Law on Corporations

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1. A corporation organized for religious purposes. d. Ecclesiastical

corporation
a. Corporation aggregate
b. Close corporation
c. Lay corporation
d. Ecclesiastical corporation

2. A class of stock entitling the holder to vote on corpo- a. Common stock

rate matters, to receive dividends after other claims
and dividends have been paid (specially to preferred
shareholders), and to share in assets upon liquida-
tion.

a. Common stock
b. Watered stock
c. Preferred stock
d. Treasury stock

3. A contract of the corporation with one or more of its c. Doctrine of

directors or trustees or officers. self-dealing board
of directors.
a. Doctrine of corporate opportunity
b. Doctrine of double compensation
c. Doctrine of self-dealing board of directors.
d. Doctrine of trust fund

4. A corporation created in strict or substantial confor- d. De jure corpora-

mity with the mandatory statutory requirements for tion
incorporation and the right of which to exist as a
corporation cannot be successfully attacked or ques-
tioned by any party even in a direct proceeding for
that purpose by the state.

a. De facto corporation
b. Government- owned or controlled corporation
c. Quasi- public corporation
d. De jure corporation

5. b. By-laws
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It constitutes charter or fundamental law of the cor-
poration.

a. Articles of incorporation
b. By-laws
c. Rules, regulation and discipline
d. None of the above

6. It is an artificial being created by operation of law, c. Corporation

having the right of succession and the powers, attrib-
utes and properties expressly authorized by law or
incidental to its existence.

a. Sole Proprietorship
b. Corporation Sole
c. Corporation
d. Partnership

7. A corporation incorporated under the laws of the b. Domestic Cor-

Philippines. poration

a. Corporation by prescription
b. Domestic Corporation
c. Foreign Corporation
d. Corporation by estoppel

8. A person shall be disqualified from being a director, d. All of the above.

trustee or officer of any corporation if, within 5 years
prior to the election or appointment as such, the per-
son was:

a. Found administratively liable for any offense in-

volving fraudulent acts.
b. Convicted by final judgment of an offense punish-
able by imprisonment for a period exceeding 6 years.
c. Found by a foreign court or equivalent foreign reg-
ulatory authority for acts, violations or misconduct.
d. All of the above.

9.
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Subscriptions to the capital stock of a corporation b. Trust funds doc-
constitute a fund to which the creditors have a right trine
to look for the satisfaction of their claims.

a. Doctrine of corporate opportunity

b. Trust funds doctrine
c. Doctrine of indivisibility
d. None of the above

10. It is a body created by- laws and composed of not less d. Executive com-
than three members of the board which, subject to the mittee
statutory limitations, has all the authority of the board
of directors to the extent provided in the by laws.

a. Officers committee
b. Trust committee
c. Board of committee
d. Executive committee

11. It is one where no part of its income is distributable a. Non-stock cor-

as dividends to its members, trustees, or officers. poration

a. Non-stock corporation
b. Stock corporation
c. Corporation by prescription
d. Corporation aggregate

12. Are shares of stock which have been issued and fully b. Treasury stock
paid for, but subsequently reacquired by the issuing
corporation by purchase, redemption, donation or
through some other lawful means.

a. Redeemable share
b. Treasury stock
c. Convertible share
d. Founder`s share

13. A written contract to purchase newly issued shares d. Subscription

of stock. contract

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a. Purchase contract
b. Sales contract
c. Redemption contract
d. Subscription contract

14. Is the book which records the names and address- d. Stock and trans-
es of all stockholders arranged alphabetically, the fer book
installment paid and unpaid on all stock for which
subscription has been made, and the date of payment
thereof.

a. Ledgers
b. Journals
c. Check book
d. Stock and transfer book

15. Refers to the continuation of a corporation`s legal a. Succession

status despite changes in ownership or manage-
ment.

a. Succession
b. Dissolution
c. Inheritance
d. Liquidation

16. It is a person who, apart from shareholdings and b. Independent di-

fees received from the corporation, is independent rector
of management and free from any business or oth-
er relationship which could, or could reasonably be
perceived to materially interfere with the exercise of
independent judgement in carrying out the responsi-
bilities as a director.

a. Dependent director
b. Independent director
c. Authorized director
d. Outstanding director

17. The following are the characteristics of a corporation,

except?
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d. Created by
a. It has the powers, attributes and properties ex- meeting of the
pressly authorized by Law or incident to its existence minds
b. It is an artificial being
c. It has the right of succession
d. Created by meeting of the minds

18. It is the preferential right of all stockholders of a stock c. Pre-emptive

corporation to subscribe to all issues or disposition right
of shares of any class, in proportion to their respec-
tive shareholdings.

a. Right to vote
b. Voting right
c. Pre-emptive right
d. Appraisal right

19. It means that a stockholder who dissented and voted d. Appraisal right
against the proposed corporate action, may choose
to get out of the corporation by demanding payment
of the fair market value of his shares.

a. Stockholders right
b. Right to liquidation
c. Pre-emptive right
d. Appraisal right

20. The requisites for a contract of the corporation with a. That in case of
one or more of its directors or trustees of officers to an officer, the con-
be validated the following except: tract has been pre-
viously authorized
a. That in case of an officer, the contract has been by the stockhold-
previously authorized by the stockholders. ers.
b. That the vote of such director or trustee was not
necessary for the approval of the contract.
c. That the presence of such director or trustee in the
board meeting in which the contract was approved
was not necessary to constitute a quorum for such
meeting.

