MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
PART I – MULTIPLE CHOICE. Select the best answer by writing the letter of your choice.
1. The following are the attributes of a corporation. Which is not?
A. It is an artificial being
B. It has the right of succession
C. It has the powers, attributes, and properties expressly authorized by its articles of
incorporation
D. It is created by operation of law
2. Preferred shares cannot vote on the proposal to:
A. To include other corporate officers in the corporation’s by-laws
B. To issue corporate bond
C. To shorten the corporate term
D. All of the above
3. Lucia, the proprietor of a fleet of fifty taxicabs decides to register and adopt as her business
name “Lucia Transport Co., Inc.” Is May this be allowed?
A. No, since the name Lucia is a generic name and not suitable for registration
B. No, it would be deceptive since Lucia is a proprietor and not a corporation
C. Yes, since doing so would give her company a corporate identity
D. Yes, since choosing a name is a prerogative of the owner and is valid so long as it is not
against the law, morals or confusingly similar to other registered names.
4. The following are the elements of a de facto corporation. Which is not.
A. Existence of a valid law under which it may be incorporated
B. Attempt in good faith to incorporate
C. Execution of the articles of incorporation and adoption of bylaws
D. Actual use or exercise in good faith of corporate powers
5. The following are defects in the formation of a corporation which may give rise to a de facto
existence of a corporation. Which is not?
A. The purpose for which the corporation is to be incorporated is illegal
B. The treasurer’s affidavit on the amount of subscription and payment is false
C. The required percentage of Filipino ownership in corporations engaged in nationalized
activities is not complied with
D. Natural person incorporators misrepresented their age
6. Which of the following is a requisite for a valid election of the directors or trustees of a
corporation?
A. There must be a notice of meeting sent to the stockholders in accordance with the form and
mode under the bylaws
B. The meeting must be presided by the President of the corporation
C. The election must be by ballot
D. The nominees receiving the majority of votes shall be duly elected as directors or trustees
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
7. The following are the qualifications of a Secretary of a corporation. Which is not?
A. The Secretary must be a director of the corporation
B. The Secretary must possess of all the qualifications and none of the disqualifications under
the bylaws of the corporation
C. The Secretary must be a Filipino citizen
D. The Secretary must be a resident of the Philippines
8. Which of the following is not a qualification of a President of a corporation?
A. The President must be a stockholder of the corporation
B. The President must be a director of the corporation
C. The President must possess of all the qualifications and none of the disqualifications under
the bylaws of the corporation
D. The President must be a resident of the Philippines
9. Questions of policy and management are left to the sound discretion and honest decision of the
officers and directors of a corporation. The board is the business manager of the manager of the
corporation, and so long as it acts in good faith, its orders are not reviewable by the courts.
A. Doctrine of apparent authority
B. Business judgment rule
C. Separate juridical personality rule
D. Limited liability doctrine
10. X is a director in MTC Corp who was elected to a one-year term on February 1, 2020. On April
11, 2020, X resigned and was replaced by R, who assumed as director on May 17, 2020. On November
21, 2020, R died. S was then elected in his place. Until which time should S serve as director.
A. April 11, 2021
B. February 1, 2021
C. May 17, 2021
D. November 21, 2011
11. Which of the following is a requisite to create an Emergency Board
A. The vacancy does not prevent the remaining directors from constituting a quorum
B. Emergency action is required to prevent loss or damage to the corporation
C. The vacancy may be temporarily filled from among the officers of the corporation
D. The appointment must be made by the majority vote of the remaining directors or trustees
12. Which of the following is not a legitimate corporate purpose where a corporation is allowed to
acquire its own shares:
A. To eliminate fractional shares arising out of stock dividends
B. To collect or compromise an indebtedness to the corporation arising out of the unpaid
subscription, in a delinquency sale, and to purchase delinquent shares sold during the said sale
