University of Northeastern Philippines

Iriga City, Camarines Sur

The Importance of Business Law:

What Business Owners Should Know

Ochavo, Mary Rose C.

BSA
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 TABLE OF CONTENTS

TITLE PAGE ..................................................................... ..….1

TABLE OF CONTENTS ...................................................... …...2

I. INTRODUCTION ……………………......……………….........3-5

II. MAIN SECTIONS……………………...………….……........5-20

A. BUSINESS STRUCTURES………………...………….....5-7

B. BUSINESS REGISTRATION …...……………….........…7-9

C. LOCAL GOVERNMENT REGULATION ON BUSINESS......9-11

D. OTHER BUSINESS RELATED LAWS……………...…..11-20

1. INTELLECTUAL PROPERTY LAWS……………..…..11-13

2. ELECTRONIC COMMERCE ACT…………………….13-14

3. PHILIPPINE COMPETITION ACT…………………….15-16

4. CONSUMERS ACT OF THE PHILIPPINE……...…..….16-17

5. LABOR LAWS OF THE PHILIPPINE………………….17-18

3. SSS, HDMF AND PHIC LAWS………………………..18-19

III. CONCLUSION……………………...………….……...............20

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 CHAPTER I

INTRODUCTION

The two most powerful institutions in today’s society are business

and governments. These two play an important aspect in our life; the
business that improves our life quality and the government that governs
and restricts businesses activities. The government has introduced
business laws; it is a must for every business because it encompasses all
the laws regulating business to maintain order from start-up to rebirth or
death of a business. As an accounting student, it is very relevant to learn
about the connection of businesses to government laws and regulations.
The government maintains order and regulates the activities of firms
despite differences in structure, size, and industry to protect the consumer
or customer and the business. It shapes business practices by
implementing laws, rules, and regulations that dictate what businesses can
and cannot do. Therefore business laws play a bigger role in every
business organization. The government and business are interrelated, and
both have responsibilities. Without government, business would be chaotic
and messy, and without businesses, the nation would suffer from an
economic crisis because the government needs to collect taxes to finance
social projects and support the community.

Businessman and author Robert Kyosaki say, ‘Starting a business is

like jumping out of an airplane without a parachute. In mid-air, the
entrepreneur begins building a parachute in mid-air and hopes it opens
before hitting the ground.’ It shows that starting a business is not easy, and
it's full of uncertainty. To become an entrepreneur or business person, you
should have the qualities of being a risk-taker. However, being a great and
successful entrepreneur, you should know how to manage risk. The more
a business person knows about starting and managing a business, the
lesser the risk. To address future risks in starting and operating a
business, a company must comply with the government's laws, rules, and
regulations to avoid subsequent problems. Therefore business laws play
an important role and every business people must know about it. However,
the business person and an accountant are responsible for knowing the
law in the enterprise or organization they are working for. Business law is
very important for both business people and accountants because this

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enables them to identify significant legal issues and take steps to reduce
their exposure of their employers and clients to legal liabilities.

This paper will discuss how to start and organize a business, such
as applying civil law as the primary regulatory law on business. Civil law
provides the regulatory framework for business transactions which
determines the right and obligations of both producer and consumer. The
law on business gives rights to producers to make a profit, organize and
employ people with equivalent responsibilities and duties. Republic Act No.
7394, titled “Consumer Act of the Philippines,” regulates the sale of
consumer products on the Philippine market. It prohibits deceptive, unfair
and unconscionable sales acts and practices. Under the “Consumer Act of
the Philippines” includes that liability for fraud or gross negligence. For
example, the buyer received a defective product that causes injury or harm
because of the failure of the manufacturer or retailer. The consumer has
the right to file a case against the producer (manufacture or retailer) of the
defective product. The manufacturer or retailer will be held liable for
damages if the buyer can prove that the breach results in serious injury;
the consumer may receive a monetary award.

This paper will also discuss the forms of business structure,

registering a business and getting permits, business operation and
business cessation. Every process in starting and organizing a company
case must comply with business law and regulations included in civil law
covered by commercial law. There are different stages of business; start-
up, growth, maturity and rebirth or cease. Every step in business must
comply with the law on business because not compliant with government
laws and regulation may be held liable in a fine penalty if not compliant
with government laws and regulation.

