TITLE I GENERAL CONCEPTS AND PRINCIPLES 10.

A corporation consisting of more than one

MULTIPLE CHOICE PART 1 member. Corporation aggregate

1. The factors for the application of the doctrine of 11. A corporation consisting of only one member for
piercing the corporate veil are the following, except: the purpose of administering and managing as
a. Stock ownership by one or common ownership of trustee, the affairs, property and temporalities of
both corporations any religious denomination, sect or church.
b. Identity of directors and officersThe manner of Corporation sole
keeping corporate books and records
c. the manner of keeping corporate books and 12. A corporation organized for religious purposes.
records Ecclesiastical corporation
d. Identity of the stockholders
13. A corporation organized for charitable purposes.
2. I. Any application of the doctrine of piercing the Eleemosynary corporation
corporate veil should be done with caution.
Il. A corporation its powers through its board of 14. It is an artificial being created by operation of
directors and/or its duly authorized officers and law, having the right of succession and the powers,
agents. Both are true attributes and properties expressly authorized by law
or incidental to its existence. Corporation
3. The continuation of a corporation's legal status
despite changes in ownership or management. 15. I. A corporation is a juridical entity vested with a
Succession legal personality separate and distinct from those
acting for and in its behalf and, in general, from the
4. I. Property acquired by a corporation is the people comprising it.
property of stockholders or members. II. Not every stockholder or officer can bind the
II. A corporation exercises said powers through its corporation considering the existence of a corporate
board of directors and/or its duly authorized officers entity separate from those who compose it.
and agents. Only Il is true Both are true

5. Corporations which have capital stock divided into 16. I. Well-settled is the principle that the corporate
shares and are authorized to distribute to the mask may be removed or the corporate veil pierced
holders of such shares dividends or allotments of the when the corporation is just an alter ego of a person
surplus profits on the basis of the shares held. or of another corporation.
Stock corporation Il. It is a basic principle in Corporation Law that a
corporation has a personality which is the same as
6. Is one where no part of its income is distributable the officers or members who compose it. a.
as dividends to its members, trustees, or officers. Both are false
Non-stock corporation
17. The following are the characteristics of a
7. One which has exercised corporate powers for an corporation, except:
indefinite period without interference on the part of a. It is an artificial being
the government. Corporation by prescription b. Created by meeting of the mind
c. It has the right of succession
8. A corporation incorporated under the laws of the d. It has the powers, attributes and properties
Philippines. expressly authorized by law or incident to its
Domestic corporation existence

9. A corporation is formed, organized or existing 18. It refers to any agency organized as a stock or
under any laws other than those of the Philippines non-stock corporation, vested with functions relating
and whose laws allow Filipino citizens and to public needs whether governmental or
corporations to do business in its own country or proprietary in nature, and owned by the
State. Foreign corporation Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of
stock corporations, to the extent of at least 51 per MULTIPLE CHOICE PART II
cent of its capital stock. 1. I. In non-stock corporations, the voting rights does
Government-owned or controlled corporation not attach to membership.
Il. Members vote as persons, in accordance with the
19. Two requisites must concur before one may be law and the bylaws of the corporation. a.
classified as a stock corporation, namely: Only Il is true
1. That it has capital stock divided into shares
Il. That it is authorized to distribute dividends and 2. I. One of the rights of a stockholder is the right to
allotments of surplus and profits to its members. participate in the control and management of the
Both are true corporation that is exercised through his vote.
Il. The right to vote is a right inherent in and
20. I. The provisions governing stock corporation, incidental to the ownership of corporate stock, but
when pertinent, shall be applicable to non-stock as such is not a property right. Only I is true
corporations.
II. A non-stock corporation must have shareholders. 3. A class of stock entitling the holder to vote on
Only I is true corporate matters, to receive dividends after other
claims and dividends have been paid (especially to
21. L. Non-stock corporations can distribute 10% of preferred shareholders), and to share in assets upon
their income to their members. liquidation. Common stock
Il. Non-stock corporations are organized for
charitable, religious, educational, professional, 4. Is one which entities the holder thereof to certain
cultural, recreational, fraternal, literary, scientific, preferences over the holders of common stock.
social, civil service, or similar purposes. Preferred stock
Only Il is true
5. They may be purchased or taken up by the
22. A private corporation which have accepted from corporation upon the expiration of a fixed period,
the State the grant of franchise or contrast involving regardless of the existence of unrestricted retained
the performance of public duties but which are earnings in the books of the corporation, and upon
organized for profit. Quasi-public corporation such other terms and conditions as may be stated in
the articles of incorporation, which terms and
23. A corporation created in strict or substantial conditions must also be stated in the certificate of
conformity with the mandatory statutory stock representing said shares. Redeemable stock
requirements for incorporation and the right of
which to exist as a corporation cannot be 6. Shares with a value fixed in the articles of
successfully attacked or questioned by any party incorporation and the certificate of stock. Par value
even in a direct proceeding for that purpose by the stock
State.
De jure corporation 7. The following are limitations on no par value
shares, except:
24. The due incorporation of any corporation It can be issued for a consideration of at least
claiming in good faith to be a corporation, and its P3.00.
right to exercise corporate powers, shall not be It is deemed fully paid and non-assessable.
inquired into collaterally in any private suit to which The entire consideration for its issuance constitutes
such corporation may be a party. De facto capital so that no part of it should be distributed as
corporation dividends.
It cannot be issued as preferred shares.
25. All persons who assume to act as a corporation
knowing it to be without authority to do so shall be 8. I. The exclusive right to vote and be voted for in
liable as general partners for all debts, liabilities and the election of directors must be for a limited period
damages incurred or arising as a result thereof. not to exceed 5 years subject to the approval of the
Corporation by estoppel SEC.
II. Preferences granted to preferred stockholders
gives them a lien upon the property of the
corporation nor make them creditors of the IL. Only stock actually issued and outstanding may be
corporation. Only l is true voted. Both are true

