RFBT-05 ATTY.

CAPUNO
CORPORATIONS ATTY. VILLEGAS
1. A private corporation commences to have corporate a. merger or consolidation
existence and juridical personality from the date: b. sale, lease, exchange, transfer, mortgage, pledge
a. the officers of the corporation are elected by the or other disposition of all or substantially all of the
stockholders corporate property
b. the incorporators sign the Articles of c. amendment of articles of incorporation
incorporation d. investment of corporate funds in another purpose
c. the Articles of incorporation and the by-laws are e. for any reason
presented to the SEC
d. the SEC issues a certificate of incorporation 9. The by-laws of the non-stock corporation may
under its official seal provide that the meetings of the members of the
e. all of the above non-stock corporation may be held:
a. within the principal place of business only
2. One of the following is not required and does not b. within the Philippines only
form part of the three-fold duties of a director of a c. at any place even outside the place where the
corporation. Which one is it? principal office of the corporation is located
a. Duty of diligence provided within the Philippines
b. Duty of loyalty d. at any place even outside the place where the
c. Duty of obedience principal office of the corporation is located and
d. Duty of efficiency even outside the Philippines
e. anywhere
3. It is one brought by one or more of the stockholders
or members in the name and on behalf of the corporation
10. In case of a delinquent stockholder, the following
to redress wrongs committed against it or to protect or
rights are not given to him, except:
vindicate corporate rights, whenever the officials of the
a. right to receive dividends in accordance with the
corporation refuse to sue, or are the ones to be sued or
provisions of the law
hold control of the corporation.
b. right to vote
a. mandamus
c. right to be voted for
b. quo warranto
d. right of representation at any stockholders’
c. appraisal right
meeting
d. derivative suit
e. individual suit
11. A corporation commences its existence from the
issuance of the certificate of incorporation, which one is the
4. A corporation cannot exist if:
exception?
a. there are incorporators who are juridical persons
a. close corporation
b. there are no articles of incorporation
b. widely-held corporation
c. no incorporating directors or trustees
c. religious corporation
d. there is no name provided for in the articles of
d. non-stock corporation
incorporation
e. educational corporation
e. all of the above
f. None of the above (b,c,d)
12. Stocks which are previously issued and fully paid for
and reacquired by the corporation either by purchase,
5. Unless otherwise provided by the Corporation Code
donation, forfeiture or some other lawful means.
or special law, the number of directors must be:
a. scrip shares
a. not less than five (5) nor more than fifteen (15)
b. treasury shares
b. not more than fifteen (15)
c. scrip shares
c. not less than fifteen (15) not more than twenty-
d. redeemable shares
five (25)
e. delinquent shares
d. more than five (5) nor more than fifteen (15)
e. more than five (5) but not less than fifteen (15)
13. A religious corporation acquires juridical personality
from –
6. Which of the following does not belong in the
a. execution of the articles of incorporation and by-
enumeration?
laws
a. serious misrepresentation as to what the
b. filing of the articles of incorporation and other
corporation can do or is doing
documents
b. the articles of incorporation is not substantially in
c. issuance of the certificate of incorporation from
the form prescribed by law
SEC
c. the purpose is patently unconstitutional, illegal
d. approval of the Securities and Exchange
or immoral
Commission
d. the treasurer’s certification is false.
e. None of the above
7. Which of the following is not a characteristic of
14. Which of the following is not an Involuntary
certificate of stock?
dissolution of the corporation?
a. tangible
a. by the vote of the board of directors and
b. may not be issued even if the subscription is not
stockholders, where no creditors are affected
fully paid
b. non-use of corporate charter
c. written evidence of ownership of the shares
c. receipt of a lawful order of the court dissolving
d. intangible
the corporation
d. continuous inoperation of a corporation
8. The appraisal right can be exercised by a stockholder
15. Voting requirement for the amendment of the by-
under the conditions provided by law, which one of
laws.
the following is the ground in case of close
a. 2/3 of the outstanding capital stock
corporation?
 b. majority of the board of directors certain price. Since the offer was good, Sebastian consented
c. majority of the board consented to by 2/3 of the to the sale. Unknown to Sebastian, at the time of the sale,
outstanding capital stock Fernando was the chief negotiator of Longan Corp. in selling
d. majority of the board of directors consented to by its substantial property to the government at a price which
majority of the outstanding capital stock greatly enhanced the value of the stock. Under what doctrine
is Fernando as director of the corporation liable?
