TITLES | DEFINITIONS. ‘Module in Business Law KEY NOTES | TOPICS EXAMPLES | SUB-TOPICS Introduction to Law ‘Meaning of Law in General. 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\rationall/beings|but/alsojthe movements or motions of all objects of creation, whether animate of inanimate. ‘Genera Divisions of Law. Law, as above defined, maybe divided into two (2) general groups: (a) Law{in the strict legal sense) which is promulgated and enforced by the state; and (2) Lewin the non-legal'sense) which s not promulgated and enforced bythe state, The first refers to what is known as the state law while the second includes divine law, natura Jaw, moral law, and physical law Subjects of Law. State law, divine law, natural law, and moral law are comprised in the definition of law asa rule of action. They apply to men as rational beings only, On the other hand, physical law opérates/on all things, including men, without regard to the etter’s use oftheir will power and intelligence. I is called law only figuratively speaking Before proceeding with the discussion of state law, let us first dispose of those laws with which the state isnot directly concerned Divine law. Divine law is the law of religion and faith which concerns itself with the concept of sin (as contrasted with crime) and salvation, ‘Natural law. ‘Natural law may then be defined as the divine inspiration in man of the sense of justice, fairness, and ‘ighteousness, not by divine revelation or formal promulgation, but by internal dictates of reason alone. ‘Moral law. When we talk of moral law, we are speaking of the totality of the norms of good and conduct growing ‘out of the collective sense of right and wrong of every community. Physical law. “tn the operation of course of nature, there are uniformites of actions and orders of sequence which are the’ physical phenomena that we'sense/andfeeli They are known as the laws of physical science or physical law." 1.Coros, Mara Dawn J. LL.B. Downloaded by Johinloyd daracan (ird0304@gmai.com)Module in Business Law The kind of law, however, which particularly concerns us in this work is the state law or the law or the aw that is promulgated and enforced by the state. Concepts of (state) law. The term law may be understood in two (2) concepts: specific or material sense. (1) Inits general'sense, the term refers to all the laws taken together. It may be defined as “the mass of obligatory rules established forthe purpose of governing the relations of personsin society” (2) Init specific sense, the term has been defined as "a rule of conduc, just, obligatory, promulgated by legitimate authority, and of common observance and benef.” Sources of Law. The 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 25 “the written instrument by which the fundamental powers ofthe government ae established, limited, and defined, and by which these powers are distributed among the several departments for thelr safe and useful exercise forthe benefit ofthe people.” (2) Legislation. - it consists in the declaration of legal rules by competent authority. (Salmond, Jurisprudence, 9" ed., p. 209.)It is the preponderant source of law in the Phillosnes. Acts passed by the legislature are so-aled enacted law or statue law. Legislation includes ordinances enacted by local governments units, (3) Administrative or executive orders, regulations, and rulings. - They are those issued by ‘administrative officials under legislative authority. Administrative rules and regulations are intended to clarify or explain the law and carry into effect its general provisions. Administrative acts are valid only when they re not contrary tothe laws and Constitution. (Art. 7, Civil Code.) (4) udicia decisions oF jurisprudence, - The decisions of the courts, particularly the Supreme Court, applying or interpreting the laws or the Constitution form part of the legal system of the Philippines. (Art. 8, /bid.) The decisions of a superior court on a point of law are binding on all subordinate courts. This is called the doctrine of precedent ot stare decisis. (5) Custom, - “It consists of those habits and practices which through long and rules of conduct.” It has the force of law when recognized and enforced by the state. (M.1. Gamboa, op. cit, p. 15.) For instance, in a contract for services rendered where no definite compensation is stipulated, the compensation to be paid may be ascertained from customs and usages of the place. (see Smith vs. Lopez, 5 Phil. 78.) (6) Other SoUrCeS, ~ To the