01F

– Salazar

Statement 1: Each of the incorporators of Stock Corporation must own or be a subscriber to at

least one (1) share of the capital stock of the corporation.
Statement 2: All persons who assume to act as a corporation knowing it to be without authority
to do so shall be liable as general partners for all debts, liabilities and damages incurred or
arising as a result thereof.
A. Both are true
B. Both are false
C. True, False
D. False, True

ANSWER: A. Both are true

Statement 1 is true. Based on Section 10 of the Revised Corporation Code of the Philippines
entitled Number and qualiLications of incorporators, it states that ".. Each incorporator of a Stock
Corporation must own or be a subscriber to at least one (1) share of the capital stock of the
corporation. .. "
while Statement 2 is also correct, because based on section 20 of the Revised Corporation Code of
the Philippines entitled Corporation by Estoppel, states that "All persons who assume to act as a
corporation knowing it to be without authority to do so shall be liable as general partners for all
debts, liabilities and damages incurred or arising as a result thereof. .."
Thus statement 1 & 2 are both true.

02F – De Chavez

Three of the following are qualiLications of the Board of Directors. Which is the exception?
A. He must own at least one (1) share of the capital stock
B. At least majority of them are citizens of the Philippines
C. The shares owned must be recorded in the books of the corporation.
D. He must continuously own at least one (1) share of the stock of the corporation

ANSWER: B. At least majority of them are citizens of the Philippines.

According to Sec. 23 of the Corporation Code, every director must own at least one (1) share 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. Any director who ceases to be the owner of at least one (1) share
of the capital stock of the corporation of which he is a director shall thereby cease to be a director.
A majority of the directors must be residents of the Philippines but there is no citizenship
requirement demanded of the members of the board of directors under the Code.
03F – Pilar

A Corporation may be dissolved voluntarily or involuntarily based on several causes. Which of the
following is a cause for the automatic dissolution of a corporation?
a.) Failure to Lile the required report to the Securities and Exchange Commission
b.) Failure to continue the business for at least Live (5) years
c.) Failure to formally organize and commence business within Live years from the issuance of the
certiLicate of incorporation
d.) Failure to Lile its corporate by-laws with the Securities and Exchange Commission within
thirty days from the issuance of the CertiLicate of incorporation

ANSWER: C. Failure to formally organize and commence business within Live years from the
issuance of the certiLicate of incorporation
Because According to Section 21 of the Revised Corporation Code of the Philippines, entitled
Effects of Non-Use of Corporate Charter and Continuous Inoperation; states that if a corporation
DOES NOT FORMALLY ORGANIZED AND COMMENCE ITS BUSINESS WITHIN FIVE(5) YEARS
FROM THE DATE OF ITS INCORPORATION its certiLicate of incorporation SHALL BE DEEMED
REVOKED as of the day following the end of the Live(5) -year period. Thus, Failure to formally
organize and commence business within Live years from the issuance of the certiLicate of
incorporation may cause for the automatic dissolution of a corporation.

04F - Soriano

Their names are mentioned in the articles of incorporation as originally forming the corporation
and signatories thereof.
A. Corporators
B. Stockholders
C. Incorporators
D. Members

ANSWER: C. Incorporators
According to Section 5 of the Revised Corporation Code, Incorporators are those stockholders or
members mentioned in the articles of incorporation as originally forming and composing the
corporation and who are signatories thereof.
They are the ones who executed and signed the articles of incorporation, having a principal
function of incorporating and enabling a corporation to become a body politic and corporate
under the law.
05F - Mediarito

X subscribed 10,000 shares in the capital stocks of AAA Corporation. He paid 50% of the 10,000
shares. X asked the Corporate Secretary to issue him the corresponding stock certiLicate
representing the 50% of what he already paid. The Corporate Secretary of the corporation
refused. Was the Corporate Secretary correct?
a. The Corporate Secretary is correct because the Corporation Code provides that no certiLicate of
stock shall be issued to a subscriber until the shares as subscribed have been fully paid.
b. The Corporate Secretary cannot refuse because a Stock CertiLicate can be issued corresponding
to the percentage of shares which were paid.
c. The Corporate Secretary cannot refuse because a CertiLicate of Stock can be issued provided it
is indicated in the CertiLicate the actual percentage of what has been paid.
d. The Corporate Secretary cannot refuse because it is his legal duty to issue a stock certiLicate
corresponding to the number of shares actually subscribed regardless of the actual payment.

ANSWER: A. The Corporate Secretary is correct because the Corporation Code provides that no
certiLicate of stock shall be issued to a subscriber until the shares as subscribed have been fully
paid.
According to Section 63 of the Revised Corporation Code, No certiLicate of stock shall be issued to
a subscriber until the full amount of the subscription together with interest and expenses (in case
of delinquent shares), if any is due, has been paid.
X has subscribed 10,000 shares, the certiLicate of stock shall only be issued upon the full payment
of such because it is indivisible. Since X has only paid 50% of the total amount, no certiLicate of
stock can be issued to him by the corporate secretary.

