BUSINESS LAW

Law on Corporation – Part 1

1. A subscribed to 1,000 shares of stock of X Corporation. She paid 25% of the said subscription.During
the stockholders meeting can A vote all her subscribed shares?
a. no because the subscription has not yet been fully paid
b. no because a’s shares have become delinquent which cannot be voted
c. no as to the unpaid percentage of subscription
d. yes because unpaid shares not delinquent can be voted

2. X Corporation posted a P1M profits in its realty business and it is real estate has appreciated in
value to the tune of P4M.
The board then declared dividends to its stockholders computed on the basis of representing profits
and appreciation in value of its real estate. Is the dividend declaration valid?
a. not valid because there was no approval of 2/3 of the outstanding capital stock
b. valid because it was based on profit and increment in the value of the corporate assets.
c. not valid because dividends must be only come from the unrestricted retained earnings.
d.valid if no creditors shall be prejudiced and approved by the required votes of the directors and
stockholders

3. A subscribed to 100 shares of X corporation, paying 25% of the amount thereof. The corporation
refuses to issue to the former a stock certificate for his subscription despite the demand of A for a
stock certificates corresponding to 25 shares which he claims have been piad. Meanwhile, the
corporation has become insolvent and A now refuses to pay for his unpaid balance on his
subscription. Is the refusal of the corporation to issue the certificate valid?
a. not valid because there can be issued a stock certificate for the number of shares already paid
b. valid because the stock certificate can only be issued after the full payment of the subscription
c. valid with respect to the unpaid portion of the subscription
d. not valid because the delinquent share maybe denied stock certificate

4. Based on the same facts, is A correct in refusing to pay for the remaining shares, the company being already
insolvent?
a. no under the trust fund doctrine upon the insolvency of the corporation to which he is still liable for unpaid
subscription
b. no because of the doctrine of piercing the veil of corporate fiction
c. yes his obligation extinguished due to the insolvency of the corporation and his discharge from liability by
reason thereof
d. yes because he is denied of his right to receive stock certificate

5. After dissolution but within the three years period for liquidation a corporation’s term may still be
extended by amendment of its articles of incorporation
The dissolution of a corporation shall take place because it has been in continuous non-operation for
for five years
a. both statements are true c. first is false, second is true
b. both are true d. first is true, second is false

6. The by-laws may provide that the holders of a majority of the outstanding capital stock may elect
all the members of the board of directors.

That it may also provide that no officer of the corporation shall be required to be a stockholder
a. both statements are true c. first is false, second is true
b. both are false d. first is true, second is false

7. Which of the following is not requisite for a close corporation?

a. the number of stock holders shall not exceed twenty
b. that no close corporation is a stockholder thereof owning at 2/3 of the voting stocks
c. there is no restriction in the transfer of shares
d. there is no public offering of shares
8. The declaration of dividends out of the and not surplus profits violation of the doctrine of piercing
the veil of corporate fiction
When the corporation is used an either ego or conduit to avoid the performance of an obligation
is violation of the trust fund doctrine?
a. both statements are false c. first is false, second is true
b. both are true d. first is true, second is false

9. Majority of the following must residents of the Philippines except:

a. members of the board of director’s c. incorporators
b. members of the trustees’ d. officers

10. Stockholders meeting must be in the city or municipality where the principal office is located
while members meeting of non-stock corporation may be outside thereof

The secretary of the corporations must generally be a citizen and resident of the Philippines
a. both are false c. first is false, second is true
b. both are true d. first is true, second is false

11. The doctrine of corporate opportunity rests on the unfairness of an officer of a corporation taking
advantage of an opportunity for his own personal benefit adverse to the corporation
The by-laws must be filled with the SEC for the corporation to acquire juridical personality
a. both statements are true c. first is false, second is true
b. both are false d. first is true, second is false

12. Private corporations have the followings attributes, except:

a. it is created by law as a juridical person
b. it has the right of succession
c. its may formed, organized and existing under a special law or charter
d. it has the powers, attributes and properties expressly authorized by the law or incident to
its existence

