1.

Laws related to business;

 Every country there are business and commerce laws that every business owner and
entrepreneur should be aware of.
 In the Philippines, there are also laws and regulations that govern businesses from
registration, operation, up to termination.
 It is important that business owners and entrepreneurs know what business laws are
applicable to their type of business and activities.
 These laws and rules should be followed to avoid punishments, charges and penalties
from the government or authorities that are implementing and enforcing them.
 Some of these laws are not only created to give or obligate business owners to do their
duties and responsibilities but they are also made to obligate and mandate the
government or the state to protect and promote these business owners and the
business.

1. Tax Reform Act of 1997 (Republic Act No. 8424)

 which amended the National Internal Revenue Code (NIRC) 2021 is the law that
governs the national taxation in the Philippines and gives the Bureau of Internal
Revenue (BIR) the power and duty to assess and collect national internal revenue
taxes in the country.
2. The Local Government Code of the Philippines (Republic Act No. 7160)
 is the law governing local taxation in the Philippines, including the taxation on real
properties.
3. Labor Code of the Philippines  (Presidential Decree No. 442)
 is the law that governs employment practices and labor relations in the
Philippines.
4. Intellectual Property Code of the Philippines  (R.A. 8293)
 is the law that governs the registration of patents, trademarks and copyright, and
the enforcement of intellectual property rights in the Philippines.
5. The Corporation Code of the Philippines  (B.P. 68)
 is the law that governs the registration and regulation of corporations in the
Philippines.
6. Civil Code of the Philippines  (R.A. No. 386)
 the civil code of the Philippines includes the laws on obligations and contracts. It
also governs special contracts such as contract of agency and partnership.
7. Social Security Act of 1997  (R.A. No. 8282)
 the law that mandates employers to register their business and their employees
with the Social Security System (SSS).
8. National Health Insurance Act of 1995  (R.A. No. 7875)
 the act that mandates employers to register their business and their employees
with the Philippine Health Insurance Corporation or PhilHealth.
9. Home Development Mutual Fund Law of 2009  (R.A. No. 9679)
 the act that mandates employers to register their business and their employees
with the Pag-Ibig Fund (HDMF).
10.Food and Drug Administration (FDA) Act of 2009  (R.A. No. 9711)
 the law that governs the inspection, registration, licensing and monitoring of
establishments and health products.
11.The Philippine Fisheries Code  (R.A. No. 8550)
 the law that governs commercial fishing in the Philippines.
12.The Animal Welfare Act of 1998  (R.A. No. 8485)
 the act that governs the supervision and regulation of the establishment and
operation of all facilities utilized for breeding, maintaining, keeping, treating, or
training of all animals in the Philippines.
13.Securities Regulation Code of the Philippines  (R.A. No. 8799)
 the law that governs the registration and regulation of securities, pre-need plans,
and securities market professionals – and the protection of shareholder interests
in the Philippines,
14.Financing Company Act of 1998  (R.A. No. 8556)
 the Act that governs the registration and regulation of financial companies in the
Philippines.
15.Truth in Lending Act (R.A. No. 3765)
 An Act to Require the Disclosure of Finance Charges in Connection with
Extensions of Credit
16.Consumer Act of the Philippines  (Republic Act No. 7394)
 The law that protects the interest of the consumers in the Philippines, promote
their general welfare, and establish standards of conduct for business and
industry.
17.Electronic Commerce Act of 2000  (R.A. 8792)
 an act providing for the recognition and use of electronic commercial and non-
commercial transactions, penalties for the unlawful use thereof, and for other
purposes.
18.The Magna Carta for Micro, Small and Medium Enterprises (MSMEs) ,  as amended (RA
9501)
 an Act to promote entrepreneurship in the Philippines by strengthening
development and assistance programs to Micro, Small and Medium Scale
Enterprises in the country.
19.Barangay Micro Business Enterprises (BMBEs)  Act of 2002  (R.A. No. 9178)
 a law that promotes the establishment of Barangay Micro Business Enterprises
(BMBEs) in the Philippines, and provides incentives and benefits such as income
tax exemption and access to financial, infrastructural, marketing, and knowledge
support from the government.
20.Insurance Act of the Philippines (R.A. 10607), as amended.
 the law that governs the insurance business and insurance transactions in the
Philippines.
21.Foreign Investments Act of 1991 (R.A. No. 7042)
 the law that governs foreign investments in the Philippines.
22.Anti-Violence Against Women and Children Act of 2004   (R.A. 9262)
 a law that protects women and children in the workplace.
23.Philippine Cooperative Code of 2008  (R.A. 9520)
 the law governing the registration, regulation, and promotion of cooperatives in
the Philippines.
24.Anti-Money Laundering Act of 2001  (RA 9160)
 An Act that aims to protect and preserve the integrity and confidentiality of bank
accounts and to ensure that the Philippines shall not be used as a money
laundering site for the proceeds of any unlawful activity.
25.The Anti-Red Tape Act of 2007 (RA 9485)
  an act enacted to improve efficiency in the delivery of government services to the
public by reducing bureaucratic red tape, preventing graft and corruption in all
the offices of the government.
2. General principles of taxation
a. Value Added Tax (VAT) – is a form of sales tax. It is a tax on consumption levied on
the sale, barter, exchange or lease of goods or properties and services in the
Philippines and on importation of goods into the Philippines.
b. Excise – A charge imposed upon the performance of an act, the enjoyment of a
privilege, or the engaging in an occupation.
c. Income Tax – is a tax on a person's income, emoluments, profits arising from
property, practice of profession, conduct of trade or business or on the pertinent
items of gross income specified in the Tax Code of 1997 (Tax Code), as amended, less
the deductions if any, authorized for such types of income, by the Tax Code, as
amended, or other special laws.
d. Sin Tax – is typically added to liquor, cigarettes, and goods that are considered
morally hazardous. Because they generate enormous revenue, state governments
favor sin taxes.
e. Regulatory Tax – is imposed primarily for the regulation of useful or non-useful
occupation or enterprises and secondarily only for the purpose of raising public
funds.