above may be added principles of justice and equity, decisions of foreign tribunals, opinions of textwriters, and religion. They are however, only the general or abstract sense, and in the 2 Coros, Mara Dawn J., LLB. Downloaded by Johnloyd daracan(Jrd0304@gmall.comModule in Business Law supplementary, that is, they are resorted to by the courts in the absence of all other sources. They are, however, not binding on the courts. (/bid., pp. 11, 14.) Rule in case of doubt in interpretation or application of laws Our Civil Code provides that “no judge or court shall decline to render judgement by reason of the silence, obscurity or insufficiency of the laws,” (Art. 9, Civil Code.) “In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail.” (Art. 10, Ibid.) In our country, courts are not only courts of law but also of justice. Faced with a choice between a decision that will serve justice and another that will deny it because of a too strict interpretation of the law, courts must resolve in favor of the former, for the ultimate end of the law is justice. (Pangan vs. Court of Appeals, 166 SCRA 375.) This is particularly true where what is at stake is the life, liberty, or property of an individual, and more so if he is poor or disadvantaged. Law on obligations and contracts defined. “The lw of obligations and contracts isthe body of rules which deals withthe nature and Sources ot obligations and the rights and duties arising fom agreements and the particular contract (iid; see ‘Act. 1307) Civil Code of the Philippines. The law on obligations and contracts is found in Republic Act No. 386, otherwise known as the Civil Code of the Philippines. When we speak of civil law, we refer to the law found primarily in our Civil Code. The Civil Code of the Philippines is based mainly on the Civil Code of Spain which took effect in Philippines on December 7, 1889. (Mijares vs. Neri, 3 Phil. 196.) It was approved as Republic Act No. 386 onJune 18, 1949 and took effect on August 30, 1950. (Lara vs. Del Rosario, 94 Phil. 778.) Title One: Obigations Chapter One: General Provisions, Art. 156, Civil Code- An obligation i a juridical necessity to give, todo, or not to do. Ibis a juridical relation ora juridical necessity whereby a person (ereltor) may demand from another (debtor) the observance of a determinative conduct (giving, doing, or not doing), and incase of breach, ‘may demand satisfaction from the assets of the latter (Makati Stock Exchange v. Campos, G.R. No. 138814, April 16, 2009). Elements of an Obligation (a) ACTIVE)SUBJECT (ObIige@/Creditor): The person who has|the right OF powerto/demand the prestation. (2). PASSIVE SUBJECT (Obligor/Debtor): The person bound to perform the prestation. 3 Coros, Mara Dawn J., LLB. Downloaded by Johnloyd daracan(jrd0304@gmal.com)‘Module in Business Law (3) PRESTATION (Objéet): The conduct required to be observed by the debtor/obligor (to give, to do, ‘or not to do). (4) VINCULUMJURIS (uridicalor Legal Tie Efficient Cause): That which binds or connects the partes to the obligation. (De Leon) Different Kinds of Prestations (1) TO(GIVE: real obligation; to deliver either (a) a specific or determinate thing, or (b) a generic or indeterminate thing. (2) TODO: positive personal obligation; includes all kinds of work or service. (3) NOT;TO!DO: negative personal obligation; to abstain from doing an act; inelidesithelobligation not to give. ‘Art. 1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and "Delicis" (5) Quasi-delicts. 4. Law— when they are imposed by law tse Example: Obligation to pay taxes; obligation to support one’s family. 2. Contracts ~ when they arise from the stipulation of the parties (Art. 1306.) Examp obligation to repay aloan or indebtedness by virtue ofan agreement, 3. Quastcontracts = when they arise from lawful, voluntary and unilateral acts which are enforceable to the end that no one shall be unjustly enriched or benefited at the expense of another. (Art.2142.) In a sense, these obligations may be considered as arising from law. Example: The obligation to return money pai by mistake or whichis not due. (Art. 254.) “oeucrs: 4, ets! or omissions punished by law ~ when they arise from vil iabilty which fs the sol consequence of a criminal offense. (Art. 1161.) Example: The obligation of a thief to return the car stolen by him; the duty of a killer to Indemnity the heirs of hs victim, -rotiontnl $+ Quasidelits oF torts - when they arise from damage caused to another through an act or ‘omission, there being