C. To reduce the number of issued and outstanding shares of a corporation
D. To pay dissenting or withdrawing stockholders
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
13. The following are the requisites for a valid donation by a corporation. Which is the not?
A. The donation must be reasonable
B. It must be for a valid purpose
C. It must be declared for tax purposes
D. The donation must bear a reasonable relation to the corporation’s interest
14. A corporation cannot exercise powers except those expressly or impliedly given to it.
A. Theory of specific capacity
B. Theory of limited capacity
C. Theory of separate juridical capacity
D. Theory of apparent authority
15. What is the voting requirement in the appointment of corporate officers?
A. At least majority of the board
B. At least majority of the board and majority of the stockholders
C. At least majority of the board and 2/3 of the outstanding capital stock
D. Majority of the quorum of the board
16. What is the voting requirement in the removal of directors/trustees?
A. At least majority of the board
B. At least majority of the board and majority of the stockholders
C. At least majority of the board and 2/3 of the outstanding capital stock
D. 2/3 of the outstanding capital stock
17. What is the voting requirement in the amendment of Articles of Incorporation?
A. At least majority of the board
B. At least majority of the board and majority of the stockholders
C. At least majority of the board and 2/3 of the outstanding capital stock
D. 2/3 of the outstanding capital stock
18. What is the voting requirement in the adoption of bylaws?
A. At least majority of the board
B. Majority of the stockholders
C. 2/3 of the outstanding capital stock
D. Majority of the quorum of the board of directors
19. What is the voting requirement in the amendment of bylaws?
A. At least majority of the board
B. At least majority of the board and majority of the stockholders
C. At least majority of the board and 2/3 of the outstanding capital stock
D. 2/3 of the outstanding capital stock
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
20. What is the voting requirement in the declaration of cash dividends?
A. At least majority of the board
B. At least majority of the board and majority of the stockholders
C. At least majority of the board and 2/3 of the outstanding capital stock
D. At least majority of the quorum of the board
21. The following are the instances when a stockholder’s pre-emptive right does not apply.
A. Denial of pre-emptive right in the corporate bylaws
B. Waiver of such right by the stockholder, whether express or implied
C. Shares issued in compliance with the laws requiring minimum stock ownership by the public
D. Issuance of share in payment of debt made in in good faith, if approved by the stockholders
representing 2/3 of the outstanding capital stock
22. In the following instances, a corporation may acquire its own shares despite the absence of
unrestricted retained earnings. Which of the following is not among these instances?
A. Redemption of redeemable shares
B. Donation of shares to the corporation
C. To eliminate fractional shares
D. Conveyance of shares to the corporation in payment of a debt
23. The Articles of Incorporation of AAA Corporation was approved by the Securities and Exchange
Commission (SEC). After the receipt of the Certificate of Approval from the SEC, AAA Corporation
decided to immediately start the operation of its business despite the fact that it has no approved By-
Laws. What is the legal status of the AAA Corporation?
A. A de jure corporation
B. A de facto corporation
C. A corporation by estoppel
D. An unregistered corporation
24. X, the President of ZZZ Corporation, was authorized by the Board of Directors of ZZZ Corporation
to obtain a loan from YYY Bank and to sign documents in behalf of the corporation. X personally
negotiated for the loan and got the loan at very low interest rates. Upon maturity of the loan, ZZZ
Corporation was unable to pay. Which statement is most accurate?
A. Because X was personally acting in behalf of the Corporation, he can be held personally liable
B. X, as President, cannot be personally held liable for the obligation of the corporation even
though he signed all the loan documents, because the loan was authorized by the Board
C. YYY Bank can choose as to who it wants to hold liable for the loan
D. If ZZZ Corporation cannot pay, X can be held subsidiarity liable
25. A corporation generally can issue both par value stock and no par value stock. These are all fixed
in the Articles of Incorporation of the corporation. Which of the following corporations may not be
allowed to issue no par value shares?
A. Insurance companies
B. Banks
C. Trust companies
D. Educational Institutions
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
26. Certain corporate acts require only the majority of the quorum of the board of directors or
trustees. Which of the following is the exception?
