THE CPA LICENSURE EXAMINATION SYLLABUS

REGULATORY FRAMEWORK for BUSINESS TRANSACTIONS

Effective October 2018 Examination

This subject covers the candidates’ knowledge of the regulatory framework governing business transactions and business
organizations/associations, and of business laws including their legal implications. Candidates should know and
understand the pertinent legal provisions, general principles, concepts, and underlying philosophy of the laws applicable
to commerce and business. The candidates must have sufficient knowledge to enable them to recognize the legal
implications of business situations or transactions and to know when to seek legal counsel or recommend that it be
sought.

The candidates must have a working knowledge to apply the various regulatory framework measures and the pertinent
provisions of the law relative to particular business scenarios.

The candidates must also be familiar with clients’ rights and remedies, with the handling of disputes on regulatory issues.
They must know the various regulatory offices that they will be interacting with and the basic regulations that they will
derive benefits from.

The candidates must also be able to communicate effectively matters pertaining to the regulatory work that will be
handled.

The knowledge of the candidates in the competencies cited above is that of an entry level accountant who can address
the fundamental requirements of the various parties that the candidates will be interacting professionally in the future.
.
Only new laws, implementing rules and regulations, jurisprudences and other issuances shall be included in the
examinations if these are in effect for at least six (6) months at the date of the examination.

The examination shall have one hundred (100) multiple choice questions.

The syllabus for the subject is presented below.

1.0 LAWS ON BUSINESS TRANSACTIONS

1.1 Obligations
1.1.1 Sources of obligations and their concepts
1.1.1.1 Law
1.1.1.2 Contracts
1.1.1.3 Quasi-contracts
1.1.1.4 Delicts
1.1.1.5 Quasi-delicts
1.1.2 Kinds of obligations in general under the Civil Code
1.1.3 Specific circumstances affecting obligations in general
1.1.3.1 Fortuitous events
1.1.3.2 Fraud
1.1.3.3 Negligence
1.1.3.4 Delay
1.1.3.5 Breach of contract
1.1.4 Duties of obligor in obligation to do or not to do
1.1.5 Extinguishment of obligation with special emphasis on
1.1.5.1 Payment of debts of money
1.1.5.2 Mercantile documents as means of payment
1.1.5.3 Special forms or modes of payment
1.1.5.4 Remission or condonation, confusion, compensation and novation
1.1.5.5 Effect of insolvency and bankruptcy on extinguishment of obligation

1.2 Contracts
1.2.1 Concepts and classification
1.2.2 Elements and stages
1.2.3 Freedom from contract and limitation
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 1.2.4 Persons bound
1.2.5 Consent
1.2.5.1 Capacitated persons
1.2.5.2 Requisites
1.2.5.3 Vices of consent
1.2.6 Objects of contracts and considerations of contracts
1.2.7 Formalities of contracts
1.2.8 Interpretation and reformation of contract
1.2.9 Defective contracts
1.2.9.1 Rescissible
1.2.9.2 Voidable
1.2.9.3 Unenforceable
1.2.9.4 Void

1.3. Sales
1.3.1 Nature, forms and requisites
1.3.2 Earnest money as distinguished from option money
1.3.3 Rights/obligations of vendor and vendee
1.3.4 Warranties (in relation to consumer laws)
1.3.5 Installment sales
1.3.5.1 Personal property – Recto Law
1.3.5.2 Real Property – Maceda Law
1.3.5.3 PD 957 / Condominium Act

2.0 LAW ON CREDIT TRANSACTIONS

2.1 Pledge, Real Mortgage and Chattel Mortgage
2.1.1 Nature and requisites
2.1.2 Requirements to bind the parties and third persons
2.1.3 Obligations and rights of pledgor and pledge
2.1.4 Obligations and rights of mortgagor and mortgagee and effect of pactum commissorium
2.1.5 Modes of extinguishment

3.0 NEGOTIABLE INSTRUMENTS AND BOUNCING CHECKS LAW

3.1 Negotiable Instruments
3.1.1 Negotiability of instrument
3.1.2 Abnormal negotiable Instruments
3.1.3 Incomplete but delivered instruments
3.1.4 Incomplete and undelivered instruments
3.1.5 Complete but undelivered instruments
3.1.6 Instruments with forged signature
3.2 Bouncing Checks
3.2.1 Checks without insufficient funds
3.2.2 Evidence of knowledge of insufficient funds
3.2.3 Duty of Drawee
3.2.4. Credit Construed