fault or negligence, but no contractual relation exists between the parties. (Art. 2176) Example: The obligation ofthe head of the family that lives in a building or a part thereof to answer for damages caused by things thrown or falling from the same (Art. 2193.); the obligation Of the possessor ofan animal to pay forthe damage which it may have caused (Art, 2183) \ww ART, 1158, Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book. (1090) 4 Coros, Mara Dawn J. LL.B. Downloaded by Johinloyd daracan (ird0304@gmai.com)Module in Business Law Legal obligations. Article 1158 refers to legal obligations OF obligations arising from law. They are not presumed because they are considered a burden upon the obligor. They are the exception, not the rule. To be demandable, they must be clearly set forth in the law, i.e., the Civil Code or special laws. Thus: (2) Anemployer has no obligation to furnish free legal assistance to his employees because no law requires this, and, therefore, an employee may not recover from his employer the amount he may have paid a lawyer hired by him to recover damages caused to said employee by a stranger or strangers while in the performance of his duties. (De la Cruz vs. Northern Theatrical Enterprises, 95 Phil 739 (1954},) (2) A private schoo! has no legal obligation to provide clothing allowance to its teachers because there is no law which imposes this obligation upon schools. But a person who wins money in gambling has the duty to return his winnings to the loser. This obligation is provided by law. (Art. 2014.) Under Article 1158, special laws refer to all other laws not contained in the Civil Code. ILLUSTRATIVE CASE: Liability of husband for medical assistance rendered to his wife but contracted by hs parents. Facts: X, by virtue of having been sent for by B and C, attended as physician and rendered professional services to a daughter-in-law of B and C during a difficult and laborious childbirth Issue: Who is bound to pay the bill: B and C, the parents-in-law of the patient, or the husband of the later? Held: The rendering of medical assistance in case of illness is comprised among the mutual obligations to which spouses are bound by way of mutual support.4 If spouses are mutually bound to support each other, there can be no question that when either of them by reason of illness should be in need of medical assistance, the other is to render the unavoidable obligation to furnish the services of a physician and is liable for all expenses, including the fees for professional services. This liability originates from the above-mentioned mutual obligation which the law has expressly established between the married couple. B and C not having personally bound themselves to pay are not liable. (Pelayo vs. Lauron, 12 Phil. 453 [1909].) conTRACTS ART. 159, Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. (1091a) The above article speaks of contractual obligations or obligations arising from contracts or voluntary agreements. ‘contract @ meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (Art. 1305.) It is the formal expression by the partes of ther rights and obligations they have agreed upon with respect to eachother. ART. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII, of this Book. (n) ‘Quast CONTRACTS 5 Coros, Mara Dawn J., LLB. Downloaded by Johnloye daracan (0904@2gmal.combeucts Intentonal Module in Business Law Quasi-contractual obligations Article 1160 treats of obligations arising from quasi-contracts or contracts implied in law. 's that juridical relation resulting from certain lawful, voluntary and unilateral {cts by virtue of which the parties become bound to each other to the end that no one will be unjustly enriched or benefited at the expense of another, (Art, 2142.) It is not, properly, a contract at al, In a contract, there is a meeting of the minds or consent; the parties must have deliberately entered into a formal agreement. In a quasi-contract, there is no consent but the same is supplied by fiction of law. In other words, the law considers the parties as having entered into a contract, irrespective of their intention, to prevent injustice. Corollarily if one who claims having enriched somebody has done so pursuant to a contract with a third party, his cause of action should be against the latter, who, in turn, may, if there is any ground therefor, seek relief against the party benefi ted, (Cruz vs. J.M, Tuason & Co., Inc., 76 SCRA 543 [1977].) Kinds of quasi-contracts ‘The principal kinds