06F - Zoleta

Which of the following is not correct?

a. All corporators are shareholders
b. A director must be a shareholder.
c. All incorporators are shareholders.
d. All corporators are incorporators.

ANSWER: D. All corporators are incorporators.

Section 5 states that corporators are those who compose a corporation whether as stockholders
or members. Incorporators are those stockholders or members mentioned in the articles of
incorporation as originally forming and composing the corporation and who are signatories
thereof . So all incorporators are corporators but a corporator is not necessarily an incorporator.
It is also a requirement under Sec. 23 that every director must own at least one share of capital
stock of the corporation of which he is a director, therefore all directors are shareholders.
07F - Katigbak

It is the right which the stockholders of a corporation has their right to subscribe or to purchase
new stock issued by the corporation; or unissued original stock in proportion to their holdings
before it can be offered to others.
A. Right of redemption
B. Pre-emptive right
C. Right to purchase
D. None of them

ANSWER: B. Pre-emptive right

This in accordance with sec 38 of the Revised Corporation Code which states that:
All stockholders of a stock corporation shall enjoy preemptive right to subscribe to all issues or
disposition of shares of any class, in proportion to their respective shareholdings, unless such
right is
denied by the articles of incorporation or an amendment thereto.

08F - Aman

A corporation acquires juridical personality:

A. Upon the Lilling of the articles of incorporation.
B. Upon the Lilling of by-laws.
C. Upon the issuance of the certiLicate of incorporation.
D. Within 30 days from the receipt of the notice of the issuance of the certiLicate of incorporation.

ANSWER: C. Upon the issuance of the certiLicate of incorporation.

According to Sec. 19, a private corporation formed or organized under the Code commences to
have corporate existence and juridical personality and is deemed incorporated from the date the
Securities and Exchange Commission issues a certiLicate of incorporation under its ofLicial seal.
Therefore, a corporation acquires juridical personality upon the issuance of the certiLicate of
incorporation.

09F - Purisima

Under this doctrine, the separate personality of a corporation may be disregarded if it is 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 capacity.

ANSWER: B. Doctrine of piercing the veil of corporate entity.

As a general rule, a corporation is an artiLicial being invested by law with a personality separate
and distinct from its stockholders and from other corporations to which it may be connected.
The doctrine applies only when such corporate Liction is used to defeat public convenience, justify
wrong, protect fraud or defend crime.

10F – Cuevas

Treasury shares
A. Shall have no voting rights as long as they remain in the treasury
B. Are not part of the outstanding capital stock
C. May again be disposed of for a reasonable price, even at less than par, by the Board of Directors
D. All of the above

ANSWER: The answer is letter d. All of the above

As for the voting right for treasury shares, it is stated under Sec. 56 of the RCC that, "Treasury
shares shall have no voting right as long as such shares remain in the treasury."
On the other hand, Sec. 173 of the RCC deLines the term “outstanding capital stock” as the total
shares of stock issued under binding subscription contracts to subscribers or stockholders,
whether fully or partially paid, except treasury shares. So therefore, treasury shares are not part
of the outstanding capital stock.
And lastly, according to Sec. 9 of the same Code, "Treasury shares are shares of stock which have
been issued and fully paid for, but subsequently reacquired by the issuing corporation through
purchase, redemption, donation, or some other lawful means. Such shares may again be disposed
of for a reasonable price Lixed by the board of directors."

11F - Cueto

A distribution by a corporation to its existing shareholders of shares of stock held by it in another

corporation is considered as _____________.
A. Stock Dividend
B. Property Dividend
C. Sale of Treasury Shares
D. Sale of Capital Assets

ANSWER: B. PROPERTY DIVIDEND

A distribution by a corporation to its existing shareholders of shares of stock held by it in another
corporation is considered as property dividend.
In addition, under the Philippine law, dividends may be declared out of a corporation’s
unrestricted retained earnings which shall be payable in cash, in property, or in stock to all
stockholders on the basis of outstanding stock held by them. The amount of retained earnings
available for declaration as dividends may be determined pursuant to regulations issued by the
SEC. The approval of the board of directors is generally sufLicient to approve the distribution of
dividends, except in the case of stock dividends which requires the approval of stockholders
representing not less than two-thirds (2/3) of the outstanding capital stock at a regular or special
meeting duly called for the purpose.
Sourced from:
http://www.topfrontier.com.ph/pdf/Dividend%20Policy.pdf
http://delcode.delaware.gov/title8/c001/sc05/index.shtml

12F - Ricafort

Statement 1: Corporators in a stock corporation are called stockholders or shareholders

Statement 2: Corporators in a non-stock corporation are called trustees
a. Only statement 1 is true
b. Only statement 2 is true
c. Both statements are true
d. Neither of the two statements is true

ANSWER: A. only statement 1 is true

Stated in Section 5, that corporators in a stock corporation are called stockholders or
shareholders while corporators in a non-stock corporation are called members.
Thus making statement 2 incorrect.