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d. That the contract is fair and reasonable under the
circumstances.

21. The following are the qualifications of a board of d. Majority of the

directors/trustees, except: board of directors
or trustees must
a. The director or trustee must be legal age. be citizens of the
b. The director or trustee must be capacitated. Philippines.
c. for a stock corporation, ownership of at least 1
share of the capital stock of the corporation in his
own name. For a non-stock corporation, only mem-
bers of the corporation can be elected
d. Majority of the board of directors or trustees must
be citizens of the Philippines.

22. Stocks issued for a consideration less than the par or c. Watered stock
issued price thereof or any other than cash valued in
excess of its fair value.

a. Optional stock
b. Preferred stock
c. Watered stock
d. Founder`s stock

23. The following are instances when a corporation may a. To acquire

acquire its own shares, except: founder`s shares.

a. To acquire founder`s shares.

b. To pay dissenting or withdrawing stockholders en-
titled to payment for their shares under the provision
of the corporation code.
c. To collect or compromise an indebtedness to the
corporation, arising out of unpaid subscription, in a
delinquency sale, and to purchase delinquent shares
sold during said sale.
d. To eliminate fractional shares arising out of stock
dividends.

24. The factors for the application of the doctrine of pierc- c. Identity of direc-
ing the corporate veil are the following except: tors and officers
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a. Stock ownership by one or common ownership of

both corporation
b. The manner of keeping corporate books and
records
c. Identity of directors and officers
d. Identity of the stockholders

25. The following are limitations on no par value shares, c. It can be issued
except; for a consideration
of at least P 3.00
a. The entire consideration for its issuance consti-
tutes capital so that no part of it should be distributed
as dividends.
b. It is deemed fully paid and non-assessable
c. It can be issued for a consideration of at least P
3.00
d. It cannot be issued as preferred shares

26. The following are the requirements before one can c. None of the
qualify as a de facto corporation, except: above

a. The existence of a valid law under which it may be

incorporate
b. An attempt in good faith to incorporate
c. None of the above
d. Assumption of corporate powers

27. The following are the limitations of an executive com- d. Amendment or

mittee, except: repeal of any reso-
lution of the board
a. Amendment or repeal of by-laws or the adoption of
new by-laws.
b. Approval of any action for which shareholders'
approval is also required.
c. Filling of vacancies in the board.
d. Amendment or repeal of any resolution of the board

28. The following are limitations in the amendment of the b. The amend-
articles of incorporation, except: ment requires the
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vote or written
a. The amendment must be for legitimate purposes assent of stock-
and must not be contrary to the corporation code and holders represent-
special laws. ing majority of the
b. The amendment requires the vote or written as- outstanding capi-
sent of stockholders representing majority of the out- tal stock or majori-
standing capital stock or majority members if it be a ty members if it be
non-stock corporation. a non-stock corpo-
c. The original and amended articles together shall ration.
contain all provision required by law to be set out in
the articles of incorporation.
d. The amendment must be approved by a majority of
the board of directors or board of trustees.

29. The following are the requisites for the exercise of a d. Any dissenting
corporate power to invest corporate funds in another stockholders shall
corporation, except: have pre-emptive
right.
a. Ratification by the stockholders representing at
least 2/3 of the outstanding capital stock, or by at
least 2/3of the members in the case of non-stock cor-
porations, at a stockholder`s or member`s meeting
duly called for the purpose.
b. Written notice of the proposed investment and the
time and place of the meeting shall be addressed
to each stockholders or member by mail or served
personally.
c. Approval of the majority of the board of directors
or trustees.
d. Any dissenting stockholders shall have pre-emp-
tive right.

30. They may be purchased or taken up by the corpora- b. Redeemable

tion upon the expiration of a fixed period, regardless stock
of the existence of unrestricted retained earnings in
the books of the corporation, and upon such other
terms and conditions must also be stated in the cer-
tificate of stock representing said shares.

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a. Par Value stock
b. Redeemable stock
c. Class A stock
d. No par value stock

31. The purposes of proxies are the following, except: a. It assures the
presence of all.
a. It assures the presence of all.
b. For convenience.
c. It secures voting control.
d. It enables those who do not wish to attend the
meeting to protect their interest.

32. The retained earnings which have not been reserved b. Restricted re-
or set aside by the board of directors for some corpo- tained earnings
rate purpose.

a. Unrestricted retained earnings

b. Restricted retained earnings
c. None of the Above.
d. All of the above

33. The following are the requisites of the corporate pow- b. Only II is true
er to extend or shorten corporate term:
I. Approval by a 2/3vote of the board of directors or
trustees.
II. Ratification by the stockholders representing at
least 2/3 of the outstanding capital stock or by at
least 2/3 of the members in case of non-stock corpo-
rations.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

34. This is the maximum amount fixed in the articles of c. Authorized capi-
incorporation that may be subscribed and paid by the tal stock
stockholders of the corporation.

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a. Outstanding capital stock
b. Paid-up capital stock
c. Authorized capital stock
d. None of the above

35. The requirements for board meeting are the following, c. Decision of the
except: majority of all the
members of the
a. Presence of the required quorum board
b. Meeting of the directors or trustees duly assembled
as a board
c. Decision of the majority of all the members of the
board
d. Meeting at the place, time, and manner provided in
the by-laws.

