Title II – INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS

1. I. Only a natural person, trust, or an estate may form a One Person Corporation.

II. Banks and quasi-banks, preneed, trust, insurance, public and Publicly-listed companies, and non-
chartered government-owned and – Controlled corporations may not incorporate as One Person
Corporations.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. This is the maximum amount fixed in the articles of incorporation that may be subscribed and paid by
the stockholders of the corporation.

a. Outstanding capital stock

b. Paid-up capital stock

c. Authorized capital stock

d. None of the above

3. The following are limitations in the amendment of the articles of incorporation, except:

a. The amendment must be for legitimate purposes and must not be contrary to the Corporation Code
and special laws.

b. The amendment requires the vote stockholders’ representing majority of the outstanding capital stock
or majority members if it be a non-stock corporation.

c. The amendment must be approved by a majority of the board of Directors or board of trustees.

d. The original and amended articles together shall contain all provisions required by law to be set out in
the articles of incorporation.

4. I. A corporation shall have perpetual existence unless its articles of Incorporation provides otherwise.

II. The general rule as to corporations is that each corporation must have a name by which it is to sue
and be sued and do all legal acts.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. I. It is the certificate of incorporation that gives juridical personality to a corporation and places it
under the jurisdiction of the Securities and Exchange Commission.
II. A corporation commences its corporate existence and juridical personality and is deemed
incorporated from the date the DTI issues certificate of incorporation under its official seal.

a. Only I is true

b. Only Il is true

c. Both are true

d. Both are false

6. The following are the requirements before one can Facto corporation, except:

a. The existence of a valid law under which it may be incorporated.

b. An attempt in good faith to incorporate.

c. Assumption of corporate powers.

d. None of the above.

7. The following are the three-fold nature of the articles of incorporation,

Except:

a. A contract between the corporations inter se.

b. A contract between the State and the corporation.

c. A contract between the corporation and its stockholders.

d. A contract between the stockholders inter se.

8. The purpose of the principal of the corporation are the following except:

a. To fix the residence of the corporation in a definite place.

b. For purposes of stockholders or members meeting.

c. To determine the venue of court cases involving the stockholders.

d. To determine the place where the books and records of the corporation are ordinarily kept.

9. I. The number of directors shall not be more than 15.

II. The number of trustees may be more than 15.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

10. I. The articles of incorporation of a non-stock corporation may amended by the vote or written
assent of majority of the trustees and at least 2/3 of the members.

II. The amendment of the articles of incorporation shall take effect upon their approval by the SEC or
from the date of filing with the SEC if not acted upon within 9 months from the date of filing for a cause
not be attributable to the corporation.

a. Only I is true

b. Only II is true

c Both are true

d. Both are false

11. The following are grounds for such disapproval, except:

a. The purpose or purposes of the corporation are patently unconstitutional, illegal, immoral or contrary
to government rules and regulations.

b. The certification concerning the amount of capital stock subscribed and/or paid is false.

c. The required percentage of Filipino ownership of the capital stock under existing laws or the
constitution has not been complied with.

d. The articles of incorporation or any amendment thereto is not substantially in accordance with the
form prescribed by the Philippine Cooperative Code.

12. No corporate name shall be allowed by the SEC if it is not distinguishable from that already reserved
or registered for the use of another corporation. A name is not distinguishable even if it contains one or
more of the following:

I. The word “corporation”, “company”, “incorporated”, “limited”, “limited liability”, or an

abbreviation of one of such words;
II. Punctuations, articles, conjunctions, contractions, prepositions, abbreviations, different
tenses, spacing, or number of the same word or phrase.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

13. I. If a corporation does not formally organize and commence its business within 5 years from the date
of its incorporation, its certificate of incorporation shall be deemed revoked.

II. If a corporation has commenced its business but subsequently becomes inoperative for a period
of at least SEC may, after due notice and hearing, place the corporation under delinquent status.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

14. I. If a delinquent corporation shall have a period of 2 years to resume operations and comply with all
requirements that the SEC shall prescribe.

II. Upon compliance by the corporation, the SEC shall issue an order lifting the delinquent status. Failure
to comply with the requirements and resume operations within the period given by the SEC shall cause
the revocation of the corporation’s certificate of incorporation.

a. Only I is true

b. Only II is true

с. Both are true

d. Both are false

15. I. Any person, partnership, association or corporation, singly or jointly with others but not more than
15 in number, may organize a corporation for any lawful purpose or purposes.

II. Natural persons who are licensed to practice a profession, and partnerships or associations organized
for the purpose of practicing a profession, shall not be allowed to organize as a corporation.

a. Only I is true

b. Only II is true

c Both are true

d. Both are false

16. I. Incorporators who are natural persons must be of legal age.

II. Each incorporator of a stock corporation must own or be a subscriber to at least 1 share of the capital
stock.

a. Only I is true

b. Only II is true n002abtn

c. Both are true

d. Both are false

17. A written contract to purchase newly issued shares of stock.

a. Sales contract

b. Redemption contract

c. Purchase contract

d. Subscription contract

18. Is that portion of the authorized capital stock which has been both subscribed and paid.

a. Authorized capital stock

b. Unissued capital stock

C. Paid-up capital

d. Outstanding capital

19. I. The contents of the articles of incorporation are binding, not only on the corporation, but also on
its shareholders.

II. The general rule as to corporations is that each corporation must have a name by which it is to sue
and be sued and do all legal acts.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

20. I. A corporation can change its name by amending its by-laws

II. A corporation with a single stockholder is considered a One Person Corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

21. The following are the reasons that a principal office of the corporation ust be stated in its articles of
incorporation, except:

a. To fix the residence of the corporation in a definite place.

b. For purposes of board of directors’ meeting.

c. To determine the venue of court cases involving corporation.

d. To determine the place where the books and records of the corporation are ordinarily kept.

22. I. A corporation is in a metaphysical sense a resident of the place where its principal office is located
as stated in the articles of incorporation.

II. The place where the principal office of the corporation is to be located is one of the required contents
of the by-laws.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

23. I. The filing of articles of incorporation and the issuance of the Certificate of incorporation are
essential for the existence of a de facto corporation.

II. An organization not registered with the SEC cannot be considered a

Corporation in any concept, not even as a corporation de facto.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

24. It applies when persons assume to form a corporation and exercise corporate functions and enter
into business relations with third persons.

a. De facto corporation

b. Corporation by prescription

C. De Jure Corporation

d. Corporation by estoppel

25. I. Stock corporations shall not be required to have a minimum capital Stock.

II. All corporations shall file with the Commission articles of

Incorporation in any of the official languages.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

26. I. An unincorporated association, which represented itself to be a corporation, will be estopped from
denying its corporate capacity in a suit against it by third person who relied in good faith on such
representation.

II. A third party who, knowing an association to be unincorporated, nonetheless treated it as a

corporation and received benefits from it, may be barred from denying its corporate existence in a suit
brought against the alleged corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

27. I. Corporation by estoppel is founded on principles of equity and is designed to prevent injustice and
unfairness.

II. Consolidation becomes effective not upon mere agreement of the members but only upon issuance of
the certificate of consolidation by the SEC.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

28. The amendment of the articles of incorporation, requires merely that:

I. The amendment is not contrary to any provision or requirement under the Corporation Code.

II. It is for a legitimate purpose.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

Title III – BOARD OF DIRECTORS/TRUSTEES AND OFFICE

1. The following are the qualifications of a board of director/trustee, except:

a. For a stock corporation, ownership of at least 1 share of the capital or Stock of the corporation in his
own name. For Non-stock Corporation, only members of the corporation can be elected.

b. Majority of the board of directors or trustees must be citizens of the Philippines.

c. The director or trustee must be capacitated.

d. The director or trustee must be of legal age.

2. I. The board of the following corporations vested with public interest shall have independent directors
constituting at least 10% of such board.

II. Independent directors must be elected by the other directors present or entitled to vote in absentia
during the election of directors.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. It is a person who, apart from shareholdings and fees received from the corporation, is independent of
management and free from any business or other relationship which could, or could reasonably be
perceived to materially interfere with the exercise of independent judgment in carrying out the
responsibilities as a director.

a. Dependent director

b. Independent director.

c Authorized director.

d. Outstanding director.

4. I. The acts of corporate officers within the scope of their authority are binding on the corporation.

II. Any 2 or more positions may be held concurrently by the same person, except that no one shall act as
president and secretary or as president and vice-president at the same time.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. I. The power to remove directors or trustees belongs to the officers exclusively.

II. Removal of directors or trustees may be with or without cause.

a. Only I is true

b. Only II is true

С. Both are true

d. Both are false

6. The requisites for removal of directors are the following, except:

a. The removal should take place at a regular or special meeting duly called for the purpose.

b. The director or trustee can only be removed by a vote of the stockholders representing at least
majority of the outstanding capital stock or majority of the members entitled to vote in case of non-
stock corporations.

c. There must be a previous notice to stockholders or members of the corporation of the intention to
propose such removal at the meeting.

d. The special meeting of the stockholders or members of a corporation for the purpose of removal must
be called by the secretary on order of the president or on the written demand of the stockholders
representing or holding at least a majority of the outstanding capital stock or a majority of the members
entitled to vote.

