Understanding Law and Its Role in Business

• Law and order is required for society to exist peacefully, free from chaos and confusion.
• Law puts society in order.
• Business and law are interconnected; for business success, one needs to learn the law or hire someone with legal expertise.
• Accountants with a good understanding of law are valuable to any businessman.

Definition of Law

• Broadest Sense: Any rule of action applicable to all objects of creation, governing men's activities and the movement of animate and inanimate creatures.
• Specific Sense: A rule of conduct that is just, obligatory, and promulgated by a legitimate authority for common observance and benefit.

Classification of Law

• Is a rule of conduct -- Tells one what shall and shall be done -- Takes cognizance of external acts only.
• Is obligatory -- A positive command requiring obedience and involving sanctions for disobedience.
• Is promulgated by legitimate authority -- Laws are enacted by Congress in the Philippines.
• Is of common observance and benefit -- Intended to regulate relations, maintain harmony, and make orderly coexistence possible for the benefit of all.

Necessity and Functions of Law

• Society cannot exist without law because internal order is as crucial as external defense.
• Law secures justice, resolves social conflicts, orders society, protects interests, and controls social relations.
• Members of society have a duty to follow rules of social order provided.

Sources of Law

• Constitution: The fundamental and supreme law of the land, binding on all citizens and government agencies. -- Laws inconsistent with it are void.
• Legislation: Declaration of legal rules by a competent authority, including acts passed by the legislature (statutes) and local ordinances..
• Administrative Rules and Regulations: Issued by administrative officials under legislative authority to clarify or explain laws. -- Are valid only when not contrary to laws and the Constitution.
• Judicial Decisions of the Supreme Court: Applying or interpreting laws, binding on all subordinate courts. -- Doctrine of precedent or "stare decisis".
• Customs: Habits and practices acknowledged and approved by society as binding rules of conduct, having the force of law when recognized and enforced by the state.

Law on Obligations and Contracts

• The body of rules dealing with the nature, sources, rights, and duties arising from obligations and contracts.
• Found in Republic Act No. 386, the Civil Code of the Philippines.
• General provisions on obligations: Articles 1156-1304.
• General provisions on contracts: Articles 1305-1422.
• Provisions dealing with natural obligations: Articles 1423 to 1430.

Essential Requisites of an Obligation

• Passive Subject (Debtor/Obligor): The person bound to fulfill the obligation.
• Active Subject (Creditor/Obligee): The person entitled to demand fulfillment of the obligation.
• Object or Prestation: The subject matter of the obligation, consisting of giving, doing, or not doing something. -- Without the prestation, there is nothing to perform.
• Juridical Tie/Legal Tie (Efficient Cause): The bond that connects the parties to the obligation, determined by its source.

Obligations Arise From

• Law
• Contracts
• Quasi-contracts
• Acts or omissions punished by law
• Quasi-delicts

Sources of Obligations

• Law: Imposed by law itself, like the obligation to pay taxes. -- Obligations derived from law are not presumed and must be expressly determined.
• Contracts: Arise from the stipulation of the parties, having the force of law between them. -- A contract is a meeting of minds where one binds themselves to give something or render some service.
• Quasi-Contracts: Arise from lawful, voluntary, and unilateral acts to prevent unjust enrichment at another's expense; obligations are considered as arising from law. -- Negotiorum Gestio: Voluntary management of another's property without their consent. -- Solutio Indebiti: Juridical relation created when something is received without the right to demand it, delivered through mistake.
• Crimes/Acts/Omissions Punished by Law: Arise from civil liability resulting from a criminal offense. -- Includes obligations like a thief returning stolen property or a killer indemnifying the victim's heirs.
• Quasi-Delicts/Torts: Arise from damage caused by fault or negligence without a contractual relation.

Scope of Civil Liability

• Restitution
• Reparation for the damage caused
• Indemnification for consequential damages

Quasi-Delict (Torts)

• An act or omission causing damage to another, giving rise to an obligation to pay for the damage, due to fault or negligence without a pre-existing contractual relationship..

