Law Iii Syllabus 2015-16.docx

University of Perpetual Help System - Isabela Campus Minante Uno, Cauayan City, Isabela

College of Business and Accountancy Syllabus in Law on Partnership & Corporation Course Code: Course Title: Credit Units Total Contact Hours:

LAW 400 Negotiable Instrument Law 3 54

Pre-requisite: Co-requisite: Semester Academic Year

Obligations and Contracts First Semester 2015-2016

Course Description: This course was made a part of Commercial Law for business students. Enables the students to understand the legal provisions or articles of the law in partnerships and Corporation laws. This course is likewise served as guideline for Accountancy Students in their preparation for the CPA Board Examination.

Course Objectives: 1. The student will learn the law of partnerships and corporations, including the forms of business organizations, partnerships and corporations. 2. The student will learn to "think critically" in law, and in the area of partnerships and corporations. This will be accomplished through the multiple-choice quizzes, the postings to the discussion forums and assignments. 3. The students will learn to draft a more complex partnership agreement, to prepare articles of incorporation, bylaws, the minutes meeting of the corporation, and the corporate forms related to the organization of a corporation. 4. The student will improve their study skills and will improve how they study law.

Course Requirements: Quizzes Assignments Major Requirements: Prelim: _________________________ Prepared by:

Recitation Group Activities Seatwork Midterm: ______________________ Final: _____________________________ Noted by:

Approved by:

REYGIE P. LOPEZ, CPA Instructor

Term

P

R

Specific Objectives 1. 2. 3. 4.

E L I M I N A R Y

JONATHAN B. DE VEYRA, CPA, MBA Dean, College of Business and Accountancy

Understand the Principal Characteristics of Negotiable Instrument Functions of Negotiable Instrument Incidents in the life of a Negotiable Instrument

Subject Matter

WARREN L. CALILUNG, Ed.D. School Director

Methodology

Teaching Aid

Time Frame

Valuing (in line with the Vision and Mission of the University)

Evaluation Tools

NEGOTIABLE INSTRUMENT LAW 1. Principal Characteristics of Negotiable Instrument a) Negotiability b) Accumulation of secondary contracts 2. Functions of Negotiable Instrument a) It serve as a substitute for money b) c)

d)

It increases the purchasing medium in circulation. It is intended like money to have a definite value to be taken at sight without the need of investigating into the outside facts. When genuine, it ought to serve as the equiv. of money.

3. Incidents in the life of a negotiable instrument a) b) c) d) e) f) g) h) i) j)

Issue Negotiation Presentment for acceptance Acceptance Dishonor by non-acceptance Presentment for payment Dishonor by non-payment Notice of dishonor Protest Discharge

4. Requisites of negotiable instrument a) It must be in writing and signed by the maker or drawer. b) It must contain an unconditional promise or order to pay a sum certain in money. c) It must be payable on demand or at a fixed or determinable future time. d) It must be payable to order or to bearer. e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. 5. Most common forms of negotiable instrument a) Promissory note b) Bill of Exchange c) Check 6. Provisions, stipulations, omissions and other matters in an instrument not affecting negotiability. a) When the sum payable is to be paid with interest b) When the sum payable is to be paid by stated installments c) When the sum payable is to be paid by stated installments,

Interactive Lectures

White board

18 Hrs

Social concern

Quizzes

Critical judgment Graded Recitation Independence Seat Work

Group Activities

Competence Assignment Due Care

Group Discussion Fairness Objectivity Truthfulness Competence Honesty

Seatwork

with a provision that upon default in payment of any installment or of interest, the whole shall become due. d)

Mechanically incomplete but delivered instrument (Sec. 14) This refers to an instrument which is wanting in a material particular such as the amount of the instrument and it is delivered to another for him to fill the blank or blanks and negotiate it either for his own benefit or that of the person making the instrument.