13F - Albrando

S1: The removal of a director must take place in a regular meeting of the corporation or in a
special meeting called for the purpose.
S2: The election must be made through the raising of hands if requested by any voting
stockholder or member. If there is no such request, voting may be made through other means like
secret ballot.
A. True; True
B. True; False
C. False; False
D. False; True

ANSWER: B. True ; False

Statement 1 is true since it is expressly stated in Section 27 of the Revised Corporation Code that
removal of a director shall take place either at a regular meeting of the corporation or at a special
meeting called for the purpose, and in either case, after previous notice to stockholders or
members of the corporation of the intention to propose such removal at the meeting.
Statement 2 is false because in Section 23 of the RCC which is about the election of directors or
trustees, it is stated therein that election must be by ballot if requested by any voting stockholder
or member. The mode of election that may be requested is by ballot, not by the raising of hands
which is the default mode of election.

14F - Santayana

Statement 1: Directors or trustees shall not participate in the determination of their own per
diems or compensation.
Statement 2: In no case shall the total yearly compensation of directors exceed ten percent (10%)
of the net assets of the corporation during the preceding year.
a. True : True
b. False : False
c. False : True
d. True: False

ANSWER: Correct answer is letter D, True : False

Sec. 29 of the Revised Corporation Code, par. 3, expressly states that "Directors or trustees shall
not participate in the determination of their own per diems or compensation." which makes the
Lirst statement correct.
However, par. 2 of the same Section stated that "In no case shall the total yearly compensation of
directors exceed ten percent (10%) of the net income before income tax of the corporation during
the preceding year." which makes the second statement incorrect. The base should be the net
income before income tax instead of net assets.

15F – Tan

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 be prescription

ANSWER: A. De Jure Corporation

De jure corporations – juridical entities created or organized in strict or substantial compliance

with the statutory requirements of incorporation and whose right to exist as such cannot be
successfully attacked even by the State in a quo warranto proceeding.
16F – Macaranas

In a corporation, two or more positions may be held concurrently by the same person, except that
no one person shall act as:
a. President and Chairman of the Board
b. Secretary and Treasurer
c. Treasurer and Director
d. President and Secretary

ANSWER: Answer: D. President and Secretary

Because under Sec. 25. Corporate ofLicers, quorum. - Immediately after their election, the
directors of a corporation must formally organize by the election of a president, who shall be a
director, a treasurer who may or may not be a director, a secretary who shall be a resident and
citizen of the Philippines, and such other ofLicers as may be provided for in the by-laws. Any two
(2) or more positions may be held concurrently by the same person, EXCEPT THAT NO ONE
SHALL ACT AS PRESIDENT AND SECRETARY OR AS TREASURER AND TREASURER AT THE SAME
TIME.

17F - Jornadal

Statement I: Any vacancy occurring in the board of directors or trustees by removal or by

expiration of term may be Lilled by the vote of at least a majority of the remaining directors or
trustees.
Stetement II: A director or trustee elected to Lill a vacancy shall be referred to as replacement
director or trustee and shall serve only for the unexpired term of the predecessor in ofLice.
A. Both Statements are True
B. Only Statement I is True
C. Only Statement II is True
D. Both Statements are False

ANSWER: C. Only Statement II is true

The Lirst statement is false as it is explicitly provided in Section 28, par. 1 of the Revised
Corporation Code that any vacancy occurring in the board of directors or trustees other than by
removal or by expiration of term may be Lilled by the vote of at least a majority of the remaining
directors or trustees, if still
constituting a quorum; otherwise, said vacancies must be Lilled by the stockholders or members
in a regular or special meeting called for that purpose.
On the other hand, the second statement is true because par. 2 of the same section states that a
director or trustee elected to Lill a vacancy shall be referred to as replacement
director or trustee and shall serve only for the unexpired term of the predecessor in ofLice.
18F - Benedicto

This shall constitute a quorum for transaction of corporate business.

A. Majority of the members
B. Majority of the stockholders
C. Majority of the directors
D. All of them

ANSWER: C. Majority of the directors

Under Sec. 52 of the Revised Corp Code, unless the articles of incorporation or the bylaws
provides for a greater majority, a MAJORITY OF THE DIRECTORS as stated in the articles of
incorporation shall constitute a quorum to transact corporate business, and every decision
reached by at least a majority of the directors constituting a quorum, except for the election of
ofLicers which shall require the vote of a majority of all the members of the board, shall be valid
as a corporate act.

