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WorksheetsRFBT: Corporation SET A
Total questions: 52
Worksheet time: 26mins
This theory which is recognized by Corporation Code states that a corporation is not in fact and in reality a person, but the law treats it as though it were a person by process of fiction, or by regarding it as an artificial person distinct and separate from its individual stockholders. It owes its existence to law and the extent of its existence, powers and liberties is fixed by its charter.
Concession theory or fiat theory or government paternity theory or franchise theory
Symbol theory
Genessonchaft theory
Realist or inherence theory
Contract theory
How may a corporation be created under Philippine setting?
In case of private corporation, by operation of general corporation law particularly the Corporation Code of the Philippines (BP 68).
In case of public corporation, by law or enactment of special law.
Either A or B.
By mere consent of the contracting parties
As an artificial being, which of the following constitutional rights is not available to a corporation?
Right to due process of law
Right to equal protection of the law.
Right against unreasonable searches and seizures
Right against self-incrimination
Which of the following statements concerning the implications of being an artificial being of a corporation is correct?
As a general rule, a corporation is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock except when a corporation has a reputation that is debased, resulting in its humiliation in the business realm particularly in the case of libel or defamation.
As a general rule, a corporation cannot be held liable for a crime because of impossibility of imposing the penal sanction of imprisonment and because a crime committed in the name of corporation is actually committed by the individuals who act for and in behalf of such corporation. However, it may become liable for fines to be imposed in the criminal action.
Both A and B.
Neither A nor B.
Which of the following corporate legal doctrines refers to the doctrine of separate juridical personality?
It means that a corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it; and that obligations incurred by the corporation, acting through its directors, officers and employees are its sole liabilities.
It means that a stockholder is personally liable for the financial obligations of the corporation to the extent only of his unpaid subscription or that a stockholder’s liability for corporate debts extends only up to the amount of his capital contribution.
It means that the capital stock of a corporation or the assets of an insolvent corporation representing its capital is a trust fund reserved for the benefit of company’s creditors.
It means that the corporation has the capacity for continuous existence despite the death or replacement of its shareholders or members, for it has a personality separate and distinct from those who compose it.
The following are the advantages of forming a corporation, except
It has a strong juridical personality through continuity of existence.
It has a legal capacity to act and contract as a distinct unit in its own name.
It is subject to greater degree of governmental supervision and regulation.
The stockholder’s limited liability on the obligation of the corporation.
Its management is centralized.
The following are the disadvantages of forming a corporation, except
There is high cost of formation and operations.
It is subject to higher taxes or sometimes indirect double taxation.
Stockholders have little voice in the conduct of the business.
Its credit is weakened by the limited liability feature.
It makes feasible gigantic financial undertakings due to numerous investors.
Which of the following legal principles best describes the strong juridical personality of a corporation?
Limited liability rule
Separate entity theory
Business judgment rule
Right of succession or continuity of existence
Are the stockholders, directors or officers personally liable for the liabilities of the corporation after the assets of the corporation are exhausted?
Yes because they are considered to be general partners.
No under all instances.
Yes under all instances.
No as a general rule unless exceptional cases warrant the piercing of the veil of corporate fiction.
What are the exceptional cases wherein the courts may pierce the veil of corporate fiction so that the stockholders, directors or officers will become personally liable for corporate debts?
When the corporate entity is used to commit fraud or to justify a wrong or to defend a crime or to commit tax evasion. (Fraud cases)
When the corporate entity is used as a mere alter ego, business conduit or instrumentality of a person or another entity. (Alter ego cases)
When the corporate entity is used to defeat public convenience such as in case of labor case. (Defeat public convenience cases)
When piercing of the corporate fiction is necessary to achieve justice or equity. (Equity cases)
Any of the above.
Which of the following instances on itself alone may justify the court in piercing the veil of corporate fiction?
The mere fact that one or more corporations are owned and controlled by a single stockholder.
The mere fact that two corporations may be sister companies and that they may be sharing personnel and resources.
The existence of interlocking directors, corporate officers and shareholders between the two corporations.