LAW ON NEGOTIABLE INSTRUMENTS page 02 Mechanically incomplete and undelivered instrument (Sec. 15) This refers to an instrument which is wanting in a material particular such as the amount of the instrument or the name of the payee, and it is undelivered. Mechanically complete but undelivered instrument (Sec. 16) This refers to an instrument which is complete in form but not delivered. Signature by procuration Procuration means the act of appointing another as one’s agent or attorney. A signature by procuration operates as notice that the agent has but a limited authority to sign, and the principal is bound only in case the agent in so signing acted within the actual limits of his authority (Sec. 21). Forgery By forgery it meant the counterfeit making or fraudulent alteration of any writing, and may consist in the signing of another’s name, or the alteration of an instrument in the name, amount, description of the person and the like, with intent to defraud. The signature that is forged or made without authority is wholly inoperative. Accommodation party It is one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. (Sec. 29)

Modes of transfer of negotiable instrument 1. By assignment 2. By operation of law 3. By negotiation. Kinds of indorsement 1. Special indorsement – it specifies the person to whom or to whose order the instrument is to be payable. 2. Blank indorsement - it specifies no indorsee. 3. Restrictive indorsement - an indorsement that either:  prohibits the further negotiation of the instrument.  constitutes the indorsee the agent of the indorser.  Vests title in the indorsee in trust for or to the use of some other person. 4. Qualified indorsement - it constitutes the indorser a mere assignor of the title to the instrument. It does not impair the negotiable character of the instrument. 5. Conditional indorsement - this is an indorsement which is subject to the happening of a condition.

1 NEGOTIABILITY OF INSTRUMENT 2 FUNCTIONS AND KINDS OF NEGOTIABLE INSTRUMENT 3 CONSTRUCTION OF AMBIGUOUS INSTRUMENT 4 FORGERY AND ITS EFFECT 5 CONSIDERATION 6 ACCOMODATION PARTY 7 MANNER AND CONSEQUENCE OF TRANSFER OF INST. 8 STRIKING OUT INDORSEMENTS 9 REQUISITES OF HOLDER IN DUE COURSE 10 DEFENSE OF PARTIES 11 DISCHARGE OF NEGOTIABLE INSTRUMENTS AND THE PARTIES SECONDARILY LIABLE

Term

Specific Objectives I - GENERAL PROVISIONS

M I D T E R M

1. 2. 3. 4. 5.

Know the definition, concept and attributes of a Corporation. Enumerate the Classification of corporations Determined the Components of Corporations Understands the concept and other terms of Capital Discern the different classification of Shares.

Subject Matter GENERAL PROVISIONS OF CORPORATION 1. Corporation, concept, attributes a. Artificial being b. Created by the operation of law c. It has the right of succession d. It has the power, attributes and properties expressly authorized by law or incidents to its existence 2.

Classifications of Corporations a. As to whether shares of stock are issued or not -stock corporation -Non-stock corporation b. As to the state or country under whose laws it was created -domestic corporation -foreign corporation c. As to number of persons composing them -corporation aggregate -corporation sole d. As to whether its purpose is public or private -public corporation -private corporation e. As to whether its purpose is religious or not -ecclesiastical or religious corporation -lay corporation f. As to whether its purpose is charitable or not -eleemosynary corporation -civil corporation g. As to their legal right to corporate existence -de jure corporation -de facto corporation h. As to their relation to another corporation or other corporations -parent or holding corporation -subsidiary corporation i. As to whether its share may be held by the public or not -close corporation -open corporation

Methodology

Interactive Lectures

Graded Recitation

Teaching Aid

White board

Time Frame

18 Hrs

Valuing (in line with the Vision and Mission of the University)

Critical judgment Fairness Accountability

Seat Work Accuracy Group Discussion

Competence Competence Objectivity Persistence

Evaluation Tools

j.

II - INCORPORATION AND ORGANIZATION PRIVATE CORPORATIONS 1. Identify the contents and forms of Articles of Incorporation. 2. Determined the purposes and requirements in Amendment of articles of incorporation. 3. Knowing the steps and procedures in Organizing a Private Corporation

Other classifications - corporation by prescription and - Corporation by estoppel

3.