9. I. The law provides that shares classified and 20. Shares classified in the articles of incorporation
issued as preferred or redeemable shares may be which may be given certain rights and privileges (eg.
deprived of voting right. dividend payments) not enjoyed by the owners of
Il. Each member shall be entitled to one vote unless other stocks. Founders' share
so limited, broadened, or denied in the articles of
incorporation or bylaws. Both are true 21. Are shares usually preferred, which by their
terms are redeemable at a fixed date, or at the
10. Is one which has no preference and entitle the option of either issuing corporation, or the
shareholder to a pro rata division of the profits, if stockholder, or both at a certain redemption price.
any. Redeemable share
Common stock
22. Subscriptions to the capital stock of a
11. Shares without a right to vote. corporation constitute a fund to which the creditors
Non-voting share have a right to look for the satisfaction of their
claims.
12. I. It acquires a judicial personality either by Trust fund doctrine
special law or a general
II. The general law under which a private corporation 23. Are shares of stock which have been issued and
may be formed or organized is the Revised fully paid for, but subsequently reacquired by the
Corporation Code. Both are true issuing corporation by purchase, redemption,
donation or through some other lawful means.
13. The stockholders or members mentioned in the Treasury stock
articles of incorporation as originally forming and
composing the corporation and who are signatories 24. Stocks issued for a consideration less than the
thereof. Incorporators par or issued price thereof or in any other form
other than cash valued in excess of its fair value. a.
14. Is the governing body in a stock corporation. Watered stock
Board of directors
25. I. Redeemable shares, once redeemed are retired
15. Is the governing body in a non-stock corporation. unless reissuance is expressly allowed in the articles
Board of trustees of incorporation.
Il. The Corporation Code allows redemption of
16. Is a person who brings about or cause to bring shares only if there are unrestricted retained
about the formation and organization of a earnings on the books of the corporation. Only l is
corporation. Promoter true

17. Each share shall be equal in all respects to every

other share except as otherwise provided in the
articles of incorporation and stated in the certificate
of stock. Doctrine of equality of shares

18. I. There shall always be a class or series of shares

which have complete voting rights.
Il. The right to vote is inherent in and incidental to
the ownership of corporate stocks. Both are true

19. L It is settled that unissued stocks may not be

voted or considered in determining whether a
quorum is present in a stockholders' meeting.
 II. A corporation commences its corporate existence
and juridical personality and is deemed incorporated
from the date the D'TI issues certificate of
incorporation under its official seat. Only I is true

6. The following are the requirements before one

can qualify as ac facto corporation, except:
a. The existence of a valid law under which it may be
TITLE II - INCORPORATION AND ORGANIZATION OF incorporated.
PRIVATE CORPORATIONS b. An attempt in good faith to incorporate.
MULTIPLE CHOICE c. Assumption of corporate powers.
d. None of the above.
1. I. Only-a natural person, trust, or an estate may
form a One Person Corporation. 7. The following are the three-fold nature of the
Il. Banks and quasi-banks, preneed, trust, insurance, articles of incorporation except:
public and publicly-listed companies, and non- a. A contract between the corporations inter se.
chartered government-owned and - controlled b. A contract between the State and the corporation.
corporations may not incorporate as One Person c. A contract between the corporation and its
Corporations. Both are true stockholders.
d. A contract between the stockholders inter se.
2. This is the maximum amount fixed in the articles
of incorporation that may be subscribed and paid by 8. The purpose of the principal of the corporation
the stockholders of the corporation. are the following except:
Authorized capital stock a. To fix the residence of the corporation in a definite
place.
3. The following are limitations in the amendment of b. For purposes of stockholders or members
the articles of incorporation, except: meeting.
a. The amendment must be for legitimate purposes c. To determine the venue of court cases involving
and must not be contrary to the Corporation Code the stockholders.
and special laws. d To determine the place where the books and
b. The amendment requires the vote or written records of the corporation are ordinarily kept.
assent of stockholders' representing majority of the
outstanding capital stock or majority members if it 9. I. The number of directors shall not be more than
be a non-stock corporation. 15.
c. The amendment must be approved by a majority II. The number of trustees may be more than 15.
of the board of directors or board of trustees. Both are true
d. The original and amended articles together
provisions required by law to be set out in the 10. I. The articles of incorporation of a nonstock
articles of shall contain all incorporation. corporation may be amended by the vote or written
assent of majority of the trustees and at least 2/3 of
4. I. A corporation shall have perpetual existence the members.
unless its articles of incorporation provides II. The amendment of the articles of incorporation
otherwise. shall take effect upon their approval by the SEC or
Il. The general rule as to corporations is that each from the date of filing with the SEC if not acted upon
corporation must have a name by which it is to sue within 9 months from the date of filing for a cause
and be sued and do all legal acts. not attributable to the corporation. a.
Both are true Only I is true

5. I. It is the certificate of incorporation that gives 11. The following are grounds for such disapproval,
juridical personality to a corporation and places it except:
under the jurisdiction of the Securities and a. The purpose or purposes of the corporation are
Exchange Commission, patently unconstitutional, illegal, immoral or
contrary to government rules and regulations.
b. The certification concerning the amount of capital organized for the purpose of practicing a profession,
stock subscribed and/or paid is false. shall not be allowed to organize as a corporation.
c. The required percentage of Filipino ownership of Both are true
the capital stock under existing laws or the
Constitution has not been complied with. 16. I. Incorporators who are natural persons must be
d. The articles of incorporation or any amendment of legal age.
thereto is not substantially in accordance with the II. Each incorporator of a stock corporation must
form prescribed by the Philippine Cooperative own or be : subscriber to at least 1 share of the
Code. capital stock.
Both are true

17. A written contract to purchase newly issued

12. No corporate name shall be allowed by the SEC if shares of stock.
it is not distinguishable from that already reserved or Subscription contract
registered for the use of another corporation. A
name is not distinguishable even if it contains one or 18. Is that portion of the authorized capital stock
more of the following: which has been both subscribed and paid.
I. The word "corporation", "company". Paid-up capital
"incorporated", "limited". "limited liability", or an
abbreviation of one of such words; 19. I. The contents of the articles of incorporation
II. Punctuations, articles, conjunctions, contractions, are binding, not only on the corporation, but also on
prepositions, abbreviations, different tenses, its shareholders.
spacing, or number of the same word or phrase. II. The general rule as to corporations is that each
Both are true corporation must have a name by which it is to sue
and be sued and do all legal acts.
13. I. If a corporation does not formally organize and Both are true
commence its business within 5 years from the date
of its incorporation, its certificate of incorporation 20. I. A corporation can change its name by
shall be deemed revoked. amending its by-laws.
Il. If a corporation has commenced its business but II. A corporation with a single stockholder is
subsequently becomes inoperative for a period of at considered a One Person Corporation.
least 5 consecutive years, the SEC may, after due Only II is true
notice and hearing place the corporation under
delinquent status. 21. The following are the reasons that a principal
Both are true office of the corporation must be stated in its articles
of incorporation, except:
14. A delinquent corporation shall have a period of 2 a. To fix the residence of the corporation in a definite
years to resume operations and comply with all place.
requirements that the SEC shall prescribe. b. For purposes of board of directors' meeting.
Il. Upon compliance by the corporation, the SEC shall c. To determine the venue of court cases involving
issue an order lifting the delinquent status. Failure to corporation.
comply with the requirements and resume d. To determine the place where the books and
operations within the period given by the SEC shall records of the corporation are ordinarily kept.
cause the revocation of the corporation's certificate
of incorporation. 22. 1. A corporation is in a metaphysical sense a
Both are true resident of the place where its principal office is
located as stated in the articles of incorporation.
15. 1. Any person, partnership, association or Il. The place where the principal office of the
corporation, singly or joins with others but not more corporation is to be located is one of the required
than 15 in number, may organize ; corporation for contents of the by-laws.
any lawful purpose or purposes Only I is true
Il. Natural persons who are licensed to practice a
profession, an i partnerships or associations
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.
Both are true