13. In the three of the following instances, shares with or without voting rights can be voted, except:
a. increase or decrease of capital stock
b. dissolution of the corporation
c. election of directors or trustee
d. merger or consolidation with other corporation

14. One of the following does not have voting rights:

a. preferred shares c. treasury shares
b. redeemable shares d.common shares

15. The executive committee cannot act on this matter except:

a. filling of vacancy in the board of directors
b. cash dividend declaration
c. board resolution on despository bank of the corporation
d. stock dividend declaration

16. At the annual meeting of ABC Corporation for the election of five directors,A,B,C,D,E,F and G
were nominated.A,B,C,D and E received the highest number of votes and proclaimed elected.F
received ten votes less than E.Subsequently,E sold his shares to F.Who between E and F has the
right to attend as director in the board meeting?The transfer of shares having been registered
with the corporation
a. e is the director because his term is one year until his successor is elected and qualified
b. f is the director for he has acquired all the shares of e
c. either of them shall be director
d. neither of them shall be director

17. ABC Corporation has an authorized capital stock of P1M divided into 50,000 common shares
and preferred shares. At its inception, the Corporation offered subscription all the common
shares.However, only 40,000 shares were subscribed.Recently, the directors thought of raising
additional capital and decided to offer to the public all the authorized shares of the corporation
at their market value. Would Mr. X a stockholder holding 4,000 shares have the pre-emptive
rights to the remaining 10,000 shares?
a. yes because all stockholders have pre-emptive rights to all issues or dispositions of share of any class
in proportion to shareholding
b. no because he did not subscribe to them when offered at incorporation
c. yes if approved by 2/3 of the outstanding capital stock
d. no because there is no pre-emptive right applies only in case of increase in the capital stock
18. Based on the same facts, would Mr. have pre-emptive rights to the 50,000 preferred shares?
a. yes because all stockholders have pre-emptive rights to all issues or dispositions of shares of any class
in proportion to shareholding
b. no because he did not subscribed to them when offered at incorporation
c. yes, if approved by 2/3 of the outstanding capital stock
d. no because pre-emptive rights apply only in increase of capital stock

19. The merger or consolidation of corporations becomes effective upon approval by the constituent corporations
of the plan merger or consolidation as the case may be.

After the merger, the absorbed corporation must undertake dissolution and winding up procedures
a. both statements are false c. first is false, second is true
b. both are true d. first is true, second is false

20. Juan was a stockholder of X Corporation who sold his shares too Pedro and delivered properly indorsed
the Stock Certificate No.1001 to the latter. The following day, Juan went to the offices of the corporation
and claimed the loss of his stock certificate .The formalities prescribed by law having been complied with,
the corporation issued Stock Certificate No.2002 in substitution of the lost certificate .Juan for with
transferred for valuable consideration the new certificate to Jose who knew nothing of the prior sale to
Pedro .Whom shall the corporation recognize as rightful stockholder?
a. both pedro and jose are rightful stockholders
b. pedro shall be the rightful stockholder being the first buyer in good faith
c. jose shall be the rightful owner being indorsee of the most recent stock certificate
d. pedro shall be the rightful stockholder because the stock certificate delivered to jose was null and void

21. When the preferred shares are issued by a corporation with a fixed interest on the face thereof, the effect is:
a. the contract of subscription subsists
b. the said stockholder is a creditor of the corporation
c. the said shares of stocks becomes negotiable instruments
d. the stockholder is a plain investor who may benefit or suffer with a financial success or failure of the
corporation.

