Title XII

First Statement: As a general rule, the pre-emptive right of the stockholders in close corporations
shall extend to 2/3 of stock to be issued, including reissuance of treasury shares, whether for
money, property or personal services or in payment of corporate debts. Second statement: Any
amendment to the articles of incorporation which seeks to delete or remove any provision
required by this Title or to reduce a quorum or voting requirement stated in said articles of
incorporation shall require the affirmative vote of majority of the outstanding capital stock,
whether with or without voting rights.
a. Only First statement is true
b. Only Second statement is true
c. Both statement are true.
d. None of the statement are true
Explanation: As a general rule of SEC. 101 it states that the pre-emptive right of the stockholders
in close corporations shall extend to ALL of the stock to be issued including reissuance of
treasury shares, whether for money, property or personal services or in payment of corporate
debts. While in SEC. 102 states that it is approve by the affirmative vote of at least two- thirds
(2/3) of the outstanding capital stock, whether with or without voting rights.

Which of the following articles of incorporation provides the correct meaning of close
corporation?
a. Quorum may be greater than the majority
b. Deadlock in the board is settled by the SEC upon the written petition by any stockholder.
c. All of the corporation's issued stock of all classes, excluding treasury shares, shall be held
of record by not more than a specified number of persons, not exceeding 20.
d. Any action by the directors of a close corporation without a meeting shall nevertheless be
deemed valid.
Explanation: The rest of the choices are characteristics of a close corporation.

Type of corporation whose shareholders and directors are entitled to operate much like a
partnership, relaxed rules with respect to the formalities of governance. For example, corporation
shareholders typically need not hold formal annual meetings.
a. Special Corporation
b. Close Corporation
c. Foreign Corporation
d. One Person Corporation
Explanation: The answer itself is already the explanation.

The articles of incorporation of a close corporation may provide the following, except:
a. The business of the corporation shall managed by the board of directors of the
corporation rather than the stockholders.
 b. For a classification of shares or rights and the qualifications for owning or holding the
same and restrictions on their transfers as may be stated therein.
c. For a classification of directors into one or more classes, each whom may be voted for
and elected solely by a particular class stock.
d. For a greater quorum or voting requirements in meetings of stockholders or directors.
Explanation: The business of the corporation shall managed by the stockholders of the
corporation rather than the board of directors.

BlazeiArc is unincorporated but wants to incorporate. One day, in order to raise money to
finance a new product line, the board of directors sells stock to a group of investors who become
shareholders. The shareholders help elect new set of board members and receive some of the
profits of BlazeiArc as dividends. Thus, the corporation has traded the money received by
shareholders for some decision-making power and a portion of the corporate profits, but it has
also gained the capital needed to expand its offerings and prosper as a successful business. In
your understanding what corporation is BlazeiArc?
a. Close Corporation
b. Special Corporation
c. Non-Stock Corporation
d. Stock Corporation
Explanation: If you want to organize for profit and sell shares of stock in the corporation to
finance its efforts, you'll need to form a stock corporation. Whereas non-stock corporations aren't
organized for profit and aren't authorized to issue company stock, stock corporations are
typically organized for profit and can raise capital for the corporation's operations or expansion
by issuing company stock to people willing to invest in the company.

Title XIII

The corporation sole having the same right, power, and privilege to own, hold and acquire
properties like any other corporation, can a corporation sole dispose or sell its real property just
like any other corporation?
a. Yes, since it is vested with juridical personality just like any other corporation.
b. Yes, if the sale is reasonably necessary for the corporation.
c. No, it needs a court order under Sec. 111.
d. No, it needs permission of the members of the church under Sec. 111.
Explanation: The general rule in SEC. 111 is that in order to dispose or sell, or mortgage real
property, an order from the Regional Trial Court must be obtain for that purpose.

X, a Certified Public Accountant who works in a firm, wants to form a One Person Corporation
to practice his profession. Is X allowed to form a One Person Corporation?
a. No, X is a licensed professional, he may not organize OPC.
b. Yes, since X is a natural person, and is of legal age.
c. No, since he’s already working in a firm.
 d. Yes, if X has the capacity to finance the OPC.
Explanation: The general rule states that professionals cannot register an OPC for the purpose of
exercising their profession.

Y, the Director of ABCD OPC, appointed A as his nominee, C as his alternate nominee, and B as
his corporate secretary. Three years after, Y, due to his sickness became incapacitated to perform
his duties. Who shall sit as a director and manage the OPC?
a. A, as a nominee, he shall sit as director and manage the OPC even if he already refused to
do so.
b. C, as an alternate nominee, shall sit as a director.
c. Y, as a director, he shall continue to manage the OPC even if he’s incapacitated.
d. B, being a corporate secretary, he shall sit as a director and manage the OPC.
Explanation: SEC. 125, the alternate nominee shall sit as a director and manage the OPC in case
of the nominee’s inability, incapacity, death or refusal.