36. The requirements for a valid proxy are the following, a. It shall be
except: signed by the cor-
porate secretary
a. It shall be signed by the corporate secretary
b. It shall be in writing
c. Unless otherwise provided in the proxy, it shall be
valid only for the meeting which it is intended.
d. It shall be filed before the scheduled meeting with
the corporate secretary

37. The stockholders or members mentioned in the ar- a. Incorporators

ticles of incorporation as originally forming and
composing the corporation and who are signatories
thereof.

a. Incorporators
b. Corporators
c. Board of directors
d. Board of trustees

38. Where a stockholder or stockholders representing d. Interlocking

the same interest of both managing and the manage Stockholders
corporations own or control more than 1/3 of the
total outstanding capital stock entitled to vote of the
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managing corporation.

a. Interlocking board of directors

b. Interlocking members
c. None of the above
d. Interlocking Stockholders

39. For a valid transfer of stocks, there must be strict a. To be valid

compliance with the mode of transfer prescribed by against third par-
law. The following are the requirements, except; ties, the transfer
must be recorded
a. To be valid against third parties, the transfer must in the SEC.
be recorded in the SEC.
b. The certificate must be endorsed by the owner or
his attorney-in-fact or other persons legally autho-
rized to make the transfer.
c. There must be delivery of the stock certificate.
d. To be valid against third parties, the transfer must
be recorded in the books of the corporation.

40. When the vacancy prevents the remaining directors a. Emergency

from constituting a quorum and emergency action is board of director
required to prevent grave, substantial, and irrepara-
ble loss or damage to the corporation, the vacancy
may be temporarily filled from among the officers of
the corporation by unanimous vote of the remaining
directors or trustees.

a. Emergency board of director

b. Interim board of director
c. Provisional board of director
d. Temporary board of director

41. The requirements for the sale of other disposition of d. SEC approval is
assets are the following except; required.

a. Any dissenting stockholders may exercise his ap-

praisal right.
b. Ratification by the vote of the stockholders repre-

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senting at least 2/3 of the outstanding capital stock,
or in case of non-stock corporation, by the of at least
to 2/3 of the members.
c. Approval by the majority vote of its board of direc-
tors or trustees.
d. SEC approval is required.

42. It means that a stockholder who dissented and voted a. Voting right
against the proposed corporate action, may choose
to get out of the corporation by demanding payment
of the fair market value of his shares.

a. Voting right
b. Appraisal right
c. Pre-emptive right
d. Management right

43. Revocation of proxy may be through the following, b. None of the

except: above

a. Formal notice;
b. None of the above
c. Verbal communication;
d. Conduct

44. The requisites for removal of directors are the follow- d. The director or
ing except: trustee can only
be removed by a
a. The removal should take place at a regular or spe- vote of the stock-
cial meeting duly called for the purpose. holders represent-
b. The special meeting of the stockholders or mem- ing at least majori-
bers of a corporation for the purpose of removal must ty of the outstand-
be called by the secretary on order of the president or ing capital stock
on the written demand of the stockholders represent- or majority of the
ing or holding at least a majority of the outstanding members entitled
capital stock or a majority of the members entitled to to vote in case
vote. of non-stock cor-
c. The must be a previous notice to stockholders or poration.
members of the corporation of the intention to pro-

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pose such removal at the meeting.
d. The director or trustee can only be removed by
a vote of the stockholders representing at least ma-
jority of the outstanding capital stock or majority of
the members entitled to vote in case of non-stock
corporation.

45. A close corporation is one whose articles of incorpo- d. All of the above.
ration provides the following, except;

a. All the issued stock of all classes shall be subject

to 1 or more specified restrictions on transfer.
b. All the corporation`s issued stock of all classes,
exclusive of treasury shares, shall be held of record
by not more than a specified number of persons, not
exceeding 20;
c. The corporation shall not list in any stock exchange
or make any public offering of its stocks of any class.
d. All of the above.

46. A corporation formed for the same purpose as corpo- a. Corporation ag-
ration sole. It consists of two or more persons. gregate

a. Corporation aggregate
b. Corporation de facto
c. Close corporation
d. Corporation sole

47. A trust created by an agreement between a group of b. Voting trust

the stockholders of a corporation and the trustee or agreement
by a group of identical agreements between individ-
ual stockholders and a common trustee, whereby it
is provided that for a term of years, or for a period
contingent upon a certain event, or until the agree-
ment is terminated, control over the stock owned by
such stockholders, either for certain purposes or for
all purposes, is to be lodged in the trustee, either with
or without a reservation to the owners, or persons
designated by the, of the power to direct how such

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control shall be used.

a. Management contract
b. Voting trust agreement
c. Proxy
d. Executive committee

48. Bidder who shall offer to pay the full amount of the b. Highest Bidder
balance on the subscription together with accrued in-
terest, costs of advertisement and expenses of sale,
for the smallest number of shares or fraction of a
share.

a. Winning bidder
b. Highest Bidder
c. Losing bidder
d. Lowest bidder

49. An action by the directors of a close corporation b. Before or af-

without a meeting shall not be deemed valid if: ter such action
is taken, written
a. The directors are accustomed to take informal ac- consent thereto is
tion with the express or implied acquiescence of all signed by a major-
the stockholders. ity the directors.
b. Before or after such action is taken, written consent
thereto is signed by a majority the directors.
c. All the directors have express or implied knowl-
edge of the action in question and none of them
makes prompt objection thereto in writing.
d. All the stockholders have actual or implied knowl-
edge of the action and make no prompt objection
thereto in writing.