22. Three of the following are not authorized to issue no par value shares. Which one of the exception?
a. industrial companies c. trust companies
b. insurance companies d.public utilities

23. The corporation has a nine member board .Two of the members have sold their shares while two others are
abroad. To have a quorum .The number required is:
a. seven c. three
b. five d. four

24. A majority of the directors or trustee of all corporations organized in the Philippines must be citizen of
the Philippines.
Any two or more positions may be held concurrently by the same person, except that no one shall acts as
president and secretary or as secretary and treasurer at the same time.
a. both statements are false c. only second statement is true
b. both are true d. both are true

25. When a par value shares issued above par, the premium or excess is to be considered as part of the legal
capital.

Shares issued without par value shall be deemed fully paid and non-assessable and the holder of such
shares shall not be liable to the corporation or its creditors in respect thereto.
a. both statements are false c. first is true, second is false
b. both are true d. first is false, second is true

26. Which of the following corporate acts requires the approval of the majority of the outstanding capital stock?
or the members
a. to invest corporate funds in another corporation or business
b. to adopt, amend or repeal by laws
c. to dissolve the incorporation
d. to amend the articles of incorporation

27. A distribution by a corporation is:

a. stock dividend c. sale of the treasury stock
b. sale of capital assets d. property dividend
28. They are issued to those who helped in incorporating the corporation or for services rendered in launching
the welfare of the same
a. preferred shares
b. stock in escrow
c. founders shares
d. promotion stock

29. A director of a corporation may be removed from the office by a vote of the stockholders holding
representing:
a. majority of the outstanding capital stock
b. 2/3 of the stockholder
c. 2/3 o the outstanding capital stock
d. majority of the stockholder

30. Three of the following are attributes of a corporation. Which is the exception?
a. created by agreement of the incorporators
b. an artificial being
c. has a right of succession
d. has powers, attributes and property expressly authorized by law or incident to its existence

31. As regards the corporate by laws, which of the following is false?

a. to adopt majority of the outstanding capital stock
b. to delegate to the board of directors the power to amend, repeal or adopt new bylaws, 2/3 of the
outstanding capital stock
c. to revoke the power delegated to the board to amend, repeal or adopt new bylaws, 2/3 of the
outstanding capital stock
d. to amend, to repeal or adopt new by laws, majority of the outstanding capital stock

32. The power to deny pre-emptive rights to stockholders is:

a. incidental power c. implied power
b. express power d. discretionary power

33. As regards treasury shares, which is not correct?

a. they have no voting rights while in the treasury
b. they may be distributed as property dividend if there surplus profit
c. they are not entitled to dividends
d. they are considered part of the earned or surplus profits thus distributable as dividends

34. This is the equitable right of the stockholders to subscribe to all issues of shares in proportion to their
shareholdings to maintain their equity participation in the corporation
a. right of firm refusal in close corporation
b. right to dividends date entity
c. pre-emptive right
d. appraisal right of dissenting stockholder

35. In the matter of management of the corporation, this is supreme

a. majority of the stockholders c. board of directors
b. 2/3 of the stockholders d. officers of the corporation

36. This is the written acknowledgement of the interest of the stockholder in the corporation
a. proxy c. voting trust agreement
b. share of stock d. certificate of stock

37. These are the persons who sign the articles of incorporation and therefore must be subscribers of shares
a. incorporator’s c. stockholders
b. directors’ d. corporate officers
38. The minimum requirement for incorporation:
Authorized Capital Stock Subscribed Capital Paid up Capital
a. P100, 000.000 P20, 000.000 P5, 000.000
b. P100, 000.000 P20, 000.000 P6, 250.000
c. P100, 000.000 P25, 000.000 P5, 000.000
d. P100, 000.000 P 25, 000.000 P6, 250.000

39. They provide and regulate the internal matters of the corporation:
a. articles of incorporation c. certificate of incorporation
b. by-laws of the corporation d. certificate of filling of by laws

40. This is a public instrument giving authority to vote for stockholder

a. proxy c. stock certificate
b. voting trust agreement d. voting trust certificate
41. A gratuitous reissue of treasury shares will result in:
a. capital surplus c. watered stock
b. stock dividend d. property dividend

42. A certificate of stock is not negotiable instrument because it lacks the requirement of:
a. the instrument must be in writing and signed by the maker or drawer
b. it must contain an unconditional order or promise to pay a sum certain money
c. it must be payable to order or to bearer
d. it must be payable on demand or at fixed or determinable future time

