CORPORATION

1. The articles of incorporation differ from the by-laws in that the articles of
incorporation are:
A. The rules of action adopted by a corporation for its internal
government.
B. Adopted before of after incorporation.
C. A condition precedent in the acquisition by a corporation of a juridical
personality.
D. Approved by the stockholders if adopted after incorporation.
2. The following may be the consideration of the shares of stock of a
corporation, except:
A. Actual cash paid to the corporation.
B. Previously incurred indebtedness of the corporation.
C. Amount transferred from unrestricted retained earnings.
D. Service to be performed by a lawyer on the proposed increase in
capital stock of the corporation.
3. A certificate of stock is distinguish from share of stock in that a share of stock:
A. Is the written evidence of a stockholder’s interest in the assets and
management of a corporation.
B. Is tangible personal property.
C. Is one of the units into which the capital stock is divided.
D. May not be issued if the subscription has not been fully paid.
4. The articles of incorporation of Acme Corporation provide for the issuance of
100,000 shares without par value and an issued price per share of P10.00. At
the time of incorporation, the subscription and paid-up capital should not be
less than:
A. P 250, 000.00 and P 62, 500.00 respectively.
B. P1, 000, 000.00 and P250, 000.00 respectively.
C. P 250, 000.00 and P250, 000.00 respectively.
D. P 250, 000.00 and P125, 000.00 respectively.
5. Their names are mentioned in the articles of incorporation as originally
forming the corporation and are signatories thereof.
A. Corporators C. Incorporators
B. Stockholders D. Members
6. A corporation acquires juridical personality:
A. Upon filing of the articles of incorporation.
B. Upon filing of the by-laws.
C. Upon the issuance of the certificate of incorporation.
D. Within 30 days from the receipt of the notice of the issuance of the
certificate of incorporation.
7. A delinquent stockholder is not entitled to the following rights, except the right:
A. To be voted.
B. To vote or be represented in the meeting of stockholders.
C. To dividends.
D. He is not entitled to all the rights of the stockholder.
8. A, B, C, D, E, F and G are the duly elected directors for 2002 of Excellent
Corporation whose articles of incorporation provide for 7 directors. On
August 1, 2003, A, B, C, D and E met to fill two vacancies in the board
brought about by the valid removal of F for disloyalty to the corporation
and the death of G. In the said meeting, the remaining directors voted for
X to replace F, and Y, a son of G, to replace his father. Both X and Y are
owners at least one share of stock of the corporation. The election of X
and Y by the remaining directors is:
A. Valid for both X and Y.
B. Not valid for both X and Y.
C. Valid with respect to X; not valid with respect to Y.
D. Not valid with respect to X; valid with respect to Y.
9. In the meeting of the board of directors of Grand Corporation, a construction
company, held on March 31, 2003, directors A, B C, D and E were present
among the 9 directors. The meeting had for its agenda the following:
i. The appointment of a new treasurer.
ii. The approval of the contract for the purchase of cement worth P5,
000.00 from X Construction Supplies Co.
When the voting took place, directors A, B, C and D voted for the election of Y
as the treasurer; directors A, B, and C voted for approval of the contract with
X Construction Supplies.
A. Both corporate acts are valid.
B. Both corporate acts are not valid.
C. The election of Y as new treasurer is valid; the approval of the
contract with X Construction Supplies is not valid.
D. The election of Y as new treasurer is not valid; the approval of the
contract with X Construction Supplies is valid.
10. Under this theory, the nationality of a corporation is that of the country under
whose laws it was formed.
A. Control test C. Domiciliary test
B. Incorporation test D. Grandfather rule
11. A corporation created in strict compliance with all the legal requirements and
whose right to exist as a corporation cannot be successfully attacked in a
direct proceeding for that purpose by the State is a:
A. De Jure corporation.
B. De facto corporation.
C. Corporation by estoppel.
D. Corporation by description.
12. Stock dividends differ from cash in that stock dividends:
A. Do not increase the legal capital.
B. Involve disbursements of corporate funds.
C. Require the approval of both the board of directors and the
stockholders.
D. Once received by the stockholders, are beyond the reach of
corporate creditors.