50. Evidence of the holder`s ownership of the stock and b. Certificate stock
of his right as a shareholder.

a. Treasury stock
b. Certificate stock

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c. Par value stock
d. Shares of stock

51. An impartial person who is neither a stockholder nor a. Provisional di-

a creditor of the corporation or of any subsidiary or rector
affiliate of the corporation, and whose further qualifi-
cations, if any, may be determined by the SEC.

a. Provisional director
b. Provisional member
c. Provisional stockholder
d. Provisional trustee

52. As a rule, a corporation that purchases the assets of c. Where the

another will not be liable for the debts of the selling transaction is
corporation, except when any of the following circum- validly entered
stances is present. Which is the exception? into.

a. Where the purchasing corporation is merely con-

tinuation of the selling corporation.
b. Where the purchaser expressly or impliedly agrees
to assume the debts.
c. Where the transaction is validly entered into.
d. Where the transaction amounts to a consolidation
or merger of the corporations.

53. Any stockholder of a corporation shall have the right b. In case of

to dissent and increase or de-
demand payment of the fair value of hiss hares in the crease of capital
following instances, stock.
except;

a. In case of sale, lease, exchange, transfer, mortgage,

pledge or
other disposition of all substantially all of the corpo-
rate property
and assets.
b. In case of increase or decrease of capital stock.
c. In case of merger or consolidation.

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d. In case any amendment to the articles of incorpo-
ration 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 exis-
tence.

54. Consideration for the issuance of stock may be: c. Labor per-
formed for or ser-
a. Property, tangible or intangible, actually received vices to be ren-
by the dered to the cor-
corporation and necessary or convenient for its use poration.
and lawful
purposes at a fair valuation equal to the par or issued
value of the
stock issued.
b. Previously incurred indebtedness of the corpora-
tion.
c. Labor performed for or services to be rendered to
the corporation.
d. Actual cash paid to the corporation

55. It is one where no part of its income is distributable d. Non-stock cor-

as dividends to its poration
members, trustees, or officers.

a. Close corporation
b. Stock corporation
c. Corporation sole
d. Non-stock corporation

56. In addition to the functions designated by the One d. All of the above
Person Corporation,
the corporate secretary shall:

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a. Be responsible for maintaining the Minutes book
and/or records of
the corporation.
b. Notify the SEC of the death of the single stockhold-
er within 5 days
from such occurrence and stating in such notice the
names,
residence addresses, and contact details of all known
legal heirs.
c. Notify the nominee or alternate nominee of the
death or incapacity
of the single stockholder, which notice shall be given
no later than
5 days from such occurrence.
d. All of the above

57. Is an action brought by minority shareholders in the c. Derivative suit

name of the corporation to redress wrongs commit-
ted against it, for which the directors refuse to sue.

a. Class suit
b. Representative suit
c. Derivative suit
d. Individual suit

58. Is one formed, organized or existing under any laws a. Foreign corpo-
other than those ration
of the Philippines and whose laws allow Filipino citi-
zens and corporations
to do business in its own country or state.

a. Foreign corporation
b. Government owned-and controlled corporation
c. None of the above
d. Domestic corporation

59. It is a union whereby one or more existing corpora- c. Merger

tions are absorbed
by another corporation that survives and continues

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the combined
business.

a. Business combination
b. Consolidation
c. Merger

60. It is the union of two or more existing entities to form d. Consolidation

a new entity
called the consolidated corporation.

a. Merger
b. Business combination
c. Acquisition
d. Consolidation

61. Stock corporations must also keep a stock and trans- d. All of the above.
fer book, which shall
contain;

a. A statement of every alienation, sale or transfer of

stock made,
the date thereof, by and to whom made.
b. The installment paid and unpaid on all stocks for
which
subscription has been made, and the date of pay-
ments of any
installment.
c. A record of all stocks in the names of the stock-
holders
alphabetically arranged.
d. All of the above.

62. The articles of incorporation of a close corporationb. A lesser quorum

may provide, except or voting require-
for. ments in meetings
of
a. The business of the corporation shall be managed stockholders or di-
by the rectors.

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stockholders of the corporation rather than by aboard
of directors.
b. A lesser quorum or voting requirements in meet-
ings of
stockholders or directors.
c. A classification of shares or rights and the qualifi-
cations for owning
or holding the same and restrictions on their transfer
as may be
stated therein, subject to the provisions of the follow-
ing section.
d. A classification of directors into one or more class-
es, each of whom
may be voted for and elected solely by a particular
class of stock.

63. The following are instances where a dissenting stock- c. The proposed
holder who demands payment of his shares is no corporate action is
longer allowed to withdraw from his decision, except: approved by the
SEC where its ap-
a. The SEC determines that such stockholder is not proval is neces-
entitled to appraisal right. b. The proposed corporate sary
action is abandoned or rescinded by the corporation.
c. The proposed corporate action is approved by the
SEC where its approval is necessary
d. The corporation consents to the withdrawal.

