BUSINESS LAW BUSINESS LAW
Law on Corporation – Part 1 Law on Corporation – Part 1 1. A
1. A subsubscrscribeibed d to 1,000 sharto 1,000 shares of es of stostock ck of X of X CorCorporporatiation. She paid on. She paid 25% of 25% of the saidthe said subscription.During
subscription.During
the stockholders eeting can A !ote all
the stockholders eeting can A !ote all her subscribed shares"her subscribed shares" a. no because the subscription has not #et been full# a. no because the subscription has not #et been full# paidpaid b. no becau
b. no because a$s shares se a$s shares ha!e becoe dha!e becoe delinuent &hich caelinuent &hich cannot be !otennot be !otedd c. no a
c. no as to the s to the unpaid perunpaid percentage of centage of subscriptionsubscription d. #es b
d. #es because unpaid ecause unpaid shares nshares not delinuent ot delinuent can be can be !oted!oted 2. X Corporation posted a '1( pro)ts in its
2. X Corporation posted a '1( pro)ts in its realt# business and it is real estate has realt# business and it is real estate has appreciated inappreciated in !alue to the tune of '*(.
!alue to the tune of '*(. +he board then declared di!id
+he board then declared di!idends to its stockholders coputed on the basis of representingends to its stockholders coputed on the basis of representing pro)ts
pro)ts
and appreciation in !alue of its real estate. s
and appreciation in !alue of its real estate. s the di!idend declaration !alid"the di!idend declaration !alid" a. not !alid because there &as no
a. not !alid because there &as no appro!al of 2- of the outstanding capital stockappro!al of 2- of the outstanding capital stock b. !alid because it
b. !alid because it &as based on pro)t and increent in the !alue of &as based on pro)t and increent in the !alue of the corporate assets.the corporate assets. c. not !alid because di!idends ust
c. not !alid because di!idends ust be onl# coe fro the unrestricted retained earnings.be onl# coe fro the unrestricted retained earnings. d.!alid if no creditors shall be
d.!alid if no creditors shall be pre/udiced and appro!ed b# the reuired !otes of the directors andpre/udiced and appro!ed b# the reuired !otes of the directors and stockholders
stockholders .
. A subscribed to 100 shares of X corporation, pa#ing 25% of A subscribed to 100 shares of X corporation, pa#ing 25% of the aount thereof. +he corporathe aount thereof. +he corporationtion refuses to issu
refuses to issue to the foe to the forer a stock rer a stock certi)cate for his certi)cate for his subscription despite subscription despite the deand othe deand of A forf A for a
a
stock certi)cates corresponding to 25 shares &hich he clais ha!e been piad. (ean&hile, the stock certi)cates corresponding to 25 shares &hich he clais ha!e been piad. (ean&hile, the corporation has becoe insol!ent and A no& refuses to pa# for his
corporation has becoe insol!ent and A no& refuses to pa# for his unpaid balance on hisunpaid balance on his subscription. s the refusal of the corporation to issue the certi)cate !alid"
subscription. s the refusal of the corporation to issue the certi)cate !alid"
a. not !alid because there can be issued a stock certi)cate for the nuber of shares alread# a. not !alid because there can be issued a stock certi)cate for the nuber of shares alread# paid
paid b. !ali
b. !alid becad because the use the stock cstock certi)certi)cate can ate can onl# be onl# be issueissued afted after the fur the full pa#ll pa#ent of tent of thehe subscription
subscription
c. !alid &ith respect to the unpaid portion of
c. !alid &ith respect to the unpaid portion of the subscriptionthe subscription d. not !alid
d. not !alid because the dbecause the delinuent share elinuent share a#be denied sta#be denied stock certi)cateock certi)cate
*. ased on the sae facts, is A correct in refusing to pa# for the reaining shares, the copan# *. ased on the sae facts, is A correct in refusing to pa# for the reaining shares, the copan# being alread# insol!ent"
being alread# insol!ent"
a. no under the trust fund doctrine upon the insol!enc# of the corporation to &hich he is still a. no under the trust fund doctrine upon the insol!enc# of the corporation to &hich he is still liable for unpaid subscription
liable for unpaid subscription
b. no because of the doctrine of piercing the !eil of corporate )ction b. no because of the doctrine of piercing the !eil of corporate )ction c. #es his obligation etinguished due to the insol!enc# of the
c. #es his obligation etinguished due to the insol!enc# of the corporation and his discharge frocorporation and his discharge fro liabilit# b# reason thereof
liabilit# b# reason thereof d. #es because he is
d. #es because he is denied of his right to recei!e stock denied of his right to recei!e stock certi)catecerti)cate
5. After dissolution but &ithin the three #ears period for liuidation a corporation$s ter a# still 5. After dissolution but &ithin the three #ears period for liuidation a corporation$s ter a# still be
be
etended b# aendent of its articles of incorporation etended b# aendent of its articles of incorporation +he dissolution of a corpora
+he dissolution of a corporation shall take place because it hation shall take place because it has been in continuous nonopes been in continuous nonoperationration for
for
for )!e #ears for )!e #ears a.
a. both both stateents stateents are are true true c. c. )rst )rst is is false, false, second second is is truetrue
b.