7. Immediately after their election, the directors of a corporation must formally organize and elect:

a. A president, who must be a director.

b. A treasurer, who must be a resident.

c. A secretary, who must be a citizen and resident of the Philippines.

d. All of the above.

8. I. If the corporation is vested with public interest, the board shall also elect a compliance officer.

II. The officers shall manage the corporation and perform such duties as may be provided in the bylaws
and/or as resolved by the board of Directors.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

9. A person shall be disqualified from being a director, trustee or officer of any corporation if, within 5
years prior to the election or appointment as such, the person was:

a. Convicted by final judgment of an offense punishable by imprisonment for a period exceeding 6 years.

b. Found administratively liable for any offense involving fraudulent Acts

c. Found by a foreign or equivalent foreign regulatory authority for acts, violations or misconduct.
d. All of the above.

10. A person shall be disqualified from being a director, trustee or officer of any corporation if, within 5
years prior to the election or appointment as such, the person was convicted by final judgment.

a. of an offense punishable by imprisonment for a period exceeding 6 years;

b. For violating the Revised Corporation Code.

c. For violating The Securities Regulation Code.

d. All of the above.

11. The SEC shall, motu proprio or upon verified complaint, and after due notice and hearing, order the
removal of a director or trustee elected despite the disqualification, or whose disqualification arose or is
discovered subsequent to an election.

The removal of a disqualified director shall be without prejudice to other sanctions that the SEC may
impose on the board of directors or trustees who, with knowledge of the disqualification, failed to
remove such director or trustee.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

12. I. Any vacancy occurring in the board of directors or trustees other than by removal or by expiration
of term may be filled by the vote of at least a majority of the remaining directors or trustees, if still
constituting a Quorum.

II. Any directorship or trusteeship to be filled by reason of an increase In the number of directors or
trustees shall be filled only by an election at a regular or at a special meeting of stockholders or
members duly called for the purpose, or in the same meeting authorizing the increase of directors or
trustees if so stated in the notice of the meeting.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

13. I. Every director must own at least 100 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.

II. Trustees of non-stock corporations must be members thereof.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

14. I. The governing body of a corporation is its board of directors.

II. The board of directors of a corporation is a creation of law.

a. Only I is true

b. Only II is true

Both are true

d. Both are false

15. I. It is well settled in this jurisdiction that where corporate directors are guilty of a breach of trust, a
stockholder may institute a suit in behalf of himself and other stockholders and for the benefit of the
corporation.

II. The board of directors (or trustees, in case of non-stock corporations) has the sole authority to
determine policies, enter into contracts, and conduct the ordinary business of the corporation within the
scope of its charter.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

16. A corporation's board of directors is understood to be that body which, except:

a. Exercises all powers provided for under the Corporation Code.

b. Conducts all business of the corporation.

c. Controls and holds all property of the corporation.

d. None of the above.

17. I. The property of the corporation is not the property of its stockholders or members; however, it
may be sold by the stockholders or members.

II. The power and responsibility to decide whether a corporation can enter into a binding contract is
lodged with the board of directors.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

18. I. The directors of a corporation shall not receive any compensation for being members of the board
of directors, except for reasonable per diems.

II. In no case shall the total yearly compensation of directors, as such directors, exceed 10% of the net
income after income tax of the corporation during the preceding year.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

19. I. The general rule is that obligations incurred by the corporation, acting through its directors, officers
and employees, are its sole liabilities, and vice versa.

II. A contract of the corporation with one or more of its directors or trustees or officers is void.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

20. A contract of the corporation with one or more of its directors or trustees or officers.

a. Doctrine of self-dealing board of directors

b. Doctrine of corporate opportunity

c. Doctrine of double compensation

d. Doctrine of trust fund

21. The requisites for a contract of the corporation with one or more of its directors or trustees or
officers to be valid are the following, except

a. That the presence of such director or trustee in the board meeting in which the contract was approved
was not necessary to constitute a quorum for such meeting.

b. That the vote of such director or trustee was not necessary for the approval of the contract.

c. That the contract is fair and reasonable under the circumstances.

d. That in case of an officer, the contract has been previously authorized by the stockholders.

22. A director, by virtue of his office, acquires for himself a business opportunity which should belong to
the corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the
latter for all such profits by refunding the same.

a. Doctrine of self-dealing board of directors

b. Doctrine of corporate opportunity

c. Doctrine of double compensation

d. Doctrine of trust fund

23. It is a body created by the by-laws and composed of not less than three members of the board
which, subject to the statutory limitations, has all the authority of the board of directors to the extent
provided in the bylaws.

a. Board committee

b. Trust committee

c. Officers' committee

d. Executive committee

24. The following are the limitations of an executive committee, except:

a. Approval of any action for which shareholders' approval is also required.

b. Filling of vacancies in the board.

c. Amendment or repeal of by-laws or the adoption of new by-laws.

d. Amendment or repeal of any resolution of the board.

25. I. The executive committee may act, by 2/3 vote of all its members.

II. The act of a director violating the doctrine of corporate opportunity can be ratified by a vote of the
stockholders owning or representing at least majority of the outstanding capital stock.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

26. I. A stockholder or member who participates through remote of communication or in absentia, shall
be deemed present for purposes of quorum.

II. The directors or trustees elected shall perform their duties as prescribed by law, rules of good
corporate governance, and bylaws of the corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

27. When the vacancy prevents the remaining directors from constituting a quorum and emergency
action is required to prevent grave, substantial, and irreparable loss or damage to the corporation, the
vacancy may be temporarily filled from among the officers of the corporation by unanimous vote of the
remaining directors or trustees.

a. Emergency board of director

b. Temporary board of director

c. Provisional board of director action

d. Interim board of director

28. I. Stockholders or members periodically elect the board of directors or trustees, who are charged
with the management of the corporation.

II. Stockholders or members also elects officers to carry out management functions on a day-to-day
basis.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

29. I. Acts of management pertain to the stockholders or members.

II. Acts of ownership pertain to the board.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

30. I. Once the directors or trustees are elected, the stockholders - members relinquish corporate powers
to the board in accordance with or law.

II. Contracts intra vires entered into by the board of directors are binding upon the corporation.

a. Only I is true

b. Only Il is true

c. Both are true

d. Both are false

Title IV – POWERS OF CORPORATIONS

1. It is the preferential right of all stockholders of a stock corporation to subscribe to all issues or
disposition of shares of any class, in proportion to their respective shareholdings.

a. Appraisal right

b. Pre-emptive right

c. Right to vote

d. Voting right

2. I. The purpose of pre-emptive right is to enable the shareholder to retain his proportionate control in
the corporation.

II. A suit to enforce preemptive rights in a corporation is a derivative suit.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. The requirements for the sale or other disposition of assets are the following, except:

a. Approval by the majority vote of its board of directors or trustees.

b. Ratification by the vote of the stockholders representing at least 2/3 of the outstanding capital stock,
or in case of non-stock corporation, by the vote of at least to 2/3 of the members.

c. Any dissenting stockholder may exercise his appraisal right.

d. SEC approval is required.

4. The following are instances when a corporation may acquire its own shares, except:

a. to acquire founders’ shares.

b. To eliminate fractional shares arising out of stock dividends.

c. 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.

d. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the
provisions of the corporation code.

5. I. The corporation may only acquire its own stocks in the presence of unrestricted retained earnings.

II. Preferred shares may be acquired even without surplus profit for as long as it will not result to the
insolvency of the corporations.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

6. I. The requirement of unrestricted retained earnings to cover the shares is based on the doctrine of
limited capacity.

II. There can be no distribution of assets among the stockholders without first paying corporate creditors.
Hence, any disposition of corporate funds to the prejudice of creditors is rescissible.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

7. The following are the requisites for the exercise of a corporate power to invest corporate funds in
another corporation, except:

a. Any dissenting stockholder shall have pre-emptive right.

b. Approval of the majority of the board of directors or trustees.

c. Ratification by the stockholders representing at least 2/3 of the outstanding capital stock, or by at least
2/3 of the members in the case of non-stock corporations, at a stockholder’s or member’s meeting duly
called for the purpose.

d. Written notice of the proposed investment and the time and place of the meeting shall be addressed
to each stockholder or member by mail or served personally.

8. The retained earnings which have not been reserved or set aside by the board of directors for some
corporate purpose.

a. Restricted retained earnings

b. All of the above

c. Unrestricted retained earnings

d. None of the above

9. I. No management contract shall be entered into for a period longer than 5 years for any 1 term.

II. No corporation shall possess or exercise corporate powers other than those conferred by the Revised
Corporation Code or by its articles of incorporation and except as necessary or incidental to the exercise
of the powers conferred.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

10. Where a stockholder or stockholders representing the same interest of both the managing and the
managed corporations own or control more than 1/3 of the total outstanding capital stock entitled to
vote of managing corporation.

a. Interlocking board of directors

b. Interlocking members

c. Interlocking stockholders

d. None of the above.

11. 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.

a. Interlocking stockholders

b. Interlocking members

c. Interlocking board of directors

d. None of the above.

12. I. A corporation has no power except those expressly conferred on it by the Corporation Code and
those that are implied or incidental to its existence.