64. The books and records required to be kept by the b. Daily time
corporation are the record
following except;

a. Minutes of meetings of stockholder or members

b. Daily time record
c. Minutes of all meetings of directors or trustees.
d. Stock and transfer book, in case of stock corpora-
tions.

65. The following are corporations that cannot incorpo- b. Industrial com-
rate as a close panies

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corporation, except;

a. Mining or oil companies

b. Industrial companies
c. Banks
d. Stock exchanges

66. The following are the characteristic of a non-stock d. By-laws may

corporation, except: provide that the
members may
a. The right to vote of members may be limited, broad- hold their meet-
ened, or even ings at any place
denied in the articles of incorporation or the by-laws. even outside the
b. Non-stock corporation may, through their articles place where the
of incorporation principal office of
or their by-laws designate their governing boards by the corporation is
any name located, even if
other than as board of trustees. that such place is
c. A non-stock corporation is not allowed to distribute outside the Philip-
any of its pines
assets or any incidental income or profit made by the
corporation
during its existence.
d. By-laws may provide that the members may hold
their meetings
at any place even outside the place where the princi-
pal office of
the corporation is located, even if that such place is
outside the
Philippines

67. The following are the characteristic of a non-stock d. By-laws may

corporation, except: provide that the
members may
a. The right to vote of members may be limited, broad- hold their meet-
ened, or ings at any place
even denied in the articles of incorporation or the even outside the
by-laws. place where the
b. Non-stock corporation may, through their articles principal office of

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of the corporation is
incorporation or their by-laws designate their govern- located, even if
ing boards that such place is
by any name other than as board of trustees. outside the Philip-
c. A non-stock corporation is not allowed to distribute pines.
any of its
assets or any incidental income or profit made by the
corporation during its existence.
d. By-laws may provide that the members may hold
their meetings
at any place even outside the place where the princi-
pal office of
the corporation is located, even if that such place is
outside the
Philippines.

68. The following, except one, are the exceptional circum- d. When a director,
stances warranting trustee or officer
the disregard of the doctrine of separate personality; is made, by spe-
cific provision of
a. When a director or officer has consented to the by-laws. Personal-
issuance of ly, liable for his cor-
watered-down stocks or who, having knowledge porate action.
thereof, did not
forthwith file with the corporate secretary his written
objection
thereto.
b. When directors and trustee or, in appropriate case,
the officers of
a corporation vote for or assent to patiently unlawful
acts of the
corporation.
c. When a director, trustee or officer has contractually
agreed or
stipulated to hold himself personally and solidarity
liable with the
corporation.
d. When a director, trustee or officer is made, by spe-

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cific provision
of by-laws. Personally, liable for his corporate action.

69. The following are the limitations on the right of in- a. The right can
spection by a be exercised only
stockholder, except: by the common
stockholders.
a. The right can be exercised only by the common
stockholders.
b. The demand is made in good faith or for a legitimate
purpose.
c. The right must be exercised during reasonable
hours on business
days.
d. The person demanding the right has not improperly
used any
information obtained through any previous examina-
tion of the
books and records of the corporation.

70. The following are the requisites of a derivative suit: d. All of the above.

a. He has tried to exhaust intra-corporate remedies,

i.e., has made
a demand on the board of directors for the appropri-
ate relief but
the latter has failed or refused to heed his plea; and
b. The cause of action actually devolves on the corpo-
ration, the
wrong doing or harm having been, or being caused to
the
corporation and not to the particular stockholder
bringing the suit.
c. The party bringing suit should be a shareholder as
of the time of
the act or transaction complained of, the number of
his shares not
being material;
d. All of the above.

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71. The following are voluntary modes of dissolution of c. By the judge-

a corporation, ment of the SEC
except: after hearing of
petition for vol-
a. By legislative enactment. untary dissolution
b. By expiration of corporate term provided for the where creditors
articles of are affected.
incorporation.
c. By the judgement of the SEC after hearing of peti-
tion for voluntary
dissolution where creditors are affected.
d. By failure to formally organize and commence its
business within
5 years form the date of incorporation.

72. The following may be grounds for involuntary disso- d. All of the above.
lution of the
corporation:

a. Upon receipt of a lawful court order dissolving the

corporation.
b. Non-use of corporate charter.
c. Continuous in operation of a corporation.
d. All of the above.

73. The merger or consolidation shall have the following d. All of the above.
effects:

a. The surviving or the consolidated corporation shall

possess all the
rights, privileges, immunities, and powers and shall
be subject to
all the duties and liabilities of a corporation.
b. The constituent corporations shall become a single
corporation.
c. The separate existence of the constituent corpora-
tions shall cease.
d. All of the above.

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74. The three tests of voting trust agreement are the d. All of the above.
following:

a. That the principal purpose of the grant of voting

rights is to acquire
voting control of the corporation.
b. That the voting rights granted are intended to be
irrevocable for
a definite period of time.
c. That the voting rights of the stock are separated
from the other
attributes of ownership.
d. All of the above.

