QUIZZER

On
CORPORATION CODE OFT HE PHILIPPINES

By: ATTY. BRYAN JASPER D. SOLIS

X----------------------------------------------------X

1. Corporate existence is disregarded under this doctrine when the corporation is formed or used for illegitimate
purposes.
a. Piercing the Veil of Corporate Fiction
b. Trust Fund Doctrine
c. Derivative Suit
d. Theory of Corporate Entity

2. It is applied to determine the nationality of the corporation by tracing the nationality of the stockholders of
Investor Corporation so as to ascertain the nationality of the corporation where investment is made.
a. Piercing the Veil of Corporate Fiction
b. Trust Fund Doctrine
c. Derivative Suit
d. Grandfather Rule

3. Under this doctrine, creditors of the corporation may sue stockholders directly for their unpaid subscription.
a. Derivative Suit
b. Trust Fund Doctrine
c. Intra-Corporate Controversy
d. Grandfather Rule

4. XENON Corporation intends to buy 15 units of photocopying machine and other office equipments for
expansion of its business from XANOR enterprises. Majority of the directors decided to issue stocks, instead of
cash, to purchase the said items. Is this a valid corporate act?
a. No, because new stocks shall be issued only to stockholders by virtue of their pre-emptive right.
b. Yes, this is one instance wherein pre-emptive right of stockholders may not be exercised.
c. No, because the stockholders did not ratify the act by a vote of two-thirds.
d. Yes, directors may choose to issue stocks to anyone or to the public.

5. It is the evidence of a holder’s ownership of the stock and of his right as a shareholder.
a. Certificate of Stock. c. Share of stock
b. Subscription Contract d. Stock and Transfer Book

6. Which below is a valid corporate contract?

a. Contract with the president of the corporation without prior authority to enter into the contract but ratified by
2/3 of outstanding capital stock.
b. Contract between two corporations with interlocking directors.
c. Contract approved by majority of directors without concurrence of the stockholders selling 90% of corporate
property.
d. Management contract of 10 years.
7. Which below is a corporate officer not required under the Corporation Code?
a. Secretary b. Accountant c. Treasurer d. President

8. Which corporator below has the right to remove directors and/or trustees?
a. Corporate Officers c. Stockholders/Members
b. Directors/Trustees d. All of them

9. What is the vote required to revoke the power delegated to the directors and/or trustees to amend or repeal the
by-laws?
a. Majority of the outstanding capital stock/majority of the trustees.
b. 2/3 of the outstanding capital stock/two-thirds of members
c. 1/3 of the outstanding capital stock/one-third of members
d. None, the power is irrevocable.

10. Which notice of meeting below may be made by publication in lieu of personal service and/or mail?
a. Meeting to elect directors.
b. Meeting to remove directors.
c. Meeting to increase or decrease capital stock.
d. Board meetings.

11. What is the maximum period fixed by law for voting trust agreement at any single time?
a. 6 months c. 2 years
b. 3 months d. 5 years

12. In the absence of any provisions in the articles of incorporation regarding voting rights, which class of shares
does not have voting rights?
a. Preferred and redeemable shares
b. Non-par value shares
c. Treasury shares
d. Founders shares

13. In the absence of any express authority to the board of directors by the articles of incorporation, which class of
shares below cannot be issued by the corporation?
a. Redeemable shares
b. Treasury Shares
c. Founders shares
d. Preferred shares

14. Who are corporators who may enjoy exclusive right to vote and be voted as directors or trustees of the board?
a. Incorporators
 b. Stockholders owning the controlling interest of the outstanding capital stock.
c. Corporate Officers
d. Holders of Founders shares

15. Which corporate act does not require the concurrence of stockholders?
a. Declaration of cash dividends.
b. Extension of corporate term
c. Amendment of the bylaws when power to amend is not delegated to the board
d. Incurring bonded indebtedness.

16. BETTER LIVING CORPORATION bought a land from STELLA R. The Acquisition of the land by the corporation
was ultra vires because the land was in excess of the corporate needs. Title passed to the corporation but
STELLA R. was not paid the price yet. When STELLA R. demanded payment for the price, the corporation refused
on the ground that its act of acquiring the land was beyond its corporate power. Is the corporation correct?
a. Yes, it is correct. Ultra Vires acts are considered void and without legal effect.
b. Yes, it is correct. STELLA R. should have inquired from the corporation if the contract is within its power
and authority to approve.
c. No, when an ultra vires act is executed on one side but executory on the other who received benefits there
from, recovery may be had by the former.
d. No because both have unclean hands and the law leaves them as they are.

17. In which corporate activity is a proxy allowed by law to participate?

a. Board meetings
b. Meeting of the executive committee
c. Election of directors
d. Election of board officers

18. In case of failure to agree on the fair value of the shares of dissenting stockholders within 60 days from
approval of the corporate action dissented from, who shall fix the value of the shares?
a. Court in a proper action
b. Corporate Treasurers
c. Directors and Shareholders in a joint meeting
d. 3 disinterested persons chosen by corporation and stockholder concerned

19. XCEL Corporation has a paid-in capital stock of Php3 Million. After the completion of its first business cycle, it
has unrestricted retained earnings of Php2.5 Million. In the meantime, its board has not declared distribution
of dividends to members despite repeated demands from among the stockholders. Can the stockholders
compel the board to declare dividends?
a. Yes, because profits are already realized and by virtue of their stockholdings, they are entitled to them
without delay.
b. No, because such corporate power is left by law to the sound discretion of the board.
c. Yes, because corporations are prohibited from retaining surplus profits.
20. In a corporation with 25 directors, the by-laws is silent regarding quorum. If 12 of the directors die in the
span of 1 week, who shall fill up the vacancy?
a. Stockholders c. Remaining directors
b. Corporate Officers d. All of them

21. The corporation of XYZ is dissolved by court in a quo warranto proceeding. Prior to its dissolution, it
contracted several corporate debts. Who is liable for such debts?
a. Corporate property
b. Separate property of XYX
c. Both a & b

22. Prior to dissolution, how will you classify the corporation of XYZ?
a. It is a de jure corporation.
b. It is a de facto corporation.
c. It is a corporation by estoppel.

23. What is the maximum number of members in an executive committee?

a. 3 c. 5
b. 10 d. None

24. What is the nationality of a corporation incorporated in the Philippines by Russian citizens, majority of which
are residents of the Philippines, and whose principal place of business is in Jakarta, Indonesia?
a. Indonesian c. Filipino
b. Russian d. All of the above

25. Which stockholder’s right insures retention of proportionate control in the corporation and to retain his equity
in the surplus?
a. Pre-emption c. Appraisal
b. Dividends d. Voting rights