II. In turn, a corporation exercises said powers through its board of

Directors and/or its duly authorized officers and agents.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

13. It is an action brought by a stockholder on behalf of the corporation to enforce corporate rights
against the corporation’s directors, officers or other insiders.

a. Individual suit

b. Derivative suit

c. Corporate suit

d. Representative suit

14. The following are the requisites of the corporate power to extend or shorten corporate term:
I. Approval by a 2/3 vote of the board of directors or trustees.

II. Ratification by the stockholders representing at least 2/3 of the outstanding capital stock or by at least
2/3 of the members in case of non-stock corporations.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

15. It means that a stockholder who dissented and voted against the proposed corporate action, may
choose to get out of the corporation by demanding payment of the fair market value of his shares.

a. Pre-emptive right

b. Appraisal right

C Stockholders right

d. Right to liquidation

16. Subscriptions to the capital stock of a corporation constitute a fund to which the creditors have a
right to look for the satisfaction of their claims.

a. Trust fund doctrine

b. Doctrine of corporate opportunity

c. Doctrine of piercing the veil of corporate fiction

d. Entity doctrine

17. The distribution of corporate capital happens in only in three instances, amendment of the articles of
incorporation to reduce the except:

a. Authorized capital stock.

b. Purchase of redeemable shares by the corporation, regardless of the existence of unrestricted

retained earnings.

c. Dissolution and eventual liquidation of the corporation.

d. Amendment of the by-laws to reduce the authorized capital stock

18. The following are the requirements of increase or decrease authorized capital stock, except:

a. No decrease of the capital stock shall be approved if its effect shall prejudice the rights of corporate
creditors. 85

b. Approval by a majority vote of the board of directors.

c. Ratification by the stockholders holding at least 2/3 of the outstanding capital stock.
d. Approval thereof by the DTI.

19. I. The right of appraisal may be exercised when there is a fundamental change in the charter or
articles of incorporation substantially prejudicing the rights of the stockholders.

II. A corporation can purchase its own shares, provided payment is made out of surplus profits and the
acquisition is for a legitimate corporate purpose.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

20. Corporate profits set aside, declared, and ordered to be paid by the directors for distribution among
stockholders at a fixed time.

a. Income

b. Dividends

c. Revenue

d. Sales

21. I. payment of dividends to a stockholder is not a matter of right but a matter of consensus.

II. The declaration of dividends is dependent upon the availability of surplus profit or restricted retained
earnings.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

22. The limitations on dividends are the following, except:

a. The right to dividend is based on duly recorded stockholdings.

b. The right to dividend accrues only if there is SEC approval.

c. Dividends among stockholders of the same class must always be pro rata equal and without
discrimination and regardless of the time when the shares were acquired. The right of the stockholder to
be paid dividends accrues as soon as the declaration is made.

d. Declaration of dividends is discretionary upon the board of directors.

23. It is an agreement whereby a corporation delegates the management of Its affairs to another
corporation for a certain period of time.
a. Voting trust agreement

b. Contract of agency

C. Self-dealing contract

d. Management contract

24. It refers to an act outside or beyond corporate powers, including those that may ostensibly be within
such powers but are, by general or special laws, prohibited or declared illegal.

a. Intra vires act

b. Doctrine of limited capacity

c. Ultra vires act

d. Doctrine of piercing the veil of corporate fiction

25. I. Every corporation has the power and capacity to have perpetual existence unless the certificate of
incorporation provides otherwise.

II. Every corporation has the power and capacity to enter into a partnership, joint venture, merger,
consolidation, or any other commercial agreement with natural and juridical persons.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

Title V – BYLAWS

1. I. It is the generally accepted rule that third persons are bound by by-laws.

II. By-laws may be necessary for the “government” of the corporation but these are subordinate to the
articles of incorporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. I. Bylaws may be adopted and filed prior to incorporation.

II. In all cases, bylaws shall be effective only upon the issuance by the SEC of a certification that the
bylaws are in accordance with the Revised Corporation Code.
a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. It is a condition precedent in the acquisition of corporate existence.

a. By-laws

b. Shares of stock

c. Articles of incorporation

d. Rules, regulation and discipline

4. I. The owners of majority of the outstanding capital stock or majority of the members in a non-stock
corporation may delegate to the board of directors or trustees the power to amend or repeal any by-
laws or adopt new by-laws.

II. The amended or new by-laws shall only be effective upon the issuance by the SEC of a certification
that the same are not inconsistent with the Revised Corporation Code.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. I. Any power delegated to the board of directors or trustees to amend repeal any by-laws or adopt
new by-laws shall be considered as revoked whenever stockholders owning or representing 2/3 of the
outstanding capital stock or 2/3 of the members in non-stock corporations, shall so vote at a regular or
special meeting.

II. Whenever the bylaws are amended or new bylaws are adopted, the corporation shall file with the SEC
such amended or new bylaws.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

6. It constitutes the charter or fundamental law of the corporation.

a. By-laws

b. Rules, regulation and discipline

c. Articles of incorporation

d. None of the above

7. A private corporation may provide the following in its bylaws:

a. The modes by which a stockholder, member, director, or trustee may attend meetings and cast their
votes.

b. The form for proxies of stockholders and members and the manner of voting them.

c. The manner of election or appointment and the term of office of all officers other than directors or
trustees.

d. All of the above.

8. The rules and regulations or private laws enacted by the corporation to regulate, govern and control
its own actions, affairs and concerns and its stockholders or members and directors and officers with
relation thereto and among themselves in their relation to it

a. articles of incorporation

b. Resolution

c. Rules, regulation and discipline

d. By-laws

9. I. The purpose of a by-law is to regulate the conduct and define the duties of the members towards
the corporation and

II. By-laws are the relatively permanent and continuing rules of action adopted by the corporation for its
own government and that of the individuals composing it and having the direction, management and
control of its affairs, in whole or in part, in the management and control of its affairs and activities.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

10. I. The bylaws shall be signed by the stockholders or members voting for them and shall be kept in the
principal office of the corporation.

II. A copy of the bylaws, duly certified by a majority of the directors or trustees and countersigned by the
secretary of the corporation, shall be filed with the SEC and attached to the original articles of
incorporation.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

Title VI - MEETINGS

1. I. As a rule, a quorum shall consist of the stockholders representing a majority of the outstanding
capital stock or a majority of the members the case of nonstock corporations.

II. 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.

a. Only I is true

b. Only Il is true

c. Both are true

d. Both are false

2. Is the book which records the names and addresses of all stockholders arranged alphabetically, the
installments paid and unpaid on all stock for which subscription has been made, and the date of
payment thereof.

a. Check book

b. Journals

c. Ledgers

d. Stock and transfer book

3. I. Every decision of at least a majority of the directors or trustees present at a meeting at which there
is a quorum shall be valid as a corporate act.

II. The election of officers which requires the vote of a majority of all the members of the board.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. The requirements for board meeting are the following, except:

a. Meeting of the directors or trustees duly assembled as a Board.

b. Decision of the majority of all the members of the board.

c. Presence of the required quorum.

d. Meeting at the place, time, and manner provided in the by-laws.

5. I. Meetings of directors or trustees of corporations may be held anywhere in or outside of the
Philippines, unless the bylaws provide otherwise.

II. 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 1 day prior to the scheduled meeting, unless a longer time is provided
in the bylaws.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

6. I. In case of pledged or mortgaged shares in stock corporations, the pledgee or mortgagee shall have
the right to attend and vote at meetings of stockholders.

II. In case of shares of stock owned jointly by two or more persons, in order to vote the same, the
consent of all the co-owners shall be necessary.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

7. I. Treasury shares shall have no voting right as long as such shares remain in the Treasury.

II. Directors or trustees cannot attend or vote by proxy at board meetings but there is no prohibition for
them to act as proxies in stockholders' meetings.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

8. I. Directors or trustees who cannot physically attend or vote at board meetings can participate and
vote through remote communication such as videoconferencing, teleconferencing, or other alternative
modes of communication that allow them reasonable opportunities to participate.

II. Directors or trustees can attend or vote by proxy at board meetings.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

9. I. The chairman or, in his absence, the president shall preside at meetings of the directors or trustees
as well as of the stockholders or members, unless the bylaws provide otherwise.

II. In case a stockholder grants security interest in his or her shares In stock corporations, the
stockholder-grantor shall have the right w attend and vote at meetings of stockholders.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

10. I. Executors, administrators, receivers, and other legal representative’s stockholders duly appointed
by the court may attend and vote in behalf of the stockholders or members without need of any written
proxy.

II. When the shares are owned in an "and/or" capacity by the holders thereof, any one of the Joint
owners can vote said shares or appoint a proxy therefor.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

11. I. Stockholders and members may vote in person or by proxy in all meetings of stockholders or
members.

Il. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or
members of corporations may also vote through remote communication or in absentia.

II. A stockholder or member who participates through remote communication or in absentia shall be
deemed present for purposes of quorum.

a. Only I is true

b. Only II is true

C. Only III is true

d. I, II and III are true

12. I. The general rule is that every member of a non-stock corporation, and every legal owner of shares
in a stock corporation, has a right to be present and to vote in all corporate meetings.

II. Voting may be expressed personally, or through proxies who vote in their representative capacities.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

13. I. Directors must act as a body in a meeting called pursuant to the law or the corporation's by-laws,
otherwise, any action taken therein may questioned by any objecting director or shareholder.