75. Where a stockholder or member is denied the right of a. Individual suit

inspection, his
suit would be individual because the wrong is done
to him personally and
not to the other stockholders or the corporation.

a. Individual suit
b. Class suit
c. Representative suit
d. Derivative suit

76. Where the wrong is done to a group of stockholders, d. Representative

as where preferred suit
stockholders` right are violated, a class suit will be
proper for the
protection of all stockholders belonging to the same
group.

a. Corporate suit
b. Individual suit
c. Class suit
d. Representative suit

77. STATEMENT I. A delinquent corporation shall have a d. Only II is true

period of 2 years

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to resume operations and comply with all require-
ments that the SEC shall
prescribe.
STATEMENT II. Upon compliance by the corporation,
the SEC shall issue
an order lifting the delinquent status. Failure to com-
ply with the requirements
and resume operations within the period given by the
SEC shall cause the
revocation of the corporation`s certificate of incorpo-
ration.

a. Only I is true
b. Both are false
c. Both are true
d. Only II is true

78. STATEMENT I: The act of corporate officers within the c. Only I is true
scope of their
authority are binding on the corporation.
STATEMENT II: Any two or more positions may be
held concurrently by
the same persons, except that no one shall act as
president and secretary or
as president and vice president at the same time.

a. Both are false

b. Both are true
c. Only I is true
d. Only II is true

79. STATEMENT I. Any city or municipality in Metro Mani- a. Both are true
la, Metro Cebu,
Metro Davao, and other Metropolitan areas shall, for
purposes of
stockholders` or members` meetings, be considered
a city or municipality.
STATEMENT II. Notice of meetings shall be sent
through the means of

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communication provided in the bylaws, which notice
shall state the time, place and purpose of the meet-
ings.

a. Both are true

b. Only II is true
c. Both are false
d. Only I is true

80. STATEMENT I. Any power delegated to the board of b. Only II is true

directors or trustees
to amend or repeal any by-laws or adopt new by-laws
shall be considered as
revoked whenever stockholders owning or represent-
ing 2/3 of the outstanding capital stock or 2/3 of the
members in non-stock corporation, shall so vote at a
regular or special meeting.
STATEMENT II. Whenever the bylaws are amended or
new bylaws are
adopted, the corporation shall file with the SEC such
amended or new bylaws.

a. Both are false

b. Only II is true
c. Only I is true
d. Both are true

81. STATEMENT I. Bylaws may be adopted and filed prior c. Both are true
to incorporation.
STATEMENT II. In all cases, bylaws shall be effective
only upon the
issuance by the SEC of a certification that the bylaws
are in accordance
with the revised corporation code.

a. Only I is true
b. Both are false
c. Both are true
d. Only II is true

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82. STATEMENT I. Directors or trustee who cannot phys- c. Only I is true

ically attend or vote
at board meetings can participate and vote through
remote communication
such as video conferencing, teleconferencing, or oth-
er alternative modes
of communication that allow them reasonable oppor-
tunities to participate.
STATEMENT II. Directors or trustees can attend or
vote by proxy at board
meetings.

a. Both are true

b. Only II is true
c. Only I is true
d. Both are false

83. STATEMENT I. Every director must own at least 100 a. Only II is true
shares of the capital
stock of the corporation of which he is a director,
which share shall stand
in his name on the books of the corporation.
STATEMENT II. Trustees of non-stock corporations
must be members
thereof.

a. Only II is true
b. Both are false
c. Both are true
d. Only I is true

84. STATEMENT I: Treasury shares shall have no voting c. Both are true
right as long as
such shares remain in the treasury.
STATEMENT II: Directors or trustees cannot attend or
vote by proxy at
board meetings but there is no prohibition for them to
act as proxies in
stockholder`s meetings.
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a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

85. STATEMENT I. If a corporation does not formally or- d. Both are true
ganize and
commence its business within 5 years from the date
of its incorporation,
its certificate of incorporation shall be deemed re-
voked.
STATEMENT II. If a corporation has commenced its
business but
subsequently becomes inoperative for a period of at
least 5 consecutive
years, the SEC may, after due notice and hearing,
place the corporation
under delinquent status.

a. Both are false

b. Only II is true
c. Only I is true
d. Both are true

86. STATEMENT I. It is the certificate of incorporation that c. Only I is true

gives juridical
personality to a corporation and places it under the
jurisdiction of the
securities and exchange commission.
STATEMENT II. A corporation commences its corpo-
rate existence and
juridical personality and is deemed incorporated
from the date the DTI
issues certificate of incorporation under its official
seal.

a. Both are true

b. Both are false

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c. Only I is true
d. Only II is true

87. Statement I. Property acquired by a corporation is the b. Only II is true

property of
stockholders or members.
Statement II. A corporation exercises said powers
through its board of
directors and/or its duly authorized officers and
agents.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

88. STATEMENT I. Stockholder`s or member`s meetings a. Both are true

shall be held in the
city or municipality where the principal office of the
corporation is located.
STATEMENT II. Regular meetings of stockholders or
members shall be held
annually on a date fixed in the bylaws, or if not so
fixed, on any date after
April 15 or every year as determined by the board of
directors or trustees.

a. Both are true

b. Only II is true
c. Both are false
d. Only I is true

89. STATEMENT I. The articles of incorporation of a non- c. Only I is true

stock corporation
may be amended by the vote or written assent of
majority of the trustees
and at least 2/3 of the members.
STATEMENT II. The amendment of the articles of in-
corporation shall take

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effect upon their approval by the SEC or from the
date of filing with the SEC if not acted upon within
9months from the date of filing for a cause
not attributable to the corporation.

