School of Management

College of Business Management, and Accountancy

Prelim Examinations in BUSLAW2
Law on Business Organizations

TEST I: MULTIPLE CHOICE Read each question/statement carefully. Write only the
letter of the correct answer

MCQ Part I (25 pts)

1. All of the following are essential requisites of a valid partnership, except:
a. There is contribution of money, property or industry to a common fund
b. There must be a valid written contract
c. The object or purpose must be lawful
d. All of the above are essential requisites of a valid partnership
Not all contracts of partnership are required to be in writing
2. The following are characteristics of a partnership, except:
a. Bilateral
b. Onerous
c. Preparatory
d. Innominate
3. This means that the contribution of each partner is considered as the equivalent of what
the other partners may have contributed
a. Bilateral c. Commutative
b. Consensual d. Onerous
4. Which of the following partnership is void?
a. An oral contract of partnership between Elizabeth and Zura where Elizabeth
contributes her skills and Zura – his jewelries worth P 3001
b. Taylor and Joe, husband and wife, entered into a general professional
partnership
c. An oral contract where one of the partners, Shin, contributes a lot worth P 2999
d. All of the above are valid partnerships
When an immovable is contributed, the contract should appear in a public
instrument regardless of value
5. Travis and Joe entered into an oral contract of partnership with Travis contributing
P3000 and Joe contributing P1000. What is the status of the contract?
a. Valid
b. Void for failure to register with SEC
c. Void since it is not made in a public instrument with inventory attached
d. Unenforceable since the contract is not notarized
Registration with SEC does not affect validity of contracts
6. Kuroo and Kenma entered into a partnership engaged in the business of selling illegal
drugs. Which of the following is true?
a. Kuroo and Kenma cannot later on enter into any kind of partnership
b. Their profits and contributions shall be confiscated in favor of the State
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 c. The contract of partnership is voidable from the beginning
d. All of the above are false statements
Note that b is wrong – only the profits are confiscated, contributions are returned
to the partners unless they are instruments of the crime committed
7. The following persons are disqualified to enter into a universal partnership, except
a. Husband and wife
b. Brothers and Sisters
c. Those guilty of adultery or concubinage
d. Those guilty of the same offense in consideration thereof
8. Robin and Nami entered into a contract of universal partnership. The Articles of
Partnership is silent as to the nature of their partnership. In the absence of stipulation
their partnership shall be _____________
a. Universal partnership of profits since it is more onerous to the partners
b. Universal partnership of all present property since it is less onerous to the
partners
c. Limited Partnership since it is more onerous to the partners
d. Universal partnership of profits since it is less onerous to the partners
9. Partners that contribute money or property or both to the partnership are called
_________
a. Industrial Partner
b. General Partner
c. Capitalist Partner
d. Limited Partner
10. All of the following are legal relations created by a partnership, except
a. Relations between the partners and the partnership
b. Relations between the partners and third persons
c. Relations between the State and the partnership
d. Relations between the partnership and third persons
11. The obligations of a partner regarding contributions include the following, except
a. Deliver the promised contribution on the promised date
b. Deliver the fruits from the time he should have delivered his contribution
c. Answer for warranty for eviction for specific and determinate things
d. Pay for interest upon demand from the time of execution of contract
When it comes to obligation of partners on contribution, demand is not necessary
12. Dorothea joined the Tortured Poets Partnership promising to contribute P100,000 on
December 13, 2023. On the said date, she was not able to deliver the promised
contribution. Which of the following is true?
a. Dorothea became the creditor of the partnership from December 13, 2023
b. Dorothea is liable for legal interest computed from December 13,2023
c. Dorothea is liable for damages upon demand by the other partners
d. All of the above are true
Again, demand is not necessary for interest and damages on contributions