24. It applies when persons assume to form a

corporation and exercise corporate functions and
enter into business relations with third persons.
Corporation by estoppel
25. I. Stock corporations shall not be required to
have a minimum capital stock.
Il. All corporations shall file with the Commission
articles of incorporation in any of the official
languages.
Both are true

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 a third person who relied in good
faith on such representation.
Il. 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.
Both are true

27. L. Corporation by estoppel is founded on

principles of equity and is designed to prevent
injustice and unfairness.
Il. Consolidation becomes effective not upon mere
agreement of the the SEC members but only upon
issuance of the certificate of consolidation by
Both are true

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.
Both are true
 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.
Only Il is true

6. The requisites for removal of directors are the

following, except:
The removal should take place at a regular or special
meeting duly called for the purpose.
The director or trustee can only be removed by a
vote of the stockholders representing at least
TITLE III – BOARD OF DIRECTORS/TRUSTEES AND majority of the outstanding capital stock or
OFFICERS majority of the members entitled to vote in case of
MULTIPLE CHOICE non-stock corporations.
There must be a previous notice to stockholders or
1. The following are the qualifications of a board of members of the corporation of the intention to
director/trustee, except: propose such removal at the meeting.
For a stock corporation, ownership of at least 1 share The, special meeting of the stockholders or members
of the capital stock of the corporation in his own of a corporation for the purpose of removal must be
name. For a non-stock corporation, only members of called by the secretary on order of the president or
the corporation can be elected. on the written demand of the stockholders
Majority of the board of directors or trustees must representing or holding at least a majority of the
be citizens of the Philippines. outstanding capital stock or a majority of the
The director or trustee must be capacitated. members entitled to vote.
The director or trustee must be of legal age.
7. Immediately after their election, the directors of a
2. I. The board of the following corporations vested corporation must formally organize and elect:
with public interest shall have independent directors
constituting at least 10% of such board. A president, who must be a director. b.
Il. Independent directors must be elected by the A treasurer, who must be a resident.
other directors present or entitled to vote in A secretary, who must be a citizen and resident of
absentia during the election of directors. the Philippines.
Both are false All of the above.

3. It is a person who, apart from shareholdings and 8. I. If the corporation is vested with public interest,
fees received from the corporation, is independent the board shall also elect a compliance officer.
of management and free from any business. or other Il. The officers shall manage the corporation and
relationship which could, or could reasonably be perform such duties as may be provided in the
perceived to materially interfere with the exercise of bylaws and/or as resolved by the board of directors.
independent judgment in carrying out the Both are true
responsibilities as a director.
Independent director. 9. A person shall be disqualified from being a
director, trustee or officer of any corporation if,
4. I The acts of corporate officers within the scope of within 5 years prior to the election or appointment
their authority are binding on the corporation. as such, the person was:
Il. Any 2 or more positions may be held concurrently a. Convicted by final judgment of an offense
by the same person, except that no one shall act as punishable by imprisonment for a period exceeding
president and secretary or as president and vice- 6 years.
president at the same time. b. Found administratively liable for any offense
Only l is true involving fraudulent acts
C. Found by a foreign court or equivalent foreign Only I is true
regulatory authority for acts, violations or
misconduct. 15. I. It is well settled in this jurisdiction that where
d. All of the above. corporate directors are guilty of a breach of trust, a
stockholder may institute a suit in behalf of himself
10. A person shall be disqualified from being a and other stockholders and for the benefit of the
director, trustee or officer of any corporation if, corporation.
within 5 years prior to the election or appointment II. The board of directors (or trustees, in case of non-
as such, the person was convicted by final judgment. stock corporations) has the sole authority to
a. Of an offense punishable by imprisonment for a determine policies, enter into contracts, and conduct
period exceeding 6 years; the ordinary business of the corporation within the
b. For violating the Revised Corporation Code. scope of its charter. a.
For violating The Securities Regulation Code. Both are true
d. All of the above.
16. A corporation's board of directors is understood
11. I. The SEC shall, motu proprio or upon verified to be that body which, except:
complaint, and after due notice and hearing, order Exercises all powers provided for under the
the removal of a director or trustee elected despite Corporation Code.
the disqualification, or whose disqualification arose Conducts all business of the corporation.
or is discovered subsequent to an election. Controls and holds all property of the corporation.
II. The removal of a disqualified director shall be None of the above.
without prejudice to other sanctions that the SEC
may impose on the board of directors or trustees 17. I. The property of the corporation is not the
who, with knowledge of the disqualification, failed to property of its stockholders or members; however, it
remove such director or trustee. may be sold by the stockholders or members.
Both are true II. The power and responsibility to decide whether a
corporation can enter into a binding contract is
12. I. Any vacancy occurring in the board of directors lodged with the board of directors. a.
or trustees other than by removal or by expiration of Only Il is true
term may be filled by the vote of at least a majority
of the remaining directors or trustees, if still 18. I. The directors of a corporation shall not receive
constituting a quorum. any compensation for being members of the board
IL. Any directorship or trusteeship to be filled by of directors, except for reasonable per diems.
reason of an increase in the number of directors or Il. In no case shall the total yearly compensation of
trustees shall be filled only by an election at a regular directors, as such directors, exceed 10% of the net
or at a special meeting of stockholders or members income after income tax of the corporation during
duly called for the purpose, or in the same meeting the preceding year. a.
authorizing the increase of directors or trustees if so Only l is true
stated in the notice of the meeting.
Both are true 19. I. The general rule is that obligations incurred by
the corporation, acting through its directors, officers
13. 1. Every director must own at least 100 share of and employees, are its sole liabilities, and vice versa.
the capital stock of the corporation of which he is a Il. A contract of the corporation with one or more of
director, which share shall stand in his name on the its directors or trustees or officers is void.
books of the corporation. Both are true
Il. Trustees of non-stock corporations must be
members thereof. 20. A contract of the corporation with one or more
Only Il is true of its directors or trustees or officers.
Doctrine of self-dealing board of directors
14. I. The governing body of a corporation is its
board of directors. 21. The requisites for a contract of the corporation
Il. The board of directors of a corporation is a with one or more of its directors or trustees or
creation of law. officers to be valid are the following, except:
a. That the presence of such director or trustee in 27. When the vacancy prevents the remaining
the board meeting in which the contract was directors from constituting a quorum and emergency
approved was not necessary to constitute a quorum action is required to prevent grave, substantial, and
for such meeting. irreparable loss or damage to the corporation, the
b. That the vote of such director or trustee was not vacancy may be temporarily filled from among the
necessary for the approval of the contract. officers of the corporation by unanimous vote of the
c. That the contract is fair and reasonable under the remaining directors or trustees.
circumstances. Emergency board of director
d. That in case of an officer, the contract has been
previous authorized by the stockholders. 28. I. Stockholders or members periodically elect the
board of directors or trustees, who are charged with
22. A director, by virtue of his office, acquires for the management of the corporation.
himself a business opportunity which should belong Il. Stockholders or members also elects officers to
to the corporation, thereby obtaining profits to the carry out management functions on a day-to-day
prejudice of such corporation, he must account to basis.
the latter for all such profits by refunding the same. Only I is true
a. 29. I. Acts of management pertain to the
Doctrine of corporate opportunity stockholders or members.
II. Acts of ownership pertain to the board.
23. It is a body created by the by-laws and composed Both are false
of not less than three members of the board which,
subject to the statutory limitations, has all the 30. I. Once the directors or trustees are elected, the
authority of the board of directors to the extent stockholders or members relinquish corporate
provided in the by laws. powers to the board in accordance with law.
Executive committee Il. Contracts intra vires entered into by the board of
directors are binding upon the corporation.
24. The following are the limitations of an executive Both are true
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.
Il. 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.
Both are false