3. Essential elements of tax

1. It is an enforced contribution.
2. It is generally payable in money.
3. It is proportionate in character.
4. It is levied on persons, property, or the exercise of a right or privilege.
 What is privilege tax Philippines?
o Unless otherwise provided, every person engaging in a business on which
the percentage tax is imposed shall pay in full a fixed annual tax of twenty
pesos for each calendar year or fraction thereof in which such person shall
engage in said business.
5. It is levied by the State which has jurisdiction over the subject or object of taxation.
 Which tax is levied by the state?
o The taxation system empowers the state governments to levy income tax
on agricultural income, professional tax, value added tax (VAT), excise duty,
real property tax, residence tax, poll tax, and sin tax.
6. It is levied by the law-making body of the State.
 Who is the law-making body of taxation?
o The Congress shall have Power to lay and collect Taxes, Duties, Imposts and
Excises, to pay the Debts and provide for the general welfare; but all duties,
imposts and excises shall be uniform, equitable and fair.
7. It is levied for public purpose or purposes.
 Limitation on public purpose
o It is an essential characteristic of the power of taxation that the tax is
imposed is for a public purpose, and not for a private purpose. It should be
for a governmental purpose – for the public welfare or the common good.
4. Purpose
 Revenue or fiscal: The primary purpose of taxation on the part of the government is to
provide funds or property with which to promote the general welfare and the
protection of its citizens and to enable it to finance its multifarious activities.
 Non-revenue or regulatory: Taxation may also be employed for purposes of regulation
or control.
1. Imposition of tariffs on imported goods to protect local industries.
2. The adoption of progressively higher tax rates to reduce inequalities in wealth and
income.
3. The increase or decrease of taxes to prevent inflation or ward off depression.

5. Life blood theory

 The life blood theory constitutes the theory of taxation, which provides that the
existence of government is a necessity; that government cannot continue without
means to pay its expenses; and that for these means it has a right to compel its citizens
and property within its limits to contribute.
 In Commissioner v. Algue, the Supreme Court said that taxes are the lifeblood of the
government and should be collected without unnecessary hindrance. They are what we
pay for a civilized society. Without taxes, the government would be paralyzed for lack
of motive power to activate and operate it. The government, for its part, is expected to
respond in the form of tangible and intangible benefits intended to improve the lives of
the people and enhance their moral and material values.
o Illustrations of lifeblood theory
1. Collection of taxes cannot be enjoined by injunction.
2. Taxes could not be the subject of compensation or set off.
3. A valid tax may result in destruction of the taxpayer’s property.
4. Taxation is an unlimited and plenary power.