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 13. TS Company is a partnership composed of Red, F.Less, F.Lore and E.More. The
partners have capital contributions of P30,000, P30,000, P20,000 and P20,000,
respectively and their profit-sharing ratio is 1:2:4:3. For 2023, the company sustained
a loss of P100,000. The share of the partners in the losses shall be:
a. P 25,000 each
b. Red – P30,000; F.Less – P30,000; F.Lore – P20,000; E.More – P20,000
c. Red – P10,000; F.Less – P20,000; F.Lore – P40,000; E.More – P30,000
d. Red – P10,000; F.Lore – P10,000; F.Less – P40,000; E.More – P30,000
Follow the profit-sharing ratio if there is no stipulation as to losses
14. Straw Hats Company is a partnership composed of Luffy, Nami and Robin
contributing P30,000; P30,000 and P40,000, respectively. In addition, Sanji also
joined contributing his cooking skills. The Articles of Partnership provides that Luffy,
Nami, Robin and Sanji’s profit-sharing ratio is 2:1:4:3. For 2023, the company earned
a net profit of P 100,000. Which of the following statement is true?
a. Sanji will receive whatever is just and equitable under the circumstances
b. Luffy and Nami’s shares in the profit are the same
c. Sanji’s share will be determined first before distributing the remaining amount
d. Robin’s share in the profit is P40,000
A and C will only be applied when there is no stipulation
15. Which is not a property right of a partner in a partnership?
a. His rights in specific partnership property.
b. His interest in the partnership.
c. His right to make an investment.
d. His right to participate in the management.
16. Minu, Jay and Dom formed a partnership contributing P50,000 each. They agreed that
profit and loss shall be shared equally among them. After 2 years, Dom decided to
convey his partnership interest to Vinny without the knowledge of the other two
partners. Which of the following statements is true?
a. Vinny automatically becomes a partner
b. The partnership is not dissolved because the conveyance of a partner’s interest in
the partnership does not of itself dissolve the partnership.
c. Vinny is now entitled to interfere in the business management
d. Dom cannot convey his interest without the consent of the other partners
17. Estee is a friend of Marjorie. While Marjorie is convincing Abigail to lend him
P50,000, she mentioned that she was in a partnership with Estee. After a year, Abigail
went to Estee to collect the amount owed to her. Estee denies liability arguing that she
was never in a partnership with Marjorie. Which of the following statements is true?
a. Estee is liable if she consented in the misrepresentation
b. Abigail cannot collect from Estee if she has prior knowledge that there is no
partnership
c. Estee is not liable if she did not consent in the misrepresentation
d. All of the above are true

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 18. XTS Company is a partnership engaged in buying and selling second hand cars in
Batangas. Harry, an industrial partner, engaged in a poultry farm business in Batangas
while Tom,
capitalist partner, engaged in franchising of coffee shops all over the Philippines.
What is the remedy of the other partners as against Harry?
a. He will automatically be excluded from the partnership
b. The partnership shall absorb the profit and losses of Harry’s separate business
c. There is no remedy since Harry may engage in other business with different
nature
d. Harry is liable for damages to the partnership
Either, exclude Harry (but not automatic) or obtain his profits only but in both
cases Harry is liable for damages
19. In Question 18, What is the remedy of the partners as against Tom?
a. There is no remedy since Tom may engage in other business with different
nature
b. He will automatically be excluded from the partnership
c. Tom shall bring to partnership the profits of his coffee shop business
d. He is liable for damages to the partnership
20. Sanji, Zoro and Ace are partners contributing P10,000 each to the common fund.
Luffy owes the company P3,000. Sanji was able to collect P1,000 before Luffy
became insolvent. Which of the following statements is true?
a. Sanji can no longer be required to share the P1,000 he collected
b. The P2000 shall be a treated as a loss divided equally among the partners
c. Sanji must bring to the partnership the P1000 he collected
d. Zoro and Ace should just wait for Luffy to be solvent again
21. Haikyuu Company is owned by Hinata, Tobio, Koutaro and Shoko. They are engaged
in importing and trading sports equipment. Shoko is the managing partner of the
company. In 2023, Tobio was authorized to purchase a service vehicle for the
company. No other authorizations were given during the year. Which of the following
transactions are binding upon Haikyuu Company?
a. Sale of sports equipment by Hinata to Noya and the latter was not aware that
Hinata has no authority
b. Sale of the partnership’s old delivery van by Koutaro
c. Renouncing of a partnership receivable by Shoko
d. Purchasing of sports equipment by Tobio from Daichi and the latter was aware
that Tobio has no authority
The act is part of ordinary course of business and third person is innocent
22. Daniel personally owe P50,000 to Vasco, the managing partner in charge for
collection of debts to PTJ Company. On the other hand, Daniel also owe P30,000 to
the company. Both debts are due and demandable. Vasco went to collect and issued a
receipt under his name. Daniel paid P50,000. How much should be applied to Vasco’s
personal receivable, if any?
a. 0