26. I. A stockholder or member who participates

through remote communication or in absentia, shall
be deemed present for purposes of quorum.
Il. The directors or trustees elected shall perform
their duties as prescribed by law, rules of good
corporate governance, and bylaws of the
corporation.
Both are true
 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.
Il. 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 l is true
b. Only Il 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
TITLE IV - POWERS OF CORPORATIONS of limited capacity.
MULTIPLE CHOICE Il. There can be no distribution of assets among the
1. It is the preferential right of all stockholders of a stockholders without first paying corporate
stock corporation to subscribe to all issues or creditors. Hence, any disposition of corporate funds
disposition of shares of any class, in proportion to to the prejudice of creditors is rescissible.
their respective shareholdings. Both are false
b. Pre-emptive right
7. The following are the requisites for the exercise of
2. I. The purpose of pre-emptive right is to enable a corporate power to invest corporate funds in
the shareholder to retain his proportionate control another corporation, except: a.
in the corporation. a. Any dissenting stockholder shall have pre-
II. A suit to enforce preemptive rights in a emptive right.
corporation is a derivative suit. b. Approval of the majority of the board of directors
a. Only I is true or trustees.
c. Ratification by the stockholders representing at
3. The requirements for the sale or other disposition least 2/3 of the outstanding capital stock, or by at
of assets are the following, except: least 2/3 of the members in the case of non-stock
a. Approval by the majority vote of its board of corporations, at a stockholder's or member's
directors or trustees. meeting duly called for the purpose.
b. Ratification by the vote of the stockholders d. Written notice of the proposed investment and
representing at least 2/3 of the outstanding capital the time and place of the meeting shall be addressed
stock, or in case of non-stock corporation, by the to each stockholder or member by mail or served
vote of at least to 2/3 of the members. personally.
c. Any dissenting stockholder may exercise his
appraisal right. 8. The retained earnings which have not been
d. SEC approval is required. reserved or set aside by the board of directors for
some corporate purpose.
4. The following are instances when a corporation Unrestricted retained earnings
may acquire its own shares, except:
a. To acquire founders' shares. 9. I No management contract shall be entered into
b. To eliminate fractional shares arising out of stock for a period longer than 5 years for any 1 term.
dividends. Il. No corporation shall possess or exercise corporate
C. To collect or compromise an indebtedness to the powers other than those conferred by the Revised
corporation, arising out of unpaid subscription, in a Corporation Code or by its articles of incorporation
delinquency sale, and to purchase delinquent shares and except as necessary or incidental to the exercise
sold during said sale. of the powers conferred.
Both are true
 a. Amendment of the articles of incorporation to
10. Where a stockholder or stockholders reduce the authorized capital stock.
representing the same interest of both the managing b. Purchase of redeemable shares by the
and the managed corporations own or control more corporation, regardless of the existence of
than 1/3 of the total outstanding capital stock unrestricted retained earnings.
entitled to vote of the managing corporation. c. Dissolution and eventual liquidation of the
d. Interlocking stockholders corporation.
d. Amendment of the by-laws to reduce the
11. Where a majority of the members of the board authorized capital stock.
of directors of the managing corporation also
constitute a majority of the members of the board of 18. The following are the requirements of increase
directors of the managed corporation. or decrease authorized capital stock, except:
Interlocking board of directors a. No decrease of the capital stock shall be approved
if its effect shall prejudice the rights of corporate
12. I. A corporation has no power except those creditors.
expressly conferred on it by the Corporation Code b. Approval by a majority vote of the board of
and those that are implied or incidental to its directors.
existence. c. Ratification by the stockholders holding at least
Il. In turn, a corporation exercises said powers 2/3 of the outstanding capital stock.
through its board of directors and/or its duly d. Approval thereof by the DTI.
authorized officers and agents.
C. Both are true 19. I. The right of appraisal may be exercised when
there is a fundamental change in the charter or
13. It is an action brought by a stockholder on behalf articles of incorporation substantially prejudicing the
of the corporation to enforce corporate rights rights of the stockholders.
against the corporation's directors, officers or other Il. A corporation can purchase its own shares,
insiders. provided payment is made out of surplus profits and
b. Derivative suit the acquisition is for a legitimate corporate purpose.
a. Only I is true
14. The following are the requisites of the corporate
power to extend or shorten corporate term: 20. Corporate profits set aside, declared, and
I. Approval by a 2/3 vote of the board of ordered to be paid by the directors for distribution
directors or trustees. among stockholders at a fixed time.
II. Ratification by the stockholders representing Dividends
at least 2/3 of the outstanding capital
stock or by at least 2/3 of the members 21. I. payment of dividends to a stockholder is not a
in case of non-stock corporations. matter of right but a matter of consensus.
Only Il is true Il. The declaration of dividends is dependent upon
the availability of surplus profit or restricted retained
15. It means that a stockholder who dissented and earnings.
voted against the proposed corporate action, may a. Only I is true
choose to get out of the corporation by demanding
payment of the fair market value of his shares. 22. The limitations on dividends are the following,
Appraisal right except:
a. The right to dividend is based on duly recorded
16. Subscriptions to the capital stock of a stockholdings.
corporation constitute a fund to | which the b. The right to dividend accrues only if there is SEC
creditors have a right to look for the satisfaction of approval.
their claims. c. Dividends among stockholders of the same class
Trust fund doctrine must always be pro rata equal and without
discrimination and regardless of the time when the
17. The distribution of corporate capital happens in shares were acquired. The right of the stockholder to
only in three instances, except:
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.
Ultra vires act