13. The subscriber of unpaid shares which are not delinquent shall be entitled to
the following rights, except the right to:
A. Vote C. A stock certificate
B. Inspect corporate books D. Dividends
14. These statements pertaining to the right of a stockholder to inspect the books
and records of a corporation were presented to you for evaluation:
i. The right may be delegated to an agent.
ii. The right may be denied if in the past, the stockholder improperly
used the information which he obtained from the books and records
of another corporation of which he is also a stockholder.
A. Both statements are true.
B. Both statements are false.
C. Statement I is true; Statement II is false.
D. Statement I is false; Statement II is true.
15. Under this doctrine, the separate personality of a corporation may be
disregarded if it used for fraudulent or illegal purpose or to escape the faithful
compliance of an obligation.
A. Trust fund doctrine.
B. Doctrine of piercing the veil of corporate entity.
C. Doctrine of corporate opportunity.
D. Doctrine of limited of capacity.
16. Consolidation differs from merger in that in consolidation:
A. The surviving corporation shall enjoy all the rights, powers and
attributes of a corporation under the Corporation Code.
 B. The existing liabilities of the constituent corporations shall be
assumed by the surviving corporation.
C. The corporate existence of the entire constituent corporation shall
be extinguished and a new corporation emerges.
D. The surviving corporation shall possess all the rights, privileges,
immunities, and franchises of the constituent corporation.
17. The right a stockholder to demand payment of the fair value of his shares
when he dissents from certain corporate acts is known as:
A. Pre-emptive right. C. Redemption right.
B. Appraisal right. D. Appreciation right.
18. These statements pertaining to the meeting of directors were presented to
you for evaluation:
I. Directors or trustees may attend or vote by proxy at board meetings.
II. The articles of incorporation or the by-laws of a corporation may provide
for a greater majority for its quorum during the meetings of the board of
directors.
a. Both statements are true.
b. Both statements are false.
c. Statement I is true; Statements II is false.
d. Statement I is false; Statements II is true.
19. A stock that is issued without consideration or below par value or the
issued price is known as:
a. Watered stock c. Redeemable stock
b. Delinquent stock d. Preferred stock
20. A non-voting stock may vote in the following corporate acts, except in case of:
a. Approval of the compensation of directors
b. Merger or consolidation
c. Increase or decrease in capital stock
d. Sale, lease, exchange, mortgage, pledge or other disposition of all
or substantially all of corporate property.
21. Directors may be given compensation through any of the following ways,
except:
a. By the vote of the stockholders representing at least a majority of
the outstanding capital stock.
b. By a provision in the by-laws.
c. By the vote of the board of directors if the compensation is a
reasonable per diem.
d. By the vote of the board of directors if the compensation is other
than per diems.
22. A is a director and owns 50% of the outstanding capital stock of Ace
Corporation which is engaged in the trading of computers. Ace Corporation
purchased computer table from Top Corporation of which A is also a director
and owns 15% of its outstanding capital stock. The articles of incorporation of
both corporations provide for 5 directors. In the approval of the contract for
the said purchase, A did not attend the meeting of the board of directors of
Ace corporation, while in the meeting of the board of directors of Top
corporation which was called for the same purpose, directors A, B, C and D
were present with all of them voting for the approval of the contract.
Assuming that there is no fraud and that the contract between Ace
Corporation and Top Corporation is:
a. Valid
b. Voidable at the option of Top Corporation
c. Unenforceable against Top Corporation
d. Void because corporations with interlocking directorate should not
enter into a contract with each other.
23. One of the following acts may be performed by the executive committee of a
corporation. Which is it?
 a. Declaration of stock dividends
b. Filling of vacancies in the board of directors.
c. Amendment or repeal of the by-laws or adoption of new by-laws.
d. Approval of contracts in the ordinary course of business.
24. The following statements pertain to the express powers of a corporation.
I. A corporation may establish pension, retirement, and other
plans for the benefit of its directors, trustees, officers and
employees.