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 b. P31,250
c. P18,750
d. P50,000
P50,000 x P50,000/P80,000
23. Daniel personally owe P50,000 to Vasco, the managing partner in charge for
collection of debts to PTJ Company. On the other hand, Daniel also owe P30,000 to
the company. Both debts are due and demandable. Vasco went to collect and issued a
receipt under the partnership name. Daniel paid P50,000. How much is the remaining
liability of Vasco to PTJ Company?
a. 0
b. P31,250
c. P18,750
d. P50,000
This is a bonus. The question should be on
the remaining liability of Daniel
24. Which of the following is not a cause for dissolution of a partnership?
a. Death of a partner
b. Termination of the particular undertaking
c. Associating a third person in partnership interest
d. Expulsion of a partner from the partnership
25. Which of the following will be paid first in settling the liabilities after partnership
dissolution?
a. Liability to partnership creditor
b. Partner’s share in profits
c. Partner’s capital contribution
d. Liability to partners aside from profit and capital contribution

MCQ PART II (10pts)

1. I. The receipt by a person of a share of the profits of a business is conclusive evidence

that he is a partner in the business – prima facie evidence
II. Co-ownership does not of itself establish a partnership except when such-co-
owners or co-possessors share in the profits made by the use of the property – despite
sharing in the profits, partnership is still not established
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
2. I. Associations whose articles are kept secret among the members shall be governed
by rules on co-ownership
II. Failure to register the partnership with SEC will render the contract void
a. Only I is true
b. Only II is true

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 c. Both statements are true
d. Both statements are false
3. I. A partnership always commence from the moment of the execution of the contract
II. Every partner is a debtor of the partnership for whatever he may have promised to
contribute thereto.
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
4. I. The partnership has a separate and distinct personality from the partners
II. Limited partners are not liable beyond their capital contribution
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
5. I. Unless there is a stipulation to the contrary, the partners shall have equal shares in
the profits of the partnership. – Absent stipulation, share in profits is based on cap.
contribution
II. A stipulation excluding a partner from sharing in the profits is void
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
6. I. Absent stipulation, all partners are considered managing partners of the partnership
II. Conveyance of partnership interest to a third person automatically entitles the latter
to participate in the management of the partnership affairs
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
7. I. All partners are co-owners of specific partnership properties
II. A stipulation excluding an industrial partner to share in the losses is valid
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
8. I. The partners cannot agree to safekeep the partnership books in the house of the
business secretary
II. The risk of specific and determinate things, which are not fungible, contributed to
the partnership so that only their use and fruits may be for the common benefit, shall
be borne by the partnership – He who owns, bears the risk
a. Only I is true
b. Only II is true

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 c. Both statements are true
d. Both statements are false
9. I. Partnership by estoppel does not apply when the third person is not deceived
II. Death of a partner terminates the partnership
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
Dissolution is different from termination of the life of the partnership
10. I. Damages suffered by the partnership through a partner’s fault may be compensated
by the profits and benefits which he earned for the partnership.
II. The partnership is liable to the partner for the amount he may he may have
disbursed on behalf of the partnership
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false

TEST II: ESSAY Answer the following questions briefly. State the legal basis supporting
your answers
1. Discuss the doctrine of delectus personae (5pts)
Keywords: Right to choose who the partners want to be associated with; fiduciary
relationship, built on trust and confidence

2. Betty and Ines are capitalist partners with James as industrial partner. Betty and
Ines contributed P15,000 each to the capital of the partnership. A contractual
liability of P40,000.00 was incurred by the partnership in favor of Augustine. If
the capital assets of the partnership have been exhausted to pay Augustine, leaving
a contractual liability of P15,000.00, who shall be liable to pay this contractual
obligation? Explain well. (5pts)
Betty, Ines and James will share equally in the P15,000 or 5,000 each
Basis – Art 1816. Take note that pro-rata as used in this provision means equally
(not to be confused with proportionate)

3. Zura (20% ownership interest), Gin (40%), Sakamoto (25%) and Takasugi (15%)
organized a general partnership. There is no stipulation as to who are the
managing partners. Elizabeth applied for the position of Secretary and Madao
applied for the position of Accountant of the partnership.