6. Classification of tax
 As to subject matter or object
1. Personal, poll or capitation tax – Tax of a fixed amount imposed on persons residing
within a specified territory, whether citizens or not, without regard to their property
or the occupation or business in which they may be engaged, i.e. community tax.
2. Property tax – Tax imposed on property, real or personal, in proportion to its value
or in accordance with some other reasonable method of apportionment.
3. Excise tax - A charge imposed upon the performance of an act, the enjoyment of a
privilege, or the engaging in an occupation.
 As to purpose
1. General/fiscal/revenue tax – A general/fiscal/revenue tax is that imposed for the
purpose of raising public funds for the service of the government.
2. Special/regulatory tax – A special or regulatory tax is imposed primarily for the
regulation of useful or non-useful occupation or enterprises and secondarily only for
the purpose of raising public funds.
  As to who bears the burden
1. Direct tax – A direct tax is demanded from the person who also shoulders the burden
of the tax. It is a tax which the taxpayer is directly or primarily liable and which he or
she cannot shift to another.
2. Indirect tax – An indirect tax is demanded from a person in the expectation and
intention that he or she shall indemnify himself or herself at the expense of another,
falling finally upon the ultimate purchaser or consumer. A tax which the taxpayer
can shift to another.
 As to scope of the tax
1. National tax – A national tax is imposed by the national government.
2. Local tax – A local tax is imposed by municipal corporations or local government
units (LGUs).

7. Obligations and contract

 It is defined as s a kind of positive law which deals with the nature and sources of
obligations as well as the rights and duties arising from agreements in contracts.
 The particular concepts on the Law on Obligations and Contracts, it is
important to know that in every obligation, one must always observe the
general principles on human relations, to wit:
 ART. 19 CC. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith. Failure to observe the above principle makes a person
civilly liable.
 Basic provisions on Law on Obligations and Contracts based on the Civil Code
of the Philippines.

8. Sources of obligation
1. law
2. contracts

9. Requisites of obligation
1. an active subject, also known as the obligee or creditor, who has the power to
demand the prestation;
2. a passive subject, also known as the debtor, who is bound to perform the prestation;
3. an object or the prestation, which is an object or undertaking to give, to do or not to
do;
4. The juridical or legal tie, the vinculum which binds the contracting parties. The
juridical tie or vinculum is based on the sources of obligation arising from either the
law or contract.
10.Essential elements of legal wrong or injury
a. a legal right in favor of a person (creditor/ obligee/plaintiff);
b. a correlative legal obligation on the part of another (debtor/obligor defendant); to
respect or not to violate said right; and.
c. an act or omission by the latter in violation of said right with resulting injury or
damage to the former.
11.Quasi-Delict
 It is also called culpa aquiliana.
 It is a French legal term used in some civil law jurisdictions. It refers to a negligent act
or omission which causes harm or damage to the person or property of another, and
thus exposes a person to civil liability as if the act or omission was intentional. It is a
residuary category of private wrongs, characterized by either vicarious or strict
liability. In quasi delicts the law creates a liability though the defendant may not in
fact be to blame.
 It is a wrong which occurs unintentionally, as a result of something like negligence,
where as a true delict requires intentional action. Thus, someone who commits
murder has committed a delict, while manslaughter would be an example of a quasi-
delict.

12.Requisites of Quasi-Delict
 There must be an actor or omission
 Such act or omission causes damage to another
 There being fault or negligence
 There being no preexisting contractual relation between the parties.
13.Quasi-Contract
 It refers to a lawful, voluntary and unilateral act based on the maxim that no one
shall unjustly enrich himself at the expense of another.

14.Forms of Quasi-Contract
1. Solutio indebiti, which is payment by mistake;
2. Negotiorum gestio, which takes place when a person without the consent of the
owner, assumes the management of an abandoned business; Article 2169 (NCC)–
Government undertaking to do necessary work; and Article 2175 (NCC) – Constrained
to pay taxes of another.

15.Law
 It is defined as a rule of conduct, just and obligatory, promulgated by the legitimate
authority, for common observance and benefit.