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.
Both are true
 5. 1. Any power delegated to the board of directors
or trustees to amend or 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.
Il. Whenever the bylaws are amended or new bylaws
are adopted, the corporation shall file with the SEC
such amended or new bylaws.
b. Only Il is true

6. It constitutes the charter or fundamental law of

the corporation.
Articles of incorporation

7. A private corporation may provide the following in

its bylaws:
a. The modes by which a stockholder, member,
TITLE V - BYLAWS director, or trustee may attend meetings and cast
MULTIPLE CHOICE their votes.
b. The form for proxies of stockholders and members
1. I. It is the generally accepted rule that third and the manner of voting them.
persons are bound by by-laws. c. The manner of election or appointment and the
II. By-laws may be necessary for the "government" of term of office of all officers other than directong or
the corporation but these are subordinate to the trustees.
articles of incorporation. d. All of the above.
Only Il is true
8. The rules and regulations or private laws enacted
2. I. Bylaws may be adopted and filed prior to by the corporation to regulate, govern and control
incorporation. its own actions, affairs and concerns and its
Il. In all cases, bylaws shall be effective only upon the stockholders or members and directors and officers
issuance by the SEC of a certification that the bylaws with relation thereto and among themselves in their
are in accordance with the Revised Corporation relation to it.
Code. By-laws
Both are true
9. I. The purpose of a by-law is to regulate the
3. It is a condition precedent in the acquisition of conduct and define the duties of the members
corporate existence. towards the corporation and among themselves.
Articles of incorporation Il. By-laws are the relatively permanent and
continuing rules of action adopted by the
4. I. The owners of majority of the outstanding corporation for its own government and that of the
capital stock or majority of the members in a non- individuals composing it and having the direction,
stock corporation may delegate to the board of management and control of its affairs, in whole or in
directors or trustees the power to amend or repeal part, in the management and control of its affairs
any by-laws or adopt new by-laws. and activities.
Il. The amended or new by-laws shall only be Both are true
effective upon the issuance by the SEC of a
certification that the same are not inconsistent with 10. I. The bylaws shall be signed by the stockholders
the Revised Corporation Code. or members voting for them and shall be kept in the
b. Only Il is true 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 II. On the death of the shareholder, the executor or
SEC and attached to the original articles of administrator duly appointed by the Court is vested
incorporation. with the legal title to the stock but not entitled to
Both are true vote it.
Only I is true

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
TITLE VII- STOCKS AND STOCKHOLDERS corporation.
MULTIPLE CHOICE b. Act in bad faith or with gross negligence in
1. I. As long as the shares are not considered directing the corporate affairs.
delinquent, stockholders are entitled to all rights c. Are guilty of conflict of interest to the prejudice of
granted to it whether or not subscribed capital the corporation, its stockholders or members, and
stocks are fully paid. other persons.
II. Shares of stock shall not be issued in exchange for d. Habitual absence in the directors’ meeting.
promissory notes or future service.
Both are true 8. I. As a rule, the doctrine of corporate opportunity
is violated where the stocks are issued by the
2. I. Stocks shall not be issued for a consideration corporation for a consideration which is less than its
less than the par or issued price thereof. par value.
Il. Where the consideration is other than actual cash, Il. Subscribers for stock shall pay to the corporation
or consists of intangible property such as patents of interest on all unpaid subscriptions from the date of
copyrights, the valuation thereof shall initially be subscription, if so required by, and at the rate of
determined by the incorporators or the board of interest fixed in the by-laws.
directors, subject to approval of the SEC. Only Il is true
Both are true
9. Bidder who shall offer to pay the full amount of
3. Unit of interest in a corporation. the balance on the subscription together with
Shares of stock accrued interest, costs of advertisement and
expenses of sale, for the smallest number of shares
4. Evidence of the holder's ownership of the stock or fraction of a Share.
and of his right as a shareholder. Highest bidder
Certificate of stock
10. I. A subscription of shares in a corporation still to
5. I. The stock and transfer book is the basis for be formed shall be irrevocable for a period of at least
ascertaining the persons entitled to the rights and six (6) months from the date of subscription.
subject to the liabilities of a stockholder.
Il. No pre-incorporation subscription may be revoked notwithstanding the fact that the parties refer to it
after the articles of incorporation is submitted to the as a purchase or some other contract.
Commission. Subscription contract
Both are true
18. I. The rule is that the endorsement of the
11. Consideration for the issuance of stock may be: certificate of stock by the owner or his attorney-in-
Labor performed for or services to be rendered to fact or any other person legally authorized to make
the corporation; the transfer shall be sufficient to effect the transfer
of shares only if the same is coupled with delivery.
12. l. In stock corporations, shareholders may II. The delivery of the stock certificate duly endorsed
generally transfer their shares. by the owner is the operative act of transfer of
Il. Membership in and all rights arising from a shares from the lawful owner to the new transferee.
nonstock corporation are personal and non- Both are true
transferable.
Both are true. 19. 1. The certificate of stock itself once issued is a
continuing affirmation or representation that the
13. Is an action brought by minority shareholders in stock described therein is valid and genuine.
the name of the corporation to redress wrongs II. Stock issued without authority and in violation of
committed against it, for which the directors refuse law is voidable and confers no rights on the person
to sue. a. to whom it is issued and subjects him to no liabilities.
Derivative suit Both are true

14. The following are the requisites of a derivative 20. I. A certificate of stock is one, entire and divisible
suit: contract.
a. The party bringing suit should be a shareholder as Il. The stockholder shall not be entitled to a
of the time of the act or transaction complained of, certificate until he has remitted the full payment of
the number of his shares not being material; his subscription together with any interest or
b. He has tried to exhaust intra-corporate remedies, expenses, if any is due. Only Il is true
i.e., has made a demand on the board of directors
for the appropriate relief but the latter has failed or 21. I. The general rule is that obligations incurred by
refused to heed his plea; and the corporation, acting through its directors, officers
c. the cause of action actually devolves on the and employees, are their joint liabilities.
corporation, the wrongdoing or harm having been, Il. It is basic that a corporation is a juridical entity
or being caused to the corporation and not to the with legal personality separate and distinct from
particular stockholder bringing the suit. those acting for and in its behalf and, in general,
d. All of the above from the people comprising it.
Only Il is true
15. Where a stockholder or member is denied the
right of inspection, his suit would be individual 22. The following, except one, are the exceptional
because the wrong is done to him personally and not circumstances warranting the disregard of the
to the other stockholders or the corporation. doctrine of separate personality:
Individual suit a. When a director, trustee or officer is made, by
specific provision of by-laws, personally liable for
16. Where the wrong is done to a group of his corporate action.
stockholders, as where preferred stockholders' rights b. When directors and trustees or, in appropriate
are violated, a class suit will be proper for the case, the officers of a corporation vote for or assent
protection of all stockholders belonging to the same to patently unlawful acts of the corporation.
group. c. When a director or officer has consented to the
Representative suit issuance of watered down stocks or who, having
knowledge thereof, did not forthwith file with the
17. Any contract for the acquisition of unissued stock corporate secretary his written objection thereto.
in an existing corporation or a corporation still to be
formed shall be deemed a subscription
d. When a director, trustee or officer has articles of incorporation substantially prejudicing the
contractually agreed or stipulated to hold himself rights of the stockholders.
personally and solidarily liable with the corporation. Only I is true