19F - Pulumbarit

The Board of Directors of Pulutan Corp. consist of 15 members, where: one died (1) two (2) of
them resigned, two (2) is abroad, the quorum would be?
a. 8
b. 7
c. 6
d. 5

ANSWER: A. 8
As stated in Section 52 of the Revised Corporation Code, unless the articles of incorporation or
the bylaws provides for a greater majority, a MAJORITY of the directors or trustees AS STATED IN
THE ARTICLES OF INCORPORATION shall constitute a quorum to transact corporate business,
which means that the base to be used in determining the quorum is the number of directors in
the AOI which in this case is Lifteen, regardless of the current composition of the board, thus, the
director who died, the 2 directors who already resigned, and also the 2 current directors abroad
are included in the base. Hence, the quorum will be the majority of 15, and the word majority
means more than half, so the quorum in this case is 8.

20F – Ilao

Directors may be given compensation through any of the following ways, except by:
A. The vote of the stockholders representing at least majority of the outstanding capital stock.
B. a provision in the by-laws
C. The vote of the board of directors if the compensation is a reasonable per diem.
D. The vote of the board of directors if the compensation is other than per diems
ANSWER: D. The vote of the board of directors if the compensation is other than per diems.
Sec. 29, par. 1 of the Revised Corporation Code provides that "In the absence of any provision in
the bylaws Lixing their compensation, the directors or trustees shall not receive any
compensation in their capacity as such, except for reasonable per diems: Provided, however, That
the stockholders representing at least a majority of the outstanding capital stock or majority of
the members may grant directors or trustees with compensation and approve the amount thereof
at a regular or special meeting."
Letter A is explicitly stated whereas the remaining choices support the concept that there should
Lirst be a provision in the bylaws regarding the compensation and if there is none, the directors or
trustees shall NOT receive any compensation EXCEPT for reasonable per diems, meaning, only
reasonable per diems are the acceptable compensation.

21F – De Leon

I. Any director or trustee of a corporation may be removed from ofLice by a vote of the
stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock
II. Directors can be compensated for at least 15% of the net income before income tax of the
corporation during the preceding year.
A. Only statement I is true
B. Only Statement II is true
C. Both statements are true
D. Both statements are false

ANSWER: A. Only statement I is true.

Sec. 27, par. 1 of the Revised Corporation Code validates the Lirst statement which the section
provided: "Any director or trustee of a corporation may be removed from ofLice by a vote of the
stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or
in a nonstock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote"
However, the second statement is incorrect because in Sec. 29, par. 2 of the RCC, it expressly
states that "In no case shall the total yearly compensation of directors exceed ten percent (10%)
of the net income before income tax of the corporation during the preceding year." It should be
ten percent (10%) not Lifteen percent (15%).

22F - Magana

Who may vote the shares without the need of any written proxy?
A. The pledgee of shares of stock.
B. The mortgagee of shares of stock.
C. The executor of an estate which owns the shares of stock.
D. The stockholder who transferred his shares in a voting trust agreement.
ANSWER: C. The executor of an estate which owns the share of stock.
According to Section 54 of the RCC, executors, administrators, receivers, and other legal
representatives duly appointed by the court may attend and vote in behalf of the stockholders or
members without need of any written proxy.

23F – Reyes

In a corporation, any two (2) or more positions may be held concurrently by the same person,
except that no one (1) person shall act as:
A.Chairman of the Board and President
B.Secretary and Treasurer
C.President and Secretary
D.Treasurer and Director

ANSWER: C. President and Secretary

RCC Section 24 states that the same person may hold two (2) or more positions concurrently,
except that no one shall act as president and secretary or as president and treasurer at the same
time, unless otherwise allowed in this Code.

24F – San Agustin

I. If a corporation does not formally organize and commence its business within Live (5) years
from the date of its incorporation, its certiLicate of incorporation shall be deemed revoked as of
the day following the end of the Live (5) year period.
II. A delinquent corporation shall have a period of Live (5) years to resume operations and comply
with all requirements that the Commission shall prescribe.
a. True; True
b. True; False
c. False; True
d. False; False

ANSWER: B. True, False

The Lirst statement is True in accordance in Section 21 of the Revised Corporation Code which
states that if a corporation does not formally organize and commence its business within Live (5)
years from the date of its incorporation, its certiLicate of incorporation shall be deemed revoked
as of the day following the end of the Live (5)year period.
The second statement is False because a corporation with a delinquent status only have 2 years to
resume operations and comply with all requirements that the Commission shall prescribe as
stated also in the Section 21 of the same code.
25F - Constantino

The voting requirement to increase or decrease capital stock

A. Majority vote of the board of directors and consented by the stockholders representing two-
thirds (2/3) of the outstanding capital stock
B. Two-thirds (2/3) vote of the board of directors with the consent of majority of outstanding
capital stock
C. Majority vote of the board of directors and with consent if majority of the outstanding capital
stock
D. Majority vote of the board of directors and three-fourths (3/4) vote of the outstanding capital 2
The voting requirement to increase or decrease capital stock

ANSWER: A. Majority vote of the board of directors and consented by the stockholders
representing two-thirds (2/3) of the outstanding capital stock
Section 37 of the Revised Corporation Code which speaks of Power to Increase or Decrease
Capital Stock; Incur, Create or Increase Bonded Indebtedness states that no corporation shall
increase or decrease its capital stock or incur, create or increase any bonded indebtedness unless
approved by a majority vote of the board of directors and by two-thirds (2/3) of the outstanding
capital stock at a stockholders’ meeting duly called for the purpose.

