University of St.

La Salle – Bacolod
Yu An Log College of Business & Accountancy
COMLAW3 – Law on Partnerships and Private
Corporations
Quiz No. 5

Choose the best answer from among the choices given.

1. Involuntary dissolution of the corporation is caused by the following, except:

a. upon finding by final judgment that the corporation committed or aided in

the commission of securities violations, smuggling, tax evasion, money
laundering, or graft and corrupt practices, and its stockholders knew.
b. upon shortening of the corporate term
c. upon receipt of a lawful court order dissolving the corporation
d. upon finding by final judgment that the corporation procured its
incorporation through fraud

2. What is the vote for the voluntary dissolution of the corporation?

a. majority of the board of directors and majority vote of the outstanding

capital stock.
b. majority of the board of directors and vote of stockholders representing at
least 2/3 of the outstanding capital stock.
c. majority of the board of directors and majority vote of the stockholders.
d. majority vote of the board of directors and 2/3 vote of the stockholders.

3. Which of the following statements is false regarding merger and consolidation?

a. The constituent corporations shall become a single corporation which, in

case of merger, shall be the surviving corporation designated in the plan of
merger.
b. Articles of merger or articles of consolidation shall be executed by the
President or Vice President of the surviving corporation.
c. The separate existence of the constituent corporations shall cease, except
that of the surviving or the consolidated corporation.
d. Two or more corporations may consolidate into a new single corporation
which shall be the consolidated corporation.

4. Any amendment to the plan of merger or consolidation shall be:

a. Approved by majority vote of the respective boards of directors or trustees

of all the constituent corporations
b. Ratified by the affirmative vote of stockholders representing at least two-
thirds (2/3) of the outstanding capital stock
c. Ratified by two-thirds (2/3) of the members of each of the constituent
corporations.
d. all of the above
5. I. A requesting party who is not a stockholder or member of record, or is a
competitor, director, officer, controlling stockholder or otherwise
represents the interests of a competitor shall have the right to inspect or
demand reproduction of corporate records.
II. Corporate records, regardless of the form in which they are stored, shall be
open to inspection by any director, trustee, stockholder or member of the
corporation in person or by a representative at reasonable hours on business
days, and a demand in writing may be made by such director, trustee or
stockholder at their expense, for copies of such records or excerpts from
said records.

a. Both Statements are true.

b. Statement I is false; Statement II is true.
c. Statement I is true; Statement II is false.
d. Both Statements are false.

6. Consideration for issuance of stock may be any or any combination of any two or
more of the following, except:

a. Property- tangible or intangible

b. Cash
c. Outstanding shares exchanged for stock in the event of reclassification or
conversion
d. none of the above

7. Which of the following definitions defines a class suit?

a. It is a remedy designed by equity and has been the principal defense of the
minority shareholders against abuses by the majority.
b. The wrong is done to the stockholder personally and not the other
stockholders or the corporation
c. The preferred stockholder’s rights are violated and the wrong is done to a
group of stockholders.
d. The wrong is done to the corporation itself and the cause of the action
belongs to the corporation and not to the individual stockholders of the
corporation.
8. I. A pre-incorporation subscription is revocable for a period of at least 6
months from the date of subscription.

II. Pre-incorporation subscription is still revocable after the articles of

incorporation are submitted to the SEC.

III. A subscriber will not become a stockholder if he has not paid for his shares
even though he already perfected the subscription contract.

a. All statements are true.

b. Statements I and II are true, while Statement III is false.
c. Statement III is true.
d. All Statements are false.

9. I. The president shall preside at all meetings of the directors or trustee as well
as of the stockholders or members, unless the bylaws provide otherwise.

II. The quorum shall consist of the stockholders representing a majority of the
outstanding capital stock or a majority of the members in the case of
nonstock corporations.
III. In case of postponement of stockholders’ or members’ regular meetings,
written notice thereof and the reason therefore shall be sent to all
stockholders or members of record at least two weeks prior to the date of
the meeting.

a. Statements I and II are true.

b. Statements II and III are true.
c. Statements I and III are false.
d. Statements II and III are false.

10. Which of the following statements is incorrect?

a. Special meetings of stockholders or members shall be held at any time

deemed necessary or as provided in the bylaws.
b. Notice of special meetings of directors and trustees must be sent to every
director or trustee at least one week prior to the scheduled meeting.
c. Regular meetings of stockholders or members shall be held annually on a
date fixed in the bylaws, or if not so fixed, on any date after April 15 of
every year as determined by the board of directors and trustees.
d. Notice of regular meetings of directors or trustees of corporations stating
the date, time and place of the meeting must be sent to every director or
trustee at least two days prior to the scheduled meeting.
11. All of these statements are true, except:

a. Directors or trustees can vote through remote communication at board

meetings.
b. Stockholders and members may vote in person.
c. Directors or trustees can vote by proxy at board meetings.
d. Stockholders of a stock corporation may create a voting trust for the
purpose of conferring upon a trustee the right to vote.