In the past few months, we’ve been assigned a task to do a

business plan. So I am very excited to plan for my dream business, a
design and branding studio named “ROSA.” Planning for a business is not
that easy because it takes time and knowledge. First is choosing a
business structure that will be your basis in business planning. Research is
very important, especially in deciding what product or service you will offer
and choosing your target market, what your target market wants, needs
and the problem you are solving for them. Then, the needed capitalization

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and the number of employees required. Next is the business goal that
must rely on SMART (Specific, Measurable, Attainable, Realistic and Time
bound) ways. Finally, after finishing the business plan, there’s more
process to go, such as raising a fund for the business, deciding the
location, registering and getting permits and hiring an employee to help
you with the company. Every process must comply with the law on
business, whether the business is starting or ending.

CHAPTER II
A. BUSINESS STRUCTURES

One of the first decisions in starting a business is deciding between

the different business structures. But, choosing between business
structures can be intimidating and confusing. Before starting a business,
you must know what business structure you are in because this will
influence the company's day-to-day operation, how much you will pay for
taxes, and the paperwork to prepare (Kappel, 2019). A sole proprietorship
is one of the simplest business structures a single person owns. Before
deciding what business structure type to use, you should know about the
different business structures. The various forms of business structure are
sole proprietorship, partnership and corporation.

Sole Proprietorship is the most common business structure owned

and operated by one individual who has full control and authority over the
business—this business structure is for the person who intends to work
alone. The business owner is referred to “as the sole proprietorship,” which
owns all losses and profits of the business. Examples include a salon,
catering, piggery, grocery, repair and cleaning service and home-based
business.

A special law does not govern this type of business structure, unlike
in the case of corporation and partnership. It only requires a minimum
amount of capital, and it's very easy to register and get permits. There’s
also a minimal regulation and compliance requirement from government
agencies. However, in this form of business structure, the business owner
has unlimited liability for the business's debts, losses, and liabilities.
There’s no legal separation between the owner and business in a sole
proprietorship. Thus, every asset is owned by the sole proprietor. It is

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difficult to raise capital and get a bank loan. The sole proprietorship rarely
survived the death or incapacity of the owners. Bankrupts affect the owner
personally, and if there’s a lawsuit against the sole proprietorship, it may
consume both the business and the owner's personal assets, and if such
lawsuit is successful, the owner is obligated to pay the damages with his or
her own money.

Another type of business structure is a partnership; it is owned by

two or more people who each partner contributes money and resources to
the entity. Two or more may also form a partnership for the exercise of a
profession. Its shares many similarities with sole proprietorships, such as it
does not exist as a separate legal entity. Examples of partnerships are law
firms, real estate investment firms and physician groups.

This type of business structure is governed by law covered the

Article 1767 to 1867of the Civil Code of the Philippines. Article 1767
defined Partnership as contract in which two or more people bind
themselves to contribute money, property or industry to a common fund
with the intention of dividing profits among themselves. In forming a
partnership, there must be a meeting of mind and with the intention that
the t and lawful object; and the parties must have the legal capacity to
enter into a contract in forming a partnership. Consent, object, and cause
are essential in entering a contract to form a partnership business.The
partnership has limited life yet unlimited liability, and all partners shall be
considered agents and whatever any one of them may do alone shall bind
the partnership as stated in Article 1803 of “The Law on Partnership”
covered by the Civil Code of the Philippines.

The corporation is the type of business structure in which a group of

people acts together as a single entity, it has the ability to acquire more
capital to form a corporation. It is complex and expensive to set up and it
requires to comply with more tax requirements and regulations. Apple Inc.,
Amazon Inc., Walmart Inc. and Microsoft Corporation are examples of
corporations.

The creation of a corporation commences only from the issuance of

a Certificate if Inc. by SEC or proper cases and passages by a special law.
This type of business structure is governed by a special law the “Revise
Corporation Code of the Philippines”. Republic Act No. 11232 defined
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Corporation as an artificial being created by operation of law, having the
right of succession and the power, attributes and properties expressly
authorized by law or incidental to existence created by a will or juridical
being. Unlike single proprietorship and partnership, the corporation has a
continuous life and it may be perpetual. The stockholder is not agent of the
corporation in the absence of express authority unlike in partnership. On
the downside of the corporation, is it subject to more requirements such as
meeting, voting and the election of directors.