b. both both are are true true d. d. )rst )rst is is true, true, second second is is falsefalse 3. +he b#la&s a# pro!ide that the holders of a a/orit# of the outstanding capital stock a# 3. +he b#la&s a# pro!ide that the holders of a a/orit# of the outstanding capital stock a# elect
elect all th
all the ebee ebers ors of thf the be board oard of of directors.directors. +hat it a# also pr
+hat it a# also pro!ide that no o4cer of tho!ide that no o4cer of the corporation shall be re corporation shall be reuired to be a euired to be a stockholderstockholder a.
a. both both stateents stateents are are true true c. c. )rst )rst is is false, false, second second is is truetrue b.
b. both both are are false false d. d. )rst )rst is is true, true, second second is is falsefalse . 6hich of the follo&ing
. 6hich of the follo&ing is not reuisite for a close corporation"is not reuisite for a close corporation" a. the nub
a. the nuber of stock holder of stock holders shall not ers shall not eceed t&ent#eceed t&ent# b. that no close corporation is a
b. that no close corporation is a stockholder thereof o&ning at 2- of the !oting stocksstockholder thereof o&ning at 2- of the !oting stocks c. there is
c. there is no restriction no restriction in the transfein the transfer of sharesr of shares d. there
d. there is no public ois no public o7ering of shar7ering of shareses 8. +he declaration of di!idends out of the
8. +he declaration of di!idends out of the and not surplus pro)ts !iolation of the doctrine ofand not surplus pro)ts !iolation of the doctrine of piercing
piercing the
the !eil !eil of of corporate corporate )ction)ction 6hen the corp
6hen the corporation is used oration is used an either ego an either ego or conduit to or conduit to a!oid the perfora!oid the perforance of an oance of an obligationbligation is
is !iolation !iolation of of the the trust trust fund fund doctrine"doctrine" a.
a. both both stateents stateents are are false false c. c. )rst )rst is is false, false, second second is is truetrue b.
b. both both are are true true d. d. )rst )rst is is true, true, second second is is falsefalse 9. (a/orit# of the follo&ing ust
9. (a/orit# of the follo&ing ust residents of the 'hilippines ecept:residents of the 'hilippines ecept: a.
a. ebers ebers of of the the board board of of director$s director$s c. c. incorporatorsincorporators b.
b. ebers ebers of of the the trustees$ trustees$ d. d. o4cerso4cers
10. Stockholders eeting ust be in the cit# or unicipalit# &here the principal o4ce is located 10. Stockholders eeting ust be in the cit# or unicipalit# &here the principal o4ce is located
&hile eber
&hile ebers eeting s eeting of nonof nonstock corpstock corporation oration a# be a# be outside outside thereofthereof +he secretar# of th
+he secretar# of the corporations ust gene corporations ust generall# be a citi;en and rerall# be a citi;en and resident of the 'hilippinesesident of the 'hilippines a.
a. both both are are false false c. c. )rst )rst is is false, false, second second is is truetrue b.
b. both both are are true true d. d. )rst )rst is is true, true, second second is is falsefalse 11. +he doctrine of corporate opportunit# rests on the unfairness of an o4cer of a corporation 11. +he doctrine of corporate opportunit# rests on the unfairness of an o4cer of a corporation taking
taking ad!antage
ad!antage of an of an opportunit# opportunit# for his for his o&n persoo&n personal bene)t nal bene)t ad!erse tad!erse to the o the corporationcorporation +he b#
+he b#la&s ust la&s ust be )lled be )lled &ith the &ith the S<C for S<C for the corpthe corporation to oration to acuire /uacuire /uridical persoridical personalit#nalit# a.
a. both both stateents stateents are are true true c. c. )rst )rst is is false, false, second second is is truetrue b.
b. both both are are false false d. d. )rst )rst is is true, true, second second is is falsefalse 12. 'ri!ate corporations ha!e the
12. 'ri!ate corporations ha!e the follo&ings attributes, ecept:follo&ings attributes, ecept: a.
a. it it is is created created b# b# la& la& as as a a /uridical /uridical personperson b.