A. Declaration of dividends
B. Appointment of corporate officers
C. Entering into a management contract
D. Fixing the issued price of no-par value shares
27. X subscribed 10,000 shares in the capital stocks of AAA Corporation. He paid 50% of the 10,000
shares. X asked the Corporate Secretary to issue him the corresponding stock certificate representing
the 50% of what he already paid. The Corporate Secretary of the corporation refused. Was the
Corporate Secretary correct?
A. The Corporate Secretary is correct because the Corporation Code provides that no certificate
of stock shall be issued to a subscriber until the shares as subscribed have been fully paid
B. The Corporate Secretary cannot refuse because a Stock Certificate can be issued
corresponding to the percentage of shares which were paid
C. The Corporate Secretary cannot refuse because a Certificate of Stock can be issued provided
it is indicated in the Certificate the actual percentage of what has been paid
D. The Corporate Secretary cannot refuse because it is his legal duty to issue a stock certificate
corresponding to the number of shares actually subscribed regardless of the actual payment
28. XXX Corporation and YYY Corporation have agreed to be merged into one corporation. To
facilitate the merger, both corporations agreed that the merger be made effective on May 31,2020. The
Securities and Exchange Commission (SEC) approved the Articles of Merger on June 30, 2020. Which
statement is most accurate?
A. The effective date of the merger is May 31, 2020, the date stipulated by the parties as the
effective date
B. The effective date of the merger is the date of the approval of the Articles of Merger by the
SEC
C. The effective date of the merger would be the date approved by the Board of Directors and
the stockholders
D. The stockholders and the Board of Directors can set the effective date of the merger anytime
after the approval of the SEC
30. Holders of nonvoting shares shall be entitled to vote on the following matters, except:
A. Amendment of the articles of incorporation
B. Merger or consolidation of the corporation with another corporation or other corporations
C. Sale, lease, exchange, mortgage, pledge, or other disposition of corporate property
D. Adoption and amendment of bylaws
31. Refers to shares of stock that have been issued and fully paid for but subsequently reacquired
by the issuing corporation through purchase, redemption, donation or some other lawful means.
A. Redeemable shares
B. Treasury shares
C. Watered stock
D. Fractional shares
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
32. It is an attribute of a corporation that regards a corporation as a juridical person, with a legal
personality separate and distinct from the persons composing it.
A. It is an artificial being
B. It has the right of succession
C. It has the powers, attributes, and properties expressly authorized by law
D. It is created by operation of law
32. In which of the following instances does the doctrine of piercing the veil of corporate fiction
does not necessarily apply?
A. When corporate fiction is used as a vehicle for the evasion of an existing obligation
B. When one corporation owns 100% of the shares of stock of another corporation
C. Where a corporation is a mere business conduit of another corporation
D. When the corporate entity is used to justify a wrong
33. In a special meeting called for the purpose, 2/3 of the stockholders representing the outstanding
capital stock in ABC Co. authorized the company’s Board of Directors to amend its Bylaws. By majority
vote, the Board then approved the amendment. Is this amendment valid?