ABCD OPC, filed its Articles of Incorporation which is needed and required by the SEC. In
accordance to that ABCD’s corporate bylaws are…
a. Also required by the SEC under Sec. 45 of the RCC.
b. Voidable as said by the SEC.
c. Void according to Sec. 119.
d. Not required as stated under Sec. 119.
Explanation: Sec. 119, states that the OPC is not required to submit and file corporate bylaws.

TITLE XI and XIV

K Charitable is a non-stock, non-profit charitable corporation which may or may not be more
than 15 members. The 15 members are hold office for not more than 1 year until their successors
are elected and qualified.
a. The number of trustees shall be fixed in the articles of incorporation or bylaws which
may or may not be more than 15 members. They shall hold office for not more than 2
years until their successors are elected and qualified.
b. The number of trustees shall be fixed in the articles of incorporation or bylaws which
may or may not be more than 17 members. They shall hold office for not more than 3
years until their successors are elected and qualified.
c. The number of trustees shall be fixed in the articles of incorporation or bylaws which
may or may not be more than 15 members. They shall hold office for not more than 3
years until their successors are elected and qualified.
d. All of the above.
Explanation: SEC. 91 Election and term of trustees. The number of trustees shall be fixed in the
articles of incorporation or bylaws which may or may not be more than 15 members. They shall
hold office for not more than 3 years until their successors are elected and qualified. Trustees
elected to fill vacancies occurring before the expiration of a particular term shall hold office be
elected as trustees.

Club shares, their shares are subject to transfer but will the transferee have the same right,
privilege to compel the corporations that he be recognized as a member?
a. No. Admission of membership is subject to the rules and regulations that may be imposed
by the non-stock corporation.
b. No. Admission of membership is subject to the rules and regulations that may be imposed
by the stock corporation.
c. Yes. Admission of membership is subject to the rules and regulations that may be
imposed by the non-stock corporation.
d. Yes. Admission of membership is subject to the rules and regulations that may be
imposed by the stock corporation.
Explanation: A non-profit and non-stock membership club may have the right to approve or
disapprove an application for proprietary membership. The right should not be exercised
arbitrarily.

K Corporation formed for the purpose of committing, smuggling, money laundering or corrupt
practices, the corporation will dissolved by the commission or motu proprio. The corporation
ground for dissolution.
a. Voluntary Dissolution
b. Involuntary Action
c. Involuntary Dissolution
d. None of the above.
Explanation: Committing, smuggling, money laundering or corrupt practices is one of the
grounds for dissolution.
H Corporation does not prejudice the rights of any creditor having a claim against it. The SEC
issued a certificate of dissolution to the corporation. They need to give the notice 20 days prior to
the meeting. The shareholder didn’t receive the notice.
a. The dissolution is void because the shareholder shall receive the notice about the
meeting.
b. The dissolution is valid because the SEC issued the certificate of dissolution.
c. Voluntary dissolution where no creditor are affected.
d. All of the above.
Explanation: Shareholder shall receive the notice for them to authorize the meeting for the
dissolution.
Title XVI
If a person violated rules and regulations or any provision or act fraudulent that can be
reasonably expected to cause significant, imminent, and irreparable danger or injury to public
safety or welfare, what can be filed against him by the SEC?
a. Cease and decease order
b. Subpoena power
c. Administrative Sanction
Explanation: If a person practices are unlawful or violate the Code, rules and regulations or any
provisions of the act, the Commission may issue a cease and decease order ex parte under Sec.
156 CDO ex parte to investigate or to notice, and hearing in a maximum period of twenty (20)
days. Then after the due notice and hearing, and the SEC can prove that the person has a
violation, the Commission may proceed administratively sanction against such person in
accordance with Sec. 158.

Ms A is an officer of a corporation. The commission issued Ms A. a cease and deceased order ex

parte. Thereafter the due notice and hearing, the Commission has found the evidences and has
proven that she had violated the commission’s orders. What can the SEC filed against Ms A?
a. Subpoena power
b. Cease and Decease order
c. Administrative sanctions
Explanation: Under Sec. 158. Administrative Sanctions, if after due notice and hearing, the SEC
find that you have violate of any provisions of this Code, rules or regulations, or any of the
Commission’s orders has been violated. The commission may impose a serious violation of:
(a)Imposition of a fine ranging from five thousand pesos(P5,000) to two Million
pesos(P2,000,000)and not more than one thousand pesos(P1,000) but in no case to exceed two
million pesos(P2,000,000); (b)Issuance of a permanent cease and desist order;(c)suspension or
revocation of the certificate of incorporation; and (d)Dissolution of the corporation and forfeiture
of its assets under the conditions in Title XIV of this code.