The control of the corporation is used by the director to commit fraud or to defeat public convenience.
Which of the following statements concerning the prayer for piercing the veil of corporation fiction is incorrect?
Piercing application is essentially a judicial prerogative.
Piercing must be shown to be necessary and with factual basis.
Piercing is an equitable remedy and may be awarded only in cases filed by a person with victim standing.
Piercing is a substantive right provided by BP 68 available as a matter of right.
Which of the following refers to “place of incorporation test or doctrine of incorporation test” in determining the nationality of a corporation?
It is the principal doctrine as enunciated in BP 68 which provides that a corporation is a national of the country under whose laws it has been organized and registered.
It means that the nationality of a corporation is determined by the nationality of the majority of the stockholders on whom equity control is vested and it is normally used as war-time test or to determine the compliance with minimum requirement of Filipino ownership in industry reserved for Filipinos.
It is a three-level relationship test by which the percentage of Filipino equity is computed in a corporation engaged in fully or partly nationalized areas of activities provided in the Constitution and other nationalization laws, in cases where corporate shareholders are present in the situation, by attributing the nationality of the second or even subsequent tier of ownership to determine the nationality of the corporate shareholder.
Which of the following statements best describes a municipal corporation?
It is created by special law for the governance of a particular territory or local government unit.
It is created by special law for public purpose or general welfare but performs some commercial functions or a corporation organized as a stock or nonstock corporation vested with functions relating to public needs, whether governmental or proprietary in nature and owned by the Government directly or through instrumentalities wither wholly or where applicable as in the case of stock corporations to the extent of at least 51% of its capital stock.
It is created by operation of BP 68 but performs essential government functions because such function is being privatized by government. They are engaged in private business affected with public interest.
It is created by operation of BP 68 and essentially performs commercial functions or for private interest.
Which of the following statements refers to a lay corporation?
It is one organized for religious purposes.
It is one established for charitable purposes.
It is a religious organization which consists of only one member or corporator.
What is oration?
It is one organized for religious purposes.
It is one established for charitable purposes.
It is one organized for a purpose other than a religion.
It is a religious organization which consists of only one member or corporator.
It is a religious organization governed by board.
What is a corporation established for business or profit?
Eleemosynary corporation
Civil corporation
Ecclesiastical corporation
Lay corporation
What is a corporation which has capital stock divided into shares of stocks and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held?
Non-stock corporation
Close corporation
Open corporation
Stock corporation
What is a corporation where no part of its income is distributable as dividends to its members and the capital of the corporation is not divided into shares of stocks?
Stock corporation
Non-stock corporation
Open corporation
Close corporation
Which of the following statements refers to a domestic corporation?
It is one incorporated under the Philippine laws.
It is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and Filipino corporations to do business in its own country.
It is one existing both in fact and law. It is a corporation organized in accordance with the requirements of law. Its juridical personality is not subject to the attack by the state.
It is one existing in fact but not in law. It is a corporation that is formed where there exists a flaw in its incorporation but there is a colorable compliance with the requirements of law. Its juridical personality is subject to direct attack only by the state.
What is the classification of HONDA Philippines under the Corporation Code?
Resident corporation
Foreign corporation
Non-resident corporation
Domestic corporation
Which of the following types of corporations is not required to file articles of incorporation to obtain juridical personality as a private corporation?
Corporation by prescription
De facto corporation
Ostensible corporation
De jure corporation
Which of the following does not have juridical personality as a corporation?
Corporation by prescription
De facto corporation
Ostensible corporation or corporation by estoppel
De jure corporation
What refers to a group of persons that assumes to act as a corporation knowing it to be without authority to do so?
De jure corporation
Corporation by prescription
Ostensible corporation or corporation by estoppel
Open corporation
Which of the following statements refers to a holding company or parent corporation?
It is a corporation which controls another as a subsidiary by the power to elect management. It is the one that holds stocks in other companies for purposes of control rather than for mere investment.
It is a company which is subject to a common control of a mother or holding company and operated as part of a system or a corporation that is directly or indirectly, through one or more intermediaries, is controlled or is under the common control of another corporation.