A. No, since the stockholders cannot delegate their right to amend the Bylaws to the Board
B. Yes, since the majority votes in the Board was sufficient to amend the Bylaws
C. No, because the voting in the Board should have been by the majority of a quorum
D. Yes , since the votes of 2/3 of the stockholders and majority of the Board were secured
34. A corporation’s articles of corporation should contain the following, except:
A. The place where the principal office of the corporation is to be located, whether within or
outside the Philippines
B. The specific purpose or purposes for which the corporation is being formed
C. The term for which the corporation is to exist, if the corporation has not elected perpetual
existence
D. An arbitration agreement may be provided in the articles of incorporation
35. Is merger a mode of dissolving a corporation?
A. No, because in merger, the merging corporations survive under a new corporate entity
B. Yes, because all merging corporations are dissolved
C. No, because a corporation is only dissolved either upon the expiration of its corporate term or
when its corporate term is shortened
D. Yes, because the absorbed corporation ceases to exist
36. The number of the Board of Trustees of a non-stock corporation shall be
A. Five only
B. Any number for as long as it is not less than five
C. Any number in multiples of five (5), for as long as it is not less than five (5) and no more than
fifteen (15)
D. Any number which may or may not be more than fifteen
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
37. It applies when persons assume to form a corporation and exercise corporate functions and
enter into business relations with third persons
A. De facto corporation
B. De jure corporation
C. Corporation by estoppel
D. Corporation by association
38. Corporate directors are personally liable if found guilty of gross negligence or bad faith in
directing the affairs of the corporation, which results in damage or injury to the corporation, its
stockholders or members, and other persons.
A. Doctrine of self-dealing board of directors
B. Doctrine of corporate opportunity
C. Doctrine of separate juridical entity
D. Trust fund doctrine
39. An action brought by a stockholder on behalf of the corporation to enforce corporate rights
against the corporation’s directors, officers or other insiders.
A. Individual suit
B. Corporate suit
C. Derivative suit
D. Representative suit
40. Where the wrong is done to a group of stockholders, as where preferred stockholders’ rights are
violated, a class suit will be proper for the protection of all stockholders belonging to the same group.
A. Individual suit
B. Corporate suit
C. Derivative suit
D. Representative suit
41. For a valid transfer of stocks, there must be strict compliance with the mode of transfer
prescribed by law. The requirements are the following, except:
A. There must be delivery of the stock certificate
B. The certificate must be endorsed by the owner or his attorney-in-fact or other persons legally
authorized to make the transfer
C. To be valid against third parties, the transfer must be recorded in the books of the
corporation
D. To be valid against third parties, the transfer must be recorded with the SEC
42. Refers to the preferential right of all stockholders of a stock corporation to subscribe to all issues
or disposition of shares of any class, in proportion to their respective shareholdings.
A. Appraisal right
B. Right to vote
C. Pre-emptive right
D. Voting right
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
43. Refers to the fixed arbitrary amount specified in the articles of incorporation and in stock
certificate.
A. Par value
B. Stated value
C. Book value
D. Fair value
44. The issued price of no par value shares may be determined by the following, except:
A. Board of directors pursuant to the authority conferred by the articles of incorporation
B. Board of directors pursuant to the authority conferred in the bylaws
C. By the stockholders representing at least 2/3 of the outstanding capital stock at a meeting
duly called for the purpose
D. By the stockholders representing at least majority of the outstanding capital stock at a
meeting duly called for the purpose
46. The following are the advantage of a corporation over other forms of business organizations,
except one. Which one is it?
A. It can continue to exist despite changes in corporator’s composition
B. Stockholders are not liable for the obligations of the corporation beyond their subscription
C. The ability of the stockholders to transfer shares without having to secure the consent of the
corporation may result in persons having conflicting interests with the corporation
D. It can mobilize more capital through the issuance of its shares
47. The capital stock of ABC Corporation is divided into common shares and preferred shares.
Preferred shares are preferred as to dividends and common shares are those shares which have the
regular and ordinary attributes of a share of a corporation. Which statement is most accurate?
A. This kind of classification may not be allowed or else it will violate the Doctrine of Equality of
shares
B. Classifications of shares may be allowed for as long as it is clearly stated as such in the Articles
of Incorporation of the Corporation
C. Classifications of shares is mainly for business purpose to attract investors.
D. Classifications of shares may be allowed with the approval of the stockholders and the Board
of Directors
48. X sold all his shares in AAA Hotel Corporation to Y. X owns 99% of AAA Hotel Corporation. As the
new owner, Y wanted a reorganization of the hotel which is to include primarily the separation of all
existing employees and the hiring of new employees. Which statement is most accurate?