of quasi-contracts are negotiorum gestio and solutio indebiti. (2) Negotiorum gstios the voluntary management ofthe property or affairs of another without the knowledge or consent ofthe latter (Art. 2144) Thus, if through the efforts of X, @ neighbor, the house of¥ was save from being burned, has the obligation to reimburse X forthe expenses Xincured although Y did not actualy give his consent to the act of Xin saving his house onthe principle of quasi: contact This juridical relation does not arise in either of these instances: (a) When the property or business is not neglected or abandoned, in which case the provisions of the Civil Code regarding unauthorized contracts (Arts. 1317, 1403[1], 1404.) shall govern; or (b) If, in fact, the manager has been tacitly authorized by the owner, in which case the rules on agency shall govern, (Art. 2144.) (2) Solutio indebit isthe juridical relation which i created when something is received when there'sino right to demand itandit was unduly devred through mistake (Art. 2254, The obligation to pay money mistakenly paid arises from the moment said payment was made, and not from the time the payee admits the obligation to reimburse. (Comm. of Internal Revenue vs. Esso Standard Eastern, Inc. 172 SCRA 364 [1989].) Under the principle, the government has to restore (credit or refund) to the taxpayer the amounts representing erroneous payments of taxes. (Phil. Geothermal, Inc. vs. Comm. of Internal Revenue, 465 SCRA 308 [2005}.) The quasi-contract of solutio indebiti is based on the ancient principle that no one shall enrich himself unjustly at the expense of another. Solutio indebiti applies where: {2} payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (b) the payment is made through mistake11 and not through liberality or some other cause. ART, 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws,14 subject to the provisions of Article 2177,15 and of the pertinent provi of Chapter 2, Prelit Title on Human Relations,16 and of Title XVIII of this Book, regulating damages. (1092a) 6 Coros, Mara Dawn J., LLB. Downloaded by Johnloys daracan(Jrd0304@gmall.comauas Module in Business Law This article deals with civ iablit arising from crimes or dlc (1) The commission of an offense has a two-pronged effect: one, on the public as it breaches the social order and the other, upon the private victim asi causes personal suffering or injury, each of which is addressed, respectively, by the imposition of heavier punishment on the acused and by an award of additional damages to the victim. (2) Oftentimes, the commission of a crime ceuses not only moral evil but also materia damage. From ths principle, the rule has been established that every person criminally lable for a felonyi7 is also civilly liable, (Art: 100, Revised Penal Code; see Albert, the Revised Penal Code Annotated, p. 276.) In crimes, however, which cause no material damage (like contempt, insults to person in authority, gambling, violations of traffic regulations, etc), there is no civil ability to be enforced. But a person not criminally responsible may stil be liable civilly. ( (Art. 29; Rules of Court, Rule 111, Sec. 2{¢].) ART, 1162. Obligations (derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws. (1093a) The above provision treats of obligations arising from quasi-delicts or torts. (see Arts. 217619 to 2194) abiligation to pay for the damage done, there being fault or negligence, but there is no preexisting contractual relation between the parties. Before a person can be held liable for quasi-delict, the following requisites must be present: (1) There must be an act or omission by the defendant; (2) There must be fault or negligence of the defendant; (3) There must be damage caused to the plaintiff; (4) There must be a direct relation or connection of cause and effect between the act or omission and the damage; and (5) There is no pre-existing contractual relation between the parties. The following are the distinctions: (1) Incrime or delict, there is criminal or malicious intent or criminal negligence, while in quasidelict, there is only negligence; (2) Crime affects public interest, while quasi-delict concerns private interest; (3) In-crime, there are generally two liabilities: criminal and civil,23 while in quasi-delict, there is only civil liability; (4) Incrime or delict, the purpose is punishment, while in quasidelict, indemnifi cation24 of the offended party; 7 Coros, Mara Dawn J., LLB. Downloaded by Johnloye daracan (jrd0904@2gmal.com