Components of Corporation a. Corporators b. Incorporators c. Stockholders d. Members

4.

Capital stock and other terms, concept a. Capital stock b. Legal capital c. Stated capital d. Capital

5.

Classes of shares of stock under the corporation code a. Common stock b. Preferred stock c. Founders Share Redeemable shares d. Treasury shares

II. INCORPORATION AND ORGANIZATION PRIVATE CORPORATIONS 1. Contents of the articles of incorporation a. The name of the corporation b. The purpose or purposes of the corporation c. The place of the principal office which must be in the Philippines d. The term of existence e. Names, nationalities and residences of the incorporators f. Number, names, nationalities and residences of the directors or trustees g. The amount of authorized capital stock in lawful money of the Philippines, the number of shares into which it is divided, and the par value of each. h. The names of the subscriber, nationalities, number of shares subscribed, amount subscribed and amount paid in i. Other matters not consistent with law and which the incorporators may deem necessary or convenient j. The name of the temporary treasurer elected (treasurer-in-trust) k. Notarial acknowledgement l. Treasurer’s affidavit

III - BOARD OF DIRECTORS/TRUSTEES/OFFICERS 1. Understand the concept and functions of BOD, Trustees. 2. Identify the Qualifications of Director, Trustees 3. How to elect Directors or Trustees 4. To Recognized who are the Corporate officers 5. Know the function and concept of Management Committee 6. Comprehend how, when and where the meetings of BOD/Trustees to be held. 7. Determine who will fill up on the vacancies in the Board of Directors or Trustees 8. Established the rule on contracts between corporations with interlocking directorate 9. Determine what are the Liabilities of directors or trustees for damages

2.

Amendment of the articles of incorporators (sec.16) a. Purpose b. Vote required c. Requirements of amendments d. Effectivity e. Grounds when articles of incorporation or amendment may be rejected or disapproved

3.

Organization of Corporation a. Corporate name b. Corporate Term c. Commencement of corporate existence d. Effects of non-use of corporate charter and continuous in operation of a corporation e. Minimum capital stock required of stock corporations f. Amount of capital stock to be subscribed and paid for purposes of incorporation. g. De facto corporations h. Corporation by estoppel

III - BOARD OF DIRECTORS/TRUSTEES/OFFICERS 1. BOD or trustees, concept and main functions a. To exercise corporate powers b. To conduct all corporate business c. To control and hold corporate property. (sec.23) 2.

Qualifications of a director or trustees a. He must be the owner of at least 1 share of stock which shall stand in his name on the books of the corporation. Any director who ceases to be the owner of at least 1 share of stock shall also cease to be a director. b. Majority of the directors or trustees must be residents of the Philippines c. The number must not be less than 5 nor more than 15

3.

Election of directors or trustees a. They are elected at the meeting called for the purpose b. There must be present in person or by the representative authorized by written proxy; -the owners of the majority of the outstanding capital stock, if a stock corporation -the majority of the members, if anon-stock corporation

c.

4.

5.

6.

7.

The election must be by ballot if requested by any voting stockholder or member. If there is no such request, voting may be made through other methods like the raising of the hands d. No delinquent stock shall be voted Corporate officers a. President b. Treasurer c. Secretary d. Other officers as may be provided in the by-laws Executive committee a. Executive committee concept b. Functions Meeting of directors or trustees a. Quorum -concept -quorum in meeting of directors or trustees b. Vote required to have a valid corporate act c. Directors or trustees cannot attend or vote by proxy at board meetings Vacancies in the office of directors and trustees a. Causes of vacancy -removal -expiration of term -increase in the number of directors -resignation -abandonment -disqualification b. Filing of vacancy -by the stockholders or members -by the board of directors or trustees c.

8. a. b. c.