b. it it has has the the right right of of successionsuccession c. its
c. its a# fora# fored, ored, organi;ed gani;ed and and eisting eisting under under a speciaa special la& l la& or chor charterarter
d. it has the po&ers, attributes and properties epressl# authori;ed b# the la& or incident to d. it has the po&ers, attributes and properties epressl# authori;ed b# the la& or incident to
its eistence its eistence
1. n the three of the follo&ing instances, shares &ith or &ithout !oting rights can be !oted, ecept:
a. increase or decrease of capital stock b. dissolution of the corporation c. election of directors or trustee
d. erger or consolidation &ith other corporation 1*. =ne of the follo&ing does not ha!e !oting rights:
a. preferred shares c. treasur# shares
b. redeeable shares d.coon shares
15. +he eecuti!e coittee cannot act on this atter ecept: a. )lling of !acanc# in the board of directors
b. cash di!idend declaration
c. board resolution on despositor# bank of the corporation d. stock di!idend declaration
13. At the annual eeting of AC Corporation for the election of )!e directors,A,,C,D,<,> and ? &ere noinated.A,,C,D and < recei!ed the highest nuber of !otes and proclaied elected.> recei!ed ten !otes less than <.Subseuentl#,< sold his shares to >.6ho bet&een < and > has the
right to attend as director in the board eeting"+he transfer of shares ha!ing been registered &ith the corporation
a. e is the director because his ter is one #ear until his successor is elected and uali)ed b. f is the director for he has acuired all the shares of e
c. either of the shall be director d. neither of the shall be director
1. AC Corporation has an authori;ed capital stock of '1( di!ided into 50,000 coon shares and preferred shares. At its inception, the Corporation o7ered subscription all the coon shares.@o&e!er, onl# *0,000 shares &ere subscribed.ecentl#, the directors thought of raising additional capital and decided to o7er to the public all the authori;ed shares of the corporation at their arket !alue. 6ould (r. X a stockholder holding *,000 shares ha!e the preepti!e rights to the reaining 10,000 shares"
a. #es because all stockholders ha!e preepti!e rights to all issues or dispositions of share of
an# class
in proportion to shareholding
b. no because he did not subscribe to the &hen o7ered at incorporation c. #es if appro!ed b# 2- of the outstanding capital stock
d. no because there is no preepti!e right applies onl# in case of increase in the capital stock 18. ased on the sae facts, &ould (r. ha!e preepti!e rights to the 50,000 preferred shares" a. #es because all stockholders ha!e preepti!e rights to all issues or dispositions of shares of
an# class
in proportion to shareholding
b. no because he did not subscribed to the &hen o7ered at incorporation c. #es, if appro!ed b# 2- of the outstanding capital stock
d. no because preepti!e rights appl# onl# in increase of capital stock
19. +he erger or consolidation of corporations becoes e7ecti!e upon appro!al b# the
constituent corporations
of the plan erger or consolidation as the case a# be.
After the erger, the absorbed corporation ust undertake dissolution and &inding up procedures
a. both stateents are false c. )rst is false, second is true b. both are true d. )rst is true, second is false 20. Buan &as a stockholder of X Corporation &ho sold his shares too 'edro and deli!ered properl# indorsed
the Stock Certi)cate o.1001 to the latter. +he follo&ing da#, Buan &ent to the o4ces of the corporation
and claied the loss of his stock certi)cate .+he foralities prescribed b# la& ha!ing been coplied &ith,
the corporation issued Stock Certi)cate o.2002 in substitution of the lost certi)cate .Buan for &ith
transferred for !aluable consideration the ne& certi)cate to Bose &ho kne& nothing of the prior sale to
'edro .6ho shall the corporation recogni;e as rightful stockholder" a. both pedro and /ose are rightful stockholders
b. pedro shall be the rightful stockholder being the )rst bu#er in good faith c. /ose shall be the rightful o&ner being indorsee of the ost recent stock certi)cate
d. pedro shall be the rightful stockholder because the stock certi)cate deli!ered to /ose &as null and !oid
21. 6hen the preferred shares are issued b# a corporation &ith a )ed interest on the face thereof, the e7ect is:
a. the contract of subscription subsists
b. the said stockholder is a creditor of the corporation c. the said shares of stocks becoes negotiable instruents
d. the stockholder is a plain in!estor &ho a# bene)t or su7er &ith a )nancial success or
failure of the
corporation.
22. +hree of the follo&ing are not authori;ed to issue no par !alue shares. 6hich one of the eception"
a. industrial copanies c. trust copanies b. insurance copanies d.public utilities
2. +he corporation has a nine eber board .+&o of the ebers ha!e sold their shares &hile
t&o others are
abroad. +o ha!e a uoru .+he nuber reuired is:
a. se!en c. three
b. )!e d. four
2*. A a/orit# of the directors or trustee of all corporations organi;ed in the 'hilippines ust be
citi;en of
An# t&o or ore positions a# be held concurrentl# b# the sae person, ecept that no one
shall acts as
president and secretar# or as secretar# and treasurer at the sae tie.
a. both stateents are false c. onl# second stateent is true
b. both are true d. both are true
25. 6hen a par !alue shares issued abo!e par, the preiu or ecess is to be considered as part
of the legal
capital.