4.0 LAWS ON BUSINESS ORGANIZATION

4.1 Partnership
4.1.1 Nature and as distinguished from corporation
4.1.2 Elements and kinds
4.1.3 Formalities required
4.1.4 Rules of management
4.1.5 Distribution of profits and losses
4.1.6 Sharing of losses and liabilities
4.1.7 Modes and retirement requirements
4.1.8 Limited partnership
4.2 Corporations
4.2.1 Nature and classes of corporation
4.2.2 Incorporation and organization of Private Corporation
4.2.3 Powers of a corporation
4.2.3.1 Expressed
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 4.2.3.2 Implied
4.2.3.3 Incidental
4.2.4 Board of Directors/Corporate Officers
4.2.4.1 Qualifications
4.2.4.2 Election and removal
4.2.4.3 Powers and fiduciary duties
4.2.5 Classes of stocks
4.2.5.1 Concepts
4.2.5.2 Subscriptions
4.2.6 Powers, duties, rights and obligations of stockholders
4.2.7 Majority and minority control
4.2.8 By Laws
4.2.9 Meetings
4.2.10 Corporate reorganization
4.2.10.1 Mergers
4.2.10.2 Consolidations
4.2.10.3 Other business combinations
4.2.11 Non-stock corporation
4.2.12 Modes of dissolution and liquidation
4.2.12.1 Retirement Requirements
4.2.13 Foreign corporations
4.2.13.1 License to do business
4.2.13.1.1 Purpose of the license
4.2.13.2 Requirements for application/issuance of license
4.2.13.3 Consequence of doing business without a license
4.2.14 Definition and rights of foreign corporations
4.2.15 Suspension or revocation of license
4.2.16 Kinds and availability of corporate books
4.2.17 Securities Regulation Code
4.2.17.1 Registration of Securities
4.2.17.2 Shareholders’ interests
4.2.17.3 Prohibition on fraud, manipulation, private tender offer and insider trading
4.2.17.4 Exchanges and other securities trading markets
4.2.18 Code of Corporate Governance
4.2.19 Securities and Regulation Code (SRC)
4.2.20 SEC Circulars and Issuances
4.2.20.1 Filing of General Information Sheet
4.2.20.2 Filing of Annual Audited Financial Statements
4.2.20.3 Filing of Articles of Incorporation, By-laws and its amendments and Secondary
License
4.2.20.4 Fines and Penalties

4.3 Cooperatives
4.3.1 Organization and Registration of Cooperatives
4.3.2 Administration
4.3.3 Responsibilities, Rights and Privileges of Cooperatives
4.3.4 Membership
4.3.5 Capital, Property of Funds
4.3.6 Audit, Inquiry and Members’ Right to Examine
4.3.7 Allocation and Distribution of Funds
4.3.8 Types and Categories of Cooperatives
4.3.9 Merger and Consolidation of Cooperatives
4.3.10 Dissolution of Cooperatives

5.0 Laws on other Business Transactions

5.1 PDIC Law

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 5.1.1 Insurable deposits
5.1.2 Maximum liability
5.1.3 Requirements for Claims

5.2 Secrecy of Bank Deposits and Unclaimed Balances Law

5.3 AMLA Law

5.3.1 Definition of Terms
5.3.2 Unlawful Activities
5.3.3 Covered Institutions/Persons / Covered Transactions
5.3.4 Suspicious transactions
5.3.5 Record Keeping Requirements
5.3.6 Powers of AMLC
5.3.7 Reporting requirements

5.4 Intellectual Property Law (except provisions under Part 1

5.4.1 The Law on Patents
5.4.2 The Law on Trademark, Service Marks and Trade Names
5.4.3 The Law on Copyright

5.5 Data Privacy Act

5.5.1 General Provisions and National Privacy Commission
5.5.2 Processing and Security of Personal Information
5.5.3 Rights of the data subject
5.5.4 Accountability for transfer of information
5.5.5 Security of Sensitive Personal Information in Government
5.5.6 Penalties

5.6. Electronic Commerce Act

5.6.1 General Provisions
5.6.2 Legal Recognition and Communication of electronic messages and electronic documents
5.6.3 Electronic commerce in carriage of goods and electronic transactions in government

6.0 Updates on Special Concerns

6.1 Globalization
6.2 Digital and Information Technology
6.3 Governance and Ethics
6.4 Regulatory Requirements and Considerations
6.5 Effective Business Communication

NOTES:

1. The following can be incorporated in the syllabus of Laws on Business Organization:

a. Securities Regulation Code
b. SEC Circulars and Issuances
c. Cooperatives

2. The SRC Rule 68 can be taught in Financial Reporting.

3. Code of Corporate Governance can be discussed in Good Governance and Corporate Responsibility.
4. The Bouncing Checks law and Banking Laws can be taught in the Negotiable Instruments Law.
5. Data Privacy Act and e-commerce law can be incorporated in the subject Other Commercial Laws.
6. Updates on Special Concerns can be discussed in the subject Integrative Course.
7. Intellectual Property Law can be discussed in Financial Reporting.