II. A corporation may make donations for the benefit of a
political party or candidate or for purposes of partisan
political activity provided the donations are reasonable.
a. Both statements are true
b. Both statements are false
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
25. Which of the following by-laws is valid?
a. A by-law which provides that one need not be the owner of a share
of stock to become a director of the corporation.
b. A by-law which provides that one must be the owner of more that
one share of stock of the corporation to become a director.
c. A by-law which provides that one can continue to be a director
throughout his term although he has disposed all his shares in the
corporation.
d. A by-law, which provides a greater number of directors than that
stated in the articles of incorporation.
26. Winner Corporation, a dealer-manufacturer of garments and with principal
office in Caloocan City, held the meeting of its stockholders in Nasugbu,
Batangas, in conjunction with its annual company outing. Stockholders
owning 75% of the capital stock were present, while 25% were duly
represented by proxies. In the said meeting, the corporation by a vote of the
stockholders representing 80% of the capital stock, approved the purchase of
sewing machines worth P5, 000,000.00. The by-laws of the Corporation
provide that contracts in excess of P3, 000,000.00 must be ratified by the
stockholders. The contract for the purchase of the sewing machines was
unanimously approved by the board of directors before it was presented to
the stockholders for ratification. What is the status of the contract for the
purchase of the sewing machines?
a. Void b. Valid c. Unenforceable d. Voidable
27. Which of the following statements pertaining to non-stock corporations is
incorrect?
a. Members may vote by mail
b. The number of trustees may be more than 15
c. Any incidental income that it may earn may be distributed as dividends
to its members.
d. The meetings of members may be held outside the city or municipality
where the principal office of the corporation is located.
28. A corporation may acquire its own shares for a legitimate purpose provided it
has unrestricted retained earnings. In which of the following acquisitions is
the requirement of unrestricted retained earnings not imposed?
a. When the acquisition is made to eliminate fractional shares.
b. When delinquent shares are acquired in a delinquency sale.
c. When redeemable shares are repurchased in accordance with the
terms provided in the articles of incorporation.
d. When shares are acquired from stockholders who exercise their
appraisal right.

Items 29, 30, and 31 are based on the following information:

 Danilo, a resident of Malolos, Bulacan obtained a loan from the Rural Bank of
Sta. Rosa, Nueva Ecija amounting to P90, 000.00. The loan is secured by a
pledge of shares of stock of Saint Michael Corporation covered by 3 stock
certificates of 1,000 shares each, which certificates are registered in the
name of Servando, a friend of Danilo. The current market value of the shares
based on the records of the Philippine Stock Exchange is P30.00 per share.
Other than the pledge of the shares, no other document or information is
recorded in the books of Saint Michael Corporation at its office in Pasig City.

29. Who is entitled to vote the shares of stock in the stockholders’ meeting?
a. Danilo
b. Servando
c. Rural Bank of Sta. Rosa
d. None, the right to vote the share is suspended while the pledge exists.
30. The pledge in order that it may bind third persons require the following:
a. The deed of pledge must be accompanied by an affidavit of good faith
and recorded in the Register of Deeds of Pasig.
b. It must be in public instrument showing a description of the thing
pledged and the date of the pledge and registered in the Register of
Deeds of Pasig.
c. The pledge must be in public instrument showing a description of the
thing pledged and the date of the pledge. Registration in the Register
of Deeds is not required.
d. The deed of pledge must be accompanied by an affidavit of good faith
and recorded in the Register of Deeds of Pasig and the province of
Bulacan.
31. Danilo pays the Rural Bank of Sta. Rosa the sum of P30, 000.00. May
Danilo demand the cancellation of the pledge of 1,000 shares of stock by
reason of such payment?
a. No, Danilo has to pay his obligation of P90, 000.00 in full before he can
demand any cancellation of the pledge of the shares of stock.
b. Yes, Danilo can demand cancellation of the pledge of 1,000 shares
because the market value of the same is equivalent to the payment of
P30, 000.00 that was made.
c. No, Danilo can demand cancellation of the pledge only if he has paid
more than 50% of his debt.
d. Yes, Danilo can demand cancellation because the pledge of each of
the 3 stock certificates is independent of one another.