Shares issued &ithout par !alue shall be deeed full# paid and nonassessable and the holder
of such
shares shall not be liable to the corporation or its creditors in respect thereto. a. both stateents are false c. )rst is true, second is false b. both are true d. )rst is false, second is true
23. 6hich of the follo&ing corporate acts reuires the appro!al of the a/orit# of the outstanding capital stock"
or the ebers
a. to in!est corporate funds in another corporation or business b. to adopt, aend or repeal b# la&s
c. to dissol!e the incorporation d. to aend the articles of i ncorporation 2. A distribution b# a corporation is:
a. stock di!idend c. sale of the treasur# stock b. sale of capital assets d. propert# di!idend
28. +he# are issued to those &ho helped in incorporating the corporation or for ser!ices rendered
in launching
the &elfare of the sae a. preferred shares b. stock in escro& c. founders shares d. prootion stock
29. A director of a corporation a# be reo!ed fro the o4ce b# a !ote of the stockholders holding representing:
a. a/orit# of the outstanding capital stock b. 2- of the stockholder
c. 2- o the outstanding capital stock d. a/orit# of the stockholder
0. +hree of the follo&ing are attributes of a corporation. 6hich is the eception" a. created b# agreeent of the incorporators
b. an arti)cial being c. has a right of succession
d. has po&ers, attributes and propert# epressl# authori;ed b# la& or incident to its eistence 1. As regards the corporate b# la&s, &hich of the follo&ing is false"
a. to adopt a/orit# of the outstanding capital stock
b. to delegate to the board of directors the po&er to aend, repeal or adopt ne& b#la&s, 2-
of the
outstanding capital stock
c. to re!oke the po&er delegated to the board to aend, repeal or adopt ne& b#la&s, 2- of the
outstanding capital stock
d. to aend, to repeal or adopt ne& b# la&s, a/orit# of the outstanding capital stock 2. +he po&er to den# preepti!e rights to stockholders is:
a. incidental po&er c. iplied po&er b. epress po&er d. discretionar# po&er . As regards treasur# shares, &hich is not correct"
a. the# ha!e no !oting rights &hile in the treasur#
b. the# a# be distributed as propert# di!idend if there surplus pro)t c. the# are not entitled to di!idends
d. the# are considered part of the earned or surplus pro)ts thus distributable as di!idends *. +his is the euitable right of the stockholders to subscribe to all issues of shares in proportion
to their
shareholdings to aintain their euit# participation in the corporation a. right of )r refusal in close corporation
b. right to di!idends date entit# c. preepti!e right
d. appraisal right of dissenting stockholder
5. n the atter of anageent of the corporation, this is supree a. a/orit# of the stockholders c. board of directors
b. 2- of the stockholders d. o4cers of the corporation 3. +his is the &ritten ackno&ledgeent of the interest of the stockholder in the corporation
a. pro# c. !oting trust agreeent
b. share of stock d. certi)cate of stock
. +hese are the persons &ho sign the articles of i ncorporation and therefore ust be subscribers of shares
a. incorporator$s c. stockholders
b. directors$ d. corporate o4cers
8. +he iniu reuireent for incorporation:
Authori;ed Capital Stock Subscribed Capital 'aid up Capital
a. '100, 000.000 '20, 000.000 '5, 000.000
b. '100, 000.000 '20, 000.000 '3, 250.000
c. '100, 000.000 '25, 000.000 '5, 000.000
d. '100, 000.000 ' 25, 000.000 '3, 250.000
9. +he# pro!ide and regulate the internal atters of the corporation:
a. articles of incorporation c. certi)cate of incorporation b. b#la&s of the corporation d. certi)cate of )lling of b# la&s *0. +his is a public instruent gi!ing authorit# to !ote for stockholder
b. !oting trust agreeent d. !oting trust certi)cate
*1. A gratuitous reissue of treasur# shares &ill result in:
a. capital surplus c. &atered stock
b. stock di!idend d. propert# di!idend
*2. A certi)cate of stock is not negotiable instruent because it lacks the reuireent of: a. the instruent ust be in &riting and signed b# the aker or dra&er
b. it ust contain an unconditional order or proise to pa# a su certain one# c. it ust be pa#able to order or to bearer
d. it ust be pa#able on deand or at )ed or deterinable future tie *. +he nuber of trustees in a nonstock corporation a# be:
a. not less than )!e #ears but not ore than )fteen b. not less than )!e but a#be not ore than )fteen c. not less than )!e but not ore than ele!en d. a#be than )!e but not ore than )fteen **. 6hich of the follo&ing is a liitation on pro#"
a. the pro# acuires legal titles to the shares of the stockholders
b. the pro# a# attend the eeting e!en in the presence of the stockholder c. the pro# as a rule for the eeting for the eeting onl# for &hich it is issued. d. the pro# is not re!ocable at &ill of the stockholder
*5. >or a de facto corporation to eist, it is necessar# that it is issued b# the S<C a certi)cate of incorporation
/ust like a de /ure corporation
n corporation b# estoppels, those &ho represent thesel!es as foring b# a corporation are
liable as
stockholders to third persons
a. )rst stateent is true, second is false c. both are false b. )rst is false, second is true d. both are true *3. +he follo&ing are reuireents for incorporators. 6hich is not"
a. a/orit# of the ust be residents of the 'hilippines b. a/orit# of the ust be of legal age
c. the# ust be a natural persons
d. the# ust not less than )!e nor ore then )fteen in nubers
*. +o elect the o4cers of the corporation, a/orit# of the directors in a eeting constituting a
uoru is
su4cient
(ebers of nonstock corporation a# all be &ithout !oting rights if pro!ided for the in the
articles of
incorporation or b# la&s
a. both stateents are true c. onl# )rst is false
b. both are true d. onl# )rst is true
*8. n three of the follo&ing corporate acts, dissenting stockholders ha!e appraisal right ecept a. erger or consolidation of corporations
b. increase or decrease of capital stock, incurring, creating or increasing bonded indebtedness c. in!estent of corporate funds in another business or corporation or for an# purpose other than
priar# purpose
d. disposition of all or substantiall# all of the corporate assets
*9. Stockholders &ith or &ithout !oting rights a# !ote on the follo&ing atters ecept a. aendent of the articles of incorporation
b. disolution of the corporation c. election of directors
d. adoption and aendent of b# la&s
50. +he nationanlit# of the corporation deterined b# the nationalit# of the stockholders in control
of the sae
is called:
a. doicile test c.anageent test
b. incoporation test d. control test
51. Directors and o4cers &ho appro!e illegal or fradulent acts or guilt# of gross negligence or bad faith in conducting the a7airs of the corporation are liable /ointl# and se!erall#.