Zura agreed to hire Elizabeth but the 3 other partners opposed.

Sakamoto and Takasugi agreed to hire Madao but Gin and Zura opposed.

Which applicant/s should be hired by the partnership, if any? Explain and give
your reason. (5 pts)

Elizabeth and Madao will not be hired. 1) Based on majority; 2) Based on controlling
interest. Absent stipulation, everyone is a managing partner.
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 School of Management
College of Business Management, and Accountancy
Midterm Examinations in BUSLAW2
Law on Business Organizations

TEST I: MULTIPLE CHOICE Read each question/statement carefully. Write only the
letter of the correct answer

MCQ Part I (20 pts)

2. Isagi, Bachira, Nagi and Baro are partners in Blue Lock Limited. Isagi and Bachira are
the general partners while Nagi and Baro are the limited partners. Unfortunately,
Bachira became insolvent and consequently wanted to quit their partnership. Which of
the following statements is true?
a. Isagi may continue managing the business if the right to do so is stated in the
certificate
b. The certificate of limited partnership needs to be amended
c. Isagi may continue managing the business upon the consent of Nagi and Baro
d. All of the above are true statements
3. A limited partner can demand the return of his contribution as a matter of right, except
a. When the right for return is provided in the certificate of limited partnership
b. After the expiration of 6 months’ notice in writing to all the other partners
c. Upon the dissolution of the partnership
d. Upon exhaustion of partnership assets
4. Which of the following shall be settled last upon the dissolution of a limited
partnership?
a. Liability to BIR for tax assessed
b. Return of capital contribution of Momo, a general partner
c. Share in the profits of Midorima, a limited partner
d. Liability to partnership creditors
5. Which of the following rights is not available to a substituted limited partner?
a. Interfere in the management of the business
b. Obtain share in profits allocated to the original limited partner
c. Inspect partnership books during reasonable hours
d. Demand true and full information of all things affecting the partnership
6. Gin and Zura are limited partners in Gintama Ltd. In the articles of co-partnership,
there is a stipulation that Gin enjoys priority as to the return of his contribution as
compared to Zura. Is the stipulation valid?
a. No, all limited partners shall stand in equal footing
b. Yes, the members may agree that one or more of the limited partners shall have
a priority over other limited partners
c. Yes, but the priority is only limited to the share in the profits
d. No, general partners are preferred over all limited partners

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 7. Nobara is a limited partner in JJK Partnership. In the certificate, it is stated that Nobara
has the right to demand for the return of his contribution on September 11, 2023. On
the same day, Nobara exercised such right, but the other partners refused to return his
contribution. Which of the following statements is false?
a. Nobara may ask for the dissolution of the limited partnership
b. Nobara should have given a written notice 6 months before Sept. 11, 2023
c. Nobara is entitled for the return of capital contribution as a matter of right
d. All of the above are true statements
No need for notice if it’s already provided in the certificate
8. This means that the corporation has a capacity of continuous existence irrespective of
death, withdrawal, insolvency or incapacity of the individual members or stockholders
and regardless of the transfer of their shares of stock.
e. Grandfather rule
f. Doctrine of piercing the corporate veil
g. Right of succession
h. Right of appraisal
9. The stockholders or members mentioned in the articles of incorporation as originally
forming and composing the corporation and who are signatories thereof.
a. Member
b. Promoter
c. Incorporator
d. Director
10. This means that each share shall be equal in all respects to every other share except as
otherwise provided in the articles of incorporation and stated in the certificate of
stock.
a. Doctrine of equality of shares
b. Doctrine of indivisibility of shares
c. Trust Fund Doctrine
d. Doctrine of separate juridical personality
11. DS Inc. was incorporated last January 09, 2014 and started operations on February 01,
2015 until January 02, 2019. Thereafter, it stopped business operations. As of January
02, 2024, what is the status of the corporation?
a. DS Inc.’s certificate of incorporation is deemed revoked effective January 02,
2024
b. DS Inc. shall be placed under delinquent status after due hearing and notice
c. DS Inc.’s certificate is still valid and subsisting
d. DS Inc. shall be placed under delinquent status on January 09, 2024
C may also be a valid answer since the certificate of incorporation is still valid
even if the corporation is already in delinquent status
12. SK Corp. was incorporated on December 20, 1999. As provided in its Articles of
Incorporation, it shall have a corporate term of 20 years. Upon the expiry of its
corporate term, which of the following statements is true?
a. SK Corp. may continue to exist after the expiry of its term