Requisites of Quasi-Delict

• Act or omission
• Fault or negligence
• Damage Caused
• Direct relation between the act/omission and the damage
• No pre-existing contractual relation between the parties

Quasi-Delict vs. Crime

• Quasi-Delict involves negligence, while Crime involves criminal or malicious intent.
• Quasi-Delict aims for indemnification, while Crime aims for punishment.
• Quasi-Delict concerns private interests and involves civil liability only, while Crime concerns public interests and may involve both criminal and civil liability.
• Liability in Quasi-Delict can be compromised, while liability in Crime generally cannot.
• Fault in Quasi-Delict may be proven by preponderance of evidence, while guilt in Crime must be proven beyond reasonable doubt.

Reviewer Questions and Answers

• Contract: Meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
• Enforceability of Contractual Obligations: Obligations arising from contract can be enforced between the contracting parties, provided such contract is not contrary to morals.
• Quasi-Contract: Juridical relation that arises from certain lawful, voluntary, and unilateral acts to the end that no one shall be unjustly enriched at the expense of another.
• Negotiorum Gestio: Unauthorized management of property or affairs.
• Delict: Act or omission punishable by law.
• Negligence: The omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, time, place, and manner.
• Fault: The wrongful act that results from imprudence, negligence, lack of foresight, or lack of skill.
• Deceit: The act performed with deliberate intent.

Definitions

• Vinculum Juris: Refers to the juridical tie in an obligation.
• Juridical Necessity: The nature of an obligation.
• Solutio Indebiti: Juridical relation created when something is received when there is no right to demand it and was unduly delivered through mistake.
• Prestation: The conduct required to be observed by the debtor.
• Quasi-delict: Arises from damage caused to another through an act or omission, there being fault or negligence, but no contractual relation exists between the parties.

Essential Elements

• Juridical Tie
• Creditor: Active subject
• The source of an obligation isn't "none of the above".

The Nature and Effects of Obligations

• Art. 1163: Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care.
• Two kinds of prestations: -- Real obligation (to give) -- Personal obligation (to do or not to do)
• Three prestations in an obligation: to give, to do, not to do
• Thing May Be -- Determinate/Specific: Particularly designated or physically segregated from the class. -- Indeterminate/Generic: Designated by class or genus without designation or physical segregation.
• Duties of debtor in obligation to give a specific thing: preserve the thing, deliver the fruits, deliver the accessions and accessories, deliver the thing itself, answer for damages in case of non-fulfillment or breach.
• Duties of debtor in obligation to give a generic thing: Deliver a thing of the quality intended by the parties, be liable for damages in case of fraud, negligence, or delay.

Obligations to Give

• Art. 1163: A person obliged to deliver or give a specific thing (debtor) has to take care of the thing with diligence.

Diligence, Kinds and Standards

• The attention and care required of a person in a given siutation
• Kinds of Diligence Under the Law -- Extraordinary: Extreme measure of care and caution -- Ordinary: Diligence of a Good Father of a Family -- Slight: Less or no prudence
• Diligence of A Good Father of Family: Ordinary diligence; diligence required of person obliged to deliver a determinate thing.
• How To Determine The Diligence Required -- Provision of Law -- Stipulation of Parties: Standard of care other than ordinary -- Assense of Stipulation Ordinary diligence

Obligations and Fruit

• Article 1164 states the creditor has the night to the fruits of the thins from the time the obligation to deliver arises
• Kinds of Fruits -- Natural Fruits: spontaneous products of soil + young, and other products of animals. -- Industrial Fruits: produced by lands with cultivation or labor. -- Civil Fruits: derived by virtue of juridical relation (rents, prices etc)
• When the obligation to deliver fruit arises: (1) At the time of perfection of the contract", (2)If subject to condition, (3) Contract of sale, (4) obligations to give arising from law, quasi-contracts, delicts, and quasi-delicts
• Personal rights or Jus in Personam -- the right or power of a person (creditor) to demand from another (debtor), as a definite passive subject, the fulfillment of the latter's obligation to GIVE, TO DO, or NOT TO DO -- binding vs enforceable against a aprticular person
• Real Rights or Jus in Re
• • power/right/ interest over a specific thing (ownership/possession), mortgage without a definite passive subject against whom may be personally reinforced and binding the whle world