The three common types of business structure are very important to

learn in planning to do a business because this will help a business person
to know what best fits for them. In the business plan, I’ve made I decided
to choose sole proprietorship than partnership or corporation. I thought that
that business structure really fits my personality. I want to manage
everything and I am the type of person “jack of all trade and tend to work
alone. It’s very easy to set-up and it requires minimal amount of capital to
start a business.

B. BUSINESS REGISTRATION

After determining which business structure you are in, it’s very
important to register your business. As we all know that local and foreign
companies are allowed to do business in the Philippines as long as they
are registered in various government agencies and have business permits.
Registering a business is a must for every kind of business even it is a
time-consuming and long process because this will help businesses to
avoid future legal problems and secure the reputation of the business.
Operating a business without license and permits may result in
government fines, LGU penalties or even closure of the business.

The DTI (Department of Trade Industry), BIR (Bureau of Internal

Revenue), and SEC (Securities Exchange and Commission) are the
government agencies involved in registering a business. The DTI has to do
with registering a business name and the issuance of a Business Name
Registration Certificate. According to DTI, a business name should have a
dominant portion and description. This is to make sure no other business
or organization has the same name as yours. In addition, DTI was also
assigned to issue a Sales Promotion Permit, Philippine Standard (PS)
Quality and/or Safety Certification Mark. On another hand, the BIR is
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mandated by the law to assess and collect all national internal revenue
taxes, fees, and charges, and the enforcement of all forfeitures, penalties,
and fines connected therewith. The BIR regulates finance, taxation, and
monetary policy in the country for the purpose of nation-building and
elevating the lives of every Filipino. According to BIR, there are four main
types of national internal revenue taxes: income, indirect, excise and
documentary stamp taxes. Registering the business with the BIR gives an
authority to print official receipts and invoices. It is the most important
prerequisite in starting a business because, without a tax identification
number or TIN, businesses cannot operate. However, the SEC is the one
is charged with supervision over the corporate sector, the capital market
participants, the securities and investment instruments market, and the
protection of the investing public. It is tasked with the “serious
responsibility of enforcing all laws affecting corporations and other forms of
associations not otherwise vested in some other government offices.” It is
necessary to register the business with the SEC in order for it to be able to
lawfully participate in the business, issue receipts, exchange financial
assets, and be entitled to certain rights under the country's corporate and
investment laws.

As a future accountant, it’s very relevant to learn about the different

government agencies involved in registering a business. It’s very daunting
dealing with government paperwork for the entrepreneur who runs a
business. Therefore, they need an accountant to help them in registering
the business. Accountant is not just for tax filing, they can help business
person to file a required legal and compliance documents for the business.
As a future accountant, being familiar with the process of registering a
business and the government agencies that have to do the legalization of
business will help us to better serve our clients. The last chapter discusses
the different forms of business structure which means that each structure
must undergo different processes in registering the business. A sole
proprietorship is required to register with DTI and BIR. However, a
partnership must comply and register with SEC and BIR as well as the
corporation.

In my business plan, as my business is a sole proprietorship I

should register it with the DTI and BIR. The sole proprietorship is the
simplest form of the business structure therefore it’s very easy to register

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it. As I have already chosen my business name “ROSA”. The next thing to
do is to register my business name with DTI to acquire a DTI Certificate of
Registration. Then, register it with the Barangay Office where my business
is going to be located to acquire a Barangay Certificate of Business
Registration. After that, register it with the Mayor’s Office to acquire a
Mayor’s Permit and also register it with BIR to acquire a Certificate of
Registration. Finally, after that process, my business is already registered
and it’s ready to operate legally.

C. LOCAL GOVERNMENT REGULATION ON BUSINESS

In the last chapter, we’ve discussed about registering the business

with the national government agencies. Now, we will discuss the regulation
of local government on business enterprise. After, registering the business
with DTI, SEC, or BIR, the next step to do is register it with the Local
Government Unit of the locality where the business will be placed because
they are authorized to issue business permits and licenses. This permits is
very important in the business operation because these will serve as proof
that the business follows a certain laws and ordinances. And if the business
failed to get permits and licenses, it may be subject to fines, penalties, or
even total closure of the business for non-compliance to the law. The Local
Government is tasked to regulate the establishments and operations of
business enterprises. They grant certificates, licenses, or clearances to the
business enterprise before engaging in business activity. Business permits
and licensing are the primary source of Municipality's income that is used to
fund programs and plans for the community. The LGU's derived their income
mainly from real property taxes, business taxes, and internal revenue
allotment.