n case of issuance of &atered stock , onl# directors and o4cers &ho appro!ed the sae are
liable for the
&ater to the corporation and creditors but not the stockholders &ho recei!ed the shares. a. both stateents are true c. onl# )rst is false
b. both are true d. onl# )rst is true
52. Directors as a rule are entitled to copensation as directors but not eceeding ten percent of
the net incoe
before ta of the preceding #ear
All pri!ate corporations in the 'hilippines shall be incorporated under the Corporation Code,
&hich is a
general la&.
a. both stateents are true c. onl# )rst is true
b. both are true d. onl# )rst is false
5. >or the cintract bet&een the corporation and its directors, o4cers or trustees a# not be
!oidable, the
follo&ing are conditions ecept
a. the presence of the director or trustee is not necessar# for the uoru b. thec ontarct is fair and reasonable under the circustances
c. the !ote of the director or trustee is not neccessaru for the appro!al of the contract d. rati)cation b# a/orit# of the outstanding capital stock or ebers
5*. edeeable shares a# be taken up or purchased b# the corporation e!en in the absence of surplus pro)ts
+reasur# shares a# be reissued for a reasonable price e!en belo& par !alue a.both stateents are false c. onl# )rst is true
b. both are true d. onl# )rst is false
55. n the case of shares o&ned in coon or b# t&o or ore stockholders, the consent of either
is enough to
!ote the sae.
+he pledgee or ortgagee shall ha!e the right to !ote the shares unless stipulated other&ise a. both stateents are false c. onl# )rst is true
b. both are true d. onl# )rst is false
53. Contracts bet&een corporations &ith interlocking directors shall onl# be !oidable and not !oid
because of the
noinal interest of the director
(anageent contracts shall be appro!ed b# 2- !ote fo the directors and stockholders of
both anaged
and anaging corporation.
a. onl# )rst stateents is false c. both are false
b. both are true d. onl# )rst istrue
5. acanc# in the board of directors can be )lled up b# the reaining directors in the follo&ing cases ecept
a. increase in the nuber of directors c. death of director
b. resignation letter d. none of the abo!e
58. +he follo&ing are reuisites for de facto corporation ecept one a. !alid la& under &hich it is incorporated
b. actual use of corporate po&ers c. attept in good faith to organi;e
d. nonissuance b# the S<C of certi)cate of incorporation
59. n open corporation, onl# in certain case do stockholders ha!e appraisal right of dissenting stockholders
&hile in close corporation stockholders can at an#tie for &hate!er reason deand pa#ent of
surrendred shares
n the forer , there is no restriction in the transfer of shares &hile in the,latter there is in the
for of the
right of )rst refusal of the coporation or stockholders
a. both stateents is true c. onl# )rst is true
b. both are false d. onl# )rst is false
30. +he b# la&s of a corporation a# pro!ide that the stockholders or trustees eeting a# be
outside of the
'hilipines
+he code b# la&s a# be )lled &ith the S<C either before or after incorporation a. onl# )rst is true
b. onl# )rst is false
PART II QUIZ ON CORPORATION
A,,C,D,< and >, >ilipino citi;ens, X,E,F,Aerican citi;ens , and and S Bapanese citi;ens agreed to for a doestic corporation &ith an authori;ed capital stock of '1,000,000.00 di!ided into one hundred thousand G100,000H shares &ith a par !alue of '10.00 per share . subscribed for 2,000
shares and he paid 12,000.00. X
subscribed for 5,000 shares he issued a proissor# note in the aount of '0,000.00.> /oined
the group but he
did not subscribed for an# nuber of sharesG+his is the basis of os. 1H 1. Can the aforeentioned persons !alidl# for a doestic corporation
a. #es pro!ided a/orit# of the are resident of the 'hilippines b. #es because a/orit# of the are >ilipino citi;ens
c. #es pro!ided the# &ill subscribed for at least 25% of the authori;ed capital stock d. no beuase foreigners cannot be incorporators of a doestic corporation
2. @o& uch at least should be subscribed b# the incorporators at the tie of incorporation"
a. '00,000.00 c. '200,000.00
b. '50,000.00 d. '250,000.00
. @o& an# shares shall be paid up b# the incorporators"
a. '325,000 c. '3,250
b. '32,500 d. '325
*. Can deand for a certi)cate of stock of 1,200 shares
a. no because certi)cate of stock shall be issued onl# after pa#ent of the full aount of the subscription
b. no because the 800 shares subscribed b# hi are alread# delinuent
c. #es because he can surrender the 800 shares the corporation and liit his subscription to
1,200 shares
onl#
d. #es because he has paid 12,000.00 representing the fulll !alue of 1,200 shares 5. s the pa#ent of X for his subscription !alid
a. #es pro!ided the proissor# note is con!erted into cash on its aturit# b. #es as long as other corporators shall accept his proissor# note c. no because the actual cash paid to the corporation can be !alid pa#ent d. ne because shares of stock shall not be issued in echange of proissor# note 3. Can > be an incorporator of the corporation
a. #es pro!ided the other incorporators do not ob/ect
b. no because an incorporator ust ha!e substantial share in the corporation
c. #es because as a )lipino , he has the right to /oin the foration of a doestic corporation d. no, because he does not o&nnat least one share of the capital stock of the corporation . Assuing that the corporation has been organi;ed , ho& an# shares can !alidl# !ote in the election
of the ebers of the board of directors a. 1,200 shares because these ha!e 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. an# of the abo!e
8. 6hich of the follo&ing stateent is correct"
a. to sell lease, ortgage or other&ise dipose of all or soe of the corporate assets, a/orit#
!ote of
directors or trustees and a/orit# of the outstanding capital stock or to the ebers is needed
b. to enter into anageent contract, a/orit# !ote of the board of directors and a/orit# of
the outstanding
capital stock or the ebers is reuired
c. to issue di!idends , a/orit# !ote of the uoru of the board of directors and a/orit# of the outstanding
capital stock is reuired
d. to in!est corporate funds in another corporation or business , a/orit# !ote of directors or trustees
and a/orit# of the outstanding capital stock or the ebers thereof.