43. The number of trustees in a non-stock corporation may be:

a. not less than five years but not more than fifteen
b. not less than five but maybe not more than fifteen
c. not less than five but not more than eleven
d. maybe than five but not more than fifteen

44. Which of the following is a limitation on proxy?

a. the proxy acquires legal titles to the shares of the stockholders
b. the proxy may attend the meeting even in the presence of the stockholder
c. the proxy as a rule for the meeting for the meeting only for which it is issued.
d. the proxy is not revocable at will of the stockholder

45. For a de facto corporation to exist, it is necessary that it is issued by the SEC a certificate of incorporation
just like a de jure corporation

In corporation by estoppels, those who represent themselves as forming by a corporation are liable as
stockholders to third persons
a. first statement is true, second is false c. both are false
b. first is false, second is true d. both are true

46. The following are requirements for incorporators. Which is not?

a. majority of them must be residents of the Philippines
b. majority of them must be of legal age
c. they must be a natural persons
d. they must not less than five nor more then fifteen in numbers

47. To elect the officers of the corporation, majority of the directors in a meeting constituting a quorum is
sufficient
Members of non-stock corporation may all be without voting rights if provided for the in the articles of
incorporation or by laws
a. both statements are true c. only first is false
b. both are true d. only first is true

48. In three of the following corporate acts, dissenting stockholders have appraisal right except
a. merger or consolidation of corporations
b. increase or decrease of capital stock, incurring, creating or increasing bonded indebtedness
c. investment of corporate funds in another business or corporation or for any purpose other than
primary purpose
d. disposition of all or substantially all of the corporate assets

49. Stockholders with or without voting rights may vote on the following matters except
a. amendment of the articles of incorporation
b. disolution of the corporation
c. election of directors
d. adoption and amendment of by laws

50. The nationanlity of the corporation determined by the nationality of the stockholders in control of the same
is called:
a. domicile test c.management test
b. incoporation test d. control test

51. Directors and officers who approve illegal or fradulent acts or guilty of gross negligence or
bad faith in conducting the affairs of the corporation are liable jointly and severally.
In case of issuance of watered stock , only directors and officers who approved the same are liable for the
water to the corporation and creditors but not the stockholders who received the shares.
a. both statements are true c. only first is false
b. both are true d. only first is true
52. Directors as a rule are entitled to compensation as directors but not exceeding ten percent of the net income
before tax of the preceding year

All private corporations in the Philippines shall be incorporated under the Corporation Code, which is a
general law.
a. both statements are true c. only first is true
b. both are true d. only first is false

53. For the cintract between the corporation and its directors, officers or trustees may not be voidable, the
following are conditions except
a. the presence of the director or trustee is not necessary for the quorum
b. thec ontarct is fair and reasonable under the circumstances
c. the vote of the director or trustee is not neccessaru for the approval of the contract
d. ratification by majority of the outstanding capital stock or members

54. Redeemable shares may be taken up or purchased by the corporation even in the absence of surplus profits

Treasury shares may be reissued for a reasonable price even below par value
a.both statements are false c. only first is true
b. both are true d. only first is false

55. In the case of shares owned in common or by two or more stockholders, the consent of either is enough to
vote the same.

The pledgee or mortgagee shall have the right to vote the shares unless stipulated otherwise
a. both statements are false c. only first is true
b. both are true d. only first is false

56. Contracts between corporations with interlocking directors shall only be voidable and not void because of the
nominal interest of the director

Management contracts shall be approved by 2/3 vote fo the directors and stockholders of both managed
and managing corporation.
a. only first statements is false c. both are false
b. both are true d. only first istrue

57. Vacancy in the board of directors can be filled up by the reamining directors in the following cases except
a. increase in the number of directors c. death of director
b. resignation letter d. none of the above

58. The following are requisites for de facto corporation except one
a. valid law under which it is incorporated
b. actual use of corporate powers
c. attempt in good faith to organize
d. non-issuance by the SEC of certificate of incorporation