Delivery

The Right to Fruits

• Creditor's Rights Time the time the obligaition to deliver it arises
• • Time is perosnal
• • Real Right upon delivery to him
• Kinds of Delivery -- Actual delivery tradition - the propery changes hands psysically e.g. buying a cake -- Constructive delivery

Constructive Delivery

-Tradition simbolica: (symbolical traddition), handing the key over -- Traditio longa manu: delivery by meere consent or pointint out the object..

• Tradition brevi manu - (delivery by shorth and) fro possessor not owner to Possrssoo Owner
• Traditio constitutum possessorium: From possessor owner - Possesoor not

When the Obligation to Deliver Arises

• If with term or aggreement and when term and contion happens
• If wiht no term or agreement

In Case of a Failure Delivery

• An action w/a rith to intermimity for damages (specific and determinitive)
• A demand for Recession/ Cancelation w/ an agreement for idemminies with damages(specific and determinitive)
• Ask for the comply by hisimself or thru a third party to be be complient at the debtors

Fortuitous Events

• Can be both determined and indermintive

When debtors have proven a delay with a delivery

A delay see discussion under Article 1169 Definitation: event which could not been forseen or wich even when were even immatriabl.

• Act of the "Man" is a fortitous events where the party is an even to another

Accessions

An Obligation that does not necessilary pertain a pincipal thing when a accident is about an obligation that is not full. In particular the accidence follows the principal

Things Joined

• This can also apply to things joiined as well where is it better to keep them toger where the are important for being together
• Personal Posiditve Oblication (To do)
• Three circumstances can be under to this type of circumstance The debitter fails an obligations which causes what happens.
• In this the the courts shall make some consencis for the over cause for what caused the issue

Remedies of a credebitted when a positive personal is not forfilled

Damages can lead to the "following";,

• a daim with damage and fraud (Article 1170)
• If damages that were caused be due to a Negligence by the terms (1170)

Refer to a Personal negative Obligation (What not todo)

• In this there is one that has caused an that cannot full filled from being able to be forced to a delay in their duties for these issues

If the creditor asks for an Oblogator, the remedy is for those who can not under go due to a reason

Mora solvendi can be used to the dilly on passitive subject

• Mora accipiendi the the delay on that part of the subject can be accepted
• If there were to be any a bridge of these violation their will interest

The debtor release himself can be also have a consition on the sum do that that are able to be used and the debtor have have the dolay of those issues can canled be used and made available for the default

Conditions that are considerd In delay

1. • The must is that a juditial delay and extertially is neaded and not needed so there must need with thoses who the law is able to provide.

• The designation for the item is to be rendered the the that Reciprocal oblications must not be able ot comply can be forfilled in that regard is needed in some circumstances

Reqiuties of delays are able to perforoms oblication is to perfomr (postiive)obligation on an aggermed date

• -- Is not alwed when the oblications has not been set

• When demand is neaded* as general ruells is to allow such that the dilays can be used to made that effect and it's a not a general rule (EXptions apply.)

• When when law is not nessery* to give some to for payments

• When the time to give a to be nessesay in all instances

When damage os to perofem and when does not the is the other to perforemed

• This causes a damage

• when the othor side is caused - the the can can perform the obligation which does make others (the a damage

Ground for Damages

• when there is an intentanallity of the oerofmerence

• as a guideness it has be been bad faith that it does not cover

When fraud can be avoided and and what not.

The one to allow is that you you may avoid is that the

What it the best actions to do that

• That is the most appropriate

What is the classifcaation

• In most cases it is about to be used to perfrom and to make party in constiution

In the end: is to ensure you avoid a dilermma (and the there must be a breach in a aggrement

1171: Is too make sure to the one fraud is not to alowed is a action

In contract must do it that the the fraud (alludes/and deceives it) and allow the injury

The rule has allow to granted by by law so we must able to alied and not harm a third party