9. A. t is illeagl to issue &atered stocks.@o&e!er , stock issues &ithout an# considerstion at all is /usti)ed
if such issues are bonus shares
. A director is reo!ed fro the o4ce b# a !ote of the stockholders holding at least 2- of the outstanding capital stock .+he !acanc# occassioned b# such reo!al can be )lled b# the
!ote of the
a/orit# of the reaining directors if still constituting &ith uoru a. onl# letter a is correct c. onl# letter b is correct b. both letters are correct d. both letters are &rong
10. 6hich of these conditions copl# &ith the iniu reuireents of la& to corporate foration
Authori;ed Subscirbed 'aidup
Capital Capital Capital
a. '3*,000 '13,000 '*,000
b. '100,000 '25,000 '12,500
c. '200,000 '10,000 '10,000
d. '200,000 '50,000 '10,000
11. 6hich of the follo&ing conditions &ill allo& corporate foration and S<C registration
Authori;ed Subscirbed 'aidup
Capital Capital Capital
a. '90,000 '12,500 ',125.00
b. '100,000 '20,000 '5,000
c. '100,000 '25,000 '5,000
d. '30,000 '15,000 '3,000
12. +he auhtori;ed capital stock of a proposed corporation is '1,000,000 di!ided into 10,000
shares &ith a par
!alue of '100 each. +he iniu aount of subscription that ust be paid is a. '32,500 or 325 shares c. '5,000 or 50 shares b. '50,000 or 500 shares d. '85,500 or 85 shares 1.6hich of the follo&ing &ill ualif# as incorporator in a corporation
a. a inor c. partnership
b. a corporation d. foreigner
1*. +he Corporation Code reuires that
a. at least one a/orit# of the directors are residents of the 'hilippines b. all of the directors or trustee are residents of the 'hilippines c. all of the directors or trustees are citi;en of the 'hilippines d. a/orit# of the directors are citi;ens of the 'hilippines
15. +he !oting proportion reuired to enable a corporation to in!est its fund in an# other
corporation or
business or for an# purpose other than its priar# purpose
a. 2- !ote of the board of directors and rati)ed b# a/orit# of the outstanding capital stock b. a/orit# !ote of the board of directors and rati)ed b# a/orit# of the outstanding capital stock
c. a/orit# of the !ote of board of directors and rati)ed b# 2- of the out standing capital stock
d. a/orit# of the !ote of board of directors and rati)ed b# 2- of the stockholders
13. 6ateredstock is a share of stock issued b# a corporation for a consideration less than its par or issued
!alue or for a consideration in an# for other than cash , !alued in ecess of its par !alue.n
this regard
a. the agreeent that it shall be paid for less than its par !alue is illegal and !oid and cannot be enforced
b. the issue itself is !oid
c. the subscriber shall not be liable for full par !alue d. ans&er not gi!en
1. Corporate disolution a# take place b# !oluntar# inaction &hich &ill result in the cessation of its
corporate po&ers and the corporation shall be deeed dissol!ed.Such !oluntar# inaction a# result fro
a. naction of the corporation through its failure to forall# organi;ed and coence &ith the transcation
or its business or the construction of its &ork &ithin t&oG2H #ears fro the date of its incorporation
b. >ailure of the coporation to subit the annual reports b# the S<Cfor a period of )!e G5H #ears
c. (erger of consolidation &ith respect to absorbed corporation d. one of the abo!e
18. =ne of the follo&ing is a ground for the suspension or re!ocation of the certi)cate of incorporation b#
the S<C
a. if the corporation fails to coence and start to operate and the failure is due to cause be#ond its control
b. if the corporation has coenced its business transaction after&ards ceased operations continousl# for
for a period of at least 5 #ears
c. if the corporation has coence its operations and subseuentl# becoe continousl#
inoperati!e for t&o
#ears
d. none of the abo!e
19.+he follo&ing are corporate acts in &hich a stockholder of a corporation shall hace the right to
dissent and
deand pa#ent of the fair !alue of his shares of stock ecept one
a. in case of an aendent to the articles of incoporation &hich has the e7ect of changing or restricting
the right of an# stockholder
b. in case of incurring, creating or increasing bonded debts c. in case of erger or consolidation
d. incase of sale, lease, ortgage or other diposal of all or an# corporate assets 20. 6hich of the follo&ing stateents is not correct
a. in case of erger or consolidation
b. in case of incurring , creating, or increasing bonded debts
c. in case of sale, lease , ortgage, or other disposal of all corporate assets
d. in case of an aendent of articles of incorporations &hich in e7ect of changing , restricting the