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 the 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 or other disposition of all or
substantially all of the corporate property and
assets.
c. In case of increase or decrease of capital stock.
d. In case of merger or consolation

5. The following are the instances of appraisal right,

except:
a. In case of investing of corporate funds in another
corporation or business.
b. In case of sale, lease, exchange, transfer,
mortgage, pledge or other disposition of all or
substantially all of the corporate property and
TITLE X - APPRAISAL RIGHT assets.
MULTIPLE CHOICE c. In case of merger or consolidation.
d. In case any amendment to the articles of
1. I. The dissenting stockholder shall be entitled to incorporation.
receive payment of the fair value of his shares 6. I. In a close corporation, any stockholder of a close
as agreed upon between him and the corporation may, for any reason, compel the said
corporation or as determined by the appraisers corporation to purchase his shares at their fair value,
chosen by them. which shall not be less than their par or issued value,
Il. Payment may be made regardless if the when the corporation has sufficient assets in its
corporation has unrestricted retained earnings in its books to cover its debts and liabilities exclusive of
books to cover the same. capital stock.
Only l is true Il. The appraisal right may be exercised by any
stockholder who shall have voted against the
2. The following are instances where a dissenting proposed corporate action, by making a written
stockholder who demands payment of his shares is demand on the corporation within 30 days after the
no longer allowed to withdraw from his decision, date on which the vote was taken for payment of the
except: fair value of his shares.
The proposed corporate action is approved by the Both are true
SEC where its approval is necessary.
7. I. If within a period of 60 days from the date the
3. I. The corporation shall bear the costs of appraisal, corporate action was approved by the stockholders,
as a rule. the withdrawing stockholder and the corporation
Il. Clearly, the right of appraisal may be exercised cannot agree on the fair value of the shares, it shall
when there is a minor change in the charter or be determined and appraised by 5 disinterested
persons.
Il. That no payment shall be made to any dissenting
stockholder unless the corporation has unrestricted 3. I . No person shall be elected as trustee unless he
retained earnings in its books to cover such is a member of the corporation.
payment. II. Unless otherwise provided in the articles of
Only Il is true incorporation or the by-laws, officers of a non-stock
corporation may be directly elected by the members.
8. The effects of transfer of dissenting shares are the Both are true
following:
I. The rights of the transferor as a dissenting 4. I. Membership shall be terminated in the manner
stockholder shall cease and the transferee shall have and for the causes provided in the articles of
all the rights of a regular stockholder. incorporation or the by-laws.
Il. All dividend distributions which would have Il. Termination of membership shall have the effect
accrued on such of extinguishing all rights of a member in the
shares shall be paid to the transferee. corporation or in its property, unless otherwise
Both are true provided in the articles of incorporation or the by-
laws.
9. I. From the time of demand for payment of the fair Both are true
value of a stockholder's shares until either the
abandonment of the corporate action involved or 5. It is one where no part of its income is
the purchase of the said shares by the corporation, distributable as dividends to its members, trustees,
all rights accruing to such shares, including voting or officers. a.
and dividend rights, shall be suspended. Stock corporation
II. If the dissenting stockholder is not paid the value Non-stock corporation
of his shares within 10 days after the award, his
voting and dividend rights shall immediately be 6. I. Any profit which a non-stock corporation may
restored. obtain as an incident to its- operations shall,
Only I is true whenever necessary or proper, be used for he
furtherance of the purpose or purposes for which
10. It means that a stockholder who dissented and the corporation was organized.
voted against the proposed corporate action, may Il. A non-stock corporation can be converted into a
choose to get out of the corporation by demanding stock corporation by mere amendment of its articles
payment of the fair market value of his shares. of incorporation.
Appraisal right Both are true

7. The following are the characteristics of a non-

TITLE XI - NONSTOCK CORPORATION stock corporation, except:
MULTIPLE CHOICE a. It does not have capital stock divided into shares.
b. As a general rule, it is not empowered to engage
1. I In stock shares. corporations, shareholders may in business. Moreover, it is prohibited to make
generally transfer their income or profits as an incident to its operation.
II. Membership in and all rights arising from a c. No part of its income during its existence is
nonstock corporation are transferable. distributable as dividends to its members, trustees,
a. Only l is true or officers.
d. There is non-transferability of membership.
2. I. The Plan of Distribution of Assets may be
adopted by a majority vote of the board of trustees 8. The following are the characteristics of a non-
and approval of majority of the members having stock corporation, except:
voting rights present or represented by proxy at the a. The right to vote of members may be limited,
meeting during which said plan is adopted. broadened, or even denied in the articles of
Il. Members' meetings may be held at any place incorporation or the by-laws.
outside the principal office of the corporation b. By-laws may provide that the members may hold
provided it shall be within the Philippines. their meetings at any place even outside the place
Only Il is true where the principal office of the corporation is
Iocated, even if that such place is outside the Only Il is true
Philippines.
c. Non-stock corporation may, through their articles 3. An impartial person who is neither a stockholder
of incorporation or their by-laws designate their nor a creditor of the corporation or of any subsidiary
governing boards by any name other than as board or affiliate of the corporation, and whose further
of trustees. qualifications, if any, may be determined by the SEC.
d. A non-stock corporation is not allowed to Provisional director
distribute any of its assets or any incidental income
or profit made by the corporation during its 4. Any stockholder of a close corporation may, by
existence. written petition to the SEC, compel the dissolution of
such corporation whenever:
9. I. The determination of whether or not "dead Any of acts of the directors or officers is illegal, or
members" are entitled to exercise their voting rights, fraudulent, or dishonest, or oppressive or unfairly
depends on those articles of incorporation or by- prejudicial to the corporation or any stockholder,
laws. Il. Corporate assets are being misapplied or wasted.
Il. In stock corporations, on the death of a a.
shareholder, the executor or administrator duly Both are true
appointed by the Court is vested with the legal title
to the stock and entitled to vote it. 5. I. A provisional director is not a receiver of the
Both are true corporation and does not have the title and powers
of a custodian or receiver.
10. I. Membership in and all rights arising from a II. A provisional director shall have all the rights and
nonstock corporation are personal and non- powers of a duly elected director of the corporation,
transferable. including the right to notice of and to vote at
II. Unless otherwise provided in the articles of meetings of directors, until such time as he shall be
incorporation or the by-laws, a member may not removed by order of the Commission or by all the
vote by proxy. stockholders. a.
Only I is true Both are true

