na nila yung kontrata sa Tile company, and they have to shoulder the
costs of finding a different manufacturer, na mas mahal ang bayad, for the rush manufacturing of the 800
boxes of tiles para lang magamit nila in time for their next project.
So sa example na ‘to, yung incidental damage refers to the initial costs na nilabas ng subcon to hire the
tile company. Yung consequential damages naman is yung cost na kailangang bayaran ng subcon to hire
an additional contractor – sa mas malaking halaga – para lang magawa yung trabaho ng tile company
that was contracted to do in the first place. Pwedeng maghabol yung subcon sa tile company for both
Incidental and consequential damages due to breach of contract.
4. For the liquidated damage naman it occurs where it is hard to assess the amount of loss in damages. So a sum
that is estimated based on the project is given as the award. It must be shown in court that actual damages were
hard to ascertain. Liquidated damages are specified by both parties in the beginning, as they are drawing up the
contract. The liquidated damages clause sa kontrata will be used to define a precise amount of money that will
be provided to the non-breaching party of the contract.
a. This clause maybe beneficial, pero may drawback depending on how they were written. For example, if
the amount listed in the clause ay masyadong mahal, meaning hindi niya na re-reflect yung actual losses,
when you apply this to the court, they will refuse to impose the damages. Bakit? Kasi yung damages will
 act as a penalty instead of being a payment for the damages caused. Courts will evaluate if the liquidated
damages are reasonable, kasama sa evaluation yung circumstances when the contract was written as
opposed to the circumstances when the breach occurred. If it is decided that the estimated losses were
not reasonable, the liquidated damages won't be enforced. But the benefit of liquidated damage is kung
ikaw yung non-breaching party, hindi mo na kailangang patunayan na you suffered loss in the process.
Magbabayad yung breaching party monetary compensation to cover the losses.
5. Nominal damages are awarded when there is a breach of contract, but the yung non-breaching party did not
suffer any loss or, if they did, it can’t be proven how much. So kung yung compensatory damages are awarded to
make up for the loses of the non-breaching party, yung nominal damages naman are awarded to remember the
days you spent in court. Bale babayaran ka nila kasi naabala ka nila for attending court hirings.
a. Now awarding of nominal damages in a contract claim is not very common. kasi these cases tend to
include financial losses if breaching has occurred. Other types of damages are awarded more frequently,
including compensatory damages, and liquidation damages.

Slide 24

The last form of business law is Bankruptcy, it is a legal action begun by a person or a corporation that is unable to pay
their obligations and seeks to have the debts forgiven or restructured by the courts.

Actually, There is no terminology as bankruptcy in Philippine laws. We refer to it as insolvency. Being insolvent refers to
the financial condition of a debtor that is unable to pay its liabilities as they fall due in the ordinary course of business or
its just that yung liabilities are more than their assets.

Since wala tayong legal proceeding on bankruptcy, we adopted the United Nations Commission on International Trade
Law (UNCITRAL) Model Law on Cross-Border Insolvency and created Financial Rehabilitation and Insolvency Act (FRIA) of
2010, which took effect on July 18, 2010.

Bago yon ano yung nag gogovern sa bankruptcy? Interestingly, meron tayong Insolvency Law (Act No. 1956) has existed
in the Philippines since 1909. It provided for procedural rules tungkol sa Suspension ng Payments ng individuals and
companies, pati na rin yung liquidation of companies.

Slide 25

Corporate rehabilitation is a remedy para sa businesses which foresee the impossibility of meeting their debts. The
debtor is given a “fresh start” or “a new lease on life [to] thereby allow creditors to be paid their claims from [the
debtor’s] earnings.” There are three types of rehabilitation.

• Court-Supervised Rehabilitation
o A voluntary court-supervised rehabilitation may be initiated by the insolvent debtor through a verified
petition, accompanied by: the approval of the owner in case of sole proprietorship; an approval by
majority vote of the partners with authority from the stockholders.
o On the other hand, kapag involuntary court-supervised rehabilitation it is initiated ng creditors with at
least One Million Pesos (PhP1,000,000.00), or at least twenty-five percent (25%) of the capital stock or
partners’ contribution, or whichever is higher
• Pre-Negotiated Rehabilitation
o The pre-negotiated Rehabilitation Plan should be endorsed and approved by creditors holding at least
two-thirds (2/3) of the total liabilities of the debtor, including secured creditors holding more than fifty
percent (50%) of the total secured claims, and unsecured creditors holding more than fifty percent (50%)
of the total unsecured claims.
▪ The Rehabilitation Court shall have a maximum period of one hundred twenty (120) days from
the date of the filing of the petition to approve the Rehabilitation Plan, and if it fails to act within
said period, the same shall be deemed approved.
 • Out-Of-Court Informal Restructuring Agreements or Rehabilitation Plans
o An out-of-court informal restructuring/workout agreement is just an agreement between the parties
involved. Hindi na kailangan dumaan sa court to resolve the debts. But it has limitations.
▪ Una, the debtor (yung may utang) and creditors (pinagkakautangan) must agree to the out-of-
court or informal restructuring/workout agreement or Rehabilitation Plan;
▪ Approved by creditors representing at least sixty-seven (67%) of the secured obligations of the
debtor; (Secured loans require some sort of collateral, such as a car, a home, or another valuable
asset, that the lender can seize if the borrower defaults on the loan.)
▪ Approved by creditors representing at least seventy-five percent (75%) of the unsecured
obligations of the debtor; (Unsecured loans require no collateral but do require that the
borrower be sufficiently creditworthy in the lender's eyes
▪ It must be approved by creditors holding at least eighty-five percent (85%) of the total liabilities,
secured and unsecured, of the debtor.

Slide 26

So for our case study we have the manosa properties inc.

In 2019 Mañosa Properties filled a petition for rehabilitation after a failed venture into different projects.

In a petition filed sa Regional Trial Court of Parañaque (dated Aug. 9, a copy of which was obtained by the Inquirer), MPI
asked the court to be placed under insolvency and nagpropose sila ng plan tpo pay all secured and unsecured creditors
over a 10-year period, with one-year grace period, without any interest rate.

So what happened is that, debt they owed ay hindi galing sa bangko pero sa individuals, trade suppliers, partner-
landowners and buyers of unfinished villas, houses and condominium units. They breached contracts, for example sa
buyer’s ng property kasi naibenta na nila yung units and nabayaran na sila. Sa sales kasi sila nagrely to fund the
construction of the projects. They are blaming the general contractors for unspecified losses in cash collections. Bale
mismanagement ng funds yung main cause daw.

https://www.pressreader.com/philippines/the-philippine-star/20190917/281994674195825