a. Doctrine of Corporate Opportunity
16. One of the characteristics of treasury shares is that:
b. Special Fact Doctrine
a. they have the status of outstanding shares
c. Business Judgment Rule
b. they may not be reissued or sold again
d. Trust Fund Doctrine
c. they can vote in the election of directors
e. Doctrine of Alter Ego
d. they participate neither in dividends not in the
f. Doctrine of Special Theory
meetings of the corporation as voting stocksa
e. they can be reacquired by the corporation
23. Hokkaido, Hakone, Ajinamoto, Nissin and Oishi are
regardless of the existence of unrestricted retained earnings
five Japanese citizens who organized a corporation in the
Philippines and registered in the same in the office of the
17. It means the total shares of stock issued to
Securities and Exchange Commission
subscribers or stockholders, whether or not fully or partially
a. It is a foreign corporation
paid (as long as there is a binding subscription agreement),
b. It is a domestic corporation
except treasury shares.
c. It is a nationalized corporation
a. authorized capital stock
d. It is partly nationalized
b. paid-up capital stock
e. Answer not given
c. shares in escrow
d. voting stock
24. The corporate existence may be disregarded
e. outstanding capital stock
where the entity is formed or used for illegal purposes.
a. Doctrine of Limited Capacity
18. The following are the advantages of par value
b. Doctrine of Piercing the Veil of Corporate Fiction
shares, which is one is not?
c. Doctrine of Corporate Fiction
a. easily sold
d. Alter Ego Doctrine
b. easily issued as fully paid and non-assessable
c. greater protection to creditors
25. A corporation can be formed for the practice of
d. unlikelihood of distribution of dividends that are
law, medicine or other professions.
only ostensible profits
a. True, the rights are granted explicitly under the
e. unlikelihood of sale of subsequently issued shares
law
at a lower price
b. True, since the same right is allowed in
partnerships
19. The following are some of the corporate acts that
c. False, because the principle of delectus
need the vote of stockholders holding 2/3 of the authorized
personarum applies in corporation.
capital stock. Which should not be included?
d. False, because consent of all the corporators is
a. Adoption, amendment or repeal of by-laws.
necessary.
b. Amendment of articles to increase or decrease
e. None of the following
capital stock.
c. Incurring, creation or increase of bonded
Choices from Question Nos. 26-31
indebtedness.
a. All are true f. I is false; II and III are true
d. Approval of merger or consolidation. b. All are false g. I and II are false; III is true
c. I is true; II and III are false h. I and III are false; II is true
d. I and II are true, III is false i. None of the above
20. Statement No. I – Dividends shall be deemed non- e. I and III are true; II is false
cumulative in the absence of an agreement.
Statement No. 2 – Shares without par value may be 26. Statement No. 1 - The remedy against a corporation
issued for a consideration less than the value of P5.00 per de jure is a quo warranto proceeding against the said
share corporation to oust it from the exercise of corporate powers
a. No.1 is true; No.2 is false usurped by it and to have it dissolved.
b. No.1 is false; No.2 is true Statement No. 2 - The issuance of the certificate of
c. Both are true incorporation gives the corporation the legal personality and
d. Both are false the authority to do business.
e. None of the above Statement No. 3 - The vote of the majority of the
outstanding capital stock is sufficient for the removal of the
21. I - Stock corporations are formed by not less than directors. B
five but not more than 15 incorporators who are natural
persons
27. Statement No. 1 - Proxy voting is allowed in the
II - Corporation sole is composed of only one
election of the board of directors.
natural person
Statement No. 2 - Under the law, the secretary of
III - Corporation may exist for not more than 50
the corporation must be a director of the corporation.
years from the date of incorporation unless sooner dissolved
Statement No. 3 - Under the law, the secretary of
or unless said period is extended.
the corporation must be a resident and citizen of the
IV – Corporation is automatically dissolved if it fails
Philippines. E
to do any business within 2 years from date of incorporation
a. I, II, III and IV are true
28. Statement No. 1 - If the vacancy results by reason
b. I and II are true, III and IV are false
of increase in the number of directors or trustees and the
c. I, II and III are true, IV is false
remaining directors or trustees still constitute a quorum, the
d. I, II, III and IV are false
remaining directors or trustees can be filled by them.
