2024-1-1 Corporation

It is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence

• Corporation

• Cooperative

• Partnership

• Joint Venture

Answer explanation

SECTION 2. Corporation Defined. — A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence.

It refers to a corporation with a single stockholder

• One person corporation (OPC)

• Partnership

• Joint Venture

• Corporation Aggregate

Answer explanation

SECTION 116. One Person Corporation. — A One Person Corporation is a corporation with a single stockholder: Provided, That only a natural person, trust, or an estate may form a One Person Corporation.

Statement 1: A domestic corporation is a corporation organized under the laws of the Philippines

Statement 2: A foreign corporation is a corporation organized under laws other than those of the Philippines

and whose laws allow Filipino citizens and corporations to do business in its own country or State

• Both statements are true

• Only Statement 1 is true

• Only Statement 2 is true

• Both statements are false

Answer explanation

Sec. 3. Classes of corporations

Domestic – one incorporated under Philippine laws.

Foreign – one formed, organized, or existing under any laws other than those of the Philippines

Statement 1: A de jure corporation refers to a corporation which actually exists both in fact and in law. It has

complied with all the requirements of law and therefore its juridical personality is not subject to the direct attack

by the state through quo warranto proceedings

Statement 2: A de facto corporation refers to a corporation which actually exists for all practical purposes as

a corporation but which has no legal right to corporate existence as against the State since it has not complied

with all the formalities or requirements provided by law. This corporation has a corporate existence but its

juridical personality may be directly attacked by the state through quo warranto proceedings

• Both statements are true

• Only Statement 1 is true

• Only Statement 2 is true

• Both statements are false

Answer explanation

SEC. 19. De facto Corporations. – The due incorporation of any corporation claiming in good faith to be a corporation under this Code, and its right to exercise corporate powers, shall not be inquired into collaterally in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor General in a quo warranto proceeding.

De Jure – one created in strict or substantial conformity with the statutory requirements for incorporation and whose right to exist as a corporation cannot be successfully attacked even in a direct proceeding for that purpose by the State

Which of the following statements pertaining to the purpose or purposes of a stock corporation is incorrect?

• A stock corporation may have more than one purpose

• The purposes, if there are several, must be susceptible of being lawfully combined

• The primary purpose and the secondary purposes may be stated together as one purpose in the articles of incorporation

• The purposes must be lawful

Answer explanation

Section 13. Contents of the Articles of Incorporation.

(b) The specific purpose or purposes for which the corporation is being formed. Where a corporation has more than one stated purpose, the articles of incorporation shall indicate the primary purpose and the secondary purpose or purposes

Are the stockholders, directors or officers personally liable for the liabilities of the corporation after the assets

of the corporations exhausted?

• Yes because they are considered to be general partners

• No under all instances

• Yes under all instances

• No as a general rule, unless exceptional cases warrant the piercing of the veil of corporate fiction

Answer explanation

Section 20. Corporation by Estoppel. - All persons who assume to act as a corporation knowing it to be without the authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by its as a corporation or on any tort committed by it as such, it shall not be allowed to use on any its lack of corporate personality as a defense. Anyone who assumes an obligation to an ostensible corporation as such cannot resist performance thereof on the ground that there was in fact no corporation.

What is/are the means by which the issue price of no par value common value shares is determined?

• It may be fixed by the Board of Directors based on the authority given in the articles of incorporation

• It may be fixed in the articles of incorporation or by-laws

• It may be fixed by stockholders representing at least a majority of the outstanding capital stock at a meeting duly called for the purpose

• Any of the above

Answer explanation

Section 61. Consideration for Stocks

The issued price of no-par value shares may be fixed in the articles of incorporation or by the board of directors pursuant to authority conferred by the articles of incorporation or the bylaws, or if not so fixed, by the stockholders representing at least a majority of the outstanding capital stock at a meeting duly called for the purpose.

If founder’s share classified as such in the Articles of Incorporation is given exclusive right to vote and be

voted in the election of the board of directors, what is the maximum period or limit of that right?

• 2 years from the approval of SEC

• 3 years from the approval of SEC

• 5 years from the approval of SEC

• 10 years from the approval of SEC

Answer explanation

Section 7. Founders' Shares. - Founders' shares may be given certain rights and privileges not enjoyed by the owners of other stock. Where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a limited period not to exceed five (5) years from the date of incorporation

What is the life of a private corporation?

• It has perpetual existence unless its articles of incorporation provide for a specific term

• It has maximum life of 20 years

• It has maximum life of 30 years

• It has maximum life of 50 years

Answer explanation

Section 11. Corporate Term. - A corporation shall have perpetual existence unless its articles of incorporation provide otherwise.

When a change in the corporate name is approved, the SEC shall issue an amended certificate of incorporation under the amended name. What is the effect of the mere change of the corporate name approved by the SEC?

• It will result to dissolution of the previous corporation

• It results to the creation of a new corporation

• It has no effect on the identity of the corporation, or on its property, rights or liabilities

• It will extinguish all the liabilities of the said corporation

Answer explanation

Section 17. Corporation Name

The Commission upon determination that the corporate name is: (1) not distinguishable from a name already reserved or registered for the use of another corporation; (2) already protected by law; or (3) contrary to law, rules and regulations, may summarily order the corporation to immediately cease and desist from using such name and require the corporation to register a new one. The Commission shall also cause the removal of all visible signages, marks, advertisements, labels prints and other effects bearing such corporate name. Upon the approval of the new corporate name, the Commission shall issue a certificate of incorporation under the amended name.

If the corporation fails to comply with the Commission's order, the Commission may hold the corporation and its responsible directors or officers in contempt and/or hold them administratively, civilly and/or criminally liable under this Code and other applicable laws and/or revoke the registration of the corporation.