As a business owner or even as an accountant, it's very essential to

know the required documents to secure and get a business permits. There
are many requirements in getting a business permits such as Barangay
Clearance, Sanitary Permit, Locational Clearance, Certificate of Electrical
and Mechanical Inspections and even the Fire Safety Inspection Certificate.
And if the place of business is yet to be constructed, you will need also a
building permit and occupancy permit. However, if the place of business is
rented or owned, it's needed a Contract of Lease or Proof of Ownership. In
addition, if the business structure is a single proprietorship, it will require
Trade Registration from DTI. On another hand, if it is a corporation or
partnership, SEC registration, Articles of Incorporation and Corporate Tax
Payment are required documents to secure business permits.

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 Getting a business permit is very time-consuming which takes weeks
or even months that makes it difficult for business people to start their
business as soon as possible. As an accountant we can help them or guide
them throughout the process of registering. As we all know that it is very
daunting and it takes time to get those business permits because of
unorganized current system which is the reason for the delay in the issuance
of business permits, licenses, and certificates needed to start a business.
Red tape is the procedure in registering a business but with excessive
complexity that results in delay or inaction. Therefore, there is a law that
aims to streamline the current systems and procedures of government
services stated in Republic Act 11032, also known as the Ease of Doing
Business and Efficient Government Service Delivery Act of 2018. This law
mandates the use of a single form for business registration and renewals. In
addition, the process will take place in just a single facility and it will look like
a "one-stop-shop" where it makes easy for business person to get or renew
business permits and it is less expensive. And not only that, the DICT or the
Department of Information and Communication Technology will create an
online Central Business Portal were all business permits, licensing,
authorization, etc. can be completed. Therefore the business registration
could be completed in just three steps: file the documents, pay the fees and
collect the permit or license means it's very easy now and less hassle.

The Ease of Doing Business and Efficient Government Service

Delivery Act of 2018, provides the deadlines or the processing timeline for
business transactions. If it's a simple that requires standard action this will
just be a 3 business days long. On another hand, if it's a complex transaction
and requires a resolution for complicated issues, this will take 7 business
days. However, if a highly technical transaction, this will take 20 business
days long. The law also will help to fight corruption in business applications
because there will be no personal contact between the business applicant
and government employees. This law also provides the obligations of the
government officials and employees that will violate such refusal to accept
an application, fail to comply with provisions, and even missed deadlines will
be penalized.

As a future accountant, it's very relevant to learn about getting

business permits because this will one of the things we can help our clients.
In my business plan, after I register my business with DTI and BIR, next is
getting the business permits but first of all, I need to get a barangay
clearance, contract of lease, and a fire safety inspection certificate. In getting
the business permits, prefer to do it online so it's will be easy for me. I will
just go to the Business Central Portal and file the documents, pay the fees
and just wait for the permits to download and print it. After that, my business

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is already legalized and I'm ready to work with my clients with confidence
and start to earn a profit.

D. OTHER BUSINESS-RELATED LAWS

In the previous chapters we’ve discussed, we are aware that

launching a business is not that easy because of a lot of preparation to do.
One thing business owners should add to the list is the time to review
common and important business laws that could help or affect the
business. Business laws consist of different areas that look like every
business activity from start-up to rebirth or cease of a business is regulated
by the laws. In this chapter, we will discuss some business-related laws
such as Intellectual Property Law, Electronic Commerce Act, and
Consumer Act of the Philippines, Philippine Competition Act, Labor Laws
of the Philippines and SSS, HDMF, PHIC Laws.