Reporting requirements on election and vacancies - Election of directors, trustees or officers - Death or resignation of a director, trustee or officer or when they in any manner cease to hold office

Rule on contracts between corporations with interlocking directorate There is no fraud The contract is fair and reasonable under the circumstances If the interest of the interlocking director in one corporation or corporation is merely nominal, he shall be subject to the following conditions insofar as the

9.

IV - POWERS OF CORPORATIONS, ULTRA VIRES ACTS, BY-LAWS, and VOTING TRUST AGREEMENT

1. Identify the different Powers of Corporation 2. Determine the concept of Ultra-vies Acts 3. Understand the By-Laws 4. Know the concept, effect, and requisites of Voting Trust 5. Recognized the rules on voting by stockholders or members

corporation or corporations are concerned. -that his presence in the board meeting in which the contract was approved was not necessary to constitute a quorum at such meeting -that his vote was not necessary for the approval of the contract Liability of directors or trustees for damages a. Grounds for liability to pay damages -by willingly and knowingly voting for or assenting to patently unlawful acts of the corporation -by being guilty of gross negligence or bad faith in directing the affairs of the corporation -by acquiring any personal or pecuniary interest in conflict with their duty as such directors or trustees b. Nature of liability c. To whom liable d. Contracts between corporations with interlocking directors e. Disloyalty of a director

IV - POWERS OF CORPORATIONS, ULTRA VIRES ACTS, BYLAWS AND VOTING TRUST. 1. Kinds of power a. Express powers b. Implied powers c. Incidental powers 2. Ultra-vires acts a. Concept b. Distinguish from illegal act c. Effect of ultra-vires act which is not illegal d. Requisites for ratification of an ultra-vires act which is not illegal 3. By-laws a. By-laws concept b. Requisite of valid by-laws c. When by-laws are adopted and filled d. Contents of by-laws e. Amendment repeal, or adoption of new by-laws f. Distinction between articles of incorporation and bylaws 4. Voting trust a. Concept b. Effect of the voting trust agreement c. Requisite and limitation of voting trust agreement

5.

d. Distinction between proxy and voting trust agreement Rules on voting by stockholders or members a. Voting shares or member -2/3 of outstanding capital stock or 2/3 of members entitled to vote -majority of the outstanding capital stock or majority of the members b. Voting and non-voting shares or members -2/3 of outstanding capital stock or 2/3 of members entitled to vote -majority of the outstanding capital stock or majority of the members

Term

F I N

Specific Objectives

Subject Matter

I STOCKS AND STOCKHOLDERS 1. Recognized how to become a Stockholder 2. Know the subscription concepts, forms and kinds 3. Determined what are the consideration for stocks 4. Knowing the different kinds of Dividends and its concept. 5. Identify what are Corporate Books and Records.

STOCKS AND STOCKHOLDERS 1. How one becomes a stockholder -by subscription of unissued shares -by purchase of treasury shares -by transfer from a stockholder 2.

II CORPORATE BOOKS AND RECORDS III MERGER AND CONSOLDATION

A L

IV APPRAISAL RIGHT V

NON-STOCK CORPORATIONS

VI

CLOSE CORPORATIONS 3.

VII SPECIAL CORPORATIONS

S

VIII DISSOLUTION IX X

Subscription - concept, form, and kinds - Pre-incorporation subscription - Issuance of Certificate of Stocks - Interest on unpaid subscription - Payment of balance of subscription - Liability of directors for watered stock - Delinquency sale - Effect of delinquency - When sale may be questioned - Court action to recover unpaid subscription - Rights of unpaid shares - Lost or destroyed certificate Consideration for stocks - Cash - Payment for services - Payment for Liabilities - No consideration

FOREIGN CORPORATIONS 4.

Dividends. Concept Kinds of dividends - Cash dividends - Property dividends - Stock dividends - Bond dividends - Scrip dividends - Liquidating dividends - Composite dividends

5.