26F - Gabia

Statement 1: When the single stockholder's incapacity to perform the affairs of the OPC is
temporary, the nominee shall sit as temporary shareholder until the original shareholder, by self
determination, regains the capacity to perform such duties.
Statement 2: When the single stockholder's incapacity to perform the affairs of the OPC is
permanent, the nominee shall sit as director and manage the affairs of the One Person
Corporation until the legal heirs of the single stockholder have been lawfully determined, and the
heirs have designated one of them or have agreed that the estate shall be the single stockholder of
the One Person Corporation.
A. Only Statement 1 is correct
B. Only Statement 2 is correct
C. Both the Statements are correct
D. Neither is correct

ANSWER: B. Only Statement 2 is correct.

Section 125, paragraph 1 of the Revised Corporation Code of the Philippines states that when the
incapacity of the single stockholder is temporary, the nominee shall sit as a director and manage
the affairs of the One Person Corporation until the stockholder, by self determination, regains the
capacity to assume such duties. Thus, Statement 1 is false since the nominee shall not assume the
temporary position of being the stockholder of such corporation.
27F - Palayan

Regular meetings of stockholders or members shall be held annually on _____________________.

A. A date Lixed in the Articles of Incorporation
B. April 15, if the date was not Lixed in the bylaws
C. Any date in April as determined by the board of directors or trustees, if the date was not Lixed
in the bylaws
D. A date Lixed in the bylaws

ANSWER: D. A date Lixed in the bylaws

According to Sec. 49 of the RCC, Regular meetings of stockholders or members shall be held
annually on a date Lixed in the bylaws, or if not so Lixed, on any date after April 15 of every year as
determined by the board of directors or trustees.

28F - Valdeavilla

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 paying dissenting or withdrawing stockholders

ANSWER: Answer: C. When redeemable shares are repurchased in accordance with the terms
provided in the articles of incorporation
The power to acquire own shares is stated under Section 40 of the Revised Corporation Code. It is
provided that stock corporation shall have the power to purchase or acquire its own shares for a
legitimate corporate purpose or purposes in the following cases ONLY:
(a) To eliminate fractional shares arising out of stock dividends;
(b) 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; and
(c) To pay dissenting or withdrawing stockholders entitled to payment for their shares under the
provisions of this Code.
Therefore C. is the answer wherein it is the only exception from the statements above.

30F - Obciana

A private corporation organized under the corporation law commences to have corporate
existence and juridical personality and is deemed incorporated from:
A. The date when the articles of incorporation is signed by the incorporators
B. When the articles of incorporation and by-laws are presented and received by the Securities
and Exchange Commission and the Liling fee is paid
C. From the date the SEC issues a certiLicate of incorporation under its ofLicial seal
D. When the Articles of Incorporation is notarized by a Notary Public

ANSWER: C. From the date the SEC issues a certiLicate of incorporation under its ofLicial seal
Stated in section 18 of the RCC that a private corporation shall commence its corporate existence
and juridical personality from the date the SEC issues a certiLicate of incorporation under its
ofLicial seal. Thus, making letter C the correct answer.

31F – Edrad

1. Member of non-stock corporation cannot vote by proxy.

2. Each member of non-stock corporation is only entitled to one vote unless limited, broadened,
or denied.
a. Only the Lirst statement is true.
b. Only the second statement is true.
c.Both statements are true.
d. Both statements are false.

ANSWER: B. Only the second statement is true.

Stated in Sec. 88 of the RCC, the right of the members of nay class or classes to vote in a
corporation may be limited, broadened or denied to the degree stated or speciLied in the articles
of incorporation or the by-laws. if there are no modiLications stated on the voting rights of
members in the articles of incorporation or by-laws, each member is entitled to 1 vote.
Unless other provided in the AOI or by-laws, a member may vote by proxy. The by-laws may also
authorize voting by remote communication or by voting in absentia.

32F – Rodil

Statement 1: Directors shall be elected for a term of one (1) year from among the holders of
stocks registered in the corporation's books.
Statement 2: Trustees shall be elected for a term not exceeding Live (5) years from among the
members of the corporation.
a. Only statement 1 is true
b. Only statement 2 is true
c. Both statements are true
d. Both statements are false

ANSWER: A. Only statement 1 is true

Under section 22 of the Revised Corporation Code, (The Board of Directors or Trustees of a
Corporation; QualiLication and Term) Unless otherwise provided in this Code, the board of
directors or trustees shall exercise the corporate powers, conduct all business, and control all
properties of the corporation.
Directors shall be elected for a term of one (1) year from among the holders of stocks registered
in the corporation’s books, while trustees shall be elected for a term not exceeding three (3) years
from among the members of the corporation. Each director and trustee shall hold ofLice until the
successor is elected and qualiLied. A director who ceases to own at least one (1) share of stock or
a trustee who ceases to be a member of the corporation shall cease to be such.