32. S is the registered owner of 500 shares of stock of XYZ Corporation whose
articles of incorporation provide for 11 directors. In the annual election of
directors for 2003, 12 stockholders filed their certificates of candidacy for the
position namely, A, B, C, D, E, F, G, H, I, J, K and L. K and L are minority
stockholders whom S wishes toe elect to represent him the other minority
stockholders in the board. In the election of directors, S may cast a maximum
of:
a. 500 votes
b. 6, 000 votes
c. 5, 500 votes
d. 1, 000 votes
33. One of the following distinctions of partnership and a corporation is a that a
partnership:
a. Is managed by a board of directors.
b. Is characterized by the principle of delectus personae.
c. Has the right of succession.
d. May be dissolved only with the consent of the state.
34. One of the distinctions between a proxy and a voting trust agreement is that
in a voting trust agreement:
a. The representative acquires legal title to the shares to be voted.
b. The exercise of the right to vote is limited to a particular meeting.
c. The representative cannot vote if the stockholder is present during the
meeting.
d. The agreements need to be corrected with the Securities and
Exchange Commission.
35. Which of the following statements is false concerning treasury shares?
a. They are entitled to dividends.
b. They have no voting right.
c. They may be disposed of for a price lower than the par value provided
such price is reasonable.
d. They are not outstanding shares.
36. Which of the following will cause the automatic dissolution of a corporation?
a. Continuous inoperation for a period of at least 5 years.
b. Failure to formally organize and commence the transaction for its
business or the constructions of its works within two years from its
incorporation.
c. Failure to adopt by-laws and submit the same to Securities and
Exchange Commission within 30 days from the receipt of the official
notice of the issuance of its certificate of incorporation.
d. Commission by the corporation of an ultra-vires act.
37. Which of the following statements pertaining to no-par shares is incorrect?
a. Subscriptions to no-par shares are deemed fully paid and non-
assessable.
b. Shares without par value may not be issued for a consideration of less
than P5.00 per share.
c. No-par shares may not be issued by banks, trust companies,
insurance companies, public utilities and building and loan
associations.
d. Subscriptions to no-par shares in excess of the issued price shall be
available for distribution as stock dividends.
38. A, B, C, D, E, F, G, H and I are directors of Strong Cement Corporation
whose articles of incorporation provide for 9 directors. In the meeting of
March 2003, directors A, B, C, D, and E were present to approve a contract
for the purchase of cement bags from E who deals in the said product. The
contract was deliberated upon exhaustively by the said directors in the
meeting including E. When the voting took place, however, only A, B, C, and
D who found the contract fair and reasonable under the circumstances, voted
for its approval. The contract between the corporation and E is:
a. Valid and enforceable
b. Voidable at the option of the corporation
c. Unenforceable against the corporation
d. Void because a Corporation must not enter into a contract with any of
its directors since a director occupies a position of trust.
39. A, B, C, D and E distributed calling cards identifying themselves as directors
of Summit Corporation, to several individual during a business conference. In
reality however no such corporation is registered with the Securities and
Exchange Commission. X, who received a calling card granted credit
amounting to P50, 000.00 to “Summit Corporation” believing that such
corporation really existed. When the supposed corporation was unable to pay,
X brought a court action against it. At that time “Summit Corporation” had
assets of P30, 000.00.
a. “Summit Corporation” is liable only up to P30, 000.00, its remaining
assets, since it is different from A, B, C, D and E who are not liable in
their individual capabilities.
 b. X can go after the separate assets of A, B, C, D and E after
exhausting the assets of “Summit Corporation”.
c. A, B, C, D and E can move for the dismissal of the court action
because “Summit Corporation” has no personality of its own.
d. X cannot allege the lack of personality on the part of “Summit
Corporation” because he is stopped form doing so.
40.Which of the following subscriptions does not comply with the subscription
and paid up capital requirements at the time of incorporation?
Authorized Subscribed Paid-up
a. P1, 000, 000.00 P250, 000.00 P 62, 500.00
b. 300, 000.00 75, 000.00 50,000.00
c. 100, 000.00 100, 000.00 100, 000.00
d. 50, 000.00 12, 500.00 3, 125.00
41. An auditing firm composed of Certified Public Accountants may validly form:
I. A Partnership
II. A Corporation
a. The statement is true with respect to both business organizations.
b. The statement is false with respect to both business organizations.
c. The statement is true with respect to the partnership; false with respect
to corporation.
d. The statement is false with respect to the partnership; true with respect
to corporation.
