MODULE I-WEEK I

PART A.INTRODUCTION TO LAW

Class: ENT103

Date: September 8, 2020

Topic:BUSINESS LAW AND TAXATION

I.
A. INTRODUCTION TO LAW
1. Law defined
2. Divisions of Law
3. Sources of Law
4. Rules in the Interpretation of the Law
5. The Interplay of the Executive, Legislative and Judicial Branches of Government
6. The Judicial Branch- the Hierarchy of Courts
7. Private Law v. Public Law
8. Concepts and Sources of Civil Law
9. Law on Obligations and Contracts
10. Obligations and Contracts vis-a-vis Special Contracts

B. OBLIGATIONS AND CONTRACTS

1. Chapter I- General Provisions -Article 1156 -1162

C. Chapter II-Nature and Effect of Obligations

1. Article 1163-1178

Learning Objectives
At the end of the Chapter, the student should be able to:
1. Understand the Philippine Legal System;
2. Understand the General Principles of Law;
3. Understand the nature and sources of law, and the concept of the rule of law and how it affects business
and economic prosperity;
4. Determine the role of the Government in enacting, implementing and interpreting the law;
5. Define and familiarize terminologies applicable in the field of law;
6. Determine the relevance on the study of law to business;
7. Relate the study of the legal environment of business, specifically the role of ENT103, to create a
foundation for future business courses.

Law Defined
Sanchez Roman made a distinction between the two senses, the term law connotes: the general sense and
the specific sense.
A. GENERAL SENSE (DERECHO)
 Law is defined as the science of moral laws based on the rational nature of man.
 These moral laws govern his free activity for the realization of his individual and social ends. They are,
by their very nature, demandable and reciprocal.

 Law in the general sense, refers to the abstract and moral conception of law.
 Morality recognizes that humans, as rational creatures, have free will, and that they have every right
to exercise this free will to achieve their unique and individual aspirations.
 This right cannot be infringed and must be respected by other humans.

B. SPECIFIC SENSE (LEY)

 Law is is defined as a rule of conduct.
 These rules of conduct are just and obligatory.
 They are promulgated by legitimate authority.
 They are of common observance and benefit.

Classification of Law
SUBSTANTIVE AND PROCEDURAL LAW

SUBSTANTIVE LAW

 That part of the law which creates, defines and regulates rights, or which regulates the right and
duties which give rise to a cause of action; that part of the law which courts are established to
administer.

REMEDIAL LAW

 Prescribes the method of enforcing rights or obtain redress for their invasions (36 C.J. 27; 52 C.J.S.
1026).
 Defines the method or proceedings in the enforcement of the rights and duties defined in
substantive law
 It is the law that deals with the process which the courts must follow in order to enforce the
substantive law.
 It enforce the methods of enforcing those rights and obligations created by substantive law.

There are two primary sources of the law:

1. STATUTES OR STATUTORY LAW - Statutes are defined as the written enactment of the will of the
legislative branch of the government rendered authentic by certain prescribed forms or solemnities are
more also known as enactment of congress. In the Philippines, statutory law includes:
a. Constitutions
b. Treaties
c. Statutes proper or legislative enactments
d. Municipal charters
e. Municipal legislation
f. Court rules
g. Administrative rules and orders
h. Legislative rules and
i. Presidential issuance.

2. JURISPRUDENCE - OR CASE LAW - is cases decided or written opinion by courts and by persons
performing judicial functions.

 Also included are all rulings in administrative and legislative tribunals such as decisions made by the
Presidential or Senate or House Electoral Tribunals.
 Rules in the Interpretation of the Law

I. LEGAL MAXIMS IN STATUTORY CONSTRUCTION

1. LITERAL MEANING OR PLAIN MEANING RULE

 If the statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied
without attempted interpretation.

 Where a statute defines a word or phrase employed therein, the word or phrase should not, by
CONSTRUCTION, be given a different meaning.

 It is settled that in the absence of legislative intent to define words, words and phrases used in
statute should be given their plain, ordinary, and common usage meaning which is supported by the
maxim GENERALIA VERBA SUNT GENERALITER INTELLIGENDA or what is generally spoken
shall be generally understood. It is also the same as GENERALI DICTUM GENERALITIR EST
INTERPRETANDUM a general statement is understood in a general sense.

2. UBI LEX NON DISTINGUIT NEC NOS DISTINGUERE DEBEMUS .When the law does not distinguish,
do not distinguish.

3. DURA LEX SED LEX OR HOC QUIDEM PERQUAM DURUM EST, SED ITA LEX SCRIPTA EST.
 The law maybe harsh, but is still the law. It is exceedingly hard, but so the law is written.