59. In open corporation, only in certain case do stockholders have appraisal right of dissenting stockholders
while in close corporation stockholders can at anytime for whatever reason demand payment of
surrendred shares

In the former , there is no restriction in the transfer of shares while in the,latter there is in the form of the
right of first refusal of the coporation or stockholders
a. both statements is true c. only first is true
b. both are false d. only first is false

60. The by laws of a corporation may provide that the stockholders or trustees meeting may be outside of the
Philipines

The code by laws may be filled with the SEC either before or after incorporation
a. only first is true
b. only first is false
BUSINESS LAW
PART II
QUIZ ON CORPORATION

A,B,C,D,E and F, Filipino citizens, X,Y,Z,American citizens , and R and S Japanese citizens agreed to form a
domestic corporation with an authorized capital stock of P1,000,000.00 divided into one hundred thousand
(100,000) shares with a par value of P10.00 per share .B subscribed for 2,000 shares and he paid 12,000.00. X
subscribed for 5,000 shares he issued a promissory note in the amount of P30,000.00.F joined the group but he
did not subscribed for any number of shares(This is the basis of Nos. 1-7)

1. Can the aforementioned persons validly form a domestic corporation

a. yes provided majority of them are resident of the Philippines
b. yes because majority of them are Filipino citizens
c. yes provided they will subscribed for at least 25% of the authorized capital stock
d. no beuase foreigners cannot be incorporators of a domestic corporation

2. How much at least should be subscribed by the incorporators at the time of incorporation?
a. P300,000.00 c. P200,000.00
b. P350,000.00 d. P250,000.00

3. How many shares shall be paid up by the incorporators?

a. P625,000 c. P6,250
b. P62,500 d. P625

4. Can B demand for a certificate of stock of 1,200 shares

a. no because certificate of stock shall be issued only after payment of the full amount of the subscription
b. no because the 800 shares subscribed by him are already delinquent
c. yes because he can surrender the 800 shares the corporation and limit his subscription to 1,200 shares
only
d. yes because he has paid 12,000.00 representing the fulll value of 1,200 shares

5. Is the payment of X for his subscription valid

a. yes provided the promissory note is converted into cash on its maturity
b. yes as long as other corporators shall accept his promissory note
c. no because the actual cash paid to the corporation can be valid payment
d. ne because shares of stock shall not be issued in exchange of promissory note

6. Can F be an incorporator of the corporation

a. yes provided the other incorporators do not object
b. no because an incorporator must have substantial share in the corporation
c. yes because as a filipino , he has the right to join the formation of a domestic corporation
d. no, because he does not ownnat least one share of the capital stock of the corporation

7. Assuming that the corporation has been organized , how many shares can B validly vote in the election
of the members of the board of directors
a. 1,200 shares because these have been paid
b. 2,000 shares because that is his total subscription
c. 800 shares because that is the balance of his unpaid subscription
d. any of the above

8. Which of the following statement is correct?

a. to sell lease, mortgage or otherwise dipose of all or some of the corporate assets, majority vote of
directors or trustees and majority of the outstanding capital stock or to the members is needed
b. to enter into management contract, majority vote of the board of directors and majority of the outstanding
capital stock or the members is required
c. to issue dividends , majority vote of the quorum of the board of directors and majority of the outstanding
capital stock is required
d. to invest corporate funds in another corporation or business , majority vote of directors or trustees
and majority of the outstanding capital stock or the members thereof.
9. A. It is illeagl to issue watered stocks.However , stock issues without any considerstion at all is justified
if such issues are bonus shares

B. A director is removed from the office by a vote of the stockholders holding at least 2/3 of the
outstanding capital stock .The vacancy occassioned by such removal can be filled by the vote of the
majority of the remaining directors if still constituting with quorum
a. only letter a is correct c. only letter b is correct
b. both letters are correct d. both letters are wrong

10. Which of these conditions comply with the minimum requirements of law to corporate formation-
Authorized Subscirbed Paid-up
Capital Capital Capital
a. P64,000 P16,000 P4,000
b. P100,000 P25,000 P12,500
c. P200,000 P10,000 P10,000
d. P200,000 P50,000 P10,000