1. Intellectual Property Laws

Intellectual property (IP) is everything that you, your business, and

your employees have created using the intellect. Everything is covered
from trademarks and logos to inventions that could turn into products or
services. Branding is very important to every business because branding is
one of the important things to develop in order for the business to succeed.
Intellectual property provides a great economic benefit to the economy,
especially in many business enterprises. The Intellectual Property law
deals with laws to protect and enforce rights of the creators and owners of
inventions, writing, music, designs, and other works, known as the
"Intellectual Property." There are several areas of intellectual property
including patents, trademarks, and copyright.

A patent is an exclusive right granted for an invention. It is a

protection for an invention that excludes others from making, using, or
selling an invention without the patent owner's consent. For example, is
Amazon's “1-Click shopping”, Amazon patented a system that allows
consumers to purchase items by clicking an order button on a website. In
the given example, who is entitled to the patent for that invention? Is it the
employer or employee? According to the law of patent under the
Intellectual Property law that it is entitled to the employee if it is not part of
his regular duties even the employee uses the time, facilities, and time of

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the employer. However, the patent is entitled to the employer if the
invention results from the performance of his regularly, assigned duties.
There is two subject matter of the patent, the product, and the process. It
does not only aim to protect the rights of the inventor but also helps to
foster innovation and development.

A small business needs to protect its intellectual property, which

includes its business name and logo. It helps protect a name or brand from
intellectual property theft or misuse as a business grows. Over time,
customers associate the logo with the business enterprise or company. For
example, the Apple logo is half bitten, and Nike with its “swoosh” logo. It is
a very essential part of branding for businesses. It does not only protect
the business but also distinguishes goods or services from others that
giving a business a competitive edge. In addition, it prevents rivals from
copying or stealing their brand. And it also avoids confusion of goods and
services.

Another area of intellectual property is copyright. Copyright usually

belongs to whoever creates the work (the 'author'), or to the employer if it
is created by an employee as part of their job. We have a copyright law
that grants authors, artists, and other creator’s automatic protection for
their literary and artistic creations, from the moment they create them.
Ownership of copyright in a work will allow the owner to prevent
unauthorized use of the work, such as the making of copies; or issuing
copies to the public. For example, selling books that you authored means
you need to protect your works from unauthorized yet you can give
exclusive rights to reproduce your books the same with products.
According to copyright laws, there are criteria for copyright protection;
originality and fixation of intangible medium. Copyright infringement (at
times referred to as piracy) is the use of works protected by copyright
without permission for a usage where such permission is required. For
example, posting a video or using images on the company's website which
features copyrighted words or songs. However, you can use copyrighted
works if it is for criticism, news reporting, teaching, and research is not an
infringement of copyright.

Intellectual Property Law is very important to know as an accountant

and a business owner because this will become part of the business. First

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of all, the patent ensures the protection of your invention regardless of
whether it is a product, a design, or a process. Another one is the
trademark that grants security for the brand and it is a very effective
communication tool. The last one is the copyright that does not only protect
the work of the creator, it also promotes creativity and learning. In my
digital studio as I specialized in branding, it is very important to learn this
law because our clients will hire us for their branding. In doing so, we need
to advise our clients to trademark their business. For example, our team is
hired for the visual branding, the logo we’ve made is not ours, the business
owns it. As a designer, we have the right to grant our clients the rights for
that log and they can trademark it in Intellectual Property Office to prevent
it from copying by others. Another example, we invented in our studio a
process for delivering the best result for our clients, we can patent it. And
all our marketing materials have copyrights and anyone uses them without
permission, we could file a case.

2. Electronic Commerce Law

As we are still in the Covid-19 pandemic situation, e-commerce

skyrocketed as consumers turned to their devices for their grocery,
apparel, and home furnishing purchases. It enables startups and large-
scale businesses to enhance their revenue through an online customer
base. In the Philippines, we have Shopee and Lazada as our e-commerce
platforms where we can buy almost everything. Republic Act of 8792 "An
Act Providing for the Recognition and Use of Electronic Commercial and
Non-Commercial Transactions, Penalties for Unlawful Use Thereof, And
Other Purposes, also known as the "Electronic Commerce Act." This law
encompasses all the legalities associated with the e-commerce industry.