II. The general rule is that a corporation, through its board of directors, should act in the manner and
within the formalities, if any, prescribed by its charter or by the general law.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

14. I. An action of the board of directors during a meeting, which was I for lack of notice, may not be
ratified.

II. Notice of meeting may not be waived, expressly or stockholder or member.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

15. The requirements for a valid meeting are the following, except:

a. It must be held at the stated date and at the appointed time.

b. . It must be called by the proper person

c. The person or persons designated in the by-laws have authority to call stockholders or members
meeting.

d. It must be held always at the principal place of business.

16. I. Stockholder's or member's meetings shall be held in the city or municipality where the principal
office of the corporation is located.

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

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

17. I. In regular meetings of stockholders or members, a written notice of regular meetings shall be sent
to all stockholders or members of at least 10 days prior to the meeting.

II. Written notice of regular meetings may be sent to all stockholders or members of record through
electronic mail or such other manner as the SEC shall allow under its guidelines.

a. Only I is true

b. Only II is true

Both are true

d. Both are false

18. I. Any city or municipality in Metro Manila, Metro Cebu, Metro Davao, and other Metropolitan areas
shall, for purposes of stockholders' or members' meetings, be considered a city or municipality.

II. Notice of meetings shall be sent through the means communication provided in the bylaws, which
notice shall state the time, place and purpose of the meetings.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

19. The requirements for a valid proxy are the following, except:

a. It shall be in writing.

b. It shall be filed before the scheduled meeting with the corporate secretary.

c. It shall be signed by the corporate secretary.

d. Unless otherwise provided in the proxy, it shall be valid only for the meeting which it is intended.

20. The purposes of proxies are the following, except:

a. For convenience.

b. It enables those who do not wish to attend the meeting to protect their interest.

c. It assures the presence of all.

d. n It secures voting control.

21. Revocation of proxy may be made through the following, except:

a. Formal notice;

b. Verbal communication; or

c. Conduct
d. None of the above

22. A trust created by an agreement between a group of the stockholders of a corporation and the
trustee or by a group of identical agreements between individual stockholders and a common trustee,
whereby it is provided that for a term of years, or for a period contingent upon a certain event, or until
the agreement is terminated, control over the stock owned by such stockholders, either for certain
purposes or for all purposes, is to be lodged in the trustee, either with or without a reservation to the
owners, or persons designated by them, of the power to direct how such control shall be used.

a. Proxy

b. Management contract

c. Voting trust agreement

d. Executive committee

23. The following are the requirements imposed on a voting trust agreement, except:

a. The agreement must be in writing and notarized and specify the terms and conditions thereof.

b. A certified copy of such agreement shall be filed with the corporation and with the Securities and
Exchange Commission; non-compliance, however, said agreement is effective and enforceable.

c. The certificate or certificates 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.

d. It shall be noted that the transfer in the name of the trustee or trustees is made pursuant to said
voting trust agreement.

24. The three tests of voting trust agreement are the following:

a. That the voting rights of the stock are separated from the other attributes of ownership

b. That the voting rights granted are intended to be irrevocable for a definite period of time.

c. That the principal purpose of the grant of voting rights is to acquire long o gaits voting control of the
corporation.

d. All of the above.

25. I. A stockholder or member may propose the holding of a special meeting and items to be included in
the agenda.

II. Whenever for any cause, there is no person authorized or the person authorized unjustly refuses to
call a meeting, the SEC, upon petition of a stockholder or member on a showing of good cause therefor,
may issue an order, directing the petitioning stockholder or member to call a meeting of the corporation
by giving proper notice.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

26. I. Unless the bylaws provide for a longer period, the stock and transfer book or membership book
shall be closed at least 20 days for regular meetings and 7 days for special meetings before the
scheduled date of the meeting.

II. The right to vote of stockholders or members may be exercised in person, through a proxy, or when so
authorized in the bylaws, through remote communication or in absentia.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

Title VII – STOCKS AND STOCKSHOLDERS

1. I. As long as the shares are not considered delinquent, stockholders are entitled to all rights granted to
it whether or not subscribed capital stocks are fully paid.

II. Shares of stock shall not be issued in exchange for promissory notes or future service.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. I. Stocks shall not be issued for a consideration less than the par or issued price thereof.

II. Where the consideration is other than actual cash, or consists of intangible property such as patents
of copyrights, the valuation thereof shall initially be determined by the incorporators or the board of
directors, subject to approval of the SEC.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. Unit of interest in a corporation.

a. Treasury stock

b. Certificate of stock
c. Shares of stock

d. Par value stock

4. Evidence of the holder’s ownership of the stock and of his right as a shareholder.

a. Treasury stock

b. Certificate of stock

c. Shares of stock

d. Par value stock

5. I. The stock and transfer book is the basis for ascertaining the persons entitled to the rights and
subject to the liabilities of a stockholder.

II. On the death of a shareholder, the executor or administrator duly appointed by the Court is vested
with the legal title to the stock but not entitled to vote it.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

6. For a valid transfer of stocks, there must be strict compliance with the mode of transfer prescribed by
law. The following are the requirements, except:

a. There must be delivery of the stock certificate.

b. The certificate must be endorsed by the owner or his attorney-in- fact or other persons legally
authorized to make the transfer.

c. To be valid against third parties, the transfer must be recorded in the books of the corporation.

d. To be valid against third parties, the transfer must be recorded in the SEC.

7. Solidary liabilities may be incurred and the veil of corporate fiction may be pierced when directors and
trustees or, in appropriate case, the officers of a corporation does the following, except:

a. Vote for or assent to patently unlawful acts of the corporation.

b. Act in bad faith or with gross negligence in directing the corporate affairs.

c. Are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and
other persons.

d. Habitual absence in the directors' meeting.

8. I. As a rule, the doctrine of corporate opportunity is violated where the to stocks are issued by the
corporation for a consideration which is less than its par value.
II. Subscribers for stock shall pay to the corporation interest on all unpaid subscriptions from the date of
subscription, if so required by, and at the rate of interest fixed in the by-laws.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

9. Bidder who shall offer to pay the full amount of the balance on the subscription together with accrued
interest, costs of advertisement and expenses of sale, for the smallest number of shares or fraction of a
share.

a. Lowest bidder

b. Winning bidder

C. Highest bidder

d. Losing bidder

10. I. A subscription of shares in a corporation still to be formed shall be irrevocable for a period of at
least six (6) months from the date of subscription.

II. No pre-incorporation subscription may be revoked after the articles of incorporation is submitted to
the Commission.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

11. Consideration for the issuance of stock may be:

a. Actual cash paid to the corporation.

b. Labor performed for or services to be rendered to the corporation;

c. 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.

d. Previously incurred indebtedness of the corporation.

12. I. In stock corporations, shareholders may generally transfer their

Shares.

II. Membership in and all rights arising from a non-stock corporation are personal and non-transferable.

a. Only I is true
b. Only II is true

c. Both are true

d. Both are false

13. Is an action brought by minority shareholders in the name of the corporation to redress wrongs
committed against it, for which the directors refuse to sue.

a. Derivative suit

b. Individual suit

c. Representative suit

d. Class suit

14. The following are the requisites of a derivative suit:

a. The party bringing suit should be a shareholder as of the time of the act or transaction complained of,
the number of his shares not being material;

b. He has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors
for the appropriate relief but the latter has failed or refused to heed his plea; and

c. The cause of action actually devolves on the corporation wrongdoing or harm having been, or being
caused to the corporation and not to the particular stockholder bringing the suit.

d. All of the above

15. Where a stockholder or member is denied the right of inspection, his suit would be individual
because the wrong is done to him personally and not to the other stockholders or the corporation.

a. Representative suit

b. Class suit

c. Derivative suit

d. Individual suit

16. Where the wrong is done to a group of stockholders, as where preferred stockholders’ rights are
violated, a class suit will be proper for the protection of all stockholders belonging to the same group.

a. Individual suit

b. Corporate suit

c. Representative suit

d. Derivative suit

17. Any contract for the acquisition of unissued stock in an existing corporation or a corporation still to
be formed shall be deemed a subscription notwithstanding the fact that the parties refer to it as a
purchase or some other contract.
a. Contract of sale

b. Management contract

c. Subscription contract

d. None of the above

18. I. The rule is that the endorsement of the certificate of stock by the owner or his attorney-in-fact or
any other person legally authorized to make the transfer shall be sufficient to effect the transfer of
shares only If the same is coupled with delivery.

II. The delivery of the stock certificate duly endorsed by the owner is the operative act of transfer of
shares from the lawful owner to the new transferee.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

19. I. The certificate of stock itself once issued is a continuing affirmation or representation that the
stock described therein is valid and genuine.

II. Stock issued without authority and in violation of law is voidable and confers no rights on the person
to whom it is issued and subjects him to no liabilities.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

20. I. A certificate of stock is one, entire and divisible contract.

II. The stockholder shall not be entitled to a certificate until he has remitted the full payment of his
subscription together with any interest or expenses, if any is due.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

21. I. The general rule is that obligations incurred by the corporation, acting through its directors, officers
and employees, are their joint

II. It is basic 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.
a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

22. The following, except one, are the exceptional circumstances warranting the disregard of the
doctrine of separate personality:

a. When a director, trustee or officer is made, by specific provision of by-laws, personally liable for
his corporate action.
b. When directors and trustees or, in appropriate case, the officers of a corporation vote for or
assent to patently unlawful acts of the corporation.
c. When a director or officer has consented to the issuance of watered down stocks or who, having
knowledge thereof, did not forthwith file with the corporate secretary his written objection
thereto.
d. When a director, trustee or officer has contractually agreed or stipulated to hold himself
personally and solidarity liable with the corporation.