a. Both are true

b. Only II is true
c. Only I is true
d. Both are false

90. STATEMENT I. Stockholders and members may vote a. I, II and III are
in person or by true
proxy in all meetings of stockholders or members.
STATEMENT II. When so authorized in the bylaws or
by a majority of the board
of directors, the stockholders or members of corpo-
rations may also vote
directors, the stockholders or members of corpora-
tions may also vote through remote communication
or in absentia.
STATEMENT III. A stockholder or member who partic-
ipates through remote
communication or in absentia shall be deemed pre-
sent for purposes of
quorum.

a. I, II and III are true

b. Only I is true
c. Only II is true
d. Only III is true

91. STATEMENT I. The directors of a corporation shall not c. Only I is true

receive any
compensation for being members of the board of
directors, except for
reasonable per diems.
STATEMENT II. In no case shall the total yearly com-
pensation of directors,
as such directors, exceed 10% of the net income after

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income tax of the
corporation during the preceding year.

a. Only II is true
b. Both are false
c. Only I is true
d. Both are true

92. STATEMENT I. The filing of articles of incorporation a. Both are true

and the issuance of
the certificate of incorporation are essential for the
existence of a de facto
corporation.
STATEMENT II. An organization not registered with
the SEC cannot be
considered a corporation in any concept, not even as
a corporation de facto.

a. Both are true

b. Both are false
c. Only II is true
d. Only I is true

93. STATEMENT I. The number of directors shall not be d. Both are true
more than 15.
STATEMENT II. The number of trustees may be more
than 15.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

94. STATEMENT I: The executive committee may act by c. Both are false
2/3 vote of all its
members.
STATEMENT II. The act of a director violating the doc-
trine of corporate
opportunity can be ratified by a vote of the stockhold-

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ers owning or
representing at least majority of the outstanding cap-
ital stock.

a. Only II is true
b. Only I is true
c. Both are false
d. Both are true

95. STATEMENT I. A foreign corporation licensed to d. Only II is true

transact business in the
Philippines may not be allowed to withdraw from the
Philippines.
STATEMENT II. The license of a foreign corporation to
transact business in
the Philippines maybe revoked or suspended by the
SEC.

a. Both are false

b. Both are true
c. Only I is true
d. Only II is true

96. STATEMENT I. A foreign corporation without a license b. Both are true

is not ipso facto
incapacitated from bringing an action in Philippine
courts. A license is
necessary only if a foreign corporation is <transact-
ing= or <doing business=
in the country.
STATEMENT II. A party is estopped from challenging
the personality of a
corporation after having acknowledge the same by
entering into a contract
with it.

a. Only I is true
b. Both are true

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c. Both are false
d. Only II is true

97. STATEMENT I. A majority of the trustee shall consti- b. Only I is true

tute a quorum for
the transaction of business.
STATEMENT II. Trustees elected thereafter in educa-
tional corporation to fill
vacancies caused by expiration of term shall hold
office for 3 years.

a. Both are false

b. Only I is true
c. Both are true
d. Only II is true

98. STATEMENT I. A One Person Corporation is a corpo- c. Both are true

ration with a single
stockholder.
STATEMENT II. Only a natural person, trust, or an
estate may form a One
Person Corporation.

a. Both are false

b. Only II is true
c. Both are true
d. Only I is true

99. STATEMENT I. Any corporation sole may purchase c. Both are true
and hold real state
and personal property for its church, charitable,
benevolent or educational
purposes, and may receive bequest or gifts for such
purposes.
STATEMENT II. Such corporation sole may sell or
mortgage real property
held by it by obtaining an order for that purpose from
the Regional Trial
Court.

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a. Only I is true
b. Both are false
c. Both are true
d. Only II is true

100. STATEMENT I. As a rule, the doctrine of corporate a. Only II is true

opportunity is violated
where the stocks are issued by the corporation for a
consideration which is
less that its par value.
STATEMENT II. Subscribers for stock shall pay to the
corporation interest on
all unpaid subscription from the date of subscription,
if so required by, and at
the rate of interest fixed in the by-laws.

a. Only II is true
b. Only I is true
c. Both are true
d. Both are false

101. STATEMENT I. As long as the shares are not consid- d. Both are true
ered delinquent,
stockholders are entitled to all rights granted to it
whether or not subscribed
capital stock are fully paid.
STATEMENT II. Shares of stock shall not be issued in
exchange for promissory
notes or future service.

a. Only II is true
b. Only I is true
c. Both are false
d. Both are true

102. STATEMENT I. For a valid merger or consolidation, d. Both are true

the approval by the SEC.
of the articles of merger or consolidation is required.

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STATEMENT II. If upon investigation, the SEC has
reason to believe that the
proposed merger or consolidation is contrary to the
provisions of the
Corporation Code or existing laws, it shall set a hear-
ing to give the
corporations concerned the opportunity to be heard.

a. Only I is true
b. Both are false
c. Only II is true
d. Both are true

103. STATEMENT I. If a foreign corporation does business d. Only I is true

in the Philippines
without license, a Philippine citizen or entity which
has contracted with said
corporation may be estopped from challenging the
foreign corporation's
corporate personality in a suit brought before Philip-
pine courts.
STATEMENT II. If a foreign corporation does business
in the Philippines
with the required license, it can sue before Philippine
courts only on isolated
transaction.

a. Both are false

b. Both are true
c. Only II is true
d. Only I is true

104. STATEMENT I. In stock corporation, shareholders c. Only I is true

may generally transfer
their shares.
STATEMENT II. Membership in and all rights arising
from a nonstock
corporation are transferable.