11. Which of the following conditions will allow corporate formation and SEC registration
Authorized Subscirbed Paid-up
Capital Capital Capital
a. P90,000 P12,500 P3,125.00
b. P100,000 P20,000 P5,000
c. P100,000 P25,000 P5,000
d. P60,000 P15,000 P6,000

12. The auhtorized capital stock of a proposed corporation is P1,000,000 divided into 10,000 shares with a par
value of P100 each. The minimum amount of subscription that must be paid is
a. P62,500 or 625 shares c. P75,000 or 750 shares
b. P50,000 or 500 shares d. P85,500 or 875 shares

13.Which of the following will qualify as incorporator in a corporation

a. a minor c. partnership
b. a corporation d. foreigner

14. The Corporation Code requires that

a. at least one majority of the directors are residents of the Philippines
b. all of the directors or trustee are residents of the Philippines
c. all of the directors or trustees are citizen of the Philippines
d. majority of the directors are citizens of the Philippines

15. The voting proportion required to enable a corporation to invest its fund in any other corporation or
business or for any purpose other than its primary purpose
a. 2/3 vote of the board of directors and ratified by majority of the outstanding capital stock
b. majority vote of the board of directors and ratified by majority of the outstanding capital stock
c. majority of the vote of board of directors and ratified by 2/3 of the out standing capital stock
d. majority of the vote of board of directors and ratified by 2/3 of the stockholders

16. Wateredstock is a share of stock issued by a corporation for a consideration less than its par or issued
value or for a consideration in any form other than cash , valued in excess of its par value.In this regard
a. the agreement that it shall be paid for less than its par value is illegal and void and cannot be enforced
b. the issue itself is void
c. the subscriber shall not be liable for full par value
d. answer not given

17. Corporate disolution may take place by voluntary inaction which will result in the cessation of its
corporate powers and the corporation shall be deemed dissolved.Such voluntary inaction may result from
a. Inaction of the corporation through its failure to formally organized and commence with the transcation
or its business or the construction of its work within two(2) years from the date of its incorporation
b. Failure of the coporation to submit the annual reports by the SECfor a period of five (5) years
c. Merger of consolidation with respect to absorbed corporation
d. None of the above
18. One of the following is a ground for the suspension or revocation of the certificate of incorporation by
the SEC
a. if the corporation fails to commence and start to operate and the failure is due to cause beyond its control
b. if the corporation has commenced its business transaction afterwards ceased operations continously for
for a period of at least 5 years
c. if the corporation has commence its operations and subsequently become continously inoperative for two
years
d. none of the above

19.The following are corporate acts in which a stockholder of a corporation shall hace the right to dissent and
demand payment of the fair value of his shares of stock except one
a. in case of an amendment to the articles of incoporation which has the effect of changing or restricting
the right of any stockholder
b. in case of incurring, creating or increasing bonded debts
c. in case of merger or consolidation
d. incase of sale, lease, mortgage or other diposal of all or any corporate assets

20. Which of the following statements is not correct

a. in case of merger or consolidation
b. in case of incurring , creating, or increasing bonded debts
c. in case of sale, lease , mortgage, or other disposal of all corporate assets
d. in case of an amendment of articles of incorporations which in effect of changing , restricting the
rights of any holder

21. Subscriber Glow has a total 1,000 delinquent sales atbP10 par value, to be sold at public auction sale.
Total amount recoverable includes : total amount of the delinquent shares 10,000 and total expenses
of the sale P5,000.Who will be declared the highest bidder among the following bidders in the public sale
a. m , who is willing to pay the P15,000 at 920 shares
b. a , who is willing to pay the P15,000 at 950 shares
c. n, who is willing to pay the P15,000 at 970 shares
d. g, who is willing to pay the P15,000 at 900 shares

22. The following are ways of enforcing payment of unpaid subscription , which is the exception
a. filing a court action to recover unpaid subscription
b. sale at a public auction of delinquent stocks
c. denying delinquent stock cash dividends
d. denying delinquent stock the right to vote and voted upon