e. Answer not given (F, T, F, F)
Statement No. 2 - The acts done by a disloyal
director may be ratified by the vote of the stockholders
22. Sebastian, one of the stockholders of Longan Corp
owning or representing at least 2/3 of the outstanding capital
was convinced by Fernando, one of the directors of said
stock.
corporation to sell to him (Fernando) his stockholding for a
 Statement No. 3 - In case of the abandonment of 36. Stikki Cement corporation (STIKKI) was organized
the contract for the sale or disposition of all or substantially primarily for cement manufacturing. Anticipating substantial
all of the corporate assets, approval of the stockholders is not profits, its president proposed that STIKKI invest in (a) a
necessary. F power plant project, (b) concrete road project, and (c) quarry
operations for limestone used in the manufacture of cement.
29. Statement No. 1 - After the incorporation of the What vote is needed if the aforementioned are reasonably
corporation, it is given one year after official notice of the necessary to manufacture of the cement?
issuance of certification from SEC to make by-laws. a. majority of the board and 2/3 vote of the
Statement No. 2 - A stockholder’s indebtedness to a outstanding capital stock
corporation under a subscription agreement cannot be b. majority of the board of directors
compensated or set-off with the amount of his shares in the c. majority of the stockholders and majority of the
same corporation there being no relation of creditor and board of directors
debtor with regard to such shares. d. majority of the stockholders
Statement No. 3 - The stockholders have the power e. 2/3 vote of the outstanding capital stock
to declare dividends in case of stock dividends. H
37. These do not form part of the outstanding capital
stock:
30. Statement No. 1 - Two-thirds (2/3) vote on the part
a. bonus shares
of the board of directors is required to declare cash
b. treasury shares
dividends.
c. redeemable shares
Statement No. 2 - The declaration of cash dividends
d. founder’s shares
creates a debt from the corporation in favor of its
e. preferred shares
stockholders.
Statement No. 3 - A corporation can be an
38. The distinction between subscription of shares from
incorporator. F
purchase of shares is that in subscription of shares:
a. it is an independent agreement between the
31. Statement No. 1 - If the shares of stock have no par individual and the corporation to buy shares of stock from it
value, the corporation has no authorized capital stock, but it at a stipulated price.
has capital stock, the amount of which is not specified in the b. it takes place before or after incorporation and is
articles of incorporation as it cannot be determined until all generally paid in installment or upon a call.
the shares have been issued. c. in case on insolvency of the corporation, the
Statement No. 2 - No par values shares may not be subscription price cannot be enforced on the theory that the
issued without being fully paid. corporation can no longer perform its obligation to deliver the
Statement No. 3 - Stockholders are liable with their certificate of stock.
separate property for the payment of the debts of the d. answer not given
corporation. D
39. One of the characteristics of treasury shares is that:
32. A writing or certificate issued to a stockholder a. they have the status of outstanding shares
entitling him to the payment of money or the like at some b. they may not be reissued or sold again
future time inasmuch as the corporation at the time of such c. they participate neither in dividends nor in the
dividends are declared has profits in cash, or has no sufficient meetings of the corporation as voting stocks
cash, or has cash but wishes to reserve it from some d. answer not given
corporate purposes.
a. optional dividend 40. Watered stocks are shares of stock issued by the
b. bond dividend corporation for a consideration less than its par or issued
c. stock dividend value or for a consideration in any form other than cash,
d. scrip dividend valued in excess of its fair value. In this regard:
e. liquidating dividend a. the issue itself is void
b. the agreement that it shall be paid for less than its
33. Which of the following does not belong to the par value is illegal and void and cannot be enforced.
limitation of the Executive Committee? c. the subscriber or purchaser shall not be liable for
a. filling of the vacancies in the board the full par value of the shares
b. the amendment or repeal of by-laws or the d. answer not given
adoption of new by-laws
c. determination of the presence of the quorum 41. An officer of a corporation may hold two or more
d. distribution of cash dividends positions in the corporation but not as:
e. amendment or repeal of any board resolution a. Chairman of the Board and President
b. President and Treasurer
34. Which of the following does not require the 2/3 vote c. Secretary and Treasurer
of the stockholders? d. Vice-President and Secretary
a. entering into management contracts
b. power to shorten or extend corporate term 42. The right of the corporation to exist as a juridical
c. sale or disposition of corporate assets person during its term as stated in its Articles of
d. investment of corporate funds in another Incorporation despite the death of any of its stockholders is:
corporation a. right of existence
b. right of redemption
35. Which of the following does not belong in the c. right of succession
enumeration? d. pre-emptive right
a. elimination of fractional shares
b. redemption of redeemable shares 43. The nationalilty of a corporation is determined by the
c. satisfaction of indebtedness to the corporation place of the controlling stockholders, This test is:
d. payment of shares of dissenting or withdrawing a. Control test
stockholders b. Domicile test
e. satisfaction of corporation’s indebtedness c. Incorporation test
d. Management test
 44. Contracts between a corporation and third persons d. corporation by prescription
must be made by or under the authority of its:
a. Board of Directors 53. This is a characteristic of a stock corporation as
b. Stockholders distinguished from a non-stock corporation
c. President and chief Operating Officer a. the powers are vested in the Board
d. General Manager b. the members can vote by mail
c. it is formed by at least 5 but not more than 15
45. Purely ultra vires acts of the officers of corporation persons
to invest corporate funds in another business or corporation, d. it is organized for profit
i.e acts not contrary to law, morals, public policy may be
ratified by: 54. Amount equal to the aggregate par value or issued
a. the stockholders holding two-thirds (2/3) of the value of the outstanding capital stock
voting power a. Legal Capital
b. majority vote of all the members of the Board b. Unissued capital stock
c. The stockholders holding one-half (1/2) of the c. Outstanding capital stock
voting power d. authorized capital stock
d. majority vote of the Board of Directors present
55. Shares without par value may not be issued for a
46. The following are the requisites, except one for a consideration
valid declaration of stock dividend: a. less than P1 per share
a. existence of original and unissued shares b. less than P5 per share
b. dividend declarations is made by the Board of c. Outstanding capital stock
Directors and approved by 2/3 of the outstanding capital d. less than P100 per share
stocks
c. it is issued to increase the authorized capital 56. If the remaining directors constitute a quorum, they
d. existence of the unrestricted retained earnings can fill up the vacancy
a. in case of removal of the director
47. Which of the following is a disadvantage of forming b. in case of expiration of the term of director
a corporation: c. if there is an increase in the number of directors
a. the shareholders are not liable for the debts of the d. in case of resignation of a director
business
b. the subservience of minority stockholders to the
wishes of the majority subject only to equitable restraints
57. Stock dividends differ from cash dividend in that
c. Because of the power of succession, the existence
stock dividends
of the entity is not affected by the personal vicissitudes of the
a. do not increase capital stock
individual shareholders.
b. involves the disbursements of corporate funds
d. the free and ready transferability of ownership
c. require the approval of both the board of directors
and the stockholders
48. The corporation shall be deemed dissolved and its
d. once received by the stockholders, are beyond the
corporate powers cease, if from the of its incorporation, it
reach of corporate directors
does not formally organize and commence the transaction of
its business
58. Rules of action adopted by the corporation for its
a. 4 years
internal government and for the government of its officers
b. 3 years
and of its stockholders or members
c. 2 years
a. contract
d. 5 years
b. Articles of Incorporation
c. Ultra vires act
49. A representative action where a stockholder brings
d. By-Laws
an action in the name and in behalf of the corporation and
any relief obtained belongs to the corporation and not to the
59. A stockholders’ option to subscribe to allotment of
stockholders individually or collectively.
shares in proportion to his holding of outstanding shares.
a. Individual suit
a. Voting right b. Pre-emptive right
b. Derivative suit
c. Ultra vires act d. Appraisal right
c. Representative suit
d. Corporate suit
60. For purposes of interlocking directors, the
stockholdings shall be considered substantial if:
50. Cash dividend as distinguished from stock dividend
a. exceeding 10% of the authorized capital stock
a. needs stockholders approval
b. exceeding 10% of the outstanding capital stock
b. declared by the board of directors
c. exceeding 20% of the authorized capital stock
c. not a taxable income
d. exceeding 20% of the outstanding capital stock
d. results to withdrawal of assets from the
corporation
61. Shares deposited by the seller or his agent with a
bank or third party to be delivered to the buyer or subscriber
51. A non-voting stock may vote in the following acts,
only upon the fulfillment of the stipulated suspensive
except in the case of:
condition.
a. approval of the compensation of directors
a. Promotion shares b. Founder’s shares
b. merger or consolidation
c. Redeemable shares d. Escrow stock
c. increase or decrease of capital stock
d. sale, lease, exchange of all or substantially all of
62. 73.  X Corporation posted a P1M profit in its realty
corporate property
business and its real estate has appreciated in value to the
tune of P4M. The board then declared dividends to its
52. Under this theory, the nationality of the corporation
stockholders computed on the basis of representing profits
is that of the country under whose laws it was formed
and appreciation in value of its real estate. Is the dividend
a. Control test
declaration valid?
b. Incorporation test
c. Corporation by estoppel
 a. Not valid because there was no approval of 2/3 of
the outstanding capital stock.