42. A, B, C, D, E, F and G are directors of Commonwealth Appliances
Corporation, a trader of appliances, whose articles of incorporation provide for
7 directors. On September 1, 2003, the board of directors met to approved a
contract for the purchase of appliances from A who is an importer of
appliances. Present during the meeting were A, B, C, D and E with A, B, C
and D voting for the approval of the contract. Assuming that the contract is fair
and reasonable under the circumstances, what is the status of the contract
between the corporation and A?
a. Valid b. Voidable c. Unenforceable d. Void
43. Alpha Corporation’s articles of incorporation provide for 7 directors and an
authorized capital stock of P1, 000, 000.00 divided into 10, 000 shares with a
par value of P100.00 per share. In the election of the directors for 2003, the
following run for the position: A, B, C, D, E, F, G and H. On that date, the
corporation had 7, 000 outstanding shares of which 5, 000 shares had been
paid in full, while 2, 000 shares were paid to the extent of 50% of the
subscription price. All the shares were subscribed at par value and covered
by a binding subscription agreement. If you were a stockholder who owns 500
shares, how mny votes are you entitled to cast in the election of directors?
a. 500 votes c. 4, 000 votes
b. 3, 500 votes d. 7 votes
44. Refer to the information in the preceding number. The number of shares
issued by the corporation is:
a. 7, 000 votes c. 6, 000 votes
b. 5, 000 votes d. 10, 000 votes
45. Alpine Corporation obtained a loan amounting to P1, 000, 000.00 from
Eastern Bank. To secure the obligation, P, the president of Alpine, mortgaged
his own building in favor of the bank. The contract of loan and the deed of
mortgage have been signed by the parties but have not been acknowledged
before a notary public.
a. Alpine Corporation and P are one and the same person.
b. P may validly mortgage his own property to secure the obligation of
Alpine to the bank.
c. The mortgage is not yet binding between the parties since it was not
notarized.
 d. The mortgage contract can stand independently from the contract of
loan.
46. On May 1, 2003, S subscribed to 1, 000 shares of stock of Sigma
Corporation at the par value of P10.00 per share. Pursuant to the policy of the
corporation, which requires a down payment of 60% of the subscription price,
S paid P6, 000.00 upon the execution of the subscription contract. The
balance of the subscription must be paid after 30 days, which in the case Of
S, is May 31, 2003.
a. Upon the execution of the subscription contract, S may demand the
issuance to him of a stock certificate covering 600 shares.
b. S is already qualified to vote although he has not yet paid his
subscription in full.
c. If S fails to pay the balance of his subscription on May 31, 2003, his
shares will become delinquent on June 1, 2003.
d. In case of delinquency, only 400 shares will be considered delinquent.
47. Which is the operative act that will give juridical personality upon a
corporation?
a. The filing of the articles of incorporation.
b. The filing of the by-laws.
c. The issuance of the certificate of incorporation.
d. The execution of the incorporators of the articles of incorporation,
which is the contract among themselves.

Items 48, 49 and 50 are based on the following information.

The articles of incorporation of XYZ Corporation provide, among other

matters, an authorized capital stock of P1, 000, 000.00 divided into 10,
000 shares at P100.00 par value per share. Five thousand shares (5, 000)
shares have been subscribed at P100.00 per share of which 3, 000 shares
have been paid in full while 2, 000 shares have been paid at 80% of the
subscription price. Of the 3, 000 shares paid in full, 100 shares were
reacquired at par value.
48. The issued capital stock of the corporation is:
a. P360, 000.00
b. P500, 000.00
c. P300, 000.00
d. P290, 000.00
49. The outstanding capital stock of the corporation is:
a. P1, 000, 000.00
b. P 500, 000.00
c. P 490, 000.00
d. P 290, 000.00
50. The subscribed capital stock of the corporation is:
a. P500, 000.00
b. P490, 000.00
c. P190, 000.00
d. P200, 000.00
51.How many shares are needed to elect 3 directors and assure each of them a
seat in the board of directors assuming that the articles of incorporation
provide for 11 directors and the corporation has 5, 000 shares outstanding
and entitled to vote?
a. 1, 521 shares
b. 4, 000 shares
c. 1, 667 shares
d. 1, 364 shares
52. Sevilla owned a 5-storey building where he operated at the ground floor Café
de Seville, a restaurant which was frequented by the tenants of the building
and the employees of the neighboring establishments. He also owned an
adjoining vacant lot, which Benitez had been offering to buy for some time.