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 b. SK Corp. shall cease existing upon the vote of two-thirds of outstanding capital
stock
c. SK Corp.’s certificate of incorporation shall automatically be cancelled
d. None of the above statements is true
Two options for those incorporated before RCC: 1) Retain the original term –
proceed with expiry with a vote of Majority BOD and OS capital
stock/members; 2) Perpetual existence – continue to exist without need of any
act/votes
13. What is the maximum number of directors/trustees allowed under the Revised
Corporation Code?
a. 10
b. 20
c. 15
d. No limit
13. Which of the following is true regarding the qualifications of an incorporator under
the Revised Corporation Code?
a. Foreigners are not allowed to be an incorporator in the Philippines
b. An incorporator of a stock corporation must own or be a subscriber to at least
one (1) share of the capital stock
c. Incorporators must be a resident of the Philippines for at least 5 years at the
time of incorporation
d. Only natural persons are allowed to be incorporators
14. The Board of Directors of HQ Corporation deemed it proper to amend its Articles of
Incorporation to change the principal place of business. What is the vote necessary
before they can file an Amended Articles of Incorporation to the Securities and
Exchange Commission?
a. Two-thirds (2/3) vote of the Board of Directors and the vote of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock
b. Majority vote of the Board of Directors and the vote of the stockholders
representing majority of the outstanding capital stock
c. Majority vote of the Board of Directors and the vote of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock
d. Two-thirds (2/3) vote of the Board of Directors and the vote of the stockholders
representing majority of the outstanding capital stock
15. Holders of nonvoting shares shall nevertheless be entitled to vote on the following
matters, except
a. Increase of authorized capital stock
b. Adoption of by-laws
c. Corporate dissolution
d. Sale of a building owned by the corporation – must be all or substantially all the
assets
16. The TPD Corporation is engaged in telecommunications thus at least 60% of its
shares should be owned by Filipinos. As of December 31, 2023, TPD Corporation has

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 total outstanding shares of 100,000 out of which 80,000 are voting and 20,000 non-
voting. What test shall be used in determining compliance with the nationality
requirement?
a. Grandfather rule
b. Control test
c. Trust Fund test
d. Separate Juridical Personality Doctrine
17. In Question No. 16, at least how many voting shares must Filipinos own?
a. 80,000
b. 60,000
c. 12,000
d. 48,000
18. In Question No. 16, at least how many non-voting shares must Filipinos own?
a. 80,000
b. 60,000
c. 12,000
d. 48,000
19. In Question No. 16, what is the maximum number of voting shares allowed for
foreigners?
a. 32,000
b. 40,000
c. 8,000
d. 12,000
20. In Question No. 16, what is the maximum number of non-voting shares allowed for
foreigners?
a. 32,000
b. 40,000
c. 8,000
d. 12,000

SEC-MC No. 8 Section 2 provides:

Section 2. All covered corporations shall, at all times, observe the constitutional or statutory ownership
requirement. For purposes of determining compliance therewith, the required percentage of Filipino
ownership shall be applied to BOTH (a) the total number of outstanding shares of stock entitled to vote in
the election of directors; AND (b) the total number of outstanding shares of stock, whether or not entitled
to vote in the election of directors.

MCQ PART II (10pts)

11. I. Eleemosynary corporation is a corporation organized for religious purposes

II. The required number of votes for the revival of an expired stock corporation is at
least a majority vote of the board of directors and outstanding capital stock
e. Only I is true
f. Only II is true
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 g. Both statements are true
h. Both statements are false
12. I. All incorporators are corporators
II. All illegal acts are ultra vires act
e. Only I is true
f. Only II is true
g. Both statements are true
h. Both statements are false
13. I. The juridical personality of the corporation commences upon the filing of Articles
with the SEC
II. No minimum capital stock is required for stock corporations to be incorporated
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
14. I. A delinquent corporation shall have a period of five (5) years to resume operations
and comply with all requirements that the Commission shall prescribe.
II. Corporations created by special laws shall be governed primarily by the provisions
of the Revised Corporation Code
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
15. I. All persons who assume to act as a corporation knowing it to be without authority
to do so shall be liable as general partners for all debts, liabilities and damages
incurred
II. Non – voting shares are allowed to vote for or against the amendment of Articles
of Incorporation
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
16. I. Any person, partnership, association or corporation may form a One Person
Corporation.
II. A preferred share of stock is one which entitles the holder to certain preferences
over the holders of common stock, including the right to vote.
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
17. I. A person may be a general partner and a limited partner in the same partnership at
the same time