23.A corporate doctrine which the stockholders are not personally liable for corporate debts
a. piercing the veil of corporate fiction c. trust fund and doctrine
b. separate legal entity d. corporate opportunity

24. A stockholder does not approve the action taken by the Board of Directors in proposing to amend articles
of incorporation is not allowed to withdraw from the corporation in one of the following instances
a. creating , incurring , increasing or decreasing any bond indebtedness
b. shortening or prolonging corporate existence
c. investing of corporate funds in another corporation
d. merger or consolidation

25. Which of the following statements is not correct?

a. the sale of delinquent stock at public auction can be stopped if the board of directors stop the sale
for valid reasons
b. payment of unpaid subscription may not be enforced by applying cash dividends to delinquent
stockholders
c. in delinquency sale at public auction the highest bidder is one who offers to pay the full amount of the
balance of the subscription plus interest and expenses of the sale for the highest number of shares
d. the board of directors shall order , by resolution in the sale of delinquent stock specifying the amount die
plus accured interest , the place, the time and the date of sale

26. One of the following does not require stockholders’ approval

a. change of corporate name
b. merger or consolidation
c. declaration of cash dividend
d. investment of corporate funds outside main purpose of the corporation
27. Which of the following is the disadvantage of forming a corporation?
a. the subservience of minority stockholders to the wishes of the majority subject only to equitable
restraints
b. the free and ready transferability of ownership
c. the shareholders are not liable for the debts of the business
d. the owner of succession the existence of the entirety is not affect by the personal vicissitudes of the
individual stockholders

28. In a corporation, two or more positions may be held concurrently by the same person, except that no person
shall act as
a. president and chairman of the board c. secretary and treasurer
b. president and secretary d. treasurer and director

29. The following are qualifications of corporate diretors , except

a. must own at least one share of stock
b. must nit be convicted by the final judgement with imprisonment at least 6 years and commited
within 5 yrs. prior to election
c. majority are citizens of the Philippines
d. ownership of shares must be recorded in the books of the corporation

30. The following are requisites except one, for valid declaration and/or issuance of stock dividend
a. existence of original & unissued shares
b. exisitng unrestricted retained earning
c. dividends declaration by the board of directors and approved by 2/3 vote of the outstanding capital stock
d. it is issued to increase the authorized capital

31. Purely ultra vires acts of the offersof a corporation to invest corporate funds in another business or
corporation , i.e.,acts no contrary to law , morals , publics policy may be ratified by:
a. majority of the vote of all members of the board
b. stockholders with ½ of voting power
c. stockholders holding 2/3 of the voting power
d. majority vote of the board present

32. Requirement to effect the amendment of the by laws of a corporation

a. majority of the vote of board of directors
b.majority of the outstanding capital
c. vote of 2/3 of the outstanding capital stock
d. majority vote of the board of directors and majority vote of the outstanding capital stock

33.The interest or right of the stockholders in the corporations profits or in the net assets of corporation on
dissolution is:
a. shares of stock c. capital
b. dividend d. certificate of stock

34. The right of corporation to exist as juridical person during its term as stated in the articles of incorporation
despite the death of any of its stockholders is:
a. right of existence c. pre-emptive right
b. right of succession d. right of redemption

35. The following cannot be the incorporator of a corporation

a. a corporation to organized under philippine laws
b. a resident alien
c. a married woman without the consent of her husband even if the payment of shares is paraphernal
property
d. subscirber who pays less than 25% of his subscription

36. One of the characteristic s of treasury shares is that

a. they may be issued or sold again
b. they have status of outstanding shares
c. they may participate in the meeting of corporation as voting shares
d. they are entitled to dividends