4. DOCTRINE OF NECESSARY IMPLICATION

 The doctrine states that what is implied in a statute is as much a part thereof as that which is
expressed. Every statute is understand by implication to contain all such provision as may be
necessary to effectuate to its object and purpose, or to make effective rights, powers, privileges or
jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly
and logically inferred from its terms. The principle is expressed in the maxim EX NECESSITATE
LEGIS or from the necessity of the law.

5. EJUSDEM GENERIS
 Means of the same kind or specie.

 This is to give effect to both the particular and general words, by treating the particular words as
indicating the class and the general words as indicating all that is embraced in said class, although
not specifically named by the particular words.

 The rule of ejusdem generis is not of universal application; it should be used to carry out, not to
defeat the intent or purpose of the law; the rule must give way in favor of the legislative intent;

6. EXPRESSIO UNIOS EST EXCLUSIO ALTERIUS.

 the expression of 1 person, thing or consequence IMPLIES the EXCLUSION of OTHERS or What
is expressed puts an end to that which is implied.

7. DOCTRINE OF CASUS OMISSUS (CASE OF OMISSION) PRO OMISSO HABENDUS EST

 A person, object or thing omitted from an enumeration must be held to have been omitted
intentionally. This rule is not absolute if it can be shown that the legislature did not intend to
exclude the person, thing or object from the enumeration. If such legislative intent is clearly
indicated, the COURT may supply the omission if to do so will carry out the intent of the
legislature and will not do violence to its language.

8. DOCTRINE OF LAST ANTECEDENT OR AD PROXIMUM ANTECEDENS FIAL RELATIO NISI

IMPEDIATUR SENTENTIA
 Relative words refer to the nearest antecedents, unless the context otherwise
requires. QUALIFYING WORDS restrict or modify only the words or phrases to which they
are immediately associated.
  The last antecedent rule is a doctrine of interpretation of a statute, by which "Referential and
qualifying phrases, where no contrary intention appears, refer solely to the last antecedent."

9. REDDENDO SINGULA SINGULIS

 when two descriptions makes it impossible to reconcile, reconcile it to have a “singular meaning” to
settle the issue.

 Refers to each phrase or expression to its appropriate object, or let each be put in its proper place,
that is, the words should be taken DISTRIBUTIVELY to effect that each word is to be applied to the
subject to which it appears by context most appropriate related and to which it is most applicable.

10. STARE DECISIS

 Latin, Let the decision stand.
 The policy of courts to abide by or adhere to principles established by decisions in earlier cases.

 The doctrine that a trial court is bound by appellate court decisions (precedents) on a legal question
which is raised in the lower court. Reliance on such precedents is required of trial courts until such
time as an appellate court changes the rule, for the trial court cannot ignore the precedent (even
when the trial judge believes it is "bad law")

11. RES JUDICATA

 Latin, A thing adjudged.
A rule that a final judgment on the merits by a court having jurisdiction is conclusive between the
parties to a suit as to all matters that were litigated or that could have been litigated in that suit.

12. INTERPRETATIO FIENDA EST UT RES MAGIS VALEAT QUAM PEREAT

 The interpretation that will give the thing the EFFICACY is to be adopted. Law must receive
sensible interpretation to promote the ends for which they are enacted. They should be given
practical CONSTRUCTION that will give LIFE to them, IF IT CAN BE DONE without doing
VIOLENCE to reason.

13. UT RES MAGIS VALEAT QUAM PEREAT

 A STATUTE must be interpreted to give it efficient operation and effect as a whole avoiding the
nullification of provisions. IT is so that a legal provision must not be so construed as to be a useless
SURPLUSAGE. Accordingly, in case of Doubt or obscurity, that construction should make the
statute fully operative and effective.

14. INTERPRETARE ET CONCORDARE LEGES LEGIBUS EST OPTIMUS INTERPRETANDI MODUS,

 Every statute must be so CONSTRUED and harmonized with other statutes as to form a uniform
system of Jurisprudence. ALL laws are presumed to be consistent with each other.

15. A GENERAL LAW AND A SPECIAL LAW ARE IN PARE MATERIA.

 The fact that one is general and the other special creates a presumption that the special act is to be
considered as remaining an exception of the General Act. One as a General Law of the Land, the
other as a LAW for a Particular case. This shall apply all the time regardless of which law was
enacted first.