33F - Batayola

I. Other corporations authorized to obtain or access funds from the public, whether publicly listed
or not, shall be permitted to issue no-par value shares of stock.
II. When the vacancy is due to term expiration, the election can be held later than the day of such
expiration at a meeting called for that purpose.
A. Both statements are true
B. Both statements are false
C. Only I is true
D. Only II is true

ANSWER: B. Both statements are false According to Sec. 6. ClassiLication of Shares - The shares or
series of shares may or may not have a par value: Provided, That banks, trust, insurance, and
preneed companies, public utilities, building and loan associations, and other corporations
authorized to obtain or access funds from the public, whether publicly listed or not, shall NOT be
permitted to issue no-par value shares of stock. And also based on Sec. 28. Vacancies in the OfLice
of Director or Trustee; Emergency Board - When the vacancy is due to term expiration, the
election shall be held NO later than the day of such expiration at a meeting called for that
purpose.

34F – Eud

I. Special meetings of the board of directors or trustees may be held at any time upon the call of
the president or as provided in the bylaws.
II. Directors’ or Trustees’ meetings, whether regular or special, shall be held in the principal ofLice
of the corporation as set forth in the articles of incorporation, or, if not practicable, in the city or
municipality where the principal ofLice of the corporation is located.
A. Both Statements are True
B. Both Statements are False
C. Only Statement I is True
D. Only Statement II is True

ANSWER: C. Only Statement I is True

As stated in Sec 52 of the Revised Corporation code, Special meetings of the board of directors or
trustees may be held at any time upon the call of the president or as provided in the bylaws.
Also, Meetings of directors or trustees of corporations may be held anywhere in or outside of the
Philippines, unless the bylaws provide otherwise. Notice of regular or special meetings stating
the date, time and place of the meeting must be sent to every director or trustee at least two (2)
days prior to the scheduled meeting, unless a longer time is provided in the bylaws. Thus proving
that the Lirst statement is true and second statement is false.

35F - Atentar

I. Stock dividend can be issued with the approval of the stockholders representing at least
majority of the outstanding capital stock at a regular or special meeting.
II. Holders of subscribed shares not fully paid which are not delinquent shall have all the rights of
a stockholder.
Which of the following statement(s) are false?
A. I and II
B. II only
C. I only
D. Neither I nor II

ANSWER: C. I only
Section 42 of the RCC. Power to Declare Dividends - That no stock dividend shall be issued
without the approval of stockholders representing at least two-thirds (2/3) of the outstanding
capital stock at a regular or special meeting duly called for the purpose.
Section 71 of the RCC. Rights of Unpaid Shares, Nondelinquent - Holders of subscribed shares not
fully paid which are not delinquent shall have all the rights of a stockholder.

36F - Jumaquio

Who may be a resident agent?

I. An individual not residing in the philippines.
II. A Domestic Corporation lawfully transacting business in the Philippines.
a. True, True
b. True, False
c. False, False
d. False, True

ANSWER: D. False, True

SEC. 144. Who May be a Resident Agent.
A resident agent may be either an individual residing in the Philippines or a domestic corporation
lawfully transacting business in the Philippines: Provided, That an individual resident agent must
be of good moral character and of sound Linancial standing: Provided, further, That in case of a
domestic corporation who will act as a resident agent, it must likewise be of sound Linancial
standing and must show proof that it is in
good standing as certiLied by the Commission.

37F – Buenaventura

I. A quorum shall consist of the stockholders representing a majority of the outstanding capital
stock or a majority of the members in the case of nonstock corporations.
II. No corporate name shall be allowed by the Commission if it is not distinguishable from that
already reserved or registered for the use of another corporation, or if such name is already
protected by law, or when its use is contrary to existing law, rules and regulations.
A. I is true, II is false
B. II is true, I is false
C. Both are true
D. Both are false

ANSWER: The answer is letter C. Both are true.

Statement no. 1 is true as it is stated under Sec. 51 of the Revised Corporation Code that, "Unless
otherwise provided in this Code or in the bylaws, a quorum shall consist of the stockholders
representing a majority of the outstanding capital stock or a majority of the members in the case
of non-stock corporations."
Statement no. 2 is also true as provided in Sec. 17. (par. 1) of the same Code that," No corporate
name shall be allowed by the Commission if it is not distinguishable from that already reserved
or registered for the use of another corporation, or if such name is already protected by law, or
when its use is contrary to existing law, rules and regulations."

38F – Aldovino

I. A contract between two (2) or more corporations having interlocking directors shall be
invalidated on that ground alone.
II. Stockhildings exceeding twenty Live percent (25%) of the outstanding capital stock shall be
considered substantial for purposes of interlocking directors.
A. Both Statements are True
B. Both Statements are False
C. Only Statement I is True
D. Only Statement II is True

ANSWER: B. Both statements are false.