Each type of e-commerce business is required to abide by a certain

laws and regulations just like any other business. All existing laws such as
the Consumer Act of the Philippines also applies to e-commerce
transaction. Under this law, it provides guidelines as to when a service
provider can be liable. Doing e-commerce business is the future and we
can notice it even today. It has unique advantages such as low costs,
flexibility and speed, and high levels of data. It is also simplified sales and
marketing, it saves time, increases revenue, and enhances efficiency.
However, the e-commerce business is most prone to hacking attacks so it

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is very important to increase the level of security to prevent it. If the
business website is hacked and all the customer’s data will be stolen and
even the owner’s credit cards and personal information can be
compromised.

As an accountant or business owner, being familiar with Electronic

Commerce law especially if your business is in the e-commerce industry.
This will help you as an e-commerce business owner to follow all legalities,
rules, and regulations so you can avoid future problems for your business.
This Act aims to facilitate domestic and international dealings,
transactions, arrangements, agreements, contracts and exchanges and
storage of information through the utilization of electronic, optical, and
similar medium, mode, instrumentality, and technology to recognize the
authenticity and reliability of electronic documents related to such activities
and to promote the universal use of electronic transaction in the
government and general public. In my business, I thought this is not
aligned law for my digital studio yet as we provide services online we are
prone also to hacking so it’s essential to learn some provisions under the
Electronic Commerce Law.

3. Consumer Act of the Philippines

Consumers are the main source of demand for all goods and
services. If there are no consumer’s means there is no demand.
Customers are important because they drive revenues; without them,
businesses cannot continue to exist. Therefore, it is very important that
consumer has their protection. The Consumer Act of the Philippines or the
Republic Act No. 7394 is a law that protects and gives rights to consumers.
It is designed to prevent businesses to engage in fraud or unfair practices
from gaining an advantage over competitors. This law covered such as
foods, drugs, cosmetics and devices, hazardous substances, and
consumer products and quality. This law gives many rights to consumers
such as the rights for basic needs, safety, information, to choose,
representation, redress, consumer education, and a healthy environment.

The Consumer Act of the Philippines is implemented by DOH, DAR,

and DTI. The Act includes labeling and fair packaging and deceptive sales
acts and practices. It is very important to consumers the label and fair
packaging so to prevent misconceptions about the product. The well-
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informed consumer will prefer to buy a product with an ICC sticker
because this will ensure safety to the consumer and it’s passed the
consumer product standard. For example, in buying a Christmas light for
decoration or even appliances. Every goods and product have a different
level of label requirements such as the expiry date, the ingredients, etc. On
another hand, is the deceptive sales acts and practices, which prevent
from taking advantage of the consumer’s ignorance or illiteracy that induce
them to enter to sales, lease, or avail a service. When a business lies to its
consumer or hides a material fact to entice the consumer to buy, it has
committed a deceptive sales act. If this act is violated by the business, the
business will be punished by law or be penalized.

As an accountant or business owner, it is very relevant to be familiar

with the Consumer Act of the Philippines, because we do business not
only for the sake of making money but to serve our customers and give
them the best of our goods and service. This law protects our customers,
not only that because of this law the trust is established between the
customer and the business if it is following all rules and regulation. This
law increases customers’ welfare by ensuring that businesses are
accountable. In my digital studio, this law is aligned to protect my clients
from fraud and deceptive sales act. As we encourage our prospective
clients to get branding, before telling them that they need branding we will
check all their brand assets and analyze their business first. Until we
suggest them to get branding or not. We want also our clients to know why
need a logo or get branding. We want our clients to value branding in their
business not by convincing them to get into contracts with us even they do
not need our service. In my business, our team aims to align our works
with our client’s vision and goals for their brand. In order them to be
satisfied and happy by giving them our best for the services we provided.

4. Philippine Competition Act

Different businesses have the freedom to attract customers based

on price, quality, service, and convenience. The type of competition will
depend on the product and market structure. In today’s world, where
there’s is competition for almost all businesses. Competition is the rivalry
between companies selling similar products and services with the goal of
achieving revenue, profit, and market share. However, competition is very

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important, especially it boosts innovation and it means greater choice and
more products or services. The Philippine Competition Act or R.A. 10667 is
the primary competition policy of the Philippines for promoting and
protecting competitive markets. This law aims to enhance economic
efficiency and promote free and fair competition in trade, industry, and all
commercial economic activities. It also penalized all forms of anti-
competitive agreements, abuse of dominant position, and anti-competitive
mergers and acquisitions.