It is a corporation which is being controlled by the parent corporation.
It is a corporation which is being influenced by the investor.
Which of the following statements refers to promoters?
They are persons who guaranteed on a firm commitment and/or declared best effort basis the distribution and sale of securities of any kind by another company.
They are the persons who acting alone or with another take initiative in founding and organizing the business or enterprise of the issuer and receive consideration therefor.
They are the corporators of a nonstock corporation.
They are the corporators of a stock corporation.
They are the persons who agreed to take and pay for original and unissued shares of a corporation formed or to be formed.
What refers to the persons mentioned in the Articles of Incorporation as originally forming and composing the corporation?
Incorporators
Corporators
Stockholders
Directors
What refers to the basic class of ordinary shares usually without extraordinary rights and privileges?
Preferred shares
Common shares
Special shares
Privileged shares
What refers to a type of shares of stocks that is issued with some privileges in the distribution of dividends and net assets of the corporation?
Preferred shares
Common shares
Special shares
Privileged shares
Which of the following statements refers to cumulative preference shares?
It is one which entitles the owner thereof to payment not only of current dividends but also back dividends not previously paid whether or not during the past year’s dividends were declared or paid.
It is one which grants the holders of such shares only to the payment of current dividends but not back dividends when and if dividends are paid to the extent agreed upon before any other stockholders are paid the same.
It is one which entitles the shareholders to share with the common shares in excess distribution at some predetermined or at a fixed ratio as may be determined.
It is one which entitles the shareholder thereof to receive the stipulated or fixed preferred dividends and no more.
If the preferred shares are classified as cumulative and participating as to dividends, when do the preferred stockholders become entitled to the cumulative and participating dividends?
When the corporation recognizes net profit.
When the corporation has credit balance in unrestricted retaining earnings.
When the corporation’s total assets exceed total liabilities.
When there is declaration of dividends by board of directors.
Under the Corporation Code, what is the requirement for the issuance of preferred shares?
Preferred shares of stock may be issued only with a stated par value.
Preferred shares of stock may be issued either with par or stated value.
Preferred shares of stock may be issued only with a stated value.
Preferred shares of stock may be issued only with discounted value.
What refers to a type of shares of stocks issued with an arbitrary amount stated in its certificate of stock?
Par value shares
No par value shares
Issued value shares
Present value shares
What refers to the arbitrary amount assigned to the share and is expressed in the certificate covering the share?
Par value
Market value
Liquidation value
Issued or stated value
It refers to a type of shares of stocks issued without an arbitrary amount stated in its certificate of stock but must have an issue price. Only common stocks may be classified as this type of shares of stocks while preferred stocks cannot be classified as this type of shares of stocks.
Par value shares
No par value shares
Issued value shares
Present value shares
What shares may be classified as No-Par value shares of stocks?
Common stocks
Preferred stocks
Both common stocks and preferred stocks
Neither common stocks nor preferred stocks
When no-par value common shares of stocks are issued, what is the minimum issue price?
P1.00
P10.00
P5.00
P2.00
What is/are the means by which the issue price of no par value common value shares is determined?
It may be fixed in the articles of incorporation or by-laws.
It may be fixed by the Board of Directors based on the authority given in the articles of incorporation.
It may be fixed by stockholders representing at least a majority of the outstanding capital stock at a meeting duly called for the purpose.
Any of the above.
Which of the following statements concerning no-par value shares is false?
The entire consideration received by the corporation for its no-par value shares shall be treated as legal capital and shall not be available for distribution as dividends.
The articles of incorporation must state the fact that it issued no par value shares as well as the number of said shares.
Shares of capital stock issued without par value shall be deemed fully paid and nonassessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereto.
No-par value shares can be issued by any type of corporation.
Which is correct as regards to legal capital of par-value shares of stocks and no-par value shares of stocks?
In case of par-value shares of stocks, the legal capital is the total par value of shares issued and subscribed.
In case of no par-value shares of stocks, the legal capital is the entire consideration received.