As stated in Section 32 of the Revised Corporation Code of the Philippines, except in cases of
fraud, and provided the contract is fair and reasonable under the circumstances, a contract
between two or more corporations having interlocking directors shall not be invalidated on that
ground alone: Provided, that if the interest of the interlocking director in one corporation is
substantial and the interest in the other corporation or corporations is merely nominal, the
contract shall be subject to the provisions of the preceding section insofar as the latter
corporation or corporations are concerned. Section 32 also states that stockholdings exceeding
twenty percent of the outstanding capital stock shall be considered substantial for purposes of
interlocking directors.

39F – Padillo

Corporation governed by special laws, aside from the requirements speciLied under the
corporation laws, in order that their articles of incorporation may be approved or accepted, must
present before the Security and Exchange Commission:
A. A favorable recommendation from the Ministry of Finance
B. A copy of previous income tax return and a statement of assets, liabilities and net worth
C. A favorable recommendation of the appropriate government agency to the effect that
such articles or amendment is in accordance with law.
D. An undertaking to change the name of the corporation if found that there is already registered
with the SEC a name or a name similar to the name of this corporation

ANSWER: C. A favorable recommendation of the appropriate government agency to the effect

that such articles or amendment is in accordance with law.

Sec. 16 of the RCC states that, no articles of incorporation or amendment to articles of

incorporation of banks, banking and quasi-banking institutions, preneed, insurance and trust
companies, NSSLAS, pawnshops, and other Linancial intermediaries shall be approved by the
Commission unless accompanied by a favorable recommendation of the appropriate government
agency to the effect that such articles or amendment is in accordance with law.

40F – Degran

Statement 1. A non-stock corporation is one where part of its income is distributable as dividends
to its members, trustees or ofLicers.
Statement 2. Membership in a non-stock corporation and all rights arising therefrom are personal
and transferable.
Which of the following statement(s) are false?
A. Statement 1 only
B. Statement 2 only
C. Both statements
D. Neither statement 1 nor statement 2

ANSWER: C. Both statements

RCC Section 86 states that a non-stock corporation is one where no part of its income is
distributable as dividends to its members, trustees, or ofLicers.
RCC section 89 states that the membership in a non-stock corporation and all rights arising there
from are personal and non-transferable, unless the articles of incorporation or the bylaws
otherwise provide.

41F – Camaligan

Consideration for the issuance of stock may be:

I. Actual cash paid to the corporation
II. Previously incurred indebtedness of the corporation
III. Amounts transferred from unrestricted retained earnings to stated capital
IV. Share of stock in another corporation
A. I and II
B. I, II and III
C. I, III and IV
D. I, II, III, and IV

ANSWER: D. I, II, III, and IV

It is enumerated under Section 61 of the Revised Corporation Code as follows:
(a) Actual cash paid to the corporation;
(b) Property, tangible or intangible, actually received by the corporation and necessary or
convenient for its use and lawful purposes at a fair valuation equal to the par or issued value of
the stock issued;
(c) Labor performed for or services actually rendered to the corporation;
(d) Previously incurred indebtedness of the corporation;
(e) Amounts transferred from unrestricted retained earnings to stated capital;
(f) Outstanding shares exchanged for stocks in the event of reclassiLication or conversion;
(g) Shares of stock in another corporation; and/or
(h) Other generally accepted form of consideration.
All statements are provided under Section 61 (a), (d), (e) and (g) thus the answer is D.

42F – Meñez

I. A voting trust agreement must be in writing and notarized, and shall specify the terms and
conditions thereof
II. No voting trust agreement shall be entered into for purposes of circumventing the laws against
anti-competitive agreements, abuse of dominant position, anti-competitive mergers and
acquisitions, violation of nationality and capital requirements, or for the perpetuation of fraud.
A. Statement I is true
B. Statement II is true
C. Both statements are true
D. Both statements are false

ANSWER: C. Both statements are true

Statement I is true because section 58 paragraph 1 of the RCC states that one or more
stockholders of a stock corporation may create a voting trust for the purpose of conferring upon a
trustee or trustees the right to vote and other rights pertaining to the shares for a period not
exceeding Live (5) years at any time: Provided, That in the case of a voting trust speciLically
required as a condition in a loan agreement, said voting trust may be for a period exceeding Live
(5) years but shall automatically expire upon full payment of the loan. A voting trust agreement
must be in writing and notarized, and shall specify the terms and conditions thereof. A certiLied
copy of such agreement shall be Liled with the corporation and with the Commission; otherwise,
the agreement is ineffective and unenforceable. The certiLicate or certiLicates of stock covered by
the voting trust agreement shall be cancelled and new ones shall be issued in the name of the
trustee or trustees, stating that they are issued pursuant to said agreement. The books of the
corporation shall state that the transfer in the name of the trustee or trustees is made pursuant to
the voting trust agreement.