The Philippine Competition Commission is the one that regulates

this law for every business enterprise. Under this law, it defines three types
of business competition; direct, indirect, and replacement. In direct
competition, the competitors are brands or business that sells the same
products or services with the same target audience. An example is
McDonalds and Burger King competing to convert burger-hungry
customers. In the same way, Coke and Pepsi, Yahoo and Google, Luis
Vuitton compete with Hermes, Gucci, and Prada. However, indirect
competitors provide the same products or services that are not the same
consumer needs. For example, mineral water and coffee, beer or soda, a
hamburger fast food restaurant indirectly compete with a pizza fast food
restaurant. On another hand, replacement competitors are brands and
businesses that have the ability to completely replace existing
organizations by producing new products or services that better satisfy the
needs of their target audience. For example, the digital camera now can
replace by smartphones because of the emerging technology and latest
innovation.

Competition is not bad for business, but this is an opportunity to

create a competitive edge over the business competitors. This helps
address the needs of customers, analyze the strengths and weaknesses of
the business and it also helps to increase demand. In addition, it
encourages innovation, has a competitive advantage, and promotes
business development. However, a business that engages in anti-
competitive agreements may be penalized. So as an accountant or
business owner, it is relevant to learn about this law because this will serve
as our guide in order to avoid future legal problems regards to unfair
competition. In my digital studio, this is essential law because entering this
kind of business, there is a lot of competition especially if you are new.

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Therefore, marketing our services is very essential and giving the best
service we can for our recent clients is important to gain competitive
advantage. In our branding services, competitive analysis and SWOT
analysis is a big part of our services because this will help clients to
identify the business uniqueness that will bring them a competitive edge
from their competitors. We always ask our clients about their competitors
because this will give them a better idea of who are they competing for.
The better the business knows about their competitors, the more equipped
they are to market their products or services effectively.

5. Labor Laws of the Philippines

Employees are our most important customers because they can

provide crucial insights into the overall customer experience. But they are
often overlooked or neglected, and most companies do not view them as
valuable assets. Every business owners need employees that are able to
get the job done because employee performance is critical to the overall
success of a business. Therefore, to ensure the protection for the
employee and employer, we have the Labor Code of the Philippines.

The Labor Code of the Philippines is the legal code that determines
all employment practices and labor relations in the Philippines. This is to
help protect employees and employers- while ensuring that neither is
subject to unfair treatment or exploitation. This law covered major parts
such as the labor standard law and labor relations law. In labor standards
law, it prescribes the minimum terms and conditions of employment that
the employer is required to grant to its employees such as working
conditions, wages, hours of work, holiday pay, and other benefits even the
termination of employment and retirement. However, labor relations
regulate the relationship between employers and workers. Under this law,
it enumerates the constitutional rights of workers, and also it defines what
the difference between employees and employers is. There are different
kinds of employment with respect to the security of tenure and respect to
position. It varies from regular employment to project, either casual or
seasonal, and fixed-period or probationary. However, if it is to respect to
positions, it varies from managerial to supervisory or rank-and-file. The
Labor Code of the Philippines also stated the process and rules for the
payment of wages. For example, the wages shall be paid directly to

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workers and if a business goes into bankruptcy, the workers shall be paid
first before the government and creditors to be paid. It is also mandated to
give other monetary benefits such as 13th-month pay, holiday pay,
premium pay, overtime pay, night shift pay, and service incentive leave.
These monetary benefits will help to boost morale and loyalty, improve
employee wellness, increase retention, and drive employee’s performance
and productivity.

As an accountant or business owner, it’s very important to give value

to the business employees because they are the biggest part of the
business the same as our customers or clients. As an accountant, this is a
very important law for us because some of our tasks are to prepare a
payroll register, we ensure that we give the right wages for the workers of
our client business. On the side of a business owner, it is very relevant to
be familiar with the Labor Law of the Philippines because as we enter the
business, we need employers to help our business to grow. The
employees are our greatest assets and resources so we should protect
them and establish a good relationship with our employees because
whatever their performance will help or affect our business. In my digital
studio, as I do not need a lot of employees, I prefer to have a project type
of employment and hire some bright-minded and creative people to
become part of my team as a regular type of employment. It is very
relevant to understand the labor law because not knowing the law is never
going to be an excuse when in my business happen to violate one.