Corporate Books and Record a. Books to be kept; stock transfer agent b. Right to financial statement

MISCELLANEOUS PROVISIONS

Methodology

Interactive Lectures

Teachin g Aid

Time Frame

Valuing (in line with the vision and Mission of the University)

Evaluation Tools

White board

18 Hrs

Social concern

Quizzes

Critical judgment Graded Recitation Independence Seat Work

Group Activities

Competence Assignment Due Care

Group Discussion Fairness Objectivity Truthfulness Competence Honesty

Seatwork

MERGER AND CONSOLDATION 1. Plan of merger or consolidation 2. Stockholders’ or members’ approval 3. Articles of merger or consolidation 4. Securities and Exchange Commission’s approval and effectivity of merger and consolidation 5. Effects of merger or consolidation APPRAISAL RIGHT 1. Instances of appraisal right 2. How right is exercised 3. Effect of demand and termination of right 4. When right to payment ceases 5. Who bears costs of appraisal 6. Notation on certificate(s), right of transferee NON-STOCK CORPORATIONS 1. Definition 2. Purposes 3. Right to vote 4. Non-transferability of membership 5. Termination of membership 6. Election and term of trustees 7. Place of meetings 8. Rules of distribution 9. Plan of distribution of assets CLOSE CORPORATIONS 1. Definition and applicability of title 2. Articles of Incorporation 3. Validity of restrictions on transfer of shares 4. Issuance or transfer of stock of a close corporation in breach of qualifying conditions 5. Agreements by stockholders 6. When board meeting is unnecessary or improperly held 7. Pre-emptive right in close corporations 8. Amendment of articles of Incorporation 9. Deadlocks 10. Withdrawal of stockholder or dissolution of corporation

SPECIAL CORPORATIONS 1. Incorporation 2. Pre-requisites to incorporation 3. Board of Trustees 4. Classes of Religious Corporations 5. Corporation Sole 6. Articles of Incorporation 7. Submission of Articles of Incorporation 8. Acquisition and alienation of property 9. Filling of vacancies 10. Dissolution 11. Religious societies DISSOLUTION 1. Methods of dissolution 2. Voluntary dissolution where no creditors are affected 3. Voluntary dissolution where creditors are affected 4. Dissolution by shortening corporate term 5. Involuntary dissolution 6. Corporate liquidation FOREIGN CORPORATIONS 1. Definition and rights of foreign corporation 2. Application to existing foreign corporations 1. Application for a license 2. Issuance of a license 3. Who may be a resident agent 4. Resident agent; service of process 5. Law applicable 6. Amendments to Articles of Incorporation or bylaws of foreign corporations 7. Amended license 8. Merger or consolidation involving a foreign corporation licensed in the Philippines 9. Doing business without license 10. Revocation of license 11. Issuance of certificate of revocation 12. Withdrawal- foreign corporation MISCELLANEOUS PROVISIONS 1. Outstanding capital stock defined 2. Designation of governing boards 3. Incorporation and other fees 4. Stock ownership in certain corporations 5. Annual reports of corporations

6. 7. 8. 9. 10. 11. 12. 13.

GRADING SYSTEM: Quizzes Recitation Seatwork/Assignment Attendance Total Class Standing

40% 25% 20% 15% 100%

Confidential nature of examination results Rule-making power of the Securities and Exchange Commission Violations of the code Amendment or repeal Repealing clauses Separability of provisions Applicability to existing corporations Effectivity

Major Exams Class Standing Total Grade

TEXTBOOK: Law on Partnership and Private Corporations – By Atty. Carlos B. Suarez and Atty. Alexander O. Suarez

BOOK REFERENCES 1. 2. 3.

Pointers in Business Law for CPA reviewees – By; Carlos B. Suarez and Alexander O. Suarez Notes in Business Law – By: Fidelito R. Soriano The Law on Partnership and Private Corporation – By Hector S. De Leon

SUPPLEMENTARY READINGS:

WEBSITES:

SUGGESTED MOVIES OR OTHER MULTI MEDIA MATERIALS

33.33% 66.67% 100%