Corporation Law Online Exam

Instructions:

1. Period within which to submit this exam: 26 August, 12noon-3pm.

2. Your answers will not be considered if:
(a) you submit this form earlier than stated;
(b) you submit this form after the deadline; or
(c) in case of multiple submissions, only your first submission will be considered.
3. Answers should not be more than five (5) sentences, unless provided otherwise.
4. Go over your answers before clicking "SUBMIT". You will not be able to edit your answers after the
form has been submitted.

*Kinakailangan

Name *

Iyong sagot
While the incorporation papers of DEF Incorporated were pending with
the SEC for approval, Juan dela Cruz, the designated Treasurer held
real estate worth Php 2,500,000.00 which Sandy Gan turned over for
shares he purchased in DEF Incorporated. Before the stock certificate
could be issued, a certain Layla DeFive claimed that he was the real
owner of the property. He filed an action against the corporation for
recovery. Will the action prosper? *
Iyong sagot

The corporation was composed mostly of aliens. Is this valid? *

Iyong sagot

A change in the corporate name by virtue of an amendment requires

the vote of its shareholders and members of the board of directors.
The debtors of the corporation considered the approval as notification
and, as such, required that they be notified as well. Are the debtors of
a Corporation required to be notified of any amendment? *
Iyong sagot

Who has the authority to pierce the veil of corporate fiction and why? *
Iyong sagot
a

Explain the Theory of Special Capacities. *

1. No, the action will not prosper. The Corporation Code provides that a private corporation formed or
organized under the code shall commence its corporate existence and juridical personality and is deemed
incorporated from the date the Securities and Exchange Commission (SEC) issued its Certificate of
Incorporation under its official seal.

DEF Inc., without a Certificate of Incorporation issued by SEC has no juridical personality of its own, hence,
has no legal existence and cannot become a real party in interest for lack of capacity to sue and be sued
as the case may be.

2. Yes, the corporation is valid. The Corporation Code set certain qualification for incorporators and other
special laws that limits foreign ownership to a certain percentage or totally prohibits foreign ownership.
The former requires the incorporators to be of legal age and a majority of whom are residents of the
Philippines and each of the incorporators must own or be a subscriber to at least one (1) share of the
capital stock of the corporation while the latter provides for the protection of certain industry and
reserves the right of ownership to Filipino citizens. The test of ownership and not the composition of
stockholders is the controlling factor.

Therefore, a corporation composed of mostly aliens that satisfies the aforementioned requirements shall
be valid.

3. No, the debtors of the corporation is not required to be notified. The Corporation Code provides that
the Articles of Incorporation may be amended by a majority vote of the board of directors or trustees and
the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding
capital stock and the amendment shall take effect upon the approval of the Securities and Exchange
Commission.

Furthermore, The Supreme Court held a mere change in name of the corporation does not affect the
identity of the corporation nor in any manner affect the rights, privileges and obligations previously
acquired or incurred by it.

Hence, notifying the debtors regarding its change of name is not required by law.

4. The Court has the authority to pierce the veil of corporate fiction. When a corporate fiction was misused
to such an extent that injustice, fraud, or crime was committed against another, in disregard of his rights
and used it as a shield to escape liability it is necessary in the interest of justice and public policy that the
court pierce the veil of corporate fiction to serve justice.

5. The theory of Special Capacities applies to juridical persons. This limits the powers of juridical persons
only to those that are expressly conferred upon them or those which can be implied therefrom or
incidental thereto.
Such acts not within the express, inherent or implied powers as provided by the Code, its charter or articles
of incorporation shall be ultra-vires acts and will allow a collateral attack upon the authority of the
corporation to engage in such particular endeavor that may result to the suspension or revocation of the
franchise or certificate of registration of the corporation.