Both A and B
Neither A nor B
These corporations are not allowed to issue no-par value common shares (BLTBPIPO under RA 11232), except
Banks
Trust companies
Public utilities
Buildings and Loans association
Other corporations authorized to obtain or access money from the public (whether publicly listed or not)
In the absence of provision in articles of incorporation and certificate of stock, what is the presumption of law as to different shares of stocks?
Each type of share shall be equal in all respects to every other share.
Preferred shares are non-voting.
Common shares are non-voting.
Redeemable shares are non-voting.
Which of the following shares are allowed to be classified as shares without right to vote or shares with limited voting rights in the articles of incorporation and stated in the certificate of stock?
Redeemable shares
Preferred shares
Common shares
Where shall the denial of the stockholder’s right to vote be provided for such denial to be valid?
By-laws of corporation
Articles of incorporation and certificate of stock
Minutes of meetings
Financial statements
The following are the fundamental corporate acts when stocks classified as without voting or non-voting stocks or stocks with limited voting rights are still allowed to vote or participate (I3AM SAD), except
Increase or decrease of capital stock
Investments of corporate funds in another corporation or another business purpose other than stated in the Articles of Incorporation as primary and secondary purpose
Incurring, creating or increasing bond indebtedness (bonds payable)
Merger or consolidation of corporations
Amendment of Articles of Incorporation for legitimate purposes including but not limited to shortening or extending of corporate term.
The following are the corporate acts when stocks classified as without voting or non-voting stocks or stocks with limited voting rights are not allowed to participate, (GRRADE), except
Ratification of disloyalty of a director or contract with self-dealing director or contract between corporations with interlocking director
Removal of a director
Approval of Management Contract
Distribution or declaration of Stock Dividends
Granting compensation to directors
Which of the following statements refers to redeemable preference shares?
It is a share that is changeable by the stockholder from one class to another at a certain price and within a certain period.
It is a share issued to those on some way interested in the company, for incorporating the company, or for services rendered in launching or promoting the welfare of the company.
It is a share classified as such in the articles of incorporation and issued to organizers and promoters of a corporation in consideration of some supposed right or property such as special preference in voting rights and dividend payment. It is a type of share that is given with certain rights and privileges not enjoyed by the owners of the other stocks such as exclusive right to vote or be voted in the election of the board of directors.
It is a type of share classified as such in the articles of incorporation which is issued by the corporation and which may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation as long as the corporation’s total assets exceeds total liabilities after the redemption, and upon such other terms and conditions as may be stated in the articles of incorporation, which terms and conditions must also be stated in the certificate of stock representing said shares.
If founder’s share classified as such in the Articles of Incorporation is given exclusive right to vote and be voted in the election of the board of directors, what is the maximum period or limit of that right?
10 years from the approval of SEC
5 years from the approval of SEC
3 years from the approval of SEC
2 years from the approval of SEC
It refers to a stock issued not in exchange for its equivalent value either in cash, property, share, stock dividends, or services. It resulted to overstatement of assets, overstatement of capital or understatement of liabilities of the corporation. The issuance of this type of shares of stocks is considered violation of trust fund doctrine.
Watered stock
Secret reserves
Par value shares
Over-issued stocks
It refers to a stock issued that resulted to understatement of assets, understatement of capital or overstatement of liabilities of the corporation. An entity might issue this stock for competitive reasons, to hide from other businesses that it is in a better financial position than appears in its financial statements.
Watered stock
Secret reserves
Par value shares
Over-issued stocks
It refers to those shares held by a third person to be released only upon the performance of a suspensive condition or the happening of a certain event contained in the agreement. It has no voting rights until the fulfillment of the suspensive condition.
Watered stock
Secret reserves
Par value shares
Escrow shares
It is a share of stocks which have been issued and fully paid for, but subsequently reacquired by the issuing corporation by purchase, redemption, donation or through some other lawful mean. The reacquisition of this type of shares must be supported by restriction of unappropriated retained earnings in order not to violate trust fund doctrine.
Promotion share
Founder’s share
Treasury share
Convertible share