Statement II is also true because as stated in section 58 paragraph 5 of the RCC, no voting trust
agreement shall be entered into for purposes of circumventing the laws against anti-competitive
agreements, abuse of dominant position, anti-competitive mergers and acquisitions, violation of
nationality and capital requirements, or for the perpetuation of fraud.

43F – Mendoza

A corporation where the business of the corporation shall be managed by the stockholders of the
corporation rather than by a board of directors:
A. Open Corporation
B. Corporation Sole
C. Eleemosynary Corporation
D. Close Corporation

ANSWER: D. Close Corporation

Sec. 96 of the Revised Corporation Code states that a close corporation may provide that the
business of the corporation shall be managed by the stockholders of the corporation rather than
by a board of directors.

44F - Laceda

In each regular meeting of stockholders or members, which is not endeavor to present by board
of directors?
a. Matters of discussed and resolutions
b. An explanation of the dividend policy and the fact of payment of dividends or the reasons for
nonpayment thereof
c. Explanation of the outstanding shares
d. A director or trustee attendance report, indicating the attendance of each director or trustee at
each of the meetings of the board and its committees and in regular or special stockholder
meetings

ANSWER: C. Explanation of the outstanding shares

According to the Section 49 of the Revised Corporation Code of the Philippines, the matters
discussed and resolution reach, an explanation of the dividend policy and the fact of payment of
dividends or the reasons for nonpayment thereof and a director or trustee attendance report,
indicating the attendance of each director or trustee at each of the meetings of the board and its
committees and in regular or special stockholder meetings shall endeavor to present by board of
directors and trustees in each regular meeting of stockholders or members. Since the explanation
of the outstanding shares is not explicitly included in the said section, that makes it not an
endeavor to present by board of directors and trustees.

45F- Rivera
To enter into management contracts, as a rule
a) Majority of the quorum of the board and majority of the outstanding capital stock of the
members of both the managing and managed corporations.
b) Majority of the quorum of the board and 2/3 of the outstanding capital stock of the managed
corporation.
c) Majority vote of the board and majority of the outstanding capital stock or of the members.
d) 2/3 of the outstanding capital stock or of the members.
ANSWER: A. Majority of the quorum of the board and majority of the outstanding capital stock of
the members of both the managing and managed corporations.

Under Section 43 of the Revised Corporation Code of the Philippines, “No corporation shall
conclude a management contract with another corporation unless such contract is approved by
the board of directors and by stockholders owning at least the majority of the outstanding capital
stock, or by at least a majority of the members in the case of a nonstock corporation, of both the
managing and the managed corporation, at a meeting duly called for the purpose: Provided, That
(a) where a stockholder or stockholders representing the same interest of both the managing and
the managed corporations own or control more than one-third (1/3) of the total outstanding
capital stock entitled to vote of the managing corporation; or (b) where a majority of the
members of the board of directors of the managing corporation also constitute a majority of the
members of the board of directors of the managed corporation, then the management contract
must be approved by the stockholders of the managed corporation owning at least two-thirds
(2/3) of the total outstanding capital stock entitled to vote, or by at least two-thirds (2/3) of the
members in the case of a nonstock corporation.” In this case, as a rule, the power to enter into
management contracts should be approved by majority of the quorum of the board and majority
of the outstanding capital stock of the members of both the managing and managed corporations.

46F-Vital
Statement 1: The corporate powers of a corporation shall be exercised by the stockholders.
Statement 2: The entire consideration received by the corporation for its no-par value shares
shall be treated as capital and shall not be available for distribution as dividends.
a. Both are true
b. Both are false
c. True, false
d. False, true
ANSWER: D. False, True

According to Sec. 22 of the Revised Corporation Code, unless otherwise provided in this Code, the
board of directors or trustees shall exercise the corporate powers, conduct all business, and
control all properties of the corporation. Sec. 6 of the RCC also stated that the entire
consideration received by the corporation for its no-par value shares shall be treated as capital
and shall not be available for distribution as dividends.

47F-Ramirez
I. The name of the corporation
II. The term for which the corporation is to exist, if the corporation has not elected perpetual
existence
III. The names, nationalities, and residence addresses of the incorporators
IV. The term for which the corporation is to exist, if the corporation has not elected perpetual
existence
The following are included in the Contents of the Articles of Incorporation.
a. I and II only
b. III and IV only
c. I, II and III only
d. I, II, III and IV
e. none of the above
ANSWER: D. I, II, III and IV

Sec. 13 Contents of the Articles of Incorporation of the RCC states that all corporations shall Lile
with the Commission articles of incorporation in any of the ofLicial languages, duly signed and
acknowledged or authenticated, in such form and manner as may be allowed by the Commission,
containing substantially the following matters, except as otherwise prescribed by this Code or by
special law:

a. The name of the corporation

d. The term for which the corporation is to exist, if the corporation has not elected perpetual
existence
e. The names, nationalities, and residence addresses of the incorporators