16.Contract
 It is a meeting of the minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.
 It is defined as ―meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or render service.
 It is important to identify the prestation in a certain obligation.
 Once the prestation is identified, you can determine who the passive subject
is whom the active subject can demand fulfillment of the obligation.
 A contract of sale and a contract of loan are examples of prestation to give; A
contract of labor or a service contract is an example of a prestation to do.
17.Received benefit principle
 This principle serves as the basis of taxation and is founded on the reciprocal duties
of protection and support between the State and its inhabitants. Also called
“symbiotic relation” between the State and its citizens.
 In return for his contribution, the taxpayer receives the general advantages and
protection which the government affords the taxpayer and his property. One is
compensation or consideration for the other; protection and support to
government’s operation. However, it does not mean that only those who are able to
and do pay taxes can enjoy the privileges and protection given to a citizen by the
government.
 In fact, from the contribution received, the government renders no special or
commensurate benefit to any particular property or person. The only benefit to
which the taxpayer is entitled is that derived from the enjoyment of the privileges of
living in an organized society established and safeguarded by the devotion of taxes to
public purpose. The government promises nothing to the person taxed beyond what
may be anticipated from an administration of the laws for the general good. Case of
Lorenzo vs. Posadas.
 Taxes are essential to the existence of the government. The obligation to pay taxes
rests not upon the privileges enjoyed by or the protection afforded to the citizen by
the government, but upon the necessity of money for the support of the State. For
this reason, no one is allowed to object to or resist payment of taxes solely because
no personal benefit to him can be pointed out as arising from the tax. Case Lorenzo
vs. Posadas.

18.Difference between tax and fees, duties

 Tax vs Tariff / Duties
o The term tariff and custom duties are used interchangeably in the Tariff and
Customs Code or PD No. 1464.
o Customs duties, or simply duties, are taxes imposed on goods exported from
or imported into a country. Custom duties are really taxes but the latter term
is broader in scope
On the other hand, tariff may be used in one of three senses: (Bo-Du-Sys)
1. A book of rates drawn usually in alphabetical order containing the names of several
kinds of merchandise with the corresponding duties to be paid for the same; or
2. The duties payable on goods imported or exported; or
3. The system or principle of imposing duties on the importation or exportation of
goods.

 Tax vs License or regulatory fee

1. License fee is legal compensation or reward of an officer for specific services while a
tax is an enforced contribution from persons or property by the law-making body by
virtue of its sovereignty and for the support of the government and all public needs.
2. License fee is imposed for regulation, while tax is levied for revenue.
3. License fee involves the exercise of police power, tax of the taxing power.
4. Amount of license fee should be limited to the necessary expenses of inspection and
regulation, while there is generally no limit on the amount of the tax to be imposed.
 5. License fee is imposed only on the right to exercise a privilege, while tax is imposed
also on persons and property.
6. Failure to pay a license fee makes the act or business illegal, while failure to pay a tax
does not necessarily make the act or business illegal.

Regulatory tax
Examples: motor vehicle registration fee, sugar levy, coconut levy, regulation of
non-useful occupations
PAL vs. Edu: This involves the imposition of motor vehicle registration fees which
the Supreme Court ruled as taxes. Fees may be regarded as taxes even though they also
serve as instruments of regulation because taxation may be made to implement State’s
police power. But if the purpose is primarily for revenue, or if revenue is, at least, one of
the real and substantial purposes, then the exaction is properly called a tax.

Criteria for determining license fees

1. Imposition must relate to an occupation or activity which involves the health, morals,
safety and development of the people and which needs regulation for the protection
and promotion of the public interest;
2. Imposition must also bear a reasonable relation to the probable expenses of
regulation, taking into account the costs of direct regulation as well as the incidental
expenses.

Instances when license fees could exceed cost of regulation, control or administration:
1. When the collection or the license fee is authorized under both the power of
taxation and police power;
2. When the license fee is collected to regulate a non-useful occupation

19.Distinguished right or wrong

 Obligation is the act or performance which the law will enforce.
 Right, on the other hand, is the power which a person has under the law, to demand
from another any prestation
 A wrong (cause of action), according to its legal meaning, is an act or omission of one
party in violation of the legal right or rights (i.e., recognized by law) of another. In
law, the term injury is also used to refer to the wrongful violation of the legal right of
another.