Title VIII – CORPORATE BOOKS AND RECORDS

1. The books and records required to be kept by the corporation are the following, except:

a. Minutes of meetings of stockholders or members.

b. Minutes of all meetings of directors or trustees.

c. Stock and transfer book, in case of stock corporations.

d. Daily time record.

2. The following are the limitations on the right of inspection by a stockholder, except:

a. The right can be exercised only by the common stockholders.

b. The right must be exercised during reasonable hours on business days.

c. The person demanding the right has not improperly used any information obtained through any
previous examination of the books and records of the corporation.

d. The demand is made in good faith or for a legitimate purpose.

3. I. The corporate secretary has the duty to record and prepare the minutes of the meeting.

II. Without the certification of the corporate secretary, it is incumbent upon the other directors or
stockholders as the case may be, to submit proof that the minutes of the meeting is accurate and
reflective of what transpired during the meeting.
a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. I. A corporation shall furnish a stockholder or member, within 10 days from receipt of their written
request, its most recent financial statement, in the form and substance of the financial reporting
required by the Commission.

II. At the regular meeting of stockholders or members, the board of directors or trustees shall present to
such stockholders or members a financial report of the operations of the corporation for the preceding
year, which shall include financial statements.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. I. The proper custodian of the books, minutes and official records of a corporation is usually the
corporate treasurer.

II. The signature of the corporate president gives the minutes of the meeting probative value and
credibility.

a. Only I is true

b. Only Il is true

c. Both are true

d. Both are false

6. I. The stockholder's right of inspection of the corporation's books and records is based upon their
ownership of the assets and property of the corporation.

II. The right of inspection granted to stockholders is absolute.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

7. I. Corporate records, regardless of the form in which they are stored shall be open to inspection by any
director, trustee, stockholder or member of the corporation in person or by a representative at
reasonable hours on business days.
II. The inspecting or reproducing party shall remain bound by confidentiality rules under prevailing laws.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

8. I. A requesting party who is not a stockholder or member of record, or is a competitor, director, officer,
controlling stockholder or otherwise represents the interests of a competitor shall have no right to
inspect or demand reproduction of corporate records.

II. If the corporation denies or does not act on a demand for inspection and/or reproduction, the
aggrieved party may report such denial or inaction to the SEC

a. Only I is true.

b. Only II is true

c. Both are true

d. Both are false

9. Stock corporations must also keep a stock and transfer book, which

a. A record of all stocks in the names of the stockholders

b. The installments paid and unpaid on all stocks for which shall contain: subscription has been made,
and the date of payment of any instalment.

c. A statement of every alienation, sale or transfer of stock made, date thereof, by and to whom made.

d. All of the above.

Title IX – MERGER AND CONSOLIDATION

1. It is the union of two or more existing entities to form a new entity called the consolidated
corporation.

a. Merger

b. Acquisition

c. Consolidation

d. Business combination

2. I. Merger or consolidation become effective upon the mere agreement of the constituent
corporations.
II. Ordinarily, in the merger of two or more existing corporations, one of the corporations survives and
continues the combined business, while the rest are dissolved and all their rights, properties, and
liabilities are acquired by the surviving corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. I. Upon approval by majority vote of each of the board of directors or trustees of the constituent
corporations of the plan of merger or consolidation, the same shall be submitted for approval by the
stockholders or members of each of such corporations at separate corporate meetings duly called for the
purpose.

II. The affirmative vote of stockholders representing at least 2/3 of the outstanding capital stock of each
corporation in the case of stock corporations or at least 2/3 of the members in the case of non-stock
corporations shall be necessary for the approval of such plan.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. I. In the merger of two existing corporations, one of the corporations survives and continues the
business, while the other is dissolved, and all its rights, properties, and liabilities are acquired by the
surviving corporation.

II. By operation of law, upon the affectivity of the merger, the absorbed corporation ceases to exist but
its rights and properties, liabilities, shall be taken and deemed transferred to and vested in tie surviving
corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. I. Any amendment to the plan of merger or consolidation may be made.

II. The amendment to the plan of merger or consolidation must be approved by a majority vote of the
respective boards of directors or trustees of all the constituent corporations and ratified by the
affirmative vote of stockholders representing at least 2/3 of the outstanding capital stock or of 2/3 of the
members of each of the constituent corporations.

a. Only I is true
b. Only II is true

c. Both are true

d. Both are false

6. The merger or consolidation shall have the following effects:

a. The constituent corporations shall become a single corporation.

b. The separate existence of the constituent corporations shall cease.

c. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities, and
powers and shall be subject to all the duties and liabilities of a corporation.

d. All of the above.

7. As a rule, a corporation that purchases the assets of another will not be liable for the debts of the
selling corporation, except when any of the following circumstances is present. Which is the exception?

a. Where the transaction is validly entered into.

b. Where the purchaser expressly or impliedly agrees to assume the debts.

c. Where the transaction amounts to a consolidation or merger of the corporations.

d. Where the purchasing corporation is merely a continuation of the selling corporation.

8. 1. Two or more corporations may merge into a single corporation which shall be one of the
constituent corporations.

II. Two or more corporations may consolidate into a new single corporation which shall be the
consolidated corporation.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

9. It is a union whereby one or more existing corporations are absorbed another corporation that
survives and continues the combined a business.

a. Consolidation

b. Acquisition

c. Business combination

d. Merger

10. I. For a valid merger or consolidation, the approval by the SEC of the articles of merger or
consolidation is required.
II. If, upon investigation, the SEC has reason to believe that the proposed merger or consolidation is
contrary to the provisions of the corporation Code or existing laws, it shall set a hearing to give the
corporations concerned the opportunity to be heard.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

11. I. The merger shall only be effective upon the issuance of a certificate of merger by the SEC.

II. Consolidation becomes effective not upon mere agreement of the members but only upon issuance of
the certificate of consolidation by the SEC.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

12. I. When the SEC is satisfied that the consolidation of the corporations is not inconsistent with the
provisions of the Corporation Code and existing laws, it issues a certificate of consolidation which makes
the reorganization official.

II. Since there is a dissolution of the absorbed corporations, there is winding up of their affairs or
liquidation of their assets.

a. Only I is true

b. Only II is true

с. Both are true

d. Both are false

Title X – APPRAISAL RIGHT

1. I. The dissenting stockholder shall be entitled to receive payment of the fair value of his shares as
agreed upon between him and the corporation or as determined by the appraisers chosen by them.

II. Payment may be made regardless if the corporation has unrestricted Retained earnings in its books to
cover the same.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

2. The following are instances where a dissenting stockholder who Demands payment of his shares is no
longer allowed to withdraw from His decision, except:

A. The corporation consents to the withdrawal.

b. The proposed corporate action is approved by the SEC where its approval is necessary.

c. The proposed corporate action is abandoned or rescinded by the corporation.

d. The SEC determines that such stockholder is not entitled to appraisal right.

3. I. The corporation shall bear the costs of appraisal, as a rule.

II. Clearly, the right of appraisal may be exercised when there is a minor change in the charter or articles
of incorporation substantially prejudicing the rights of the stockholders.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value
of his shares in the following instances, except:

a. In case any amendment to the articles of incorporation has effect of changing or restricting the rights
of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of
outstanding shares of any class, or of extending or shortening the term of corporate existence.

b. In case of sale, lease, exchange, transfer, mortgage, pledge o disposition of all or substantially all of the
corporate property and or other assets.

c. In case of increase or decrease of capital stock.

d. In case of merger or consolidation.

5. The following are the instances of appraisal right, except:

a. In case of investing of corporate funds in another corporation or

b. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially
all of the corporate property and business assets.

c. In case of merger or consolidation.

d. In case any amendment to the articles of incorporation.

6. I. In a close corporation, any stockholder of a close corporation may, for any reason, compel the said
corporation to purchase his shares at their fair value, which shall not be less than their par or issued
value, when the corporation has sufficient assets in its books to cover its debts and liabilities exclusive of
capital stock.
II. The appraisal right may be exercised by any stockholder who shall have voted against the proposed
corporate action, by making a written demand on the corporation within 30 days after the date on which
the vote was taken for payment of the fair value of his shares.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

7. I. If within a period of 60 days from the date the corporate action was approved by the stockholders,
the withdrawing stockholder and the corporation cannot agree on the fair value of the shares, it shall be
determined and appraised by 5 disinterested persons.

II. That no payment shall be made to any dissenting stockholder unless the corporation has unrestricted
retained earnings in its books to cover such payment.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

8. The effects of transfer of dissenting shares are the following:

I. The rights of the transferor as a dissenting stockholder shall cease and the transferee shall have all the
rights of a regular stockholder.

II. All dividend distributions which would have accrued on such shares shall be paid to the transferee.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

9. I. From the time of demand for payment of the fair value of a stockholder's shares until either the
abandonment of the corporate action involved or the purchase of the said shares by the corporation, all
rights accruing to such shares, including voting and dividend rights, shall be suspended.