11. I. The number of trustees shall be fixed in the 6. A close corporation is one whose articles of
articles of incorporation or bylaws which may or may incorporation provides the following, except:
not be more than 15. a. All the corporation's issued stock of all classes,
Il. Except with respect to independent trustees of exclusive of treasury shares, shall be held of record
nonstock corporations vested with public interest, by not more than a specified number of persons, not
only a member of the corporation shall be elected as exceeding 20;
trustee. b. All the issued stock of all classes shall be subject to
Both are true 1 or more specified restrictions on transfer.
c. The corporation shall not list in any stock exchange
TITLE XII - CLOSECORPORATIONS or make any public offering of its stocks of any class.
MULTIPLE CHOICE d. All of the above.
7. The following are corporations that cannot
1. An action by the directors of a close corporation incorporate as a close corporation, except:
without a meeting shall not be deemed valid if: a. Industrial companies
Before or after such action is taken, written consent b. Mining or oil companies
thereto is signed by a majority the directors. c. Stock exchanges
d. Banks
2. I. The pre-emptive right of stockholders in close
corporations shall extend to all stock to be issued, 8. The following are characteristics of a close
excluding reissuance of treasury shares. corporation, except:
II. A close corporation may, at its option, refuse to a. Where the articles of incorporation provide that
register the transfer of stock in the name of the the business of the corporation shall be managed by
transferee if the person is not qualified to be a the stockholders themselves rather than by the
stockholder and has notice thereof. . 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 for:
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
 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 temporalities administration of 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.
Il. Trustees elected thereafter in educational
corporation to fill vacancies caused by expiration of
term shall hold office for 3 years. a.
Only l is true

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.
Il. 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. holding, selling and mortgaging real estate
and personal property, such rules, regulations and
discipline shall control, and the intervention of the
courts shall not be necessary.
Both are true

5. I. The One Person Corporation shall appoint a

treasurer, corporate secretary, and other officers as
TITLE XIII – SPECIAL CORPORATIONS it may deem necessary,
MULTIPLE CHOICE II. The single stockholder may be appointed as the
corporate secretary.
1. I. Any corporation sole may purchase and hold real Both are true
estate and personal property for its church,
charitable, benevolent or educational purposes, and 6. In addition to the functions designated by the One
may receive bequests or gifts for such purposes. Person Corporation, the corporate secretary shall:
Il. Such corporation sole may sell or mortgage real a. Be responsible for maintaining the minutes book
property held by it by obtaining an order for that and/or records of the corporation.
purpose from the Regional Trial Court. b. Notify the nominee or alternate nominee of the
Both are true death or incapacity of the single stockholder, which
notice shall be given no later than 5 days from such 10. I. When action is needed on any matter, it shall
occurrence. be sufficient to prepare a written resolution, signed
c. Notify the SEC of the death of the single and dated by the single stockholder, and recorded in
stockholder within 5 days from such occurrence and the minutes book of the One Person Corporation.
stating in such notice the names, residence Il. The date of recording in the minutes book shall be
addresses, and contact details of all known legal deemed to be the date of the meeting for all
heirs. purposes.
d. All of the above. Both are true

7. I. The single stockholder shall designate a nominee 11. I. The One Person Corporation converted from an
and an alternate nominee who shall, in the event of ordinary stock corporation shall succeed the latter
the single stockholder's death or incapacity, take the and be legally responsible for all the latter's
place of the single stockholder as director and shall outstanding liabilities as of the date of conversion.
manage the corporation's affairs. Il. The ordinary
Il. The articles of incorporation shall state the names, stock corporation converted from a One Person
residence addresses and contact details of the Corporation shall succeed the latter and be legally
nominee and alternate nominee, as well as the responsible for all the latter's outstanding liabilities
extent and limitations of their authority in managing as of the date of conversion.
the affairs of the One Person Corporation. Both are true
Both are true
12. I. Trustees of educational institutions organized
8. I. When the incapacity of the single stockholder is corporations shall not be less than 5 nor more than
temporary, the nominee shall sit as director and 15.
manage the affairs of the One Person Corporation Il. The number of trustees shall be in multiples of 5.
until the stockholder, by self determination, regains a.
the capacity to assume such duties. Both are true
Il. In case of death or permanent incapacity of the
single stockholder, the nominee shall sit as director 13. I. The board of trustees shall, as soon as
and manage the affairs of the One Person organized, so classify themselves that the term of
Corporation until the legal heirs of the single office of 1/5 of their number shall expire every year.
stockholder have been lawfully determined, and the Il. Religious corporations may be incorporated by
heirs have designated one of them or have agreed one or more persons. Such corporations may be
that the estate shall be the single stockholder of the classified into corporations sole and religious
One Person Corporation. societies.
IlI. The alternate nominee shall sit as director and Both are true
manage the One Person Corporation in case of the
nominee's inability, incapacity, death,or relusal to 14. A corporation formed by the chief archbishop,
discharge the functions as director and manager of bishop, priest, minister, rabbi or other presiding
the corporation, and only for the same term and elder of a religious denomination, sect, or church, for
under the same conditions applicable to the the purpose of administering or managing, as
nominee. trustee, the affairs, properties and temporalities of
I, II, and Ill are true such religious denomination, sect or church.
9. I. The single stockholder may, at any time, change Corporation sole
its nominee and alternate nominee by submitting to
the SEC the names of the new nominees and their 15. A corporation formed for the same purpose as
corresponding written consent. corporation sole. It consists of two or more persons.
II. A One Person Corporation shall maintain a Corporation aggregate
minutes book which shall contain all actions, 16. 1. For the purpose of administering and
decisions, and resolutions taken by the One Person managing, as trustee, the affairs, property and
Corporation. temporalities of any religious denomination, sect or
Both are true church, a corporation sole may be formed by the
chief archbishop, bishop, priest, minister, rabbi, or
other presiding elder of such religious denomination, b. A report containing explanations or comments by
sect or church. the president on every qualification, reservision, or
Il. In order to become a corporation sole, the chief adverse remark or disclaimer made by the auditor in
archbishop, bishop, priest, minister, rabbi, or the latter's report;
presiding elder of any religious denomination, sect c. A disclosure of all self-dealings and related party
or church must file with the Commission articles of transactions entered into between the One Person
incorporation. Corporation and the single stockholder.
Both are true d. All of the above.

