Legal Issues That Businesses May Encounter (Do You Really Need a Lawyer?)

“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.”1

If only everyone would conscientiously take this principle to heart, then there will be no need for laws. And lawyers. And Congress. And the entire judicial system. Sadly though, the real scenario is far from ideal, if not the complete opposite. Thus, we have Congress to expound this ideology into specific scenarios through various laws and the judiciary to keep everything in check.

The goal of the legal profession is to render public service and secure justice for those who seek its aid.2 Thus, it is a lawyer’s duty to champion the cause of his client while, at the same time, uphold the rule of law.

Although it is axiomatic that the law is everywhere, one facet of life where its presence and function is too evident to be ignored is in business. From conception to operation to dissolution, businesses are highly delicate, legally dependent creatures—one false move can make the empire crumble.

Here are some of the more common business aspects that usually involve the services of a lawyer.

Business Registration

You want to create a corporation. Your friend suggests you can just copy the contents of the incorporation papers of their business (XXX Merchandising Co.) to save on costs. You go through the motions; the papers get approved—only to find out you just created a corporation only allowed to engage in retail merchandising when you intended to have a real estate business.

It is true that those intending to create a business entity can have bookkeepers or messengers do the processing or even do the processing on their own. A word of warning though: registration papers need to contain certain provisions for these to serve their purpose and to protect the stakeholders. Engaging a lawyer to ensure that things get done properly the first time will save you the extra time, money, and hassle needed to remedy things later on.

By-laws, Internal Structure, and Governance

By-laws are a corporation’s own set of laws created to govern its internal structure and relations.

Now, although a corporation is relatively free to decide what it wants to include in its by-laws, section 46 of the Corporation Code (the Code) provides that in all cases, by-laws shall be effective only upon the issuance by the SEC of a certification that the by-laws are not inconsistent with the Code. This is where a lawyer comes in.
A person versed in the law will ensure that your by-law provisions are in accordance with the laws of the land. As a bonus, a lawyer with ample experience in the industry will know what additional matters your company may have to provide for, as an act of prudence, based on other companies’ not-so-pleasant experiences.

Negotiations, Deals, Contracts, and Joint Ventures

The life of a business is practically a series of countless deals and contracts. Each sale, each transaction, and each hire are a deal and an agreement of their own, each with their own consequences.
Sure, it may be cost-efficient to make and review your own contracts, but having a lawyer review the terms and conditions of large, risky, and high-impact agreements is not only prudent; it is imperative.

Intellectual Property

Company X is selling fake goods and is using the same logo your company is using. Or Company A is manufacturing your invention without your permission. Is there something you can do about it?

Not many business owners realize the importance of intellectual property. Your brand, your logo, your tagline, etc.—these are the things that give your business its identity, thus the need to protect it and ensure its integrity. Your artworks, your inventions are all intangibles but are virtually infinite income opportunities for a business. These are all protected under Philippine and international laws. Your lawyer can tell you how you can secure your rights to these assets and to defend them if the need arises.


One common hurdle for businesses is how to keep employees happy while, at the same time, protect the interests of the business so it won’t be sucked dry by unreasonable employee demands.

Consulting a lawyer before making any changes with regard to labor policies and benefits will ensure that your moves will be within the bounds of the law. In the long run, this will protect your company from being subject to speculative and groundless lawsuits from malicious employees. To stress the importance of a legal practitioner on this matter, keep in mind that all things being equal, labor laws and decisions in the Philippines lean toward the favor of employees.

Regulatory Compliance

One thing constant in this world is change. Our laws and regulations keep evolving, thus the need for those in the legal profession to keep up-to-date with the latest developments.

In being engrossed in the intricacies of making your business survive and grow, it is easy to be caught unaware of new developments that may adversely affect your endeavors if ignored. Have a lawyer tasked to give you updates on the latest laws and regulations and for proper compliance processing. Keep in mind that in this country and, perhaps, also for the rest of the world, “ignorance of the law excuses no one.”


Another thing constant in this world is taxation. If there is one field of law that is really consistently changing, it is the field of taxation. And unfortunately, this is the field that most easily has a gigantic and instant financial impact, what with the sky-high surcharges (25–50 percent) and interest rates (20 percent) that increase with each day of inaction. Thus, out of all the circumstances I have enumerated above, this is the one aspect for which I will highly recommend the need for engaging a legal retainer focused on taxation.

Keep in mind, though, that it may not be necessary to engage the services of a lawyer for the above circumstances at all times, but it is equally true that there are instances when engaging one will save you the unnecessary headache both financially and literally. Furthermore, the above-mentioned matters are only examples, and the list is far from exhaustive. In any case, however, just remember that prevention is still always better than cure. Consulting a legal professional early on, coupled with extensive planning and proper controls in place, is the best preventive move against the time-consuming and financially draining cure called litigation.

1Article 19, the Civil Code of the Philippines.
2Docena v. Limon, 356 Phil. 570, September 10, 1998.

Consultant at Bahandi Consultancy and Management Inc.
Bahandi Consultancy and Management Inc.
Michelle Liao placed 5th in the 2014 Philippine Bar Examinations. She is also a Certified Public Accountant with experience in external assurance and internal accounting management services. She is currently a consultant of Bahandi Consultancy and Management, Inc. and specializes in financial reporting and internal controls. She is also a faculty member of the University of Cebu - College of Law.

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