Background info
The dog is about 8 years old, male, Pekingese, but "huge" - unlike the rest of his family. He is very nice, until he is not. He has his own personal space, which he defends aggressively. What is worse, is that he craves for interaction / caressing, but if someone dares to humor actually caress him, he goes to defend his personal space.
He lives with my parents, which are almost always at home. He is walked several times a day, every day. He is not spayed, but vaccinated and seen by a veterinarian whenever needed.
A good reason for this behavior might be my father, who is not at all calm, or sometimes, even reasonable.
Problem description
The dog bites us, or anyone who does not know and respect his boundaries. Any object fallen on the floor accidentally is hos property, which he defends at all costs.
I am not complaining about playful bites. Those bites were almost never hurtful - except for a few occasions, when he was too enthusiastic playing. Recently he learned to only touch our hands with the sides of his lips while playing, instead of pretending to bite.
We have to be very careful to understand when he had enough play time. When we notice that, we must stop interacting with him, at the cost of punctures in out feet.
Question
Since we cannot really change my father's behavior, how can we change the dog's behavior? I have seen dogs in my life, where the people around them are much more aggressive / unreasonable, and those dogs are still calm and forgiving.
Note: I specified "impure" as an aid to understand the temperament of the dog better, in the idea that it might be relevant.