A. With the change in ownership, in effect there is a new juridical entity and therefore all
employees are considered separated
B. Despite the change in shareholder, there is actually no change in the juridical entity and
therefore existing employees can not automatically be considered separated
C. Y, as the new shareholder, has the right to retain only those employees who in his judgment
are qualified
D. For as long as the existing employees are given their separation pay, they can be terminated
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
49. Which of the following statements regarding board of directors and trustees is correct?
A. The number of directors of a corporation may be more than fifteen
B. The number of trustees of a corporation may be more than fifteen
C. Majority of the directors in a corporation must be residents of the Philippines
D. Majority of the trustees in a corporation must be residents of the Philippines
50. The following kinds of shares are not included in the determination of the majority of
outstanding capital stock to elect directors of a stock corporation. Which of the following may be
included?
A. Unpaid shares
B. Non-voting shares
C. Delinquent shares
D. Treasury shares
51. STATEMENT I. The President of a corporation cannot hold concurrently any other position in the
corporation
STATEMENT II. The position of treasurer and secretary may be held concurrently by one person
A. Only Statement I is True
B. Only Statement II is True
C. Both Statements are True
D. Both Statements are Not True
52. A stockholders’ meeting for approval called for the purpose is required under the following,
except:
A. Extension or shortening of corporate terms
B. Increase or decrease of capital stock
C. Merger or consolidation
D. Deny a stockholder’s pre-emptive right
53. The SEC may summarily order a corporation to immediately cease and desist from using a name
and order it to change its corporate name under the following, except:
A. It is not distinguishable from a name already reserved for the use of another corporation
B. It is already used by another entity
C. Name is contrary to law
D. Name is already protected by law
54. Does a change in the corporate name make a new corporation?
A. Yes, the name of the corporation is its identity, therefore a change in the name ipso facto
creates a new corporation
B. No, a change in the corporate name has no effect on the corporation’s identity, its property,
rights and obligations
C. Yes, following the separate juridical personality doctrine, a change in corporate name creates
a new juridical personality
D. No, because a corporation, once it has adopted a name cannot change its name unless it
creates a new corporate entity
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
55. STATEMENT I. Within forty five (45) days after the election of the directors, trustees and officers
of the corporation, the secretary, or any other officer of the corporation, the secretary, or any
other officer of the corporation, shall submit to the Commission, the names, nationalities,
shareholdings, and residence addresses of the directors, trustees and officers elected.
STATEMENT II. The non-holding of elections and the reasons therefor shall be reported to the
Commission within sixty (60) days from the date of the scheduled election.
A. Only Statement I is True
B. Only Statement II is True
C. Both Statements are True
D. Both Statements are Not True
56. DDS Corporation has capital stock of Php1,000,000 divided into 1,000,000 shares with a par
value of Php1 per share. It is fully subscribed and paid up. Can DDS Corporation reduce it
Php500,000?
A. Yes, provided it first pays its creditors so no creditor will be prejudiced from the reduction in
capital stock of DDS Corporation
B. No, following the trust fund doctrine, the capital stock of a corporation must be kept intact
for the protection of its creditors
C. Yes, the capital stock of a corporation are its assets, therefore may be used by the corporation
for any lawful purpose
D. Yes, provided it complies with the formalities provided under the RCC such as the voting and
notice requirements
57. AAA Corporation is a wholly owned subsidiary of BBB Corporation. To support the business of
AAA Corporation, BBB Corporation agreed to give its corporate guarantee to the loan of AAA
Corporation. What is required so that the corporate guarantee will be valid?
A. It only requires the approval of the Board of Directors of BBB Corporation
B. The Articles of Incorporation must provide such power and be approved by the Board of
Directors
C. Providing corporate guarantee to another corporation is a necessary exercise of power of a
corporation
D. It would require both the approval of the Board of Directors and the stockholders on record
58. Y, as President of and on behalf of ABC Corporation, as a way to accommodate X, one of its
stockholders, endorsed the check issued by X. Which statement is most accurate?