69.   A director of a corporation may be removed from the
b. Valid because it was based on profit and increment in
office by a vote of the stockholders holding representing:
the value of the corporate assets.
a. Majority of the outstanding capital stock
c. Not valid because the dividends must only come from
b. 2/3 of the stockholder
unrestricted retained earnings
c. 2/3 of the OCS
d. Valid if no creditors shall be prejudiced and approved
d. Majority of the stockholders
by the required votes of the directors and
stockholders.
70. The effectivity of the Founders’ Shares.
a. 3 years
63. S1 - After dissolution but within the three-year period of
b. 4 years
liquidation a corporation’s term may still be extended by
c. 5 years
amendment of its articles of incorporation.
d. 10 years
      S2 - The dissolution of a corporation shall take place
because it has been in continuous non-operation for 2 years. 71. Vote in Corporations vested with public interest in case of
a. Both statements are false Self-dealing director.
b. Both are true.  a. majority of the BOD and 2/3 of OCS
c. First is false, second is true. b. majority of the BOD and majority of OCS
d. First is true, second is false c. majority of the BOD and 2/3 of Independent
directors
64.  The doctrine of corporate opportunity rests on the d 2/3 of the BOD and majority of the independent
unfairness of an officer or director of a corporation taking directors
advantage of an opportunity for his own personal benefit e. Answer not given
adverse to the corporation.
       The by-laws must be filed with the SEC for the 72. Period to notify in case of election of Regular Meeting of
corporation to acquire juridical personality. Stockholders.
a. Both statements are true a. At least 20 days
b. Both are false.  b. At least 21 days
c. First is true, second is false c. 1 week
d. First is false, second is true. d. 2 weeks
e. 10 days

65.   The executive committee cannot act on this matter 73. Percentage requirement to consider stockholdings
except: substantial
a. Filling of vacancy in the board of directors a. exceeds 10%
b. Cash dividend declaration b. exceeds 100%
c. Board resolution on depository bank of the c. exceeds 20%
corporation d. exceeds 25%
d. Stock dividend declaration e. exceeds 30%

66.   At the annual meeting of ABC Corporation for the 74. Period for Pre-Incorporation Subscription Contract
election of five directors, A, B, C, D, E, F and G were a. at least 1 month
nominated.   A, B, C, D and E received the highest number b. at least 3 months
of votes and proclaimed elected. F received ten votes less c. at least 6 months
than E. Subsequently, E sold his shares to F. Who between E d. at least 1 year
and F has the right to attend as director in the board
meeting?  The transfer of shares having been registered with 75. Period for notation of Certificate of Stock in case of
the corporation. exercise of Appraisal Right
a. 20 days
a. E is the director because his term is one year until
b. 3 days
his successor is elected and qualified
c. 15 days
b. F is the director for he has acquired all the shares of
d. 10 days
E.
e. 30 days
c. Either of them shall be the director
d. Neither of them shall be the director
76. Annual Financial Statements need not need an
independent CPA if the total assets or liabilities is –
67.  S1 The merger or consolidations of corporations become
a. below 50,0000
effective upon approval by the constituent corporations of the
b. below 100,000
plan of merger or consolidation as the case may be.
c. below 500,000
       S2 After the merger the absorbed corporation must
d. below 600,000
undertake dissolution and winding-up procedures.
e. below 1 Million
a. Both statements are false
b. Both are true. 77. The following are penalties imposable by SEC, except:
c. First is false, second is true. a. Escheat
d. First is true, second is false. b. Contempt
c. Dissolution
68.   The corporation has nine-member board. Two of the d permanent cease and desist
members have sold their shares while two others are abroad. e. Suspension of COI
To have a quorum, the number required is:
a. Seven “There is light at the end of the rainbow”
b. Five
c. Three
d. Four