17. 1. A corporation sole may be dissolved and its 23. I. A sole shareholder claiming limited liability has
affairs settled voluntarily by submitting to the the burden of affirmatively showing that the
Commission a verified declaration of dissolution. corporation was adequately financed.
Il. Upon approval of such declaration of dissolution Il. Where the single stockholder cannot prove that
by the SEC, the corporation shall cease to carry on its the property of the One Person Corporation is
operations except for the purpose of winding up its independent of the stockholder's personal property,
affairs. the stockholder shall be jointly and severally liable
Both are true for the debts and other liabilities of the One Person
Corporation.
18. I. A One Person Corporation is a corporation with Both are true
a single stockholder.
Il. Only a natural person, trust, or an estate may 24. I. The principles of piercing the corporate veil
form a One Person Corporation. applies with equal force to One Person Corporations
Only I is true as with other corporations.
II. The Commission may place the corporation under
19. 1. Banks and quasi-banks, preneed, trust, delinquent status should the corporation fail to
insurance, public and publicly-listed companies, and submit the reportorial requirements 3 times,
non-chartered government-owned and - controlled consecutively or intermittently, within a period of 5
corporations may not incorporate as One Person years.
Corporations. Both are true
Il. A natural person who is licensed to exercise a
profession may organize as a One Person 25. I. When a single stockholder acquires all the
Corporation for the purpose of exercising such stocks of an ordinary stock corporation, the latter
profession. may apply for conversion into a One Person
Only l is true Corporation.
Il. A One Person Corporation may be converted into
20. L. A One Person Corporation shall not be an ordinary stock corporation after due notice to the
required to have a minimum authorized capital SEC of such fact and of the circumstances leading to
stock. the conversion, and after compliance with all other
Il. The One Person Corporation is required to submit requirements for stock corporations.
and file corporate bylaws. Both are true
Only l is true

21. I. A One Person Corporation shall indicate the

letters "OPC" either below or at the end of its
corporate name.
Il. The single stockholder shall be the sole director
and president of the One Person Corporation.
Both are true

22. The One Person Corporation shall submit the

following within such period as the SEC may
prescribe:
a. Annual financial statements.
 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.
Il. 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.
Only l is true

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.
Il. An involuntary dissolution may be effected by
amending the articles of incorporation to shorten
the corporate term.
Only l is true

3. 1. 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.
Il. 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.
Both are true

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 of any creditor having a claim against it,
TITLE XIV – DISSOLUTION the dissolution may be effected by majority vote of
MULTIPLE CHOICE the board of directors or trustees, and by a
resolution adopted by the affirmative vote of the TITLE XV - FOREIGN CORPORATIONS
stockholders owning at least majority of the MULTIPLE CHOICE
outstanding capital stock or majority of the
members. 1. I. If a foreign corporation does business in the
Both are true Philippines without a license, a Philippine citizen or
entity which has contracted with said corporation
6. I. A withdrawal of the request for dissolution shall may be estopped from challenging the foreign
be made in writing duly verified by any incorporator, corporation's corporate personality in a suit brought
director, trustee, shareholder, or member and before Philippine
signed by the same number of incorporators, courts.
directors, trustees, Il. If a foreign corporation does business in the
shareholders, or members necessary to request for Philippines with the required license, it can sue
dissolution. before Philippine courts only on isolated transaction.
Il. Upon receipt of a withdrawal of request for Only I is true
dissolution, the SEC shall withhold action on the
request for dissolution. 2. I. A foreign corporation's by-laws, though
Both are true originating from a foreign jurisdiction, are valid and
effective in the Philippines.
7. The following may be grounds for involuntary Il. The appointment of a resident agent of a foreign
dissolution of the corporation: corporation is revocable at any time at the instance
a. Non-use of corporate charter. of the corporation.
b. Continuous inoperation of a corporation. Both are true
Upon receipt of a lawful court order dissolving the
corporation. 3. A resident agent of a foreign corporation can
d. All of the above. either be:
I. An individual residing in the Philippines regardless
8. The following are voluntary modes of dissolution of solvency.
of a corporation, except: Il. A domestic corporation lawfully transacting
a. By the vote of the board of directors or trustees business in the Philippines.
and the resolution adopted by the stockholders or Only II is true
members where no creditors are affected.
b. By legislative enactment. 4. The purposes of appointing a resident agent are
By amending the articles of incorporation to shorten the following:
the corporate term. Notice affecting the corporation pending the
d. In case of a corporation sole, by submitting to the establishment of its local office.
SEC a verified declaration of the dissolution for Il. Summons and other legal processes in all
approval. proceedings for or against the corporation.
Both are true
9. I. Every corporation whose charter expires
pursuant to its articles of incorporation, is annulled 5. I. Actual transaction of business within the
by forfeiture, or whose corporate existence is Philippine territory is an essential requisite for the
terminated in any other manner, shall nevertheless Philippines to acquire jurisdiction over a foreign
remain as a body corporate for 5 years after the corporation and thus require the foreign corporation
effective date of dissolution. to secure a Philippine business license.
Il. Upon the winding up of corporate affairs, any II. If a foreign corporation does not transact such
asset distributable to any creditor or stockholder or kind of business in the Philippines, even if it experts
member who is unknown or cannot be found shall its products to the Philippines, the Philippines has no
be escheated in favor of the national government. jurisdiction to require such foreign corporation to
Only II is true secure a Philippine business license.
Both are true

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 12. I. A foreign corporation licensed to transact
business in its own country or state. business in the Philippines may not be allowed to
Foreign corporation withdraw from the Philippines.
Il. The license of a foreign corporation to transact
7. The following are the requisites for a foreign business in the Philippines may be revoked or
corporation under the Corporation Code: suspended by the SEC. a.
I. It must be formed, organized, or existing under any Only II is true
laws other than those of the Philippines.
Il. The laws of the country where the corporation 13. I. A foreign corporation authorized to transact
was organized allow Filipino citizens and business in the Philippines need not obtain an
corporations to do business in its own country or amended license in the event it changes its
state. corporate name, or desires to pursue in the
Both are true Philippines other or additional purposes.
Il. A foreign corporation applying for a license to
8. I. A foreign corporation must first obtain a license transact business in the Philippines shall submit to
from the SEC and a certificate from the SEC before it the SEC a copy of its articles of incorporation and by-
can transact business in the Philippines. laws, certified in accordance with law, and their
Il. Where a foreign corporation does business in the translation to an official language of the Philippines,
Philippines without the proper license, it cannot if necessary.
maintain any action or proceeding before Philippine Only II is true
courts.
Both are true

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.
Il. 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.
Both are true

10. I. If a foreign corporation does business in the

Philippines without a license, it cannot sue before
the Philippine courts.
Il. 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.
Only I is true

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.
Both are true