Since 1977

BUSINESS LAW ATTY. ONG/LOPEZ

BL.2802 Drill 2 - Corporation MAY 2020

1. One who has agreed to take stock from the corporation on the a. unless set aside by the members in plenary session.
original issue of such stock is called b. in every case even if the Board of Trustees resolves
a. Incorporators c. Promoters otherwise.
b. Members d. Subscribers c. unless otherwise provided in the Articles of Incorporation
2. EFG Foundation, Inc., a non-profit organization, scheduled or in the By-laws.
an election for its six-member Board of Trustees. X, Y and Z, d. in every case even if the majority of the members decide
who are minority members of the foundation, wish to otherwise during the
exercise cumulative voting in order to protect their interest, 11. Voluntary dissolution of a corporation is caused by:
although the Foundation's Articles and By-laws are silent on a. Voluntary dissolution where no creditors are affected
the matter. As to each of the three, what is the maximum b. Voluntary dissolution where creditors are affected
number of votes that he/she can cast? (2011 Bar) c. Amendments of the Articles of Incorporation resulting in
a. 6 c. 12 the shortening of corporate term
b. 9 d. 3 d. All of the above
3. A corporation, the sole purpose of which is to invest its 12. It is one brought by one or more of the stockholder or
capital in a specific property and afterwards consume that members in the name and on behalf of the corporation to
property or extract its value at a profit is called: redress wrongs committed against it or to protect or vindicate
a. Quasi corporation corporate rights, whenever the officials of the corporation
b. Open corporation refuse to sue, or are the ones to be sued or hold control of the
c. Wasting asset corporation corporation.
d. Eleemosynary corporation a. Mandamus c. Derivative suit
4. What is the voting proportion required for the voluntary b. Quo warranto d. Individual suit
dissolution of the corporation? 13. The power to examine into the affairs of a corporation in
a. Majority votes of the board of directors and 2/3 votes of order to supervise, direct, and control its management is
the outstanding capital stock. called
b. Majority votes of the board of directors and majority vote a. Visitorial power of the state
of the outstanding capital stock b. Visitorial power of stockholders
c. Majority vote of the board of directors and 2/3 vote of the c. Visitorial power of directors
stockholders d. Visitorial power of employees
d. Majority vote of the board of directors and majority vote 14. All of the close corporation's issued shares shall be held of
of the stockholders record by not more than
5. Stock which has been issued by a corporation, has fully paid a. 10 persons c. 20 persons
up when in fact it is not, because it has been issued as bonus b. 15 persons d. None of the above
or otherwise, without any consideration at all, or for less than 15. Foreign corporation
par, or for property, labor or services at an overvaluation. a. Are organized under the laws of countries other than the
a. Watered stock c. Treasury stock Philippines.
b. Over issued stock d. Redeemable stock b. Are not permitted to transact business in the Philippines
6. A corporation commences its existence from the issuance of until after they have obtained a license for the purpose
the certificate of incorporation, which one is the exception? from SEC.
a. Close corporation c. If found to be engaged in business without any license,
b. Widely-held corporation they are not permitted to sue in any court or
c. Religious corporation administrative agency of the Philippines but may be
d. Non-stock corporation sued.
e. Educational corporation d. All of the above
7. The business of this corporation can be managed by the 16. Delinquent stocks are:
stockholders: a. Entitled to vote in stockholders' meeting
a. Close c. Eleemosynary b. Entitled to inspect the books of the corporation
b. Open d. All of the above c. Entitled to dividends
8. Voluntary dissolution of a corporation is caused by: d. None of the above
a. Voluntary dissolution where no creditors are affected 17. A corporate stockholder sold his share to another, but the sale
b. Voluntary dissolution where creditors are affected has not been recorded in the books of the corporation. The
c. Amendments of the Articles of Incorporation resulting in sale is:
the shortening of corporate term a. The sale is void because it was not registered in the
d. All of the above corporate book.
9. An action brought by a stockholder against the corporation b. The sale is perfectly valid as between the buyer and the
for direct violation of his contractual rights seller.
a. Representative suit c. Derivative suit c. The sale is void because the corporation has no consent
b. Individual suit d. Corporate suit in the sale of share of stock.
10. In elections for the Board of Trustees of non-stock d. The sale is valid only if the same be registered in the
corporations, members may cast as many votes as there are corporate book.
trustees to be elected but may not cast more than one vote for 18. A non-stock corporation:
one candidate. This is true – (2011 Bar) a. May not engage in business for profit