12. The Board of Directors of Copper Management, Inc. approved its plan of merger
with Brass Corp. A special meeting for the stockholders was scheduled for the
approval of the merger. Due to time constraint, a notice was only sent via email
three days prior to the scheduled meeting on 30 May 2024 in Seda Hotel in Cebu
City located in Metro Cebu. Marites, a stockholder, personally attended the
meeting without manifesting her objection. It was only after three days that she
opposed the approval of merger made by the stockholders. She questioned the
validity of the meeting and argued that the principal office of the corporation is
located at Lapu-Lapu City, not Cebu City, and the urgent notice was sent through
an electronic data message. Is the stockholders’ meeting for the approval of the
plan of merger valid and in compliance with the law?

a. No, the notice for a special meeting of stockholders should be written and
made one week prior to the scheduled day of meeting.
b. Yes, the notice of meeting can be made thru electronic message at any time
prior to the scheduled date.
c. Yes, the notice of meeting can be waived when the stockholder attended the
meeting without raising her objection and the meeting held in Seda Hotel
Cebu is valid since it was held within Metro Cebu.
d. No, the meeting was not held at the principal office of the corporation.

13. This document confers authority to vote on the stock in a corporate meeting.

a. Power of attorney
b. Subscription agreement
c. Authorization letter
d. Proxy
14. I. A majority of the board of directors or trustees, and the owners of at least a
majority of the outstanding capital stock, or at least a majority of the
members of a nonstock corporation, at a regular or special meetings duly
called for the purpose, may amend or repeal the bylaws or adopt new
bylaws.

II. The amended or new bylaws may be effective upon the acknowledgment of
receipt by the SEC.

a. I is true; II is true
b. I is false; II is false
c. I is false; II is true
d. I is true; II is false

15. A private corporation may provide the following in its bylaws, except:

a. The directors’ or trustees’ qualifications, duties, and responsibilities, the

guidelines for setting the compensation of directors or trustees and officers,
and the maximum number of other board representations that an
independent director or trustee may have which shall, in no case be more
than the number prescribed by the Commission.
b. The form for proxies of stockholders and members and the manner of
voting them.
c. The time, place, and manner of calling and conducting regular or special
meetings of the directors or trustees.
d. The form of proxies for meetings of the board of directors and the manner
of voting them.

16. It is an act outside the powers conferred by the Revised Corporation Code or by
the Article of Incorporation or beyond what is necessary or incidental to the
exercise of the power so conferred.

a. De jure act
b. De facto act
c. Intra vires act
d. Ultra vires act

17. I. Any corporation may make donations for the benefit of a political party or
candidate or for purposes of partisan political activity provided the
donations are reasonable.
II. A corporation has the capacity to enter into a partnership, joint venture,
merger, consolidation, or any other commercial agreement with natural and
juridical persons.

a. I is true; II is false.
b. I is false; II is true.
c. I is true; II is true.
d. I is false; II is false.
18. I. The declaration of dividends is dependent upon the availability of surplus
profit or unrestricted retained earnings.
II. Payment of dividends to a common stockholder is not a matter of right but
a matter of discretion.

a. I is true; II is false.
b. I is false; II is true.
c. I is true; II is true.
d. I is false; II is false.

19. Suppose that BABA Corporation has already issued the 2,000 originally
authorized shares of the corporation so that its Board of Directors and
stockholders wish to increase BABA's authorized capital stock. After complying
with the requirements of the law on increase of capital stock, BABA Corporation
issued an additional 2,000 shares of the same value. Assume that stockholder
Anabelle presently holds 300 out of the 2,000 original shares. Would Anabelle have
a preemptive right to 300 of the new issue of 2,000 shares?

a. No, she will not have any pre-emptive right to 300 shares since it is a new
issue of 2000 shares and its right will only be applicable to the original one
and not to the newly issued shares.
b. It depends on whether she exercises such right.
c. Yes, since she owns at least 10% of the outstanding capital stock.
d. Yes, since such right is conferred by law to stockholders of record.

20. The following are the instances where corporation may acquire its own shares,
except:

a. Redeemable shares regardless of the existence of retained earnings.

b. To collect or compromise indebtedness to the corporation, arising out of
paid subscription, in a delinquency sale and to purchase delinquent shares
sold during said sale.
c. To acquire treasury shares.
d. To pay dissenting or withdrawing stockholders in the exercise of the
stockholder’s appraisal right.