II. If the dissenting stockholder is not paid the value of his shares within 10 days after the award, his
voting and dividend rights shall immediately be restored.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

10. It means that a stockholder who dissented and voted against the proposed corporate action, may
choose to get out of the corporation by demanding payment of the fair market value of his shares.

a. Pre-emptive right

b. Voting right

c. Appraisal right

d. Management right

Title XI – NONSTOCK CORPORATION

1. I. In stock corporations, shareholders may generally transfer their shares.

II. Membership in and all rights arising from a non-stock corporation are transferable.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. The Plan of Distribution of Assets may be adopted by a majority vote of the board of trustees and
approval of majority of the members having voting rights present or represented by proxy at the meeting
during which said plan is adopted.

II. Members’ meetings may be held at any place outside the principal office of the corporation provided
it shall be within the Philippines.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. I. No person shall be elected as trustee unless he is a member of the corporation.

II. Unless otherwise provided in the articles of incorporation or the by-laws, officers of a non-stock
corporation may be directly elected by the members.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. I. Membership shall be terminated in the manner and for the causes provided in the articles of
incorporation or the by-laws.

II. Termination of membership shall have the effect of extinguishing all rights of a member in the
corporation or in its property, unless otherwise provided in the articles of incorporation or the by-laws.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

5. It is one where no part of its income is distributable as dividends to its members, trustees, or officers.

a. Stock corporation

b. Close corporation

c. Corporation sole

d. Non-stock corporation

6. I. Any profit which a non-stock corporation may obtain as an incident to its operations shall, whenever
necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation
was organized.

II. A non-stock corporation can be converted into a stock e by mere amendment of its articles of
incorporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

7. The following are the characteristics of a non-stock corporation, except:

a. It does not have capital stock divided into shares.

b. As a general rule, it is not empowered to engage in business. Moreover, it is prohibited to make

income or profits as an incident to its operation.

c. No part of its income during its existence is distributable as dividends to its members, trustees, or
officers.

d. There is non-transferability of membership.

8. The following are the characteristics of a non-stock corporation, except:

a. The right to vote of members may be limited, broadened, or even denied in the articles of
incorporation or the by-laws.
b. By-laws may provide that the members may hold their meetings at any place even outside the place
where the principal office of the corporation is located, even if that such place is outside the Philippines.

c. Non-stock corporation may, through their articles of incorporation or their by-laws designate their
governing boards by any name other than as board of trustees.

d. A non-stock corporation is not allowed to distribute any of its assets or any incidental income or profit
made by the corporation during its existence.

9. I. The determination of whether or not “dead members” are entitled to exercise their voting rights,
depends on those articles of incorporation or by-laws.

II. In stock corporations, on the death of a shareholder, the executor or administrator duly appointed by
the Court is vested with the legal title to the stock and entitled to vote it.

a. Only I is true

b. Only Il is true

c. Both are true

d. Both are false

10. I. Membership in and all rights arising from a non-stock corporation a personal and non-transferable.

II. Unless otherwise provided in the articles of incorporation or the by-Laws, a member may not vote by
proxy.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

11. I. The number of trustees shall be fixed in the articles of incorporation or bylaws which may or may
not be more than 15.

II. Except with respect to independent trustees of nonstick corporations vested with public interest, only
a member of corporation shall be elected as trustee.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

Title XII – CLOSE CORPORATIONS

1. An action by the directors of a close corporation without a meeting shall not be deemed valid if:
a. All the stockholders have actual or implied knowledge of the action and make no prompt objection
thereto in wring.

b. the directors are accustomed to take informal action with the express or implied acquiescence of all
the stockholders.

c. all the directors have express or implied knowledge of the action in question and none of them makes
prompt objection thereto in writing.

d. Before or after such action is taken, written consent thereto is signed by a majority the directors.

2. I. The pre-emptive right of stockholders in close corporation shall extend to all stock to be issued,
excluding reissuance of treasury shares.

II. A close corporation may, at its option, refuse to register the transfer of the stock in the name of the
transferee if the person is not qualified to be a stockholder and has notice thereof.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. An impartial person who is neither a stockholder nor a creditor of the corporation or any subsidiary of
the corporation, and whose further qualifications, if any, may be determined by the SEC.

a. Provisional stockholder

b. Provisional member

c. Provisional trustee

d. Provisional director

4. Any stockholder of a close corporation may by written petition to the sec compel the dissolution of
such corporation whenever:

I. Any of act of the directors or officers is illegal or fraudulent or dishonest or oppressive or unfairly
prejudicial to the corporation or any stockholder

II. Corporate assets are being misapplied or wasted.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. I. A provisional directory is not a receiver of the corporation and does not have the title and powers of
a custodian or receiver.
II. A provisional director shall have all the rights and powers of a duly elected director of the corporation,
including the right to notice of and to vote at meetings of directors, until such time as he shall be
removed by order of the Commission or by all the stockholders.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

6. A close corporation is one whose articles of incorporation provides the following, except:

а. All the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of record by
not more than specified number of persons, not exceeding 20;

b. All the issued stock of all classes shall be subject to 1 or more specified restrictions on transfer.

c. The corporation shall not list in any stock exchange or make any public offering of its stocks of any
class.

d. All of the above.

7. The following are corporations that cannot incorporate as a close corporation, except:

a. Industrial companies

b. Mining or oil companies

c. Stock exchanges

d. Banks

8. The following are characteristics of a close corporation, except:

a. Where the articles of incorporation provide that the business of the corporation shall be managed by
the stockholders themselves rather than by the board of directors, then the stockholders shall be
deemed to be the directors with all the liabilities imposed by the Corporation Code on directors. The
stockholders shall not be personally liable for corporate torts.

b. Quorum may be greater than mere majority.

c. Restrictions on transfer of shares can be validly imposed.

d. Any action by the directors of a close corporation without a meeting shall nevertheless be deemed
valid.

9. The following are characteristics of a close corporation, except.

a. Any action by the directors of a close corporation without a meeting shall nevertheless be deemed
valid.

b. Deadlock in the board is settled by the SEC upon the written petition by any stockholder.
c. Pre-emptive right does not extend to all stock issuances.

d. A stockholder may withdraw and avail of his right of appraisal.

10. The articles of incorporation of a close corporation may provide, except

a. A classification of shares or rights and the qualifications for owning or holding the same and
restrictions on their transfers as may be stated therein, subject to the provisions of the following
section.
b. A lesser quorum or voting requirements in meetings of stockholders or directors.
c. A classification of directors into one or more classes, each of whom may be voted for and
elected solely by a particular class of stock.
d. The business of the corporation shall be managed by the stockholders of the corporation rather
than by a board of directors.

11. Any person to whom stock or a close corporation has been issued or transferred has, or is
conclusively presumed to have notice.

a. That he is a person not eligible to be a holder of stock of the corporation

b. That transfer of stock to him would cause the stock of the corporation to be held by more than the
number of persons permitted by its articles of incorporation to hold stock of the corporation; or

c. That the transfer of stock is in violation of a restriction on transfer of stock.

d. All of the above

Title XIII – SPECIAL CORPORATIONS

1.. Any corporation sole may purchase and hold real estate and personal property for its church,
charitable, benevolent or educational purposes, and may receive bequests or gifts for such purposes.

II. Such corporation sole may sell or mortgage real property held by it by obtaining an order for that
purpose from the Regional Trial Court.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. A corporation sole must have an articles of incorporation setting forth the following:

a. That the applicant chief archbishop, bishop, priest, minister, rabbi Or presiding elder of his religious
denomination, sect or church which desires to become a corporation sole.

b. That the rules, regulations and discipline of his religious denomination, sect or church are not
inconsistent with becoming a corporation sole and do not forbid it.
c. That as such chief archbishop, bishop, priest, minister, rabbi or presiding elder, he is charged with the
administration of the temporalities and the management of the affairs, estate and properties of his
religious denomination, sect or church within the territorial jurisdiction, describing such territorial
jurisdiction.

d. All of the above

3. I. A majority of the trustees shall constitute a quorum for the transaction of business.

II. Trustees elected thereafter in educational corporation to fill vacancies caused by expiration of term
shall hold office for 3 years.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. I. Any corporation sole may purchase and hold real estate and personal property for its church,
charitable, benevolent or educational purposes, and may receive bequests or gifts for such purposes.

II. In cases where the rules, regulations and discipline of the religious denomination, sect or church,
religious society or order concerned represented by such corporation sole regulate the method of
acquiring such holding, selling and mortgaging real estate and personal property such as rules,
regulations and discipline shall control, and the intervention of the courts shall not be necessary.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. 1. The One Person Corporation shall appoint a treasurer, corporate secretary, and other officers as it
may deem necessary.

II. The single stockholder may be appointed as the corporate secretary.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

6. In addition to the functions designated by the One Person Corporation, the corporate secretary shall:

a. Be responsible for maintaining the minute’s book and/or records of the corporation.
b. Notify the nominee or alternate nominee of the death or incapacity of the single stockholder, which
notice shall be given no later than 5 days from such occurrence.

c. Notify the SEC of the death of the single stockholder within 5 days from such occurrence and stating in
such notice the names, residence addresses, and contact details of all known legal heirs.

d. All of the above.