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PROFESSIONAL REVIEW and TRAINING CENTER, Inc.
b. One where the capital is not divided into shares
c. No part of the income must be distributed as dividends
d. All of the above
19. A written instrument signed by the proper officers of the
corporation, stating or acknowledging that the person named
therein is the holder of a designated number of shares of its
stock:
a. Certificate of stock
b. Certificate of incorporation
c. Share of stock
d. Dividend
20. A close corporation:
a. Shall not list shares in any stock exchange nor offer its
shares to the public
b. All of its issued shares exclusive of treasury shares shall
be held of record by not more than 20 stockholders
c. All shares are subject to one or more restriction on
transfer of shares
d. All of the above
21. The by-laws of a corporation may create an executive
committee, composed of not less than 3 members of the board
of directors to be appointed by the board. The executive
committee may act, by majority vote of all its members on
such specific matters within the competence of the board, as
may be delegated to it in the bylaws or on majority vote of
the board, EXCEPT:
a. Approval of any action for which shareholders' approval
is also required.
b. Amendment or repeal of by laws or adoption of new by
laws.
c. Filling of vacancies in the Board,
d. All of the above
22. Dissenting stockholders are given appraisal right:
a. In case any amendments to the Articles of Incorporation
has the effect of changing or restricting the right of any
stockholders or class of shares, or of authorizing
preference in any respect superior to those of outstanding
shares of any class, or of extending or shortening the
terms of corporate existence
b. In case of sale, lease, exchange, transfer mortgage or
other disposition of all or substantially all of the
corporate assets
c. In case of merger and consolidation
d. All of the above
23. It is a high yield but high-risk bonds issued by heavily
indebted or financially weak corporations that are desperately
in need of additional capital.
a. Junk bonds
b. Debenture bond
c. Convertible bonds
d. Collateral trust bond
24. May organize as a close corporation
a. Mining companies c. Both of (a) and (b)
b. Oil companies d. None of (a) and (b)
25. On May 1, 2019, 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, 2019.
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 paid his
subscription in full.
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c. If S fails to pay the balance of his subscription on May
31, 2019, his shares will become delinquent on June 1,
2019.
d. In case of delinquency, only 400 shares will be
considered delinquent.
26. 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. CC at a total price
of P1,200.00, from Mr. DD, another stockholder.
Which of the above transactions are enforceable although
they are not in writing?
a. I and II. c. I and III.
b. II and III d. I only
27. Involuntary dissolution of the corporation is caused by:
a. An expiration of the period for which it was lawfully
formed
b. Judicial decree of forfeiture or by order of the SEC
c. Legislative enactment
d. All of the above
28. Stockholders of the close corporation
a. Are given absolute right of pre-emption in the issuance of
all kinds of shares including the shares of treasury shares
b. May enter into a written agreement making them partners
among themselves
c. May, for any reason, withdraw from the corporation and
compel it to purchase their shares at their fair value,
which shall not be less than their or issued value,
provided the corporation has sufficient assets to cover its
debts and liabilities exclusive of capital stock
d. All of the above
29. The right given to the stockholders to dissent and demand
payment of the fair value of their shares is called:
a. Right of proxy c. Pre-emptive right"
b. Appraisal right d. Stock right
30. The right of dissenting stockholders to demand payment of
the value of their share shall cease:
a. When the demand for payment is withdrawn with the
consent of the corporation
b. When the proposed corporate action is abandoned or
rescinded by the corporation
c. When the proposed corporate action is disapproved by
the SEC where such approval is necessary.
d. All of the above
31. 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.
BL.2802