37. Which of the following is a ground for the suspension or revocation of the certificate of incorporation by
the SEC
a.if the corporation has commenced its business and subsequently become continously
inoperative for two years
b. if the corporation has ceased operations continously for a period of at least five years
c. if the corporation did not commence its business transactions for 2 years
d. if the corporation did not formally organize after incorporation
38. Watered stocks are shares of stock issued by a corporation for a consideration less than its par or
issued value or for a consideration in any form other than cash , valued in excess of its par value .In this
regard
a. the agreement that it shall be paid for less than its par value is illegal and void cannot be enforced
b. the subscriber or purchaser shall not be liable for the full par value of the shares
c. the issue itself is void
d. the directors officers and stockholder ar jointly liable

39. The distinction between proxy and voting trust is that in voting trust:
a. the trustee has no legal title to the shares of the transferring stockholder
b. it is limited to any particular meeting
c. the stock certificate is not cancelled
d. the trustee may attend the stockholders meeting even in the presence of the stockholder trustor

40. The following defect will prelude the creation of even a de facto corporation
a. the incorporators or a certain number of them are not residents of the Philippines
b. lack of certificate of incorporation from the SEC
c. name of the corporation closely resembles that of a preexisting corporation and may deceive the public
d. there is actual use of corporate powers

A subcribed for 1,000 shares form ABC corporation at the cost of 300 per share .He initially paid 21,000.00. The
subscription contract is silent as regards the payment of balance .The Board of Directors issued a call requiring
all the stockholders with unpaid balance to pay 50% of the balance on their subscription on before September
15,2006 .X failed to pay on September 15,2006 as required in the call(This is the basis of the question Nos. 41
to 43)

41. After September 15,2006 but before the sale of his share of stock at public auction how much should X pay
to the corporation
a. P4,500 plus interest c. P12,000 plus interest
b. P9,000 plus interest d. P15,000 plus interest

42. How many shares shall be offered for sale at the delinquency sale
a. 1,000 shares c. 500 shares
b. 700 shares d. 300 shares

43.Assuming that the amount due to the corporation is P9,750 and the following are the bids in the delinquency
sale, who is the highest bidder
a. P- P 9,500 for 700 shares c. S-P 9,750 for 648 shares
b. R- P 9,750 for 600 shares d. T- P 9,680 for shares

44. (1) The meetings of the Board of Directors of a stock corporation may be held anyhwere in the world.
(2) The meetings of the members of a non-stock corporation may be held anywhere within the Philippines
a. (1) is true but (2) is false; c. both are false
b. (1) is false but (2) is true d. both are true

45. The holders of non-voting shares shall nevertheless be entitled to vote on the following matter
a. increase or decrease of capital stock c. dissolution of the corporation
b. adoption or amendment of by laws d. dividend declaration

46. (1) Appraisal right means that whenever the capital stock of a corporation is increased and new shares
of stock are issued , the new issue must be first be offered to the stockholders in proportion to their existing
shareholdings before subscription are received from the general public
(2) Ultra vires acts are illegal and therefore void
(3) Certificate of incorporation is the document prepared by the persons establishing the corporation and
filed with the SEC containing the matter required by the Corporation Code
a. only (1) is true c. all are false
b. only (2) is false d. all are true

47. (1) A foreign corporation doing business in the Philippines without a license may be sued but it cannot sue.
(2) A written demand for payment of the fair value of the shares made in the exercise of the appraisal right
will suspend the stockholders rights
a.(1) is false but (2) is true c. both are true
b. (1) is true but (2) is false d. both are true
 48. An individual or a domestic corporation designated in a written power of attorney ,by a foreign
corporation authorized to transact business in the Philippines , on whom any summons and other legal
processes may be served in all actions or other legal proceeding against such corporation is called
a. resident director c. receiver
b. resident agent d. trustee

49. (1) Corporators are incoporators (2) Incorporators are corporators

a. (1) is wrong but (2) is correct c. both statements are correct
b. (1) is correct but (2) is wrong d. both statements are wrong

50. Which of the following statement is correct

a. eleemosynary corporation is one established for business or profit
b. corporaiton aggregate is one established for religious purposes
c. civil corporation is one established under the laws of the Philippines
d. Lay corporation is one estalished for purposes other than religious