6. SSS, HDMF, PHIC Laws

In our younger age, we always heard these terms from our parents
like SSS, HDMF or Pag-ibig and PHIC or Philhealth. As we enter, adulting
we become more familiar and aware of it. This SSS, HDMF, and PHIC
become part of the benefits received by the employee, employer, or even a
self-employed. It is mandatory for employee benefits and contributions to
the Philippines. The SSS social insurance program aims to provide
protection to its members and beneficiaries. It provides replacement
income for workers in times of death, disability, sickness, maternity, and
old age. However, HDMF also known as PAG-IBIG provides a national
savings program and an affordable house financing for Filipinos. On
another hand, PHIC also known as Philhealth provides Filipinos with

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financial assistance and access to affordable health services. It usually
covers hospital costs, subsidies for room and boarding, medicine, and
professional services.

Every registered business in the Philippines is required to report

their new employees to the government agencies such as the BIR, SSS,
HDMF, and PHIC in order for the employees to receive a mandatory
employee benefit. This is administered by respective government agencies
through a monthly contribution scheme that requires the employer to remit
a portion of the employee’s actual monthly salary. And if the employers
failed to pay the required amount of contribution monthly, they may be held
liable for a payment interest. And not only have that if had they deliberately
avoided paying contributions for a long time it means they violate the
Social Security Law. The delinquent employers may be fined from Php
5,000 to Php 20,000 or imprisoned for more than six years to 12 years. On
another hand, if the employer fails to pay HDMF contribution, they may be
charged a fine of not less than but not more than twice of the unremitted
amount, jailed for six years or less, or both. Also if the employers failed to
pay Philhealth, they may be obliged to pay for interests and surcharges
and cost suit aside from getting civil liabilities.

As an accountant or business owner, it is very relevant to learn

about SSS, HDMF, and PHIC because this is one of the best benefits we
can give and the government for our employees. On the side of an
accountant, learning about the SSS, PHIC, and Laws stated above will
help her to determine the right amount of contribution to be paid by the
employers and the employees. It is essential also in doing a payroll
register because being familiar with the law will help the accountant to be
fair to both employees and employers’ contributions. On another hand, a
business owner must learn also about this law to be informed and not to be
penalized because of negligence or violation of the law stated under the
SSS law, HDMF law, and PHIC law. In my business, as I just need a few
regular employees in my business, it is my responsibility to report them to
respective government agencies because it is their right to receive and
contributes to that’s benefits.

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 CHAPTER III

CONCLUSION

In this paper, we’ve discussed almost everything from business

structure, to registering a business, how LGU regulates business and
some of other business related laws. The contents of these paper is very
important especially to the students studying accountancy or other-related
business course. It also helps business owners to have first-hand
knowledge before jumping into business because the more we understand
the law for the business we are in, this will help also to avoid future legal
problems that makes our business operation or activities based on laws.

As an accountant, every topic written in this paper is very essential

to learn and understand because this will help the accountant to better
serve their clients. As we’ve mentioned in previous chapter that accountant
is not just for filing tax but they can offer help to their clients even in
registering a business, giving them advice about some laws that will help
their business to avoid penalties because of not knowing the law. An
accountant can help them not just only for managing financial aspect of
business but there’s more they can offer. In these paper, we find how
important the business law in every accountant because this will serve as
their guide and basic foundation in entering in business or corporate world.
We find out that every business must follow a certain laws and regulation,
and if there is violation, the business and employer will be held liable and
may face legal problems in the future if there is ignorance of the laws
related on business. So as accountant, we will be penalized if we don’t do
our job with integrity and honesty. Therefore, we should be responsible
and be knowledgeable about business law so we can help our clients from
getting a future legal problems.

As a business owner, everything stated in these paper is very

essential because this will be a part of our business activity. Theirs is no
ending process in doing business, as the government gives us the right to
make a profit, we are responsible for paying taxes and giving our best
products or service to our costumer. As we’ve mentioned in first chapter of
this paper that starting a business is full of uncertainty and it is risky but we
can manage it by being prepared and knowledgeable about how business
works and following the laws related on the business we are in.
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