16. DOCTRINE OF NECESSARY IMPLICATION,EX NECESSITATE LEGIS OR FROM THE NECESSITY

OF THE LAW.
 Every statute is understood by IMPLICATION, to contain such provisions as maybe necessary to
EFFECTUATE its object and purpose, or to make effective Rights, powers, privileges or
JURISDICTION which it grants, including all such COLLATERAL and subsidiary consequences as
may be fairly and LOGICALLY inferred from its TERMS.

17. INCONSISTENT REGULATIONS/LAWS

 If both the statute and the ordinance can stand together and be given effect, it is the duty of the
courts to harmonize them and not nullify the ordinance.

 City and municipal ordinances must be consistent with STATUTES. Such ordinances are
inconsistent with state law when they cannot co-exist with a statute.
18. SELF-EXECUTING PROVISION
 Does not require enabling legislation for its enforcement.

19. MANDATORY PROVISION

 Declares or imposes a duty or requirement that must be followed.

20. DIRECTORY PROVISION

 Sets forth procedures or " confers discretion on the legislature" for its implementation.

21. RETROACTIVE ENACTMENT OF LAWS

 Accordingly, when a statute is amended while an action is pending, the rights of the parties are to
be deemed in accordance with the law in effect when the action is begun, unless the
amended statute shows a clear intention to vary such rights.

 retroactive laws are not favored, and that a statute is always construed to operate prospectively
unless a contrary legislative intent is manifest; New laws will apply only to future cases unless
there is something in the very nature of the case, or in the language of the new provision, which
shows that the new law was intended to have a retrospective effect.

 Retroactive effect will be given to a statute only when legislative intent that a statute be so applied
is stated in clear, explicit, and unequivocal terms.

22. Two Statutes Pertaining to the Same Subject

 It is well accepted that statutes relating to the same subject should not be read in isolation. Such
statutes should be considered in pari materia. Moreover, statutes dealing with the same subject
matter should be construed together to achieve a harmonious result, resolving conflicts to give
effect to legislative intent.

23. The Terms May/Shall

 The term "may," as used in a statute, should be given its ordinary meaning intended by the
CONGRESS -permission, importing discretion.

 The use of the word "shall" in a statute generally implies that its terms are intended to be
mandatory, rather than permissive or directive.

24. The Term Aggrieved “Locus Standi”

 The term 'aggrieved' has a settled meaning when it becomes necessary to determine who is a
proper party to seek court relief from an adverse decision. In order for a petitioner to
be 'aggrieved,' it must affirmatively appear that such person had some direct interest in the subject
matter of the proceeding that he seeks to attack. The petitioner 'must show that he has an
immediate, pecuniary and substantial interest in the litigation, and not a remote or indirect interest.

II. INTERPRETATION OF CONTRACTS

 The interpretation of contract is the determination of the meaning of the words/terms used in its
contents that are ambiguous, not understood, and not obvious.
 An interpretation involves a question of law since there is a force of law between the contracting
parties.

Some principles in the interpretation of contracts

1. LITERAL MEANING
 The literal meaning of the words/terms and provisions/stipulations shall prevail if they are clear and
leave no doubt upon the intention of the contracting parties.
2. EVIDENT INTENTION OF THE PARTIES
 The evident intention of the parties shall prevail if there is a conflict between such intention and the
terms.
 The evident intention are determined by considering:
a. the interpretation to the terms and stipulations by the parties themselves.
b. the contemporaneous and subsequent acts of the parties.
c. the mutual relationship between the parties and the purpose of the contract.
3. INCONSISTECY OF GENERAL TERMS
 The specific terms shall prevail if there is inconsistency or confusion over the uses of general terms
covering the same subject matter. Similarly, a specific intent prevails over a general intent.
 The meaning of general words/terms should not also include things and events that are different from
those upon which the parties intended to agree.

4. STIPULATIONS HAVING MULTIPLE MEANINGS

 The most adequate meaning shall prevail if some provisions/stipulations have several meanings.
The provisions should bear that interpreted meaning (input) to make the contract valid and effective.

5. TERMS HAVING MULTIPLE MEANINGS

 The most sensible meaning shall prevail if a word/term has multiple meanings. The sensibility of a
meaning is determined by:
 keeping with the nature and object of the contract.
 presuming the ordinary and generally accepted meaning.
 proving it with the use of evidences.

6. DOUBTFUL PROVISIONS
 The interpretation of a contract as a whole shall prevail if there are various doubtful stipulations in
the entirety.
 The provisions of a contract must not be viewed together, not in isolation to each other. These
provisions are harmonized with each other so as to give effect and meaning to the entire contract.

7. USAGE OR CUSTOM OF THE PLACE

 The usage or custom of the place shall prevail if the parties entered into their contract with reference
to such usage or custom.