7. I. The single stockholder shall designate a nominee and an alternate nominee who shall, in the event
of the single stockholder's death or incapacity, take the place of the single stockholder as director and
shall manage the corporation's affairs.

II. The articles of incorporation shall state the names, residence addresses and contact details of the
nominee and alternate nominee, as well as the extent and limitations of their authority in managing the
affairs of the One Person Corporation.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

8. I. When the incapacity of the single stockholder is temporary, the nominee shall sit as director and
manage the affairs of the One Person Corporation until the stockholder, by self-determination, regains
the capacity to assume such duties.

II. In case of death or permanent incapacity of the single stockholder, 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.

III. The alternate nominee shall sit as director and manage the One Person Corporation in case of the
nominee's inability, incapacity, death, or refusal to discharge the functions as director and manager of
the corporation, and only for the same term and under the same conditions applicable to the nominee.

a. Only I is true

b. Only II is true

c. Only III is true

d. I, II, and III are true

9. I. The single stockholder may, at any time, change its nominee and alternate nominee by submitting to
the SEC the names of the nominees and their corresponding written consent.

II. A One Person Corporation shall maintain a minute’s book which shall contain all actions, decisions,
and resolutions taken by the One Person Corporation.

a. Only I is true
b. Only II is true

c. Both are true

d. Both are false

10. I. When action is needed on any matter, it shall be sufficient to prepare a written resolution, signed
and dated by the single stockholder, and recorded in the minute’s book of the One Person Corporation.

II. The date of recording in the minute’s book shall be deemed to be the date of the meeting for all
purposes.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

11. I. The One Person Corporation converted from an ordinary stock corporation shall succeed the latter
and be legally responsible for all the latter's outstanding liabilities as of the date of conversion.

II. The ordinary stock corporation converted from a One Person Corporation shall succeed the latter and
be legally responsible for all the latter's outstanding liabilities as of the date of conversion.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

12. I. Trustees of educational institutions organized as nonstick corporations shall not be less than 5 nor
more than 15.

II. The number of trustees shall be in multiples of 5.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

13. I. The board of trustees shall, as soon as organized, so classify themselves that the term of office of
1/5 of their number shall expire every year.

II. Religious corporations may be incorporated by one or more persons. Such corporations may be
classified into corporations sole and religious societies.

a. Only I is true
b. Only II is true

c. Both are true

d. Both are false

14 A corporation formed by the chief archbishop, bishop, priest, minister, rabbi or other presiding elder
of a religious denomination, sect, or church, for the purpose of administering or managing, as trustee,
the affairs, properties and temporalities of such religious denomination, sect or church,

a. Corporation aggregate

b. Close corporation

c. Corporation de facto

d. Corporation sole

15. A corporation formed for the same purpose as corporation sole. It consists of two or more persons.

a. Corporation sole

b. Close corporation

c. Corporation aggregate

d. Corporation de facto

16. I. For the purpose of administering and managing, as trustee, the affairs, property and temporalities
of any religious denomination, sect or church, a corporation sole may be formed by the chief archbishop,
bishop, priest, minister, rabbi, or other presiding elder of such religious denomination, sect or church.

II. In order to become a corporation sole, the chief archbishop, bishop, priest, minister, rabbi, or
presiding elder of any religious denomination, sect or church must file with the Commission articles of
incorporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

17. I. A corporation sole may be dissolved and its affairs settled voluntarily by submitting to the
Commission a verified declaration of dissolution.

II. Upon approval of such declaration of dissolution by the SEC, the corporation shall cease to carry on its
operations except for the purpose of winding up its affairs.

a. Only 1 is true

b. Only II is true

c. Both are true

d. Both are false

18. I. A One Person Corporation is a corporation with a single stockholder.

II. Only a natural person, trust, or an estate may form a One Person Corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

19. I. Banks and quasi-banks, preneed, trust, insurance, public and publicly- listed companies, and non-
chartered government-owned and controlled corporations may not incorporate as One Person
Corporations.

II. A natural person who is licensed to exercise a profession may organize as a One Person Corporation
for the purpose of exercising such profession.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

20. I. A One Person Corporation shall not be required to have a minimum authorized capital stock.

II. The One Person Corporation is required to submit and file corporate bylaws.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

21. I. A One Person Corporation shall indicate the letters "OPC" either below or at the end of its
corporate name.

II. The single stockholder shall be the sole director and president of the One Person Corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

22. The One Person Corporation shall submit the following within such period as the SEC may prescribe:
a. Annual financial statements. OE

b. A report containing explanations or comments by the president on every qualification, reservation, or

adverse remark or disclaimer made by the auditor in the latter’s report;

c. A disclosure of all self-dealings and related party transactions entered into between the One Person
Corporation and the single stockholder.

d. All of the above.

24. I. A sole shareholder claiming limited liability has the burden of Affirmatively showing that the
corporation was adequately financed.

II. Where the single stockholder cannot prove that the property of the One Person Corporation is
independent of the stockholder’s personal Property, the stockholder shall be jointly and severally liable
for the Debts and other liabilities of the One Person Corporation.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

24. I. The principles of piercing the corporate veil applies with equal force To One Person Corporations as
with other corporations.

II. The Commission may place the corporation under delinquent status should the corporation fail to
submit the reportorial requirements 3 times, consecutively or intermittently, within a period of 5 years.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

25. I. When a single stockholder acquires all the stocks of an ordinary stock corporation, the latter may
apply for conversion into a One Person Corporation.

II. A One Person Corporation may be converted into an ordinary stock corporation after due notice to the
SEC of such fact and of the circumstances leading to the conversion, and after compliance with all other
requirements for stock corporations.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

 Title XIV - DISSOLUTION

1. I. Where the dissolution of a corporation may prejudice the rights of any creditor, the petition for
dissolution shall be filed with the SEC.

II. The petition shall be signed by a majority of its board of directors or trustees and that its dissolution
was resolved upon by the affirmative vote of the stockholders representing at least majority of the
outstanding capital stock or by at least majority of the members.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. I. In the case of dissolution where creditors are affected, the SEC may appoint a receiver to take charge
of the liquidation of the corporation.

II. An involuntary dissolution may be effected by amending the articles of incorporation to shorten the
corporate term.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

3. I. No application for dissolution of banks, banking and quasi-banking institutions, preneed, insurance
and trust companies, nonstock savings and loan associations, pawnshops, and other financial
intermediaries shall be approved by the SEC unless accompanied by a favorable recommendation of the
appropriate government agency.

II. In the case of expiration of corporate term, dissolution shall automatically take effect on the day
following the last day of the corporate term stated in the articles of incorporation, without the need for
the issuance by the SEC of a certificate of dissolution.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. The following are voluntary modes of dissolution of a corporation, except:

a. By expiration of corporate term provided for the articles of incorporation.

b. By legislative enactment.

C. By failure to formally organize and commence its business within 5 years from the date of
incorporation.

d. By the judgment of the SEC after hearing of petition for voluntary dissolution where creditors are
affected.

5. I. A corporation formed or organized under the Corporation Code may be dissolved voluntarily or
involuntarily.

II. If dissolution of a corporation does not prejudice the rights creditor having a claim against it, the
dissolution may be effected by majority vote of the board of directors or trustees, and by a resolution
adopted by the affirmative vote of the stockholders owning at least majority of the outstanding capital
stock or majority of the members,

а. Only I is true

b. Only II is true

c. Both are true

d. Both are false

6. I. A withdrawal of the request for dissolution shall be made in writing duly verified by any
incorporator, director, trustee, shareholder member and signed by the same number of incorporators,
director, trustee, shareholder, or members necessary to request for dissolution.

II. Upon receipt of a withdrawal of request for dissolution, the SEC shall withhold action on the request
for dissolution.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

7. The following may be grounds for involuntary dissolution of the corporation:

a. Non-use of corporate charter.

b. Continuous inoperation of a corporation.

c. Upon receipt of a lawful court order dissolving the corporation.

d. All of the above.

8. The following are voluntary modes of dissolution of a corporation, except:

a. By the vote of the board of directors or trustees and the resolution adopted by the stockholders or
members where no creditors are affected.
b. By legislative enactment.

c. By amending the articles of incorporation to shorten the corporate term.

d. In case of a corporation sole, by submitting to the SEC a verified declaration of the dissolution for
approval.

9. I. Every corporation whose charter expires pursuant to its articles of incorporation, is annulled by
forfeiture, or whose corporate existence is terminated in any other manner, shall nevertheless remain as
a body corporate for 5 years after the effective date of dissolution.

II. Upon the winding up of corporate affairs, any asset distributable to any creditor or stockholder or
member who is unknown or cannot be found shall be escheated in favor of the national government.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

Title XV – FOREIGH CORPORATIONS

1. I. If a foreign corporation does business in the Philippines without a License, a Philippine citizen or
entity which has contracted with said corporation may be estopped from challenging the foreign
corporation’s corporate personality in a suit brought before Philippine courts.

II. If a foreign corporation does business in the Philippines with the required license, it can sue before
Philippine courts only on isolated transaction.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. I.A foreign corporation’s by-laws, though originating from a foreign jurisdiction, are valid and effective
in the Philippines.