21. When the director of the company is involved in a prejudicial action of obtaining
profits, he/she must be asked to refund the corporation's profits, unless:

a. The act has been ratified by a vote of the stockholders owning or

representing at least two- thirds (2/3) of the outstanding capital stock.
b. The director himself/herself is issued a board resolution ratifying his/her
by all the members of the board.
c. The director resigns
d. The director secures an authorization from the SEC.
22. Which of the following is not one of the qualifications of a corporate president?

a. Must be a director
b. Must be a stockholder on record of at least 1 share
c. Must be a Filipino citizen
d. Need not be a resident of the Philippines

23. I. Directors or Trustees shall not receive any compensation, as such directors
or trustees, except for reasonable per diems.
II. A contract of a corporation with one or more of its directors or trustees,
officers or their spouses and relatives within the fourth civil degree of
consanguinity or affinity is void, at the option of such corporation.

a. I is true; II is false.
b. I is false; II is true.
c. I is true; II is true.
d. I is false; II is false.

24. The following are the requirements for the election of directors/trustees, except:

a. The election must be by ballot, if requested by any voting stockholder or

member.
b. In stock corporations, the total number of votes may exceed the number of
shares owned by the stockholder as shown in the books of the corporation
multiplied by the whole number of directors to be elected. Provided, that no
delinquent stock shall be voted.
c. The owners of majority of the outstanding capital stock or if there be no
capital stock, a majority of the members entitled to vote, of the corporation
must be present, either in person or through a representative authorized to
act by written proxy.
d. Nominees for directors or trustees receiving the highest number of votes
shall be declared elected.

25. The following are limitations in the amendment of the articles of incorporation,
except:

a. The original and amended articles together shall contain all provisions
required by law to be set out in the articles of incorporation.
b. The amendment must be for legitimate purposes and must not be contrary
to the Corporation Code and special laws.
c. The amendment must be approved by a majority of the board of directors
or board of trustees.
d. The amendment requires the vote or written assent of stockholders
representing majority of the outstanding capital stock or majority members
if it be a non-stock corporation.
26. What is the maximum period fixed by law for a voting trust agreement for any
single time?

a. 6 months
b. 1 year
c. 2 years
d. 5 years

27. I. The trustee in the voting trust agreement may further delegate his/her right
to vote through proxy.
II. While both proxy and voting trust agreement need to be filed with the SEC,
only the latter requires notarization.

a. I is true; II is false.
b. I is false; II is true.
c. I is true; II is true.
d. I is false; II is false

28. ABC Corporation has a paid-in capital stock of PhP3,000,000. After the completion
of its first business cycle, it has unrestricted retained earnings of PhP2,500,000.
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.
d. No, because the corporation’s retained earnings have not exceeded its paid-
in capital stock yet.

29. In a corporation with 15 directors, 8 of these directors died of food poisoning

during a company event over the weekend. Who should fill the vacancy for the
remaining term of these directors?

a. The stockholders
b. The remaining members of the board of directors
c. The executive committee
d. The SEC by petition of the stockholders

30. Which stockholder’s right ensures retention of proportionate control in the

corporation and to retain his equity in the surplus?

a. right of redemption
b. right of pre-emption
c. right of first refusal
d. right of appraisal
31. 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 corporate officers

32. 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

33. Who are the corporators who may enjoy exclusive right to vote and be voted as
directors or trustees of the board within a period specified by law?

a. Incorporators
b. Stockholders owning the controlling interest of the outstanding capital stock
c. Corporate Officers
d. Holders of Founders shares

34. 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 or majority of the trustees

b. 2/3 of the outstanding capital stock or 2/3 of members
c. 1/3 of the outstanding capital stock or 1/3 of members
d. none of the above.

35. Which of the following corporate officers is not required for a bank?
a. Compliance officer
b. President
c. Secretary
d. none of the above

36. It is the evidence of a holder’s ownership of the stock and of his right as a
shareholder.

a. certificate of stock
b. subscription contract
c. share of stock
d. stock and transfer book
37. 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. class or representative suit

38. The following are instances when a preferred stockholder may vote, except?

a. Sale, lease, exchange, mortgage, pledge, or other disposition of all or

substantially all of the corporate property
b. Incurring, creating, or increasing bonded indebtedness
c. Election of directors or trustees
d. Increase or decrease of authorized capital stock

39. The following are the requirements for the exercise of the right to inspect
corporate books, except:

a. It must be exercised at reasonable hours on business days.

b. The stockholder has not improperly used any information he has secured
through any previous examination.
c. Demand is made in good faith or for a legitimate purpose.
d. none of these.

40. The following are the rights of a stockholder, except:

a. To be issued stock certificates

b. To exercise his/her pre-emptive right
c. To elect corporate officers
d. To exercise his/her appraisal right

***Nothing follows***