Mr H issuing a subpoena to compel and to appear before them and to take testimony in any
inquiry or investigation but he don't like to comply with the Sec. What can be the punishment of
a person if didn't comply with SEC?
a. Mr H shall be punished a Violation of Duty to Maintain Records
b. Mr H shall be punished a Contempt powers and be held and
contempt with a fine ranging amount of not exceeding thirty
Thousand pesos (30,000) with a daily fine impose of One thousand
pesos (1,000) until the order, decision you complied.
c. Mr H shall be punished a Violation of a Disqualification provision

Explanation: Under the Sec.157.Contempt - any person who, without justifiable cause, fails or
refuses to comply with any lawful order, decision, or subpoena issued by the commission shall,
after due notice and hearing, be held in contempt and fined ranging amount of not exceeding
thirty Thousand pesos (30,000) with a daily fine impose of One thousand pesos (1,000) until the
order, decision you complied.

THE SHINING R CORP. is a famous and well -known corporation, So Now the ABCD group
they plan to set up a Corporation and they thought a name of the Corporation is Shining R corp.
Shining R Corp is an Existing name so A is against the corporate name. A just wants to make a
New name to make Unique and for to be easy to recognized but B says, Shining R Corp. is better
because it is already famous as a Corporation, We will copy the name but we have a different
product. What do you think is it okay to use the existing corporate name?
a. Yes, because the product they sell to the other corp. is different.
b. Yes, they can continue their plan even without the authorization of the real owner of the
corporate name.
c. No, because it is not permitted to use an existing corporate name, especially without the
authorization of the real owner of the corporate name.
Explanation: Not permitted to use the existing name until the real owner has no permission. Any
person can use the corporate name without authorization of the owner shall be punished with a
fine ranging from ten thousand pesos (P 10,000) to Two hundred thousand pesos (P 200,000).

Title XV- FOREIGN CORPORATIONS

X. Failure to pay any and all taxes, imposts, assessments or penalties, if any, lawfully due to the
Philippine Government or any of its agencies or political subdivisions. Y. Transacting business
in the Philippines as agent of or acting on behalf of any foreign corporation or entity not duly
licensed to do business in the Philippines.
A. Only statement X is true.
B. Only statement Y is true.
C. Both X and Y are true.
D. Both X and Y are false.
Explanation: Based on Revised Corporation Code of the Philippines under Title XV section 150
revocation of license.
JAX Corporation is a foreign corporation without license in the Philippines. JAX Corporation
agreed to operate a business with Mr Aquino which is a Filipino citizen. SEC recognized the
business operation and may sue in the Philippines courts. Is JAX Corporation can file a case
against Mr Aquino?
A. Yes because this rule is the doctrine of estoppel.
B. No because they are both subjected to disobeying the revised corporation code of the
Philippines.
 C. No only JAX Corporation may be sued or proceed against before the Philippine court.
D. None of the above.
Explanation: According to RCCP title XV section 150 the exception to the rule is the doctrine of
estoppel, JAX Corporation can file a case against Mr Aquino because he benefitted to the
transaction, since Mr Aquino is a Filipino citizen he is liable.

Title XVII- MISCELLANEOUS PROVISIONS

The EFG Corporation is an educational institution and the charter of its corporate existence
expires in the middle of school year. Does EFG educational institution can continue the
operation?
a. Yes, EFG Corporation can still continue the operation because it is the vested
rights of the students who are enrolled and also the corporation to finish the
school year as long as the enrollment for the classes will made prior to the
dissolution of the corporation.
b. Yes but the operation may stop during the middle of school year since the charter
of corporate existence will expire.
c. No because according to section 184 there is no recognition of the right against
impairment of the obligations of a contract or of vested rights.
d. None of the above
Explanation: Under Revised Corporation Code of the Philippines title XVII section 184 There is
a recognition of the right against impairment of the obligations of a contract or of vested rights,
remember that the vested right survives even the dissolution of corporation.
PNK Corp. is a foreign corporation doing business in the Philippines. The corporation failed to
submit to the SEC a reportorial requirements three times, consecutively within a period of five
years. The commission may place the corporation under:
a. Willful certificate of incomplete reports
b. Fraudulent conduct of business
c. Delinquent status
d. Arbitration for corporation
Explanation: Based on Revised Corporation Code of the Philippines title XVII section 177
failure to submit reportorial requirements the commission may place the corporation under
delinquent status.