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 II. A general-limited partner cannot interfere in managing the business of the
partnership
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
18. I. The certificate of limited partnership may be executed in any form
II. Absent any stipulation, all limited partners stand in equal footing
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
19. I. The contributions of a limited partner maybe cash or property
II. Amendment of the certificate of limited partnership requires SEC approval
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false
20. I. General partners are liable up to the extent of their separate property before
partnership assets are exhausted
II. The certificate has to be amended to admit a new general partner in the limited
partnership
a. Only I is true
b. Only II is true
c. Both statements are true
d. Both statements are false

TEST II: ESSAY (15pts) Answer the following questions briefly. State the legal basis
supporting your answers

4. The Eras Limited is formed by Taylor, Allison and Swift – all general partners
and 7 other limited partners. For the year 2023, the following acts are performed
by the general partners as managers of the business.

a. Used of one of the floors of a building owned by the partnership as lodging for
Taylor’s relatives with the approval of Allison and Swift;

b. Admitted Travis as a general partner opposed by Joe – an existing limited

partner;

c. Admitted Harry as a limited partner. The right to admit limited partners is

stated in the Certificate of Limited Partnership.

Which of the above acts is/are valid? Explain well. (5pts)

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 Only C is a valid act by the general partners of Eras Limited.

Under Art. 1850 of the Civil Code, the general partner or all of the general
partners have no authority to 1) use partnership property for any purpose other
than for partnership purposes and 2) admit a new general partner without the
written ratification of all the limited partners.

In this case, the general partners failed to get the written ratification of all the
limited partners in A and B. For C, the right to admit limited partners have already
been granted in the certificate.

Accordingly, only C is the valid act among the three.

5. Mr. Panda is a holder of redeemable shares in JJK Corp. After the lapse of the
period indicated in his stock certificate and the Articles, Mr. Panda wanted to have
his shares redeemed. However, JJK Corp. refused alleging that it has no
unrestricted retained earnings. It also showed evidence that its capital has been
impaired due to losses and presently its debts are more than its assets. May Mr.
Panda compel JJK Corp. to redeem his shares? Explain. (5pts)

No, Mr. Panda cannot compel JJK Corp. to redeem his shares.

While the Revised Corporation Code provides that redeemable shares may be
redeemed despite absence of unrestricted retained earnings, redemption shall not
be done if it will result in the insolvency of the corporation. Under the Trust Fund
Doctrine, the capital, all the assets and properties of a corporation are regarded as
equity in trust for the payment of corporate creditors. Release of assets shall not
be allowed if it will be detrimental to the corporate creditors.

In this case, there is evidence of JJK Corp’s insolvency. Redemption of Mr.

Panda’s share would further result to the insufficiency of the assets to pay its
corporate creditors.

For these reasons, Mr. Panda cannot compel redemption of his shares by JJK
Corp.

6. The Black Clover Corporation Board of Directors proposed the amendment of its
articles of incorporation to provide for additional business purposes. A
stockholder, Asta, is against the amendment but was told by the corporate
secretary that he cannot vote at the stockholders meeting called for the purpose
because he owns preference shares. Is the corporate secretary correct? Explain.
(5pts.)

No, the corporate secretary is not correct.

Prelim Examinations in BUSLAW2 (Atty. Jheny Mae Amakin)

2nd Semester. AY 2023 - 2024 Page 14
 Under Sec. 6 of the Revised Corporation Code, one of the instances when non-
voting shares shall nonetheless be allowed to vote is upon the amendment of
Articles of Incorporation.

In this case, while Asta is a holder of a preference share without the right to vote,
he is still entitled to decide on the Amendment of Articles of Incorporation.

Prelim Examinations in BUSLAW2 (Atty. Jheny Mae Amakin)

2nd Semester. AY 2023 - 2024 Page 15