II. The appointment of a resident agent of a foreign corporation is Revocable at any time at the instance
of the corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

3. A resident agent of a foreign corporation can either be:

I. An individual residing in the Philippines regardless of solvency.

II. A domestic corporation lawfully transacting business in the Philippines.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. The purposes of appointing a resident agent are the following:

I. Notice affecting the corporation pending the establishment of its local office.

II. Summons and other legal processes in all proceedings for or against the corporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

5. I. Actual transaction of business within the Philippine territory is an Essential requisite for the
Philippines to acquire jurisdiction over a foreign corporation and thus require the foreign corporation to
secure Philippine business license.

II. If a foreign corporation does not transact such kind of business in the Philippines has no jurisdiction to
require such foreign corporation to secure a Philippine business license.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

6. Is one formed, organized or existing under any laws other than those of the Philippines and whose
laws allow Filipino citizens and corporations to do business in its own country or state.

a. Domestic corporation

b. Government owned-and controlled corporation

c. Foreign corporation

d. None of the above

7. The following are the requisites for a foreign corporation under the Corporation Code:
 I. It must be formed, organized, or existing under any laws other than those of the Philippines.
II. The laws of the country where the corporation was organized allow Filipino citizens and
corporations to do business in its own country or state.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

8. I. A foreign corporation must first obtain a license from the SEC and a certificate from the SEC before it
can transact business in the Philippines.

II. Where a foreign corporation does business in the Philippines without the proper license, it cannot
maintain any action or proceeding before Philippine courts.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

9. I. The purpose of the law in requiring that a foreign corporation doing business in the Philippines be
licensed to do so is to subject such corporation to the jurisdiction of the courts.

II. It is not the absence of the prescribed license but “doing business” in the Philippines without such
license which debars the foreign corporation from access to our courts.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

10. I. If a foreign corporation does business in the Philippines without a license, it cannot sue before the
Philippine courts.

II. If a foreign corporation is not doing business in the Philippines, it still needs a license to sue before
Philippine courts on an isolated transaction or on a cause of action entirely independent of any business
transaction.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

11. I. A foreign corporation without a license is not ipso facto incapacitated from bringing an action in
Philippine courts. A license is necessary only if a foreign corporation is "transacting" or "doing business"
in the country.

II. A party is estopped from challenging the personality of a corporation after having acknowledged the
same by entering into a contract with it.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

12. I. A foreign corporation licensed to transact business in the Philippines may not be allowed to
withdraw from the Philippines.

II. The license of a foreign corporation to transact business in the Philippines may be revoked or
suspended by the SEC.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

13. I. A foreign corporation authorized to transact business in the Philippines need not obtain an
amended license in the event it changes its corporate name, or desires to pursue in the Philippines other
or additional purposes.

II. A foreign corporation applying for a license to transact business in The Philippines shall submit to the
SEC a copy of its articles of incorporation and by-laws, certified in accordance with law, and their
translation to an official language of the Philippines, if necessary.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

Title XVI – INVESTIGATIONS, OFFENSES, AND PENALTIES

1. I. An independent auditor who, in collusion with the corporation’s Directors or representatives,

certifies the corporation’s financial Statements despite its incompleteness or inaccuracy, its failure to
give a pair and accurate presentation of the corporation’s condition, or despite containing false or
misleading statements, shall be punished with a fine Ranging from P80,000.00 to P500,000.00.
II. Those responsible for the formation of a corporation through fraud, or who assisted directly or
indirectly therein, shall be punished with a fine ranging from P200,000.00 to P2,000,000.00.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. I. A corporation that conducts its business through fraud shall punished with a fine ranging from
P200,000.00 to P2,000,000.00.

II. A Corporation used for fraud, or for committing or concealing graft and corrupt practices as defined
under pertinent statutes, shall be liable for a fine ranging from P100, 000.00 to P5, 000,000.00.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

2. I. A director, trustee, or officer who knowingly fails to sanction, report, or file the appropriate action
with proper agencies, allows or tolerates the graft and corrupt practices or fraudulent acts committed by
a Corporation’s directors, trustees, officers, or employees shall be punished with a fine ranging from
P500,000.00 to P1,000,000.00.

II. If the offender is a corporation, the penalty may, at the discretion of the court, be imposed upon such
corporation and/or upon its director, trustees, stockholders, members, officers, or employees
responsible for the violation or indispensable to its commission.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. I. The unauthorized use of a corporate name shall be punished with a fine ranging from P10,000.00 to
P200,000.00.

II. When, despite the knowledge of the existence of a disqualification, a director, trustee or officer
willfully holds office, or willfully conceals such disqualification, such director, trustee or officer shall be
punished with a fine ranging from P10,000.00 to P200,000.00 at the discretion of the court, but shall not
be permanently disqualified ground for from being a director, trustee or officer of any corporation.

a. Only I is true

b. Only II is true
c. Both are true

d. Both are false

5. I. The unjustified failure or refusal by the corporation, or by those responsible for keeping and
maintaining corporate records, to comply on the inspection and reproduction of records shall be
punished with a fine ranging from P10,000.00 to P200,000.00, at the discretion of the court, taking into
consideration the seriousness of the violation and its implications.

II. Any person who willfully certifies a report required under the revised Corporation Code, knowing that
the same contains incomplete, inaccurate, false, or misleading information or statements, shall be
punished with a fine ranging from P20,000.00 to P200,000.00.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

6. It refers to any person who provides truthful information relating to the SEC or possible commission of
any offense or violation under the revised Corporation Code.

a. Whistleblower

b. Intermediary

c. Mediator

d. Conciliator

7. I. The SEC may investigate an alleged violation of the Revised Corporation Code, or of a rule,
regulation, or order of the SEC.

II. The SEC may administer oaths and affirmations, issue subpoena and subpoena duces tecum, take
testimony in any inquiry or investigation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

8. I. Whenever the SEC has reasonable basis to believe that a person has violated, or is about to violate
the Revised Corporation Code, a rule, regulation, or order of the SEC, it may direct such person to desist
from committing the act constituting the violation.

II. The Commission may issue a cease and desist order ex parte to enjoin an act or practice which is
fraudulent or can be reasonably expected to cause significant, imminent, and irreparable danger or
injury to public safety or welfare.
a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

9. I. Any person who, without justifiable cause, fails or refuses to with any lawful order, decision, or
subpoena issued by the SEC shall, after due notice and hearing, be held in contempt and fined in an
amount not exceeding P30,000.00.

II. When the refusal amounts to clear and open defiance of the Commission's order, decision, or
subpoena, the SEC may impose a daily fine of P1, 000.00 until the order, decision, or subpoena is
complied with.

a. Only I is true

b. Only II is true

C. Both are true

d. Both are false

Title XVII – MISCELLANEOUS PROVISIONS

1. The SEC shall have the power and authority to:

a. Exercise supervision and jurisdiction over all corporations and persons acting on their behalf.

b. Impose sanctions for the violation of the Revised Corporation Code, its implementing rules and orders
of the SEC.

c. Promote corporate governance and the protection of minority investors, through, among others, the
issuance of rules and regulations consistent with international best practices.

d. All of the above.

2. The SEC shall have the power and authority to:

a. Issue opinions to clarify the application of laws, rules and regulations.

b. Issue cease and desist orders ex parte to prevent imminent fraud or injury to the public.

c. Hold corporations in direct and indirect contempt.

d. All of the above.

3. I. An arbitration agreement may be provided in the articles of incorporation or bylaws of a

corporation.

II. Regulators such as the Bangko Sentral ng Pilipinas and the Insurance Commission shall exercise
primary authority over special corporations such as banks, nonbank financial institutions, and insurance
companies under their supervision and regulation.
a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

4. Every corporation, domestic or foreign, doing business in the Philippines shall submit to the SEC:

a. Annual financial statements audited by an independent certified Public accountant: Provided, That if
the total assets or total liabilities of the corporation are less than P600,000.00, the financial statements
shall be certified under oath by the corporation’s treasurer or chief financial officer.

b. A general information sheet.

c. All of the above.

d. None of the above.

5. I. The SEC shall exercise visitorial powers over all corporations, which powers shall include the
examination and inspection of records, regulation and supervision of activities, enforcement of
compliance and imposition of sanctions.

II. Should the corporation, without justifiable cause, refuse or obstruct the SEC’s exercise of its visitorial
powers, the SEC may revoke its Certificate of incorporation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

6. The SEC shall have the power and authority to:

a. Issue writs of execution and attachment to enforce payment of fees, administrative fines, and other
dues collectible under the Revised Corporation Code.

b. Prescribe the number of independent directors and the minimum criteria in determining the
independence of a director.

c. Impose or recommend new modes by which a stockholder, member, director, or trustee may attend
meetings or cast their votes, as technology may allow, taking into account the company's scale, number
of shareholders or members, structure, and other factors consistent with the basic right of corporate
suffrage.

d. All of the above.

7. It means the total shares of stock issued under binding subscription contracts to subscribers or
stockholders, whether or not fully or partially paid, except treasury shares.

a. Authorized capital stock

b. Issued capital stock

c. Paid in capital stock

d. Outstanding capital stock

8. I. Non-stock or special corporations may, through their articles of incorporation or their by-laws,
designate their governing boards by any name other than as board of trustees.

II. The SEC may place the corporation under delinquent status in case of failure to submit the reportorial
requirements 3 times, consecutively or intermittently, within a period of 5 years.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false