Eventually, Sevilla sold the vacant lot to Benitez under an agreement that
Benitez should not put any restaurant , catering or similar business on the lot
within 5 years from the time of sale. Benitez completed the construction of a
building on the lot in 6 months and admitted lessees including Peggie’s Place,
an eatery manage by Peggie, Benitez’s sister, and owned by Golden Spoon
Corporation which was incorporated just three months earlier at the instance
of Benitez as principal stockholder owning 95% of the subscribed capital and
Peggie and other investors as minority stockholders. Sevilla now complains
that Benitez violated his agreement with him but Benitez contends that
Golden Spoon Corporation is a different company.
a. Benitez did not violate the agreement because Golden Spoon has a
personality separate and distinct from that of Benitez.
b. Benitez violated the agreement because under the circumstances, he
and the Golden Spoon Corporation should be considered as one.
c. Benitez did not violate the agreement because the eatery is being
managed by another person.
d. Sevilla has no course of action against Golden Spoon under the
Principle of Relativity of Contract because Golden Spoon was not a
party to the agreement between him (Sevilla) and Benitez.
53. The articles of incorporation of Alco corporation, a construction company,
classify its shares into voting common stock and non-voting preferred stock,
and provide for 11 directors. Its by-laws, on the other hand, give the board of
directors the authority to approve transactions not exceeding P2,000,000.00.
Any transaction in excess of the said amount have to be ratified by the
stockholders. In which of the following cases may the preferred stock vote?
a. Approval of a loan amounting to P3,000,000.00 from Equitable Bank.
b. Declaration of stock dividends from the unissued common stock.
c. Increase in the number of directors from 11 to 15.
d. Purchase of cement worth P2,500,000.00 from Davao Cement
Corporation.
54. Which of the following statements pertaining to treasury shares is incorrect?
a. Treasury shares are not part of subscribed capital stock.
b. Treasury shares may be disposed of at a price lower than the par or
issued price provided it is reasonable and approved by the board of
directors.
c. Treasury shares are not entitled to dividends.
d. Treasury shares, once disposed of, entitle the purchaser or transferee
the right to vote.
55. The articles of incorporation of Power Corporation provide for 15 directors.
For the year 2003, only 5 meetings of the board of directors were convened
because of the difficulty in mustering a quorum. In view thereof, some
transactions of the corporation which required board approval did not
materialize resulting in lost profits. In preparation for the annual meeting of
stockholders, the following were considered by the board of directors as
possible solutions for approval of the stockholders:
I. Amending the by-laws reducing the quorum to 6 directors.
II. Providing a by-law for the creation of an executive committee consisting
of 5 members of the board of directors to act on matters that may be
delegated to it by the board.
III. Providing a by-law allowing directors to send representatives during the
board meeting provided that the representative is given a special power of
attorney.
 lV. Amending the articles of incorporation reducing the number of directors
from 15 to 7 effective the expiration of the term of the incumbent directors.
Which of the above proposed solutions may you validly recommend for
submission to the stockholders?
a. I or III b. II or IV c. I or IV d. II or III
56. In which of the following corporations will those composing the corporation be
liable as general partners?
a. Corporation by prescription c. Corporation by estoppel.
b. De facto corporation d. De jure corporation
57. The following statements concerning representative voting were presented to
you for evaluation:
I. The representative acquires legal title to the shares.
ll. It is good only for the meeting for which it was intended.
lll. It is generally revocable, and the stockholder may vote even in the
presence of the representative.
lV. The agreement giving the representative the power to vote must be
duly notarized and a copy thereof must be submitted to the securities
and exchange commission to be effective and enforceable.
a. I and IV apply to voting trust agreement.
b. I and III apply to voting trust agreement.
c. I and IV apply to proxy.
d. I and III apply to proxy.