rights of an# holder
21. Subscriber ?lo& has a total 1,000 delinuent sales atb'10 par !alue, to be sold at public auction sale.
+otal aount reco!erable includes : total aount of the delinuent shares 10,000 and total epenses
of the sale '5,000.6ho &ill be declared the highest bidder aong the follo&ing bidders in the public sale
a. , &ho is &illing to pa# the '15,000 at 920 shares b. a , &ho is &illing to pa# the '15,000 at 950 shares c. n, &ho is &illing to pa# the '15,000 at 90 shares d. g, &ho is &illing to pa# the '15,000 at 900 shares
22. +he follo&ing are &a#s of enforcing pa#ent of unpaid subscription , &hich is the eception a. )ling a court action to reco!er unpaid subscription
b. sale at a public auction of delinuent stocks c. den#ing delinuent stock cash di!idends
d. den#ing delinuent stock the right to !ote and !oted upon
2.A corporate doctrine &hich the stockholders are not personall# liable for corporate debts a. piercing the !eil of corporate )ction c. trust fund and doctrine b. separate legal entit# d. corporate opportunit#
2*. A stockholder does not appro!e the action taken b# the oard of Directors in proposing to
aend articles
of incorporation is not allo&ed to &ithdra& fro the corporation in one of the follo&ing instances
a. creating , incurring , increasing or decreasing an# bond indebtedness b. shortening or prolonging corporate eistence
c. in!esting of corporate funds in another corporation d. erger or consolidation
25. 6hich of the follo&ing stateents is not correct"
a. the sale of delinuent stock at public auction can be stopped if the board of directors stop
the sale
for !alid reasons
b. pa#ent of unpaid subscription a# not be enforced b# appl#ing cash di!idends to delinuent
stockholders
c. in delinuenc# sale at public auction the highest bidder is one &ho o7ers to pa# the full
aount of the
balance of the subscription plus interest and epenses of the sale for the highest nuber of shares
d. the board of directors shall order , b# resolution in the sale of delinuent stock specif#ing the
aount die
plus accured interest , the place, the tie and the date of sale 23. =ne of the follo&ing does not reuire stockholders$ appro!al
a. change of corporate nae b. erger or consolidation c. declaration of cash di!idend
d. in!estent of corporate funds outside ain purpose of the corporation 2. 6hich of the follo&ing is the disad!antage of foring a corporation"
a. the subser!ience of inorit# stockholders to the &ishes of the a/orit# sub/ect onl# to euitable
restraints
b. the free and read# transferabilit# of o&nership
c. the shareholders are not liable for the debts of the business
d. the o&ner of succession the eistence of the entiret# is not a7ect b# the personal
!icissitudes of the
indi!idual stockholders
28. n a corporation, t&o or ore positions a# be held concurrentl# b# the sae person, ecept
that no person
shall act as
a. president and chairan of the board c. secretar# and treasurer b. president and secretar# d. treasurer and director 29. +he follo&ing are uali)cations of corporate diretors , ecept
b. ust nit be con!icted b# the )nal /udgeent &ith iprisonent at least 3 #ears and coited
&ithin 5 #rs. prior to election c. a/orit# are citi;ens of the 'hilippines
d. o&nership of shares ust be recorded in the books of the corporation
0. +he follo&ing are reuisites ecept one, for !alid declaration and-or issuance of stock di!idend
a. eistence of original I unissued shares b. eisitng unrestricted retained earning
c. di!idends declaration b# the board of directors and appro!ed b# 2- !ote of the outstanding capital stock
d. it is issued to increase the authori;ed capital
1. 'urel# ultra !ires acts of the o7ersof a corporation to in!est corporate funds in another
business or
corporation , i.e.,acts no contrar# to la& , orals , publics polic# a# be rati)ed b#: a. a/orit# of the !ote of all ebers of the board
b. stockholders &ith J of !oting po&er c. stockholders holding 2- of the !oting po&er d. a/orit# !ote of the board present
2. euireent to e7ect the aendent of the b# la&s of a corporation a. a/orit# of the !ote of board of directors
b.a/orit# of the outstanding capital c. !ote of 2- of the outstanding capital stock
d. a/orit# !ote of the board of directors and a/orit# !ote of the outstanding capital stock .+he interest or right of the stockholders in the corporations pro)ts or in the net assets of
corporation on
dissolution is:
a. shares of stock c. capital
b. di!idend d. certi)cate of stock
*. +he right of corporation to eist as /uridical person during its ter as stated in the articles of incorporation
despite the death of an# of its stockholders is:
a. right of eistence c. preepti!e right b. right of succession d. right of redeption 5. +he follo&ing cannot be the incorporator of a corporation
a. a corporation to organi;ed under philippine la&s b. a resident alien
c. a arried &oan &ithout the consent of her husband e!en if the pa#ent of shares is paraphernal
propert#
d. subscirber &ho pa#s less than 25% of his subscription 3. =ne of the characteristic s of treasur# shares is that
a. the# a# be issued or sold again b. the# ha!e status of outstanding shares