8. OBSCURE TERMS
 The interpretation of obscure term or stipulation shall be against the party who caused the obscurity.
This is because one should be careful in drafting a contract and responsible in case of mistakes and
ambiguity.

9. SUPPLEMENTARY RULE OF INTERPRETATION

In case the aforementioned rules are unable to settle doubts, the supplementary rule shall resolved such
doubts:
 In incidental circumstances of a gratuitous contract, the interpretation should be made which would
result in the least transmission of rights and interests.
 In incidental circumstances of an onerous contract, the interpretation should be made which would
result in the greatest reciprocity of interests.
 In object, the contract shall be null and void since the intention of the parties cannot be known.
The Interplay of the Executive, Legislative and Judicial Branches of
Government

The Philippines is a presidential system of government, corollary to it, is the principle of separation of powers
wherein legislation belongs to Congress, execution to the Executive, and settlement of legal controversies to
the Judiciary.

1. The Legislative branch is authorized to make laws, alter, and repeal them through the power vested
in the Philippine Congress. This institution is divided into the Senate and the House of
Representatives.

2. The Executive branch carries out laws. It is composed of the President and the Vice President who
are elected by direct popular vote and serve a term of six years. The Constitution grants the
President authority to appoint his Cabinet. These departments form a large portion of the country’s
bureaucracy.

3. The Judicial branch evaluates laws. It holds the power to settle controversies involving rights that
are legally demandable and enforceable. This branch determines whether or not there has been a
 grave abuse of discretion amounting to lack or excess of jurisdiction on the part and instrumentality
of the government. It is made up of a Supreme Court and lower courts.

 The judicial system follows a ladderized scheme which in essence requires that lower courts initially
decide on a case before it is considered by a higher court.

 Specifically, under a judicial policy recognizing the hierarchy of courts, a higher court will not entertain
direct resort to it unless the redress cannot be obtained in the appropriate courts (Santiago v. Vasquez,
217 SCRA 167).

 The principle is an established policy necessary to avoid inordinate demands upon the Court’s time and
attention which are better devoted to those matters within its exclusive jurisdiction and to preclude
further clogging of the Court’s docket (Lim vs. Vianzon, G. R. 137187, August 3, 20026).

Private Law v. Public Law

Essentially, the difference between public law and private law is whether the act or acts affect society as a
whole or is an issue between two or more people.

PUBLIC LAW
To simplify things, public law deals with issues that affect the general public or state - society as a whole.
Some of the laws that its wide scope covers are:

 Administrative law - laws that govern government agencies, like the Department of Education.
 Constitutional laws are laws that protect citizens' rights as afforded in the Constitution.
 Criminal laws are laws that relate to crime.
 Municipal laws are ordinances, regulations and by-laws that govern a city or town.
 International laws are laws that oversee relations between nations.

PRIVATE LAW
Private law affects the rights and obligations of individuals, families, businesses and small groups and exists
to assist citizens in disputes that involve private matters. Its scope is more specific than public law and
covers:

 Law on Contract - governs the rights and obligations of those entering into contracts.
 Law on Torts - rights, obligations and remedies provided to someone who has been wronged by
another individual.
 Law on Property - governs forms of property ownership, transfer and tenant issues.
 Law on Succession - governs the transfer of an estate between parties.

Concept and Sources of Civil Law

CIVIL LAW- defined as the mass pf precepts which determines and regulates those relations of assistance,
authority and obedience existing among members of a family as well as among members of a society for the
protection of private interests (1 Sanchez Roman 70).

CIVIL CODE - defined as the collection of laws which regulates the private relations of the members of the
civil society, determining their respective rights and obligations with reference to persons, things and civil
acts. (1 Tolentino, Civil Code, p.10 )

SOURCES OF CIVIL CODE OF THE PHILIPPINES:

1. Civil Code of Spain of 1889;
2. Codes and Laws of other Countries;
3. Judicial decisions of the Supreme Courts of the Philippines, of various states of the United States, of
Spain, and of other countries;
4. Philippine laws or statutes, such as the Code of Civil Procedure (Act No. 190), the Rules of Court, the
Marriage Law (Act No. 3613, and the Divorce Law (Act No. 2710)
5. Works of Jurists and commentators of various nations;
6. Filipino customs and traditions;
7. The Code Commission itself.
Law on Obligations and Contracts

The body of rules which deals with the nature and sources of obligations and the rights and duties
arising from agreements and particular contracts

 The Law on Obligations and Contracts by Hector S. De Leon (2013 Edition)

 Pointers in Business Law by Suarez
 Annotations on the New Civil Code, Book IV by Edgardo Paras
 Civil Law Reviewer by Jurado