A. It is an ultra vires act
B. It is a valid indorsement
C. The corporation will be held liable to any holder in due course
D. It is an invalid indorsement
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
59. Which of the following is an attribute of a proxy?
A. In writing, signed by the stockholder and notarized
B. No right to inspect corporate books
C. Vested with legal title to the shares
D. Valid for a period not exceeding five (5) years
60. Mar is a minority stockholder of Yellow Corporation. Noy is a member of the Board of Directors
of Yellow Corporation and at the same time its President. Mar believes that Noy is mismanaging Yellow
Corporation hence, as a stockholder and on behalf of the other stockholders, he wanted to sue Noy.
Which is statement is most accurate?
A. Mar can institute a derivative suit on behalf of himself as a stockholder
B. A derivative suit must be instituted on behalf of Yellow corporation
C. Derivative suit is an exclusive remedy that Mar can institute
D. Derivative suit is not the proper remedy in this situation
61. STATEMENT I. Contracts entered into between corporations with interlocking directors are
invalid.
STATEMENT II. Where a director, by virtue of such office, acquires a business opportunity which
should belong to the corporation, thereby obtaining profits to the prejudice of such corporation,
the director must account for and refund to the latter all such profits, unless said director risked
his own funds in the venture.
A. Only Statement I is True
B. Only Statement II is True
C. Both Statements are True
D. Both Statements are Not True
62. The following, except one, are the exceptional circumstances warranting the disregard of the
doctrine of separate personality:
A. When directors and trustees or, in appropriate case, the officers of a corporation vote for or
assent to patently unlawful acts of the corporation
B. When a director or officer has consented to the issuance of watered down stocks or who,
having knowledge thereof, did not forthwith file with the corporate secretary his written
objection thereto
C. When a director, trustee or officer has contractually agreed or stipulated to hold himself
personally and solidarily liable with the corporation
D. When director, trustee or officer is made, by specific provision of by-laws, personally liable for
his corporate action
63. Solidary liabilities may be incurred and the veil of corporate fiction may be pierced when
directors and trustees or, in appropriate case, the officers of a corporation do the following, except:
A. Vote for or assent to patently unlawful acts of the corporation
B. Act in bad faith or with gross negligence in directing the corporate affairs
C. Are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons
D. Habitual absence in the directors’ meeting
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
MANILA TYTANA COLLEGES
A Partner of the Metrobank Group
College of Accountancy and Management
FINALS EXAMINATION
First Semester, School Year 2020-2021
SUBJECT: BLAW 02 Business Laws and Regulations
COURSE, YEAR AND SECTION: BSA II-01
64. Bidder who shall offer to pay the full amount of the balance on the subscription together with
accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares or
fraction of a share.
A. Lowest bidder
B. Highest bidder
C. Winning bidder
D. Losing bidder
65. Any stockholder of a corporation shall have the right to dissent and demand payment of the fair
value of his shares in the following instances, except:
A. I case any amendment to the articles of incorporation has the effect of changing or restricting
the rights of any stockholder or class of shares, or of authorizing preferences in any respect
superior to those of outstanding shares of any class, or of extending or shortening the term of
corporate existence.
B. In case of increase or decrease of capital stock.
C. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or
substantially all of the corporate property and assets.
D. In case of merger or consolidation.
PART II. ESSAY
1. What is the doctrine of piercing the veil of corporate fiction? (10pts)
2. What is the alter ego theory? (5pts)
3. A, B and C are stockholders of ABC corporation. All of them have fully paid their subscription except B.
C is also a director of the corporation. The corporation experienced financial difficulties and failed to pay
its obligations to various creditors. It eventually became insolvent and closed business. It appears that
the company’s financial woes were due to the gross negligence and faith of the directors, including C.
May the creditors of the corporation run after A, B, and C? (10pts)
4. Cite the conditions or requirements for a corporation to declare dividends. (10pts)
PREPARED BY:ATTY. AL C. BONGHANOY, CPA
CHECKED BY:
PROGRAM HEAD DEAN, CAM