c. the# a# participate in the eeting of corporation as !oting shares d. the# are entitled to di!idends
. 6hich of the follo&ing is a ground for the suspension or re!ocation of the certi)cate of
incorporation b#
the S<C
a.if the corporation has coenced its business and subseuentl# becoe continousl# inoperati!e for t&o #ears
b. if the corporation has ceased operations continousl# for a period of at least )!e #ears c. if the corporation did not coence its business transactions for 2 #ears
d. if the corporation did not forall# organi;e after incorporation
8. 6atered stocks are shares of stock issued b# a corporation for a consideration less than its par or
issued !alue or for a consideration in an# for other than cash , !alued in ecess of its par
!alue .n this
regard
a. the agreeent that it shall be paid for less than its par !alue is illegal and !oid cannot be enforced
b. the subscriber or purchaser shall not be liable for the full par !alue of the shares c. the issue itself is !oid
d. the directors o4cers and stockholder ar /ointl# liable
9. +he distinction bet&een pro# and !oting trust is that in !oting trust: a. the trustee has no legal title to the shares of the transferring stockholder b. it is liited to an# particular eeting
c. the stock certi)cate is not cancelled
d. the trustee a# attend the stockholders eeting e!en in the presence of the stockholder trustor
*0. +he follo&ing defect &ill prelude the creation of e!en a de facto corporation a. the incorporators or a certain nuber of the are not residents of the 'hilippines b. lack of certi)cate of incorporation fro the S<C
c. nae of the corporation closel# resebles that of a preeisting corporation and a#
decei!e the public
d. there is actual use of corporate po&ers
A subcribed for 1,000 shares for AC corporation at the cost of 00 per share .@e initiall# paid 21,000.00. +he
subscription contract is silent as regards the pa#ent of balance .+he oard of Directors issued a call reuiring
all the stockholders &ith unpaid balance to pa# 50% of the balance on their subscription on
before Septeber
15,2003 .X failed to pa# on Septeber 15,2003 as reuired in the callG+his is the basis of the
uestion os. *1
to *H
*1. After Septeber 15,2003 but before the sale of his share of stock at public auction ho& uch
should X pa#
to the corporation
b. '9,000 plus interest d. '15,000 plus interest *2. @o& an# shares shall be o7ered for sale at the delinuenc# sale
a. 1,000 shares c. 500 shares
b. 00 shares d. 00 shares
*.Assuing that the aount due to the corporation is '9,50 and the follo&ing are the bids in the delinuenc#
sale, &ho is the highest bidder
a. ' ' 9,500 for 00 shares c. S' 9,50 for 3*8 shares b. ' 9,50 for 300 shares d. + ' 9,380 for shares
**. G1H +he eetings of the oard of Directors of a stock corporation a# be held an#h&ere in the &orld.
G2H +he eetings of the ebers of a nonstock corporation a# be held an#&here &ithin the 'hilippines
a. G1H is true but G2H is falseK c. both are false b. G1H is false but G2H is true d. both are true
*5. +he holders of non!oting shares shall ne!ertheless be entitled to !ote on the follo&ing atter a. increase or decrease of capital stock c. dissolution of the corporation b. adoption or aendent of b# la&s d. di!idend declaration
*3. G1H Appraisal right eans that &hene!er the capital stock of a corporation is increased and
ne& shares
of stock are issued , the ne& issue ust be )rst be o7ered to the stockholders in proportion to
their eisting
shareholdings before subscription are recei!ed fro the general public G2H Lltra !ires acts are illegal and therefore !oid
GH Certi)cate of incorporation is the docuent prepared b# the persons establishing the
corporation and
)led &ith the S<C containing the atter reuired b# the Corporation Code
a. onl# G1H is true c. all are false
b. onl# G2H is false d. all are true
*. G1H A foreign corporation doing business in the 'hilippines &ithout a license a# be sued but it cannot sue.
G2H A &ritten deand for pa#ent of the fair !alue of the shares ade in the eercise of the
appraisal right
&ill suspend the stockholders rights
a.G1H is false but G2H is true c. both are true b. G1H is true but G2H is false d. both are true
*8. An indi!idual or a doestic corporation designated in a &ritten po&er of attorne# ,b# a foreign
corporation authori;ed to transact business in the 'hilippines , on &ho an# suons and
other legal
processes a# be ser!ed in all actions or other legal proceeding against such corporation is called
a. resident director c. recei!er
b. resident agent d. trustee
*9. G1H Corporators are incoporators G2H ncorporators are corporators a. G1H is &rong but G2H is correct c. both stateents are correct
b. G1H is correct but G2H is &rong d. both stateents are &rong
50. 6hich of the follo&ing stateent is correct
a. eleeos#nar# corporation is one established for business or pro)t b. corporaiton aggregate is one established for religious purposes c. ci!il corporation is one established under the la&s of the 'hilippines d. Ma# corporation is one estalished for purposes other than religious