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a. Both are true
b. Only II is true
c. Only I is true
d. Both are false

105. STATEMENT I. Membership in and all rights arising a. Only I is true

from a nonstock
corporation are personal and non-transferable.
STATEMENT II. Unless otherwise provided in the arti-
cles of incorporation or
the by-laws, a member may not vote by proxy.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

106. STATEMENT I. No person shall be elected as trustee c. Both are true

unless he is a
member of the corporation.
STATEMENT II. Unless otherwise provided in the arti-
cles of incorporation or
the by-laws, officers of a non-stock corporation may
be directly elected by the members.

a. Only II is true
b. Both are false
c. Both are true
d. Only I is true

107. STATEMENT I. Stocks shall not be issued for a con- d. Both are true
sideration less than
the par or issued price thereof.
STATEMENT II. Where the consideration is other that
actual cash, or consists
of intangible property such as patents of copyrights,
the valuation thereof shall initially be determined by
the incorporators or the board of directors, subject to
approval of the SEC.

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a. Both are false

b. Only II is true
c. Only I is true
d. Both are true

108. STATEMENT I. The board of trustees shall, as soon as a. Both are true
organized, so
classify themselves that the term of office 1/5 of their
number shall expire
every year.
STATEMENT II. Religious corporations may be incor-
porated by one or more
persons. Such corporations may be classified into
Corporations sole and
religious societies.

a. Both are true

b. Only II is true
c. Only I is true
d. Both are false

109. STATEMENT I. The corporation shall bear the costs of b. Only I is true
appraisal, as a
rule.
STATEMENT II. Clearly, the right of appraisal may be
exercised when there is
a minor change in the charter or articles of incorpo-
ration substantially
prejudicing the rights of the stockholders.

a. Both are false

b. Only I is true
c. Only II is true
d. Both are true

110. STATEMENT I. The One Person Corporation shall ap- c. Only I is true
point a treasurer,
corporate secretary, and other officers as it may deem

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necessary.
STATEMENT II. The single stockholder may be ap-
pointed as the corporate
secretary.

a. Both are false

b. Both are true
c. Only I is true
d. Only II is true

111. STATEMENT I. The merger shall only be effective d. Both are true
upon the issuance of
a certificate of merger by the SEC.
STATEMENTII. Consolidation becomes effective not
upon mere agreement of
the members but only upon issuance of the certificate
of consolidation by the
SEC.

a. Both are false

b. Only I is true
c. Only II is true
d. Both are true

112. STATEMENT I. The pre-emptive right of stockholders a. Only II is true

in close
corporations shall extend to all stock to be issued,
excluding reissuance of
treasury shares.
STATEMENT II. A close corporation may, at its option,
refuse to register
the transfer of stock in the name of the transferee if
the person is not
qualified to be a stockholder and has notice thereof.

a. Only II is true
b. Both are true
c. Only I is true
d. Both are false

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113. STATEMENT I. The principles of piercing the corpo- a. Both are true
rate veil applies with
equal force to One Person Corporations as with other
corporations.
STATEMENT II. The commission may place the corpo-
ration under delinquent
status should the corporation fail to submit the repor-
torial requirements 3
times, consecutively or Intermittently, within a period
of 5 years.

a. Both are true

b. Only I is true
c. Only II is true
d. Both are false

114. STATEMENT I. The proper custodian of the books, a. Both are false
minutes and official
records of a corporation is usually the corporate trea-
surer.
STATEMENT II. The signature of the corporate presi-
dent gives the minutes of
the meeting probative value and credibility.

a. Both are false

b. Only II is true
c. Both are true
d. Only I is true

115. STATEMENT I. The rule is that the endorsement of the c. Both are true
certificate of stock
by the owner or his attorney-in-fact or any other per-
son legally authorized
to make the transfer shall be sufficient to effect the
transfer of shares only
if the same is coupled with delivery.
STATEMENT II. The delivery of the stock certificate
duly endorsed by the
owner is the operative act of transfer of shares from
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the lawful owner to the
new transferee.

a. Both are false

b. Only II is true
c. Both are true
d. Only I is true

116. STATEMENT I. Trustees of educational institutions or- a. Both are true

ganized as
nonstock corporations shall not be less than 5 nor
more than 15.
STATEMENT II. The number of trustees shall be in
multiple of 5.

a. Both are true

b. Both are false
c. Only I is true
d. Only II is true

117. STATEMENT I. When the SEC is satisfied that the a. Only I is true
consolidation of the
corporations is not inconsistent with the provisions
of the corporation code
and existing laws, it issues a certificate of consolida-
tion which makes the
reorganized official.
STATEMENT II. Since there is a dissolution of the
absorbed corporations, there
is winding up of their affairs or liquidation of their
assets.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

118. The effect of transfer or dissenting shares are the b. Both are true
following:

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STATEMENT I. The rights of the transferor as a dis-
senting stockholder shall
cease and the transferee shall have all the rights of a
regular stockholder.
STATEMENT II. All dividend distributions which
would have accrued on such
shares shall be paid to the transferee.

a. Only II is true
b. Both are true
c. Only I is true
d. Both are false

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