58. The articles of incorporation of Alpha Corporation, a construction company,
provide for 7 directors. In the monthly meeting of the board of directors held
on April 12, 2004, directors A, B, C, D and E were present and the following
resolutions were approved:
I. A resolution for the purchase of 500 pieces of hollow blocks from
Excellent Concrete Enterprises, a sole proprietorship owned by E.
B, C, D and E voted for the resolution.
II. A resolution appointing T as the new treasurer of the corporation. A,
B, C and D voted for the resolution.
Based on the foregoing:
a. Both resolutions are valid.
b. Both resolutions are not valid.
c. Resolution I is valid; Resolution II is not valid.
d. Resolution I is not valid; Resolution II is valid.
59. Which cause of vacancy in the board of directors may be filled by the board
of directors if the remaining directors still constitute a quorum and by the
stockholders if such quorum does not exist?
a. Removal of a director.
b. Resignation of a director.
c. Increase in the number of directors.
d. Expiration of the term of some directors.
60. Which of the following rights is the subscriber of shares not fully paid who is
not delinquent not entitled to?
a. Right to dividends.
b. Right to vote in stockholders’ meetings.
c. Right to a stock certificate.
d. Right to inspection of corporate books and records.
61. The following statements were presented to you:
I. All ultra-vires acts are illegal acts.
II. An illegal acts are ultra-vires acts.
a. Both statements are true c. I is true; II is false.
b. Both statements are false d. I is false; II is true.
62. The following are transactions pertaining to shares of stock of a certain
corporation:
 I. Subscriptions to 100 shares of stock at P100.00 par value per share
by Mr. AA.
II. Purchase of 30 shares of stock from the corporation’s treasury
shares by Mr. BB at a total price of P300.00.
III. Purchase of 100 shares of stock by Mr. DD, another stockholder.
Which of the above transactions are enforceable although they are not
in writing?
a. I and II b. II and III c. I and III d. I only
63. In which of the following corporate acts in the appraisal right not available?
a. Merger or consolidation.
b. Extension or shortening of corporate existence.
c. Sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of its corporate stock.
d. Investment of funds for the accomplishment of the primary purpose of
the corporation.
64. Which of the following is not a qualification of incorporators of a stock
corporation?
a. They must be natural persons.
b. They must be of legal age.
c. Majority of them must be a citizens of the Philippines.
d. They must be subscribers to at least 1 share of stock of corporation.
65. The certificate of incorporation of Seven Stars Corporation, a trading
corporation, was issued although only 2 of its 5 incorporators are residents of
the Philippines. The corporation created in such a situation is a:
a. de jure corporation.
b. Corporation by estoppel.
c. De facto corporation.
d. No corporation was created at all.
66. The following statements pertaining to the power of a corporation to issue
non-voting shares were presented to you for evaluation:
I. Those classified as “redeemable” or “preferred” may be deprived of
the voting right.
II. All shares of the corporation may be deprived of the voting right.
III. Non-voting shares may vote in certain corporate acts like in the
amendment of the articles of incorporation.
a. I and II are true c. I and III are true
b. II and III are true d. All statements are true
67. Which of the following is not a qualification of directors of a stock
corporation?
a. Each director must be the owner of at least 1 share of stock.
b. Such shares of stock must stand in their name in the books of the
corporation during their term as directors.
c. Majority of the directors must be a citizens of the Philippines.
d. The number of directors should not be less than 5 nor more than 15.
68. Which of the following statements pertaining to the purpose or purposes of a
stock corporation is incorrect?
a. A stock corporation may have more than one purpose.
b. The purposes, if there are several, must be susceptible of being
lawfully combined.
c. The purposes may be stated together in the articles of incorporation.
d. The purposes must be lawful.
69. A stock corporation is similar to a non-stock corporation in what respect?
a. Transferability of shares or of membership.
b. Method of voting directors or trustees.
c. Voting by stockholders or members in person or by proxy.
d. Term of directors or trustees.
70. Which of the following special corporations is required by the Corporation
Code to have its number of directors in multiples of 5, i.e., 10 or 15?
a. A stock educational corporation.
b. A non-stock educational corporation.
c. A corporation sole.
d. A religious society.